S-1/A

As Filed With the Securities and Exchange Commission on August 24, 2023

Registration Number 333-256785

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

AMENDMENT NO. 3

to

FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

DATA443 RISK MITIGATION, INC.

(Exact name of registrant as specified in its charter)

Nevada	7372	86-0914051
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

4000 Sancar Way, Suite 400

Research Triangle Park, NC 27709

(919) 526-1070

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive office)

Jason Remillard

President and Chief Executive Officer

4000 Sancar Way, Suite 400

Research Triangle Park, NC 27709

(919) 443-0654

(Name, address, including zip code, and telephone number, including area code, of agent for service)

With Copies to:

M. Ali Panjwani	Greg McCraw	Ralph V. De Martino
Pryor Cashman LLP	Chief Financial Officer	ArentFox Schiff LLP
7 Times Square	Data443 Risk Mitigation, Inc.	1717 K Street
New York, New York 10036	4000 Sancar Way, Suite 400	Washington, DC 20006
(212) 326-0820	Research Triangle Park, NC 27709	202-724-6848
	919-526-1070 x136

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement is declared effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [X]

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [  ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [  ]

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth 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	[X]

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 7(a)(2)(B) of the Securities Act. [ ]

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to Section 8(a), may determine.

PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED AUGUST 24, 2023

The information in this preliminary Prospectus is not complete and may be changed. Neither we nor the selling stockholders may sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary Prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state or other jurisdiction where the offer or sale is not permitted.

                         Units

Each Unit Consisting of

One Share of Common Stock and

One Warrant to Purchase One Share of Common Stock

DATA443 RISK MITIGATION, INC.

ALL THINGS DATA SECURITY®

This is a firm commitment for an underwritten public offering of units (the “Units”), based on an assumed initial offering price of $                  per Unit, which is the midpoint of the range of the offering price per Unit, of DATA443 RISK MITIGATION, INC., a Nevada corporation (alternatively, the “Company”; “we”; “us”; “our”). We anticipate a public offering price of $                  per Unit. Each Unit consists of one share of common stock, $0.001 par value per share, and one warrant (each, a “Warrant” and collectively, the “Warrants”) to purchase one share of common stock at an exercise price of $                  per share, constituting 100% of the price of each Unit sold in this offering based on an assumed initial offering price of $                  per Unit. The Units have no stand-alone rights and will not be certificated or issued as stand-alone securities. The shares of common stock and the Warrants comprising the Units are immediately separable and will be issued separately in this offering. Each Warrant offered hereby is immediately exercisable on the date of issuance and will expire five years from the date of issuance. This offering also includes the shares of common stock issuable from time to time upon exercise of the Warrants.

We have also registered for public sale 931,000 shares of common stock held by 37 selling stockholders (the selling stockholders referred to herein as the “Selling Stockholders”). We will not receive any of the proceeds from the sale of Common Stock by the Selling Stockholders. The shares to be sold by the Selling Stockholders (the “Selling Stockholder Shares”) will not be purchased by the underwriters or otherwise included in the underwritten offering of our Units in this public offering. The Selling Stockholders may sell or otherwise dispose of their shares in a number of different ways and at varying prices, but will not sell any Selling Stockholder Shares until after the closing of this offering. See “Selling Stockholders—Plan of Distribution.” We will pay all expenses (other than discounts, concessions, commissions and similar selling expenses, if any) relating to the registration of the Selling Stockholders’ shares of Common Stock with the U.S. Securities and Exchange Commission.

Our common stock is quoted on the OTC Link LLC quotation system operated by OTC Markets, Group, Inc., under the symbol “ATDS” on the OTC Pink tier. On August 15, 2023, the reported closing price of our Common Stock was $0.02 per share. We have applied to list our common stock and Warrants on The Nasdaq Capital Market under the symbols “ATDS” and “ATDSW”, respectively. No assurance can be given that our application will be approved or that the trading prices of our common stock on the OTC Pink tier will be indicative of the prices of our common stock if our common stock were traded on The Nasdaq Capital Market. The approval of our listing on The Nasdaq Capital Market is a condition of closing this offering.

The offering price of the Units has been determined between the underwriter and us, considering our historical performance and capital structure, prevailing market conditions, and overall assessment of our business, and may be at a discount to the current market price.

Investing in our common stock involves a high degree of risk. This offering is highly speculative and these securities involve a high degree of risk and should be considered only by persons who can afford the loss of their entire investment. You should carefully review the risks and uncertainties described under the heading “Risk Factors” beginning on page 8 of this Prospectus, and under similar headings in any amendments or supplements to this Prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this Prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

	Per Unit	Total
Offering price	$	$
Underwriting discount and commissions (1)	$	$
Proceeds to us before offering expenses (2)	$	$

(1)	We have also agreed to issue warrants to purchase shares of our common stock to the underwriter and to reimburse the underwriter for certain expenses. See “Underwriting” for additional information regarding total underwriter compensation.
(2)	The amount of offering proceeds to us presented in this table does not give effect to any exercise of the: (i) over-allotment option (if any) we have granted to the underwriter as described below; and (ii) warrants being issued to the underwriter in this offering. We will receive no proceeds from the sale of any Selling Stockholder Shares.

We have granted a 45-day option to the underwriter, exercisable one or more times in whole or in part, to purchase up to an additional                   shares of common stock and/or                   additional Warrants at the public offering price of $                  per share, less, in each case, the underwriting discounts payable by us, in any combination solely to cover over-allotments, if any. If the underwriter exercises the option in full, the total underwriting discounts and commissions payable will be $                 , and the total proceeds to us, before expenses, will be $                 .

The underwriter expects to deliver the securities against payment to the investors in this offering on or about                      , 2023.

Sole Book-Running Manager

DAWSON JAMES SECURITIES, INC.

The date of this Prospectus is                         , 2023

DATA443 RISK MITIGATION, INC.

ALL THINGS DATA SECURITY™

TABLE OF CONTENTS

ABOUT THIS PROSPECTUS	1
INFORMATION SUMMARY	2
OFFERING SUMMARY	6
RISK FACTORS	8
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS	28
USE OF PROCEEDS	29
DETERMINATION OF OFFERING PRICE	29
DILUTION	29
PRICE RANGE OF THE REGISTRANT’S COMMON STOCK	31
DIVIDEND POLICY	31
CAPITALIZATION	31
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	33
BUSINESS	42
MANAGEMENT	48
EXECUTIVE AND DIRECTOR COMPENSATION	54
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS	56
PRINCIPAL STOCKHOLDERS	56
SELLING STOCKHOLDERS	57
SHARES ELIGIBLE FOR FUTURE SALE	62
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES	64
DESCRIPTION OF SECURITIES THAT WE ARE OFFERING	64
UNDERWRITING	68
LEGAL MATTERS	72
EXPERTS	72
WHERE YOU CAN FIND MORE INFORMATION	72
INDEX TO FINANCIAL STATEMENTS	F-1

In this Prospectus, “we”; “us”; “our”; the “Company”; and “ATDS” refer to DATA443 RISK MITIGATION, INC., a Nevada corporation, and where appropriate, its subsidiaries, unless expressly indicated or the content requires otherwise.

ABOUT THIS PROSPECTUS

You should rely only on information contained in this Prospectus. We have not, and the underwriter has not, authorized anyone to provide you with additional information or information different from that contained in this Prospectus. Neither the delivery of this Prospectus nor the sale of our securities means that the information contained in this Prospectus is correct after the date of this Prospectus. This Prospectus is not an offer to sell or the solicitation of an offer to buy our securities in any circumstances under which the offer or solicitation is unlawful or in any state or other jurisdiction where the offer is not permitted.

For investors outside the United States: Neither we nor the underwriter have taken any action that would permit this offering or possession or distribution of this Prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this Prospectus must inform themselves about, and observe any restrictions relating to, the offering of the securities covered hereby and the distribution of this Prospectus outside of the United States.

The information in this Prospectus is accurate only as of the date on the front cover of this Prospectus. Our business, financial condition, results of operations and prospects may have changed since those dates.

We are responsible for the information contained in this Prospectus and in any free-writing prospectus we prepare or authorize. We have not, the Selling Stockholders have not, and the underwriters have not, authorized anyone to provide you with different information, and we take no, the Selling Stockholders take no, and the underwriters take no, responsibility for any other information others may give you. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, the Selling Stockholders are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front of this Prospectus.

This Prospectus includes market and industry data that has been obtained from third-party sources, including industry publications, as well as industry data prepared by our management on the basis of its knowledge of and experience in the industries in which we operate (including our management’s estimates and assumptions relating to such industries based on that knowledge). Management’s knowledge of such industries has been developed through its experience and participation in these industries. While our management believes the third-party sources referred to in this Prospectus are reliable, neither we nor our management have independently verified any of the data from such sources referred to in this Prospectus or ascertained the underlying economic assumptions relied upon by such sources. Internally prepared and third-party market forecasts in particular are estimates only and may be inaccurate, especially over long periods of time. In addition, the underwriter has not independently verified any of the industry data prepared by management or ascertained the underlying estimates and assumptions relied upon by management. Furthermore, references in this Prospectus to any publications, reports, surveys, or articles prepared by third parties should not be construed as depicting the complete findings of the entire publication, report, survey, or article. The information in any such publication, report, survey, or article is not incorporated by reference in this Prospectus.

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PROSPECTUS SUMMARY

This summary highlights selected information about this offering included elsewhere in this Prospectus. This summary does not contain all the information that you should evaluate and consider before investing in our securities. You should carefully read, consider, and evaluate this entire Prospectus, especially the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements included herein, including the notes thereto, before making an investment decision.

Business Overview

We provide data security and privacy management solutions across the enterprise and in the cloud. Trusted by over 10,000 customers, we provide the visibility and control needed to protect data at scale, regardless of format, location, or consumer, and to facilitate compliance with fast-changing global data privacy requirements. Our customers include established leaders and up-and-coming businesses spanning the private and public/government sectors across diverse industries and fields, including financial services, healthcare, manufacturing, retail, technology, and telecommunications.

The mounting ransomware landscape as well as other threats to data have accelerated the rate at which businesses are adopting data security solutions and we believe that our portfolio of data security and privacy products provides an encompassing solution set such that we are well positioned to capitalize on that increased adoption rate and establish our products as new data privacy and security standards. Our offerings are anchored in reliable and comprehensive privacy management and equip organizations with a seamless approach to safeguard data, protect against attacks, and otherwise mitigate the most critical risks.

Sector-specific US laws, state-level legislation, and outside-the-United States (OUS) regulations are confounding enterprises of all sizes for whom safeguarding and stewarding data is key, but for whom becoming specialists in privacy and security is not an element of their strategic roadmap. For many of these enterprises, we can bridge the gap between their need to protect data and their need to use their resources to grow their core business by offering turnkey solutions and related counseling and technical support to offset risks from data breaches and security incidents of various types. We provide products and services for the marketplace that are designed to protect data that is stored in the cloud, on-premises, and in hybrid cloud/on-premises environments, and data that is transmitted throughout the enterprise, including but not limited to by remote employees. Our suite of security products focuses on protecting sensitive files and email, confidential customer, patient and employee data, financial records, strategic and product plans, intellectual property and other proprietary information, allowing our customers to create, share, and protect their sensitive data wherever it is stored and however it is used.

We deliver solutions and capabilities that businesses can use in conjunction with their use of established cloud vendors such as Microsoft® Azure, Google® Cloud Platform (GCP), and Amazon® Web Services (AWS), as well as with on-premises databases and database applications and with virtualization platforms, such as those hosted or configured using VMWare®, Citrix®, and Oracle® products.

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We sell or plan to sell substantially all our products and services through a sales model that combines the leverage of a channel sales model or direct account management, thereby providing us with opportunities to grow our current customer base and deliver our value proposition for data privacy and security. We endeavor to use subscription models to license products and services, commonly for a paid-in-advance, multiyear term that is auto-renewing. We also make use of channel partners, distributors, and resellers which sell to end-users of the products and services. This approach allows us to maintain close relationships with our customers and benefit from the global reach of our partners. Additionally, we are enhancing our product offerings and go-to-market strategy by establishing technology alliances within the IT infrastructure and security vendor ecosystem. Our sales and marketing focus for new organic growth is on organizations with 500 or more users who are adopting cloud services and can make larger purchases with us over time and have a greater potential lifetime value.

We continue to onboard to cloud-native technology adoption portals such as the Microsoft® Azure Marketplace and the Amazon® AWS Marketplace. Vendors may offer incentives to us as a software and services provider to onboard and market via their marketplace portals.

We strive to create new and innovative products and to improve existing products, proactively identifying and solving the data security needs of our customers.

As cloud adoption continues to accelerate, data privacy requirements get more complex, and data security becomes more challenging, we believe that Data443 is well positioned to capture more market share, continue to lead in strategic data security technology development, and prepare organizations for the next epoch in IT data privacy services.

Our Products

Each of our major product lines provides features and functionality which we believe enable our customers to optimally secure their data. The products are modular, giving our customers the flexibility to select what they require for their business needs and the flexibility to expand their usage simply by adding a license. We currently offer the following products and services:

● Data443® Ransomware Recovery Manager (also known as “SmartShield™”), a unique offering designed to recover a workstation immediately upon infection to the last known business-operable state, without requiring any end user or IT administrator intervention.

● Data443® Data Identification Manager (also known as ClassiDocs® and FileFacets®), our data classification and governance technology, which supports GDPR, CCPA, and LGPD compliance in a Software-as-a-Service (SaaS) platform that performs sophisticated data discovery and content searching of structured and unstructured data within corporate networks, servers, content management systems, email, desktops, and laptops.

● Data443® Data Archive Manager (also known as ArcMail®), a simple, secure, and cost-effective solution for enterprise data retention management and archiving.

● Data443® Sensitive Content Manager (also known as ARALOC®), a secure, cloud-based platform for managing, protecting and distributing digital content to desktop and mobile devices, which protects an organization’s confidential content and intellectual property assets from accidental leakage or intentional misappropriation—without impeding all authorized users of the content and other stakeholders from collaborating.

● Data443® Data Placement Manager (also known as DATAEXPRESS®), a data transport, transformation, and delivery product being used by leading financial organizations worldwide.

● Data443® Access Control Manager (also known as “Resilient Access”), enables fine-grained access controls across a wide variety of platforms at scale for internal customer systems and commercial public cloud platforms like Salesforce®, Box.Net, Google® G Suite, Microsoft® OneDrive, and others.

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● Data443® Blockchain Protection Manager (also known as ClassiDocs® for Blockchain), provides an active implementation for the Ripple XRP that protects blockchain transactions from inadvertent disclosure and data leaks.

● Data443® Global Privacy Manager, a privacy compliance and consumer loss mitigation platform which is integrated with the Data443® Data Identification Manager to do the delivery portions of GDPR and CCPA as well as process privacy-related requests under such laws, and therefore enables customers to manage the full range of privacy-law driven requirements, such as responding to permitted consumer demands for access or removal, as well as to remediate issues and monitor and report on status and compliance.

● Data443® IntellyWP, products for enhancing the user experience for the world’s largest content management platform, WordPress.

● Data443® Chat History Scanner, which scans chat messages for compliance, security, personally identifiable information (PII), personal information (PI), payment card information (PCI) as well as any custom keywords selected by the customer, and which can be used with third party platforms such as the Zoom Video Communications, Inc. video conferencing platform.

● Data443® GDPR Framework, CCPA Framework, and LGPD Framework WordPress Plugins, which help organizations of all sizes comply with Europe, California and Brazil privacy rules and regulations and are currently used by over 30,000 active site owners. We offer the plugins with a freemium business model, i.e., basic features at no cost and additional or more advanced features at a premium.

Our Growth Strategy

Key elements of our growth strategy include:

Acquisitions. We intend to aggressively pursue acquisitions of other cybersecurity software and service providers focused on the data security sector. We target companies with a developed and/or steady client base, as well as companies with offerings that complement our existing suite of products.

Research & Development; Innovation. We intend to increase our spending on research and development to create new and innovative products and to improve existing products, proactively identifying and solving the data security needs of our clients.

Grow Our Customer Base. We believe the continued challenges businesses face in managing their enterprise data and the ever-evolving landscape of cybersecurity threats will keep the demand high for the type of products and services we offer. We intend to capitalize on this demand by continually developing and curating a collection of products and services that are attractive and relevant to both our established revenue base and to new customers.

Expand Our Sales Capacity. We believe that continuing to expand our sales force will be essential to achieving our expansion and growth. We intend to expand our sales capacity by adding sales and marketing employees, with heavy focus on customer success and leveraging our existing customer relationships.

Our Customers

Our current customer base is comprised primarily of two segments – commercial enterprises and open-source consumers. Our commercial enterprise customers are generally focused within the U.S., range from 500 employees to over 150,000 employees, and use our data security products. We have over 10,000 commercial enterprise customers. We have approximately 20 customers in the financial technology industry that contract with us directly for products with subscriptions with terms of more than three years. We have more than 2,500 customers comprising mid-market-sized organizations that also contract with us directly for products with subscriptions with terms of one to three years. Our open-source consumers are more widely distributed geographically, include organizations of all sizes in terms of both number of employees and revenues, and typically use our online GDPR/CCPA/GLPD Privacy plugins, our Privacy Badge solution, or our user experience enhancement products. We have over 200,000 open-source consumers with active installations of our plugins, and we have 9,000 open-source consumers that pay a premium for additional or advanced features. We expect that some of our open-source consumers will become commercial customers over time.

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Corporate Information

Our principal offices are located at 4000 Sancar Way, Research Triangle Park, North Carolina 27709, and our telephone number is (919) 526-1070.

Implications of Being an Emerging Growth Company

We qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the “JOBS Act.” An emerging growth company may take advantage of certain reduced disclosure and other requirements that are otherwise applicable to public companies that are not emerging growth companies. As a result, the information that we provide to stockholders may be different than the information you may receive from other public companies in which you hold equity. For example, as long as we are an emerging growth company:

● we are not required to engage an auditor to report on our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”);

● we are not required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board (the “PCAOB”) regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis);

● we are not required to submit certain executive compensation matters to stockholder advisory votes, such as “say-on-pay,” “say-on-frequency” and “say-on-golden parachutes”; and

● we are not required to comply with certain disclosure requirements related to executive compensation, such as the requirement to disclose the correlation between executive compensation and performance and the requirement to present a comparison of our Chief Executive Officer’s compensation to our median employee compensation.

We may take advantage of these reduced disclosure and other requirements until we are no longer an emerging growth company. We will remain an emerging growth company until the earliest to occur of: the last day of the fiscal year in which we have more than $1.07 billion in annual revenue; the last day of the fiscal year in which we qualify as a “large accelerated filer”; the date on which we have, during the previous three-year period, issued more than $1.0 billion of non-convertible debt securities; and the last day of the fiscal year in which the fifth anniversary of this offering occurs.

As mentioned above, the JOBS Act permits us, as an emerging growth company, to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We have elected not to opt out of the extended transition period which means that when an accounting standard is issued or revised and it has different application dates for public or private companies, as an emerging growth company, we can adopt the new or revised standard at the time private companies adopt the new or revised standard. As a result, our financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies that are not emerging growth companies, which may make comparison of our financials to those of such other public companies more difficult.

We are also a “smaller reporting company,” meaning that we are not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company. The market value of our stock held by non-affiliates plus the proposed aggregate amount of gross proceeds to us as a result of this offering is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company after this offering if either (i) the market value of our stock held by non-affiliates (public float) is less than $250 million as of the last business day of the second fiscal quarter or (ii) our annual revenue is less than $100 Million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million as of the last business day of the second fiscal quarter. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation. In the event that we are still considered a “smaller reporting company” at such time as we cease being an “emerging growth company,” the disclosure we will be required to provide in our SEC filings will increase, but it will still be less than it would be if we were considered neither an “emerging growth company” nor a “smaller reporting company.” Specifically, similar to “emerging growth companies,” “smaller reporting companies” are able to provide simplified executive compensation disclosures in their filings; are exempt from the provisions of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; and have certain other decreased disclosure obligations in their SEC filings, including, among other things, being required to provide only two years of audited financial statements in annual reports. Decreased disclosures in our SEC filings due to our status as an “emerging growth company” or “smaller reporting company” may make it harder for investors to analyze our results of operations and financial prospects.

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OFFERING SUMMARY

Issuer:	Data443 Risk Mitigation, Inc., a Nevada corporation
Securities offered by us:	Units (or                   Units if the over-allotment option is exercised in full), with each Unit consisting of one share of our common stock and one Warrant to purchase one share of our common stock. Each Warrant will have an exercise price of $                  per share (100% of the assumed public offering price of one Unit), exercisable immediately and expiring five (5) years from the date of issuance. The Units will not be certificated or issued in stand-alone form. The shares of our common stock and the Warrants comprising the Units are immediately separable upon issuance and will be issued separately in this offering.
Number of shares of common stock offered by us:	shares
Number of Warrants offered by us:
Number of shares of common stock offered by the Selling Stockholders	Up to a maximum of 931,000 shares. See “Selling Stockholders” for a description of how we calculated the number of shares offered by the Selling Stockholders.
Public offering price:	$                  per Unit, which is the midpoint of the price range set forth on the cover page of this prospectus. The actual offering price per share will be as determined between the underwriter and us at the time of pricing and may be issued at a discount to the current market price of our Common Stock.(1).
Shares of common stock outstanding prior to the offering (1):	shares.
Shares of common stock outstanding after the offering(2):	shares (                  shares if the over-allotment option is exercised in full) (assuming none of the Warrants issued in the offering are exercised).
Over-allotment option:	We have granted a 45-day option to the underwriter to purchase up to                   additional shares of common stock and/or                   Warrants at the public offering price per share of common stock and per Warrant, respectively, less, in each case, the underwriting discounts payable by us, in any combination solely to cover over-allotments, if any. The underwriter may exercise this option in full or in part at any time and from time to time until 45 days after the date of this Prospectus.
Use of proceeds:	We estimate that we will receive net proceeds of approximately $                  from our sale of Units, after deducting underwriting discounts and estimated offering expenses payable by us, or $                  if the underwriters exercise their over-allotment option in full, assuming an offernig price of $                  , which is the midpoint of the price range set forth on the cover page of this prospectus. We intend to use the net proceeds of this offering to provide funding for the following purposes: general corporate purposes and operations; acquisitions; debt repayment; expanding our sales force and inbound and outbound marketing capabilities; technology and research and development; IT development operations and hosting facility expansion; and working capital. We will not receive any proceeds from the sale of the Selling Stockholder Shares by the Selling Stockholders, if any. See “Use of Proceeds”.

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Description of the Warrants:	The exercise price of the Warrants is $                  per share (100% of the assumed public offering price of one Unit). Each Warrant is exercisable for one share of common stock, subject to adjustment in the event of stock dividends, stock splits, stock combinations, reclassifications, reorganizations or similar events affecting our common stock, as described herein. A holder may not exercise any portion of a Warrant to the extent that the holder, together with its affiliates and any other person or entity acting as a group, would own more than 4.99% of the outstanding common stock after exercise, as such percentage ownership is determined in accordance with the terms of the Warrants, except that upon notice from the holder to us, the holder may waive such limitation up to a percentage, not in excess of 9.99%. Each Warrant will be exercisable immediately upon issuance and will expire five years after the initial issuance date. The terms of the Warrants will be governed by a Warrant Agreement, dated as of the closing date of this offering, between us and Madison Stock Transfer, Inc., as the warrant agent (the “Warrant Agent”). This Prospectus also relates to the offering of the shares of common stock issuable upon exercise of the Warrants. For more information regarding the Warrants, you should carefully read the section titled “Description of Securities - Warrants” in this Prospectus.
Underwriter’s Warrants:	The Registration Statement of which this Prospectus is a part also registers for sale warrants (the “Underwriter’s Warrants”) to purchase shares of our common stock (based on an offering price of $                  per Unit (which is the public offering price) to Dawson James Securities, Inc. (“Dawson” or the “underwriter”), as a portion of the underwriting compensation in connection with this offering. The Underwriter’s Warrants will be exercisable at any time, and from time to time, in whole or in part, during the period commencing 180 days following the closing date of this offering and ending on the fifth anniversary of the closing date of this offering at a per share exercise price of $                  (125% of the assumed public offering price of the Units). Please see “Underwriting - Underwriter’s Warrants” for a description of the Underwriter’s Warrants.
Underwriter Compensation:	In connection with this offering, the underwriter will receive an underwriting discount equal to eight (8%) of the gross proceeds from the sale of Units in the offering. We will also reimburse the underwriter for certain expenses related to the offering (including up to $165,000 in legal expenses, approximately $                  for other costs). See “Underwriting”.
Trading Symbol:	Our common stock is quoted on the OTC Pink tier (“OTC Pink”) operated by the OTC Markets Group, under the symbol “ATDS”. We have applied to have our common stock and the Warrants offered in the offering listed on The Nasdaq Capital Market under the symbols “ATDS” and “ATDSW”, respectively. The approval of the listing on The Nasdaq Capital Market is a condition of closing this offering.
Risk Factors:	Investing in our common stock involves a high degree of risk, and the purchasers of our common stock may lose all or part of their investment. Before deciding to invest in our securities, please carefully read the section entitled “Risk Factors” beginning on page 8 and the other information in this Prospectus.
Dividends:	We do not anticipate paying dividends on our common stock in the foreseeable future.
Lock-up Agreements:	We and our directors, officers and certain shareholders have agreed with the underwriter not to offer for sale, issue, sell, contract to sell, pledge or otherwise dispose of any of our common stock or securities convertible into common stock for a period of 180 days after the date of this Prospectus. See “Underwriting—Lock-Up Agreements”.

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The number of shares of our common stock outstanding prior to and to be outstanding immediately after this offering, as set forth in the table above, is based on 61,413,168 shares outstanding as of August 7, 2023.

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The number of shares outstanding after this offering is based on 61,413,168 shares outstanding as of August 7, 2023, but does not include, as of that date: (i) 159,974 shares of our common stock issuable upon exercise of outstanding warrants at a weighted average exercise price per share in the range of about $0.93 to $20.00; (ii) 149,892 shares of common stock issuable upon conversion of our outstanding Series A Preferred Stock; (iii) exercise of the Underwriter’s Warrants; and (iv) exercise of the underwriter’s option to purchase additional shares and/or Warrants from us in this offering.

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RISK FACTORS

An investment in our securities involves a high degree of risk. You should carefully read, consider, and evaluate risks described below, as well as all the other information contained in this Prospectus, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes, before investing in our common stock. If any of the following risks actually occur, as well as other risks not currently known to us or that we currently consider immaterial, our business, operating results and financial condition could be materially adversely affected. As a result, the market or trading price of our common stock could decline, and you may lose all or part of your investment.

Risk Factor Summary

Our business is subject to numerous risks and uncertainties, including those described in “Risk Factors” in this Prospectus, any of which could materially and adversely impact our business and operations, adversely impact our growth prospects, cause us to incur additional costs or liabilities and/or cause the price of our common stock to decline. You should carefully consider these risks and uncertainties when investing in our common stock. Some of the principal risks and uncertainties include the following:

● We will require additional funds in the future to achieve our current business strategy;

● Technology is constantly changing and evolving and the continued viability of our products and services requires that we keep up with an ever-changing technological landscape;

● We face intense competition in our market, especially from larger, well-established companies;

● We are dependent on the continued services and performance of our founder and Chief Executive Officer;

● We may be unable to attract new customers and/or expand sales to existing customers;

● We may be unable to maintain successful relationships with our channel partners;

● We may be subject to breaches in our security, cyberattacks or other cyber risks;

● We may be unable to protect our proprietary technology and intellectual property rights;

● We may be subject to real or perceived errors, failures, or bugs in our technology;

● We are subject to federal, state and industry privacy and data security regulations;

● Our business is susceptible to risks associated with international operations;

● Our business is subject to the risks of pandemic, fire, power outages, floods, earthquakes, and other catastrophic events, and to interruption by manmade problems such as terrorism and war;

● Our operations may continue to increase in complexity as we grow, which will add additional challenges to the management of our business in the future;

● We may be unable to secure necessary financing on acceptable terms and in a timely manner;

● There is no assurance that future financing from Mr. Remillard will be available or, if available, that it will be on terms that are satisfactory to us;

● We may not be able to identify suitable acquisition candidates or consummate acquisitions on acceptable terms, or we may be unable to successfully integrate acquisitions;

● The JOBS Act allows us to postpone the date by which we must comply with certain laws and regulations intended to protect investors and to reduce the amount of information we provide in reports filed with the SEC;

● Failure to implement proper and effective internal controls or to remediate weakness in internal accounting controls could result in material misstatements in our financial statements.

● We have secured debt, which could have adverse consequences to you;

● We may not be able to attract the attention of research analysts at major brokerage firms;

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● In the event of a bankruptcy, liquidation or winding up of our assets, our common stock will rank junior to all of our liabilities to third party creditors, and to any class or series of our capital stock created after this offering that, by its terms, ranks senior to our common stock;

● The trading price of our common stock may be subject to rapid and substantial price volatility that may be unrelated to our actual or expected operating performance and financial condition or prospects.

● Future issuances of debt securities and preferred stock may adversely affect the return of your investment;

● Our common stock is subject to the SEC’s penny stock rules;

● Our common stock has historically experienced low trading volume on the OTC Pink, and therefore the price may not accurately reflect our value and there can be no assurance that an active market for our common stock will develop, either now or in the future;

● We have had a history of losses and may incur future losses, which may prevent us from attaining profitability;

● There is substantial doubt about our ability to continue as a going concern;

● We currently have outstanding shares of preferred stock that have special rights that could limit our ability to undertake corporate transactions, inhibit potential changes of control and reduce the proceeds available to our common stockholders in the event of a change in control;

● Our Chief Executive Officer has the ability to control all matters submitted to stockholders for approval;

● We will continue to incur substantial costs as a result of operating as a public reporting company, and our management will be required to devote substantial time to compliance initiatives;

● We may issue additional shares of our common stock, which may dilute current stockholders;

● Our management will have broad discretion in the use of the net proceeds from this offering;

● We may not be able to continue to comply with the continued listing standards of the Nasdaq Capital Market;

● Adverse or uncertain macroeconomic or geopolitical conditions or reduced IT spending may adversely impact our business, revenues, and profitability; and

● Prolonged economic uncertainties or downturns could materially adversely affect our business.

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Risks Related to Our Business and Industry

We will require additional funds in the future to achieve our current business strategy and an inability to obtain funding could cause our business to fail.

We will need to raise additional funds through public or private debt or equity financings in order to fund our future operations and fulfill our future contractual obligations. These financings may not be available when needed. Even if these financings are available, they may be on terms that we deem unacceptable or that are materially adverse to your interests with respect to dilution of book value, dividend preferences, liquidation preferences, or other terms. Our inability to obtain financing could have an adverse effect on our ability to implement our business plan and develop our products, and as a result, could diminish our sales or require us to suspend our operations and possibly cease our existence.

Even if we are successful in raising capital in the future, we will likely need to raise additional capital to continue and/or expand our operations. If we do not raise the additional capital, the value of any investment in us may become worthless.

If we do raise additional capital but from other than conventional sources, we may need to scale back or otherwise adjust our growth strategy which may prevent us from fully implementing our business plan.

Technology is constantly changing and evolving and the continued viability of our products and services requires that we keep up with an ever-changing technological landscape.

Our industry is categorized by rapid technological progression, ever-increasing innovation, changes in customer requirements, and frequent new product introductions, and we may be subject to legal and regulatory compliance mandates as the relevant law develops in the fields in which are products are used. As a result, we must continually change and improve our products in response to such changes, and our products must also successfully interface with products from other vendors, which are also subject to constant change. While we believe we have the competency to aid our customers in all aspects of data privacy and security, we will need to constantly improve our current assets and offerings to keep up with technological advances that are expected to occur.

We cannot guarantee that we will be able to anticipate future market needs and opportunities or be able to develop new products and services or expand the functionality of our current products and services in a timely manner or at all. Even if we are able to anticipate, develop, and introduce new products and expand the functionality of our current products, there can be no assurance that enhancements or new products will achieve widespread market acceptance: If they do not, our business may be adversely affected and we may have to cease operations altogether.

We face intense competition in our market, especially from larger, well-established companies, and we may lack sufficient financial and other resources to maintain and improve our competitive position.

The market for data privacy and security and other data governance solutions is intensely competitive and is characterized by constant change and innovation. We face competition from both traditional, larger software vendors offering enterprise-wide software frameworks and services and smaller companies offering point solutions for specific identification and data governance issues. We also compete with IT equipment vendors and systems management solution providers whose products and services address data identification and classification and data governance requirements. Our principal competitors vary depending on the product. Many of our existing competitors have achieved, and some of our potential competitors could achieve, substantial competitive advantages due to:

● greater name recognition and longer operating histories;

● more comprehensive and varied products and services;

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● broader market focus;

● greater resources to develop technologies or make acquisitions;

● intellectual property portfolios that may limit our ability to market or sell products and services in the United States or markets outside the United States;

● broader distribution capabilities and established relationships with distribution partners and customers;

● greater customer support resources; and

● substantially greater financial, technical, and other resources.

Our competitors may be able to compete and respond more effectively than we can to new or changing opportunities, technologies, standards, or customer requirements. Our competitors may also seek to extend or supplement their existing products and services to provide data security and data governance solutions that more closely compete with our products and services offerings. Potential customers may also prefer to purchase, or incrementally add solutions, from their existing suppliers rather than to onboard with us as a new or additional supplier regardless of whether our products offer better performance or more features.

In addition, with the recent increase in large merger and acquisition transactions in the technology industry, particularly transactions involving cloud-based technologies, there is a greater likelihood that we will compete with other large technology companies in the future.

Some of our competitors have made acquisitions or entered into strategic relationships to offer more comprehensive product offerings in combination than they were previously able to offer alone. Companies resulting from these possible consolidations and partnerships may be able to offer more attractive pricing, making them more compelling to customers and more difficult for us to compete with effectively. In addition, continued industry consolidation may adversely impact customer perceptions of the viability of small- and medium-sized technology companies and consequently their willingness to purchase from those companies. Conditions in our market could change rapidly and significantly as a result of technological advancements, partnering among our competitors, or continuing market consolidation. These competitive pressures in our market or our potential inability to compete effectively may result in price reductions, fewer orders, reduced revenue and gross margins, increased net losses, and loss of market share. Any failure to meet and address these factors could adversely affect our business, financial condition, and operating results.

We are dependent on the continued services and performance of our founder and Chief Executive Officer, Jason Remillard, the loss of whom could adversely affect our business.

Our future performance depends in large part on the continued services and continuing contributions of our founder, Chief Executive Officer and president, Jason Remillard, to successfully manage the Company, to execute on our business plan, and to identify and pursue new opportunities and deliver product innovations. The loss of Mr. Remillard’s services could significantly delay or prevent us from achieving our development and strategic objectives and adversely affect our business.

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If we are unable to attract new customers and/or expand sales to existing customers, both domestically and internationally, our growth could be slower than we expect, and our business may be harmed.

Our future growth depends in part upon increasing our customer base. Our ability to achieve significant growth in revenues in the future will depend upon the effectiveness of our sales and marketing efforts, both domestically and internationally, and our ability to attract new customers. If we fail to attract new customers, our revenues may grow more slowly than expected, and our business may be harmed.

Our future growth also depends upon expanding sales of our products and services to existing customers and their organizations. If our customers do not purchase additional licenses or our other offerings related to complementary products and services , our revenues may grow more slowly than expected, may not grow at all, or may decline. There can be no assurance that our efforts will result in increased sales to existing customers and additional revenues. If our efforts are not successful, our business may suffer.

If we are unable to maintain successful relationships with our channel partners, our business could be adversely affected.

We intend to rely to some extent on channel partners, such as distribution partners and resellers, to sell licenses for our products and to sell our technical support and maintenance services. Our ability to achieve revenue growth in the future may depend in part on our success in maintaining successful relationships with our channel partners. Agreements with channel partners tend to be non-exclusive, meaning our channel partners may offer customers the products of several different companies. If our channel partners do not effectively market and sell our products and services, choose to use greater efforts to market and sell their own products or those of others, or fail to meet the needs of our customers, our ability to grow our business may be adversely affected. Furthermore, agreements with channel partners generally allow them to terminate their agreements for any reason upon 30 days’ notice. If we are unable to maintain our relationships with these channel partners, our business, results of operations, financial condition, or cash flows could be adversely affected.

Breaches in our security, cyberattacks, or other cyber risks could expose us to significant liability and cause our business and reputation to suffer.

Our operations may involve transmitting and processing the confidential, proprietary, and sensitive information of our customers. We have legal and contractual obligations to protect the confidentiality of and to appropriately use customer data. Despite our security measures, our information technology and infrastructure may be vulnerable to attacks as a result of third-party action, employee error, or misconduct. Security risks, including, but not limited to, unauthorized use or disclosure of customer data, theft of proprietary information, loss or corruption of customer data, and computer hacking attacks or other cyberattacks, could expose us to substantial litigation expenses and damages, indemnity and other contractual obligations, government fines and penalties, mitigation expenses and other liabilities. We have been subject to attempted cyberattacks in the past and expect to be subject to such attacks in the future. We continuously work to improve our information technology systems, and to create security boundaries around our critical and sensitive assets. We perform activities to mitigate the risk of attacks and to increase our capabilities to responsibly handle any security violation or attack. However, because techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until successfully launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. If an actual or perceived breach of our security occurs, the market perception of the effectiveness of our security measures and our products could be harmed, we could lose potential sales and existing customers, our ability to operate our business could be impaired, and we may incur significant liabilities.

Failure to protect our proprietary technology and intellectual property rights could substantially harm our business.

The success of our business depends on our ability to obtain, protect, and enforce our trade secrets, patents, and other intellectual property rights such as copyrights and trademarks. We attempt to protect our intellectual property under trade secret, patent, copyright, and trademark laws, and through a combination of confidentiality procedures, contractual provisions and other methods, all of which offer only limited protection. The process of obtaining patent protection is expensive and time consuming, and we may choose not to seek patent protection for certain innovations and may choose not to pursue patent protection in certain jurisdictions in which we do or plan to do business. Not seeking patent protection may limit our options to exclude competitors from using those innovations altogether or in those jurisdictions.

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Our policy is to require our employees to execute written agreements in which they assign to us their rights in potential inventions and other intellectual property created within the scope of their employment. We also require any consultants we engage to provide services that may result in intellectual property that would benefit us to contractually agree to assign their rights to their inventions or creations to us, in connection with the engagement. However, we cannot assure you that we have adequately protected our rights in every such agreement or that we have executed an agreement with every such party. Finally, in order to benefit from intellectual property protection, we must monitor, detect, and pursue infringement claims in certain circumstances in relevant jurisdictions, all of which is costly and time-consuming. As a result, we may not be able to adequately protect our intellectual property rights.

The data security, cybersecurity, data retention, and data governance industries are characterized by the existence of a large number of relevant patents and frequent claims and related litigation regarding patent and other intellectual property rights. From time to time, third parties have asserted and may assert their patent, copyright, trademark and other intellectual property rights against us, our channel partners, or our customers. Successful claims of infringement or misappropriation by a third party could prevent us from distributing certain products or performing certain services or could require us to pay substantial damages (including, for example, treble damages if we are found to have willfully infringed patents and increased statutory damages if we are found to have willfully infringed copyrights), royalties or other fees. Such claims also could require us to cease making, licensing or using solutions that are alleged to infringe or misappropriate the intellectual property of others or to expend additional development resources to attempt to redesign our products or services or otherwise to develop non-infringing technology. Even if third parties may offer a license to their technology, the terms of any offered license may not be acceptable, and the failure to obtain a license or the costs associated with any license could cause our business, results of operations or financial condition to be materially and adversely affected. In some cases, we indemnify our channel partners and customers against claims that our products infringe the intellectual property of third parties. Defending against claims of infringement or being deemed to be infringing the intellectual property rights of others could impair our ability to innovate, develop, distribute, and sell our current and planned products and services. If we are unable to protect our intellectual property rights and ensure that we are not violating the intellectual property rights of others, we may find ourselves at a competitive disadvantage to others who need not incur the additional expense, time, and effort required to create the innovative products that have enabled us to be successful to date.

Real or perceived errors, failures, or bugs in our technology could adversely affect our growth prospects.

Because we develop, use, and provide complex technology, undetected errors, failures, or bugs may occur. Our technology is often installed and used in a variety of computing environments with different operating system management software, equipment, and networking configurations, which may cause errors or failures of our technology or other aspects of the computing environment into which it is deployed. In addition, deployment of our technology into computing environments may expose undetected errors, compatibility issues, failures, or bugs in our technology. Despite testing by us, errors, failures, or bugs may not be found until our technology is released to our customers. Moreover, our customers could incorrectly implement or inadvertently misuse our technology, which could result in customer dissatisfaction and adversely impact the perceived utility of our products. Any of these real or perceived errors, compatibility issues, failures, or bugs could result in negative publicity, reputational harm, loss of or delay in market acceptance, loss of competitive position, or claims by customers for losses sustained by them. In such an event, we may be required, or may choose, for customer relations or other reasons, to expend additional resources in order to help correct the problem.

We are subject to federal, state and industry privacy and data security regulations, which could result in additional costs and liabilities to us or inhibit sales of our software.

The regulatory framework for privacy issues worldwide is rapidly evolving and is likely to remain fluid and unpredictable for the foreseeable future. Many federal, state, and foreign government bodies and agencies have adopted or are considering adopting privacy and data security laws and regulations. In addition, privacy advocates and industry groups may propose new and different self-regulatory standards. We also may determine that certain requirements or standards are best practices for us to implement. Because the interpretation and application of privacy and data protection laws can be uncertain, it is possible that these laws may be interpreted and applied in a manner that is inconsistent with our existing data security practices. If so, in addition to the possibility of fines, lawsuits and other claims, we could be required to fundamentally change our business activities and practices or modify our technology, which could have an adverse effect on our business. Any inability to adequately address privacy concerns, even if unfounded, or comply with applicable privacy or data protection laws, regulations and policies, could result in additional cost and liability to us, damage our reputation, inhibit sales and adversely affect our business.

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Because our long-term success depends, in part, on our ability to expand the sales and marketing of our technology and solutions to customers located outside of the United States, our business is susceptible to risks associated with international operations.

We intend to expand our international sales and marketing operations. Conducting international operations subjects us to risks that we may not face in the United States or may prove more challenging to address. These risks include:

● pandemics, political instability, war, armed conflict, or terrorist activities;

● challenges developing, marketing, selling, and implementing our technology and solutions caused by language, cultural and ethical differences, and the competitive environment;

● heightened risks of unethical, unfair, or corrupt business practices, actual or claimed, in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and necessitate restatements of or result in irregularities in financial statements;

● competition from bigger and stronger companies in the new markets;

● laws imposing heightened restrictions on data use and increased penalties for failure to comply with applicable laws, particularly in countries within the European Union (EU);

● currency fluctuations;

● management communication and integration problems resulting from cultural differences and geographic dispersion;

● potentially adverse tax consequences, including multiple and possibly overlapping tax structures, the complexities of foreign value-added tax (VAT) systems, restrictions on the repatriation of earnings and changes in tax rates; and

● lack of familiarity with local laws, customs and practices, and laws and business practices favoring local competitors or commercial parties.

The occurrence of any one of these risks could harm our international business and, consequently, our operating results. Additionally, operating in international markets requires significant management attention and financial resources. We cannot be certain that the investment and additional resources required to operate in other countries will produce desired levels of revenue or net income.

Changes in financial accounting standards may cause adverse and unexpected revenue fluctuations and impact our results of operations.

A change in accounting standards or practices could harm our operating results and may even affect our reporting of transactions completed before the change is effective. New accounting pronouncements have occurred and may occur in the future. Changes to existing rules or the questioning of current practices may harm our operating results or the way we conduct our business. Additionally, the adoption of new or revised accounting principles may require that we make significant changes to our systems process and controls, which could be time consuming and costly.

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Our business is subject to the risks of pandemic, fire, power outages, floods, earthquakes, and other catastrophic events, and to interruption by manmade problems such as terrorism and war.

A pandemic, significant natural disaster, such as a fire, flood or an earthquake, or a significant power outage could have a material adverse impact on our business, results of operations and financial condition. In the event our customers’ information technology systems or our channel partners’ selling or distribution abilities are hindered by any of these events, we may miss financial targets, such as revenues and sales targets, for a particular quarter. Furthermore, if a natural disaster occurs in a region from which we derive a significant portion of our revenue, customers in that region may delay or forego purchases of our products, which may materially and adversely impact our results of operations for a particular period. In addition, acts of terrorism or war could cause disruptions in our business or the business of channel partners, customers, or the economy as a whole. All of the aforementioned risks may be exacerbated if the disaster recovery plans for us and our channel partners prove to be inadequate. To the extent that any of the above results in delays or cancellations of customer orders, or delays in producing, deploying or shipping our products or delivering our services, our business, financial condition and results of operations would be adversely affected.

We anticipate that our operations will continue to increase in complexity as we grow, which will add additional challenges to the management of our business in the future.

We expect that our business will grow as we execute on our business plan, and that as we grow our operations will increase in complexity. To effectively manage this growth, we have made and continue to make substantial investments to improve our operational, financial and management controls as well as our reporting systems and procedures. Further, as our customer base grows, we will need to expand our professional services and other personnel. We also will need to effectively manage our direct and indirect sales processes as the number and type of our sales personnel and channel partners grows and becomes more complex, and as we expand into foreign markets. If we are unable to effectively manage the increasing complexity of our business and operations, the quality of our technology and customer service could suffer, and we may not be able to adequately address competitive challenges. These factors could all negatively impact our business, operations, operating results, and financial condition.

We require additional financing to sustain our operations and execute our business plan. If we fail to secure the required additional financing on acceptable terms and in a timely manner, our ability to implement our business plan will be compromised and we may be unable to sustain our operations.

We have limited capital resources and operations. To date, our operations have been funded largely from the proceeds of debt and equity financings. We will require substantial additional capital in the near future to operate our business. We may be unable to obtain additional financing on terms acceptable to us, or at all. Even if we obtain financing for our near-term operations, we expect that we will require additional capital thereafter. Our capital needs will depend on numerous factors including but not limited to (i) the scale of our marketing and sales activities , (ii) other expenditures of resources to maintain or increase revenue and (iii) the amount of our capital expenditures, including acquisitions. We cannot assure you that we will be able to obtain capital in the future to meet our needs. If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership held by our existing shareholders will be reduced and our shareholders may experience significant dilution. In addition, new securities may contain rights, preferences, or privileges that are senior to those of our common stock. If we raise additional capital by incurring debt, this will result in increased interest expense. If we raise additional funds through the issuance of securities, market fluctuations in the price of our shares of common stock could limit our ability to obtain equity financing. We cannot give any assurance that any additional financing will be available to us, or if available, will be on terms favorable to us. If we are unable to raise capital when needed, our business, financial condition, and results of operations would be materially adversely affected, and we could be forced to reduce or discontinue our operations.

We have relied on funding from Jason Remillard for working capital to fund operations in the past, and there is no assurance that future financing from Mr. Remillard will be available or, if available, that it will be on terms that are satisfactory to us.

For the past several years, we have depended on our Chief Executive Officer, Jason Remillard, for working capital to fund our operations and to execute our business plan. In addition, we have in the past been and in the future be dependent upon Mr. Remillard to provide continued funding and capital resources. However, no assurance can be given that future financing from Mr. Remillard will be available or, if available, that it will be on terms that are satisfactory to us. In the absence of financing from other sources, the inability to obtain additional financing from Mr. Remillard could result in the scaling back or discontinuance of our operations or our inability to successfully implement our plan of operations.

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We have made and expect to continue to make acquisitions as a primary component of our growth strategy. We may not be able to identify suitable acquisition candidates or consummate acquisitions on acceptable terms, or we may be unable to successfully integrate acquisitions, which could disrupt our operations and adversely impact our business and operating results.

A primary component of our growth strategy is to acquire complementary businesses. We intend to continue to pursue acquisitions of complementary technologies, products, and businesses as a primary component of our growth strategy to enhance the features and functionality of our offerings, to expand our customer base and access to new markets, and to increase benefits of scale. Acquisitions involve certain known and unknown risks that could cause our actual growth or operating results to differ from our expectations. For example:

● we may not be able to identify suitable acquisition candidates or to consummate acquisitions on acceptable terms;

● we may pursue international acquisitions, which inherently pose more risks than domestic acquisitions;

● we compete with others to acquire complementary products, technologies, and businesses, which may result in decreased availability of, or increased price for, suitable acquisition candidates;

● we may not be able to obtain the necessary financing on favorable terms or at all, to finance our potential acquisitions;

● we may ultimately fail to consummate an acquisition even if we announce that we plan to acquire a technology, product, or business; and

● acquired technologies, products, or businesses may not perform as we expect and we may fail to realize anticipated revenue and profits.

In addition, our acquisition strategy may divert management’s attention away from our existing business, resulting in the loss of key customers or employees, and expose us to unanticipated problems or legal liabilities, including responsibility as a successor for undisclosed or contingent liabilities of acquired businesses or assets.

If we fail to conduct due diligence on our potential targets effectively, we may, for example, not identify problems at target companies or fail to recognize incompatibilities or other obstacles to successful integration. Our inability to successfully integrate future acquisitions could impede us from realizing all of the benefits of those acquisitions and could severely weaken our business operations. The integration process may disrupt our business and, if new technologies, products, or businesses are not implemented effectively, may preclude the realization of the full benefits expected by us and could harm our results of operations. In addition, the overall integration of new technologies, products, or businesses may result in unanticipated problems, expenses, liabilities, and competitive responses.

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In addition, even if the operations of an acquisition are integrated successfully, we may not realize the full benefits of the acquisition, including the synergies, cost savings, or growth opportunities that we expect. The benefits we do realize may not be achieved within the anticipated time frame.

The JOBS Act allows us to postpone the date by which we must comply with certain laws and regulations intended to protect investors and to reduce the amount of information we provide in reports filed with the SEC.

The JOBS Act is intended to reduce the regulatory burden on “emerging growth companies.” We meet the definition of an emerging growth company and so long as we qualify as an emerging growth company, we are, among other things:

● not required to comply with the auditor attestation requirements of the Sarbanes-Oxley Act, which include having an independent registered public accounting firm provide an attestation report on the effectiveness of our internal control over financial reporting;

● subject to reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exempt from the requirement to hold a nonbinding advisory vote on executive compensation and stockholder approval of any “golden parachute” payments not previously approved;

● permitted to present only two years of audited financial statements and only two years of management’s discussion and analysis of financial condition and results of operations disclosure in this Prospectus; and

● not required to comply with any rules that may be adopted by the PCAOB requiring mandatory audit firm rotation or a supplement to the auditor’s report on our financial statements.

We may choose to take advantage of some or all of these reduced burdens while we qualify as an emerging growth company. We have taken advantage of all of these reduced burdens in this Prospectus, and currently intend to do so in future filings. As a result, the information we provide stockholders may be different than information you might receive from other public companies in which you hold equity. In addition, the JOBS Act provides that an emerging growth company can delay adopting new or revised accounting standards until those standards apply to private companies. We have elected to avail ourselves of this exemption. We will remain an emerging growth company until the earliest to occur of the last day of the fiscal year in which we have more than $1.07 billion in annual revenue; the last day of the fiscal year in which we qualify as a “large accelerated filer”, the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt securities; and the last day of the fiscal year in which the fifth anniversary of this offering occurs.

We are also currently a “smaller reporting company,” meaning that the market value of our stock held by non-affiliates plus the proposed aggregate amount of gross proceeds to us as a result of this offering is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. We are not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company. We may continue to be a smaller reporting company after this offering if either (i) the market value of our stock held by non-affiliates is less than $250 million as of the last business day of the second fiscal quarter or (ii) our annual revenue is less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million as of the last business day of the second fiscal quarter. In the event that we are still considered a smaller reporting company, at the time we cease being an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that area available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.

Decreased disclosures in our SEC filings due to our status as an emerging growth company or smaller reporting company may make it harder for investors to analyze our results of operations and financial prospects.

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Failure to remediate weakness in internal accounting controls could result in material misstatements in our financial statements and may result in a lack of certain protections typically afforded to investors.

As a reporting company we are required, pursuant to the Sarbanes-Oxley Act, to include in our Annual Report on Form 10-K our assessment of the effectiveness of our internal control over financial reporting. Our assessment must include disclosure of any material weaknesses identified by our management in our internal control over financial reporting, and when we cease to be an emerging growth company, we will need to provide a statement that our independent registered public accounting firm has issued an opinion on the effectiveness of our internal control over financial reporting.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our consolidated financial statements will not be prevented or detected on a timely basis. Our management has identified a material weakness in our internal control over financial reporting related to lack of segregation of duties resulting from our limited personnel and has concluded that, due to such weakness, our disclosure controls and procedures were not effective as of December 31, 2022. We do not have a sufficient number of employees to segregate responsibilities and may be unable to afford increasing our staff or engaging outside consultants or professionals to overcome our lack of employees, and we do not expect to be able to remediate this weakness until after the offering. If not remediated, or if we identify further weaknesses in our internal controls, our failure to establish and maintain effective disclosure controls and procedures and internal control over financial reporting could result in material misstatements in our financial statements and a failure to meet our reporting and financial obligations, each of which could have a material adverse effect on our financial condition and the trading price of our common stock.

We do not have a majority of independent directors on our board of directors, and we have not voluntarily implemented various corporate governance measures, in the absence of which stockholders may have more limited protections against interested director transactions, conflicts of interest and similar matters.

Federal legislation, including the Sarbanes-Oxley Act, has resulted in the adoption of various corporate governance measures designed to promote the integrity of the corporate management and the securities markets. Some of these measures have been adopted in response to legal requirements. Others have been adopted by companies in response to the requirements of national securities exchanges, such as the NYSE or the NASDAQ Stock Market, on which their securities are listed. Among the corporate governance measures that are required under the rules of national securities exchanges are those that address the board of directors’ independence, audit committee oversight, and the adoption of a code of ethics. Although we plan to adopt these corporate governance measures upon our listing on The Nasdaq Capital Market, we have not yet adopted any of these other corporate governance measures and since our securities are not yet listed on a national securities exchange, we are not required to do so.

Our Board of Directors is comprised of one individual, who is also our executive officer. As a result, we do not have independent directors on our Board of Directors. Upon our listing on The Nasdaq Capital Market, we plan to establish audit and compensation committees comprised only of independent directors. However, until that date, our current sole director has the ability, among other things, to determine his own level of compensation and to unilaterally make certain other governance decisions. and the prior absence of such standards of corporate governance may leave our stockholders without protections against interested-director transactions, conflicts of interest, and similar matters.

We have secured debt, which could have adverse consequences to you.

The terms of the secured debt we have incurred could result in adverse consequences, including but not limited to the following:

● limiting our ability to obtain additional financing for working capital, capital expenditures, acquisitions, and other general corporate requirements;

● limiting our flexibility in planning for or reacting to changes in our business and the industry in which we operate; and

● placing us at a competitive disadvantage compared to competitors that may have proportionately less debt and greater financial resources.

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If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures, sell material assets or operations, obtain additional capital, or restructure our debt. In the event that we are required to dispose of material assets or operations to service our debt and to meet our other obligations, the value realized on such assets or operations will depend on market conditions and the availability of buyers. Accordingly, any such sale may not, among other things, be for a sufficient dollar amount. Certain of our obligations are secured by a security interest in all of our assets. The foregoing encumbrances may limit our ability to dispose of material assets or operations. We also may not be able to restructure our indebtedness on favorable economic terms, if at all.

Risks Related to this Offering and Ownership of Our Securities

The trading price of our common stock following this offering may be subject to rapid and substantial price volatility that may be unrelated to our actual or expected operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our common stock.

The trading price of our common stock following this offering may be subject to rapid and substantial price volatility that may be unrelated to our actual or expected operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our common stock. Our common stock may trade at prices higher or lower than the offering price. There have been recent instances of extreme share price run-ups followed by rapid price declines following initial public offerings, with share price volatility seemingly unrelated to company performance, particularly among companies with relatively smaller public floats, and we expect that such instances may continue and/or increase in the future. Contributing to this risk of volatility are a number of factors. First, we anticipate that our shares of common stock will initially be held by a relatively limited number of stockholders and thus, are likely to be more sporadically and thinly traded than that of larger, more established companies. As a consequence of this lack of liquidity, the trading of relatively small quantities of shares by our stockholders may disproportionately influence the price of those shares in either direction. The price of our shares of common stock could, for example, decline precipitously in the event that a large number of our shares are sold on the market without commensurate demand as compared to a seasoned issuer that could better absorb those sales without adverse impact on its share price. Second, we are a speculative investment due to our limited operating history in our current business strategy, not being profitable, and being an early stage company with no guarantee that we can operate our business profitably. As a consequence of this enhanced risk, more risk-adverse investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their shares on the market more quickly and at greater discounts than would be the case with the shares of a larger, more established company that has a relatively large public float.

Because we became a reporting company under the Exchange Act by means other than a traditional underwritten initial public offering, we may not be able to attract the attention of research analysts at major brokerage firms.

Because we did not become a reporting company by conducting an underwritten initial public offering, or IPO, of our common stock on a national securities exchange, and because prior to this offering, our stock traded on OTC Pink rather than being listed on a national securities exchange, research analysts of brokerage firms may not provide coverage of our Company. In addition, investment banks may be less likely to agree to underwrite secondary offerings on our behalf than they might if we had become a public reporting company by means of an IPO because they may be less familiar with our Company as a result of more limited coverage by analysts and the media, and because we became public at an early stage in our development.

Our common stock will rank junior to all our liabilities to third party creditors, and to any class or series of our capital stock created after this offering specifically ranking by its terms senior to the common stock, in the event of a bankruptcy, liquidation or winding up of our assets.

In the event of bankruptcy, liquidation or winding up, our assets will be available to pay obligations on our common stock only after all our liabilities have been paid. Our common stock will effectively rank junior to all existing and future liabilities held by third party creditors. The terms of our common stock do not restrict our ability to raise additional capital in the future through the issuance of debt or senior series of preferred stock. Our common stock will also rank junior to our existing Series A and any Series B Preferred Stock we may issue, as well as any class or series of our capital stock created after this offering specifically ranking by its terms senior to the common stock. In the event of bankruptcy, liquidation or winding up, there may not be sufficient assets remaining, after paying our liabilities, to pay amounts due on any or all of our common stock then outstanding.

Future issuances of debt securities, which would rank senior to our common stock upon our bankruptcy or liquidation, and future issuances of preferred stock, which could rank senior to our common stock for the purposes of dividends and liquidating distributions, may adversely affect the level of return you may be able to achieve from an investment in our common stock.

In the future, we may attempt to increase our capital resources by offering debt securities. Upon bankruptcy or liquidation, holders of our debt securities, and lenders with respect to other borrowings we may make, would receive distributions of our available assets prior to any distributions being made to holders of our common stock. Moreover, if we issue preferred stock, the holders of such preferred stock could be entitled to preferences over holders of common stock in respect of the payment of dividends and the payment of liquidating distributions. Because our decision to issue debt or preferred stock in any future offering, or borrow money from lenders, will depend in part on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing, or nature of any such future offerings or borrowings. Holders of our common stock must bear the risk that any future offerings we conduct or borrowings we make may adversely affect the level of return, if any, they may be able to achieve from an investment in our common stock.

Our common stock is subject to the SEC’s penny stock rules, which may make it difficult for broker-dealers to complete customer transactions and could adversely affect trading activity in our securities.

The SEC has adopted regulations which generally define “penny stock” to be an equity security that has a market price of less than $5.00 per share, subject to specific exemptions. The market price of our common stock may be less than $5.00 per share for some period of time and therefore would be a penny stock according to SEC rules, unless we are listed on a national securities exchange. We can offer no assurance that if we successfully list on The Nasdaq Capital Markets, we will be able to continue to satisfy the conditions necessary to stay listed on The Nasdaq Capital Market. Under the SEC penny stock rules, broker-dealers who recommend such securities to persons other than institutional accredited investors must:

● make a special written suitability determination for the purchaser;

● receive the purchaser’s prior written agreement to the transaction;

● provide the purchaser with risk disclosure documents which identify certain risks associated with investing in penny stocks and which describe the market for these penny stocks as well as a purchaser’s legal remedies; and

● obtain a signed and dated acknowledgment from the purchaser demonstrating that the purchaser has actually received the required risk disclosure document before a transaction in a penny stock can be completed.

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If required to comply with these rules, broker-dealers may find it difficult to effectuate customer transactions and trading activity in our securities may be adversely affected.

Our common stock has historically experienced low trading volume on the OTC Pink, and therefore the price may not accurately reflect our value. There can be no assurance that an active market for our common stock will develop, either now or in the future.

Our shares of common stock have been thinly traded on the OTC Pink. Only a small percentage of our common stock is available to be traded and is held by a small number of holders and the price, if traded, may not reflect our actual or perceived value. There can be no assurance that there will be an active market for our shares of common stock either now or in the future. The market liquidity will be dependent on the perception of our operating business, among other things. We will take certain steps that may include any or all of investor awareness campaigns, press releases, road shows and conferences to increase awareness of our business and any steps that we might take to bring us to the awareness of investors may require that we compensate consultants with cash and/or stock.

In addition, the trading volume of stocks quoted on the OTC Pink is often low and is often characterized by wide fluctuations in trading prices due to many factors that may have little to do with a company’s operations or business prospects. Because our common stock was quoted on the OTC Pink prior to this offering, trading has been only possible through broker-dealers, and the trading volume of our common stock has been low. Because we were quoted on the OTC Pink prior to this offering and were not a privately-held company, our common stock may continue to experience low trading volume after this offering, and you may experience difficulty liquidating your investment in our common stock or liquidating it at a price that reflects the value of our business. As a result, holders of our securities may not find purchasers for our securities should they desire to sell them. Accordingly, our securities should be purchased only by investors having no need for liquidity in their investment and who can hold our securities for an indefinite period of time. Our listing on The Nasdaq Capital Market is a condition of this offering, but we cannot assure you that there will be a market for our common stock in the future.

We have had a history of losses and may incur future losses, which may prevent us from attaining profitability.

We have had a history of operating losses since our inception and, as of June 30, 2023, we had an accumulated deficit of $52,060,481. We may incur operating losses in the future, and these losses could be substantial and impact our ability to attain profitability. If we cannot increase revenue growth, we will not achieve or sustain profitability or positive operating cash flows. Even if we achieve profitability and positive operating cash flows, we may not be able to sustain or increase profitability or positive operating cash flows on a quarterly or annual basis.

There is substantial doubt about our ability to continue as a going concern.

Our independent registered public accounting firm has included an explanatory paragraph in their report in our audited financial statements for the fiscal year ended June 30, 2023 to the effect that our losses from operations and our negative cash flows from operations raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern within one year after the date that the financial statements are issued. We may be required to cease operations which could result in our stockholders losing all or almost all of their investment. As of June 30 ,2023, we had cash balance of $15,904 and our principal sources of liquidity were trade accounts receivable of $3,147 and prepaid, advance payment for acquisition of $2,726,188 and other current assets of $273,159, as compared to cash of $1,712, trade accounts receivable of $21,569 advance payment for acquisition of $2,726,188 and prepaid expenses and other current assets of $91,204 as of December 31, 2022.

The market price of our common stock may be volatile and may fluctuate in a way that is disproportionate to our operating performance.

Our stock price may experience substantial volatility as a result of a number of factors, including:

● sales or potential sales of substantial amounts of our common stock;

● the success of competitive products or technologies;

● announcements about us or about our competitors, including new product introductions and commercial results;

● the recruitment or departure of key personnel;

● litigation and other developments;

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● actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts;

● variations in our financial results or those of companies that are perceived to be similar to us; and

● general economic, industry and market conditions.

Many of these factors are beyond our control. The stock markets in general, and the market for companies whose shares are quoted on the OTC Pink in particular have historically experienced extreme price and volume fluctuations. These fluctuations often have been unrelated or disproportionate to the operating performance of these companies. Broad market and industry factors could reduce the market price of our common stock, regardless of our actual operating performance.

We currently have outstanding shares of preferred stock that have special rights that could limit our ability to undertake corporate transactions, inhibit potential changes of control and reduce the proceeds available to our common stockholders in the event of a change in control.

We currently have common stock and preferred stock outstanding. Our preferred stockholders have special rights that holders of our common stock do not have. Currently, we have two types of preferred stock: Series A Preferred Stock and Series B Preferred Stock. An example of special rights that holders of our Series A Preferred Stock have is the ability to vote on all matters submitted to holders of common stock with 15,000 votes for each share of Series A Preferred Stock. Examples of the special rights that holders of our Series B Preferred Stock have are that each share of Series B Preferred Stock has (i) a stated value of $10.00 per share; (ii) is convertible into common stock at a price per share equal to 61% of the lowest price for the Company’s common stock during the 20 day of trading preceding the date of the conversion; (iii) earns dividends at the rate of 9% per annum; but (iv) has no voting rights. Our Series A Preferred Stock and Series B Preferred Stock ranks senior to holders of our common stock as to dividend rights and liquidation preference. We currently have 149,892 shares of Series A Preferred Stock outstanding and no shares of Series B Preferred Stock outstanding.

As a result of the rights our preferred stockholders have, we may not be able to undertake certain corporate transactions, including equity or debt transactions necessary to raise sufficient capital to run our business, change of control transactions or other transactions that may be beneficial to our businesses. The holdings of the preferred stockholders may discourage, delay, or prevent a merger, acquisition, or other change in control of us that stockholders may consider favorable, including transactions in which our common stockholders might otherwise receive a premium for their shares. The market price of our common stock could be adversely affected by the rights of our preferred stockholders.

We have never paid and do not currently intend to pay cash dividends.

We have never paid cash dividends on any of our common stock and we currently intend to retain future earnings, if any, to fund the development and growth of our business. As a result, capital appreciation, if any, of our common stock will be our common stockholders’ sole source of gain for the foreseeable future. Under the terms of our existing Articles of Incorporation, we cannot declare, pay, or set aside any dividends on shares of any class or series of our capital stock, other than dividends on shares of common stock payable in shares of common stock, unless we pay dividends to the holders of our preferred stock. Additionally, without special stockholder and Board of Directors approvals, we cannot currently pay or declare dividends and will be limited in our ability to do so until such time, if ever, that we are listed on a stock exchange.

Our Chief Executive Officer has the ability to control all matters submitted to stockholders for approval, which limits stockholders’ ability to influence corporate affairs.

Our Chief Executive Officer, Jason Remillard, holds 149,892 shares of our Series A Preferred Stock (each share votes as the equivalent of 15,000 shares of common stock on all matters submitted for a vote by the common stockholders), and as such, Mr. Remillard would be able to control all matters submitted to our stockholders for approval, as well as our management and affairs. For example, Mr. Remillard would control the election of directors and approval of any merger, consolidation, or sale of all or substantially all of our assets.

This concentration of voting power could delay or prevent a change of control of our Company on terms that other stockholders may desire, which could deprive our stockholders from receiving a premium for their common stock. Concentrated ownership and control by Mr. Remillard could adversely affect the price of our common stock. Any material sales of common stock by Mr. Remillard, for example, could adversely affect the price of our common stock.

The interests of Mr. Remillard and his affiliates may differ from the interests of other stockholders with respect to the issuance of shares, business transactions with and/or sales to other companies, selection of officers and directors, and other business decisions. The non-controlling stockholders are severely limited in their ability to override the decisions of Mr. Remillard.

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Provisions in our articles of incorporation and bylaws and under Nevada law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.

Provisions in our articles of incorporation and bylaws, respectively, may discourage, delay or prevent a merger, acquisition or other change in control of us that stockholders may consider favorable, including transactions in which our common stockholders might otherwise receive a premium price for their shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock. In addition, because our Board of Directors is responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our Board of Directors.

We will continue to incur substantial costs as a result of operating as a public reporting company, and our management will be required to devote substantial time to compliance initiatives.

As a public reporting company listed on The Nasdaq Capital Market, we will incur significant legal, accounting, and other expenses that we did not incur as a private company or while our common stock was quoted on the OTC Pink. In addition, the Sarbanes-Oxley Act and rules subsequently implemented by the SEC have imposed various requirements on public companies, including to establish and maintain effective disclosure and financial controls and corporate governance practices. Complying with these laws and regulations will require the time and attention of our Board of Directors and management and will increase our expenses. We estimate that we will incur approximately $350,000 to $600,000 in 2023 to comply with public company compliance requirements with many of those costs recurring annually thereafter.

Among other things, we will be required to:

● maintain and evaluate a system of internal controls over financial reporting in compliance with the requirements of the Sarbanes-Oxley Act and the related rules and regulations of the SEC and the Public Company Accounting Oversight Board;

● maintain adequate insurance coverage to attract and retain directors and officers;

● provide adequate compensation to attract qualified directors;

● maintain policies relating to disclosure controls and procedures;

● prepare and distribute periodic reports in compliance with our obligations under federal securities laws;

● institute a more comprehensive compliance function, including corporate governance; and

● involve, to a greater degree, our outside legal counsel and accountants in the above activities.

The costs of preparing and filing annual and quarterly reports, proxy statements and other information with the SEC and furnishing audited reports to stockholders are significant and much greater for a publicly-held company listed on The Nasdaq Capital Market than for a privately-held company or for a Company whose common stock is quoted on the OTC Pink, and compliance with these rules and regulations may require us to hire additional financial reporting, internal controls and other finance personnel, and will involve a material increase in regulatory, legal and accounting expenses, and the attention of management. There can be no assurance that we will be able to comply with the applicable regulations in a timely manner, if at all. In addition, being a public company listed on The Nasdaq Capital Market may make it more expensive for us to obtain director and officer liability insurance. In the future, we may be required to accept reduced coverage or incur substantially higher costs to obtain this coverage.

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We currently have outstanding, and we may in the future issue, instruments which are convertible into shares of common stock, which will result in additional dilution to you.

We currently have outstanding instruments which are convertible into shares of common stock, and we may need to issue similar instruments in the future. If these convertible instruments are converted into shares of common stock, or if we issue other convertible or exchangeable securities, you could experience additional dilution. Furthermore, we cannot assure you that we will be able to issue shares or other securities in any other offering at a price per share that is equal to or greater than the price per share you pay or the then-current market price.

We may, in the future, issue additional shares of our common stock, which may have a dilutive effect on our current stockholders.

Our articles of incorporation authorize the issuance of 500,000,000 shares of common stock, of which 61,413,168 shares were issued and outstanding as of August 7, 2023. The future issuance of shares of our common stock may result in substantial dilution in the percentage of our common stock held by our then-existing stockholders. We may value any common stock issued in the future on an arbitrary basis. The issuance of common stock for future services or acquisitions or other corporate actions may have the effect of diluting the value of the shares held by our investors and might have an adverse effect on any trading market for our common stock.

Investors in this offering will experience immediate and substantial dilution in net tangible book value.

The public offering price per share is substantially higher than the net tangible book value per share of our outstanding shares of Common Stock. As a result, investors in this offering will incur immediate dilution of $          per share, based on the assumed public offering price of $           per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus. Investors in this offering will pay a price per share that substantially exceeds the book value of our assets after subtracting our liabilities. See “Dilution” for a more complete description of how the value of your investment will be diluted upon the completion of this offering.

An investment in our common stock is speculative and there can be no assurance of any return on any such investment.

An investment in our common stock is speculative and there is no assurance that investors will obtain any return on their investment. Investors will be subject to substantial risks involved in an investment in us, including the risk of losing their entire investment.

If we fail to establish and maintain an effective system of internal controls, we may not be able to report our financial results accurately or prevent fraud. Any inability to report and file our financial results accurately and on a timely basis could harm our reputation and adversely impact the trading price of our common stock.

Effective internal control is necessary for us to provide reliable financial reports and prevent fraud. If we cannot provide reliable financial reports or prevent fraud, we may not be able to manage our business as effectively as we would if an effective control environment existed, and our business and reputation with investors may be harmed. As a result, our small size and any current internal control deficiencies may adversely affect our financial condition, results of operation, and access to capital. We have not performed an in-depth analysis to determine if historical undiscovered failures of internal controls exist, and we may in the future discover areas of our internal control that need improvement.

We must ensure that we have adequate internal financial and accounting controls and procedures in place to produce accurate financial statements on a timely basis. We have tested our internal controls and identified a weakness and may find additional areas for improvement in the future. Remediating this weakness will require us to hire and train additional personnel. Implementing any future changes to our internal controls may require compliance training of our directors, officers, and employees, entail substantial costs to modify our accounting systems and take a significant period of time to complete. Such changes may not, however, be effective in establishing the adequacy of our internal control over financial reporting, and our failure to produce accurate financial statements on a timely basis could increase our operating costs and could materially impair our ability to operate our business. In addition, investor perception that our internal control over financial reporting is inadequate or that we are unable to produce accurate financial statements may materially adversely affect our stock price.

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Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.

If our stockholders sell substantial amounts of our common stock in the public market, or upon the expiration of any statutory holding period under Rule 144 or upon the exercise of outstanding options or Warrants, such sale could create a circumstance commonly referred to as an “overhang”. In anticipation of an overhang, the market price of our common stock could decline. The existence of an overhang, whether or not sales have occurred or are occurring, also could make more difficult our ability to raise additional funds through the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.

Our management will have broad discretion in the use of the net proceeds from this offering and may invest or spend the proceeds in ways with which you do not agree and in ways that may not yield a return.

Our management will have broad discretion in the application of the net proceeds from this offering, including for any of the purposes described in the section titled “Use of Proceeds”, and you will not have the opportunity as part of your investment decision to assess whether the net proceeds are being used appropriately. Because of the number and variability of factors that will determine our use of the net proceeds from this offering, their ultimate use may vary from their currently intended use. The failure by our management to apply these funds effectively could harm our business. Pending their use, we may invest the net proceeds from this offering in investment-grade, interest-bearing securities. These investments may not yield a favorable return to holders of our common stock.

The warrants offered hereby are speculative in nature.

The Warrants offered in this offering do not confer any rights of common stock ownership on their holders, such as voting rights or the right to receive dividends, but rather merely represent the right to acquire shares of our common stock at a fixed price for a limited period of time. Specifically, commencing on the date of issuance, holders of the Warrants may exercise their right to acquire the common stock and pay an exercise price of $                  per share (100% of the public offering price of a Unit), prior to five years from the date of issuance, after which date any unexercised Warrants will expire and have no further value. In addition, there is no established trading market for the Warrants and, although we have applied to list the Warrants on The Nasdaq Capital Market, there can be no assurance that an active trading market will develop. The approval of such listing on The Nasdaq Capital Market is a condition of closing this offering. Without an active trading market, the liquidity of the Warrants will be limited.

Holders of the Warrants will have no rights as a common stockholder until they acquire our common stock.

Until holders of the Warrants acquire shares of our common stock upon exercise of the Warrants, the holders will have no rights with respect to shares of our common stock issuable upon exercise of the Warrants. Upon exercise of the Warrants, the holder will be entitled to exercise the rights of a common stockholder as to the security exercised only as to matters for which the record date occurs after the exercise.

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Provisions of the Warrants could discourage an acquisition of us by a third party.

Certain provisions of the Warrants offered by this Prospectus could make it more difficult or expensive for a third party to acquire us. The Warrants prohibit us from engaging in certain transactions constituting “fundamental transactions” unless, among other things, the surviving entity assumes our obligations under the Warrants. These and other provisions of the Warrants offered by this Prospectus could prevent or deter a third party from acquiring us even where the acquisition could be beneficial to you.

There is no guarantee that we will be able to continue to comply with the continued listing standards of the Nasdaq Capital Market , and a failure to do so could result in a delisting of our common stock.

There can be no assurance that the market price of our common stock will remain at the level required for compliance with The Nasdaq Capital Market continued listing requirement of a minimum bid price above one dollar. There are a number of factors, including negative financial or operational results, that could adversely affect the market price of our common stock and jeopardize our ability to meet or maintain The Nasdaq Capital Market’s minimum bid price requirement.

The Nasdaq Capital Market requires that the trading price of its listed stocks remain above one dollar in order for the stock to remain listed. If a listed stock trades below one dollar for more than 30 consecutive trading days, it is subject to delisting from The Nasdaq Capital Market. In addition, to maintain a listing on The Nasdaq Capital Market we must satisfy minimum financial and other continued listing requirements and standards, including those regarding director independence and independent committee requirements, minimum stockholders’ equity, and certain shareholder approval requirements. If we are unable to satisfy these requirements or standards, we could be subject to delisting, which would have a negative effect on the price of our common stock and could impair your ability to sell or purchase our common stock when you wish to do so. In the event of a delisting, we would expect to take actions to restore our compliance with the listing requirements, but we can provide no assurance that any such action taken by us would allow our common stock to become listed again, stabilize the market price, or improve the liquidity of our common stock, prevent our common stock from dropping below the minimum bid price requirement, or prevent future non-compliance with the listing requirements.

Our common stock may not attract new investors, including institutional investors, and may not satisfy the investing requirements of those investors. Consequently, the liquidity of our common stock may not improve.

Although we believe that a higher market price of our common stock may help generate greater or broader investor interest, there can be no assurance that our share price that will attract new investors, including institutional investors. In addition, there can be no assurance that the market price of our common stock will satisfy the investing requirements of those investors.

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Even once listed on The Nasdaq Capital Market, the share price of our common stock may continue to experience volatility.

The OTC Pink, where our common stock is currently quoted, provides significantly less liquidity than The Nasdaq Capital Market. As such, investors and potential investors may find it difficult to obtain accurate stock price quotations, and holders of our common stock may be unable to resell their securities at or near their original offering price or at any price. Our public offering price per Unit may vary from the market price of our common stock after the offering. If an active market for our stock develops and continues, our stock price may nevertheless be volatile. If our stock experiences volatility, investors may not be able to sell their common stock at or above the public offering price per Unit. Sales of substantial amounts of our common stock, or the perception that such sales might occur, could adversely affect prevailing market prices of our common stock and our stock price may decline substantially in a short period of time. As a result, our shareholders could suffer losses or be unable to liquidate their holdings. No assurance can be given that the price of our common stock will become less volatile than it is now once listed on The Nasdaq Capital Market.

Adverse or uncertain macroeconomic or geopolitical conditions or reduced IT spending may adversely impact our business, revenues, and profitability.

Our business, operations and performance are dependent in part on worldwide economic conditions and events that may be outside of our control, such as political and social unrest, terrorist attacks, hostilities, malicious human acts, climate change, natural disasters (including extreme weather), pandemics or other major public health concerns and other similar events, and the impact these conditions and events have on the overall demand for enterprise computing infrastructure solutions and on the economic health and general willingness of our current and prospective end customers to purchase our solutions and to continue spending on IT in general. The global macroeconomic environment has been, and may continue to be, inconsistent, challenging and unpredictable due to international trade disputes, tariffs, including those recently imposed by the U.S. government on Chinese imports to the U.S., restrictions on sales and technology transfers, uncertainties related to changes in public policies such as domestic and international regulations, taxes, or international trade agreements, elections, geopolitical turmoil and civil unrests, instability in the global credit markets, uncertainties regarding the effects of the United Kingdom’s separation from the European Union, commonly known as “Brexit”, actual or potential government shutdowns, and other disruptions to global and regional economies and markets. Specifically, COVID-19 (collectively with any future mutations or related strains thereof, “COVID-19”) has caused and may continue to cause travel bans or disruptions, supply chain delays and disruptions, and additional macroeconomic uncertainty. COVID-19 caused, and COVID or a similar health crisis in the future may cause, various negative effects, including an inability to meet with actual or potential customers, our customers deciding to delay or abandon their planned purchases, us deciding to delay, cancel, or withdraw from user and industry conferences and other marketing events, and delays or disruptions in our or our partners’ supply chains, including delays or disruptions in procuring and shipping the hardware appliances on which our software solutions run. As a result, we could experience extended sales cycles, our ability to close transactions with new and existing customers and partners may be negatively impacted, potentially significantly, our ability to recognize revenue from software transactions we do close may be negatively impacted, potentially significantly, our demand generation activities, and the efficiency and effect of those activities, may be negatively affected, our ability to provide 24x7 worldwide support to our customers may be effected, and it may continue to be more difficult for us to forecast our operating results. These macroeconomic challenges and uncertainties, including COVID-19, have, and may in the future, put pressure on global economic conditions and overall IT spending and may cause our customers to modify spending priorities or delay or abandon purchasing decisions, thereby lengthening sales cycles and potentially lowering prices for our solutions and product and services offerings, and may make it difficult for us to forecast our sales and operating results and to make decisions about future investments, any of which could materially harm our business, operating results and financial condition.

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Public health threats or outbreaks of communicable diseases could have a material adverse effect on our operations and overall financial performance.

We may face risks related to public health threats or outbreaks of communicable diseases. A global health crisis, such as COVID-19, could adversely affect the United States and global economies and limit the ability of enterprises to conduct business for an indefinite period of time. COVID-19 negatively impacted the global economy, disrupted financial markets, and international trade, resulted in increased unemployment levels and significantly impacted global supply chains, all of which have the potential to impact our business and COVID-19 or a similar health crisis in the future, could do the same.

During the COVID-19 outbreak, government authorities implemented various mitigation measures, including travel restrictions, limitations on business operations, stay-at-home orders, and social distancing protocols. If similar measures are taken in the future, either because of COVID-19 or another health crisis, the economic impact of the aforementioned actions could impair our ability to sustain sufficient financial liquidity and impact our financial results. Specifically, COVID-19 or another health crisis, and efforts to contain COVID-19 or such other health crisis could: (i) result in an increase in costs related to delayed payments from customers and uncollectable accounts, (ii) cause a reduction in revenue related to late fees and other charges related to governmental regulations, (iii) cause delays and disruptions in the supply chain related to obtaining necessary materials for our network infrastructure or customer equipment, (iv) cause workforce disruptions, including the availability of qualified personnel; and (v) cause other unpredictable events.

As we cannot predict the duration or scope of a future global health crisis, the anticipated negative financial impact to our operating results cannot be reasonably estimated but could be material and could last for an extended period of time.

Prolonged economic uncertainties or downturns could materially adversely affect our business.

Our business depends on our current and prospective customers’ ability and willingness to invest money in IT services, and more importantly cybersecurity projects, which in turn is dependent upon their overall economic health. Negative conditions in the general economy both in the United States and abroad, including conditions resulting from COVID-19 and numerous other factors beyond our control, could cause a decrease in business investments, including corporate spending on enterprise software in general, and could negatively affect the rate of growth of our business. Uncertainty in the global economy makes it difficult for our customers and us to forecast and plan future business activities accurately. This could cause our customers to reevaluate decisions to purchase our product or to delay their purchasing decisions, which could lengthen our sales cycles.

A significant number of our customers have been and continue to be impacted by the economic turmoil caused by the COVID-19 pandemic. Our customers may reduce their spending on IT; delay or cancel IT projects; focus on in-house development efforts; or seek to lower their costs by renegotiating maintenance and support agreements. To the extent purchases of licenses for our software and services are perceived by customers and potential customers to be discretionary, our revenues may be disproportionately affected by delays or reductions in general IT spending. If the economic conditions of the general economy or industries in which we operate worsen from present levels, our business, results of operations and financial condition could be adversely affected.

In addition, should we have a significant number of our employees contract the COVID-19 virus it could have a negative impact on our ability to serve customers in a timely fashion.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Prospectus includes statements that express our opinions, expectations, beliefs, plans, objectives, assumptions, or projections regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements.” All statements other than statements of historical facts contained in this Prospectus may be forward-looking statements. These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “continues,” “anticipates,” “expects,” “seeks,” “projects,” “intends,” “plans,” “may,” “will,” “would” or “should” or, in each case, their negative or other variations or comparable terminology. They appear in a number of places throughout this Prospectus, and include statements regarding our intentions, beliefs, or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies, future acquisitions, and the industry in which we operate.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We believe that these risks and uncertainties include, but are not limited to, those described in the “Risk Factors” section of this Prospectus, which include, but are not limited to, the following:

● we will need additional capital to fund our operations;

● there is substantial doubt about our ability to continue as a going concern;

● we will face intense competition in our market, and we may lack sufficient financial and other resources to maintain and improve our competitive position;

● we are dependent on the continued services and performance of our founder and Chief Executive Officer, Jason Remillard;

● our common stock is currently quoted on the OTC Pink and is thinly traded, reducing your ability to liquidate your investment in us;

● we have had a history of losses and may incur future losses, which may prevent us from attaining profitability;

● the market price of our common stock may be volatile and may fluctuate in a way that is disproportionate to our operating performance;

● we have shares of preferred stock that have special rights that could limit our ability to undertake corporate transactions, inhibit potential changes of control, and reduce the proceeds available to our common stockholders in the event of a change in control;

● we have never paid and do not intend to pay cash dividends;

● our Chief Executive Officer has the ability to control all matters submitted to stockholders for approval, which limits our stockholders’ ability to influence corporate affairs; and

● the other factors described in “Risk Factors.”

Those factors should not be construed as exhaustive and should be read with the other cautionary statements in this Prospectus.

Although we base these forward-looking statements on assumptions that we believe are reasonable when made, we caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and industry developments may differ materially from statements made in or suggested by the forward-looking statements contained in this Prospectus. The matters summarized under “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and elsewhere in this Prospectus could cause our actual results to differ significantly from those contained in our forward-looking statements. In addition, even if our results of operations, financial condition and liquidity, and industry developments are consistent with the forward-looking statements contained in this Prospectus, those results or developments may not be indicative of results or developments in subsequent periods.

In light of these risks and uncertainties, we caution you not to place undue reliance on these forward-looking statements. Any forward-looking statement that we make in this Prospectus speaks only as of the date of such statement, and we undertake no obligation to update any forward-looking statement or to publicly announce the results of any revision to any of those statements to reflect future events or developments, except as required by applicable law. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless specifically expressed as such, and should only be viewed as historical data.

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USE OF PROCEEDS

We estimate that the net proceeds from this offering will be approximately $               from the sale of the                Units offered in this offering, after deducting estimated underwriting discounts and estimated offering expenses payable by us. If the underwriter’s over-allotment option is exercised in full, we estimate that our net proceeds will be approximately $              . We will not receive any of the proceeds from the sale of our Common Stock by the Selling Stockholders. We intend to use the net proceeds from this offering, and any proceeds from the exercise of the Warrants, for the following purposes:

Use of Net Proceeds*:
General corporate purposes and operations, including engineering, tooling investments, information technology
Acquisitions
Debt repayment
Expansion of sales force, inbound and outbound marketing
Technology and research development
IT development operations and hosting facility expansion
Total Uses	$

* Assuming the over-allotment is not exercised.

We intend to use the net proceeds of this offering to for general corporate purposes, working capital, potential acquisitions and to repay approximately $               of short-term debt obligations.

Our management will have broad discretion over the use of the net proceeds from this offering. Our expected use of the net proceeds from this offering represents our intentions based upon our current plans and business conditions. The amounts and timing of our expenditures will depend upon numerous factors, and the actual allocation of proceeds realized from this offering will depend upon our operating revenues and cash position and our working capital requirements and may change. As of the date of this Prospectus, we cannot predict with certainty all of the particular uses for the net proceeds to be received upon the completion of this offering or the amounts that we will actually spend on the uses set forth above. While we have no current agreements or commitments for any specific acquisitions at this time, we may use a portion of the net proceeds for these purposes.

Pending our use of the net proceeds from this offering, we intend to invest the net proceeds in a variety of capital preservation investments, including short-term, investment-grade, interest-bearing instruments and United States government securities. We anticipate that the proceeds from this offering will enable us to further grow the business and increase cash flows from operations.

DETERMINATION OF OFFERING PRICE

The offering price of the Units has been negotiated between the underwriter and us considering our historical performance and capital structure, prevailing market conditions, and overall assessment of our business. Each Unit consists of one share of our common stock and a Warrant to purchase one share of our common stock at an exercise price equal to $                 , which is 100% of the assumed public offering price of the Units.

DILUTION

If you invest in our Units in this offering, your interest will be diluted to the extent of the difference between the assumed public offering price per share of common stock that is part of the Unit and the as-adjusted net tangible book value per share of common stock immediately after this offering.

Our net tangible book value is the amount of our total tangible assets less our total liabilities. Our net tangible book value as of June 30, 2023 was $(8,702,040), or $(.15) per share of common stock.

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As-adjusted net tangible book value is our net tangible book value after taking into account the effect of the sale of Units in this offering at the assumed public offering price of $5 per Unit and after deducting the underwriting discounts and commissions and other estimated offering expenses payable by us. Our as adjusted net tangible book value as of June 30, 2023 would have been approximately $(2,262,000), or $(.01) per share. This amount represents an immediate increase in as-adjusted net tangible book value of approximately $.14 per share to our existing stockholders, and an immediate dilution of $5.01 per share to new investors participating in this offering. Dilution per share to new investors is determined by subtracting as adjusted net tangible book value per share after this offering from the public offering price per share paid by new investors.

The following table illustrates this per share dilution:

Assumed public offering price per share (attributing no value to the warrants)	$	5
Net tangible book value per share as of June 30, 2023	$	(.15	)
Increase in as-adjusted net tangible book value per share after this offering	$	.14
As adjusted net tangible book value per share after giving effect to this offering	$	(.01	)
Dilution in as-adjusted net tangible book value per share to new investors	$	5.01

A $1.00 increase (decrease) in the assumed public offering price of $1.00 per Unit would increase (decrease) the as-adjusted net tangible book value per share by $.01, and the dilution per share to new investors in this offering by $5.00, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, assuming the number of Units offered by us, as set forth on the cover page of this Prospectus remains the same and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.

The information above assumes that the underwriter does not exercise its over-allotment option. If the underwriter exercises its over-allotment option in full, the as-adjusted net tangible book value will increase to $.0015 per share, representing an immediate increase to existing stockholders of $.02 per share and an immediate dilution of $.75 per share to new investors.

The foregoing discussion and table do not take into account further dilution to new investors that could occur upon the exercise of outstanding Warrants having a per share exercise price less than the per share offering price to the public in this offering.

We may choose to raise additional capital due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. To the extent that additional capital is raised through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our stockholders.

The above discussion and table are based on 59,363,988 shares outstanding as of June 30, 2023. The discussion and table do not include, as of that date:

● shares of common stock issuable upon conversion of our outstanding Series A Convertible Preferred Stock;

● exercise of the Warrants;

● exercise of the Underwriter’s Warrants; and

● exercise of the underwriter’s option to purchase additional shares and/or the Underwriter’s Warrants from us in this offering.

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PRICE RANGE OF THE REGISTRANT’S COMMON STOCK

Our common stock is currently quoted on the OTC Pink under the trading symbol “ATDS”.

For the periods indicated, the following table sets forth the high and low bid prices per share of common stock based on inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

Fiscal Year 2023	High Bid		Low Bid
First Quarter	$	0.43	$	0.025
Second Quarter	$	0.081	$	0.01815
Third Quarter	$		$
Fourth Quarter	$		$

Fiscal Year 2022	High Bid		Low Bid
First Quarter	$	18.40	$	1.41
Second Quarter	$	7.50	$	1.55
Third Quarter	$	6.99	$	1.61
Fourth Quarter	$	2.80	$	.28

Fiscal Year 2021	High Bid		Low Bid
First Quarter	$	592.00	$	96.00
Second Quarter	$	206.40	$	73.60
Third Quarter	$	80.40	$	25.00
Fourth Quarter	$	28.00	$	6.40

As of August 7, 2023, the last reported sales price reported on the OTC Pink for our common stock was $0.0239 per share. As of August 7, 2023, we had 605 holders of record of our common stock. The number of record holders was determined from the records of our transfer agent and does not include beneficial owners of common stock whose shares are held in the names of various security brokers, dealers or registered clearing agencies. The transfer agent of our common stock is Madison Stock Transfer Inc., located at 2500 Coney Island Ave, Sub Level, Brooklyn, New York 11223.

DIVIDEND POLICY

Holders of our common stock are entitled to receive dividends as may be declared from time to time by our Board of Directors. We have not paid any cash dividends since inception on our common stock and do not anticipate paying any in the foreseeable future. Our current policy is to retain earnings, if any, for use in our operations.

CAPITALIZATION

The following table sets forth our capitalization as of June 30, 2023:

● on an actual basis;

● on an as adjusted basis to reflect the issuance and sale by us of 1,610,000 Units (which number includes the exercise in full of the over-allotment option) in this offering at the public offering price of $5 per Unit, after deducting underwriting discounts and commissions and estimated offering expenses payable by us and the receipt by us of the proceeds of such sale.

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You should consider this table in conjunction with “Use of Proceeds” above as well as our “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and the notes to those financial statements for the three and six months ended June 30, 2023 and the year ended December 31, 2022 included elsewhere in this Prospectus.

	June 30, 2023
	Actual			Pro Forma As Adjusted
Cash	$	15,904		$	4,230,724
Total Current Liabilities		10,300,348			8,075,168
Total Liabilities		12,519,149			10,296,969
Stockholders’ Equity:
Series A convertible preferred stock, par value $0.001, 150,000 shares designated, 149,892 shares issued and outstanding		150			150
Common stock, par value $0.001, 125,000,000 shares authorized, 954,561 shares issued and outstanding Pro forma as adjusted; 1,907,173 shares issued and outstanding		59,360			60,648
Additional paid in capital		43,503,928			50,502,5828
Accumulated Deficit		(52,060,481	)		(52,060,481	)
Total Stockholders’ Equity (Deficit)		(8,497,043	)		(1,497,043	)
Total capitalization	$	4,022,106		$	8,796,926

(1) The as-adjusted information discussed above is illustrative only and will be further adjusted based on the actual public offering price and other terms of this offering determined at pricing.

A $1.00 increase (decrease) in the assumed public offering price of $5 per Unit, which is the midpoint of the estimated offering price range set forth on the cover page of this Prospectus, would increase (decrease) cash and cash equivalents, working capital, total assets, and total stockholders’ (deficit) equity by $1,400,000, assuming that the number of Units offered by us, as set forth on the cover page of this Prospectus remains the same, after deducting the estimated underwriting discounts and commissions.

The above discussion and table are based on 59,363,988 shares outstanding as of June 30, 2023, do not include, as of that date:

● shares of common stock issuable upon conversion of our outstanding Series A Convertible Preferred Stock and, if any, Series B Convertible Preferred Stock; and

● exercise of the Underwriter’s Warrants.

As of August 7, 2023 we are authorized to issue 500,000,000 shares of common stock, par value $0.001 per share, of which 61,413,168 shares of common stock were issued and outstanding. We are also authorized to issue 337,500 shares of preferred stock, of which (a) 150,000 shares are designated Series A Preferred Stock, par value $0.001 per share, of which 149,892 shares were issued and outstanding; and (b) 80,000 shares are designated Series B Preferred Stock, par value $10.00 per share, none of which were issued and outstanding.

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MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the results of operations and financial condition for the three and six months ended June 30, 2023 and for the years ended 2022 and 2021 should be read in conjunction with our consolidated historical financial statements for those periods, and the notes to those financial statements that are included elsewhere in this Registration Statement. The statements in this discussion regarding expectations of our future performance, liquidity and capital resources and other non-historical statements are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in “Risk factors” and “Cautionary note regarding forward-looking statements.” Our actual results may differ materially from those contained in or implied by any forward-looking statements.

Overview

We provide data security and privacy management solutions across the enterprise and in the cloud. With over 10,000 customers, we provide the visibility and control needed to protect data at scale, regardless of format, location, or consumer, and to facilitate compliance with fast-changing global data privacy requirements. Our customers include established leaders and up-and-coming businesses spanning the private and public/government sectors across diverse industries and fields, including financial services, healthcare, manufacturing, retail, technology, and telecommunications.

The mounting ransomware landscape as well as other threats to data have accelerated the rate at which businesses are adopting data security solutions and we believe that our portfolio of data security and privacy products provides an encompassing solution set such that we are well positioned to capitalize on that increased adoption rate and establish our products as new data privacy and security standards. Our offerings are anchored in reliable and comprehensive privacy management and equip organizations with a seamless approach to safeguard data, protect against attacks, and otherwise mitigate the most critical risks.

Sector-specific US laws, state-level legislation, and outside-the-United States (OUS) regulations are confounding enterprises of all sizes for whom safeguarding and stewarding data is key, but for whom becoming specialists in privacy and security is not an element of their strategic roadmap. For many of these enterprises, we can bridge the gap between their need to protect data and their need to use their resources to grow their core business by offering turnkey solutions and related counseling and technical support to offset risks from data breaches and security incidents of various types. We provide products and services for the marketplace that are designed to protect data that is stored in the cloud, on-premises, and in hybrid cloud/on-premises environments, and data that is transmitted throughout the enterprise, including but not limited to by remote employees. Our suite of security products focuses on protecting sensitive files and email, confidential customer, patient and employee data, financial records, strategic and product plans, intellectual property and other proprietary information, allowing our customers to create, share, and protect their sensitive data wherever it is stored and however it is used.

We deliver solutions and capabilities that businesses can use in conjunction with their use of established cloud vendors such as Microsoft® Azure, Google® Cloud Platform (GCP), and Amazon® Web Services (AWS), as well as with on-premises databases and database applications and with virtualization platforms, such as those hosted or configured using VMWare®, Citrix®, and Oracle® products.

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We sell or plan to sell substantially all of our products and services through a sales model that combines the leverage of a channel sales model or direct account management, thereby providing us with opportunities to grow our current customer base and deliver our value proposition for data privacy and security. We endeavor to use subscription models to license products and services, commonly for a paid in-advance, multiyear term that is auto-renewing. We also make use of channel partners, distributors, and resellers which sell to end-users of the products and services. This approach allows us to maintain close relationships with our customers and benefit from the global reach of our partners. Additionally, we are enhancing our product offerings and go-to-market strategy by establishing technology alliances within the IT infrastructure and security vendor ecosystem. Our sales and marketing focus for new organic growth is on organizations with 500 or more users who are adopting cloud services and can make larger purchases with us over time and have a greater potential lifetime value.

We continue to onboard to cloud-native technology adoption portals such as the Microsoft® Azure Marketplace and the Amazon® AWS Marketplace. Vendors may offer incentives to us as a software and services provider to onboard and market via their marketplace portals.

We strive to create new and innovative products and to improve existing products, proactively identifying and solving the data security needs of our customers.

As cloud adoption continues to accelerate, data privacy requirements get more complex, and data security becomes more challenging, we believe we are well positioned to capture more market share, continue to lead in strategic data security technology development, and prepare organizations for the next epoch in IT data privacy services.

Our Products

Each of our major product lines provides features and functionality which we believe enable our customers to optimally secure their data. The products are modular, giving our customers the flexibility to select what they require for their business needs and the flexibility to expand their usage simply by adding a license. We currently offer the following products and services:

● Data443® Ransomware Recovery Manager (also known as SmartShield™), a unique offering designed to recover a workstation immediately upon infection to the last known business-operable state, without requiring any end user or IT administrator intervention.

● Data443® Data Identification Manager (also known as ClassiDocs® and FileFacets®), our data classification and governance technology, which supports CCPA (California), LGPD (Brazil) and GDPR (Europe) compliance in a Software-as-a-Service (SaaS) platform that performs sophisticated data discovery and content searching of structured and unstructured data within corporate networks, servers, content management systems, email, desktops, and laptops.

● Data443® Data Archive Manager (also known as ArcMail®), a simple, secure, and cost-effective enterprise data retention management and archiving.

● Data443® Sensitive Content Manager (also known as ARALOC®), a secure, cloud-based platform for managing, protecting and distributing digital content to desktop and mobile devices, which protects an organization’s confidential content and intellectual property assets from accidental leakage or intentional misappropriation - without impeding all other authorized users of the content and other stakeholder from collaborating.

● Data443® Data Placement Manager (also known as DATAEXPRESS®), a data transport, transformation, and delivery product trusted by leading financial organizations worldwide.

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● Data443® Access Control Manager (also known as “Resilient Access”), enables fine-grained access controls across a wide variety of platforms at scale for internal client systems and commercial public cloud platforms like Salesforce®, Box.Net, Google® G Suite, Microsoft® OneDrive, and others.

● Data443® Blockchain Protection Manager (also known as ClassiDocs® for Blockchain), provides an active implementation for the Ripple XRP that protects blockchain transactions from inadvertent disclosure and data leaks.

● Data443® Global Privacy Manager, the privacy compliance and consumer loss mitigation platform which is integrated with Data443® Data Identification Manager to do the delivery portions of GDPR and CCPA as well as process privacy-related requests under such laws, and therefore enables customers to manage the full range of privacy-law driven requirements, such as responding to permitted consumer demands for access or removal, as well as to remediate issues and monitor and report on status and compliance.

● Data443® IntellyWP, products for enhancing the user experience for the world’s largest content management platform, WordPress.

● Data443® Chat History Scanner, which scans chat messages for compliance, security, personally identifiable information (PII), personal information (PI), payment card industry (PCI) information as well as any custom keywords selected by the customer, and which can be used with third party platforms such as the Zoom Video Communications, Inc. video conferencing platform.

● Data443® - GDPR Framework, CCPA Framework, and LGPD Framework WordPress® Plugins, which help organizations of all sizes comply with Europe, California and Brazil privacy rules and regulations and are currently used by over 30,000 active site owners. We offer the plugins with a “freemium” business model, i.e., basic features at no cost and additional or more advanced features at a premium.

Outlook

Our objective is to further integrate our suite of data security, ransomware protection, and privacy products and offer the products alone or in combination to enterprise customers directly and via our partner channels. We aim to position our products to meet the challenges our customers face - data privacy concerns grow in lockstep with security breaches, the need to continually expand data storage, and to meet telework, telehealth, and remote learning requirements.

We have relied on and expect to continue to benefit from strategic acquisitions of products, talent, and an established customer base to contribute to our long-term growth objectives.

Key elements of our growth strategy may be summarized as follows:

Acquisitions. We intend to aggressively pursue acquisitions of other cybersecurity software and service providers focused on the data security sector. We target companies with a developed and/or steady client base, as well as companies with offerings that complement our existing suite of products.

Research & Development; Innovation. We intend to increase our spending on research and development to create new and innovative products and to improve existing products, proactively identifying and solving the data security needs of our clients.

Grow Our Customer Base. We believe the continued challenges businesses face in managing their enterprise data and the ever-evolving landscape of cybersecurity threats will keep the demand high for the type of products and services we offer. We intend to capitalize on this demand by continually developing and curating a collection of products and services that are attractive and relevant to both our established revenue base and to new customers.

Expand Our Sales Capacity. We believe that continuing to expand our sales force will be essential to achieving our expansion and growth. We intend to expand our sales capacity by adding sales and marketing employees, with heavy focus on customer success and leveraging our existing customer relationships.

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Management’s Plans

Our plan is to continue to grow our business through strategic acquisitions, and then expand selling across our subsidiaries and affiliated companies. During the next twelve months, we anticipate incurring costs related to (i) filing of Exchange Act reports; and (ii) operating our businesses. We will require additional operating capital to maintain and continue operations. We will need to raise additional capital through debt or equity financing, and there is no assurance we will be able to raise the necessary capital.

While we primarily report income based on recognized and deferred revenue, another measurement internally for the business is booked revenues. Management uses this measure to track numerous indicators such as: contract value growth; initial contract value per customer; and certain other values that change quarter-over-quarter. These results may also be subject to, and impacted by, sales compensation plans, internal performance objectives, and other activities. We continue to increase revenue from our existing operations. We generally recognize revenue from customers ratably over the terms of their subscription, which is generally one year at a time. As a result, a substantial portion of the revenue we report in each period is attributable to the recognition of deferred revenue relating to agreements that we executed during previous periods. Consequently, any increase or decline in new sales or renewals in any one period will not be immediately reflected in our revenue for that period. Any such change, however, would affect our revenue in future periods. Accordingly, the effect of downturns or upturns in new sales and potential changes in our rate of renewals may not be fully reflected in our results of operations until future periods.

Recent Developments

On May 11, 2023, we entered into a definitive agreement to purchase certain assets (the “Purchase Agreement”) with the Appointed Receiver for the Assets of Cyren Ltd (the “Receiver”). Pursuant to the Purchase Agreement, the Receiver sold, transferred, assigned, conveyed and delivered to the Company, and we purchased from Receiver, all right, title, and interest in and to certain assets in the Purchase Agreement (the “Assets”). In exchange for the Assets, we will pay (i) $500,000 payable in cash, (ii) shares of our common stock equivalent to $2,000,000 and (iii) $1,000,000 in the form of an earn out payment, as further described in the Purchase Agreement. The transaction is expected to close in the third quarter of 2023.

Results of Operations for the Three and Six Months Ended June 30, 2023 Compared to the Three and Six Months Ended June 30, 2022

Our operations for the three months ended June 30, 2023 and 2022 are outlined below:

	Three Months Ended
	June 30						Change
	2023			2022			$			%
Revenue	$	619,040		$	750,989		$	(131,949	)		(18	)%
Cost of revenue		244,881			78,593			166,288			212	%
Gross Profit		374,159			672,396			(298,237	)		(44	)%
Gross Profit Percentage		60	%		90	%
Operating expense		1,699,878			2,175,855			(475,977	)		(22	)%
Other income (expense)		1,415,259			(942,753	)		2,358,012			250	%
Net loss	$	89,540		$	(2,446,212	)	$	2,535,752			(104	)%

Revenue

The decrease in revenue has partially resulted from some sales that were originally forecasted for the second quarter of 2023 being pulled forward to the first quarter of 2023. In addition, two of our larger customers opted for annual renewals instead of a multi-year, paid-up-front renewals.. We have restarted several of our lead generation and funnel movement activities throughout the second quarter of 2023. Our existing customers continue to evaluate our offerings for multiple products at a time, rather than singular use cases, which continues to build on organic growth from our customers that come from our acquisitions.

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Cost of Revenue

Cost of revenue consists of direct expenses, such as labor, shipping, and supplies. The increase in cost of revenue in part is due to the rise in inflation for products and services. We also incurred additional software and contractor costs related to new business activities.

Operating Expenses

For the three months ended June 30, 2023 and 2022 our operating expenses were as follows:

	Three Months Ended
	June 30,				Change
	2023		2022		$			%
General and administrative	$	1,635,499	$	2,116,220	$	(480,721	)		(23	)%
Sales and marketing		64,379		59,635		4,744			8	%
Total operating expenses	$	1,699,878	$	2,175,855	$	(475,977	)		(22	)%

General and Administrative Expenses

The general and administrative expenses primarily consisted of management costs, costs to integrate assets we acquired and to expand sales, product enhancements, audit and review fees, filing fees, professional fees, and other expenses related to SEC reporting, including the re-classification of sales-related management expenses, in connection with the projected growth of our business. Additionally, we continue to incur specific one-time costs in relation to our planned Nasdaq Capital Markets uplist, additional financing activities and related functions. The decrease in general and administrative expense was primarily due to an increase cost cutting measures.

Sales and Marketing Expenses

The sales and marketing expenses primarily consisted of continuing to shift our sales operation toward an inbound model, continued high focus on renewals and customer success operations and previously reported expenses, which are, primarily management costs, reclassified to general and administrative expenses.

Other income (expense)

Other expenses for the three months ended June 30, 2023 consisted primarily of interest expense and an forgiveness of debt on note payable of $4,904,081 and accrued interest of $3,488,822. Other expenses for the June 30, 2022 consisted of interest expense and loss on change in fair value of derivative. The decrease in other expenses was primarily due to a decrease in interest expense.

Net Income

Net loss decreased 93% from $2,446,212 for the three months ended June 30, 2022 to net income of $89,540 for the three months ended June 30, 2023. The net income was mainly derived from an operating loss of $1,325,719, and interest expense of $3,488,822 and settlement of debt of $4,904,081. The net loss for the three months ended June 30, 2022 was mainly derived from an operating loss of $1,503,459, interest expense of $671,862 and loss on change in fair value of derivative liability of $178,398. The decrease in net loss was primarily due to the increase in recognized revenue and a decrease in interest expense and the forgiveness of debt.

Our operations for the six months ended June 30, 2023 and 2022 are outlined below:

	Six Months Ended
	June 30,						Change
	2023			2022			$			%
Revenue	$	1,998,846		$	1,363,505		$	635,341			47	%
Cost of revenue		453,863			278,272			175,591			63	%
Gross Profit		1,544,983			1,085,233			459,750			42	%
Gross Profit Percentage		77	%		80	%
Operating expense		3,132,861			3,269,812			(136,951	)		4	%
Other income (expense)		939,525			(2,094,952	)		3,034,477			145	%
Net loss	$	(648,353	)	$	(4,279,531	)	$	3,631,178			(85	)%

Revenue

Revenues increased 47% from $1,363,505 for the six months ended June 30, 2022 to $1,998,846 for the six months ended June 30, 2023. The increase in revenues was driven by existing customer organic growth customers, new customer acquisitions and our high renewal rate.

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Cost of Revenue

Cost of revenue consists of direct expenses, such as sales commission, shipping, and supplies. The increase in cost of revenue was primarily due to an increase in one-time costs, including sales commissions for some larger deal closings and customer outreach.

Operating Expenses

For the six months ended June 30, 2023 and 2022 our operating expenses were as follows:

	Six Months Ended
	June 30,				Change
	2023		2022		$			%
General and administrative	$	3,036,308	$	3,089,782	$	(53,474	)		(2	)%
Sales and marketing		96,553		180,030		(83,477	)		(46	)%
Total operating expenses	$	3,132,861	$	3,269,812	$	(136,951	)		(4	)%

General and Administrative Expenses

The general and administrative expenses primarily consisted of management costs, costs to integrate assets we acquired and to expand sales, product enhancements, audit and review fees, filing fees, professional fees, and other expenses related to SEC reporting, including the re-classification of sales-related management expenses, in connection with the projected growth of our business. Additionally, we continue to incur specific costs in relation to our planned uplist to the Nasdaq Capital Markets, additional financing activities and related functions. The decrease in general and administrative expense was primarily due to a increases in professional services fees related to uplist activities, increased overhead costs associated with our continued public OTC Pink Market listing, and acquisition-related costs.

Sales and Marketing Expenses

The sales and marketing expenses primarily consisted of continuing to shift our sales operation toward an inbound model, continued high focus on renewals and customer success operations and previously reported expenses, primarily management costs, reclassified to general and administrative expenses. The decrease in sales and marketing expense was primarily due to not having dedicated sales and marketing staff to drive efforts expenses.

Other income (expense)

Other income (expenses) for the six months ended June 30, 2023 consisted primarily of interest expense of $3,964,556 and an forgiveness of debt on note payable of $4,724,299. Other expenses for the six months ended June 30, 2022 consisted of interest expense and loss on change in fair value of derivative. The decrease in other expenses was primarily due to a decrease in interest expense.

Net Loss

Net loss decreased 85% from $4,279,531 for the six months ended June 30, 2022 to $648,353 for the six months ended June 30, 2023. The net loss was mainly derived from an operating loss of $1,587,878, and interest expense of $3,964,556 and settlement of debt of $4,904,081. The net loss for the six months ended June 30, 2022 was mainly derived from an operating loss of $2,184,579, and interest expense of $2,037,069.

Accumulated Losses

We had a net operating loss carryfowards of approximately $6 million from prior operations in 2017, before our current President and Chief Executive Officer acquired a controlling interest in the company. Subsequent to this and through June 30, 2023, we have relied on convertible notes and other debt instruments that may contain unfavorable discounts, origination fees, and have embedded conversion features that are subject to derivative treatment for accounting purposes. Due primarily to this treatment of convertible notes, debt and related derivative accounting, since 2017, we have accumulated deficits of approximately $14.1 million due to derivative valuations and $14.5 million expensed for interest and amortization of debt discounts for financing and other origination fees.

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Liquidity and Capital Resources

Working Capital

The following table provides selected financial data about our company as of June 30, 2023 and December 31, 2022, respectively.

	June 30,			December 31,			Change
	2023			2022			$			%
Current assets	$	292,210		$	124,894		$	167,316			134	%
Current liabilities	$	10,300,348		$	8,604,066		$	1,696,282			20	%
Working capital deficiency	$	(10,008,138	)	$	(8,479,172	)	$	(1,528,966	)		(18	)%

We require cash to fund our operating expenses and working capital requirements, including outlays for capital expenditures. As of June 30, 2023, we had cash balance of $15,904 and our principal sources of liquidity were trade accounts receivable of $3,147, and prepaid expenses and other current assets of $273,169, as compared to cash of $1,712 trade accounts receivable of $31,978, and prepaid expenses and other current assets of $91,204 as of December 31, 2022.

During the last three years, and through the date of this Report, we have faced an increasingly challenging liquidity situation that has limited our ability to execute our operating plan. We will need to obtain capital to continue operations. There is no assurance that we will be able to secure such funding on acceptable terms. During the six months ended June 30, 2023, we reported a loss from operations of $1,587,878.

As of June 30, 2023, we had assets of cash in the amount of $15,904 and other current assets in the amount of $276,306. As of June 30, 2023, we had current liabilities of $10,300,348. Our accumulated deficit as of June 30, 2023 was $52,060,481.

As of December 31, 2022, we had assets of cash in the amount of $1,712 and other current assets in the amount of $123,182. As of December 31, 2022, we had current liabilities of $8,604,066. Our accumulated deficit as of December 31, 2022 was $51,412,128.

The revenues generated from our current operations will not be sufficient to fund our planned growth. We will require additional capital to continue to operate our business, and to further expand our business. Sources of additional capital through various financing transactions or arrangements with third parties may include equity or debt financing, bank loans or revolving credit facilities. We may not be successful in locating suitable financing transactions in the time period required or at all, and we may not obtain the capital we require by other means. Unless we can attract additional investment, our operating as a going concern is in doubt.

We are now obligated to file annual, quarterly and current reports with the SEC pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In addition, the Sarbanes-Oxley Act and the rules subsequently implemented by the SEC and the PCAOB have imposed various requirements on public companies, including requiring changes in corporate governance practices. We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities of ours more time-consuming and costly. In order to meet the needs to comply with the requirements of the Exchange Act, we will need investment of capital.

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We have determined that additional capital will be required in the form of equity or debt securities. There is no assurance that we will be able to raise capital on terms acceptable to us, or at all.

If we are unable to obtain sufficient amounts of additional capital, we may have to cease filing the required reports and cease operations completely. If we obtain additional funds by selling any of our equity securities or by issuing common stock to pay current or future obligations, the percentage ownership of our stockholders will be reduced, stockholders may experience additional dilution, or the equity securities may have rights preferences or privileges senior to the common stock.

Cash Flow

	Six Months Ended
	June 30,
	2023			2022			Change
Cash provided by (used in) operating activities	$	175,918		$	(115,911	)	$	291,829
Cash used in investing activities	$	(167,427	)	$	(346,960	)	$	179,533
Cash used in financing activities	$	5,701		$	(742,062	)	$	747,763
Cash on hand	$	15,904		$	-		$	15,904

Operating Activities

During the six months ended June 30, 2023, we provided $175,918 by operating activities, compared to $115,911 used by during the six months ended June 30, 2022.

Investing Activities

During the six months ended June 30, 2023, we used funds in investing activities of $167,427 to acquire property and equipment and advance payment for acquisition. During the six months ended June 30, 2022, we used funds in investing activities of $346,960 to acquire property and equipment.

Financing Activities

During the six months ended June 30, 2023, we (i) raised $564,070 from issuance of convertible debt; (ii) received proceeds from a related party of $229,426; and (iii) received proceeds of $417,427 from issuance of notes payable; (iv) repaid of convertible note payable of $146,663; (v) repaid of $1,047,218 on notes payable; and (vi) repaid to a related party of $21,000. For June 30, 2023 we had net cash inflows for financing activities of $5,701. By comparison, during the six months ended June 30, 2022, we (i) raised $75,000 through the issuance of Series B Preferred Stock; (ii) raised $1,207,800 from issuance of convertible debt; (iii) received proceeds from related party of $116,238, (iv) had a bank overdraft of $3,781; and (v) received $1,186,453 from issuance of notes payable. These amounts were offset in part through (i) redemption of Series B Preferred Stock of $487,730; (ii) repayment of convertible note payable of $758,346; (iii) repayment of $1,957,492 on notes payable; (iv) repayment to related party of $86,571; and (v) $41,195 of finance lease payments.

We are dependent upon the receipt of capital investment or other financing to fund our ongoing operations and to execute our business plan. If continued funding and capital resources are unavailable at reasonable terms, we may not be able to implement our plan of operations.

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Off-Balance Sheet Arrangements

As of June 30, 2023, we did not have any off-balance sheet arrangements.

Critical Accounting Policies

Critical Accounting Policies and Significant Judgments and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of income and expense during the reporting periods presented.

Our critical estimates include revenue recognition and intangible assets. Although we believe that these estimates are reasonable, actual results could differ from those estimates given a change in conditions or assumptions that have been consistently applied. We also have other policies that we consider key accounting policies, such as our policy for revenue recognition, however, the application of these policies does not require us to make significant estimates or judgments that are difficult or subjective.

The critical accounting policies used by management and the methodology for its estimates and assumptions are as follows:

Convertible Financial Instruments

We bifurcate conversion options from their host instruments and accounts for them as free standing derivative financial instruments if certain criteria are met. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. An exception to this rule is when the host instrument is deemed to be conventional, as that term is described under applicable GAAP.

When we have determined that the embedded conversion options should not be bifurcated from their host instruments, discounts are recorded for the intrinsic value of conversion options embedded in the instruments based upon the differences between the fair value of the underlying Common Stock at the commitment date of the transaction and the effective conversion price embedded in the instrument.

Beneficial Conversion Feature

The issuance of the convertible debt described in Note 9, below, generated a beneficial conversion feature (“BCF”), which arises when a debt or equity security is issued with an embedded conversion option that is beneficial to the investor or in the money at inception because the conversion option has an effective strike price that is less than the market price of the underlying stock at the commitment date. We recognized the BCF by allocating the intrinsic value of the conversion option, which is the number of shares of Common Stock available upon conversion multiplied by the difference between the effective conversion price per share and the fair value of Common Stock per share on the commitment date, resulting in a discount on the convertible debt (recorded as a component of additional paid-in capital). The discount is amortized to interest expense over the term of the convertible debt.

Stock-Based Compensation

We measure the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees and directors, the fair value of the award is measured on the grant date. For non-employees, as per ASU No. 2018-7, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Stock-Based Payment Accounting, remeasurement is not required. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. Stock-based compensation expense is recorded by us in the same expense classifications in the consolidated statements of operations, as if such amounts were paid in cash. Also, refer to Note 1 – Summary of Significant Accounting Policies, in the consolidated financial statements that are included in this Quarterly Report.

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BUSINESS

We are a corporation organized under the laws of the State of Nevada and have a wholly-owned subsidiary corporation with the same name organized under the laws of the State of North Carolina. We were incorporated as Landstar, Inc. on May 4, 1998. On October 15, 2019, we changed our name with the Secretary of State of Nevada from Landstar, Inc. to Data443 Risk Mitigation, Inc.

Business Overview

We provide data security and privacy management solutions across the enterprise and in the cloud. Trusted by over 10,000 customers, we provide the visibility and control needed to protect data at scale, regardless of format, location, or consumer, and to facilitate compliance with fast-changing global data privacy requirements. Our customers include established leaders and up-and-coming businesses spanning the private and public/government sectors across diverse industries and fields, including financial services, healthcare, manufacturing, retail, technology, and telecommunications.

The mounting ransomware landscape as well as other threats to data have accelerated the rate at which businesses are adopting data security solutions and we believe that our portfolio of data security and privacy products provides an encompassing solution set such that we are well positioned to capitalize on that increased adoption rate and establish our products as new data privacy and security standards. Our offerings are anchored in reliable and comprehensive privacy management and equip organizations with a seamless approach to safeguard data, protect against attacks, and otherwise mitigate the most critical risks.

Sector-specific US laws, state-level legislation, and outside-the-United States (OUS) regulations are confounding enterprises of all sizes for whom safeguarding and stewarding data is key, but for whom becoming specialists in privacy and security is not an element of their strategic roadmap. For many of these enterprises, we can bridge the gap between their need to protect data and their need to use their resources to grow their core business by offering turnkey solutions and related counseling and technical support to offset risks from data breaches and security incidents of various types. We provide products and services for the marketplace that are designed to protect data that is stored in the cloud, on-premises, and in hybrid cloud/on-premises environments, and data that is transmitted throughout the enterprise, including but not limited to by remote employees. Our suite of security products focuses on protecting sensitive files and email, confidential customer, patient and employee data, financial records, strategic and product plans, intellectual property and other proprietary information, allowing our customers to create, share, and protect their sensitive data wherever it is stored and however it is used.

We deliver solutions and capabilities that businesses can use in conjunction with their use of established cloud vendors such as Microsoft® Azure, Google® Cloud Platform (GCP), and Amazon® Web Services (AWS), as well as with on-premises databases and database applications and with virtualization platforms, such as those hosted or configured using VMWare®, Citrix®, and Oracle® products.

We sell or plan to sell substantially all our products and services through a sales model that combines the leverage of a channel sales model or direct account management, thereby providing us with opportunities to grow our current customer base and deliver our value proposition for data privacy and security. We endeavor to use subscription models to license products and services, commonly for a paid-in-advance, multiyear term that is auto-renewing. We also make use of channel partners, distributors, and resellers which sell to end-users of the products and services. This approach allows us to maintain close relationships with our customers and benefit from the global reach of our partners. Additionally, we are enhancing our product offerings and go-to-market strategy by establishing technology alliances within the IT infrastructure and security vendor ecosystem. Our sales and marketing focus for new organic growth is on organizations with 500 or more users who are adopting cloud services and can make larger purchases with us over time and have a greater potential lifetime value.

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We continue to onboard to cloud-native technology adoption portals such as the Microsoft® Azure Marketplace and the Amazon® AWS Marketplace. Vendors may offer incentives to us as a software and services provider to onboard and market via their marketplace portals.

We strive to create new and innovative products and to improve existing products, proactively identifying and solving the data security needs of our customers.

As cloud adoption continues to accelerate, data privacy requirements get more complex, and data security becomes more challenging, we believe that Data443 is well positioned to capture more market share, continue to lead in strategic data security technology development, and prepare organizations for the next epoch in IT data privacy services.

Size of Our Market Opportunity

By 2024, according to a study from Gartner, Inc., it is expected that 30% of enterprises will have adopted data security platforms, up from less than 5% in 2019. Gartner, Inc. also stated in another report titled “Predicts 2022: Consolidated Security Platforms Are The Future” that customers are working on vendor consolidation strategies aggressively in addition to expecting a portfolio or stack approach to their purchasing requirements.

We expect that current market conditions, recent data thefts, ransomware shutdowns and continued variability in the worldwide worker and retail marketplace will continue to position our product line front and center for many strategic IT and critical board-level opportunities with customers.

The competitive marketplace continues to consolidate via buyouts, take-private transactions and large ‘unicorn’ competitors being acquired prior to their initial public offerings. We believe that these changes in ownership, closure of product lines and general turmoil in certain product segments represent opportunities for us.

We believe that the functionalities offered by our programs and services position us to benefit from this growing market. Furthermore, as we continue to grow our business, we believe that we may have opportunities to expand into collateral growing markets, such IT operations management, storage management and data integration.

Our Products

Each of our major product lines provides features and functionality which we believe enable our customers to optimally secure their data. The products are modular, giving our customers the flexibility to select what they require for their business needs and the flexibility to expand their usage simply by adding a license. We currently offer the following products and services:

●
Data443® Ransomware Recovery Manager (also known as SmartShield™), a unique offering designed to recover a workstation immediately upon infection to the last known business-operable state, without requiring any end user or IT administrator intervention.

●
Data443® Data Identification Manager (also known as ClassiDocs® and FileFacets®), our data classification and governance technology, which supports CCPA (California), LGPD (Brazil) and GDPR (Europe) compliance in a Software-as-a-Service (SaaS) platform that performs sophisticated data discovery and content searching of structured and unstructured data within corporate networks, servers, content management systems, email, desktops, and laptops.

● Data443® Data Archive Manager (also known as ArcMail®), a simple, secure, and cost-effective enterprise data retention management and archiving.

● Data443® Sensitive Content Manager (also known as ARALOC®), a secure, cloud-based platform for managing, protecting and distributing digital content to desktop and mobile devices, which protects an organization’s confidential content and intellectual property assets from accidental leakage or intentional misappropriation - without impeding all other authorized users of the content and other stakeholder from collaborating.

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●
Data443® Data Placement Manager (also known as DATAEXPRESS®), a data transport, transformation, and delivery product trusted by leading financial organizations worldwide.

● Data443® Access Control Manager (also known as “Resilient Access”), enables fine-grained access controls across a wide variety of platforms at scale for internal client systems and commercial public cloud platforms like Salesforce®, Box.Net, Google® G Suite, Microsoft® OneDrive, and others.

● Data443® Blockchain Protection Manager (also known as ClassiDocs® for Blockchain), provides an active implementation for the Ripple XRP that protects blockchain transactions from inadvertent disclosure and data leaks.

● Data443® Global Privacy Manager, the privacy compliance and consumer loss mitigation platform which is integrated with Data443® Data Identification Manager to do the delivery portions of GDPR and CCPA as well as process privacy-related requests under such laws, and therefore enables customers to manage the full range of privacy-law driven requirements, such as responding to permitted consumer demands for access or removal, as well as to remediate issues and monitor and report on status and compliance.

● Data443® IntellyWP, products for enhancing the user experience for the world’s largest content management platform, WordPress.

● Data443® Chat History Scanner, which scans chat messages for compliance, security, personally identifiable information (PII), personal information (PI), payment card industry (PCI) information as well as any custom keywords selected by the customer, and which can be used with third party platforms such as the Zoom Video Communications, Inc. video conferencing platform.

● Data443® - GDPR Framework, CCPA Framework, and LGPD Framework WordPress® Plugins, which help organizations of all sizes comply with Europe, California and Brazil privacy rules and regulations and are currently used by over 30,000 active site owners. We offer the plugins with a “freemium” business model, i.e., basic features at no cost and additional or more advanced features at a premium.

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Our Growth Strategy

Key elements of our growth strategy include:

Acquisitions. We intend to aggressively pursue acquisitions of other cybersecurity software and service providers focused on the data security sector. We target companies with a developed and/or steady client base, as well as companies with offerings that complement our existing suite of products.

Research & Development; Innovation. We intend to increase our spending on research and development to create new and innovative products and to improve existing products, proactively identifying and solving the data security needs of our clients.

Grow Our Customer Base. We believe the continued challenges businesses face in managing their enterprise data and the ever-evolving landscape of cybersecurity threats will keep the demand high for the type of products and services we offer. We intend to capitalize on this demand by continually developing and curating a collection of products and services that are attractive and relevant to both our established revenue base and to new customers.

Expand Our Sales Capacity. We believe that continuing to expand our sales force will be essential to achieving our expansion and growth. We intend to expand our sales capacity by adding sales and marketing employees, with heavy focus on customer success and leveraging our existing customer relationships.  

Our Customers

Our current customer base is comprised primarily of two segments – commercial enterprises and open-source consumers. Our commercial enterprise customers are generally focused within the U.S., range from 500 employees to over 150,000 employees, and use our data security products. We have over 10,000 commercial enterprise customers. We have approximately 20 customers in the financial technology industry that contract with us directly for products with subscriptions with terms of more than three years. We have more than 2,500 customers comprising mid-market-sized organizations that also contract with us directly for products with subscriptions with terms of one to three years. Our open-source consumers are more widely distributed geographically, include organizations of all sizes in terms of both number of employees and revenues, and typically use our online GDPR/CCPA/GLPD Privacy plugins, our Privacy Badge solution, or our user experience enhancement products. We have over 200,000 open-source consumers with active installations of our plugins, and we have 9,000 open-source consumers that pay a premium for additional or advanced features. We expect that some of our open-source consumers will become commercial customers over time.

Services

Maintenance and Support

Some of our customers purchase an initial ‘perpetual license’ to one or more of our software products and subsequent maintenance and support contracts on an annual basis. We are striving to move customers to a business model in which they purchase a license to use the software as a time-based subscription, with maintenance and technical support included as part of the subscription. We have and plan to maintain a customer support organization that provides all levels of technical support to our customers.

Professional Services

While users can easily download, install and deploy our software on their own, certain enterprises use our professional service team to provide fee-based services, which include training our customers in the use of our products, providing advice on deployment planning, network design, product configuration and implementation, automating and customizing reports, and tuning policies and configuration of our products for the particular characteristics of the customer’s environment. In some cases, we bundle the professional services with the sale of the product(s).

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Sales and Marketing

Sales

We intend to sell the majority of our products and services directly to end users of our products and services. In specialized cases where local markets dictate, we intend to effect sales through a network of channel partners, which in turn, will sell the products they purchase from us to the end users. We expect to continue to develop, refine and leverage different models for different regions, product lines and marketplaces as the market changes.

Marketing

Our marketing strategy focuses on building our brand and product awareness, increasing customer adoption and demand, communicating advantages and business benefits, and generating leads for our channel partners and sales force. We market our products as a solution for securing and managing file systems and enterprise data and protecting against cyberattacks. Our internal marketing focus is on branding, content generation, and product marketing. Our marketing efforts also include public relations in multiple regions, analyst relations, customer marketing, and extensive content development available through our website and our social media outlets.

Research and Development

We continue to invest and develop our capabilities in research and development. In addition to core software code, we have continued to enhance our capabilities in user experience and design, which we believe benefits our product lines and further supports customer adoption. We continue to increase the frequency, quality, and feature set of our products for our customers and to adopt advanced development, quality assurance and deployment methodologies.

Intellectual Property

Our commercial success depends in part on our ability to obtain and maintain intellectual property protection for our products and services and our brands, to prevent others from infringing, misappropriating, or otherwise violating our intellectual property rights, to defend and enforce our intellectual property rights, and to operate without infringing, misappropriating, or otherwise violating valid and enforceable intellectual property rights of others. We actively seek to protect intellectual property that we believe is important to our business, which includes maintaining issued patents that we believe cover our products and services or features of the same, and pursuing new patents through patent applications filed with the United States Patent and Trademark Office (the “USPTO”) for processes or other inventions that are commercially or strategically important to developing and maximizing our value. We seek to protect the confidentiality of trade secrets that may be important to our existing businesses or to developing and exploiting new opportunities. We take steps to build and maintain the integrity of our brands, for example, with trademarks and service marks. We rely on a strategy that combines the use of patents, trade secrets, and trademarks, know-how, and license agreements, as well as other intellectual property laws, employment agreements imposing confidentiality and invention assignment obligations, and other contractual protections to establish and protect our intellectual property rights.

Patents

We own three patents that claim inventions related to the technology associated with its Data443® Asset Control Manager product, namely, US Patent Nos. 8,347,313, 8,752,069, and 8,443,997 and which have anticipated expiration dates in 2025, 2024, and 2031, respectively. We also acquired an exclusive, royalty-free license to certain patent assets as a result of its January 19, 2022 purchase of the assets of Centurion Holdings I, LLC. US Patent No. 9,390, 275 has claims directed to protecting a hard drive and controlling hard drive data change and is anticipated to expire in January 2035. US Patent Application Nos. 16/923,747 and 16/923,785 were filed July 8, 2020 and both are pending with the USPTO. The ‘747 and ‘785 applications have been published as US 2021-0011807 and 2021-0012002, respectively and seek protection for claims directed to methods and systems for recognizing unintended file system changes. For new innovations, we intend to seek patent protection either to exclude others from practicing its inventions or to leverage the patent rights for licensing/cross-licensing, whichever may be most appropriate, to further the interests of the business.

Trade Secrets

We also rely on trade secrets relating to our product and technology, and we maintain the confidentiality of such proprietary information to protect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection. We seek to protect our trade secrets and know-how by entering into confidentiality and invention assignment agreements with employees, contractors, consultants, suppliers, customers, and other third parties, who have access to such information. These agreements generally provide that all confidential information concerning our business or financial affairs developed or made known to the individual during the course of the individual’s relationship with us are to be kept confidential and not disclosed to third parties except in specific circumstances.

Trademarks

Our trademark portfolio is designed to protect the brands of our products and services and any future products and services. As of March 31, 2022, we own and presently intend to maintain 12 United States trademark registrations for word marks and logos including for “DATA443”, and “ALL THINGS DATA SECURITY”, “CLASSIDOCS”, “DATAEXPRESS”, “ARALOC”, “FILEFACETS”, “ENTERPRISE ID”, and “ARCMAIL”.

We also make use of, manage, and otherwise enforce the use of several graphical implementations of our service marks in various capacities, including on our website, and with direct marketing and our product lines. These are also managed as part of our normal IP management processes.

For more information regarding the risks related to our intellectual property, please see “Risk Factors-Failure to protect our proprietary technology and intellectual property rights could substantially harm our business.”

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Competition

The industry in which we compete is highly competitive. Many companies offer similar products and services for data security. We hope to maintain a competitive advantage by offering quality at a competitive price, continuing to acquire unique and capable technologies and by utilizing the experience, knowledge, and expertise of our management team.

Employees

As of August 7, 2023, we had 24 employees and 21 independent contractors, of which two were considered to be part of our management team; our Chief Executive Officer, Jason Remillard, and Chief Financial Officer, Greg McCraw. We have not experienced any work stoppages, and we consider our relations with our employees to be good. Our employees are not represented by any labor union.

Government regulation

We are subject to the laws and regulations of the jurisdictions in which we operate, which may include business licensing requirements, income taxes and payroll taxes. In general, the development and operation of our business is not subject to special regulatory and/or supervisory requirements.

Available Information

We expect to continue to file annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, proxy statements and other information with the SEC. Any materials we filed with the SEC may be read on the website maintained by the SEC that contains annual, quarterly and current reports, proxy statements and other information that issuers file electronically with the SEC. The internet address of the SEC’s website is http://www.sec.gov. We also make our reports, amendments thereto, and other information available, free of charge, on our website at www.data443.com. Our telephone number is 919-526-1070.

Legal Proceedings

We may from time to time be involved in various claims and legal proceedings of a nature it believes are normal and incidental to its business. These matters may include product liability, intellectual property, employment, personal injury caused by our employees, and other general claims. We are not presently a party to any legal proceedings that, in the opinion of its management, are likely to have a material adverse effect on its business. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

Properties

We do not own properties. Our principal executive offices are located at 4000 Sancar Way, Suite 400, Research Triangle Park, NC 27709 under a lease agreement. We lease our office pursuant to a lease agreement that terminates on December 31, 2023. We believe our current office space is suitable for the conduct of our business.

Going Concern

We are dependent upon the receipt of capital investment and other financing to fund our ongoing operations and to execute our business plan. If continued funding and capital resources are unavailable at reasonable terms, we may not be able to implement our plan of operations. We may be required to obtain alternative or additional financing, from financial institutions or otherwise, in order to maintain and expand our existing operations. The failure by us to obtain such financing would have a material adverse effect upon our business, financial condition and results of operations.

Our financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Our independent registered public accounting firm has included an explanatory paragraph in their report in our audited financial statements for the fiscal year ended December 31, 2022 to the effect that our limited operations and lack of profitability raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern within one year after the date that the financial statements are issued. We may be required to cease operations which could result in our stockholders losing all or almost all of their investment.

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MANAGEMENT

Directors and Executive Officers

Our directors and executive officers, including their age, positions, and biographical information as of August 16, 2023, are set forth below.

Name	Position	Age
Jason Remillard	President, Chief Executive Officer and Director	50
Greg McCraw	Vice President and Chief Financial Officer	60
Anthony Palma	Independent Director Nominee*	65
Michael Favish	Independent Director Nominee*	74
Lewis Jaffe	Independent Director Nominee*	65

* Appointment will be effective as of the first day our common stock and Warrants are traded on The Nasdaq Capital Market.

Our directors are appointed for a one-year term to hold office until the next annual general meeting of our stockholders or until removed from office in accordance with our bylaws. Our officers are appointed by our Board of Directors and hold office until removed by the board. All officers and directors listed above will remain in office until the next annual meeting of our stockholders, and until their successors have been duly elected and qualified. There are no agreements with respect to the election of directors.

Set forth below is a brief description of the background and business experience of our current executive officers and directors for the past five years.

Jason Remillard

Jason Remillard is our Founder, President, Chief Executive Officer, and Chairman of the Board of Directors, positions he has held since November 2017.

Mr. Remillard started his career in the early 1990s with an internet service provider. Mr. Remillard has led software organizations of all sizes throughout his career. In addition to product management, development, and marketing, he has delivered strategic consulting for leading organizations worldwide and in both cybersecurity and IT operations capabilities. He has had a long and distinguished career in the business of enterprise information technology, providing services world-wide. He has been on all three of the recognized aspects of information technology: (i) as a vendor; (ii) as an implementer; and (iii) as the customer. Mr. Remillard has developed, delivered, and sold pervasive solutions and products for companies culminating in four successful market exits.

Immediately prior to forming Data443, Mr. Remillard focused on building an award-winning data privacy and compliance product – ClassiDocs®. During this period, he focused on enterprise customer relationships, strategic industry partnerships and setting the foundation for a new and unique entry into the global and growing data privacy and compliance marketplace. He served as Vice President of Security Architecture and Engineering for Deutsche Bank based in New York City and managed a large and complex portfolio of technology and staff globally, including risk management, data security and enterprise compliance programs. Mr. Remillard also led a large global diversified security products portfolio for Dell Software (formerly Quest Software), with over 4,000 active customers, development & marketing teams, and international distribution channels. Mr. Remillard was a management consultant for IBM Corporation, and developed, marketed, and successfully managed five other startups in the cybersecurity space. With over 30 years of enterprise IT, business development and product sales experience, Mr. Remillard continues to execute on his vision of simplifying important security capabilities to protect important assets.

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Mr. Remillard holds an MBA from the Richard Ivey School of Business (London, ON Canada). He is also a Certified Information Systems Security Professional (CISSP). Mr. Remillard is a former Vice President of CISO Global Security Architecture and Engineering at Deutsche Bank; Senior Product Manager for Dell/Quest Software; Management Consultant for IBM; and, Strategic Consultant for RBC Bank, TD Bank. Based upon his experience, and expertise, in the data security space, we believe that Mr. Remillard is qualified to serve as our Chief Executive Officer and on our Board of Directors.

Greg McCraw

Greg McCraw joined as our Vice President and Chief Financial Officer in September 2022. Mr. McCraw has over 25 years of experience helping businesses strengthen accounting and finance operations, addressing compliance challenges in highly regulated environments, and implementing accounting best practices. Mr. McCraw previously was Vice President of Finance for Light Wave Dental (d/b/a Gladwell Orthodontics) in Wake Forest, NC since January 2021, overseeing seven direct reports and controlling a budget of $17 million. From April 2011 until January 2021, Mr. McCraw was the Managing Director of FMAC Group, LLC of Wake Forest, a boutique accounting and finance consulting firm, advising Fortune clients in pharmaceutical, financial services, and private equity sectors on executing on regulatory and compliance solutions. Mr. McCraw is a certified public accountant and holds a bachelor of arts degree in accounting from North Carolina State University. Based on his extensive experience in finance, we believe Mr. McCraw is qualified to serve as our Chief Financial Officer. 

Set forth below is a brief description of the background and business experience of the individuals who have agreed to join as our independent directors upon the first day our common stock and Warrants are traded on The Nasdaq Capital Market:

Anthony Palma

Mr. Palma is currently a faculty member at Fordham University’s School of Law, where he has taught since April 2021 and at Fordham University’s Graduate School of Business Administration, where he has taught since January 2014. From October 2020 until March 2022, Mr. Palma served as a consultant at Treliant Risk Advisors, a risk management consulting firm that advises financial services organizations. Prior to Mr. Palma’s tenure at Treliant Risk Advisors, from November 1995 to September 2009 and from April 2011 to July 2019, Mr. Palma served as Vice President and Global Risk Officer and in various other roles at Citigroup Inc., where he focused on internal audit and risk management. Mr. Palma currently sits on the board of directors of the Will Restaurant Group, a restaurant startup in the Outer Banks, North Carolina and in the past has served on the board of directors of several other private companies. Mr. Palma holds certifications as a Certified Anti-Money Laundering Specialist, a Certified Financial Services Auditor and a Certified Fraud Examiner. We believe that Mr. Palma’s analytical, financial, and presentation skills, and his ample experience advising companies on risk management qualify him to serve as one of our directors.

Lewis Jaffe

Lewis (Lew) Jaffe is a Clinical Professor and an Entrepreneur-in-Residence at Loyola Marymount University in the Fred Kiesner Center for Entrepreneurship Management, where he teaches both undergraduates and MBA candidates. Mr. Jaffe serves on the board of directors of Reed Inc. (NASDAQ: REED); Fit Life Brands (OTCQX: FTLF); and is the lead independent director for York Telecom, a privately-held company. Formerly, he was the lead independent director of Benihana Inc. prior to it being taken private. Mr. Jaffe’s career includes serving as CEO and Founder/Cofounder of numerous companies including, MoviMe Network; CEO of Oxford Media Inc. (publicly traded at the time of Mr. Jaffe’s involvement); and President and COO of Verso Technologies (publicly traded at the time of Mr. Jaffe’s involvement) where he integrated numerous acquisitions that were made prior to his tenure while creating product bundles with in-house technology. As the CEO of PictureTel Corporation (publicly traded at the time of Mr. Jaffe’s involvement), a $750 million revenue video conferencing company which he sold in 2001, he developed video compression and communications technologies. Mr. Jaffe has been a guest on a number of business shows for CNBC, MSNBC, and ABC, and has been quoted in a variety of business and trade publications, including Forbes Magazine, The Wall Street Journal, the New York Times, Business Week, and The Boston Globe. We believe Mr. Jaffe’s extensive experience as a financial expert in myriad aspects of business and markets, as well as his understanding of our business, operations, and strategy, qualifies him to serve on our Board of Directors.

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Michael Favish

Michael Favish has more than 30 years of experience in founding, developing, and managing private and public companies. He is an acknowledged and respected leader, entrepreneur, and innovator with hands-on experience in strategic marketing, brand building, sales, and product development. Mr. Favish also founded Fotoball USA, a pioneer in retail licensed products and marketing, in 1984. In 1994, Mr. Favish transformed Fotoball into a publicly-held company listed on The Nasdaq Stock Exchange with 200 employees. After growing revenues from $7 million in 1994 to $50 million in 2003, Fotoball was acquired in January 2004 by an industry-leading NYSE company. Mr. Favish also founded Guardion Health Sciences (GHS) in 2009 with a strong belief that the healthcare industry has not focused enough on a proactive model of wellness for an expanding and increasingly affluent market. Mr. Favish is a strong advocate of bringing research-validated technologies and solutions to the medical and patient markets’ attention. Mr. Favish led GHSI through an IPO in April 2019 and raise $20 million for GHSI from inception. Upon stepping down as Founder and CEO in June 2020, the company had $12 million in cash with no debt. In late 2020 Mr. Favish co-founded and became CEO of Cyrano Medical Health with a mission to provide a real alternative to the current methods used to collect samples for testing for pathogens residing in the nasopharyngeal channel. Throughout his career, Mr. Favish has been a guest speaker at several leading universities and an advisor to companies in both the United States and Asia, advising them on branding, product development, and marketing strategies. We believe that Mr. Jaffe’s experience qualifies him to serve on our Board of Directors.

Involvement in Certain Legal Proceedings

To our knowledge, (i) no director or executive officer has been a director or executive officer of any business which has filed a bankruptcy petition or had a bankruptcy petition filed against it during the past ten years; (ii) no director or executive officer has been convicted of a criminal offense or is the subject of a pending criminal proceeding during the past ten years; (iii) no director or executive officer has been the subject of any order, judgment or decree of any court permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities during the past ten years; and (iv) no director or officer has been found by a court to have violated a federal or state securities or commodities law during the past ten years.

Family Relationships

There are no family relationships between any of our officers, directors, or persons nominated to become directors.

Board Committees

We intend to list our common stock on The Nasdaq Capital Market. Under the rules of Nasdaq, independent directors must comprise a majority of a listed company’s board of directors within a specified period of the completion of this offering. In addition, rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation, and nominating and corporate governance committee be independent. Under rules, a director will only qualify as an “independent director” if, in the opinion of that company’s board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

Audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act. In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee: (1) accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries; or (2) be an affiliated person of the listed company or any of its subsidiaries. We intend to satisfy the audit committee independence requirements of Rule 10A-3 as of the closing of this offering.

Our Board of Directors has undertaken a review of the independence of each director and considered whether each director has a material relationship with us that could compromise his or her ability to exercise independent judgment in carrying out his or her responsibilities. As a result of this review, our Board of Directors determined that Mr. Favish, Mr. Jaffe and Mr. Palma are “independent directors” as defined under the applicable rules and regulations of the SEC and the listing requirements and rules of Nasdaq. In making these determinations, our Board of Directors reviewed and discussed information provided by the directors and us with regard to each director’s business and personal activities and current and prior relationships as they may relate to us and our management, including the beneficial ownership of our capital stock by each non-employee director and the transactions involving them described in the section titled “Certain Relationships and Related Party Transactions.”

Upon completion of this offering, our Board of Directors plans to establish three standing committees: an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee. Each of the committees will operate pursuant to its charter then in effect. The committee charters will be reviewed annually by the Nominating and Corporate Governance Committee and if appropriate, and in consultation with the chairs of the other committees, the Nominating and Corporate Governance Committee may propose revisions to the charters. The responsibilities of each committee are described in more detail below.

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Audit Committee

The Audit Committee, among other things, will be responsible for:

● appointing; approving the compensation of; overseeing the work of; and assessing the independence, qualifications, and performance of the independent auditor;

● reviewing the internal audit function, including its independence, plans, and budget;

● approving, in advance, audit and any permissible non-audit services performed by our independent auditor;

● reviewing our internal controls with the independent auditor, the internal auditor, and management;

● reviewing the adequacy of our accounting and financial controls as reported by the independent auditor, the internal auditor, and management;

● overseeing our financial compliance system; and

● overseeing our major risk exposures regarding our accounting and financial reporting policies, the activities of our internal audit function, and information technology.

Our Board of Directors has affirmatively determined that each member of the Audit Committee meets the additional independence criteria applicable to audit committee members under SEC rules and listing rules for The Nasdaq Capital Market. Effective upon the first day our common stock and Warrants are traded on Nasdaq, the Board of Directors will adopt a written charter setting forth the authority and responsibilities of the Audit Committee. The Board of Directors has affirmatively determined that each member of the Audit Committee is financially literate, and that Mr. Jaffe meets the qualifications of an Audit Committee financial expert.

The Audit Committee will consist of Mr. Jaffe, Mr. Palma and Mr. Favish. Mr. Jaffe will chair the Audit Committee. We believe that on the first day our common stock and Warrants are traded on The Nasdaq Capital Market the functioning of the Audit Committee will comply with the applicable requirements of the rules and regulations of the listing rules of The Nasdaq Capital Market and the SEC.

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Compensation Committee

The Compensation Committee will be responsible for:

● reviewing and making recommendations to our Board of Directors with respect to the compensation of our officers and directors, including our Chief Executive Officer;

● overseeing and administering our executive compensation plans, including equity-based awards;

● negotiating and overseeing employment agreements with officers and directors; and

● overseeing how our compensation policies and practices may affect our risk management practices and/or risk-taking incentives.

Effective upon the first day our common stock and Warrants are traded on The Nasdaq Capital Market, the Board of Directors will adopt a written charter setting forth the authority and responsibilities of the Compensation Committee. The Compensation Committee will consist of Mr. Favish, Mr. Jaffe and Mr. Palma. Mr. Favish will serve as chairman of the Compensation Committee. The Board of Directors has affirmatively determined that each member of the Compensation Committee meets the independence criteria applicable to compensation committee members under SEC rules and Nasdaq listing rules. We believe that, after the consummation of the offering, the composition of the Compensation Committee will meet the requirements for independence under, and the functioning of such Compensation Committee will comply with, any applicable requirements of the rules and regulations of listing rules for The Nasdaq Capital Market and the SEC.

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee, among other things, will be responsible for:

● reviewing and assessing the development of the executive officers and considering and making recommendations to the Board of Directors regarding promotion and succession issues;

● evaluating and reporting to the Board of Directors on the performance and effectiveness of the directors, committees and the Board of Directors as a whole;

● working with the Board of Directors to determine the appropriate and desirable mix of characteristics, skills, expertise and experience, including diversity considerations, for the full Board of Directors and each committee;

● annually presenting a list of individuals recommended to be nominated for election to the Board of Directors;

● reviewing, evaluating, and recommending changes to our corporate governance principles and committee charters;

● recommending to the Board of Directors individuals to be elected to fill vacancies and newly created directorships;

● overseeing our compliance program, including the Code of Business Conduct and Ethics; and

● overseeing and evaluating how our corporate governance and legal and regulatory compliance policies and practices, including leadership, structure, and succession planning, may affect our major risk exposures.

Effective upon the first day our common stock and Warrants are traded on The Nasdaq Capital Market, the Board of Directors will adopt a written charter setting forth the authority and responsibilities of the Nominating and Corporate Governance Committee.

The Nominating and Corporate Governance Committee will consist of Mr. Palma and Mr. Jaffe. Mr. Palma will serve as chairperson. The Board of Directors has affirmatively determined that each member of the Nominating and Corporate Governance Committee is independent within the meaning of the independent director guidelines of the listing rules for The Nasdaq Capital Market and the SEC.

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Compensation Committee Interlocks and Insider Participation

Jason Remillard, our President and Chief Executive Officer, has previously served as the sole member of our Board of Directors. In that role Mr. Remillard performed an equivalent function to the compensation committee. Moving forward, none of the members of our compensation committee will be an officer or employee of ours.

Code of Business Conduct and Ethics

We will adopt a Code of Business Conduct and Ethics applicable to its employees, directors and officers, in accordance with applicable United States federal securities laws and the corporate governance rules of The Nasdaq Capital Market. The Code of Business Conduct and Ethics will be publicly available on our website. Any substantive amendments or waivers of the Code of Business Conduct and Ethics may be made only by our Board of Directors and will be promptly disclosed as required by applicable United States securities laws and the corporate governance rules of The Nasdaq Capital Market.

Director Terms; Qualifications

Members of our Board of Directors serve until the next annual meeting of stockholders, or until their successors have been duly elected. When considering whether directors and nominees have the experience, qualifications, attributes and skills to enable the Board of Directors to satisfy its oversight responsibilities effectively in light of our business and structure, the Board of Directors focuses primarily on the industry and transactional experience, and other background, in addition to any unique skills or attributes associated with a director.

Directors and Officers Liability Insurance

We have obtained directors’ and officers’ liability insurance insuring its directors and officers against liability for acts or omissions in their capacities as directors or officers, subject to certain exclusions. Such insurance also insures us against losses, which it may incur in indemnifying its officers and directors. In addition, officers and directors also have indemnification rights under applicable laws, and our articles of incorporation and bylaws.

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Corporate Governance Guidelines

Prior to the completion of this offering, our Board of Directors will adopt corporate governance guidelines in accordance with rules of The Nasdaq Capital Market.

EXECUTIVE AND DIRECTOR COMPENSATION

Summary Compensation Table

The following table sets forth certain compensation awarded to, earned by, or paid to the following “named executive officers,” which is defined as follows:

(a)	all individuals serving as our principal executive officer during the year ended December 31, 2022 and 2021; and
(b)	each of our two other most highly compensated executive officers who were serving as executive officers at the end of the year ended December 31, 2022 and 2021.

We did not have any individuals for whom disclosure would have been required but for the fact that the individual was not serving as an executive officer as of the fiscal year ended December 31, 2022.

				Stock		Option		All Other
	Fiscal	Salary		Awards		Awards		Compensation		Total
Name and Principal Position	Year	($)		($)		($)		($)		($)
Jason Remillard	2022	$	171,006		-	$	412,000		-	$	583,006
Chief Executive Officer and Director(1)	2021		201,441		-		6,834		-	$	201,441
Greg McCraw	2022	$	49,842		-	$	41,180		-	$	91,026
Chief Financial Officer(2)	2021		-		-		-		-		-

(1) Mr. Remillard served as our Chief Financial Officer from January 24, 2020 until December 3, 2021.

(2) Mr. McCraw has served as our Chief Financial Officer since September 6, 2022.

Outstanding Equity Awards at Fiscal Year-End

The following table sets forth information regarding outstanding stock options and stock awards held by our Named Executive Officers as of December 31, 2022:

	Option Awards												Stock Awards
Name	Number of Securities Underlying Unexercised Options: Exercisable		Number of Securities Underlying Unexercised Options: Unexercisable		Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options		Option Exercise Price		Option Expiration Date		Number of Shares or Units of Stock That Have Not Vested		Market Value of Shares or Units of Stock That Have Not Vested		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested
Jason Remillard		3		-		-	$	62,400		December 30, 2028		-		-		-		-
		-		18		-	$	10,062		February 9, 2031		-		-		-		-
		317,801		-			$	1.87		November 15, 2027		-		-		-		-
		-		-		-		-		-		18	$	157		-		-	*
		-		-		-		-		-		192,857	$	61,714
Greg McCraw		41,800		-		-	$	1.70		November 15, 2027		-		-		-		-
												192,857	$	61,714		-		-

Employment Agreements

Jason M. Remillard Employment Agreement

Effective March 1, 2019, we and Mr. Remillard entered into an employment agreement (the “Remillard Employment Agreement”) providing for at-will employment, each party having the right to terminate the employment relationship at any time for any reason or no reason.

The Remillard Employment Agreement provides that Mr. Remillard will be employed by us as President and Chief Executive Officer. Under the Remillard Employment Agreement, Mr. Remillard receives a base salary of $180,000 annually. Mr. Remillard is also entitled to receive restricted stock units (“RSUs”) every three months until such time as Mr. Remillard is no longer employed by us. Each RSA consists of a number of shares of our Common Stock equal to the value of $45,000 under our 2019 Omnibus Incentive Plan (the “2019 Plan”). The RSUs vest in full six months from date of grant.

Each quarter, Mr. Remillard is also entitled to receive incentive stock options to purchase our Common Stock up to a value of $35,000, in accordance with the vesting schedule determined by the administrator of the 2019 Plan.

Under the Remillard Employment Agreement, Mr. Remillard is entitled to participate in all employee benefit programs that we establish and make available to our employees from time to time, including our health and dental plans.

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Greg McCraw Employment Agreement

Effective September 6, 2022, we entered into an employment agreement with Mr. McCraw (the “McCraw Employment Agreement”) providing for at-will employment, each party having the right to terminate the employment relationship at any time for any reason or no reason.

The McCraw Employment Agreement provides that Mr. McCraw will be employed as our Chief Financial Officer. Under the McCraw Employment Agreement, Mr. McCraw receives a base salary of $180,000 annually. Mr. McCraw is also entitled to receive RSUs every three months until such time as Mr. McCraw is no longer employed by us. Each RSU consists of a number of shares of our Common Stock equal to the value of $45,000 under the 2019 Plan. The RSUs vest in full six months from date of grant.

Each quarter, Mr. McCraw is also entitled to receive incentive stock options to purchase our Common Stock up to a value of $35,000, in accordance with the vesting schedule determined by the administrator of the 2019 Plan.

Under the McCraw Employment Agreement, Mr. McCraw is entitled to participate in all employee benefit programs that we establish and make available to our employees from time to time, including our health and dental plans.

Executive Compensation Philosophy

Our Board of Directors determines the compensation given to our executive officers in their sole determination. Our board of directors reserves the right to pay our executive or any future executives a salary, and/or issue them shares of common stock in consideration for services rendered and/or to award incentive bonuses which are linked to our performance, as well as to the individual executive officer’s performance. This package may also include long-term stock-based compensation to certain executives, which is intended to align the performance of our executives with our long-term business strategies. Additionally, while our Board of Directors has not granted any performance-based stock options to date, the Board of Directors reserves the right to grant such options in the future, if the Board of Directors in its sole determination believes such grants would be in our best interests.

Incentive Bonus

Our Board of Directors may grant incentive bonuses to our executive officers and/or future executive officers in its sole discretion, if the Board of Directors believes such bonuses are in our best interests, after analyzing our current business objectives and growth, if any, and the amount of revenue we are able to generate each month, which revenue is a direct result of the actions and ability of such executives.

Long-term, Stock-based Compensation

In order to attract, retain and motivate executive talent necessary to support our long-term business strategy we may award our executives and any future executives with long-term, stock-based compensation in the future, at the sole discretion of our Board of Directors. We do not have any immediate plans to grant any additional awards.

The 2019 Plan was adopted by our Board of Directors on May 16, 2019 and by a majority of our voting securities on June 24, 2019. The 2019 Plan permits the granting of incentive stock options to eligible employees and other incentive equity grants to directors or consultants such as restricted stock units, restrictive stock awards, stock appreciation rights, or other right or benefit under the 2019 Plan. We grant options to purchase shares of our common stock under the 2019 Plan at no less than the fair value of the underlying common stock as of the date of grant. Options granted under the Plan have a maximum term of ten years.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Certain Relationships and Related Transactions

Jason Remillard is our president and Chief Executive Officer and sole director. Through his ownership of Series A Preferred Stock, Mr. Remillard has voting control over all matters to be submitted to a vote of our stockholders.

On September 16, 2019, we entered into an Asset Purchase Agreement with DMB Group, LLC (“DMB Group”). A significant part of the purchase price was in the form of our Common stock. As a direct result of this transaction and our Common stock issued to DMB Group, we determined that DMB Group was a related party. Amounts owed to DMB Group, including the note payable of $940,000 and member loans of $97,689 were recorded as amounts due to a related party.

During the year ended December 31, 2022, we repaid a note payable of $124,985 including interest expense of $1,240. As of December 31, 2022 and December 31, 2021, we had recorded a liability to DMB Group totaling $0 and $123,745, respectively.

During the year ended December 31, 2022, we received cash from our Chief Executive Officer of $299,281, our Chief Executive Officer paid operating expenses of $167,653, and we repaid $602,237 to our Chief Executive Officer.

As of December 31, 2022 and December 31, 2021, we had due to related party transactions in the amounts of $112,064 and $247,366, respectively.

Review, Approval and Ratification of Related Party Transactions

Given our small size and limited financial resources, we have not adopted formal policies and procedures for the review, approval, or ratification of transactions with our executive officers, directors, and significant stockholders. We intend to establish formal policies and procedures in the future, once we have sufficient resources and have appointed additional directors, so that such transactions will be subject to the review, approval, or ratification of our board of directors, or an appropriate committee thereof. Going forward, our directors will continue to approve any related-party transaction.

PRINCIPAL STOCKHOLDERS

The following table sets forth, as of August 17, 2023, certain information with regard to the record and beneficial ownership of our common stock by (i) each person known to us to be the record or beneficial owner of more than 5% of our common stock, (ii) each of our directors, (iii) each of the named executive officers, and (iv) all of our executive officers and directors as a group.

Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Beneficial ownership also includes shares of stock subject to options and warrants currently exercisable or exercisable within 60-days of the date of this table. In determining the percent of common stock owned by a person or entity as of the date of this Prospectus (a) the numerator is the number of shares of the class beneficially owned by such person or entity, including shares which may be acquired within 60 days on exercise of warrants or options and conversion of convertible securities, and (b) the denominator is the sum of (i) the total shares of common stock outstanding as of the date of this Prospectus, which is 61,413,168 shares, and (ii) the total number of shares of common stock that the beneficial owner may acquire upon exercise of the derivative securities. Unless otherwise stated, each beneficial owner has sole power to vote and dispose of its shares.

Name of Beneficial Owner(1)	Number of Shares of Beneficially Owned			Percentage Beneficially Owned
Officers and Directors
Jason Remillard		152,343,236	(2)		71.27	(2)
Greg McCraw		2,436,418	(3)		3.82	(3)
		-			-
All current executive officers and directors as a group (2 people)		154,779,654			75.09
		-
		-
5% Beneficial Stockholders
Jason Remillard		152,343,236	(2)		71.27	(2)

(1)	The mailing address for each officer and director is c/o Data443 Risk Mitigation, Inc., 4000 Sancar Way, Suite 400, Research Triangle Park, North Carolina 27709.
(2)	Includes (i) 451,236 shares of Common Stock, (ii) 149,892,000 shares of Common Stock issuable to Mr. Remillard upon full conversion of all of his 149,892 Series A Shares, (iii) 1,125,000 restricted stock units that vest on October 1, 2023 and (iv) 875,000 options to purchase shares of Common Stock.
(3)	Includes (i) 278,571 shares of Common Stock, (ii) 1,125,000 restricted stock units that vest on October 1, 2023 and (iii) 875,000 options to purchase common stock that vest on October 1, 2023.

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SELLING STOCKHOLDERS

Selling Stockholder Sales

This prospectus covers the possible resale by the Selling Stockholders identified in the table below of up to 46,550,000 shares of our Common Stock, which were issued to 37 Selling Stockholders. The Selling Stockholders acquired the Selling Stockholder Shares pursuant to a private placement of securities.

The Selling Stockholders may sell some, all or none of their Selling Stockholder Shares. We currently have no agreements, arrangements or understandings with the Selling Stockholders regarding the sale of any of the Selling Stockholder Shares. Unless otherwise indicated in the footnotes to the below table, no Selling Stockholder has had any material relationship with us or any of our affiliates within the past three years other than as a securityholder of our company.

We have prepared the following table based on written representations and information furnished to us by or on behalf of the Selling Stockholders. Since the date on which the Selling Stockholders provided this information, the Selling Stockholders may have sold, transferred or otherwise disposed of all or a portion of the Selling Stockholder Shares in a transaction exempt from the registration requirements of the Securities Act. Unless otherwise indicated in the footnotes below, we believe that: (i) none of the Selling Stockholders are broker-dealers or affiliates of broker-dealers, and (ii) no Selling Stockholder has direct or indirect agreements or understandings with any person to distribute their Selling Stockholder Shares. To the extent any Selling Stockholder identified below is, or is affiliated with, a broker-dealer, it could be deemed to be an “underwriter” within the meaning of the Securities Act. Information about the Selling Stockholders may change over time.

The following table presents information regarding the Selling Stockholders and the Selling Stockholder Shares that each may offer and sell from time to time under this Prospectus. The table is prepared based on information supplied to us by the Selling Stockholders, and reflects their respective holdings as of August 24, 2023, unless otherwise noted in the footnotes to the table. Beneficial ownership is determined in accordance with the rules of the SEC, and thus represents voting or investment power with respect to our securities. Under such rules, beneficial ownership includes any shares over which the individual has sole or shared voting power or investment power as well as any shares that the individual has the right to acquire within 60 days after the date of this table. To our knowledge and subject to applicable community property rules, the persons and entities named in the table have sole voting and sole investment power with respect to all equity interests beneficially owned. The percentage of shares beneficially owned before and after the Offering is based on 61,413,168 shares of our Common Stock issued and outstanding on August 7, 2023, and                   shares to be issued and outstanding after the Offering, which excludes (i) 159,974 shares of our common stock issuable upon exercise of outstanding warrants at a weighted average exercise price per share in the range of approximately $0.93 to $22.07 (ii) 149,892 shares of common stock issuable upon conversion of our outstanding Series A Preferred Stock; (iii) exercise of the Underwriter’s Warrants; and, (iv) exercise of the underwriter’s option to purchase additional shares and/or Warrants from us in this offering.

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	Name of Selling Stockholder	Common Stock Owned Prior to Offering					Maximum Number of Shares of Common Stock to be Sold		Common Stock Owned After Offering				Address
		Shares			Percent (1)				Shares		Percent (1)
1	Aega Investment Inc (2)		2,500,000			3.91		2,500,000		—		—	3898 NW 52nd Street, Boca Raton, FL 33496
2	R. Douglas Armstrong		500,000			0.81		500,000		—		—	570 Ocean Drive, #201, Juno Beach, FL 33408-1953
3	John R. Baleno		1,250,000			1.99		1,250,000		—		—	1456 East Bexley Park Drive, Delray Beach, FL 33445-3443
4	Ben Manheimer III		250,600			0.41		250,000		600		*	35 Arrowhead Estates Lane, Chesterfield, MO 63017
5	BRR Palm Irrevocable Trust (3)		500,000			0.81		4500,000		—		—	1384 Thatch Palm Drive, Boca Raton, FL 33432
6	Gregory A. Harrison		2,000,000			3.15		2,000,000		—		—	16209 Kimberly Grove Road, Gaithersburg, MD 20878
7	Helen K Bates LIV Trust dtd 12-12-97 (4)		500,000			0.81		500,000		—		—	17797 Westhampton Woods Drive, Wildwood, MO 63005
8	Mallard Fund I, LLC (5)		2,500,000			3.91		2,500,000		—		—	17797 Westhampton Woods Drive, Wildwood, MO 63005
9	SSJ7, LLC (6)		500,000			0.81		500,000		—		—	17797 Westhampton Woods Drive, Wildwood, MO 63005
10	Leo Pasquale Miceli		1,134,076	(18)		1.81		1,134,076		—		—	3470 Hampton, S106, St. Louis, MO 63139
11	Samuel Stephen Hancock		1,000,000			1.60		1,000,000		—		—	29 Schonoff Lane, Cape Girardeau, MO 63703
12	Vital Link Financial Services, LLC (7)		500,000			0.81		500,000		—		—	17797 Westhampton Woods Drive, Wildwood, MO 63005
13	William Liggett Bates Liv. Trust dtd 12-12-97 (8)		500,000			0.81		500,000		—		—	17797 Westhampton Woods Drive, Wildwood, MO 63005
14	David John Webb		2,500,000			3.91		2,500,000		—		—	6625 Adkins Street, Cocoa, FL 32927
15	Dean H. Welle and Paula A. Welle, JTROS (9)		1,250,000			1.99		1,250,000		—		—	13554 200th Street, Little Falls, MN 56345
16	Robert Stuart Drake Powers		500,000			0.81		500,000		—		—	631 Francis Place, Clayton, MD 63105

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	Name of Selling Stockholder	Common Stock Owned Prior to Offering					Maximum Number of Shares of Common Stock to be Sold		Common Stock Owned After Offering				Address
		Shares			Percent (1)				Shares		Percent (1)
17	Eugene Rankin TOD		1,634,076	(19)		2.59		1,634,076		—		—	1410 Shadycreek Ct., Apt B, St. Louis, MO 63146
18	Frank J. Hughes		1,250,000			1.99		1,250,000		—		—	13840 S. Seminole Drive, Olathe, KS 66062
19	Daniel W. Armstrong		1,250,000			1.99		1,250,000		—		—	611 Lock Chalet Court, Arlington, TX 76012
20	Ivan C Tong		1,900,000			3.00		1,900,000		—		—	1508 Sapphire Ct., Odenton, MD 21113
21	Jeffrey Joseph Merkel		500,000			0.81		500,000		—		—	5215 Hoxey Drive, Alhambra, IL 62001
22	John A. Modica		500,000			0.81		500,000		—		—	1628 Mystic Way, The Villages, FL 32162
23	Jordan Family LLC (10)		2,050,000			3.23		2,050,000		—		—	400 E. Lake St., Minneapolis, MN 55408
24	Charles F. Mueller & Michaele Mueller JTWROS (11)		1,500,000			2.38		1,500,000		—		—	38 Yankee Hill Rd, Ridgefield, CT 06877-3631
25	Michael Thomas		500,000			0.81		500,000		—		—	3120 Venice Street, West Sacramento, CA 98691
26	Sharon S. Modica		500,000			0.81		500,000		—		—	1628 Mystic Way, The Villages, FL 32162
27	Steven Prager		750,000			1.21		750,000		—		—	2027 Selby Avenue, Los Angeles, CA 90025
28	Super Angel Capital LLC (12)		5,000,000			7.53		5,000,000		—		—	801 12th Avenue S, #259, Nashville, TN 37203
29	Thomas B. Pilgrim		1,250,000			1.99		1,250,000		—		—	3842 SE Fairway West, Stuart, FL 34997
30	Stephen Wagner & Leslie Wagner JTWROS (13)		250,000			0.41		250,000		—		—	5167 S. Stonehaven Drive, Springfield, MO 65809
31	Thomas Calkins II and Diane Calkins JT-TEN-COM (14)		5,000,000			7.53		5,000,000		—		—	415 W. Sanilac Rd., Sandusky, MI 48471
32	Gregory Pieper and Jeanette Tines JTWROS (15)		1,500,000			2.38		1,500,000		—		—	14647 Mallard Lake Dr., Chesterfield, MO 63017
33	Walter Parham		1,250,000			1.99		1,250,000		—		—	958 Cabernet Drive, Town and Country, MO 63017
34	Earl River		350,000			0.57		350,000		—		—	#82 Hartura Way, Hot Springs Village, AR 71909
35	T&I Limited (16)		1,250,000			1.99		1,250,000		—		—	Eaton Court Maylands Avenue, Hemel Hempstead Hertfordshire, HP27TR, UK
36	Jay Scott Manheimer		500,000			0.81		500,000		—		—	229 Dimmick Ave., Venice, CA 90291
37	Genmark Holdings LLLP (17)		1,250,000			1.99		1,250,000		—		—	1515 North Federal Highway, Suite 306, Boca Raton, FL 33423

* Represents ownership of less than 1.0% of the total shares of Common Stock outstanding.

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(1)	Assumes all shares offered by the Selling Stockholders hereby are sold and that the Selling Stockholders buy or sell no additional shares of Common Stock prior to the completion of this offering. The registration of these shares does not necessarily mean that the Selling Stockholders will sell all or any portion of the shares covered by this Prospectus.
(2)	Aega Investment Inc. is managed by the Andres Eloy Garcia Trust. Andres Eloy Garcia, the Trustee of the Andrews Eloy Garcia Trust, may be deemed to hold voting and dispositive power over the shares of common stock held by this selling stockholder. Mr. Garcia disclaims any beneficial ownership of these shares.
(3)	Roxanne S. Rosetto, the Trustee of this selling stockholder, may be deemed to hold voting and dispositive power over the shares of common stock held by this selling stockholder. Ms. Rosetto disclaims any beneficial ownership of these shares.
(4)	Helen K. Bates, the Trustee of this selling stockholder, may be deemed to hold voting and dispositive power over the shares of common stock held by this selling stockholder. Ms. Bates disclaims any beneficial ownership of these shares.
(5)	William L. Bates, the sole manager of this selling stockholder, may be deemed to hold voting and dispositive power over the shares of common stock held by this selling stockholder. Mr. Bates disclaims any beneficial ownership of these shares.
(6)	William L. Bates, the sole manager of this selling stockholder, may be deemed to hold voting and dispositive power over the shares of common stock held by this selling stockholder. Mr. Bates disclaims any beneficial ownership of these shares.
(7)	William L. Bates, the manager of this selling stockholder, may be deemed to hold voting and dispositive power over the shares of common stock held by this selling stockholder. Mr. Bates disclaims any beneficial ownership of these shares.
(8)	William L. Bates, the Trustee of this selling stockholder, may be deemed to hold voting and dispositive power over the shares of common stock held by this selling stockholder. Mr. Bates disclaims any beneficial ownership of these shares.
(9)	Dean H. Welle and Paula A. Welle each may be deemed to hold voting and dispositive power over the shares of common stock held by this selling stockholder. Each of Mr. Welle and Ms. Welle disclaim any beneficial ownership of these shares.
(10)	Patricia J. Jordan, the chief manager of this selling stockholder, may be deemed to hold voting and dispositive power over the shares of common stock held by this selling stockholder. Ms. Jordan disclaims any beneficial ownership of these shares.
(11)	Charles F. Mueller and Michele Mueller each may be deemed to hold voting and dispositive power over the shares of common stock held by this selling stockholder. Each of Mr. Mueller and Ms. Mueller disclaim any beneficial ownership of these shares.
(12)	Joseph F. Reece, the Managing Member of this selling stockholder, may be deemed to hold voting and dispositive power over the shares of common stock held by this selling stockholder. Mr. Reece disclaims any beneficial ownership of these shares.
(13)	Stephen Wagner and Leslie Wagner each may be deemed to hold voting and dispositive power over the shares of common stock held by this selling stockholder. Each of Mr. Wagner and Ms. Wagner disclaim any beneficial ownership of these shares.
(14)	Thomas Calkins II and Diane Calkins each may be deemed to hold voting and dispositive power over the shares of common stock held by this selling stockholder. Each of Mr. Calkins and Ms. Calkins disclaim any beneficial ownership of these shares.
(15)	Gregory Pieper and Jeanette Tines each may be deemed to hold voting and dispositive power over the shares of common stock held by this selling stockholder. Each of Mr. Pieper and Ms. Tines disclaim any beneficial ownership of these shares.
(16)	Gillian Bush, a director of this selling stockholder and Sir Andrew McAlpine, a Director of this selling stockholder, each may be deemed to  hold voting and dispositive power over the shares of common stock held by this selling stockholder. Ms. Bush and Sir McAlpine each disclaim any beneficial ownership of these shares.
(17)	Mark A. Gensheimer, the Managing Member of this selling stockholder, nay be deemed to hold voting and dispositive power over the shares of common stock held by this selling stockholder. Mr. Gensheimer disclaims any beneficial ownership of these shares.
(18)	The selling stockholder beneficially owns an aggregate number of 1,134,076 shares of our common stock, consisting of (i) 500,000 shares of common stock which shares are being registered for resale under this prospectus and (ii) 634,076 shares of common stock underlying a promssory note held by this selling stockholder, converted at a price of $0.0184, which is a 20% discount to the closing price of our common stock on August 23, 2023, all of which are being registered under this prospectus.
(19)	The selling stockholder beneficially owns an aggregate number of 1,634,076 shares of our common stock, consisting of (i) 1,000,000 shares of common stock which shares are being registered for resale under this prospectus and (ii) 634,076 shares of common stock underlying a promssory note held by this selling stockholder, converted at a price of $0.0184, which is a 20% discount to the closing price of our common stock on August 23, 2023, all of which are being registered under this prospectus.

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Plan of Distribution

We are registering the Selling Stockholder Shares issued to permit the resale of the Selling Stockholder Shares by the Selling Stockholders from time to time after the date of this Prospectus. We will not receive any of the proceeds from the sale of the Selling Stockholder Shares. We will bear all fees and expenses incident to the registration of the Selling Stockholder Shares in the registration statement of which this Prospectus forms a part. The Selling Stockholder Shares will not be sold through Dawson in this public offering.

The Selling Stockholders may sell all or a portion of the Selling Stockholder Shares beneficially owned by them and offered hereby from time to time directly or through one or more underwriters, broker-dealers or agents. If the Selling Stockholder Shares are sold through underwriters or broker-dealers, the Selling Stockholders will be responsible for underwriting discounts or commissions or agent’s commissions. The Selling Stockholder Shares may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale, or at negotiated prices. These sales may be effected in transactions, which may involve crosses or block transactions,

● on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale;

● in the over-the-counter market;

● in transactions otherwise than on these exchanges or systems or in the over-the-counter market;

● ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

● block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction;

● purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

● an exchange distribution in accordance with the rules of the applicable exchange;

● privately negotiated transactions;

● short sales;

● in transactions through broker-dealers that agree with the Selling Stockholders to sell a specified number of such securities at a stipulated price per security;

● through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;

● a combination of any such methods of sale; or

● any other method permitted pursuant to applicable law.

The Selling Stockholders may also sell securities under Rule 144 or any other exemption from registration under the Securities Act, if available, rather than under this Prospectus. However, the Selling Stockholders will not sell any Selling Stockholder Shares until after the closing of this offering.

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If the Selling Stockholders effect such transactions by Selling Stockholder Shares to or through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the Selling Stockholders or commissions from purchasers of the Selling Stockholder Shares for whom they may act as agent or to whom they may sell as principal (which discounts, concessions or commissions as to particular underwriters, broker-dealers or agents may be in excess of those customary in the types of transactions involved). In connection with sales of the Selling Stockholder Shares or otherwise, the Selling Stockholders may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the Selling Stockholder Shares in the course of hedging in positions they assume. The Selling Stockholders may also sell Selling Stockholder Shares short and deliver Selling Stockholder Shares covered by this Prospectus to close out short positions and to return borrowed shares in connection with such short sales. The Selling Stockholders may also loan or pledge Selling Stockholder Shares to broker-dealers that in turn may sell such shares.

The Selling Stockholders may pledge or grant a security interest in some or all of the Selling Stockholder Shares owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the Selling Stockholder Shares from time to time pursuant to this Prospectus or any amendment to this Prospectus under the applicable provision of the Securities Act, amending, if necessary, the list of Selling Stockholders to include the pledgee, transferee or other successors in interest as Selling Stockholders under this Prospectus. The Selling Stockholders also may transfer and donate the Selling Stockholder Shares in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this Prospectus.

The Selling Stockholders and any broker-dealer participating in the distribution of the Selling Stockholder Shares may be deemed to be “underwriters” within the meaning of the Securities Act, and any commission paid, or any discounts or concessions allowed to, any such broker-dealer may be deemed to be underwriting commissions or discounts under the Securities Act. At the time a particular offering of the Selling Stockholder Shares is made, a prospectus supplement, if required, will be distributed which will set forth the aggregate amount of Selling Stockholder Shares being offered and the terms of the offering, including the name or names of any broker-dealers or agents, any discounts, commissions and other terms constituting compensation from the Selling Stockholders and any discounts, commissions or concessions allowed or reallowed or paid to broker-dealers.

Under the securities laws of some states, the Selling Stockholder Shares may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states the Selling Stockholder Shares may not be sold unless such shares have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.

There can be no assurance that any Selling Stockholder will sell any or all of the Selling Stockholder Shares registered pursuant to the registration statement, of which this Prospectus forms a part.

The Selling Stockholders and any other person participating in such distribution will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including, without limitation, Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the Selling Stockholder Shares by the Selling Stockholders and any other participating person. Regulation M may also restrict the ability of any person engaged in the distribution of the Selling Stockholder Shares to engage in market-making activities with respect to the Selling Stockholder Shares. All of the foregoing may affect the marketability of the Selling Stockholder Shares and the ability of any person or entity to engage in market-making activities with respect to the Selling Stockholder Shares.

Once sold under the registration statement, of which this Prospectus forms a part, the Selling Stockholder Shares will be freely tradeable in the hands of persons other than our affiliates.

SHARES ELIGIBLE FOR FUTURE SALE

The sale of a substantial number of shares of our common stock, including sales by the Selling Stockholders, or the perception that such sales could occur, could adversely affect prevailing market prices for our common stock. In addition, any such sale or perception could make it more difficult for us to sell equity, or equity related, securities in the future at a time and price that we deem appropriate. If and when this Registration Statement, of which this Prospectus is a part, becomes effective, we might elect to adopt a stock option plan and file a Registration Statement under the Securities Act registering the shares of common stock reserved for issuance thereunder. Following the effectiveness of any such Registration Statement, the shares of common stock issued under such plan, other than shares held by affiliates, if any, would be immediately eligible for resale in the public market without restriction.

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The sale of shares of our common stock which are not registered under the Securities Act, known as “restricted” shares, typically are effected under Rule 144. As of August 7, 2023, we had outstanding an aggregate of 61,413,168 shares of common stock, of which approximately 47,376,727 shares are restricted common stock. All our shares of common stock might be sold under Rule 144 after having been held for six months. No prediction can be made as to the effect, if any, that future sales of “restricted” shares of our common stock, or the availability of such shares for future sale, will have on the market price of our common stock or our ability to raise capital through an offering of our equity securities.

All of the shares of our common stock sold under this Prospectus will be freely tradable without restriction or further registration under the Securities Act, unless the shares are purchased by “affiliates” as that term is defined in Rule 144 under the Securities Act. Any shares purchased by an affiliate or held by our current stockholders, or issued by us in connection with the conversion or exercise of the preferred stock, warrants and options described above, may not be resold except pursuant to an effective registration statement or an exemption from registration, including the exemption under Rule 144 of the Securities Act described below. These restricted securities are eligible for public sale only if they are registered under the Securities Act or if they qualify for an exemption from registration under Rule 144 or Rule 701 under the Securities Act, which are summarized below.

Rule 144

In general, under Rule 144 as currently in effect, once we have been subject to public company reporting requirements for at least 90 days, a person who is not deemed to have been one of our affiliates for purposes of the Securities Act at any time during the 90 days preceding a sale and who has beneficially owned the shares proposed to be sold for at least six months, including the holding period of any prior owner other than our affiliates, is entitled to sell those shares without complying with the manner of sale, volume limitation or notice provisions of Rule 144, subject to compliance with the current public information requirements of Rule 144. If such a person has beneficially owned the shares proposed to be sold for at least one year, including the holding period of any prior owner other than our affiliates, then that person is entitled to sell those shares without complying with any of the requirements of Rule 144.

In general, under Rule 144 as currently in effect, our affiliates or persons selling shares on behalf of our affiliates are entitled to sell, within any three-month period, a number of shares that does not exceed the greater of:

● 1.0% of the then outstanding shares of our common stock; or

● the average weekly trading volume during the four calendar weeks preceding the date on which notice of the sale is filed on Form 144.

Such sales by affiliates under Rule 144 are also subject to restrictions relating to the manner of sale, notice requirements, and the availability of current public information about us, and to the holding period requirements set forth above if the shares are restricted securities.

Rule 701

Rule 701 of the Securities Act, as currently in effect, permits each of our employees, officers, directors, and consultants, to the extent such persons are not “affiliates” as that term is defined in Rule 144, who purchased or received our shares pursuant to a written compensatory plan or contract, to resell such shares in reliance upon Rule 144, but without compliance with the specific requirements regarding the availability of public information or holding periods thereunder. Rule 701 provides that affiliates who purchased or received shares pursuant to a written compensatory plan or contract are eligible to resell their Rule 701 shares under Rule 144 without complying with the holding period requirement of Rule 144.

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INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

Sections 78.7502 and 78.751 of the Nevada Revised Statutes authorize a court to award, or a corporation’s board of directors to grant, indemnity to directors and officers in terms sufficiently broad to permit indemnification, including reimbursement of expenses incurred, under certain circumstances for liabilities arising under the Securities Act. In addition, our Amended and Restated Bylaws provide that we have the authority to indemnify our directors and officers and may indemnify our employees and agents (other than officers and directors) against liabilities to the fullest extent permitted by Nevada law. We are also empowered under our bylaws to purchase insurance on behalf of any person whom we are required or permitted to indemnify.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.

DESCRIPTION OF SECURITIES THAT WE ARE OFFERING

We are offering Units in this offering at an assumed initial offering price of $                  per unit. Each Unit consists of one share of our common stock and one Warrant to purchase one share of our common stock at an exercise price equal to $                 , which is 100% of the assumed public offering price of the Units (each a “Warrant” and together, the “Warrants”). Our Units will not be certificated and the shares of our common stock and the Warrants part of such Units are immediately separable and will be issued separately in this offering. We are also registering the shares of common stock issuable upon exercise of the Warrants. These securities are being issued pursuant to an underwriting agreement between us and the underwriter. You should review the underwriting agreement and the form of Warrant, each filed as exhibits to the Registration Statement, of which this Prospectus is a part, for a complete description of the terms and conditions applicable to the Warrants.

As of August 7, 2023, we are authorized to issue 500,000,000 shares of common stock, par value $0.001 per share, of which 61,413,168 shares of common stock were issued and outstanding. We are also authorized to issue 337,500 shares of preferred stock, par value $0.001 per share, of which (a) 150,000 shares are designated Series A Preferred Stock, of which 149,892 shares of Series A Preferred Stock were issued and outstanding; and (b) 80,000 shares are designated Series B Preferred Stock of which none are issued or outstanding.

This description is intended as a summary and is qualified in its entirety by reference to our amended and restated articles of incorporation and amended and restated bylaws, which are filed, or incorporated by reference, as exhibits to the Registration Statement of which this Prospectus forms a part.

Common Stock

The holders of our common stock have equal ratable rights to dividends from funds legally available therefor, when, as and if declared by our board of directors. Holders of common stock are also entitled to share ratably in all of our assets available for distribution to holders of common stock upon liquidation, dissolution, or winding up of the affairs.

The holders of shares of our common stock do not have cumulative voting rights, which means that the holders of more than 50% of such outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose, and in such event, the holders of the remaining shares will not be able to elect any of our directors. The holders of 50% percent of the outstanding common stock constitute a quorum at any meeting of stockholders, and the vote by the holders of a majority of the outstanding shares or a majority of the stockholders at a meeting at which quorum exists are required to effect certain fundamental corporate changes, such as liquidation, merger or amendment of our articles of incorporation.

The authorized but unissued shares of our common stock are available for future issuance without stockholder approval. These additional shares may be used for a variety of corporate purposes, including future offerings to raise additional capital, corporate acquisitions, and employee benefit plans. The existence of authorized but unissued shares of common stock may enable our board of directors to issue shares of stock to persons friendly to existing management, which may deter or frustrate a takeover of us.

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Warrants

Overview. The following summary of certain terms and provisions of the Warrants offered hereby is not complete and is subject to, and qualified in its entirety by, the provisions of the warrant agent agreement between us and the Warrant Agent, and the form of Warrant, both of which are filed as exhibits to the Registration Statement of which this Prospectus is a part. Prospective investors should carefully review the terms and provisions set forth in the warrant agent agreement, including the annexes thereto, and form of Warrant.

The Warrants issued in this offering entitle the registered holder to purchase one share of our common stock at a price equal to $                  per share (based on the public offering price of $                  per Unit), subject to adjustment as discussed below, immediately following the issuance of such warrant and terminating at 5:00 p.m., New York City time, five years after the closing of this offering. As described herein, we have applied to list the Warrants on The Nasdaq Capital Market under the symbol “ATDSW”.

The exercise price and number of shares of common stock issuable upon exercise of the Warrants may be adjusted in certain circumstances, including in the event of a stock dividend or recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuances of common stock at prices below its exercise price.

Exercisability. The Warrants are exercisable at any time after their original issuance and at any time up to the date that is five (5) years after their original issuance. The Warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the Warrant Agent, with the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price, by certified or official bank check payable to us, for the number of Warrants being exercised. Under the terms of the Warrant Agreement, we must use our best efforts to maintain the effectiveness of the Registration Statement and current Prospectus relating to common stock issuable upon exercise of the Warrants until the expiration of the Warrants. If we fail to maintain the effectiveness of the Registration Statement and current Prospectus relating to the common stock issuable upon exercise of the Warrants, the holders of the Warrants shall have the right to exercise the Warrants solely via a cashless exercise feature provided for in the Warrants, until such time as there is an effective registration statement and current prospectus.

Exercise Limitation. A holder may not exercise any portion of a Warrant to the extent that the holder, together with its affiliates and any other person or entity acting as a group, would own more than 4.99% of the outstanding common stock after exercise, as such percentage ownership is determined in accordance with the terms of the Warrant, except that upon prior notice from the holder to us, the holder may waive such limitation up to a percentage not in excess of 9.99%.

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Exercise Price. The exercise price per whole share of common stock purchasable upon exercise of the Warrants is $                  per share (based on the public offering price of $                  per Unit) or 100% of the public offering price of the common stock. The exercise price is subject to appropriate adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting our common stock and also upon any distributions of assets, including cash, stock or other property to our stockholders.

Fractional Shares. No fractional shares of common stock will be issued upon exercise of the Warrants. If, upon exercise of the Warrant, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise, pay a cash adjustment in respect of such fraction in an amount equal to such fraction multiplied by the exercise price. If multiple Warrants are exercised by the holder at the same time, we shall pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the exercise price.

Transferability. Subject to applicable laws, the Warrants may be offered for sale, sold, transferred or assigned without our consent.

Exchange Listing. We have applied to list our Warrants on The Nasdaq Capital Market under the symbol “ATDSW”. No assurance can be given that our listing application will be approved. The approval of such listing on The Nasdaq Capital Market is a condition of closing this offering.

Warrant Agent; Global Certificate. The Warrants will be issued in registered form under a warrant agent agreement between the Warrant Agent and us. The warrants shall initially be represented only by one or more global warrants deposited with the Warrant Agent, as custodian on behalf of The Depository Trust Company (DTC) and registered in the name of Cede & Co., a nominee of DTC, or as otherwise directed by DTC.

Fundamental Transactions. In the event of a fundamental transaction, as described in the Warrants and generally including any reorganization, recapitalization or reclassification of our common stock, the sale, transfer or other disposition of all or substantially all of our properties or assets, our consolidation or merger with or into another person, the acquisition of more than 50% of our outstanding common stock, or any person or group becoming the beneficial owner of 50% of the voting power represented by our outstanding common stock, the holders of the Warrants will be entitled to receive the kind and amount of securities, cash or other property that the holders would have received had they exercised the warrants immediately prior to such fundamental transaction.

Rights as a Stockholder. The Warrant holders do not have the rights or privileges of holders of common stock or any voting rights until they exercise their Warrants and receive shares of common stock. After the issuance of shares of common stock upon exercise of the Warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by stockholders.

Governing Law. The Warrants and the warrant agent agreement are governed by New York law.

Underwriter’s Warrants. The Registration Statement of which this Prospectus is a part also registers for sale the Underwriter’s Warrants, as a portion of the underwriting compensation in connection with this offering. The Underwriter’s Warrants will be exercisable for a four-and-one-half-year period commencing 180 days from the effective date of the offering (i.e., following the effective date of the Registration Statement of which this Prospectus is a part) at a per share exercise price of $                  (125% of the assumed public offering price of the Units). Please see “Underwriting—Underwriter’s Warrants” for a description of the Underwriter’s Warrants we have agreed to issue to the underwriter in this offering, subject to the completion of the offering.

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Combinations with Interested Stockholders Provisions of the Nevada Revised Statutes

Pursuant to provisions in our articles of incorporation, we have elected not to be governed by certain Nevada statutes that may have the effect of discouraging corporate takeovers.

Nevada’s “combinations with interested stockholders” statutes (NRS 78.411 through 78.444, inclusive) prohibit specified types of business “combinations” between certain Nevada corporations and any person deemed to be an “interested stockholder” for two years after such person first becomes an “interested stockholder” unless the corporation’s board of directors approves the combination (or the transaction by which such person becomes an “interested stockholder”) in advance, or unless the combination is approved by the board of directors and sixty percent of the corporation’s voting power not beneficially owned by the interested stockholder, its affiliates and associates. Furthermore, in the absence of prior approval certain restrictions may apply even after such two-year period. For purposes of these statutes, an “interested stockholder” is any person who is (1) the beneficial owner, directly or indirectly, of ten percent or more of the voting power of the outstanding voting shares of the corporation, or (2) an affiliate or associate of the corporation and at any time within the two previous years was the beneficial owner, directly or indirectly, of ten percent or more of the voting power of the then-outstanding shares of the corporation. The definition of the term “combination” is sufficiently broad to cover most significant transactions between a corporation and an “interested stockholder.” Our articles of incorporation opt out of these provisions, as provided for in the NRS, and accordingly, the combinations with interested stockholders statutes are not applicable to us.

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is Madison Stock Transfer, Inc. Our transfer agent will also be the Warrant Agent.

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UNDERWRITING

Dawson is acting as the underwriter of the offering. We have entered into an underwriting agreement dated as of this Prospectus with the underwriter. Subject to the terms and conditions of the underwriting agreement, we have agreed to sell to the underwriter, and such underwriter has agreed to purchase from us, at the public offering price per Unit less the underwriting discounts set forth on the cover page of this Prospectus, the number of Units listed next to its name in the following table:

Underwriter	Number of Units
Dawson James Securities, Inc.
Total

The underwriting agreement provides that the obligation of the underwriter to purchase all of the Units being offered to the public is subject to specific conditions, including the absence of any material adverse change in our business or in the financial markets and the receipt of certain legal opinions, certificates, and letters from us, our counsel and the independent auditors. The underwriting agreement also provides that if the underwriter defaults, the offering may be terminated. Subject to the terms of the underwriting agreement, the underwriter will purchase all of the Units being offered to the public, other than those covered by the over-allotment option described below, if any of these Units are purchased. The underwriter is not involved in the sale of the Selling Stockholder Shares.

The underwriter is offering the Units, subject to prior sale, when, as and if issued to and accepted by it, subject to approval of legal matters by its counsel and other conditions specified in the underwriting agreement. The underwriter reserves the right to withdraw, cancel, or modify offers to the public and to reject orders in whole or in part.

Over-Allotment Option

We have granted to the underwriter an option, exercisable one or more times in whole or in part, not later than 45-days after the date of this Prospectus, to purchase from us up to (i)                   additional shares of common stock (15% of the shares of common stock included in the Units sold in this offering) at a price of $                  per share and/or (ii)                   additional warrants to purchase shares of common stock (15% of the warrants included in the Units sold in this offering) at a price of $                  per warrant, in each case, less the underwriting discounts and commissions set forth on the cover of this Prospectus in any combination thereof to cover over-allotments, if any. The underwriters may exercise this option solely to cover over-allotments, if any, made in connection with this offering. To the extent the option is exercised, and the conditions of the underwriting agreement are satisfied, we will be obligated to sell to the underwriter, and the underwriter will be obligated to purchase, these additional shares of common stock and/or warrants.

Discounts and Commissions; Expenses

The following table shows the public offering price, underwriting discount and proceeds, before expenses, to us. The information assumes either no exercise or full exercise by the underwriter of the over-allotment option.

	Per Unit	Total Without Over- Allotment Option	Total With Full Over- Allotment Option
Public offering price	$	$	$
Underwriting discount (8%)	$	$	$
Proceeds, before expenses, to us	$	$	$

The underwriter proposes to offer the Units offered by us to the public at the public offering price of per $                  per Unit, set forth on the cover of this Prospectus. In addition, the underwriter may offer some of the Units to other securities dealers at such price less a concession of $                    per Unit. After the initial offering, the public offering price and concession to dealers may be changed.

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We have also agreed to reimburse the underwriter for reasonable out-of-pocket expenses not to exceed $150,000 in the aggregate, plus payment of up to $25,000 for “blue sky” legal fees and expenses. We estimate that total expenses payable by us in connection with this offering, other than the underwriting discount and corporate finance fee, will be approximately $                    .

Discretionary Accounts

The underwriter does not intend to confirm sales of the Units offered hereby to any accounts over which it has discretionary authority.

Indemnification

We have agreed to indemnify the underwriter against specified liabilities, including liabilities under the Securities Act, and to contribute to payments the underwriter may be required to make in respect thereof.

Lock-Up Agreements

Our directors and executive officers, as of the effective date of the Registration Statement of which this Prospectus is a part, have agreed, subject to limited exceptions, for a period of six months after the closing of this offering, not to offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of, directly or indirectly any shares of our common stock or any securities convertible into or exchangeable for our common stock either owned as of the date of the underwriting agreement or thereafter acquired without the prior written consent of the underwriter.

We have agreed that for a period of six months after the closing of this offering that we will not, without the prior written consent of the representative of the underwriters, which may be withheld or delayed in the representative’s sole discretion: (a) offer, sell, or otherwise transfer or dispose of, directly or indirectly, our common stock or any securities convertible into or exercisable or exchangeable for common stock; or (b) file with the SEC a registration statement under the Securities Act relating to, any shares of our common stock or any securities convertible into or exercisable or exchangeable for common stock.

 Pricing of this Offering

Prior to this offering, there has not been an active market for our common stock and there has been no public market for our warrants. The public offering price for our Units will be determined through negotiations between us and the underwriter. Among the factors to be considered in these negotiations will be prevailing market conditions, our financial information, market valuations of other companies that we and the underwriter believe to be comparable to us, estimates of our business potential, the present state of our development and other factors deemed relevant.

We offer no assurances that the public offering price of our Units will correspond to the price at which our common stock will trade in the public market subsequent to this offering or that an active trading market for our common stock and warrants will develop and continue after this offering.

Underwriter’s Warrants

We have agreed to issue to the underwriter (or its permitted assignees) warrants to purchase up to a total of                   shares of common stock (8% of the shares of common stock included in the Units, excluding the over-allotment, if any). The Underwriter’s Warrants will be exercisable at any time, and from time to time, in whole or in part, commencing from the closing of the offering and expiring five (5) years from the commencement of sales in the offering and will have a cashless exercise provision. The Underwriter’s Warrants are not exercisable or convertible for more than five years from the commencement of sales of the public offering. The Underwriter’s Warrants will also provide for customary anti-dilution provisions, a one-time demand registration right and unlimited piggyback registration rights with respect to the registration of the shares underlying the Warrants for a period of five years from commencement of sales of this offering. The Warrants are not redeemable by us. The Underwriter’s Warrants and the shares of common stock issuable upon exercise of the Underwriter’s Warrants have been included on the registration statement of which this prospectus forms a part.

The Underwriter’s Warrants and the underlying shares are deemed to be compensation by FINRA, and therefore will be subject to a 180-day lock-up period pursuant to FINRA Rule 5110(e)(1). In accordance with FINRA Rule 5110(e)(1), neither the Underwriter’s Warrants nor any of our common stock issued upon exercise of the Underwriter’s Warrants may be sold, transferred, assigned, pledged or hypothecated, or be the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of such securities by any person, for a period of 180 days immediately following commencement of sale of this offering subject to certain exceptions permitted by FINRA Rule 5110(e)(2).

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Right of First Refusal and Certain Post-Offering Investments

Subject to the closing of this offering and certain conditions set forth in the underwriting agreement, for a period of seven months after the closing of this offering, the underwriter shall have a right of first refusal to act as lead managing underwriter and book-runner and/or placement agent for any and all future public or private equity, equity-linked or debt (excluding commercial bank debt) offerings undertaken during such period by us, or any of our successors or subsidiaries, on terms customary to each of the underwriter. The underwriter, in conjunction with us, shall have the sole right to determine whether or not any other broker-dealer shall have the right to participate in any such offering and the economic terms of any such participation.

For a period of seven months after the closing of this offering, the underwriter shall be entitled to the compensation discussed above with respect to any public or private offering or other financing or capital-raising transaction of any kind to the extent that financing or capital is provided by investors that were contacted by Dawson James Securities, Inc. in connection with this offering during the term of its engagement for this offering or seven months following the completion thereof.

Trading; The Nasdaq Capital Market Listing

Our common stock is presently quoted on the OTC Pink under the symbol “ATDS.” We have applied to apply to list our common stock and the Warrants offered in the offering on The Nasdaq Capital Market under the symbols “ATDS” and “ATDSW”, respectively. No assurance can be given that our listing application will be approved by The Nasdaq Capital Market. The approval of such listing on The Nasdaq Capital Market is a condition of closing this offering.

Price Stabilization, Short Positions and Penalty Bids

In connection with this offering the underwriter may engage in stabilizing transactions, over-allotment transactions, syndicate covering transactions and penalty bids in accordance with Regulation M under the Exchange Act:

● stabilizing transactions permit bids to purchase securities so long as the stabilizing bids do not exceed a specified maximum.

● over-allotment involves sales by the underwriter of securities in excess of the number of securities the underwriter is obligated to purchase, which creates a syndicate short position. The short position may be either a covered short position or a naked short position. In a covered short position, the number of securities over-allotted by the underwriter is not greater than the number of securities that they may purchase in the over-allotment option. In a naked short position, the number of securities involved is greater than the number of securities in the over-allotment option. The underwriter may close out any covered short position by either exercising its over-allotment option and/or purchasing securities in the open market.

● syndicate covering transactions involve purchases of the securities in the open market after the distribution has been completed in order to cover syndicate short positions. In determining the source of securities to close out the short position, the underwriter will consider, among other things, the price of securities available for purchase in the open market as compared to the price at which they may purchase securities through the over-allotment option. A naked short position occurs if the underwriter sells more securities than could be covered by the over-allotment option. This position can only be closed out by buying securities in the open market. A naked short position is more likely to be created if the underwriter is concerned that there could be downward pressure on the price of the securities in the open market after pricing that could adversely affect investors who purchase in this offering.

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●  penalty bids permit the underwriter to reclaim a selling concession from a syndicate member when securities originally sold by the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.

These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our securities or preventing or retarding a decline in the market price of the securities. As a result, the price of our shares of common stock and warrants may be higher than the price that might otherwise exist in the open market. These transactions may be discontinued at any time.

Neither we nor the underwriter make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of our shares of common stock and warrants. In addition, neither we nor the underwriter make any representation that the underwriter will engage in these transactions or that any transaction, if commenced, will not be discontinued without notice.

Electronic Distribution

This Prospectus in electronic format may be made available on websites or through other online services maintained by the underwriter, or by their affiliates. Other than this Prospectus in electronic format, the information on the underwriter’s website and any information contained in any other websites maintained by the underwriter is not part of this Prospectus or the Registration Statement of which this Prospectus forms a part, has not been approved and/or endorsed by us or the underwriter in its capacity as underwriter, and should not be relied upon by investors.

Other

The underwriter and certain of its affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. From time to time, the underwriter and/or its affiliates have provided, and may in the future provide, various investment banking and other financial services for us for which services it has received and, may in the future receive, customary fees. Except for the services provided in connection with this offering and other than as described below, the underwriter has not provided any investment banking or other financial services during the 180-day period preceding the date of this Prospectus.

In the ordinary course of their various business activities, the underwriter and certain of its affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investment and securities activities may involve securities and/or instruments of the issuer or its affiliates. If the underwriter or its affiliates have a lending relationship with us, they routinely hedge their credit exposure to us consistent with their customary risk management policies. The underwriter and its affiliates may hedge such exposure by entering into transactions which consist of either the purchase of credit default swaps or the creation of short positions in our securities or the securities of our affiliates, including potentially the shares of common stock offered hereby. Any such credit default swaps or short positions could adversely affect future trading prices of the shares of common stock offered hereby. The underwriter and certain of its affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments. 

Offers Outside the United States

Other than in the United States, no action has been taken by us or the underwriter that would permit a public offering of the securities offered by this Prospectus in any jurisdiction where action for that purpose is required. The securities offered by this Prospectus may not be offered or sold, directly or indirectly, nor may this Prospectus or any other offering material or advertisements in connection with the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this Prospectus comes are advised to inform themselves about and to observe any restrictions relating to the offering and the distribution of this Prospectus. This Prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities offered by this Prospectus in any jurisdiction in which such an offer or a solicitation is unlawful.

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LEGAL MATTERS 

The validity of the securities offered hereby will be passed upon for us by Flangas Law Group. Certain legal matters in connection with this offering will be passed upon for us by Pryor Cashman LLP, New York, New York. ArentFox Schiff LLP, Washington, DC, is acting as counsel for the underwriter in this offering.

EXPERTS

Our audited consolidated financial statements as of December 31, 2022 and 2021 and for the years then ended appearing in this Prospectus have been so included in reliance on the reports of TPS Thayer, LLC, an independent public accounting firm, appearing elsewhere herein, given on the authority of said firm as experts in auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

We are subject to the information requirements of the Exchange Act and, in accordance therewith, file annual, quarterly, and special reports, proxy statements and other information with the SEC. These documents also may be accessed through the SEC’s electronic data gathering, analysis and retrieval system, or EDGAR, via electronic means, including the SEC’s home page on the Internet (www.sec.gov). On our website, as listed under the ‘Investor Relations’ link – https://data443.com/investor-relations/ - you may find summaries of all our filings with the SEC. However, authoritatively the SEC website continues to be the primary source for all our information.

We have filed with the SEC a Registration Statement on Form S-1 under the Securities Act, with respect to the securities being offered hereby. This Prospectus, which constitutes a part of the Registration Statement, does not contain all the information set forth in the Registration Statement or the exhibits and schedules filed with the Registration Statement. For further information about us and the securities offered hereby, we refer you to the Registration Statement and the exhibits filed with the Registration Statement. Statements contained in this Prospectus regarding the contents of any contract or any other document that is filed as an exhibit to the Registration Statement are not necessarily complete, and each such statement is qualified in all respects by reference to the full text of such contract or other document filed as an exhibit to the Registration Statement.

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DATA443 RISK MITIGATION, INC.

Consolidated Financial Statements

Contents

INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS:	Page
Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022 (unaudited)	F-2
Consolidated Statements of Operations for the three months and six months ended June 30, 2023 and 2022 (unaudited)	F-3
Consolidated Statements of Stockholders’ Deficit for the six months ended June 30, 2023 and 2022 (unaudited)	F-4
Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022 (unaudited)	F-7
Notes to the Unaudited Consolidated Financial Statements	F-8

AUDITED CONSOLIDATED FINANCIAL STATEMENTS:	Page
Report of Independent Registered Public Accounting Firm (PCAOB ID: 6706)	F-20
Consolidated Balance Sheet as of December 31, 2022 and 2021	F-21
Consolidated Statement of Operations for the Year Ended December 31, 2022 and 2021	F-22
Consolidated Statement of Changes in Stockholders’ Deficit for the Years Ended December 31, 2022 and 2021	F-23
Consolidated Statement of Cash Flows for the Years Ended December 31, 2022 and 2021	F-24
Notes to Consolidated Financial Statements	F-25

F-1

DATA443 RISK MITIGATION, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	June 30,			December 31,
	2023			2022
Assets
Current assets
Cash	$	15,904		$	1,712
Accounts receivable, net		3,147			31,978
Prepaid expense and other current assets		273,159			91,204
Total current assets		292,210			124,894
Property and equipment, net		503,242			427,031
Operating lease right-of-use assets, net		249,796			405,148
Advance payment for acquisition		2,726,188			2,726,188
Intellectual property, net of accumulated amortization		204,997			454,331
Deposits		45,673			45,673
Total Assets	$	4,022,106		$	4,183,265
Liabilities and Stockholders’ Deficit
Current Liabilities
Accounts payable and accrued liabilities		2,221,000			1,031,931
Deferred revenue		1,814,620			1,704,249
Interest payable		616,593			478,712
Notes payable, net of unamortized discount		2,267,658			918,785
Convertible notes payable, net of unamortized discount		2,721,171			4,134,155
Due to a related party		320,488			112,062
Operating lease liability		338,818			213,831
Finance lease liability		-			10,341
Total Current Liabilities		10,300,348			8,604,066
Notes payable, net of unamortized discount - non-current		1,605,855			3,104,573
Convertible notes payable, net of unamortized discount - non-current		97,946			97,946
Deferred revenues - non-current		515,000			788,902
Operating lease liability - non-current		-			354,631
Total Liabilities		12,519,149			12,950,118
Commitments and Contingencies
Stockholders’ Deficit
Series A Preferred Stock, 150,000 shares designated; $0.001 par value; 149,892 shares issued and outstanding, respectively		150			150
Series B Preferred Stock, 80,000 designated; $10 par value; 0 shares issued and outstanding		-			-
Common stock: 500,000,000 authorized; $0.001 par value 59,363,988 and 2,615,737 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively		59,360			2,611
Additional paid in capital		43,503,928			42,642,514
Accumulated deficit		(52,060,481	)		(51,412,128	)
Total Stockholders’ Deficit		(8,497,043	)		(8,766,853	)
Total Liabilities and Stockholders’ Deficit	$	4,022,106		$	4,183,265

See the accompanying notes, which are an integral part of these unaudited condensed consolidated financial statements.

F-2

DATA443 RISK MITIGATION, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
Revenue	$	619,040		$	750,989		$	1,998,846		$	1,363,505
Cost of revenue		244,881			78,593			453,863			278,272
Gross profit		374,159			672,396			1,544,983			1,085,233
Operating expenses
General and administrative		1,635,499			2,116,220			3,036,308			3,089,782
Sales and marketing		64,379			59,635			96,553			180,030
Total operating expenses		1,699,878			2,175,855			3,132,861			3,269,812
Loss from operations		(1,325,719	)		(1,503,459	)		(1,587,878	)		(2,184,579	)
Other income (expense)
Interest expense		(3,488,822	)		(942,753	)		(3,964,556	)		(2,037,069	)
Gain (loss) on settlement of debt		4,904,081			-			4,904,081			-
Change in fair value of derivative liability		-			-			-			(57,883	)
Total other expense		1,415,259			(942,753	)		939,525			(2,094,952	)
Income/(loss) before income taxes		89,540			(2,446,212	)		(648,353	)		(4,279,531	)
Provision for income taxes		-			-			-			-
Net income/(loss)	$	89,540		$	(2,446,212	)	$	(648,353	)	$	(4,279,531	)
Dividend on Series B Preferred Stock		-			-			-			(104,631	)
Net income/(loss) attributable to common stockholders	$	89,540		$	(2,446,212	)	$	(648,353	)	$	(4,384,162	)
Basic and diluted income/(loss) per Common Share	$	0.00		$	(25.10	)	$	(0.04	)	$	(9.62	)
Basic and diluted weighted average number of common shares outstanding		28,510,444			97,477			16,334,701			444,824

See the accompanying notes, which are an integral part of these unaudited condensed consolidated financial statements.

F-3

DATA443 RISK MITIGATION, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

(UNAUDITED)

Six Months Ended June 30, 2023

	Series A								Additional						Total
	Preferred Stock				Common stock				Paid in			Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Capital			Deficit			Deficit
Balance - December 31, 2022		149,892	$	150		2,615,737	$	2,611	$	42,642,514		$	(51,412,128	)	$	(8,766,853	)
Subscription of stock for cash		-		-		-		-		20,000			-			20,000
Common stock issued for conversion of debt		-		-		10,807,823		10,808		321,784			-			332,592
Common stock issued for adjustment to PPM investors		-		-		45,619,000		45,619		(45,619	)		-			-
Stock-based compensation		-		-		321,428		322		565,249			-			565,571
Net loss		-		-		-		-		-			(648,353	)		(648,353	)
Balance – June 30, 2023		149,892	$	150		59,363,988	$	59,360	$	43,503,928		$	(52,060,481	)	$	(8,497,043	)

Three Months Ended June 30, 2023

	Series A								Additional						Total
	Preferred Stock				Common stock				Paid in			Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Capital			Deficit			Deficit
Balance - March 31, 2023		149,892	$	150		6,746,764	$	6,742	$	42,982,226		$	(52,150,021	)	$	(9,160,903	)
Subscription of stock for cash		-		-		-		-		20,000			-			20,000
Common stock issued for conversion of debt		-		-		6,676,796		6,677		95,926			-			102,603
Common stock issued for adjustment to PPM investors		-		-		45,619,000		45,619		(45,619	)		-			-
Stock-based compensation		-		-		321,428		322		451,395			-			451,717
Net income		-		-		-		-		-			89,540			89,540
Balance – June 30, 2023		149,892	$	150		59,363,988	$	59,360	$	43,503,928		$	(52,060,481	)	$	(8,497,043	)

F-4

Six Months Ended June 30, 2022

	Series A									Additional						Total
	Preferred Stock					Common Stock				Paid in			Accumulated			Stockholders’
	Shares			Amount		Shares		Amount		Capital			Deficit			Deficit
Balance - December 31, 2021		150,000		$	150		122,044	$	122	$	37,810,380		$	(42,033,887	)	$	(4,223,235	)
Cumulative-effect adjustment from adoption of ASU 2020-06		-			-		-		-		(517,500	)		439,857			(77,643	)
Common stock issued for acquisition of Centurion assets		-			-		380,952		381		2,475,807			-			2,476,188
Common stock issued for conversion of preferred stock		(108	)		-		108,000		108		(108	)					-
Common stock issued for conversion of debt		-			-		165,273		165		29,160			-			29,325
Common stock issued in conjunction with convertible notes		-			-		18,170		18		140,918			-			140,936
Common stock issued for exercised cashless warrant		-			-		6,631		7		(7	)		-			-
Common stock issued for service		-			-		153,491		153		844,048			-			844,201
Resolution of derivative liability upon exercise of warrant		-			-				-		57,883			-			57,883
Warrant issued in conjunction with debts		-			-				-		47,628			-			47,628
Stock-based compensation		-			-				-		(45,511	)		-			(45,511	)
Net loss		-			-				-		-			(4,384,162	)		(4,384,162	)
Balance - June 30, 2022		149,892		$	150		954,561	$	954	$	40,842,698		$	(45,978,192	)	$	(5,134,390	)

See the accompanying notes, which are an integral part of these unaudited condensed consolidated financial statements.

F-5

Three months ended June 30, 2022

	Series A									Additional						Total
	Preferred Stock					Common Stock				Paid in			Accumulated			Stockholders’
	Shares			Amount		Shares		Amount		Capital			Deficit			Deficit
Balance - March 31, 2022		150,000		$	150		148,367	$	148	$	37,353,357		$	(43,531,980	)	$	(6,178,325	)
Common stock issued for acquisition of Centurion assets		-			-		380,952		381		2,475,807			-			2,476,188
Common stock issued for conversion of preferred stock		(108	)		-		108,000		108		(108	)		-			-
Common stock issued for conversion of debt		-			-		151,200		151		1,361			-			1,512
Common stock issued for service		-			-		153,491		153		844,048			-			844,201
Common stock issued in conjunction with convertible notes		-			-		12,551		13		78,431			-			78,444
Warrant issued in conjunction with debts		-			-		-		-		47,628			-			47,628
Stock-based compensation		-			-		-		-		42,174			-			42,174
Adjustment of reverse stock split		-			-									-			-
Net loss		-			-									(2,446,212	)		(2,446,212	)
Balance - June 30, 2022		149,892			150		954,561		954		40,842,698			(45,978,192	)		(5,134,390	)

See the accompanying notes, which are an integral part of these unaudited condensed consolidated financial statements.

F-6

DATA443 RISK MITIGATION, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Six Months Ended
	June 30,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(648,353	)	$	(4,279,531	)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in fair value of derivative liability		-			57,883
Gain on settlement of debt		(4,904,081	)		-
Stock-based compensation expense		565,571			798,690
Depreciation and amortization		340,550			540,714
Amortization of debt discount		625,783			1,549,752
Lease liability amortization		(74,292	)		(14,958	)
Changes in operating assets and liabilities:
Accounts receivable		28,831			(209,938	)
Prepaid expenses and other assets		(181,955	)		42,852
Accounts payable and accrued liabilities		1,189,069			308,642
Deferred revenue		(163,531	)		973,992
Accrued interest		3,398,326			105,577
Deposit		-			10,414
Net Cash provided by/(used in) Operating Activities		175,918			(115,911	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Advance payment for acquisition		-			(250,000	)
Purchase of property and equipment		(167,427	)		(96,960	)
Net Cash used in Investing Activities		(167,427	)		(346,960	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Bank overdraft		-			3,781
Proceeds from issuance of convertible notes payable		564,070			1,207,800
Repayment of convertible notes payable		(146,663	)		(758,346	)
Proceeds from stock subscription		20,000			-
Proceeds from issuance of Series B Preferred Stock		-			75,000
Redemption of Series B Preferred Stock		-			(487,730	)
Finance lease payments		(10,341	)		(41,195	)
Proceeds from issuance of notes payable		417,427			1,186,453
Repayment of notes payable		(1,047,218	)		(1,957,492	)
Proceeds from related parties		229,426			116,238
Repayment to related parties		(21,000	)		(86,571	)
Net Cash provided by/(used in) Financing Activities		5,701			(742,062	)
Net change in cash		14,192			(1,204,933	)
Cash, beginning of period		1,712			1,204,933
Cash, end of period	$	15,904		$	-
Supplemental cash flow information
Cash paid for interest	$	408,160		$	344,867
Non-cash Investing and Financing transactions:
Common stock issued for exercised cashless warrant	$	-		$	7
Settlement of convertible notes payable through issuance of common stock	$	332,592		$	27,812
Common stock issued in conjunction with convertible note	$	-		$	62,493
Resolution of derivative liability upon exercise of warrant	$	-		$	57,883
Settlement of convertible notes payable through issuance of preferred common stock	$	-		$	65,600
Note payable issued for settlement of License fee payable	$	-		$	77,643

See the accompanying notes, which are an integral part of these unaudited condensed consolidated financial statements.

F-7

DATA443 RISK MITIGATION, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Data443 Risk Mitigation, Inc. (the “Company”) was incorporated as a Nevada corporation on May 4, 1998. On October 15, 2019, the Company changed its name from LandStar, Inc. to Data443 Risk Mitigation, Inc. within the state of Nevada.

The Company delivers solutions and capabilities that businesses can use in conjunction with their use of established cloud vendors such as Microsoft® Azure, Google® Cloud Platform (GCP) and Amazon® Web Services (AWS), as well as with on-premises databases and database applications with virtualization platforms, such as those hosted or configured using VMWare®, Citrix® and Oracle® clouds/products).

Advance Payment for Acquisition

On January 19, 2022, we entered into an Asset Purchase Agreement with Centurion Holdings I, LLC (“Centurion”) to acquire the intellectual property rights and certain assets collectively known as Centurion SmartShield Home and SmartShield Enterprise, patented technology that protects and recovers devices in the event of ransomware attacks. The total purchase price of $3,400,000 consists of: (i) a $250,000 cash payment at closing; (ii) a $2,900,000 promissory note issued by Data443 in favor of Centurion (“Centurion Note”); and (iii) $250,000 in the form of a contingent payment. The Centurion Note matures January 19, 2027 but provides that Data443’s repayment obligation would accelerate on the occurrence of certain events. One of those events was a financing event that did not occur within the originally anticipated timeframe. If that event had occurred, then Data443’s repayment obligation would have been to repay the balance of the outstanding principal and interest as follows: (i) $500,000 of the then-outstanding amount due in cash; and (ii) the remaining balance, at Data443’s option, in Common stock or a combination of Common stock and cash, with the number of shares of Common stock to be determined according to a specified formula. In April 2022, Data443 and Centurion agreed that, even though the trigger for this acceleration event did not occur, Data443 would issue shares of Common stock to Centurion in an amount then-equivalent to $2,400,000, as partial repayment of the obligation due under the Centurion Note. The number of shares of Common stock Data443 issued to Centurion on April 20, 2022, was 380,952. Because Data443 still has some repayment obligations to fulfill under the Centurion Note, as of the filing date of these financial statements, the acquisition that is the subject of the Centurion Asset Purchase Agreement is still not completed, and is expected to be completed in 2023.

Basis of Presentation

These unaudited condensed consolidated financial statements have been prepared in accordance with rules and regulations of the Securities and Exchange Commission (“SEC”) and generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, the unaudited condensed consolidated financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, we have included all adjustments considered necessary for a fair presentation and such adjustments are of a normal recurring nature. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2022 and notes thereto and other pertinent information contained in our Form 10-K as filed with the SEC on February 24, 2023. The results of operations for the six months ended June 30, 2023, are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2023.

Basis of Consolidation

The accompanying unaudited consolidated financial statements as of June 30, 2023 include our accounts and those of our wholly-owned subsidiary, Data 443 Risk Mitigation, Inc., a North Carolina operating company. These unaudited consolidated financial statements have been prepared on the accrual basis of accounting in accordance with US GAAP. All inter company balances and transactions have been eliminated in consolidation.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on the net earnings (loss) or and financial position.

F-8

Accounts Receivable

Trade receivables are generally recorded at the invoice amount mostly for a one-year period, net of an allowance for bad debt. For the three months ended June 30, 2023, and June 30, 2022, we recorded bad debt expense of $0 and $0, respectively

Stock-Based Compensation

Employees – We account for stock-based compensation under the fair value method which requires all such compensation to employees, including the grant of employee stock options, to be calculated based on its fair value at the measurement date (generally the grant date), and recognized in the consolidated statement of operations over the requisite service period.

Nonemployees - Under the requirements of the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Stock-Based Payment Accounting (“ASU 2018-07”), we account for stock-based compensation to non-employees under the fair value method which requires all such compensation to be calculated based on the fair value at the measurement date (generally the grant date), and recognized in the statement of operations over the requisite service period.

We recorded approximately $565,571 in stock-based compensation expense for the six months ended June 30, 2023, compared to $798,690 in stock-based compensation expense for the six months ended June 30, 2022. Determining the appropriate fair value model and the related assumptions requires judgment. During the three months ended June 30, 2023, the fair value of each option grant was estimated using a Black-Scholes option-pricing model. The expected volatility represents the historical volatility of our publicly traded common stock. Due to limited historical data, we calculate the expected life based on the mid-point between the vesting date and the contractual term which is in accordance with the simplified method. The expected term for options granted to nonemployees is the contractual life. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of stock options. We have not paid and do not anticipate paying cash dividends on our shares of Common stock; therefore, the expected dividend yield is assumed to be zero.

Contingencies

We account for contingent liabilities in accordance with Accounting Standards Codification (“ASC”) Topic 450, Contingencies. This standard requires management to assess potential contingent liabilities that may exist as of the date of the financial statements to determine the probability and amount of loss that may have occurred, which inherently involves an exercise of judgment. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in our financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed in our financial statements. For loss contingencies considered remote, we generally would neither accrue any estimated liability nor disclose the nature of the contingent liability in our financial statements. Management has assessed potential contingent liabilities as of June 30, 2023, and based on that assessment, there are no probable or possible loss contingencies requiring accrual or establishment of a reserve.

Basic and Diluted Net Loss Per Common Share

Basic earnings per share (“EPS”) is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method and as if converted method. Dilutive potential common shares include outstanding stock options, warrant and convertible notes.

For the six months ended June 30, 2023 and 2022, respectively, the following common stock equivalents were excluded from the computation of diluted net loss per share as the result of the computation was anti-dilutive:

	Six Months Ended
	June 30,
	2023		2022
	(Shares)		(Shares)
Series A Preferred Stock		149,892,000		149,892,000
Stock options		2,838,067		1,029
Warrants		158,441		158,441
Total		152,888,508		150,051,470

F-9

Recently Adopted Accounting Guidance

In August 2020, the FASB issued ASU 2020-06, ASC Subtopic 470-20 “Debt—Debt with Conversion and Other Options” and ASC subtopic 815-40 “Hedging—Contracts in Entity’s Own Equity” (“Standard”). The Standard reduced the number of accounting models available for convertible debt instruments and convertible preferred stock. Pursuant to the Standard, convertible debt instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting; and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid in capital. The Standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Due to adoption of this Standard on January 1, 2022, we recognized a cumulative effect adjustment to increase the opening retained earnings as of January 1, 2022 by $439,857.

To compute the transition adjustment for a convertible instrument under both the modified retrospective and full retrospective methods, entities need to recompute the basis of that instrument at transition (i.e., the beginning of year of adoption for the modified retrospective method or the beginning of earliest year presented for the full retrospective method) as if the conversion option had not been separated. The Company use the modified retrospective method to adjust.

Recently Issued Accounting Pronouncements

The Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its consolidated financial statements.

NOTE 2: LIQUIDITY AND GOING CONCERN

The accompanying financial statements have been prepared assuming that we will continue as a going concern. As reflected in the financial statements, we have incurred significant current period losses of $648,353 for the six months ended June 30, 2023 and we have negative working capital of $10,008,138 and an accumulated deficit $52,060,481 as of June 30, 2023. We have relied upon loans and issuances of our equity to fund our operations. These conditions, among others, raise substantial doubt about our ability to continue as a going concern. Management’s plans regarding these matters, include raising additional debt or equity financing, the terms of which might not be acceptable. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

NOTE 3: PROPERTY AND EQUIPMENT

The following table summarizes the components of our property and equipment as of the dates presented:

	June 30,			December 31,
	2023			2022
Furniture and Fixtures	$	6,103		$	6,103
Computer Equipment		1,035,097			867,670
		1,041,200			873,773
Accumulated depreciation		(537,958	)		(446,742	)
Property and equipment, net of accumulated depreciation	$	503,242		$	427,031

Depreciation expense for the six months ended June 30, 2023 and 2022, was $91,216 and $80,170, respectively.

During the six months ended June 30, 2023 and 2022, we purchased property and equipment of $167,427 and $96,960, respectively.

F-10

NOTE 4: INTELLECTUAL PROPERTY

The following table summarizes the components of our intellectual property as of the dates presented:

	June 30, 2023			December 31, 2022
Intellectual property:
WordPress® GDPR rights	$	46,800		$	46,800
ARALOC®		1,850,000			1,850,000
ArcMail®		1,445,000			1,445,000
DataExpress®		1,388,051			1,388,051
FileFacets®		135,000			135,000
IntellyWP™		60,000			60,000
Resilient Network Systems		305,000			305,000
		5,229,851			5,229,851
Accumulated amortization		(5,024,854	)		(4,775,520	)
Intellectual property, net of accumulated amortization	$	204,997		$	454,331

We recognized amortization expense of $249,334 and $460,544 for the six months ended June 30, 2023, and 2022, respectively.

Based on the carrying value of definite-lived intangible assets as of June 30, 2023, we estimate our amortization expense for the next five years will be as follows:

	Amortization
	Expense
Year ended December 31,
2023 (excluding the six months ended June 30, 2023)	$	162,247
2024		27,000
2025		15,750
Thereafter		-
	$	204,997

NOTE 5: ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

The following table summarizes the components of our accounts payable and accrued liabilities as of the dates presented:

	June 30,		December 31,
	2023		2022
Accounts payable	$	1,370,015	$	427,553
Credit cards		72,374		50,302
Accrued liabilities		778,611		554,076
	$	2,221,000	$	1,031,931

NOTE 6: DEFERRED REVENUE

For the six months ended June 30, 2023 and as of December 31, 2022, changes in deferred revenue were as follows:

	June 30,			December 31,
	2023			2022
Balance, beginning of period	$	2,493,151		$	1,608,596
Deferral of revenue		1,186,955			3,511,678
Recognition of deferred revenue		(1,350,486	)		(2,627,123	)
Balance, end of period	$	2,329,620		$	2,493,151

As of June 30, 2023 and December 31, 2022, deferred revenue is classified as follows:

	June 30,		December 31,
	2023		2022
Current	$	1,814,620	$	1,704,249
Non-current		515,000		788,902
	$	2,329,620	$	2,493,151

NOTE 7: LEASES

Operating lease

We have two noncancelable operating leases for office facilities, one that we entered into January 2019 and that expires January 10, 2024 and another that we entered into in April 2022 and that expires April 30, 2024. Each operating lease has a renewal option and a rent escalation clause. In the summer of 2022, we relocated to the expanded square footage of the premises that are the subject of the April 2022 lease to support our growing operations, and entered into a commission agreement with the landlord of the building to sublet the premises that are the subject of the January 2019 lease.

We recognized total lease expense of approximately $146,994 and $83,339 for the six months ended June 30, 2023 and 2022, respectively, primarily related to operating lease costs paid to lessors from operating cash flows. As of June 30, 2023 and December 31, 2022, we recorded a security deposit of $33,467.

At June 30, 2023, future minimum lease payments under operating leases that have initial noncancelable lease terms in excess of one year were as follows:

	Total
Year Ended December 31,
2023 (excluding the six months ended June 30, 2023)		242,379
2024		121,406
Thereafter		-
		363,785
Less: Imputed interest		(24,967	)
Operating lease liabilities		338,818
Operating lease liability - current		338,818
Operating lease liability - non-current	$	-

The following summarizes other supplemental information about our operating leases as of June 30, 2023:

Weighted average discount rate	8	%
Weighted average remaining lease term (years)	.70

Financing leases

We do not have any financing leases as June 30, 2023 and $10,341 as of December 31, 2022.

F-11

NOTE 8: CONVERTIBLE NOTES PAYABLE

Convertible notes payable consists of the following:

	June 30,			December 31,
	2023			2022
Convertible Notes - Issued in fiscal year 2020		97,946			97,946
Convertible Notes - Issued in fiscal year 2021		414,690			600,400
Convertible Notes - Issued in fiscal year 2022		1,891,083			3,710,440
Convertible Notes - Issued in fiscal year 2023		534,454			-
		2,938,173			4,408,786
Less debt discount and debt issuance cost		(119,056	)		(176,685	)
		2,819,117			4,232,101
Less current portion of convertible notes payable		2,721,171			4,134,155
Long-term convertible notes payable	$	97,946		$	97,946

During the six months ended June 30, 2023 and the year ended December 31, 2022, we recognized interest expense of $3,964,556 and $374,938, respectively, and amortization of debt discount expense of $145,837 and $636,010, respectively. During the six months ended June 30, 2022 we recognized interest expense of $346,348 and amortization of debt discount, included in interest expense of $625,783.

Conversion

During the six months ended June 30, 2023, we converted notes with principal amounts and accrued interest of $332,592 into 10,807,823 shares of common stock.

F-12

Convertible notes payable consists of the following:

Promissory Notes - Issued in fiscal year 2020

In 2020, we issued convertible promissory notes with principal amounts totaling $100,000. The 2020 Promissory Notes have the following key provisions:

● Terms 60 months.

● Annual interest rates of 5%.

● Conversion price fixed at $0.01.

Promissory Notes - Issued in fiscal year 2021

In 2021, we issued convertible promissory notes with principal amounts totaling $1,696,999, which resulted in cash proceeds of $1,482,000 after financing fees of $214,999 were deducted. The 2021 Convertible Notes have the following key provisions:

● Terms ranging from 90 days to 12 months.

● Annual interest rates of 5% to 12%.

● Convertible at the option of the holders after varying dates.

● Conversion price based on a formula corresponding to a discount (39% discount) off the average closing price or lowest trading price of our Common stock for the 20 prior trading days including the day on which a notice of conversion is received.

● The Mast Hill Fund, LLC convertible promissory note matured on October 19, 2022. The default annual interest rate of 16% becomes the effective interest rate on the past due principal and interest. As of June 30, 2023 the note had a principle balance of $414,690 and accrued interest of $39,822. The note is currently in default.

The 2021 Convertible Notes also were associated with the following:

● The issuance of 1,414 shares of Common stock valued at $133,663.

● The issuance of 117,992 warrants to purchase shares of Common stock with an exercise price a range from $7.44 to 36.00. The term in which the warrants can be exercised is 5 years from issue date. (Note 12)

During the six months ended June 30, 2023, in connection with the 2021 Convertible Notes, we repaid principal in the amount of $38,490 and interest expense of $39,822.

Promissory Notes - Issued in fiscal year 2022

During the year ended December 31, 2022, we issued convertible promissory notes with principal amounts totaling $2,120,575, which resulted in cash proceeds of $1,857,800 after deducting a financing fee of $262,775. The 2022 Convertible Notes have the following key provisions:

● Terms ranging from 3 to 12 months.

● Annual interest rates of 9% to 20%.

● Convertible at the option of the holders after varying dates.

● Conversion price based on a formula corresponding to a discount (20% or 39% discount) off the lowest trading price of our Common stock for the 20 prior trading days including the day on which a notice of conversion is received, although one of the 2022 Convertible Notes establishes a fixed conversion price of $4.50 per share.

● 554,464 shares of common stock valued at $473,691 issued in conjunction with convertible notes.

● On June 30, 2023, the Company entered into a Note Exchange Agreement (the “Note Exchange Agreement”) with Westland Properties LLC (the “Noteholder”), pursuant to which the Company agreed with Westland Properties LLC to exchange one outstanding note with a total outstanding balance of $5,398,299 for a new note with an aggregate value of $665,000 (the “New Note”). The New Note matures on June 1, 2024, and calls for payments of (i) $115,000 on or prior to July 25, 2023, (ii) nine monthly payments to the noteholder in the amount of $38,889 each, with the first payment beginning September 1, 2023 and (iii) $200,000 on the earlier of (a) three business days following the Company’s successful listing on any of the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange or (b) the receipt of not less than $4,000,000 in funding from a single transaction. If the conditions for payment of the above $200,000 are not met, but the Company raises capital in excess of $500,000 in a single closing, then 25% of any capital raised in such closing shall be used to satisfy the $200,000 payment. The Company followed ASC470 Trouble Debt Restructuring, to record a gain on settlement of debt for $4,904,081.

In connection with the adoption of ASU 2020-06 on January 1, 2022, we reclassified $517,500, previously allocated to the conversion feature, from additional paid-in capital to convertible notes on our balance sheet. The reclassification was recorded to combine the two legacy units of account into a single instrument classified as a liability. As of January 1, 2022, we also recognized a cumulative effect adjustment of $439,857 to accumulated deficit on our balance sheet, that was primarily driven by the derecognition of interest expense related to the accretion of the debt discount as required under the legacy accounting guidance. Under ASU 2020-06, we will no longer incur non-cash interest expense related to the accretion of the debt discount associated with the embedded conversion option.

Promissory Notes - Issued in fiscal year 2023

During the six months ended June 30, 2023, we issued convertible promissory notes with principal amounts totaling $637,858, which resulted in cash proceeds of $520,000 after deducting a financing fee of $117,858. The 2023 Convertible Notes have the following key provisions:

● Terms ranging from 9 to 12 months.

● Annual interest rates of 9% to 20%.

● Convertible at the option of the holders after varying dates.

● Conversion price based on a formula corresponding to a discount (20% or 30% discount) off the lowest trading price of our Common stock for the 20 prior trading days including the day on which a notice of conversion is received, although one of the 2023 Convertible Notes establishes a fixed conversion price of $.50 per share.

● As of the six months ended June 30, 2023, there were no derivative liabilities.

F-13

NOTE 9: DERIVATIVE LIABILITIES

We analyzed the conversion option of convertible notes for derivative accounting consideration under ASC 815, Derivatives and Hedging, and hedging, and determined that the instrument should be classified as a liability since the conversion option becomes effective at issuance resulting in there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.

ASC 815 requires we assess the fair market value of derivative liability at the end of each reporting period and recognize any change in the fair market value as other income or expense item.

We determined our derivative liabilities to be a Level 3 fair value measurement during the year based on management’s estimate of the expected future cash flows required to settle the liabilities, and used the Binomial pricing model to calculate the fair value as of June 30, 2023. The Binomial model requires six basic data inputs: the exercise or strike price, time to expiration, the risk-free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each convertible note and warrant is estimated using the Binomial valuation model. As of the six months ended June 30, 2023, there were no derivative liabilities.

For the six months ended June 30, 2023 there was no derivative outstanding, and no loss recorded. For the six months ended June 30, 2022, the change in fair value of the derivative liability was $57,883 and the loss on the derivative was $57,883.

The fair value of the derivative liability for all the notes that became convertible, including the notes issued in prior years, during the year ended December 31, 2022 amounted to $57,883 recognized as a derivative loss.

The inputs used to calculate the derivative values are as follows:

	Six months ended			Year ended
	June 30,			December 31,
	2023			2022
Expected term		-			-	*
Expected average volatility		-	%		280	%
Expected dividend yield		-			-
Risk-free interest rate		-	%		3.65	%

* There is no excepted term on the convertible notes.

F-14

NOTE 10: NOTES PAYABLE

Notes payable consists of the following:

	June 30,			December 31,				Interest
	2023			2022			Maturity	Rate
Economic Injury Disaster Loan - originated in May 2020 (1, 2)	$	500,000		$	500,000		30 years		3.75	%
Promissory note - originated in September 2020		7,568			20,182		$2,873.89 monthly payment for 36 months		14.0	%
Promissory note - originated in December 2020		7,551			16,047		$1,854.41 monthly payment for 36 months		8.0	%
Promissory note - originated in January 2021		11,268			22,243		$2,675.89 monthly payment for 36 months		18.0	%
Promissory note - originated in February 2021 (3)		1,305,373			1,305,373		5 years		4.0	%
Promissory note - originated in April 2021(4)		866,666			866,666		1 year		12	%
Promissory note - originated in July 2021(4)		352,500			352,500		1 year		12	%
Promissory note - originated in September 2021		37,712			43,667		$1,383.56 monthly payment for 60 months		28	%
Promissory note - originated in April 2022		64,680			73,204		$1,695.41 monthly payment for 36 months		16.0	%
Promissory note - originated in April 2022		64,053			239,858		$7,250 daily payment for 168 days		25	%
Promissory note – originated in June 2022		-			149,011		$20,995 weekly payment for 30 weeks		49	%
Promissory note - originated in July 2022		48,569			54,557		$1,485.38 monthly payment for 60 months		18	%
Promissory note - originated in July 2022		76,514			94,878		$3,546.87 monthly payment for 36 months		10	%
Promissory note - originated in August 2022		22,710			26,538		$589.92 monthly payment for 60 months		8	%
Promissory note - originated in October 2022		1,193,612			635,745		$1,749.00 daily payment for 30 days		66	%
Promissory note - originated in January 2023		5,160			-		$237.03 monthly payment for 36 months		25	%
Promissory note - originated in March 2023		53,519			-		$1,521.73 monthly payment for 60 months		18	%
Promissory note - originated in March 2023		13,495			-		$559.25 monthly payment for36 months		17	%
Promissory note - originated in April 2023		31,672			-		$3,999.00 monthly payment for 12 months		12	%
Promissory note - originated in April 2023		40,400			-		$3,918.03 monthly payment for 12 months		6	%
Promissory note - originated in May 2023		250,000			-		3 months		29	%
		4,953,022			4,400,469
Less debt discount and debt issuance cost		(1,079,509	)		(377,111	)
		3,873,513			4,023,358
Less current portion of promissory notes payable		2,267,658			918,785
Long-term promissory notes payable	$	1,605,855		$	3,104,573

During the six months ended June 30, 2023 and 2022, we recognized interest expense of $630,192 and $113,693, and amortization of debt discount, of $479,946 and $625,621, respectively, included in interest expense.

During the six months ended June 30, 2023 and 2022, we issued promissory notes for a total of $1,599,772 and $1,840,518, less discount of $1,182,344 and $654,065, and repaid $1,047,218 and $1,957,492, respectively.

F-15

NOTE 11: COMMITMENTS AND CONTINGENCIES

DMB Note Collection Action

On June 17, 2021, DMB Group, LLC (“DMB”) filed a lawsuit against our wholly-owned subsidiary, the North Carolina operating company Data443 Risk Mitigation, Inc., (the “Subsidiary”) in County Court in Denton County, Texas, naming the Subsidiary as defendant. The matter was settled September 2021 by mutual agreement of the involved parties. The Subsidiary has made all payments required pursuant to the settlement and the matter is now considered closed. The Court granted our motions for nonsuit and dismissal with prejudice on orders entered May 4 and May 5, 2022 respectively.

Employment Related Claims

We view most legal proceedings involving claims of former employees as routine litigation incidental to the business, and therefore not material.

Litigation

In the ordinary course of business, we are involved in a number of lawsuits incidental to our business, including litigation related to intellectual property, employees, and commercial matters. Although it is difficult to predict the ultimate outcome of these cases, management believes that any ultimate liability would not have a material adverse effect on our consolidated financial condition or results of operations. However, an unforeseen unfavorable development in any of these cases could have a material adverse effect on our consolidated financial condition, results of operations, or cash flows in the period in which it is recorded.

NOTE 12: CAPITAL STOCK AND REVERSE STOCK SPLIT

Preferred Stock

As of June 30, 2023, we are authorized to issue 337,500 shares of preferred stock with a par value of $0.001, of which 150,000 shares have been designated as Series A, and 80,000 shares have been designated as Series B.

Series A Preferred Stock

As of June 30, 2023, we are authorized to issue 150,000 of Series A Preferred Stock with par value of $0.001. Each share of Series A was (i) convertible into 1,000 shares of common stock, and (ii) entitled to vote 15,000 shares of common stock on all matters submitted to a vote by shareholders voting common stock. All issued and outstanding shares of Series A Preferred Stock are held by our Chief Executive Officer.

As of June 30, 2023 and December 31, 2022, 149,892 shares of Series A were issued and outstanding, respectively.

F-16

Series B Preferred Stock

As of June 30, 2023, we are authorized to issue 80,000 of Series A Preferred Stock with par value of $10.00. Each share of Series B (i) is convertible into Common stock at a price per share equal to sixty one percent (61%) of the lowest price for our Common stock during the twenty (20) days of trading preceding the date of the conversion; (ii) earns dividends at the rate of nine percent (9%) per annum; and, (iii) has no voting rights.

As of June 30, 2023 and December 31, 2022, 0 and 0 shares of Series B were issued and outstanding, respectively.

Common stock

As of June 30, 2023, we are authorized to issue 500,000,000 shares of Common stock with a par value of $0.001. All shares have equal voting rights, are non-assessable, and have one vote per share.

During the six months ended June 30, 2023, we issued Common stock as follows:

● 10,807,823 shares issued for conversion of debt;

● 45,619,000 shares issued for adjustment to PPM investors;

● 321,428 shares issued for stock-based compensation.

As of June 30, 2023 and December 31, 2022, 59,363,988 and 2,615,737 shares of Common stock were issued and outstanding, respectively.

Warrants

A summary of activity during the six months ended June 30, 2023 follows:

	Warrants Outstanding
			Weighted Average
	Shares		Exercise Price
Outstanding, December 31, 2022		159,974	$	22.07
Granted		-		-
Exercised		-		-
Forfeited/canceled		-		-
Outstanding, June 30, 2023		159,974	$	22.07

During the six months ended June 30, 2023, 0 warrants were exercised and we issued 0 shares of Common stock as a result.

F-17

The following table summarizes information relating to outstanding and exercisable warrants as of June 30, 2023:

Exercisable Warrants Outstanding
		Weighted Average Remaining
Number of Shares		Contractual life (in years)		Weighted Average Exercise Price
	6,250		2.45	$	160.00
	6,934		2.81	$	120.00
	15,666		3.07	$	36.00
	2,917		3.25	$	36.00
	32,837		3.04	$	9.88
	74,671		3.50	$	7.44
	20,699		3.86	$	6.00
	159,974		3.33	$	22.07

NOTE 13: STOCK-BASED COMPENSATION

Stock Options

During the six months ended June 30, 2023, we granted options for the purchase of our Common stock to certain employees as consideration for services rendered. The terms of the stock option grants are determined by our Board of Directors consistent our 2019 Omnibus Stock Incentive Plan which the Board adopted May 16, 2019. Our stock options generally vest upon the one-year anniversary date of the grant and have a maximum term of ten years.

The following summarizes the stock option activity for the six months ended June 30, 2023:

	Options Outstanding		Weighted-Average Exercise Price
Balance as of December 31, 2022		865,983	$	1.67
Grants		1,972,728		.07
Exercised		-		-
Cancelled		644		67.40
Balance as of June 30, 2023		2,838,067	$	.57

The following summarizes certain information about stock options vested and expected to vest as of June 30, 2023:

	Number of Options		Weighted-Average Remaining Contractual Life (In Years)		Weighted- Average Exercise Price
Outstanding		2,838,067		9.07	$	.78
Exercisable		477,112		8.29	$	3.14
Expected to vest		2,838,067		9.07	$	.78

As of June 30, 2023 and December 31, 2022, there was $226,716 and $381,547, respectively, of total compensation costs related to non-vested stock-based compensation arrangements which we expect to recognized within the next 12 months.

F-18

Restricted Stock Awards

The following summarizes the restricted stock activity for the six months ended June 30, 2023:

			Weighted-Average
	Shares		Fair Value
Balance as of December 31, 2022		322,798	$	225,639
Shares of restricted stock granted		2,550,000		180,000
Exercised		-		-
Cancelled		-		-
Balance as of June 30, 2023		2,872,798	$	405,639

Number of Restricted Stock Awards	June 30, 2023		December 31, 2022
Vested		322,798		1,370
Non-vested		2,550,000		321,428

NOTE 14: RELATED PARTY TRANSACTIONS

Jason Remillard is our president and Chief Executive Officer and the sole director. Through his ownership of Series A Preferred Shares, Mr. Remillard has voting control over all matters to be submitted to a vote of our shareholders. Greg McCraw is our Chief Financial Officer own shares of the Company.

During the six months ended June 30, 2023, the Company borrowed $19,700 from our CEO and $150,000 from our CFO. Our CEO paid operating expenses of $68,942 on behalf of the Company and the Company repaid $21,000 to our CEO.

As of June 30, 2023 and December 31, 2022, we had due to related party transactions in the amounts of $320,486 and $112,062, respectively.

NOTE 15: SUBSEQUENT EVENTS

The Company does not have any events subsequent to June 30, 2023 through August 14, 2023, the date the financial statements were issued for disclosure consideration, except for the following:

● On July 7, 2023, we issued 2,049,180 shares of Common Stock to Root Ventures, LLC pursuant to an agreement with Root Ventures, LLC, in exchange for $25,000 in note payable principal.

● On July 6, 2023, we received funds as result of entering into a securities purchase agreement (“Purchase Agreement #1”) with an accredited investor as purchaser (“Investor #1”). Pursuant to Purchase Agreement #1, the Company sold, and Investor #1 purchased, $812,500.00 in principal amount of secured convertible notes (the “Investor #1 Notes”) and pre-funded warrants (the “Investor #1 Warrants”). The Investor #1 Notes are convertible into shares of the Company’s common stock, par value $0.01 per share (“Common Stock”), at a conversion price per share of $0.005, subject to adjustment under certain circumstances described in the Investor #1 Notes. The Investor #1 Notes were issued with an original issue discount of 30.00%, do not bear interest, and mature twelve months from the date of issuance.

● On July 24, 2023, we received funds as result of entering into a second securities purchase agreement (“Purchase Agreement #2” and, together with Purchase Agreement #1, the “Purchase Agreements”) with an accredited investor as purchaser (“Investor #2” and, together with Investor #1, the “Investors”). Pursuant to Purchase Agreement #2, the Company sold, and Investor #2 purchased, $718,750.00 in principal amount of secured convertible notes (the “Investor #2 Notes” and, together with the Investor #1 Notes, the “Notes”) and pre-funded warrants (the “Investor #2 Warrants” and, together with the Investor #1 Warrants, the “Warrants”). The Investor #2 Notes are convertible into Common Stock, at a conversion price per share of $0.005, subject to adjustment under certain circumstances described in the Notes. The Notes were issued with an original issue discount of 15.00%, bear interest at a rate of 12%, and mature twelve months from the date of issuance.

F-19

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholder’s

Data443 Risk Mitigation

Opinion on the Financial

We have audited the accompanying consolidated balance sheets of Data443 Risk Mitigation, Inc. (the Company) as of December 31, 2022 and 2021, and the related statements of operations, stockholders’ deficit, and cash flows for each of the years in the period ended December 31, 2022, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Restatement of Prior Issued Financials

As discussed in Note 17 to the financial statements, the 2022 financial statements have been restated to correct the presentation of the statement of cashflows.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As described in Note 3 to the financial statements, the Company has suffered recurring losses from operations and has negative working capital and a stockholders’ deficit that raise substantial doubt about its ability to continue as a going concern. Management’s plans regarding these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

TPS Thayer, LLC

We have served as the Company’s auditor since 2020.

Sugar Land, Texas

February 24, 2023, except for Note 17, as to which the date is August 23, 2023

F-20

DATA443 RISK MITIGATION, INC.

CONSOLIDATED BALANCE SHEETS

	As of
	December 31,			December 31,
	2022			2021
Assets
Current assets
Cash	$	1,712		$	1,204,933
Accounts receivable, net		31,978			21,569
Advance payment for acquisition		2,726,188			-
Prepaid expense and other current assets		91,204			70,802
Total current assets		2,851,082			1,297,304
Property and equipment, net		427,031			288,406
Operating lease right-of-use assets, net		405,148			174,282
Intellectual property, net of accumulated amortization		454,331			1,269,819
Deposits		45,673			31,440
Total Assets	$	4,183,265		$	3,061,251
Liabilities and Stockholders’ Deficit
Current Liabilities
Accounts payable and accrued liabilities	$	1,031,931			115,673
Deferred revenue		1,704,249			1,035,185
Interest payable		478,712			204,915
Notes payable, net of unamortized discount		918,785			1,720,777
Convertible notes payable, net of unamortized discount		4,134,155			993,931
Due to a related party		112,062			247,366
Operating lease liability		213,831			112,322
Finance lease liability		10,341			72,768
Total Current Liabilities		8,604,066			4,502,937
Series B Preferred Stock, 80,000 shares designated; $0.001 par value; Stated value $10.00, 0 and 29,750 shares issued and outstanding, net of discount, respectively		-			278,811
Notes payable, net of unamortized discount - non-current		3,104,573			1,770,989
Convertible notes payable, net of unamortized discount - non-current		97,946			22,357
Deferred revenues - non-current		788,902			573,411
Operating lease liability - non-current		354,631			125,640
Finance lease liability - non-current		-			10,341
Total Liabilities		12,950,118			7,284,486
Stockholders’ Deficit
Preferred stock: 337,500 authorized; $0.001 par value
Series A Preferred Stock, 150,000 shares designated; $0.001 par value; 149,892 and 150,000 shares issued and outstanding, respectively		150			150
Common stock: 125,000,000 authorized; $0.001 par value; 2,615,737 and 122,044 shares issued and outstanding, respectively		2,611			122
Additional paid in capital		42,642,514			37,810,380
Accumulated deficit		(51,412,128	)		(42,033,887	)
Total Stockholders’ Deficit		(8,766,853	)		(4,223,235	)
Total Liabilities and Stockholders’ Deficit	$	4,183,265		$	3,061,251

See the accompanying notes, which are an integral part of these consolidated financial statements.

F-21

DATA443 RISK MITIGATION, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

	Years Ended
	December 31,
	2022			2021
Revenue	$	2,627,123		$	3,609,494
Cost of revenue		518,843			546,888
Gross profit		2,108,280			3,062,606
Operating expenses
General and administrative		5,552,936			5,433,113
Sales and marketing		231,472			266,732
Total operating expenses		5,784,408			5,699,845
Net loss from operations		(3,676,128	)		(2,637,239	)
Other income (expense)
Interest expense		(5,979,456	)		(3,334,413	)
Loss on impairment of intangible asset		-			(75,000	)
Gain (loss) on settlement of debt		-			186,156
Change in fair value of derivative liability		(57,883	)		(614,658	)
Total other expense		(6,037,339	)		(3,837,915	)
Loss before income taxes		(9,713,467	)		(6,475,154	)
Provision for income taxes		-			-
Net loss	$	(9,713,467	)	$	(6,475,154	)
Dividend on Series B Preferred Stock		(104,631	)		(40,149	)
Net loss attributable to common stockholders	$	(9,818,098	)	$	(6,515,303	)
Basic and diluted loss per Common Share	$	(3.75	)	$	(68.79	)
Basic and diluted weighted average number of common shares outstanding		2,140,198			94,708

See the accompanying notes, which are an integral part of these consolidated financial statements.

F-22

DATA443 RISK MITIGATION, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

	Series A									Additional						Total Stockholders’
	Preferred Stock					Common Stock				Paid in			Accumulated			Equity
	Shares			Amount		Shares		Amount		Capital			Deficit			(Deficit)
Balance - December 31, 2020		150,000		$	150		65,308	$	66	$	32,027,696		$	(35,518,584	)	$	(3,490,672	)
Common stock issued for cash		-			-		10,419		10		846,791			-			846,801
Common stock issued for conversion of Series B preferred stock		-			-		18,024		18		827,088						827,106
Common stock issued for conversion of debt		-			-		24,536		25		1,842,828			-			1,842,853
Common stock issued in conjunction with convertible notes		-			-		1,414		1		133,662			-			133,663
Common stock issued for exercised cashless warrant		-			-		1,116		1		(1	)		-			-
Warrant issued in conjunction with debts		-			-		-		-		1,024,780			-			1,024,780
Resolution of derivative liability upon exercise of warrant		-			-		-		-		139,067			-			139,067
Stock-based compensation		-			-		1,227		1		968,469			-			968,470
Net loss		-			-		-		-		-			(6,515,303	)		(6,515,303	)
Balance - December 31, 2021		150,000		$	150		122,044	$	122	$	37,810,380		$	(42,033,887	)	$	(4,223,235	)
Cumulative-effect adjustment from adoption of ASU 2020-06		-			-		-		-		(517,500	)		439,857			(77,643	)
Common stock issued for acquisition of Centurion assets		-			-		380,952		380		2,475,808			-			2,476,188
Subscription for share issuance		-			-		931,000		931		930,069			-			931,000
Common stock issued for conversion of preferred stock		(108	)		-		108,000		108		(108	)		-			-
Common stock issued for conversion of debt		-			-		998,899		995		652,801			-			653,796
Common stock issued in conjunction with convertible notes		-			-		18,170		18		140,919			-			140,937
Common stock issued for exercised cashless warrants		-			-		6,631		7		(7	)		-			-
Common stock issued for service		-			-		50,041		50		164,970			-			165,020
Resolution of derivative liability upon exercise of warrants		-			-		-		-		57,883			-			57,883
Warrants issued in conjunction with debts		-			-		-		-		47,628			-			47,628
Stock-based compensation		-			-		-		-		879,671			-			879,671
Net loss		-			-		-		-		-			(9,818,098	)		(9,818,098	)
Balance - December 31, 2022		149,892		$	150		2,615,737	$	2,611	$	42,642,514		$	(51,412,128	)	$	(8,766,853	)

See the accompanying notes, which are an integral part of these consolidated financial statements.

F-23

DATA443 RISK MITIGATION, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Years Ended
	December 31,
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(9,713,467	)	$	(6,475,154	)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in fair value of derivative liability		57,883			614,658
(Gain) loss on settlement of debt		-			(186,156	)
Stock-based compensation expense		1,044,680			968,470
Loss on impairment of intangible asset		-			75,000
Depreciation and amortization		987,991			1,140,362
Amortization of debt discount		2,321,011			2,906,645
Bad debt		-			36,456
Right of use asset amortization		99,634			(26,214	)
Changes in assets and liabilities:
Accounts receivable, net		(10,409	)		78,478
Prepaid expenses and other current assets		(20,402	)		(70,802	)
Accounts payable and accrued liabilities		916,254			(291,922	)
Deferred revenue		884,555			90,433
Interest payable		2,193,853			284,206
Deposit		(14,233	)		-
Net Cash used in Operating Activities		(1,252,650	)		(855,540	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Advance payment for acquisition		(250,000	)		-
Purchase of property and equipment		(311,128	)		(138,331	)
Net Cash used in Investing Activities		(561,128	)		(138,331	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of convertible notes payable		2,027,570			1,482,000
Repayment of convertible notes payable		(771,718	)		(45,000	)
Proceeds from issuance of common stock		931,000			846,801
Proceeds from issuance of Series B Preferred Stock		75,000			525,000
Redemption of Series B Preferred Stock		(487,730	)		(63,999	)
Finance lease payments		(78,268	)		(90,565	)
Proceeds from issuance of notes payable		3,458,247			4,377,226
Repayment of notes payable		(4,408,240	)		(4,577,578	)
Proceeds from related parties		299,280			366,943
Repayment to related parties		(434,584	)		(680,807	)
Net Cash provided by Financing Activities		610,557			2,140,021
Net change in cash		(1,203,221	)		1,146,150
Cash, beginning of period		1,204,933			58,783
Cash, end of period	$	1,712		$	1,204,933
Supplemental cash flow information
Cash paid for interest	$	5,979,456		$	152,643
Cash paid for taxes	$	-		$	-
Non-cash Investing and Financing transactions:
Common stock issued for acquisition of subsidiary	$	2,476,188		$	-
Common stock issued for exercised cashless warrant	$	7		$	1
Settlement of series B preferred stock through issuance of common stock	$	-		$	827,106
Settlement of convertible notes payable through issuance of common stock	$	653,796		$	1,842,853
Common stock issued in conjunction with convertible note	$	140,937		$	133,663
Warrant issued in conjunction with debts	$	47,628		$	1,024,780
Dividend Series B preferred stock		104,631			40,149
Resolution of derivative liability upon exercise of warrant	$	57,883		$	139,067
Resolution of derivative liability upon conversion of debt	$	-		$	531,700
Derivative liability recognized as debt discount	$	-		$	390,000
Settlement of convertible notes payable through issuance of preferred common stock	$	-		$	65,600
Note payable issued for settlement of License fee payable	$	-		$	1,004,880
Cumulative-effect adjustment from adoption of ASU 2020-06	$	77,643		$	-

See the accompanying notes, which are an integral part of these consolidated financial statements.

F-24

DATA443 RISK MITIGATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2022 AND 2021

NOTE 1: BUSINESS DESCRIPTION

Description of Business

Data443 Risk Mitigation, Inc. (the “Company”) was incorporated as a Nevada corporation on May 4, 1998. On October 15, 2019, the Company changed its name from LandStar, Inc. to Data443 Risk Mitigation, Inc. within the state of Nevada.

We deliver solutions and capabilities that businesses can use in conjunction with their use of established cloud vendors such as Microsoft® Azure, Google® Cloud Platform (GCP) and Amazon® Web Services (AWS), as well as with on-premises databases and database applications with virtualization platforms, such as those hosted or configured using VMWare®, Citrix® and Oracle® clouds/products).

Advance Payment for Acquisition

On January 19, 2022, we entered into an Asset Purchase Agreement with Centurion Holdings I, LLC (“Centurion”) to acquire the intellectual property rights and certain assets collectively known as Centurion SmartShield Home and SmartShield Enterprise, patented technology that protects and recovers devices in the event of ransomware attacks. The total purchase price of $3,400,000 consists of: (i) a $250,000 cash payment at closing; (ii) a $2,900,000 promissory note issued by Data443 in favor of Centurion (“Centurion Note”); and (iii) $250,000 in the form of a contingent payment. The Centurion Note matures January 19, 2027 but provides that Data443’s repayment obligation would accelerate on the occurrence of certain events. One of those events was a financing event that did not occur within the originally anticipated timeframe. If that event had occurred, then Data443’s repayment obligation would have been to repay the balance of the outstanding principal and interest as follows: (i) $500,000 of the then-outstanding amount due in cash; and (ii) the remaining balance, at Data443’s option, in Common stock or a combination of Common stock and cash, with the number of shares of Common stock to be determined according to a specified formula. In April 2022, Data443 and Centurion agreed that, even though the trigger for this acceleration event did not occur, Data443 would issue shares of Common stock to Centurion in an amount then-equivalent to $2,400,000, as partial repayment of the obligation due under the Centurion Note. The number of shares of Common stock Data443 issued to Centurion on April 20, 2022, was 380,952. Because Data443 still has some repayment obligations to fulfill under the Centurion Note, as of the filing date of these financial statements, the acquisition that is the subject of the Centurion Asset Purchase Agreement is still not completed, and is expected to be completed in 2023.

Reverse Stock Splits

Effective March 7, 2022 and July 1, 2021, we effected an 8 for 1 and 2,000 for 1 reverse stock split, respectively, of our issued and outstanding common stock (the “Reverse Stock Splits”). All references to shares of our common stock in this annual report refers to the number of shares of common stock after giving retrospective effect to these Reverse Stock Splits (unless otherwise indicated).

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements as of December 31, 2022 include the accounts of the Company and its wholly-owned subsidiary, Data 443 Risk Mitigation, Inc., a North Carolina operating company. All intercompany accounts and activities have been eliminated upon consolidation. These consolidated financial statements have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”).

F-25

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current presentation. These reclassifications had no impact on net earnings (loss) or and financial position.

Revenue Recognition

The Company derives revenue primarily from contracts for subscription to access our SaaS platforms and, to a much lesser degree, ancillary services provided in connection with subscription services. The Company’s contracts include the performance obligations that require us to provide access to the platforms, usually on an annual subscription. The Company’s contracts are for subscriptions to our data classification, movement, governance, encryption, access control and distribution software and related services. We also perform professional services consulting with specific deliverables managed primarily by statements of work. Customers typically enter into our services subscription and various statements of work concurrently. Most of the Company’s performance obligations are not considered to be distinct from the subscriptions to our software or hosting platforms and related services and are combined into a single performance obligation. New statements of work and modifications of contracts are reviewed each reporting period and to assess the nature and characteristics of the new or modified performance obligations on a contract by contract basis.

Revenue related to contracts with customers is evaluated utilizing the following steps: (i) Identify the contract, or contracts, with a customer; (ii) Identify the performance obligations in the contract; (iii) Determine the transaction price; (iv) Allocate the transaction price to the performance obligations in the contract; (v) Recognize revenue when the Company satisfies a performance obligation.

Revenues from professional services consist mostly of time and material services. The performance obligations are satisfied, and revenues are recognized, when the services are provided or over the time of the service term until it expires.

Subscription software that is sold on-premises is recognized at the point of time when the software license has been delivered and the benefit of the asset has transferred. Maintenance associated with subscription licenses is recognized ratably over the term of the agreement. Our SaaS offerings allow customers to use hosted software, and our revenue is recognized ratably over the associated contract time period.

F-26

Cash and Cash Equivalents

For purposes of balance sheet presentation and reporting of cash flows, the Company considers all unrestricted demand deposits, money market funds and highly liquid debt instruments with an original maturity of less than 90 days to be cash and cash equivalents. The Company had no cash equivalents at December 31, 2022 and 2021.

Accounts Receivable

Accounts receivable are recorded in accordance with ASC 310, “Receivables.” Accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable.

Deferred Revenue

Deferred revenue mostly consists of service subscriptions received from users in advance of revenue recognition. The increase in the deferred revenue balance for the year ended December 31, 2022 and 2021 was driven by cash payments from customers in advance of satisfying our performance obligations, offset by revenue recognized that was included in the deferred revenue balance at the beginning of the period.

Convertible Financial Instruments

The Company account for our convertible financial instruments in accordance with ASC 470-20 “Debt with Conversion and Other Options.” Prior to the adoption of ASU 2020-06 on January 1, 2022, we separated the convertible notes into liability and equity components. The carrying amounts of the liability component of the convertible notes were calculated by measuring the fair value of similar debt instruments that do not have an associated convertible feature. The carrying amounts of the equity components, representing the conversion option, were determined by deducting the fair value of the liability components from the par value of the convertible notes. This difference represents the debt discount that is amortized to interest expense over the terms of the convertible notes using the effective interest rate method.

Following the adoption of ASU 2020-06 on January 1, 2022, which we elected to adopt using a modified retrospective approach, we no longer separate the convertible notes into liability and equity components. Now convertible notes are recorded and disclosed as convertible notes payable, net of unamortized discount.

F-27

Share-Based Compensation

Employees - The Company accounts for share-based compensation under the fair value method which requires all such compensation to employees, including the grant of employee stock options, to be calculated based on its fair value at the measurement date (generally the grant date), and recognized in the consolidated statement of operations over the requisite service period.

Nonemployees - During June 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”) to simplify the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees. The Company elected to adopt ASU 2018-07 early. Under the requirements of ASU 2018-07, the Company accounts for share-based compensation to non-employees under the fair value method which requires all such compensation to be calculated based on the fair value at the measurement date (generally the grant date), and recognized in the statement of operations over the requisite service period.

The Company recorded approximately $879,671 in share-based compensation expense for the year ended December 31, 2022, compared to approximately $968,470 in share-based compensation expense for the year ended December 31, 2021.

Determining the appropriate fair value model and the related assumptions requires judgment. During the year ended December 31, 2022 and 2021, the fair value of each option grant was estimated using a Black-Scholes option-pricing model.

The expected volatility represents the historical volatility of the Company’s publicly traded common stock. Due to limited historical data, the Company calculates the expected life based on the mid-point between the vesting date and the contractual term which is in accordance with the simplified method. The expected term for options granted to nonemployees is the contractual life. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of stock options. The Company has not paid and does not anticipate paying cash dividends on its shares of common stock; therefore, the expected dividend yield is assumed to be zero.

Income Taxes

The asset and liability method is used in the Company’s accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse.

Deferred tax assets and liabilities are determined based on the temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities using the enacted tax rates in effect in the years in which the differences are expected to reverse. In estimating future tax consequences, all expected future events are considered other than enactment of changes in the tax law or rates.

The Company adopted ASC 740 “Income Taxes,” which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. ASC 740 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company had no material adjustments to its liabilities for unrecognized income tax benefits.

F-28

The determination of recording or releasing tax valuation allowance is made, in part, pursuant to an assessment performed by management regarding the likelihood that the Company will generate future taxable income against which benefits of its deferred tax assets may or may not be realized.

Intellectual Property

The cost of intangible assets with determinable useful lives is amortized to reflect the pattern of economic benefits consumed on a straight-line basis over the estimated periods benefited. Patents, technology and other intangibles with contractual terms are generally amortized over their respective legal or contractual lives. When certain events or changes in operating conditions occur, an impairment assessment is performed and lives of intangible assets with determinable lives may be adjusted.

Long-Lived Assets

Long-lived assets are evaluated for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the undiscounted future cash flows to the recorded value of the asset. If impairment is indicated, the asset is written down to its estimated fair value.

Property and Equipment

Property and equipment, consisting mostly of computer equipment, is recorded at cost reduced by accumulated depreciation and impairment, if any. Depreciation expense is recognized over the assets’ estimated useful lives of three - seven years using the straight-line method. Major additions and improvements are capitalized as additions to the property and equipment accounts, while replacements, maintenance and repairs that do not improve or extend the life of the respective assets, are expensed as incurred. Estimated useful lives are periodically reviewed and, when appropriate, changes are made prospectively. When certain events or changes in operating conditions occur, asset lives may be adjusted and an impairment assessment may be performed on the recoverability of the carrying amounts.

Fair Value Measurements

The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value. The three tiers are defined as follows:

● Level 1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets;

● Level 2—Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and

● Level 3—Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions.

Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The carrying amounts of cash and cash equivalents, marketable securities, trade receivables, short-term deposits and trade payables approximate their fair value due to the short-term maturity of such instruments. This valuation technique involves management’s estimates and judgment based on unobservable inputs and is classified in level 3.

F-29

Basic and Diluted Net Loss Per Common Share

Basic earnings per share (“EPS”) is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method and as if converted method. Dilutive potential common shares include outstanding stock options, warrant and convertible notes.

For the year ended December 31, 2022 and 2021, respectively, the following common stock equivalents were excluded from the computation of diluted net loss per share as the result of the computation was anti-dilutive.

	Years Ended
	December 31,
	2022		2021
	(Shares)		(Shares)
Series A Preferred Stock		149,892,000		150,000,000
Stock options		867,237		2,121
Warrants		159,974		146,842
Convertible notes		-		-
Preferred B stock		-		3,955
Total		150,919,211		150,152,918

Leases

We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities - current, and operating lease liabilities - noncurrent on the balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities in our balance sheets.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Segments

Operating segments are defined as components of an enterprise engaging in business activities for which discrete financial information is available and regularly reviewed by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company operates and manages its business as one operating segment and all of the Company’s revenues and operations are currently in the United States.

Recently Adopted Accounting Guidance

In August 2020, the FASB issued ASU 2020-06, ASC Subtopic 470-20 “Debt—Debt with Conversion and Other Options” and ASC subtopic 815-40 “Hedging—Contracts in Entity’s Own Equity”. The standard reduced the number of accounting models for convertible debt instruments and convertible preferred stock. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting; and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. The amendments in this update are effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Due to adoption of this accounting policy on January 1, 2022, we recognized a cumulative effect adjustment to increase the opening retained earnings as of January 1, 2022 by $77,643.

F-30

Recently Issued Accounting Pronouncements

The Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its consolidated financial statements.

NOTE 3: LIQUIDITY AND GOING CONCERN

The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern. As reflected in the financial statements, we have incurred significant current period losses and negative cash flows from operating activities, and we have negative working capital and an accumulated deficit. We have relied upon loans and issuances of our equity to fund our operations. These conditions, among others, raise substantial doubt about our ability to continue as a going concern. Management’s plans regarding these matters, include raising additional debt or equity financing, the terms of which might not be acceptable. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

NOTE 4: PROPERTY AND EQUIPMENT

The following table summarizes the components of the Company’s property and equipment as of the dates presented:

	December 31,			December 31,
	2022			2021
Furniture and Fixtures	$	6,103		$	2,991
Computer Equipment		867,670			559,654
		873,773			562,645
Accumulated depreciation		(446,742	)		(274,239	)
Property and equipment, net of accumulated depreciation	$	427,031		$	288,406

F-31

Depreciation expense for the years ended December 31, 2022 and 2021, was $172,503 and $174,274, respectively, and recorded in general and administrative expenses.

During the years ended December 31, 2022 and 2021, the Company acquired property and equipment of $311,128 and $138,331, respectively.

NOTE 5: INTELLECTUAL PROPERTY

On February 7, 2019, the Company entered into an Exclusive License and Management Agreement (the “License Agreement”) with WALA, INC., which conducts business under the name ArcMail Technology (“ArcMail”). Under the License Agreement, the Company was granted the exclusive right and license to receive all benefits from the marketing, selling and licensing, of the ArcMail business products, including, without limitation, the good will of the business. The term of the License Agreement is twenty-seven (27) months, with the following payments to be made by the Company to ArcMail: (i) $200,000 upon signing the License Agreement; (ii) monthly payments starting 30 days after the execution of the License Agreement in the amount of $25,000 per month during months 1-6; (iii) monthly payments in the amount of $30,000 per month during months 7-17; and (iii) in month 18, final payment in the amount of $765,000. As of December 31, 2019, the balance of payments due under the License Agreement was $1,094,691. In connection with the execution of the License Agreement, two other agreements were also executed: (a) a Stock Purchase Rights Agreement, under which the Company has the right, though not the obligation, to acquire 100% of the issued and outstanding shares of stock of ArcMail from Rory Welch, the CEO of ArcMail (the right can be exercised over a period of 27 months); and (b) a Business Covenants Agreement, under which ArcMail and Mr. Welch agreed to not compete with the Company’s use of the ArcMail business under the License Agreement for a period of twenty-four (24) months. Mr. Welch shall continue to serve as ArcMail’s CEO. The Company has not purchased any outstanding shares under the Stock Purchase Rights Agreement. As of September 30, 2020, the Company terminated all agreements with Mr. Welch and ArcMail. The Company continued to use all assets under the License Agreement and was finalizing an agreement with the creditors of Mr. Welch and ArcMail (the creditors have taken ownership of the assets) for the Company’s continued use of all assets. During the year ended December 31. 2021, the Company reached the agreement and issued notes payable of $1,404,000 to settle license fee payable of $1,094,691. As a result, the Company recorded a loss on settlement of debt of $309,309.

On August 13, 2020, the Company entered into an Asset Purchase Agreement to acquire certain assets collectively known as FileFacets^™, a Software-as-a-Service (SaaS) platform that performs sophisticated data discovery and content search of structured and unstructured data within corporate networks, servers, content management systems, email, desktops and laptops. The total purchase price was $135,000, which amount was paid in full at the closing of the transaction.

On September 21, 2020, the Company entered into an Asset Purchase Agreement with the owners of a business known as IntellyWP™, to acquire the intellectual property rights and certain assets collectively known as IntellyWP™, an Italy-based developer that produces WordPress plug-ins that enhance the overall user experience for webmaster and end users. The total purchase price of $135,000 consists of: (i) a $55,000 cash payment at closing; (ii) a cash payment of $40,000 upon completion of certain training; and, (iii) a cash payment of $40,000 upon the Company collecting $25,000 from the assets acquired in the subject transaction.

On October 8, 2020, the Company entered into an Asset Purchase Agreement with Resilient Network Systems, Inc. (“RNS”) to acquire the intellectual property rights and certain assets collectively known as Resilient Networks™, a Silicon Valley based SaaS platform that performs SSO and adaptive access control “on the fly” with sophisticated and flexible policy workflows for authentication and authorization. The total purchase price of $305,000 consists of: (i) a $125,000 cash payment at closing; and, (ii) the issuance of 19,148,936 shares of our common stock to RNS.

The following table summarizes the components of the Company’s intellectual property as of the dates presented:

	December 31,			December 31,
	2022			2021
Intellectual property:
WordPress® GDPR rights	$	46,800		$	46,800
ARALOC™		1,850,000			1,850,000
ArcMail License		1,445,000			1,445,000
DataExpressTM		1,388,051			1,388,051
FileFacetsTM		135,000			135,000
IntellyWP™		60,000			135,000
Resilient Network Systems		305,000			305,000
		5,229,851			5,304,851
Accumulated amortization		(4,775,520	)		(3,960,032	)
Impairment		-			(75,000	)
Intellectual property, net of accumulated amortization	$	454,331		$	1,269,819

F-32

The Company recognized amortization expense of approximately $815,488 and $966,088 for the years ended December 31, 2022 and 2021, respectively, recorded as general and administrative expense.

During the year ended December 31, 2021 the Company determined that IntellyWP^TM should be impaired because of the reduction in sales from this service. Accordingly, the Company estimated the undiscounted future cash flows to be generated by IntellyWP^TM to be an immaterial amount, which was less than the carrying amount of IntellyWP^TM of $75,000. This resulted in a $75,000 write-down of the assets, which was reflected as a separate line item in the income statement.

Based on the carrying value of definite-lived intangible assets as of December 31, 2022, we estimate our amortization expense for the next five years will be as follows:

	Amortization
Year Ended December 31,	Expense
2023		411,581
2024		27,000
Thereafter		15,750
		454,331

NOTE 6: ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

The following table summarizes the components of the Company’s accounts payable and accrued liabilities as of the dates presented:

	December 31,		December 31,
	2022		2021
Accounts payable	$	427,553	$	75,628
Credit cards		50,302		28,492
Accrued dividend - preferred stock		-		6,849
Accrued liabilities		554,076		4,704
Balance, end of year	$	1,031,931	$	115,673

NOTE 7: DEFERRED REVENUE

For the years ended December 31, 2022 and 2021, changes in deferred revenue were as follows:

	December 31,			December 31,
	2022			2021
Balance, beginning of year	$	1,608,596		$	1,518,163
Deferral of revenue		3,511,678			2,581,801
Recognition of deferred revenue		(2,627,123	)		(2,491,368	)
Balance, end of year	$	2,493,151		$	1,608,596

F-33

As of December 31, 2022 and 2021, is classified as follows:

	December 31,		December 31,
	2022		2021
Current	$	1,704,249	$	1,035,185
Non-current		788,902		573,411
Balance, end of year	$	2,493,151	$	1,608,596

NOTE 8: LEASES

Operating lease

We have two noncancelable operating leases for office facilities, one that we entered into January 2019 and that expires January 10, 2024 and another that we entered into in April 2022 and that expires April 30, 2024. Each operating lease has a renewal option and a rent escalation clause. In the summer of 2022, we relocated to the expanded square footage of the premises that are the subject of the April 2022 lease to support our growing operations, and entered into a commission agreement with the landlord of the building to sublet the premises that are the subject of the January 2019 lease.

Lease right-of-use assets represent the right to use an underlying asset pursuant to the lease for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Lease right-of-use assets and lease liabilities are recognized at the commencement of an arrangement where it is determined at inception that a lease exists. These assets and liabilities are initially recognized based on the present value of lease payments over the lease term calculated using our estimated incremental borrowing rate generally applicable to the location of the lease right-of-use asset, unless an implicit rate is readily determinable. We combine lease and certain non-lease components in determining the lease payments subject to the initial present value calculation. Lease right-of-use assets include upfront lease payments and exclude lease incentives, if applicable. When lease terms include an option to extend the lease, we have not assumed the options will be exercised.

Lease expense for operating leases generally consist of both fixed and variable components. Expense related to fixed lease payments are recognized on a straight-line basis over the lease term. Variable lease payments are generally expensed as incurred, where applicable, and include agreed-upon changes in rent, certain non-lease components, such as maintenance and other services provided by the lessor, and other charges included in the lease. Leases with an initial term of twelve months or less are not recorded on the balance sheet. We recognized total lease expense of approximately $240,492 and $97,385 for the years ended December 31, 2022 and 2021, respectively, primarily related to operating lease costs paid to lessors from operating cash flows. As of December 31, 2022 and 2021, the Company recorded security deposit of $10,000. We entered into our operating lease in January 2019.

Future minimum lease payments under operating leases that have initial noncancelable lease terms in excess of one year at December 31, 2022 were as follows:

	Total
Year Ended December 31,
2023		484,759
2024		121,405
Thereafter		-
		606,164
Less: Imputed interest		(37,702	)
Operating lease liabilities		568,462
Operating lease liability - current		213,831
Operating lease liability - non-current	$	354,631

F-34

The following summarizes other supplemental information about the Company’s operating lease as of December 31, 2022:

Weighted average discount rate	8	%
Weighted average remaining lease term (years)	1.17

Finance lease

The Company leases computer and hardware under non-cancellable capital lease arrangements. The term of those capital leases is 3 years and annual interest rate is 12%. At December 31, 2022 and 2021, capital lease obligations included in current liabilities were $10,341 and $72,768, respectively, and capital lease obligations included in long-term liabilities were $-0- and $10,341, respectively. As of December 31, 2022 and 2021, the Company recorded security deposit of $33,467. During the years ended December 31, 2022 and 2021, the Company paid interest expense of $7,047 and $15,967, respectively.

At December 31, 2022, future minimum lease payments under the finance lease obligations, are as follows:

	Total
2023		10,341
Thereafter		-
		10,341
Less: Imputed interest		(5,300	)
Finance lease liabilities		5,041
Finance lease liability		10,341
Finance lease liability - non-current	$	-

As of December 31, 2022 and 2021, finance lease assets are included in property and equipment as follows:

	December 31,			December 31,
	2022			2021
Finance lease assets	$	267,284		$	267,284
Accumulated depreciation		(258,506	)		(192,928	)
Finance lease assets, net of accumulated depreciation	$	8,778		$	74,356

NOTE 9: CONVERTIBLE NOTES PAYABLE

Convertible notes payable consists of the following:

	December 31,			December 31,
	2022			2021
Convertible Notes - Issued in fiscal year 2020		97,946			100,000
Convertible Notes - Issued in fiscal year 2021		600,400			1,607,857
Convertible Notes - Issued in fiscal year 2022		3,710,440			-
		4,408,786			1,707,857
Less debt discount and debt issuance cost		(176,685	)		(691,569	)
		4,232,101			1,016,288
Less current portion of convertible notes payable		4,134,155			993,931
Long-term convertible notes payable	$	97,946		$	22,357

F-35

During the years ended December 31, 2022 and 2021, the Company recognized interest expense on convertible notes payable of $3,795,591 and $131,623, and amortization of debt discount, included in interest expense of $911,020 and $478,582, respectively.

Replacement of note 

During the year ended December 31, 2020, the Company assigned a portion of note with outstanding principal amounts of $150,000 to a lender. Our CEO paid $135,000 to repay a principal amount of $81,000 on behalf of the company. As a result, the Company recorded due to related party of $135,000 and loss on settlement of debt of $54,000.

Effective September 30, 2020, the Company exchanged (i) its convertible promissory note originally issued on March 20, 2020 in the amount of $125,000 (referred to herein as the Granite Note); and, (ii) the Common Stock Purchase Warrant dated 18 March 2020 for the issuance of sixteen (16) shares of Company Common Stock (the “Granite Warrant”) for the issuance of a new convertible promissory note issued in favor of Blue Citi LLC in the amount of $325,000 (the “Exchange Note”). Both the Granite Note and the Granite Warrant were cancelled as a result of the exchange and the issuance of the Exchange Note. Terms of the Exchange Note include, without limitation, the following:

a.	Principal balance of $325,000, which includes all accrued and unpaid interest on the Granite Note;
b.	No further interest shall accrue so long as there is no event of default;
c.	Conversions into common stock under the Exchange Note shall be effected at the lowest closing stock price during the five (5) days preceding any conversion, with -0- discount and a conversion price not below $112;
d.	No prepayment premiums or penalties; and
e.	Maturity date of September 30, 2021. Notes were fully converted in February 2021

Effective November 17, 2020, the Company entered into a Settlement and Release Agreement (the “Settlement Agreement”) with an existing lender to, among things, settle all dispute regarding a convertible promissory note, and exchanged that note for a newly issued note. The disputed note, referred to herein as the “Smea2z Note”, was originally issued on October 23, 2018 in favor of Smea2z LLC in the original principal amount of Two Hundred Twenty Thousand Dollars ($220,000). Subsequent to the issuance of the Smea2z Note, a series of agreements were executed which amended various terms and conditions of the Smea2z Note, resulting in, among other things, a purported principal balance of Six Hundred Thousand Eight Hundred Fifty Dollars ($608,850). As a result of the Settlement Agreement, the Smea2z Note was cancelled, and a new note was issued (the “Exchange Note”) in exchange for the Smea2z Note. The Exchange Note was issued as of November 17, 2020 in the reduced original principal amount of Four Hundred Thousand Dollars ($400,000). The Exchange Note further provides as follows:

a.	No further interest shall accrue so long as there is no event of default;
b.	Maturity date remains the same: 30 June 2021;
c.	No right to prepay;
d.	Conversion price is fixed at $56;
e.	Typical events of default for such a note, as well as a default in the event the closing price for the Company’s common stock is less than $56 for at least 5-consecutive days; and

F-36

f. Leak out provision:

1.	One conversion per week, for no more than forty million shares;
2.	If the trading volume for the Company’s common stock exceeds fifty million shares on any day, a second conversion may be exercised during that week, again for no more than forty million shares (a total of eighty million shares for that week). Notes were fully converted in February 2021

Effective November 18, 2020, the Company entered into an agreement with three existing investors in the Company

(the “Warrant Holders”), each of which was the holder of warrants issued the Company. The total number of warrants (collectively, the “Exchanged Warrants”) held by the Warrant Holders totaled 39. The Company and the Warrant Holders agreed to exchange the Exchanged Warrants for three newly issued promissory notes (the “Warrant Exchange Notes”). As a result of the exchange, the Exchanged Warrants were cancelled and of no further force and effect. The Warrants Exchange Notes were issued as of November 18, 2020, in the total original principal amount of One Hundred Thousand Dollars ($100,000). The Warrant Exchange Notes further provide as follows: (i) interest accrues at 5% per annum; (ii) maturity date of November 18, 2025; (iii) no right to prepay; (iv) fixed conversion price of $160; and, (v) typical events of default for such a note.

Conversion

During the year ended December 31, 2022, the Company converted notes with principal amounts and accrued interest of $653,796 into 998,899 shares of common stock.

During the year ended December 31, 2021, the Company converted notes with principal amounts and accrued interest of $1,450,150 into 24,536 shares of common stock. The corresponding derivative liability at the date of conversion of $392,703 was credited to additional paid in capital.

Convertible notes payable consists of the following:

Promissory Notes - Issued in fiscal year 2020

During the twelve months ended December 31, 2020, the Company issued a total of $2,466,500 of notes with the following terms:

● Terms ranging from 5 months to 60 months.

● Annual interest rates of 0% - 25%.

● Convertible at the option of the holders at issuance date, after maturity date or 6 months after issuance date.

● Conversion prices are typically based on the discounted (25% to 50% discount) average closing prices or lowest trading prices of the Company’s shares during various periods prior to conversion. Certain note has a fixed conversion price ranging from $16 to $112. Certain note has a fixed conversion price of $0.5 for a first 5 months Certain note allows the principal amount will increase by $15,000 and the discount rate of conversion price will decrease by 18% if the conversion price is less than $160.

F-37

As of December 31, 2021, $100,000 notes that were issued in fiscal year 2020 were outstanding.

Promissory Notes - Issued in fiscal year 2021

During the year ended December 31, 2021, the Company issued convertible notes of $1,696,999 for cash proceeds of $1,482,000 after deducting financing fee of $214,999 with the following terms;

● Terms ranging from 90 days to 12 months.

● Annual interest rates of 5% to 12%.

● Convertible at the option of the holders after varying dates.

● Conversion prices are typically based on the discounted (39% discount) average closing prices or lowest trading prices of the Company’s shares during 20 periods prior to conversion.

● 1,414 shares of common stock valued at $133,663 issued in conjunction with convertible notes.

● 117,992 warrants to purchase shares of common stock with an exercise price a range from $7.44 to 36.00 granted in conjunction with convertible notes. The term of warrant is 5 years from issue date. (Note 12)

● The convertible note on October 19, 2021 by the Company in favor of Mast Hill Fund matured on October 19, 2022 which triggered the conversion provision, the default interest rate of 16% and penalty of 125% additional principal based on the outstanding principal balance and accrued interest. As a result of additional principal penalty, the outstanding principal balance increase $91,311 and the effective interest rate increased to 16%.

● The convertible note on December 21, 2021 by the Company in favor of Westland Properties, LLC matured on December 21, 2022 which triggered the default interest rate of 24% and penalty of 125% additional principal based on the outstanding principal balance and accrued interest. The Company broke certain covenants of the convertible note related to the failure of the Company uplist 60 days from the note issuance date that triggered a 10% penalty of the outstanding principal and additional 5% of the outstanding principal every 10 calendar days until the uplist is completed or the note is paid off. The conversion provision triggered on the 6 month anniversary of the note as a result of not completing the uplist. As a result of the covenants, outstanding principal increased by $1,974,914 and the effective interest rate increased to 24% with an additional 5% every 10 days until uplist.

As of December 31, 2021, $1,607,857 notes that were issued in fiscal year 2021 were outstanding.

Convertible note with outstanding balance $361,869 is in default as of October 19, 2022 with a default interest rate of 16%. We are in communication with the lender.

Convertible note with outstanding balance $238,532 is in default as of December 21, 2022 with a default interest rate of 24%. We are in communication with the lender.

Promissory Notes - Issued in fiscal year 2022

During the year ended December 31, 2022, we issued convertible promissory notes with principal amounts totaling $2,120,575, which resulted in cash proceeds of $1,857,800 after deducting a financing fee of $262,775. The 2022 Convertible Notes have the following key provisions:

● Terms ranging from 3 to 12 months.

● Annual interest rates of 9% to 20%.

● Convertible at the option of the holders after varying dates.

● Conversion price based on a formula corresponding to a discount (20% or 39% discount) off the lowest trading price of our Common stock for the 20 prior trading days including the day on which a notice of conversion is received, although one of the 2022 Convertible Notes establishes a fixed conversion price of $4.50 per share.

● 554,464 shares of common stock valued at $473,691 issued in conjunction with convertible notes.

In connection with the adoption of ASU 2020-06 on January 1, 2022, we reclassified $517,500, previously allocated to the conversion feature, from additional paid-in capital to convertible notes on our balance sheet. The reclassification was recorded to combine the two legacy units of account into a single instrument classified as a liability. As of January 1, 2022, we also recognized a cumulative effect adjustment of $439,857 to accumulated deficit on our balance sheet, that was primarily driven by the derecognition of interest expense related to the accretion of the debt discount as required under the legacy accounting guidance. Under ASU 2020-06, we will no longer incur non-cash interest expense related to the accretion of the debt discount associated with the embedded conversion option.

F-38

NOTE 10: DERIVATIVE LIABILITIES

We analyzed the conversion option for derivative accounting consideration under ASC 815, Derivatives and Hedging, and hedging, and determined that the instrument should be classified as a liability since the conversion option becomes effective at issuance resulting in there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.

ASC 815 requires we assess the fair market value of derivative liability at the end of each reporting period and recognize any change in the fair market value as other income or expense item.

We determined our derivative liabilities to be a Level 3 fair value measurement during the year based on management’s estimate of the expected future cash flows required to settle the liabilities, and used the Binomial pricing model to calculate the fair value as of December 31, 2022. As of the year ended December 31, 2022, there were no derivative liabilities. The Binomial model requires six basic data inputs: the exercise or strike price, time to expiration, the risk-free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each convertible note and warrant is estimated using the Binomial valuation model.

For the year ended December 31, 2022 and year ended December 31, 2021, the estimated fair values of the liabilities measured on a recurring basis are as follows:

The fair value of the derivative liability for all the notes that became convertible, including the notes issued in prior years, during the year ended December 31, 2022 amounted to $57,883 recognized as a derivative loss.

For the year ended December 31, 2022 and year ended December 31, 2021, the estimated fair values of the liabilities measured on a recurring basis are as follows:

	Year ended		Year ended
	December 31,		December 31,
	2022		2021
Expected term	-	*	0.48 - 5.00 years
Expected average volatility	280	%	160%- 302	%
Expected dividend yield	-		-
Risk-free interest rate	3.65	%	0.04% - 1.24	%

* There is no excepted term on the convertible notes.

F-39

The following table summarizes the changes in the derivative liabilities during the years ended December 31, 2022 and 2021:

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Derivative liability as of December 31, 2020	$	-
Addition of new derivatives recognized as debt discounts		390,000
Addition of new derivatives recognized as day-one loss		559,939
Derivative liabilities settled upon conversion of convertible note		(1,004,658	)
Change in derivative liabilities recognized as loss on derivative		54,719
Derivative liability as of December 31, 2021	$	-
Addition of new derivatives recognized as debt discounts		-
Addition of new derivatives recognized as day-one loss		57,883
Derivative liabilities settled upon conversion of convertible note		(57,883	)
Change in derivative liabilities recognized as loss on derivative		-
Derivative liability as of December 31, 2022	$	-

The aggregate loss on derivatives during the years ended December 31, 2022 and 2021 was $57,883 and $614,658, respectively.

NOTE 11: NOTES PAYABLE

Notes payable consists of the following:

	December 31,			December 31,				Interest
	2022			2021			Maturity	Rate
Economic Injury Disaster Loan - originated in May 2020 (1, 2)	$	500,000		$	500,000		30 years		3.75	%
Promissory note - originated in September 2020		20,182			50,456		$2,873.89 monthly payment for 36 months		14.0	%
Promissory note - originated in December 2020		16,047			33,039		$1,854.41 monthly payment for 36 months		8.0	%
Promissory note - originated in January 2021		22,243			48,583		$2,675.89 monthly payment for 36 months		18.0	%
Promissory note - originated in February 2021 (3)		1,305,373			1,328,848		5 years		4.0	%
Promissory note - originated in April 2021(4)		866,666			832,000		1 year		12	%
Promissory note - originated in July 2021(4)		352,500			282,000		1 year		12	%
Promissory note - originated in September 2021		43,667			55,576		$1,383.56 monthly payment for 60 months		28	%
Promissory note - originated in December 2021		-			406,300		$20,050 weekly payment for 28 weeks		49	%
Promissory note - originated in December 2021		-			241,716		$10,071.45 weekly payment for 28 weeks		4.94	%
Promissory note - originated in December 2021		-			189,975		$2,793.75 daily payment for 80 days		7	%
Promissory note - originated in April 2022		73,204			-		$1,695.41 monthly payment for 36 months		16.0	%
Promissory note - originated in April 2022		239,858			-		$7,250 daily payment for 168 days		25	%
Promissory note – originated in June 2022		149,011			-		$20,995 weekly payment for 30 weeks		49	%
Promissory note - originated in July 2022		54,557			-		$1,485.38 monthly payment for 60 months		18	%
Promissory note - originated in July 2022		94,878			-		$3,546.87 monthly payment for 36 months		10	%
Promissory note - originated in August 2022		26,538			-		$589.92 monthly payment for 60 months		8	%
Promissory note - originated in October 2022		635,745			-		$1,749.00 daily payment for 30 days		66	%
		4,400,469			3,968,493
Less debt discount and debt issuance cost		(377,111	)		(476,727	)
		4,023,358			3,491,766
Less current portion of promissory notes payable		918,785			1,720,777
Long-term promissory notes payable	$	3,104,573		$	1,770,989

(1)	We received an advance under the Economic Injury Disaster Loan (EIDL) program.
(2)	We received a second advance under the EIDL program in fiscal year 2021.
(3)	On February 12, 2021, we issued notes payable of $1,404,000 to settle license fee payable of $1,094,691. As a result, we recorded loss on settlement of debt of $186,156 in fiscal year 2021.
(4)	Note payable with outstanding balance of $866,666 matured on April 22, 2022. Note payable with outstanding balance of $352,500 matured on July 27, 2022. The default annual interest rate of 16% becomes the effective interest rate on the past due principal and interest. A penalty of 125% of the outstanding principal and accrued interest was triggered and as a result $173,333 and $70,500, respectively, additional principal was added to the outstanding balance. We are in communication with the lender.

F-40

During the years ended December 31, 2022 and 2021, the Company recognized interest expense on notes payable of $505,198 and $260,155, and amortization of debt discount, included in interest expense of $2,537,167 and $2,082,875, respectively.

During the years ended December 31, 2022 and 2021, the Company issued a total of $4,840,215 and $6,094,051, less discount of $1,381,970 and $1,716,825 and repaid $4,408,240 and $4,577,578, respectively.

NOTE 12: CAPITAL STOCK AND REVERSE STOCK SPLIT

Changes in Authorized Shares

On March 5, 2020, the Company amended its Articles of Incorporation to increase the number of shares of authorized common stock to 250,000,000.

On April 15, 2020, the Company amended its Articles of Incorporation to increase the number of shares of authorized common stock to 750,000,000.

On August 17, 2020, the Company amended its Articles of Incorporation to increase the number of shares of authorized common stock to 1,500,000,000.

On November 25, 2020 the Company filed a Certificate of Designation to authorize and create its Series B Preferred shares, consisting of 80,000 shares, $0.001 par value.

On December 15, 2020 the Company amended its Articles of Incorporation to increase the number of shares of authorized common stock to 1,800,000,000.

On July 1, 2021, we effected a 1-for-2,000 reverse stock split of our issued and outstanding common stock. 

On March 7, 2022, the Company filed an amendment to its Articles of Incorporation to effect a 1-for-8 reverse stock split of its issued and outstanding shares of common and preferred shares, each with $0.001 par value. All per share amounts and number of shares, in the consolidated financial statements and related notes have been retroactively adjusted to reflect the reverse stock split.

Preferred Stock

Each share of Series B (i) has a stated value of Ten Dollars ($10.00) per share; (ii) is convertible into Common stock at a price per share equal to sixty one percent (61%) of the lowest price for our Common stock during the twenty (20) days of trading preceding the date of the conversion; (iii) earns dividends at the rate of nine percent (9%) per annum; and, (iv) has no voting rights.

During the year ended December 31, 2022, we issued 7,875 shares of Series B preferred stock for $78,750, less $3,750 financing fees.

During the year ended December 31, 2022, we redeemed 37,625 shares of Series B preferred stock, representing all outstanding shares of Series B preferred stock, for $487,730.

During the year ended December 31, 2022 we recorded an accrued dividend of $104,631, and amortization of debt discount, included in interest expense of $22,439.

As of December 31, 2022 and December 31, 2021, 0 and 29,750 shares of Series B were issued and outstanding, respectively.

Each share of Series A is the equivalent of 15,000 shares of Common Stock. Our Chief Executive Officer, Jason Remillard, holds 149,892 shares of our Series A Preferred Stock. Through his ownership of Series A Preferred Stock, Mr. Remillard has voting control over all matters to be submitted to a vote of our shareholders.

During the year ended December 31, 2022, we issued 108,000 shares of Common Stock for conversion of Series A Preferred Stock.

As of December 31, 2022 and December 31, 2021, 149,892 and 150,000 shares of Series A Preferred Stock were issued and outstanding, respectively.

F-41

Common Stock

As of December 31, 2022, the Company is authorized to issue 125,000,000 shares of common stock with a par value of $0.001. All shares have equal voting rights, are non-assessable, and have one vote per share. The total number of shares of Company common stock issued and outstanding as of December 31, 2022 and 2021, respectively, was 2,615,737 and 122,044 shares, respectively.

During the year ended December 31, 2022, the Company issued common stock as follows:

● 998,899 shares issued for conversion of debt;

● 6,631 shares issued upon the cash-less exercise of warrants;

● 380,952 shares issued for consideration under an asset purchase agreement;

● 108,000 shares issued for conversion of Series A Preferred Stock;

● 50,041 shares issued for services;

● 18,170 shares issued as a loan fee in connection with the issuance of promissory notes; and

● 931,000 shares were subscribed for cash pursuant to private placement offering.

During the year ended December 31, 2021, the Company issued common stock as follows:

● 24,536 shares issued for conversion of debt;

● 10,419 shares issued for cash of $1,000,000, less financing cost of $10,000, less an additional financing discount of $143,199;

● 1,227 shares issued for service;

● 1,116 shares issued upon the cash-less exercise of warrants;

● 18,024 shares issued for conversion of Series B preferred stock;

● 1,414 shares issued as a loan fee in connection with the issuance of promissory notes.

Beginning on August 25, 2022 and concluding on November 4, 2022, the Company initiated a private placement transaction with certain “accredited investors,” as defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended. In connection with the Offering, we entered into a securities purchase agreement with each investor pursuant to which we offered and sold to the investors a total of 931,000 shares of our common stock, par value $0.001 at a purchase price of $1.00 per share, for aggregate gross proceeds of approximately $931,000. The Common stock has not been registered under the Securities Act, and may not be offered or sold in the United States absent effective registration or an applicable exemption from registration requirements. For these shares, we are relying on the private placement exemption from registration provided by Section 4(a)(2) of the Securities Act and by Rule 506 of Regulation D, promulgated thereunder and on similar exemptions under applicable state laws.

Warrants

The Company identified conversion features embedded within warrants issued during the year ended December 31, 2020. The Company has determined that the conversion feature of the Warrants represents an embedded derivative since the conversion price includes a reset provision which could cause adjustments upon conversion. During the year ended December 31, 2020, 21 warrants were granted, for a period of five years from issuance, at price of $8,000 per share. However, as of September 30, 2020, 16 of these original warrants, as reset, were completely cancelled and are all null and void in all respects as part of the consideration for the issuance of the Exchange Note.

As a result of the reset features, the warrants increased by 22,919 for the year ended December 31, 2020, and the total warrants exercisable into 23,057 shares of common stock at a weighted average exercise price of $81.60 per share as of December 31, 2020. The reset feature of warrants was effective at the time that a separate convertible instrument with lower exercise price was issued. We accounted for the issuance of the Warrants as a derivative.

During the year ended December 31, 2020, the Company entered into an agreement with three existing investors in the Company (the “Holders”), each of which was the holder of warrants issued the Company. The total number of warrants (collectively, the “Warrants”) held by the Holders totaled 2. The Company and the Holders agreed to exchange the Warrants for three newly issued convertible promissory notes. As a result of the exchange, the Company recorded loss on settlement of $100,000.

F-42

On December 11, 2020, the Company entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) with Triton Funds LP, a Delaware limited partnership (“Triton”). Pursuant to the Purchase Agreement, subject to certain conditions set forth in the Purchase Agreement, Triton is obligated to purchase up to One Million Dollars ($1,000,000) of the Company’s common stock from time-to-time. The Company also granted to Triton warrants to purchase 6,250 shares of the Company’s Common Stock. The exercise price for the warrants is $160 per share, and may be exercised at any time, in whole or in part, prior to December 11, 2025. The Warrant Agreement provides for certain adjustments that may be made to the exercise price and the number of shares issuable upon exercise due to future corporate events. The Warrant Agreement also contains a limited cashless exercise feature, providing for the cashless exercise of 1,250 shares only upon the Company’s failure to secure the effectiveness of the Registration Statement, which is to include all shares under the Warrant Agreement.

During the year ended December 31, 2021, the Company issued the following warrants: (i) to acquire 6,933 shares of the Company’s common stock pursuant at an exercise price of $120, with a cashless exercise option; (ii) to acquire 6,933 shares of the Company’s common stock at an exercise price of $120, exercisable only in the event of a default under that certain Senior Secured Promissory Note issued on 23 April 2021 in the original principal amount of $832,000; (iii) to acquire 15,666 shares of the Company’s common stock at an exercise price of $36, exercisable only in the event of a default under that certain Senior Secured Promissory Note issued on July 27, 2021 in the original principal amount of $282,000; (iv) to acquire 2,917 shares of the Company’s common stock at an exercise price of $36, exercisable only in the event of a default under that certain Convertible Promissory Note issued on September 28, 2021 in the original principal amount of $282,000; (v) to acquire 40,404 shares of the Company’s common stock at an exercise price of $36, exercisable only in the event of a default under that certain Convertible Promissory Note issued on October 19, 2021 in the original principal amount of $444,444 and, (vi) to acquire 74,671 shares of the Company’s common stock at an exercise price of $7.44, exercisable only in the event of a default under that certain Convertible Promissory Note issued on December 21, 2021 in the original principal amount of $555,555. 

During the year ended December 31, 2022, the Company issued the following warrants: (i) to acquire 19,166 shares of the Company’s common stock pursuant at an exercise price of $6, with a cashless exercise option; and (ii) to acquire 1,533 shares of the Company’s common stock pursuant at an exercise price of $6, with a cashless exercise option.

A summary of activity during the period ended December 31, 2022 follows:

			Weighted Average
	Shares			Exercise Price
Outstanding, December 31, 2020	6,250		$	20.00
Granted	141,721			22.18
Reset feature	-			-
Exercised	(2,416	)		5.80
Forfeited/canceled	-			-
Outstanding, December 31, 2021	146,842		$	27.86
Granted	20,699			6.00
Reset feature	-			-
Exercised	(7,567	)		-
Forfeited/canceled	-			-
Outstanding, December 31, 2022	159,974		$	22.07

The following table summarizes information relating to outstanding and exercisable warrants as of December 31, 2022:

Warrants Outstanding						Warrants Exercisable
Number of Shares		Weighted Average Remaining Contractual life (in years)		Weighted Average Exercise Price		Number of Shares		Weighted Average Exercise Price
	6,250		2.95	$	160.00		-	$	-
	6,934		3.31	$	120.00		-	$	-
	15,666		3.57	$	36.00		-	$	-
	2,917		3.75	$	36.00		-	$	-
	32,837		3.80	$	9.88		-	$	-
	74,671		4.00	$	7.44		-	$	-
	20,699		4.36	$	6.00		-	$	-

F-43

NOTE 13: INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and deferred tax liabilities are as follows as of December 31:

	December 31,			December 31,
	2022			2021
Non-operating loss carryforward	$	6,326,000		$	4,685,000
Valuation allowance		(6,326,000	)		(4,685,000	)
Net deferred tax asset	$	-		$	-

The Company has established a valuation allowance against its deferred tax assets due to the uncertainty surrounding the realization of such assets. During 2022 the valuation allowance increased by $1,641,000. The Company has net operating and economic loss carry-forwards of approximately $26,030,830 available to offset future federal and state taxable income.

A reconciliation between expected income taxes, computed at the federal income tax rate of 21% applied to the pretax accounting loss, and our blended state income tax rate of 2.0%, and the income tax net expense included in the consolidated statements of operations for the years ended December 31, 2022 and 2021 is as follows:

	Years Ended
	December 31,
	2022			2021
Loss for the year	$	(9,713,467	)	$	(6,475,154	)
Income tax (recovery) at statutory rate	$	(2,040,000	)	$	(1,360,000	)
State income tax expense, net of federal tax effect		(194,000	)		(130,000	)
Permanent difference and other		593,000			819,000
Change in valuation allowance		1,641,000			671,000
Income tax expense per books	$	-		$	-

The effective tax rate of 0% differs from our statutory rate of 21% primarily due to the effect of non-deductible income and expenses. Tax returns for the years ended 2013 – 2022, are subject to review by the tax authorities.

NOTE 14: SHARE-BASED COMPENSATION

Stock Options

During the years ended December 31, 2022 and 2021, the Company granted options for the purchase of the Company’s common stock to certain employees, consultants and advisors as consideration for services rendered. The terms of the stock option grants are determined by the Company’s Board of Directors. The Company’s stock options generally vest upon the one-year or two-year anniversary date of the grant and have a maximum term of ten years.

F-44

The following summarizes the stock option activity for the years ended December 31, 2022 and 2021:

	Options		Weighted-Average
	Outstanding		Exercise Price
Balance as of December 31, 2020		735	$	775.93
Grants		1,386		304.44
Exercised		-		-
Cancelled		-		-
Balance as of December 31, 2021		2,121	$	775.93
Grants		865,116		1.34
Exercised		-		-
Cancelled		1,254		67.40
Balance as of December 31, 2022		865,983	$	1.67

The weighted average grant date fair value of stock options granted during the years ended December 31, 2022 and 2021 was $1.34 and $299, respectively. The total fair value of stock options that granted during the year ended December 31, 2022 and 2021 was approximately $1,341,002 and $414,902, respectively. The fair value of each stock option is estimated on the date of grant using the Black-Scholes-Merton option pricing model with the following weighted average assumptions for stock options granted during the year ended December 31, 2022 and 2021:

	2022			2021
Expected term (years)		5			5.74
Expected stock price volatility		280.82	%		296.25	%
Weighted-average risk-free interest rate		3.65	%		0.62	%
Expected dividend	$	0.00		$	0.00

Volatility is a measure of the amount by which a financial variable such as share price has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. The Company estimates expected volatility giving primary consideration to the historical volatility of its common stock. The risk-free interest rate is based on the published yield available on U.S. Treasury issues with an equivalent term remaining equal to the expected life of the stock option. The expected lives of the stock options represent the estimated period of time until exercise or forfeiture and are based on the simplified method of using the mid-point between the vesting term and the original contractual term.

The following summarizes certain information about stock options vested and expected to vest as of December 31, 2022:

			Weighted-Average
	Number of		Remaining Contractual Life		Weighted-Average
	Options		(In Years)		Exercise Price
Outstanding		865,983		4.85	$	1.54
Exercisable		689,948		4.83	$	1.67
Expected to vest		865,983		4.85	$	1.54

As of December 31, 2022 and 2021, there was $381,547 and $381,547, respectively, of total unrecognized compensation cost related to non-vested stock-based compensation arrangements which is expected to be recognized within the next year.

F-45

Restricted Stock Awards

During the years ended December 31, 2022 and 2021, the Company issued restricted stock awards for shares of common stock which have been reserved for the holders of the awards. Restricted stock awards were issued to certain consultants and advisors as consideration for services rendered. The terms of the restricted stock units are determined by the Company’s Board of Directors. The Company’s restricted stock shares generally vest over a period of one year and have a maximum term of ten years.

The following summarizes the restricted stock activity for the years ended December 31, 2022 and 2021:

			Weighted-Average
	Shares		Fair Value
Balance as of December 31, 2020		923		748.89
Shares of restricted stock granted		447		413.33
Exercised		-		-
Cancelled		-		-
Balance as of December 31, 2021		1,370		639.22
Shares of restricted stock granted		321,428		225,000
Exercised		-		-
Cancelled		-		-
Balance as of December 31, 2022		322,798		225,639

	December 31,		December 31,
Number of Restricted Stock Awards	2022		2021
Vested		1,370		1,370
Non-vested		321,428		-

As of December 31, 2022 and 2021, there was $0 of total unrecognized compensation cost related to non-vested stock-based compensation, which is expected to be recognized over the next year.

NOTE 15: INTEREST EXPENSE

For the years ended December 31, 2022 and 2021, the Company recorded interest expense as follows:

	Year ended		Year ended
	December 31,		December 31,
	2022		2021
Interest expense - convertible notes	$	2,884,571	$	131,623
Interest expense - notes payable		505,198		260,155
Interest expense - notes payable - related party		-		9,992
Finance lease		7,047		15,967
Other		45,473		10,031
Amortization of debt discount		2,537,167		2,906,645
	$	5,979,456	$	3,334,413

F-46

NOTE 16: RELATED PARTY TRANSACTIONS

Jason Remillard is our Chief Executive Officer and sole director. Through his ownership of Series A Preferred Stock, Mr. Remillard has voting control over all matters to be submitted to a vote of our shareholders.

In January 2018 the Company acquired substantially all of the assets of Myriad Software Productions, LLC, which is owned 100% by Mr. Remillard. Those assets were comprised of the software program known as ClassiDocs, and all intellectual property associated therewith. This acquisition changed the Company’s status to no longer being a “shell” under applicable securities rules. In consideration for the acquisition, the Company agreed to a purchase price of $1,500,000 comprised of: (i) $50,000 paid at closing; (ii) $250,000 in the form of our promissory note; and (iii) $1,200,000 in shares of our common stock, valued as of the closing, which equated to 100 shares of our common stock. The shares were issued in the form of 144,000 shares of the Company’s Series A Preferred Stock as part of the consideration under the Share Settlement Agreement dated August 14, 2020.

On September 16, 2019, the Company entered into an Asset Purchase Agreement with DMBGroup, LLC. Amounts owed to DMBGroup, LLC including the note payable of $940,000 and member loans of $97,689 were recorded as amounts due to a related party. During the year ended December 31, 2022 and 2021, the Company repaid note payable of $124,985 and $281,638 including interest expense of $1,240 and $9,992, respectively. As of December 31, 2022 and 2021, the Company had recorded a liability to DMBGroup totaling $0 and $405,382, respectively.

During the year ended December 31, 2022, the Company borrowed $299,281 from our CEO, our CEO paid operating expenses of $167,653 on behalf of the Company and the Company repaid $602,237 to our CEO. During the year ended December 31, 2021, the Company borrowed $231,150 from our CEO, our CEO paid operating expenses of $135,793 on behalf of the Company and the Company repaid $399,169 to our CEO.

As of December 31, 2022 and 2021, the Company had due to related party of $112,062 and $247,366, respectively, which arose from the DMB transaction to acquire DataExpress™.

NOTE 17: RESTATEMENT OF PRIOR ISSUED FINANCIALS

The audited financial statements for the year ended December 31, 2022 have been restated to reflect the correction of errors noted below:

Correction of errors – Subsequent to the yearend the Company noticed that a restatement was needed in the previously issued financial statements, related to the presentation of certain balances on the statement of cashflows for the year ended December 31, 2022. Specifically related to the presentation of the issuance of convertible notes from financing activities to operating activities.

Accordingly, the following table summarizes the error corrections to the Company’s consolidated statement of cashflows for the year ended December 31, 2022.

	31-Dec-22
	As Previously Reported			Impact of Adjustment			As Revised
Consolidated Statement of Cashflows
Amortization of debt discount		2,512,725			(191,714	)		2,321,011
Stock based compensation		1,044,691			(11	)		1,044,680
Accounts payable and accrued liabilities		923,107			(6,853	)		916,254
Interest payable		361,588			1,832,265			2,193,853
Net Cash used in Operating Activities		(2,886,337	)		1,633,687			(1,252,650	)
Proceeds from convertible notes issued		1,747,680			279,890			2,027,570
Repayment on convertible notes		1,146,359			(1,918,077	)		(771,718	)
Proceeds from issuance of notes payable		3,448,246			10,001			3,458,247
Proceeds from related parties		229,281			(1	)		299,280
Finance lease payments		(72,768	)		(5,500	)		(78,268	)
Net cash provided by Financing Activities		2,244,244			(1,633,687	)		610,557

NOTE 18: SUBSEQUENT EVENTS

In accordance with ASC 855-10, “Subsequent Events”, we analyzed our operations subsequent to December 31, 2022 to February 24, 2023, the date when these consolidated financial statements were issued. The Company did not identify any material subsequent events requiring adjustments to or disclosure in its financial statements, other than those noted below.

● On January 4, 2023, GS Capital Partners LLC converted $15,000 of principal and $1,209 of accrued interest of the convertible note into 97,761 shares of our common stock.

● On January 9, 2023, Westland Properties, LLC converted $15,000 of principal of the convertible note into 83,333 shares of our common stock.

● On January 16, 2023, Root Ventures LLC converted $23,027 of principal of the convertible note into 139,557 shares of our common stock.

● On January 20, 2023, Fast Capital, LLC converted $20,000 of principal of the convertible note into 139,500 shares of our common stock.

● On January 24, 2023, the Company issued convertible note a total of $300,000, which the term of notes is 1 year and Original Interest Discount of $50,000. Note is convertible at the option of the holder at any time and conversion price are Conversion price is $.25 per share.

● On February 1, 2023, Mast Hill Fund converted $13,023 of principal and $14,949 of accrued interest of the convertible note into 165,000 shares of our common stock.

● On February 6, 2023, Westland Properties, LLC converted $15,000 of principal of the convertible note into 118,858 shares of our common stock.

● On February 17, 2023, Mast Hill Fund converted $21,638 of principal and $4,197 of accrued interest of the convertible note into 179,000 shares of our common stock.

F-47

DATA443 RISK MITIGATION, INC.

                  Units

Each Unit Consisting of

One Share of Common Stock and

One Warrant to Purchase One Share of Common Stock

Prospectus

                   , 2023

Sole Book Running Manager

DAWSON JAMES SECURITIES, INC.

Through and including                , 2023 (90-days after the date of this Prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

The following table sets forth the costs and expenses paid or payable by us in connection with the issuance and distribution of the securities being registered. We will bear all of the below fees and expenses, which are inclusive of the fees and expenses incidental to the registration of the Selling Stockholder Shares. All amounts shown are estimates, except for the SEC registration fee and the FINRA filing fee.

	Amount Paid or to be Paid
SEC registration fee	$	3,115.90
Nasdaq listing fees		50,000
FINRA filing fee		10,000
Legal fees expenses		250,000
Accounting fees and expenses		60,000
Transfer agent and Warrant Agent fees expenses		10,000
Miscellaneous expenses		5,000
Total	$	388,115.90

Item 14. Indemnification of Directors and Officers

Under our Amended and Restated Bylaws, every person who was or is a party to, or is threatened to be made a party to, or is involved in any action, suit, or proceeding, whether civil, criminal, administrative, or investigative, by reason of the fact that he is or was a director or officer of the Registrant, or is or was serving at the request of the Registrant as a director or officer of another corporation, or as its representative in a partnership, joint venture, trust, or other enterprise, shall be indemnified and held harmless to the fullest extent legally permissible under the laws of the State of Nevada from time to time against all expenses, liability, and loss (including attorneys’ fees judgments, fines, and amounts paid or to be paid in settlement) reasonably incurred or suffered by him in connection therewith. Such right of indemnification shall be a contract right, which may be enforced in any manner desired by such person. The expenses of officers and directors incurred in defending a civil or criminal action, suit, or proceeding must be paid by the Registrant as they are incurred and in advance of the final disposition of the action, suit, or proceeding, upon receipt of an undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined by a court of competent jurisdiction that he is not entitled to be indemnified by us. Such right of indemnification shall not be exclusive of any other right which such directors, officers, or representatives may have or hereafter acquire, and, without limiting the generality of such statement, they shall be entitled to their respective rights of indemnification under any bylaw, agreement, vote of shareholders, provision of law, or otherwise.

Without limiting the application of the foregoing, our board of directors may adopt bylaws from time to time with respect to indemnification, to provide at all times the fullest indemnification permitted by the laws of the State of Nevada, and may cause the Registrant to purchase and maintain insurance on behalf of any person who is or was a director or officer of the Registrant, or is or was serving at the request of the Registrant as a director or officer of another corporation, or as its representative in a partnership, joint venture, trust, or other enterprise against any liability asserted against such person and incurred in any such capacity or arising out of such status, whether or not the Registrant would have the power to indemnify such person. The indemnification provided shall continue as to a person who has ceased to be a director, officer, employee, or agent, and shall inure to the benefit of the heirs, executors and administrators of such person.

II-1

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the Registrant pursuant to the foregoing provisions, the Registrant has been informed that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

We have not entered into any agreements with our directors and executive officers that require us to indemnify these persons against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred (including expenses of a derivative action) in connection with any proceeding, whether actual or threatened, to which any such person may be made a party by reason of the fact that the person is or was a director or officer of the Registrant or any of our affiliated enterprises. We have an insurance policy covering our officers and directors with respect to certain liabilities, including liabilities arising under the Securities Act, or otherwise.

Item 15. Recent Sales of Unregistered Securities

During the past three years, we have issued securities in the following transactions, each of which was exempt from the registration requirements of the Securities Act. Except for the shares of our common stock that were issued upon the conversion of convertible indebtedness, all of the below-referenced securities were issued pursuant to the exemption from registration under Section 4(a)(2) of the Securities Act and are deemed to be restricted securities for purposes of the Securities Act. There were no underwriters or placement agents employed in connection with any of these transactions. Use of the exemption provided in Section 4(a)(2) for transactions not involving a public offering is based on the following facts:

● Neither we nor any person acting on our behalf solicited any offer to buy or sell securities by any form of general solicitation or advertising.

● The recipients were either accredited or otherwise sophisticated individuals who had such knowledge and experience in business matters that they were capable of evaluating the merits and risks of the prospective investment in our securities.

● The recipients had access to business and financial information concerning our company.

● All securities issued were issued with a restrictive legend and may only be disposed of pursuant to an effective registration or exemption from registration in compliance with federal and state securities laws.

The shares of our common stock that were issued upon the conversion of our preferred stock and convertible indebtedness were issued pursuant to the exemption from registration under Section 3(a)(9) of the Securities Act and are deemed to be restricted securities for purposes of the Securities Act.

On June 10, 2021, we effected a reverse stock split of its issued common stock in a ratio of 2000-for-1(the “First Reverse Stock Split”). On March 7, 2022, we effected a reverse stock split of its issued common stock in a ratio of 8-for-1 (the “Second Reverse Stock Split” and, together with the First Reverse Stock Split, the “Reverse Stock Splits”). The number of shares of common stock issued or issuable in each transaction, and the price per share of common stock in each transaction, has been adjusted to give effect to the Reverse Stock Splits.

II-2

● On August 24, 2020, we converted $116,976 of a promissory note into 9,748 shares of our common stock.

● On August 24, 2020, we issued a Convertible Promissory Note in the aggregate principal amount of $300,000 to Blue Citi and received gross proceeds of $275,000.

● On August 27, 2020, we converted $41,600 of a promissory note into 5,000 shares of our common stock.

● On August 31, 2020, we converted $86,100 of a promissory note into 10,500 shares of our common stock.

● On September 01, 2020, we converted $40,696.47 of a promissory note into 3,990 shares of our common stock.

● On September 02, 2020, we converted $94,300 of a promissory note into 11,500 shares of our common stock.

● On September 09, 2020, we converted $143,368.15 of a promissory note into 11,714 shares of our common stock.

● On September 10, 2020, we issued a Convertible Promissory Note in the aggregate principal amount of $63,000, and received gross proceeds of $60,000 from the lender.

● On September 14, 2020, we converted $13,750 of a promissory note into 1,037 shares of our common stock.

● On September 15, 2020, we converted $20,000 of a promissory note into 1,509 shares of our common stock.

● On September 17, 2020, we converted $25,000 of a promissory note into 1,886 shares of our common stock.

● On September 18, 2020, we converted $57,400 of a promissory note into 7,000 shares of our common stock.

● On September 22, 2020, we converted $24,131.94 of a promissory note into 1,895 shares of our common stock.

● On September 29, 2020, we converted $75,000 of a promissory note into 12,500 shares of our common stock.

● On September 30, 2020, we exchanged (i) a convertible promissory note originally issued on March 20, 2020 in the amount of $125,000; and, (ii) the common stock purchase warrant dated March 18, 2020 for 125 shares of our common stock for a new convertible promissory note issued in favor of Blue Citi LLC in the amount of $325,000 .

● On October 02, 2020, we issued a total of 59,580 shares of our common stock to three individuals in connection with the transaction closed on September 16, 2019, in which we acquired certain assets collectively known under the trade name DATAEXPRESS^® from DMBGroup, LLC.

II-3

● On October 06, 2020, we issued 12,650 shares of our common stock upon the cashless exercise of a warrant.

● On October 07, 2020, we converted $92,600 of a promissory note into 15,434 shares of our common stock.

● On October 08, 2020, we entered into an Asset Purchase Agreement with Resilient Network Systems, Inc. (“RNS”) to acquire the intellectual property rights and certain assets collectively known under the trade name Resilient Networks™, a Silicon Valley-based SaaS platform that performs single sign on (SSO) and adaptive access control “on the fly” with sophisticated and flexible policy workflows for authentication and authorization. The total purchase price of $305,000 consisted of: (i) a $125,000 cash payment at closing; and (ii) the issuance of 9,575 shares of our common stock to RNS.

● On October 21, 2020, we converted $131,250 of a promissory note into 18,750 shares of our common stock.

● On November 04, 2020, we issued 6,536 shares of our common stock upon the cashless exercise of a warrant.

● On November 16, 2020, we converted $118,000 of a promissory note into 20,000 shares of our common stock.

● On November 17, 2020, we entered into an agreement to settle a dispute regarding a convertible promissory note (the “Smea2zNote”) and exchanged that note for a newly issued note. The Smea2z Note was originally issued October 23, 2018 in the original principal amount of $220,000, with a variable conversion feature at discount to the market price, and a maturity date of July 23, 2019.

● On November 18, 2020, we entered into an agreement with three of our existing investors (the “Warrant Holders”), each of which was the holder of warrants we issued. The total number of warrants (collectively, the “Exchanged Warrants”) held by the Warrant Holders totaled 309. We and the Warrant Holders agreed to exchange the Exchanged Warrants for three newly issued promissory notes (the “Warrant Exchange Notes”). As a result of the exchange, the Exchanged Warrants were cancelled and of no further force and effect. The Warrants Exchange Notes were issued as of November 18, 2020 in the total original principal amount of $100,000.

● On November 23, 2020, we converted $44,900 of a promissory note into 7,742 shares of our common stock.

II-4

● On November 25, 2020, we issued 5,300 shares of its Series B Preferred Stock in exchange for $50,000 of net proceeds from an investor.

● On December 02, 2020, we converted $140,000 of a promissory note into 20,000 shares of our common stock.

● On December 08, 2020, we converted $140,000 of a promissory note into 20,000 shares of our common stock.

● On December 11, 2020, we entered into a Common Stock Purchase Agreement with Triton Funds, LP, pursuant to which we issued

● On December 15, 2020, we converted $30,000 of a promissory note into 4,688 shares of our common stock.

● On December 15, 2020, we converted $15,150 of a promissory note into 2,368 shares of our common stock.

● On December 17, 2020, we converted $45,000 of a promissory note into 6,186 shares of our common stock.

● On December 29, 2020, we converted $45,150 of a promissory note into 7,055 shares of our common stock.

● On January 04, 2021, we converted $45,390 of a promissory note into 5,934 shares of our common stock.

● On January 06, 2021, we issued 3,800 shares of our Series B Preferred Stock in exchange for $35,000 of net proceeds from an investor.

● On January 25, 2021, pursuant to the terms and conditions of a Note Purchase Agreement, we issued a Convertible Promissory Note in the aggregate principal amount of $114,500, and received gross proceeds of $100,000.

● On January 27, 2021, we converted $45,150 of a promissory note into 6,271 shares of our common stock.

● On January 28, 2021, we issued 1,000 shares of our common stock to a consultant pursuant to a consulting agreement.

● On February 2, 2021, we issued 10,342 shares of our common stock to Maxim Partners LLC pursuant to an agreement to provide financial advisory services.

● On February 03, 2021, we issued 625 shares of our common stock to an Advisor on our Company’s Advisory Board.

● On February 03, 2021, we issued 625 shares of our common stock to an Advisor on our Advisory Board.

● Effective February 08, 2021, we entered into a settlement agreement with to, among other things, settle all disputes regarding all convertible promissory notes issued in favor of Blue Citi.

● On February 09, 2021, we converted $120,000 of a promissory note into 17,143 shares of our common stock.

II-5

● On February 10, 2021, we converted $200,000 of a promissory note into 20,000 shares of our common stock.

● Effective February 12, 2021, we finalized and closed with Geneva Roth Remark Holdings, Inc. (“Geneva Roth”) a Securities Exchange Agreement which resulted in cancellation of a September 10, 2020 Convertible Promissory Note.

● On February 19, 2021, we converted $200,000 of a promissory note into 10,000 shares of our common stock.

● On February 19, 2021, we converted $150,000 of a promissory note into 7,500 shares of our common stock.

● On February 19, 2021, we issued 7,800 shares of our Series B Preferred Stock in exchange for $75,000 of net proceeds from an investor.

● On February 19, 2021, we converted $100,000 of a promissory note into 10,000 shares of our common stock.

● On February 24, 2021, we converted $200,000 of a promissory note into 20,000 shares of our common stock.

● On February 25, 2021, we converted $325,000 of a promissory note into 10,834 shares of our common stock.

● On March 15, 2021, we converted 4,500 shares of its Series B Preferred Stock into 3,841 shares of our common stock.

● On March 16, 2021, we converted 2,060 shares of its Series B Preferred Stock into 1,758 shares of our common stock.

● On March 24, 2021, we issued 5,300 shares of our Series B Preferred Stock in exchange for $50,000 of net proceeds from an investor.

● On April 22, 2021, we issued 8,923 shares of our common stock upon the cashless exercise of a warrant.

● On April 23, 2021, Auctus Fund, LLC (“Auctus”) purchased from us a Senior Secured Promissory Note in the aggregate principal amount of $832,000.00. . We also issued to Auctus warrants to acquire 55,467 shares of our common stock pursuant to a Common Stock Purchase Warrant. 

II-6

● On May 13, 2021, we issued 5,375 shares of our Series B Preferred Stock in exchange for $50,000 of net proceeds from an investor.

● On May 21, 2021, we issued 10,307 shares of our common stock to Maxim Partners LLC.

● On June 01, 2021, we converted 5,300 shares of our Series B Preferred Stock into 8,934 shares of our common stock.

● On July 07, 2021, we issued 4,375 shares of our Series B Preferred Stock in exchange for $40,000 of net proceeds from an investor.

● On July 12, 2021, we converted 1,800 shares of our Series B Preferred Stock into 6,280 shares of our common stock.

● On July 16, 2021, we converted 2,000 shares of our Series B Preferred Stock into 7,699 shares of our common stock.

● On July 30, 2021, Auctus purchased from us a Senior Secured Promissory Note in the aggregate principal amount of $282,000.00 (We also issued to Auctus warrants to acquire 62,667 shares of our common stock pursuant to a Common Stock Purchase Warrant. 

● On August 05, 2021, we entered into and closed a financing transaction pursuant to the terms and conditions of a Purchase Agreement with Geneva Roth. Pursuant to the Purchase Agreement, Geneva Roth purchased from us 5,375 shares of our Series B Preferred stock at a total purchase price of $53,750. Geneva Roth delivered gross proceeds of $50,000.00 to us (excluded were legal fees and a transaction fee charged by Geneva Roth).

● On August 13, 2021, One44 Capital LLC purchased from us a Convertible Promissory Note in the aggregate principal amount of $157,500.

II-7

● On August 13, 2021, GS Capital Partners, LLC purchased from us a Convertible Promissory Note in the aggregate principal amount of $157,500. As additional consideration for the purchase of the GS Note we also issued to GS 2,642 shares of our common stock.

● On August 18, 2021, Fast Capital, LLC purchased from us a Convertible Promissory Note in the aggregate principal amount of $157,500. As additional consideration for the purchase of the Fast Capital Note we also issued to Fast Capital 3,150 shares of our common stock.

● On August 23, 2021, we converted 2,500 shares of our Series B Preferred Stock into 10,446 shares of our common stock.

● On August 24, 2021, we converted 3,000 shares of our Series B Preferred Stock into 12,535 shares of its common stock.

● On August 30, 2021, we converted 2,300 shares of its Series B Preferred Stock into 9,802 shares of our common stock.

● On September 10, 2021, we issued 5,375 shares of our Series B Preferred stock.

● On September 22, 2021, we converted $30,000 of a promissory note into 14,112 shares of our common stock.

● On September 27, 2021, we converted 2,000 shares of our Series B Preferred Stock into 10,383 shares of our common stock.

II-8

● On September 28, 2021, Jefferson Street Capital, LLC purchased from us a Convertible Promissory Note in the aggregate principal amount of $110,000. As additional consideration for the purchase of the Jefferson Street Note, we also issued to Jefferson Street a common stock purchase warrant for 22,222 shares of our common stock at an exercise price of $4.50 per share. In connection with this transaction, we also paid to Moody Capital Solutions, Inc., a FINRA registered broker-dealer, a fee comprised of (i) $8,000 in cash; and (ii) a common stock purchase warrant for 1,111 shares of our common stock at an exercise price of $4.50 per share.

● On October 04, 2021, we converted 3,300 shares of our Series B Preferred Stock into 18,535 shares of our common stock.

● On October 19, 2021, we converted $30,000 of a promissory note into 20,281 shares of our common stock.

● On October 19, 2021, Mast Hill Fund, L.P. purchased from us a Promissory Note in the aggregate principal amount of $444,444.00. We also issued to Mast Hill warrants to acquire 161,616 shares of our common stock pursuant to a Common Stock Purchase Warrant.

● On October 27, 2021, we issued 5,375 shares of our Series B Preferred stock to Geneva Roth at a total purchase price of $53,750.

● On November 08, 2021, we converted $30,000 of a promissory note into 24,287 shares of our common stock.

● On November 15, 2021, we converted 2,000 shares of our Series B Preferred Stock into 18,033 shares of its common stock.

● On November 18, 2021, we converted 3,375 shares of our Series B Preferred Stock into 35,912 shares of its common stock.

● On December 1, 2021, we issued 4,875 shares of our Series B Preferred Stock to Geneva Roth at a total purchase price of $48,750.

II-9

● On February 8, 2022, a noteholder converted $27,812 of convertible debt into 6,091 shares of the Company’s common stock due to a conversion of promissory notes.

● On February 11, 2022, noteholders converted $47,997 of convertible debt into 4,150 shares of the Company’s common stock due to a conversion of promissory notes.

● On February 28, 2022, a noteholder converted 6,631 of warrants into 6,631 shares of the Company’s common stock.

● On March 1, 2022, a noteholder converted $14,496 of convertible debt into 1,469 shares of the Company’s common stock due to a conversion of promissory notes.

● On April 7, 2022, we issued 2,402 shares of our common stock to Root Ventures, LLC pursuant to an agreement with Root Ventures, LLC. The issuance was exempt under Section 4(a)(2) of the Securities Act.

● On April 7, 2022, we issued 1,852 shares of our common stock to One44 Capital, LLC pursuant to an agreement with One44 Capital, LLC. The issuance was exempt under Section 4(a)(2) of the Securities Act.

● On April 7, 2022, we issued 933 shares of our common stock to GS Capital Partners, LLC pursuant to an agreement with GS Capital Partners, LLC. The issuance was exempt under Section 4(a)(2) of the Securities Act.

● On April 7, 2022, we issued 6,431 shares of our common stock to Westland Properties, LLC pursuant to an agreement with Westland Properties, LLC. The issuance was exempt under Section 4(a)(2) of the Securities Act.

● On April 7, 2022, we issued 2,402 shares of our common stock to Fast Capital, LLC pursuant to an agreement with Fast Capital, LLC. The issuance was exempt under Section 4(a)(2) of the Securities Act.

● On April 20, 2022, we issued 380,952 shares of our common stock to Centurion Holdings I, LLC pursuant to an agreement with Centurion Holdings I, LLC. The issuance was exempt under Section 4(a)(2) of the Securities Act.

● On May 3, 2022, we issued 75,200 shares of our common stock to SJSS Investments pursuant to an agreement with SJSS Investments. The issuance was exempt under Section 4(a)(2) of the Securities Act.

● On May 3, 2022, we issued 76,000 shares of our common stock to Allan S. Brantley pursuant to an agreement with Allan S. Brantley. The issuance was exempt under Section 4(a)(2) of the Securities Act.

● On July 26, 2022, we issued 31,019 shares of our common stock to One44 Capital, LLC pursuant to an agreement with One44 Capital, LLC. The issuance was exempt under Section 4(a)(2) of the Securities Act.

● On August 18, 2022, we issued 27,322 shares of our common stock to Fast Capital, LLC pursuant to an agreement with Fast Capital, LLC. The issuance was exempt under Section 4(a)(2) of the Securities Act.

● On August 19, 2022, we issued 23,460 shares of our common stock to Allan S. Brantley pursuant to an agreement with Allan S. Brantley. The issuance was exempt under Section 4(a)(2) of the Securities Act.

● On September 14, 2022, we issued 11,111 shares of our common stock to Red Road Holdings Corporation pursuant to an agreement with Red Road Holdings Corporation. The issuance was exempt under Section 4(a)(2) of the Securities Act.

● On September 21, 2022, we issued 30,700 shares of our common stock to SJSS Investments pursuant to an agreement with SJSS Investments. The issuance was exempt under Section 4(a)(2) of the Securities Act.

● On October 9, 2022, we issued 26,748 shares of our common stock to Red Road Holdings Corporation pursuant to an agreement with Red Road Holdings Corporation. The issuance was exempt under Section 4(a)(2) of the Securities Act.

● Between August 25, 2022, and November 7, 2022, we sold 931,000 shares of Common Stock to 39 accredited investors in a private placement offering, in exchange for $931,000.

● On November 7, 2022, we issued 54,776 shares of Common Stock to Mast Hill Fund pursuant to an agreement with Mast Hill Fund, in exchange for $54,776 of accrued interest.

● On November 8, 2022, we issued 18,382 shares of Common Stock to Red Road Holdings Corporation pursuant to an agreement with Red Road Holdings Corporation, in exchange for $15,000 in note payable principal.

● On November 15, 2022, we issued 32,895 shares of Common Stock to Red Road Holdings Corporation pursuant to an agreement with Red Road Holdings Corporation, in exchange for $30,000 in note payable principal.  

● On November 21, 2022, we issued 27,627 shares of Common Stock to Red Road Holdings Corporation pursuant to an agreement with Red Road Holdings Corporation, in exchange for $21,813 in note payable principal and accrued interest of $6,919.  

● On November 23, 2022, we issued 24,038 shares of Common Stock to 1800 Diagonal Lending, LLC pursuant to an agreement with 1800 Diagonal Lending, LLC, in exchange for $25,000 in note payable principal.  

● On November 23, 2022, we issued 54,776 shares of Common Stock to Mast Hill Fund pursuant to an agreement with Mast Hill Fund, in exchange for $21,988 in note payable principal and $8,730 of accrued interest.  

● On November 28, 2022, we issued 47,753 shares of Common Stock to GS Capital Partners LLC pursuant to an agreement with GS Capital Partners LLC, in exchange for $32,500 in note payable principal and $2,499 of accrued interest.

● On November 28, 2022, we issued 28,846 shares of Common Stock to 1800 Diagonal Lending, LLC pursuant to an agreement with 1800 Diagonal Lending, LLC, in exchange for $30,000 in note payable principal.

● On November 30, 2022, we issued 37,602 shares of Common Stock to 1800 Diagonal Lending, LLC pursuant to an agreement with 1800 Diagonal Lending, LLC, in exchange for $35,562 in note payable principal and $4,157 of accrued interest.

● On November 30, 2022, we issued 30,750 shares of Common Stock to Jefferson Street Capital LLC pursuant to an agreement with Jefferson Street Capital LLC, in exchange for $30,000 in note payable principal and $750 of accrued interest.

● On December 7, 2022, we issued 30,750 shares of Common Stock to Jefferson Street Capital LLC pursuant to an agreement with Jefferson Street Capital LLC, in exchange for $30,000 in note payable principal and $750 of accrued interest.

● On December 7, 2022, we issued 96,432 shares of Common Stock to Fast Capital LLC pursuant to an agreement with Fast Capital LLC, in exchange for $50,000 in note payable principal.

● On December 8, 2022, we issued 83,189 shares of Common Stock to GS Capital Partners LLC pursuant to an agreement with GS Capital Partners LLC, in exchange for $40,000 in note payable principal and $3,134 of accrued interest.

● On January 4, 2023, we issued 97,761 shares of Common Stock to GS Capital Partners LLC pursuant to an agreement with GS Capital Partners LLC, in exchange for $15,000 in note payable principal and $1,384 of accrued interest.

● On January 9, 2023, we issued 83,333 shares of Common Stock to Westland Properties, LLC pursuant to an agreement with Westland Properties, LLC, in exchange for $15,000 in note payable principal.

II-10

● On January 16, 2023, we issued 139,557 shares of Common Stock to Root Ventures, LLC pursuant to an agreement with Root Ventures, LLC, in exchange for $23,027 in note payable principal.

● On January 19, 2023, we issued 139,500 shares of Common Stock to Fast Capital LLC pursuant to an agreement with Fast Capital LLC, in exchange for $20,000 in note payable principal.

● On January 20, 2023, we issued 122,248 shares of Common Stock to GS Capital Partners LLC pursuant to an agreement with GS Capital Partners LLC, in exchange for $16,000 in note payable principal and $1,524 of accrued interest.

● On January 25, 2023, we issued 111,773 shares of Common Stock to Westland Properties, LLC pursuant to an agreement with Westland Properties, LLC, in exchange for $15,000 in note payable principal.

● On February 1, 2023, we issued 165,000 shares of Common Stock to Mast Hill Fund pursuant to an agreement with Mast Hill Fund, in exchange for $13,023 in note payable principal and $10,792 of accrued interest.

● On February 6, 2023, we issued 118,858 shares of Common Stock to Westland Properties, LLC pursuant to an agreement with Westland Properties, LLC, in exchange for $15,000 in note payable principal.

● On February 17, 2023, we issued 179,000 shares of Common Stock to Mast Hill Fund pursuant to an agreement with Mast Hill Fund, in exchange for $21,638 in note payable principal and $4,197 of accrued interest.

● On February 21, 2023, we issued 174,539 shares of Common Stock to One44 Capital, LLC pursuant to an agreement with One44 Capital, LLC, in exchange for $6,900 in note payable principal and $638 of accrued interest.  

● On February 21, 2023, we issued 179,325 shares of Common Stock to Root Ventures, LLC pursuant to an agreement with Root Ventures, LLC, in exchange for $7,711 in note payable principal.

● On February 23, 2023, we issued 192,702 shares of Common Stock to GS Capital Partners LLC pursuant to an agreement with GS Capital Partners LLC, in exchange for $5,200 in note payable principal and $503 of accrued interest.

● On February 23, 2023, we issued 200,674 shares of Common Stock to One44 Capital, LLC pursuant to an agreement with One44 Capital, LLC, in exchange for $5,600 in note payable principal and $521 of accrued interest.  

● On February 28, 2023, we issued 179,000 shares of Common Stock to Mast Hill Fund pursuant to an agreement with Mast Hill Fund, in exchange for $356 in note payable principal and $1,434 of accrued interest.

● On February 28, 2023, we issued 216,390 shares of Common Stock to One44 Capital, LLC pursuant to an agreement with One44 Capital, LLC, in exchange for $3,800 in note payable principal and $358 of accrued interest.

● On March 2, 2023, we issued 245,000 shares of Common Stock to Mast Hill Fund pursuant to an agreement with Mast Hill Fund, in exchange for $2,020 in note payable principal and $430 of accrued interest.

● On March 3, 2023, we issued 220,139 shares of Common Stock to GS Capital Partners LLC pursuant to an agreement with GS Capital Partners LLC, in exchange for $2,900 in note payable principal and $471 of accrued interest.  

● On March 3, 2023, we issued 235,992 shares of Common Stock to One44 Capital, LLC pursuant to an agreement with One44 Capital, LLC, in exchange for $3,300 in note payable principal and $313 of accrued interest.

● On March 7, 2023, we issued 273,081 shares of Common Stock to One44 Capital, LLC pursuant to an agreement with One44 Capital, LLC, in exchange for $3,800 in note payable principal and $364 of accrued interest.

● On March 9, 2023, we issued 245,000 shares of Common Stock to Mast Hill Fund pursuant to an agreement with Mast Hill Fund, in exchange for $2,205 in note payable principal and $997 of accrued interest.

II-11

● On March 10, 2023, we issued 302,030 shares of Common Stock to One44 Capital, LLC pursuant to an agreement with One44 Capital, LLC, in exchange for $4,200 in note payable principal and $406 of accrued interest.

● On March 23, 2023, we issued 310,125 shares of Common Stock to One44 Capital, LLC pursuant to an agreement with One44 Capital, LLC, in exchange for $4,300 in note payable principal and $429 of accrued interest.

● On May 1, 2023, we issued 328,796 shares of Common Stock to One44 Capital, LLC pursuant to an agreement with One44 Capital, LLC, in exchange for $6,300 in note payable principal and $690 of accrued interest.

● On May 1, 2023, we issued 336,663 shares of Common Stock to Root Ventures, LLC pursuant to an agreement with Root Ventures, LLC, in exchange for $7,137 in note payable principal.

● On May 8, 2023, we issued 362,878 shares of Common Stock to One44 Capital, LLC pursuant to an agreement with One44 Capital, LLC, in exchange for $6,000 in note payable principal and $556 of accrued interest.

● On May 19, 2023, we issued 394,437 shares of Common Stock to One44 Capital, LLC pursuant to an agreement with One44 Capital, LLC, in exchange for $5,400 in note payable principal and $615 of accrued interest.

● On May 26, 2023, we issued 1,644,736 shares of Common Stock to Root Ventures, LLC pursuant to an agreement with Root Ventures, LLC, in exchange for $25,000 in note payable principal.

● On May 26, 2023, we issued 2,333,333 shares of Common Stock to Fast Capital LLC pursuant to an agreement with Fast Capital LLC, in exchange for $35,000 in note payable principal.

● On May 31, 2023, we issued 425,580 shares of Common Stock to GS Capital Partners LLC pursuant to an agreement with GS Capital Partners LLC, in exchange for $5,442 in note payable principal and $873 of accrued interest.

● On June 16, 2023, we issued 850,373 shares of Common Stock to One44 Capital, LLC pursuant to an agreement with One44 Capital, LLC, in exchange for $8,400 in note payable principal and $1,015 of accrued interest.

● On July 7, 2023, we issued 2,049,180 shares of Common Stock to Root Ventures, LLC pursuant to an agreement with Root Ventures, LLC, in exchange for $25,000 in note payable principal.

II-12

Item 16. Exhibits and Financial Statement Schedules

(a) Exhibits

The following documents are filed as exhibits to this registration statement:

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	Exhibit	Filing Date/ Period End Date
1.1*	Form of Underwriting Agreement.
2.1	Share Exchange Agreement dated December 31, 1998, by and between the Company and Rebound Corp.,	10-SB/A	10.7	1/7/2000
3.1	Amended and Restated Articles of Incorporation of the Company, dated May 1, 2018.	10-12G	3.2	1/11/2019
3.2	Certificate of Designation for Preferred Series A Stock of the Company, dated May 28, 2008.	10-12G	3.4	1/11/2019
3.3	Amendment to Certificate of Designation for Preferred Series A Stock of the Company, dated April 27, 2018.	10-12G	3.4	1/11/2019
3.4	Bylaws of the Company.	10-SB	I	1/4/2000
3.5	Certificate of Amendment to the Company’s Articles of Incorporation dated October 29, 2019.	8-K	3.1	10/15/2019
3.6	Certificate of Amendment to the Company’s Articles of Incorporation dated August 17, 2020.	8-K	3.1	8/21/2020
3.7	Certificate of Designation for Preferred Series B Stock of the Company, dated November 25, 2020.	8-K	3.1	12/2/2020
3.8	Certificate of Amendment to the Company’s Articles of Incorporation dated December 15, 2020, increasing the number of authorized shares of Common Stock to 1.8 billion.	8-K	3.1	12/17/2020
3.9	Certificate of Amendment to the Company’s Articles of Incorporation dated April 21, 2021.	8-K	3.1	4/27/2021
3.10	Certificate of Amendment to the Company’s Articles of Incorporation dated January 10, 2021.	8-K	3.1	6/21/2021
3.11	Certificate of Change to the Company’s Articles of Incorporation dated January 6, 2022.	8-K	3.1	3/11/2022
3.12	Certificate of Change to the Company’s Articles of Incorporation dated May 25, 2023.	8-K	3.1	05/26/2023
4.1	Warrant Exchange Notes issued as of 17 November 2020 in the total original principal amount of $100,000.	10-K	4.7	3/23/2021
4.2	Common Stock Purchase Warrant issued in favor of Triton Funds LP on December 11, 2020.	8-K	4.1	12/17/2020

II-13

4.3	Common Stock Purchase Warrant (the “First Warrant”) issued in favor of Auctus Fund, LLC on 23 April 2021.	8-K	4.1	4/27/2021
4.4	Common Stock Purchase Warrant (the “Second Warrant”) issued in favor of Auctus Fund, LLC on April 22, 2021.	8-K	4.2	4/27/2021
4.5	Common Stock Purchase Warrant (the “First Warrant”) issued in favor of Auctus Fund, LLC on 30 July 2021 for the purchase of 62,667 shares of Common Stock at $4.50 per share.	10-Q	4.11	8/03/2021
4.6	Common Stock Purchase Warrant (the “Second Warrant”) issued in favor of Auctus Fund, LLC on 30 July 2021 for the purchase of 62,667 shares of Common Stock at $4.50 per share.	10-Q	4.12	8/03/2021
4.7	Common Stock Purchase Warrant (the “First Warrant”) issued in favor of Jefferson Street Capital LLC on 28 September 2021.	10-K	4.8	03/31/2022
4.8	Common Stock Purchase Warrant (the “Second Warrant”) issued in favor of Jefferson Street Capital LLC on 28 September 2021.	10-K	4.9	03/31/2022
4.9	Convertible Promissory Note issued the Company in favor of Jefferson Street Capital LLC on 28 September 2021 in the original principal amount of $110,000.	10-K	4.10	03/31/2022
4.10	Common Stock Purchase Warrant (the “First Warrant”) issued in favor of Mast Hill Fund, LP on 19 October 2021.	10-Q	4.13	10/26/2021
4.11	Common Stock Purchase Warrant (the “Second Warrant”) issued in favor of Mast Hill Fund, LP on 19 October 2021.	10-Q	4.14	10/26/2021
4.12	Common Stock Purchase Warrant issued in favor of Westland Properties, LLC on 21 December 2021.	10-K	4.13	03/31/2022
4.13	Convertible Promissory Note issued the Company in favor of Westland Properties, LLC on 21 December 2021 in the original principal amount of $555,555.	10-K	4.14	03/31/2022
4.14	Convertible Promissory Note issued the Company in favor of GS Capital Partners, LLC on 11 February 2022 in the original principal amount of $207,500.	10-K	4.15	03/31/2022
4.15	Convertible Promissory Note issued the Company in favor of One44 Capital LLC on 11 February 2022 in the original principal amount of $160,000.	10-K	4.16	03/31/2022
4.16	Convertible Promissory Note issued the Company in favor of Fast Capital, LLC on 14 February 2022 in the original principal amount of $207,500.	10-K	4.17	03/31/2022
4.17	Convertible Promissory Note issued the Company in favor of Root Ventures, LLC on 1 March 2022 in the original principal amount of $207,500.	10-K	4.18	03/31/2022
4.18	Convertible Promissory Note issued the Company in favor of Red Road Holdings Corporation on 9 March 2022 in the original principal amount of $176,813.	10-K	4.19	03/31/2022

II-14

4.19	Convertible Promissory Note issued by the Company in favor of 1800 Diagonal Lending LLC, dated May 16, 2022.	10-Q	4.1	08/14/2023
4.20	Form of Note, between the Company and Walleye Opportunities Master Fund Ltd on December 7, 2022.	8-K	4.1	12/12/2022
4.21	Form of Warrant, between the Company and Walleye Opportunities Master Fund Ltd on December 7, 2022.	8-K	4.2	12/12/2022
4.22	Form of Note, between the Company and Walleye Opportunities Master Fund Ltd on January 24, 2023.	8-K	4.1	01/30/2023
4.23	Form of Warrant, between the Company and Walleye Opportunities Master Fund Ltd on January 24, 2023.	8-K	4.2	01/30/2023
4.24	Convertible Promissory Note issued by the Company in favor of Jefferson Street Capital LLC on May 9, 2022.	10-K	4.24	02/24/2023
4.25	Common Stock Purchase Warrant issued to Moody Capital Solutions Inc. on May 9, 2022.	10-K	4.25	02/24/2023
4.26	Convertible Promissory Note issued by the Company in favor of 1800 Diagonal Lending LLC on January 4, 2023.	10-K	4.26	02/24/2023
4.27	Form of Note, between the Company and Investor #1.	8-K	4.1	07/24/2023
4.28	Form of Warrant, between the Company and Investor #1.	8-K	4.2	07/24/2023
4.29	Form of Note, between the Company and Investor #2.	8-K	4.3	07/24/2023
4.30	Form of Warrant, between the Company and Investor #2.	8-K	4.4	07/24/2023
4.31	Form of Warrant, between the Company and the Placement Agent	8-K	4.5	07/24/2023
4.32	Form of Warrant, between the Company and the Previous Investor.	8-K	4.6	07/24/2023
4.33	Form of New Note, between the Company and the Noteholder.	8-K	4.7	07/24/2023
4.34*	Form of Warrant Agent Agreement
4.35*	Form of Warrant
4.36*	Form of Underwriter’s Warrant

II-15

5.1+	Opinion of Flangas Law Group
10.1	Asset Purchase Agreement dated January 26, 2018 by and between Myriad Software Productions, LLC and Data443 Risk Management, Inc.	10-12G	10.1	1/11/2019
10.2	Secured Promissory Note dated January 26, 2018 issued by Data443 Risk Management, Inc. in favor of Myriad Software Productions, LLC in the original principal amount of $250,000.	10-12G	10.2	1/11/2019
10.3	Security Agreement dated January 26, 2018 executed by Data443 Risk Management, Inc. in favor of Myriad Software Productions, LLC.	10-12G	10.3	1/11/2019
10.4†	2019 Omnibus Stock Incentive Plan dated May 16, 2019	8-K	10.1	5/19/2019
10.5	Letter Agreement effective August 26, 2020, between the Company and Maxim Group, LLC.	10-Q	10.23	11/16/2020
10.6	Asset Sale Agreement effective January 31, 2021, between the Company and the secured creditors of Wala, Inc.	10-K	10.28	3/23/2021
10.7	Three Secured Promissory Notes, each effective January 31, 2021 and issued by the Company in favor of the secured creditors of Wala, Inc.	10-K	10.29	3/23/2021
10.8	Security Agreement effective January 31, 2021, between the Company and the secured creditors of Wala, Inc.	10-K	4.6	3/23/2021
10.9	Form of Securities Purchase Agreement entered into with Auctus Fund, LLC on April 23, 2021.	8-K	10.1	4/27/2021
10.10	Form of Senior Secured Promissory Note issued in favor of Auctus Fund, LLC on April 23, 2021.	8-K	10.2	4/27/2021
10.11	Form of Security Agreement entered into with Auctus Fund, LLC on April 23, 2021.	8-K	10.3	4/27/2021
10.12†	Employment Agreement, Effective March 1, 2019 between the Company and Jason Remillard	10-K	10.13	03/31/2022
10.13†	Employment Agreement, effective December 1, 2021 between the Company and Nanuk Warman	10-K	10.14	03/31/2022
10.14	Form of Securities Purchase Agreement entered into with Auctus Fund, LLC on 29 July 2021.	10-Q	10.34	8/3/2021

II-16

10.15	Form of Senior Secured Promissory Note issued in favor of Auctus Fund, LLC on 29 July 2021.	10-Q	10.35	8/3/2021
10.16	Form of Security Agreement entered into with Auctus Fund, LLC on 29 July 2021.	10-Q	10.36	8/3/2021
10.17	Form of Securities Purchase Agreement entered into with Jefferson Street Capital LLC on 28 September 2021.	10-K	10.18	03/31/2022
10.18	Form of Securities Purchase Agreement entered into with Mast Hill Fund, LP on 19 October 2021.	10-Q	10.37	10/26/2021
10.19	Form of Promissory Note issued in favor of Mast Hill Fund, LP on 19 October 2021.	10-Q	10.38	10/26/2021
10.20	Form of Securities Purchase Agreement entered into with Westland Properties, LLC on 21 December 2021.	10-K	10.21	03/31/2022
10.21	Centurion Holdings I, LLC asset purchase agreement dated January 19, 2022	8-K	10.1	1/19/2022
10.22	Form of Securities Purchase Agreement entered into with GS Capital Partners, LLC on 11 February 2022.	10-K	10.23	03/31/2022
10.23	Form of Securities Purchase Agreement entered into with One44 Capital LLC on 11 February 2022.	10-K	10.24	03/31/2022
10.24	Form of Securities Purchase Agreement entered into with Fast Capital, LLC on 14 February 2022.	10-K	10.25	03/31/2022
10.25	Form of Securities Purchase Agreement entered into with Root Ventures, LLC on 1 March 2022.	10-K	10.26	03/31/2022
10.26	Form of Securities Purchase Agreement entered into with Red Road Holdings Corporation on 9 March 2022.	10-K	10.27	03/31/2022
10.27	Form of Securities Purchase Agreement, between the Company and Walleye Opportunities Master Fund Ltd on December 7, 2022.	8-K	10.1	12/12/2022
10.28	Form of Securities Purchase Agreement, between the Company and Walleye Opportunities Master Fund Ltd, dated January 30, 2023.	8-K	10.1	01/30/2023
10.29	Form of Securities Purchase Agreement between the Company and Jefferson Street Capital LLC, dated May 9, 2022, 2022.	10-K	10.30	02/24/2023
10.30	Form of Securities Purchase Agreement between the Company and 1800 Diagonal Lending LLC, dated January 4, 2023.	10-K	10.31	02/24/2023
10.31	Asset Sale Agreement, between the Company and Wala, Inc., dated January 31, 2021.	10-K	10.32	02/24/2023
10.32	Bill of Sale, between the Company and the sellers listed therein, date January 31, 2021.	10-K	10.33	02/24/2023
10.33	I.P. Assignment and Assumption Agreement, between the Company and certain noteholders of the Company, dated January 31, 2021.	10-K	10.34	02/24/2023
10.34	Security Agreement, between the Company and certain secured parties listed therein, dated January 31, 2021.	10-K	10.35	02/24/2023

II-17

10.35	Form of Amendment dated March 23, 2023 to Securities Purchase Agreement dated November 4, 2022, between the Company and the Investor.	8-K	10.1	03/23/2023
10.36	Form of Purchase Agreement, dated May 11, 2023, between the Company and the Appointed Receiver for the Assets of Cyren Ltd.	8-K	10.1	05/15/2023
10.37	Form of Securities Purchase Agreement between the Company and Investor #1.	8-K	10.1	07/24/2023
10.38	Form of Securities Purchase Agreement between the Company and Investor #2.	8-K	10.2	07/24/2023
10.39	Form of Security Agreement between the Company and the Investors.	8-K	10.3	07/24/2023
10.40	Form of Amendment, between	8-K	10.4	07/24/2023
10.41	Form of Note Exchange Agreement, between the Company and the Noteholder.	8-K	10.5	07/24/2023
14.1*	Code of Conduct and Business Ethics
21.1	List of subsidiaries of Registrant.	S-1	23.1	12/07/2021
23.1*	Consent of TPS Thayer, LLC.
23.2+	Consent of Flangas Law Group (included in Exhibit 5.1).
99.1*	Consent of Director Nominee (Palma)
99.2*	Consent of Director Nominee (Jaffe)
99.3*	Consent of Director Nominee (Favish)
99.4*	Audit Committee Charter
99.5*	Compensation Committee Charter
99.6*	Nominating and Corporate Governance Committee Charter
101*	Inline XBRL Document Set for the consolidated financial statements and accompanying notes in Part II, Item 8, “Financial Statements and Supplementary Data” of this Prospectus.
104*	Inline XBRL for the cover page of this Prospectus, included in the Exhibit 101 Inline XBRL Document Set.
107*	Filing Fee Table

*	Filed herewith.
†	Indicates management contract or compensatory plan or arrangement
+	To be filed by amendment.

(b) Financial Statement Schedules

All schedules have been omitted because the information required to be set forth in the schedules is either not applicable or is shown in the financial statements or notes thereto.

II-18

Item 17. Undertakings

(a) The undersigned registrant hereby undertakes as follows:

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i)	To include any Prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii)	To reflect in the Prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of Prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;
(iii)	To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

(2)	That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3)	To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4)	That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each Prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than Prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or Prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or Prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or Prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
(5)	That, for the purpose of determining any liability under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i)	Any preliminary Prospectus or Prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii)	Any free writing Prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
(iii)	The portion of any other free writing Prospectus relating to the offering containing material information about the undersigned registrant or our securities provided by or on behalf of the undersigned registrant; and
(iv)	Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

(b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the undersigned pursuant to the foregoing provisions, or otherwise, the undersigned has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the undersigned of expenses incurred or paid by a director, officer or controlling person of the undersigned in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the undersigned will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this Registration Statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Morrisville, State of North Carolina, on the 24th day of August, 2023.

DATA443 RISK MITIGATION, INC.
By:	/s/ Jason Remillard
	Jason Remillard
	Chief Executive Officer

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

SIGNATURE	TITLE	DATE
/s/ Jason Remillard	President, Chief Executive Officer and Director	August 24, 2023
Jason Remillard	(principal executive officer)
/s/ Greg McCraw	Vice President and Chief Financial Officer	August 24, 2023
Greg McCraw	(principal financial and accounting officer)

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EX-1.1

Exhibit 1.1

UNDERWRITING AGREEMENT

[              ], 2023

DAWSON JAMES SECURITIES, INC.

101 N. Federal Highway Suite 600

Newport Beach, CA 92660

As Representative of the several Underwriters named on Schedule 1 attached hereto

Ladies and Gentlemen:

The undersigned, Data443 Risk Mitigation, Inc., a Nevada corporation (the “Company”), hereby confirms its agreement (this “Agreement”) with Dawson James Securities Inc. (the “Representative”) and with the other underwriters, if any, named on Schedule 1 hereto for which the Representative is acting as representative (the Representative and such other underwriters being collectively called the “Underwriters” or, individually, an “Underwriter”) as follows:

1. Purchase and Sale of Shares and Warrants.

(a) Firm Shares and Firm Warrants.

(i) Nature and Purchase of Firm Shares and Firm Warrants.

(A) On the basis of the representations and warranties herein contained, but subject to the terms and conditions herein set forth, the Company agrees to issue and sell to the Underwriters an aggregate of [     ] units (each a “Unit,” and collectively, the “Units”), each comprised of one share (the “Firm Shares”) of Company common stock, par value $0.001 per share (the “Common Shares”), and (ii) a warrant to purchase one Common Share at an exercise price of $[     ] per share (the “Firm Warrants” and, collectively with the Firm Shares, the “Firm Securities”).

(B) The Underwriters, severally and not jointly, agree to purchase from the Company the number of Units set forth opposite their respective names on Schedule 1 attached hereto and made a part hereof. The combined purchase price for one Unit shall be $[      ] (92% of the public offering price per Unit of $[    ]) which shall be allocated as $[     ] per Firm Share (the “Share Purchase Price”) and $0.0092 per Firm Warrant (the “Warrant Purchase Price”). The Units are to be offered initially to the public at the offering price set forth on the cover page of the Prospectus (as defined in Section 2(a)(B) hereof) (the “Purchase Price”). The Firm Shares and the Firm Warrants will be separated immediately upon issuance.

(ii) Securities Payment and Delivery.

(A) Delivery and payment for the Units shall be made no later than 2:00 p.m., Eastern Time, on the second (2^nd) Business Day following the effective date (the “Effective Date”) of the Registration Statement (as defined in Section 2(a)(i)(A) below) (or the third (3^rd) Business Day following the Effective Date if the Registration Statement is declared effective after 4:01 p.m., Eastern Time) or at such other time as shall be agreed upon by the Representative and the Company, at the offices of ArentFox Schiff LLP, 1717 K Street NW, Washington DC 20006 (“Representative’s Counsel”), or at such other place (or by electronic transmission) as shall be agreed upon by the Representative and the Company. The hour and date of delivery and payment for the Units is called the “Closing Date.”

(B) Payment for the Units shall be made on the Closing Date by wire transfer in federal (same day) funds, payable to the order of the Company upon delivery of the certificates (in form and substance satisfactory to the Underwriters) (or through the facilities of the Depository Trust Company (“DTC”)), for the account of the Underwriters. The Firm Shares and Firm Warrants underlying the Units shall be registered in such name or names and in such authorized denominations as the Representative may request in writing prior to the Closing Date. The Company shall not be obligated to sell or deliver the Firm Shares and Firm Warrants underlying the Units except upon tender of payment by the Representative for all of the Units or via delivery versus payment for the Units. The term “Business Day” means any day other than a Saturday, a Sunday or a legal holiday or a day on which banking institutions are authorized or obligated by law to close in New York, New York.

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(b) Over-Allotment Option.

(i) Option Securities. For the purposes of covering any over-allotments in connection with the distribution and sale of the Units, the Company hereby grants to the Representative an option (the “Over-Allotment Option”) to purchase, in the aggregate, (a) up to [     ] additional Common Shares (15% of the Firm Shares) at a purchase price per share of $[     ] (92% of the public offering price allocated to each Firm Share) (the “Option Shares” and together with the Firm Shares, the “Shares”), and/or (b) [    ] warrants to purchase an aggregate of [     ] Common Shares (15% of the Firm Warrants) at a purchase price of $0.0092 per warrant (92% of the public offering price allocated to each set of Firm Warrants) (the “Option Warrants” and together with the Firm Warrants, the “Warrants”), which may be purchased in any combination of Option Shares and/or Option Warrants. The Option Shares and the Option Warrants are referred to as the “Option Securities”). The Firm Securities and the Option Securities are collectively referred to as the “Public Securities.” The Public Securities shall be issued directly by the Company and shall have the rights and privileges described in the Registration Statement, the Pricing Disclosure Package and the Prospectus referred to below. The offering and sale of the Public Securities is hereinafter referred to as the “Offering.”

(ii) Exercise of Over-Allotment Option. The Over-Allotment Option granted pursuant to Section 1(b)(i) hereof may be exercised by the Representative as to all (at any time) or any part (from time to time) of the Option Securities within 45 days after the Closing Date. An Underwriter shall not be under any obligation to purchase any Option Securities prior to the exercise of the Over-Allotment Option by the Representative. The Over-Allotment Option granted hereby may be exercised by the giving of oral notice to the Company from the Representative, which must be confirmed in writing by overnight mail or by email or other electronic transmission setting forth the number of Option Shares and/or Option Warrants to be purchased and the date and time for delivery of and payment for the Option Shares and/or Option Warrants, as the case may be (each, an “Option Closing Date”), which shall not be earlier than one (1) Business Day nor later than five (5) full Business Days after the date of the written notice or such other time as shall be agreed upon by the Company and the Representative, at the offices of the Representative’s Counsel, or at such other place (including remotely by electronic transmission) as shall be agreed upon by the Company and the Representative. If such delivery and payment for the Option Shares and/or Option Warrants does not occur on the Closing Date, each Option Closing Date will be as set forth in the notice. Upon exercise of the Over-Allotment Option, the Company will become obligated to convey to the Representative, and, subject to the terms and conditions set forth herein, the Representative will become obligated to purchase, the number of Option Shares and/or Option Warrants specified in such notice.

(iii) Payment and Delivery. Payment for the Option Shares and/or Option Warrants shall be made on the Option Closing Date by wire transfer in federal (same day) funds, payable to the order of the Company upon delivery to the Representative of certificates (in form and substance satisfactory to the Representative) representing the Option Shares and/or Option Warrants (or through the facilities of the DTC or Deposit/Withdrawal at Custodian transfer) for the account of the Representative. The Option Shares and/or Option Warrants shall be registered in such name or names and in such authorized denominations as the Representative may request in writing prior to the Option Closing Date. The Company shall not be obligated to sell or deliver the Option Shares and/or Option Warrants except upon tender of payment by the Representative for the applicable Option Shares and/or Option Warrants.

(c) Representative’s Warrant.

(i) Representative’s Warrant. The Company hereby agrees to issue to the Representative (and/or its designees) on the Closing Date a warrant for the purchase of the number of Common Shares equal to 8.0% of the Common Shares underlying the Units issued in the Offering, pursuant to a warrant agreement in the form attached hereto as Exhibit A (the “Representative’s Warrant”), at an initial exercise price of $[    ] per share, which is equal to 125% of the public offering price for one Unit. The Representative’s Warrant and the Common Shares issuable upon exercise of the Representative’s Warrant are hereinafter referred to together as the “Representative’s Securities.” The Representative understands and agrees that there are significant restrictions pursuant to FINRA Rule 5110 against transferring the Representative’s Warrant and the underlying securities during the 180 days after the commencement date of sales in the Offering and by its acceptance thereof shall agree that it will not sell, transfer, assign, pledge or hypothecate the Representative’s Warrant, or any portion thereof, or be the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of such securities for a period of 180 days after the commencement date of sales in the Offering, except as expressly permitted by FINRA Rule 5110(e), and only if any such transferee agrees to the foregoing lock-up restrictions.

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(ii) Delivery. Delivery of the Representative’s Warrant shall be made on the Closing Date, and shall be issued in the name or names and in such authorized denominations as the Representative may reasonably request.

2. Representations and Warranties of the Company. The Company represents and warrants to the Underwriters as of the Applicable Time (as defined below) and as of the Closing Date, or any Option Closing Date, as follows:

(a) Registration Matters.

(i) Pursuant to the Securities Act.

(A) The Company has filed with the U.S. Securities and Exchange Commission (the “Commission”) a registration statement, and amendments thereto, on Form S-1 (File No. 333-256785), including any related prospectus or prospectuses (the “Prospectus”), for the registration of the Public Securities, the Representative’s Securities and the Underlying Common Stock (as defined below) under the Securities Act of 1933, as amended (the “Securities Act”), which registration statement and amendment or amendments have been prepared by the Company in conformity in all material respects with the requirements of the Securities Act and the rules and regulations of the Commission under the Securities Act (the “Securities Act Regulations”) and will contain all material statements that are required to be stated therein in accordance with the Securities Act and the Securities Act Regulations. Except as the context may otherwise require, such registration statement, as amended, on file with the Commission at the time the registration statement became effective (including the Preliminary Prospectus included in the registration statement, financial statements, schedules, exhibits and all other documents filed as a part thereof and all information deemed to be a part thereof as of the Effective Date pursuant to paragraph (b) of Rule 430A of the Securities Act Regulations (the “Rule 430A Information”)), is referred to herein as the “Registration Statement.” If the Company files any registration statement pursuant to Rule 462(b) of the Securities Act Regulations, then after such filing, the term “Registration Statement” shall include such registration statement filed pursuant to Rule 462(b). The Registration Statement has been declared effective by the Commission on the date hereof.

(B) Each prospectus used prior to the effectiveness of the Registration Statement, and each prospectus that omitted the Rule 430A Information that was used after such effectiveness and prior to the execution and delivery of this Agreement, is herein called a “Preliminary Prospectus.” The Preliminary Prospectus, subject to completion, dated [_____], 2023, that was included in the Registration Statement immediately prior to the Applicable Time is hereinafter called the “Pricing Prospectus.” The final prospectus in the form first furnished to the Underwriters for use in the Offering is hereinafter called the “Prospectus.” Any reference to the “most recent Preliminary Prospectus” shall be deemed to refer to the latest Preliminary Prospectus included in the Registration Statement.

(C) The term “Pricing Disclosure Package” means (i) the Preliminary Prospectus, as most recently amended or supplemented immediately prior to the Applicable Time (as defined herein), and (ii) the information included on Schedule 2 of this Agreement.

(D) “Applicable Time” means 4:30 p.m., Eastern Time, on the date of this Agreement.

(ii) Pursuant to the Exchange Act. The Company has filed with the Commission a Form 8-A providing for the registration pursuant to Section 12(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), of the Common Shares and Warrants. The registration of the Common Shares and Warrants under the Exchange Act will be effective on or prior to the date hereof. The Company has taken no action designed to, or likely to have the effect of, terminating the registration of the Common Shares or Warrants under the Exchange Act, nor has the Company received any notification that the Commission is contemplating terminating such registration.

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(b) Stock Exchange Listing. The Common Shares and Warrants have been approved for listing on The Nasdaq Capital Market (the “Exchange”), and the Company has taken no action designed to, or likely to have the effect of, delisting the Common Shares or Warrants from the Exchange, nor has the Company received any notification that the Exchange is contemplating terminating such listing.

(c) No Stop Orders, etc. Neither the Commission nor, to the Company’s knowledge, any state regulatory authority has issued any order preventing or suspending the use of the Registration Statement, any Preliminary Prospectus or the Prospectus or has instituted or, to the Company’s knowledge, threatened to institute, any proceedings with respect to such an order. The Company has complied with each request (if any) from the Commission for additional information.

(d) Organization; Good Standing; No Subsidiaries. The Company has been duly incorporated and is validly existing as entities in good standing under the laws of the State of Nevada, with power and authority to own, lease and operate its respective properties and conduct its respective businesses as described in the Preliminary Prospectus, and has been duly qualified as foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, except where the failure so to qualify or be in good standing would not have a Material Adverse Change (as defined in Section 2(f)(i)). The Company is not in violation or default of any of the provisions of its certificate of incorporation, bylaws or other organizational or charter documents. Other than Data 443 Risk Mitigation, Inc., a North Carolina corporation, the Company does not have any direct or indirect subsidiaries.

(e) Disclosures in Registration Statement.

(i) Compliance with Securities Act and 10b-5 Representation.

(A) Each of the Registration Statement and any post-effective amendment thereto, at the time it became effective, complied in all material respects with the requirements of the Securities Act and the Securities Act Regulations. Each Preliminary Prospectus, including the prospectus filed as part of the Registration Statement as originally filed or as part of any amendment or supplement thereto, and the Prospectus, at the time each was filed with the Commission, complied in all material respects with the requirements of the Securities Act and the Securities Act Regulations. Each Preliminary Prospectus delivered to the Underwriters for use in connection with this Offering and the Prospectus was or will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.

(B) Neither the Registration Statement nor any amendment thereto, at its respective effective time, contained, contains or will contain an untrue statement of a material fact or omitted, omits or will omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that this representation and warranty shall not apply to the Underwriters’ Information (as defined below).

(C) The Pricing Disclosure Package, as of the Applicable Time, at the Closing Date or at any Option Closing Date, did not and does not, and will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to statements made or statements omitted in reliance upon and in conformity with written information furnished to the Company with respect to the Underwriters by the Representative expressly for use in the Registration Statement, the Preliminary Prospectus or the Prospectus or any amendment thereof or supplement thereto. The parties acknowledge and agree that such information provided by or on behalf of any Underwriter consists solely of the following disclosure contained in the following paragraphs in the “Underwriting” section of the Prospectus: (i) the names of the several underwriters, and (ii) the information under the subsections “Discounts and Commissions; Expenses”; “Discretionary Accounts,” “Price Stabilization, Short Positions and Penalty Bids;” and “Electronic Distribution” (the “Underwriters’ Information”); and

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(D) Neither the Prospectus nor any amendment or supplement thereto (including any prospectus wrapper), as of its issue date, at the time of any filing with the Commission pursuant to Rule 424(b), or at the Closing Date, included, includes or will include an untrue statement of a material fact or omitted, omits or will omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to the Underwriters’ Information.

(ii) Disclosure of Agreements. The agreements and documents described in the Registration Statement, the Pricing Disclosure Package and the Prospectus conform in all material respects to the descriptions thereof contained therein and there are no agreements or other documents required by the Securities Act and the Securities Act Regulations to be described in the Registration Statement, the Pricing Disclosure Package and the Prospectus or to be filed with the Commission as exhibits to the Registration Statement, that have not been so described or filed. Each agreement or other instrument (however characterized or described) to which the Company is a party or by which it is or may be bound or affected and (i) that is referred to in the Registration Statement, the Pricing Disclosure Package and the Prospectus, and (ii) is material to the Company’s business, has been duly authorized and validly executed by the Company, is in full force and effect in all material respects and is enforceable against the Company and, to the Company’s knowledge, the other parties thereto, in accordance with its terms, except (w) for such agreements or instruments for enforceability of which would not reasonably be expected to result, individually or in the aggregate, in a Material Adverse Change, (x) as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally, (y) as enforceability of any indemnification or contribution provision may be limited under the federal and state securities laws, and (z) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to the equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. Except as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, none of such agreements or instruments has been assigned by the Company, and neither the Company nor, to the Company’s knowledge, any other party is in material default thereunder and, to the Company’s knowledge, no event has occurred that, with the lapse of time or the giving of notice, or both, would constitute a material default thereunder, except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, or which would not reasonably be expected to result, individually or in the aggregate, in a Material Adverse Change. To the Company’s best knowledge, performance by the Company of the material provisions of such agreements or instruments will not result in a violation of any existing applicable law, rule, regulation, judgment, order or decree of any governmental agency or court, domestic or foreign, having jurisdiction over the Company or any of its assets or businesses (each, a “Governmental Entity”), including, without limitation, those relating to environmental laws and regulations, except such violations which would not reasonably be expected to result, individually or in the aggregate, in a Material Adverse Change.

(iii) Prior Securities Transactions. Since the beginning of the last two full fiscal years, no securities of the Company have been sold by the Company or by or on behalf of, or for the benefit of, any person or persons controlling, controlled by or under common control with the Company, except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Preliminary Prospectus.

(iv) Regulations. The disclosures in the Registration Statement, the Pricing Disclosure Package and the Prospectus concerning the effects of federal, state, local and foreign laws, rules and regulations relating to the Company’s business as currently contemplated are correct in all material respects and no other such regulations are required to be disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus which are not so disclosed.

(f) Changes After Dates in Registration Statement.

(i) No Material Adverse Change. Since the respective dates as of which information is given in the Registration Statement, the Pricing Disclosure Package and the Prospectus, except as otherwise specifically stated therein: (i) there has been no material adverse change in the financial position or results of operations of the Company, nor, to the Company’s knowledge, any change or development that, singularly or in the aggregate, would involve a material adverse change in or affecting the condition (financial or otherwise), results of operations, business or assets of the Company, taken as a whole (a “Material Adverse Change”); (ii) there have been no material transactions entered into by the Company, other than as contemplated pursuant to this Agreement; and (iii) no officer or director of the Company has resigned from any position with the Company.

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(ii) Recent Securities Transactions, etc. Subsequent to the respective dates as of which information is given in the Registration Statement, the Pricing Disclosure Package and the Prospectus, and except as may otherwise be indicated or contemplated herein or disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company has not: (i) issued any securities (other than (i) grants under any stock compensation plan and (ii) Common Shares issued upon exercise or conversion of option, warrants or convertible securities described in the Registration Statement, the Pricing Disclosure Package and the Prospectus) or incurred any liability or obligation, direct or contingent, for borrowed money; or (ii) declared or paid any dividend or made any other distribution on or in respect to its capital stock.

(g) Independent Accountants. To the knowledge of the Company, TPS Thayer, LLC, during such time as it was engaged by the Company (the “Auditors”), has been and is an independent registered public accounting firm as required by the Securities Act and the Securities Act Regulations and the Public Company Accounting Oversight Board. During such time period in which the Auditors served as the Company’s independent registered public accounting firm, the Auditors did not or have not, during the periods covered by the financial statements included in the Registration Statement, the Pricing Disclosure Package and the Prospectus, provided to the Company any non-audit services, as such term is used in Section 10A(g) of the Exchange Act.

(h) Financial Statements, etc. The financial statements, including the notes thereto and supporting schedules included in the Registration Statement, the Pricing Disclosure Package and the Prospectus, fairly present in all material respects the financial position and the results of operations of the Company at the dates and for the periods to which they apply; and such financial statements have been prepared in conformity with United States generally accepted accounting principles (“GAAP”), consistently applied throughout the periods involved (provided that unaudited interim financial statements are subject to year-end audit adjustments that are not expected to be material in the aggregate and do not contain all footnotes required by GAAP); and the supporting schedules included in the Registration Statement present fairly in all material respects the information required to be stated therein. Except as included therein, no historical or pro forma financial statements are required to be included in the Registration Statement, the Pricing Disclosure Package or the Prospectus under the Securities Act or the Securities Act Regulations. The pro forma and pro forma as adjusted financial information and the related notes, if any, included in the Registration Statement, the Pricing Disclosure Package and the Prospectus have been properly compiled and prepared in all material respects in accordance with the applicable requirements of the Securities Act and the Securities Act Regulations and present fairly in all material respects the information shown therein, and the assumptions used in the preparation thereof are reasonable and the adjustments used therein are appropriate to give effect to the transactions and circumstances referred to therein. All disclosures contained in the Registration Statement, the Pricing Disclosure Package or the Prospectus regarding “non-GAAP financial measures” (as such term is defined by the rules and regulations of the Commission), if any, comply with Regulation G of the Exchange Act and Item 10 of Regulation S-K of the Securities Act, to the extent applicable. Each of the Registration Statement, the Pricing Disclosure Package and the Prospectus discloses all material off-balance sheet transactions, arrangements, obligations (including contingent obligations), and other relationships of the Company with unconsolidated entities or other persons that may have a material current or future effect on the Company’s financial condition, changes in financial condition, results of operations, liquidity, capital expenditures, capital resources, or significant components of revenues or expenses. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, (a) the Company has not incurred any material liabilities or obligations, direct or contingent, or entered into any material transactions other than in the ordinary course of business, (b) the Company has not declared or paid any dividends or made any distribution of any kind with respect to its capital stock, (c) there has not been any change in the capital stock of the Company (other than (i) grants under any stock compensation plan and (ii) Common Shares issued upon exercise or conversion of option, warrants or convertible securities described in the Registration Statement, the Pricing Disclosure Package and the Prospectus), and (d) there has not been any Material Adverse Change in the Company’s long-term or short-term debt.

(i) Authorized Capital; Options, etc. The Company had, at the date or dates indicated in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the duly authorized, issued and outstanding capitalization as set forth therein. Based on the assumptions stated in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company will have on the Closing Date the adjusted stock capitalization set forth therein. Except as set forth in, or contemplated by, the Registration Statement, the Pricing Disclosure Package and the Prospectus, on the Effective Date, as of the Applicable Time, and on the Closing Date, there will be no stock options, warrants, or other rights to purchase or otherwise acquire any authorized, but unissued Common Shares or any security convertible or exercisable into Common Shares, or any contracts or commitments to issue or sell Common Shares or any such options, warrants, rights or convertible securities.

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(j) Valid Issuance of Securities, etc.

(i) Outstanding Securities. All issued and outstanding securities of the Company issued prior to the transactions contemplated by this Agreement have been duly authorized and validly issued and are fully paid and non-assessable; the holders thereof have no rights of rescission with respect thereto, and are not subject to personal liability by reason of being such holders; and none of such securities were issued in violation of the preemptive rights of any holders of any security of the Company or similar contractual rights granted by the Company. The offers and sales of the outstanding Common Shares were at all relevant times either registered under the Securities Act and the applicable state securities or “blue sky” laws or, based in part on the representations and warranties of the purchasers of such shares, exempt from such registration requirements. The authorized Common Shares and other outstanding securities conform in all material respects to all statements relating thereto contained in the Registration Statement, the Pricing Disclosure Package and the Prospectus.

(ii) Securities Sold Pursuant to this Agreement. The Public Securities and the Representative’s Securities have been duly authorized for issuance and sale and, when issued and paid for in accordance with the terms of this Agreement, will be validly issued, fully paid and non-assessable; the holders thereof are not and will not be subject to personal liability by reason of being such holders; the Public Securities and Representative’s Securities are not and will not be subject to the preemptive rights of any holders of any security of the Company or similar contractual rights granted by the Company; and all corporate action required to be taken for the authorization, issuance and sale of the Public Securities and Representative’s Securities has been duly and validly taken. The Public Securities and Representative’s Securities conform in all material respects to all statements with respect thereto contained in the Registration Statement, the Pricing Disclosure Package and the Prospectus. The Common Shares issuable upon exercise of the Warrants and the Representative’s Warrant (the “Underlying Common Stock”) have been duly authorized and reserved for issuance by all necessary corporate action on the part of the Company and when paid for and issued in accordance with such Warrants or the Representative’s Warrant, or exercised on a cashless basis as set forth in such Warrants or Representative’s Warrant, if applicable, as the case may be, such shares of Underlying Common Stock will be validly issued, fully paid and non-assessable.

(k) Registration Rights of Third Parties. Except as set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus, no holders of any securities of the Company or any rights exercisable for or convertible or exchangeable into securities of the Company have the right to require the Company to register any such securities of the Company under the Securities Act or to include any such securities in a registration statement to be filed by the Company.

(l) Validity and Binding Effect of Agreements. This Agreement, the Warrant Agreement by and between the Company and Madison Stock Transfer, Inc. (the “Warrant Agreement”), and the Representative’s Warrant have been duly and validly authorized by the Company and, when executed and delivered, will constitute, the valid and binding agreements of the Company, enforceable against the Company in accordance with their respective terms, except: (i) as such enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, fraudulent transfer, moratorium or similar laws affecting creditors’ rights generally; (ii) as enforceability of any indemnification or contribution provision may be limited under the federal and state securities laws; and (iii) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to the equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

(m) No Conflicts, etc. The execution, delivery and performance by the Company of this Agreement, the Warrant Agreement, the Representative’s Warrant and all ancillary documents, the consummation by the Company of the transactions herein and therein contemplated and the compliance by the Company with the terms hereof and thereof do not and will not, with or without the giving of notice or the lapse of time or both: (i) result in a material breach of, or conflict with any of the terms and provisions of, or constitute a material default under, or result in the creation, modification, termination or imposition of any material lien, charge or encumbrance upon any property or assets of the Company pursuant to the terms of any agreement or instrument to which the Company is a party; (ii) result in any violation of the provisions of the Company’s certificate of incorporation (as the same may be amended or restated from time to time, the “Charter”) or the by-laws of the Company (as the same may be amended or restated from time to time, the “Bylaws”); or (iii) violate any existing law, rule, regulation, judgment, order or decree of any Governmental Entity applicable to the Company as of the date hereof, except in the case of clauses (i) and (iii) above for any such breaches, conflicts or violations which would not reasonably be expected to result in a Material Adverse Change.

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(n) Regulatory. Except as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus or as would not reasonably be expected to result, individually or in the aggregate, in a Material Adverse Change: (i) the Company has not received any written notice of adverse finding, warning letter or other correspondence or written notice from any Governmental Entity alleging or asserting noncompliance with any Applicable Laws (as defined in clause (ii) below) or Authorizations (as defined in clause (iii) below); (ii) to its knowledge, the Company is and has been in material compliance with statutes, laws, ordinances, rules and regulations applicable to the Company, including, without limitation, all statutes, laws, ordinances, rules and regulations for the ownership, testing, development, manufacture, packaging, processing, use, distribution, marketing, labeling, promotion, sale, offer for sale, storage, import, export or disposal of any product manufactured or distributed by the Company (collectively, “Applicable Laws”); (iii) to its knowledge, the Company possesses all licenses, certificates, approvals, clearances, consents, authorizations, qualifications, registrations, permits, and supplements or amendments thereto required by any such Applicable Laws and/or to carry on its businesses as now conducted (“Authorizations”) and such Authorizations are valid and in full force and effect and the Company is not in violation of any term of any such Authorizations; (iv) the Company has not received written notice of any claim, action, suit, proceeding, hearing, enforcement, investigation, arbitration or other action from any Governmental Entity or third party alleging that any product, operation or activity is in violation of any Applicable Laws or Authorizations or has any knowledge that any such Governmental Entity or third party is considering any such claim, litigation, arbitration, action, suit, investigation or proceeding, nor, to the Company’s knowledge, has there been any material noncompliance with or violation of any Applicable Laws by the Company that could reasonably be expected to require the issuance of any such communication or result in an investigation, corrective action, or enforcement action by any Governmental Entity; (v) the Company has not received written notice that any Governmental Entity has taken, is taking or intends to take action to limit, suspend, modify or revoke any Authorizations or has any knowledge that any such Governmental Entity has threatened or is considering such action; (vi) to its knowledge, the Company has filed, obtained, maintained or submitted all reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments as required by any Applicable Laws or Authorizations and that all such reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments were, in all material respects, complete, correct and not misleading on the date filed (or were corrected or supplemented by a subsequent submission); and (vii) the Company has not, either voluntarily or involuntarily, initiated, conducted or issued, or caused to be initiated, conducted or issued, any recall, market withdrawal or replacement, safety alert, post-sale warning, or other notice or action relating to the alleged lack of safety or efficacy of any product or any alleged product defect or violation and, to the Company’s knowledge, no third party has initiated, conducted or intends to initiate or conduct such notice or action. Neither the Company nor, to the Company’s knowledge, any of its directors, officers, employees or agents (in their capacities as such) has been convicted of any crime under any Applicable Laws or has been the subject of a debarment proceeding. To the Company’s knowledge, neither the Company, nor any of its directors, officers, employees or agents (in their capacities as such), has made, or caused the making of, any false statements on, or material omissions from, any other records or documentation prepared or maintained to comply with the requirements of any Governmental Entity. Neither the Company nor, to the Company’s knowledge, any of its directors, officers, employees or agents (in their capacities as such), have with respect to each of the following statutes, or regulations promulgated thereto, as applicable, knowingly engaged in any activities under the Federal False Claims Act, 31 U.S.C. § 3729.

(o) No Defaults; Violations. Except as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, no default exists in the due performance and observance of any term, covenant or condition of any material license, contract, indenture, mortgage, deed of trust, note, loan or credit agreement, or any other agreement or instrument evidencing an obligation for borrowed money, or any other material agreement or instrument to which the Company is a party or by which the Company may be bound or to which any of the properties or assets of the Company is subject, except as would not reasonably be expected to result, individually or in the aggregate, in a Material Adverse Change. The Company is not (i) in violation of any term or provision of its Charter or Bylaws, or (ii) except as would not reasonably be expected to result, individually or in the aggregate, in a Material Adverse Change, in violation of any franchise, license, permit, applicable law, rule, regulation, judgment or decree of any Governmental Entity applicable to the Company.

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(p) Corporate Power; Licenses; Consents.

(i) Conduct of Business. Except as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company has all requisite corporate power and authority, and has all necessary authorizations, approvals, orders, licenses, certificates and permits of and from all governmental regulatory officials and bodies that it needs as of the date hereof to conduct its business purpose as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, except where such failure to have such necessary authorizations, approvals, orders, licenses, certificates and permits would not reasonably be expected to result in a Material Adverse Change.

(ii) Transactions Contemplated Herein. The Company has all corporate power and authority to enter into this Agreement and to carry out the provisions and conditions hereof, and all consents, authorizations, approvals and orders required in connection therewith have been obtained. No consent, authorization or order of, and no filing with, any court, government agency or other body is required for the valid issuance, sale and delivery of the Public Securities and the consummation of the transactions and agreements contemplated by this Agreement and as contemplated by the Registration Statement, the Pricing Disclosure Package and the Prospectus, except with respect to applicable federal and state securities laws, the rules and regulations of the Financial Industry Regulatory Authority, Inc. (“FINRA”) and the rules and regulations of the Exchange, and except with respect to such consent, authorization, order or filing that would not reasonably be expected to have a Material Adverse Change.

(q) Litigation; Governmental Proceedings. There is no material action, suit, proceeding, inquiry, arbitration, investigation, litigation or governmental proceeding pending or, to the Company’s knowledge, threatened against, or involving the Company or, to the Company’s knowledge, any executive officer or director which has not been disclosed in the Registration Statement, the Pricing Disclosure Package, the Prospectus or in connection with the Company’s listing application for the additional listing of the Shares on the Exchange and which is required to be disclosed, in each case individually or in the aggregate.

(r) Good Standing. The Company has been duly organized and is validly existing as a corporation and is in good standing under the laws of the State of Nevada as of the date hereof, and is duly qualified to do business and is in good standing in each other jurisdiction in which its ownership or lease of property or the conduct of business requires such qualification, except where the failure to qualify, singularly or in the aggregate, would not have or reasonably be expected to result in a Material Adverse Change.

(s) Insurance. The Company carries or is entitled to the benefits of insurance, with, to the Company’s knowledge, reputable insurers, and in such amounts and covering such risks which the Company believes are reasonably adequate, and all such insurance is in full force and effect. The Company has no reason to believe that it will not be able (i) to renew its existing insurance coverage as and when such policies expire or (ii) to obtain comparable coverage from similar institutions as may be necessary or appropriate to conduct its business as now conducted and at a cost that would not reasonably be expected to result in a Material Adverse Change.

(t) Transactions Affecting Disclosure to FINRA.

(i) Finder’s Fees. Except as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, there are no claims, payments, arrangements, agreements or understandings relating to the payment of a finder’s, consulting or origination fee by the Company or any executive officer or director of the Company (each, an, “Insider”) with respect to the sale of the Public Securities hereunder or any other arrangements, agreements or understandings of the Company or, to the Company’s knowledge, any of its stockholders that may affect the Underwriters’ compensation, as determined by FINRA.

(ii) Payments Within 180 Days. The Company has not made any direct or indirect payments (in cash, securities or otherwise) to: (i) any U.S. person, as a finder’s fee, consulting fee or otherwise, in consideration of such person raising capital for the Company or introducing to the Company persons who raised or provided capital to the Company; (ii) any FINRA member; or (iii) any person or entity that has any direct or indirect affiliation or association with any FINRA member, within the 180 days prior to the date of the initial filing of the Registration Statement, other than the payment to the Underwriters as provided hereunder in connection with the Offering.

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(iii) Use of Proceeds. None of the net proceeds of the Offering will be paid by the Company to any participating FINRA member or its affiliates, except as specifically authorized herein.

(iv) FINRA Affiliation. There is no (i) officer or director of the Company, (ii) to the Company’s knowledge, beneficial owner of 5% or more of any class of the Company’s securities or (iii) to the Company’s knowledge, beneficial owner of the Company’s unregistered equity securities which were acquired during the 180-day period immediately preceding the filing of the Registration Statement that, in each such case, is an affiliate or associated person of a FINRA member participating in the Offering (as determined in accordance with the rules and regulations of FINRA).

(v) Information. To the Company’s knowledge, all information provided by the Company’s officers and directors in their FINRA Questionnaires to Representative’s Counsel specifically for use by Representative’s Counsel in connection with its Public Offering System filings (and related disclosure) with FINRA is true, correct and complete in all material respects.

(u) Foreign Corrupt Practices Act. Neither the Company nor, to the Company’s knowledge, any director, officer, agent, employee or affiliate of the Company (acting in such capacity) or any other person acting on behalf of the Company (acting in such capacity), has, directly or indirectly, given or agreed to give any money, gift or similar benefit (other than legal price concessions to customers in the ordinary course of business) to any customer, supplier, employee or agent of a customer or supplier, or official or employee of any governmental agency or instrumentality of any government (domestic or foreign) or any political party or candidate for office (domestic or foreign) or other person who was, is, or may be in a position to help or hinder the business of the Company (or assist it in connection with any actual or proposed transaction) that (i) might subject the Company to any damage or penalty in any civil, criminal or governmental litigation or proceeding, (ii) if not given in the past, might reasonably been expected to have had a Material Adverse Change or (iii) if not continued in the future, might adversely affect the assets, business, operations or prospects of the Company. The Company has taken reasonable steps to ensure that its accounting controls and procedures are sufficient to cause the Company to comply in all material respects with the Foreign Corrupt Practices Act of 1977, as amended.

(v) Compliance with OFAC. Neither the Company nor, to the Company’s knowledge, any director, officer, agent, employee or affiliate of the Company (acting in such capacity) or any other person acting on behalf of the Company (acting in such capacity), is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”).

(w) Money Laundering Laws. The operations of the Company are and have been conducted at all times in compliance in all material respects with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Entity (collectively, the “Money Laundering Laws”); and no action, suit or proceeding by or before any Governmental Entity involving the Company with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.

(x) Officers’ Certificate. Any certificate signed by any duly authorized officer of the Company in connection with the Offering and delivered to the Representative or to Representative’s Counsel shall be deemed a representation and warranty by the Company to the Underwriters as to the matters covered thereby.

(y) Related Party Transactions. There are no business relationships or related party transactions involving the Company or any other person required to be described in the Registration Statement, the Pricing Disclosure Package and the Prospectus that have not been described as required.

(z) Board of Directors. The qualifications of the persons serving as board members and the overall composition of the board, in each case as of the Effective Date, comply with the Exchange Act, the Exchange Act Regulations, the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder (the “Sarbanes-Oxley Act”) applicable to the Company and the listing rules of the Exchange. At least one member of the Audit Committee of the Board of Directors of the Company, as comprised on the Effective Date, qualifies as an “audit committee financial expert,” as such term is defined under Regulation S-K and the listing rules of the Exchange.

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(aa) Sarbanes-Oxley Compliance.

(i) Disclosure Controls. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company has developed and currently maintains disclosure controls and procedures that will comply with Rule 13a-15 or 15d-15 under the Exchange Act Regulations applicable to it, and, except as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, such controls and procedures are as of the date hereof effective to ensure that all material information concerning the Company will be made known on a timely basis to the individuals responsible for the preparation of the Company’s Exchange Act filings and other public disclosure documents.

(ii) Compliance. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company is in compliance with the provisions of the Sarbanes-Oxley Act applicable to it, and has implemented or will implement such programs and has taken or will take reasonable steps to ensure the Company’s future compliance (not later than the relevant statutory and regulatory deadlines therefor) with all of the provisions of the Sarbanes-Oxley Act, except where the failure to be in compliance would not have or reasonably be expected to result in a Material Adverse Change.

(bb) Accounting Controls. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company maintains systems of “internal control over financial reporting” (as defined under Rules 13a-15 and 15d-15 under the Exchange Act Regulations) that comply in all material respects with the requirements of the Exchange Act and have been designed by, or under the supervision of, its principal executive and principal financial officers, or persons performing similar functions, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, including, but not limited to, internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the Company has no knowledge of any material weaknesses in its internal controls. The Auditors and the Audit Committee of the Board of Directors of the Company have been advised of: (i) all significant deficiencies and material weaknesses, if any, in the design or operation of internal controls over financial reporting which are known to the Company’s management and that have adversely affected or are reasonably likely to adversely affect the Company’ ability to record, process, summarize and report financial information; and (ii) any fraud, if any, known to the Company’s management, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting.

(cc) No Investment Company Status. The Company is not and, after giving effect to the Offering and the application of the proceeds thereof as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, will not be, required to register as an “investment company,” as defined in the Investment Company Act of 1940, as amended.

(dd) No Labor Disputes. No labor dispute with the employees of the Company exists or, to the knowledge of the Company, is imminent.

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(ee) Intellectual Property Rights. To the Company’s knowledge, the Company has, or can acquire on reasonable terms, ownership of and/or license to, or otherwise has the right to use, all inventions, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), patents and patent rights trademarks, service marks and trade names and copyrights (collectively “Intellectual Property”) material to carrying on its businesses as described in the Pricing Prospectus. The Company has not received any written notice relating to any Intellectual Property, including written notice of: (A) infringement or misappropriation of, or conflict with, any Intellectual Property of a third party; (B) asserted rights of others with respect to any Intellectual Property of the Company; or (C) assertions that any Intellectual Property of the Company is invalid or otherwise inadequate to protect the interest of the Company, that in each case (if the subject of any unfavorable decision, ruling or finding), individually or in the aggregate, would have or would reasonably be expected to have a Material Adverse Change. To the Company’s knowledge, there are no third parties who have been able to establish any material rights to any Intellectual Property, except for the retained rights of the owners or licensors of any Intellectual Property that is licensed to the Company. There is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others: (A) challenging the validity, enforceability or scope of any Intellectual Property of the Company in any material respect or (B) challenging the Company’s rights in or to any Intellectual Property in any material respect or (C) that the Company materially infringes, misappropriates or otherwise violates or conflicts with any Intellectual Property or other proprietary rights of others. The Company has complied in all material respects with the terms of each agreement described in the Registration Statement, Pricing Disclosure Package or Prospectus pursuant to which any Intellectual Property is licensed to the Company, except for such noncompliance as did not have a Material Adverse Change, and all such agreements related to products currently made or sold by the Company, or to product candidates currently under development, are in full force and effect. All patents issued in the name of, or assigned to, or licensed to the Company, and all patent applications made by or on behalf of the Company (collectively, the “Company Patents”) have been duly and properly filed, except for such failures to file as would reasonably be expected to result in a Material Adverse Change. The Company has no knowledge of any material information that was required to be disclosed to the United States Patent and Trademark Office (the “PTO”) but that was not disclosed to the PTO with respect to any issued Company Patent, or that is required to be disclosed and has not yet been disclosed in any pending application in the Company Patents and that would preclude the grant of a patent on such application. To the Company’s knowledge, the Company is the sole owner or exclusive licensee of the Company Patents.

(ff) Taxes. The Company has filed all returns (as hereinafter defined) required to be filed with taxing authorities prior to the date hereof or has duly obtained extensions of time for the filing thereof. The Company has paid all taxes (as hereinafter defined) shown as due on such returns that were filed and has paid all taxes imposed on or assessed against the Company, except (i) such taxes the Company is challenging in good faith and (ii) for such exceptions as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Change. The provisions for taxes payable, if any, shown on the financial statements filed with or as part of the Registration Statement are sufficient for all material accrued and unpaid taxes, whether or not disputed, and for all periods to and including the dates of such consolidated financial statements. Except as would not reasonably be expected to result in a Material Adverse Change, (i) no issues have been raised (and are currently pending) by any taxing authority in connection with any of the returns or taxes asserted as due from the Company, and (ii) no waivers of statutes of limitation with respect to the returns or collection of taxes have been given by or requested from the Company. The term “taxes” mean all federal, state, local, foreign and other net income, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, license, lease, service, service use, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, windfall profits, customs, duties or other taxes, fees, assessments or charges of any kind whatever, together with any interest and any penalties, additions to tax or additional amounts with respect thereto. The term “returns” means all returns, declarations, reports, statements and other documents required to be filed in respect to taxes.

(gg) Employee Benefit Laws. The operations of the Company are and have, in the last three (3) years, been conducted at all times in material compliance with the Employee Retirement Income Security Act of 1974, as amended, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Employee Benefit Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company with respect to the Employee Benefit Laws is pending or, to the knowledge of the Company, threatened.

(hh) Compliance with Laws. The Company in the last three (3) years: (A) to its knowledge is and at all times has been in compliance with all Applicable Laws, except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Change; (B) has not received any written correspondence from any Governmental Entity alleging or asserting noncompliance with any Applicable Laws or any Authorizations; (C) possesses all material Authorizations and such Authorizations are valid and in full force and effect and the Company is not in material violation of any term of any such Authorizations, in each case except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Change; (D) has not received written notice of any claim, action, suit, proceeding, hearing, enforcement, investigation, arbitration or other action from any Governmental Entity or third party alleging that any product operation or activity is in violation of any Applicable Laws or Authorizations and has no knowledge that any such Governmental Entity or third party is considering any such claim, litigation, arbitration, action, suit, investigation or proceeding; (E) has not received written notice that any Governmental Entity has taken, is taking or intends to take action to limit, suspend, modify or revoke any Authorizations; and (F) has filed, obtained, maintained or submitted all material reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments as required by any Applicable Laws or Authorizations and that all such reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments were complete and correct in all material respects on the date filed (or were corrected or supplemented by a subsequent submission).

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(ii) Ineligible Issuer. At the time of filing the Registration Statement and any post-effective amendment thereto, at the time of effectiveness of the Registration Statement and any amendment thereto, at the earliest time thereafter that the Company or another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) of the Securities Act Regulations) of the Public Securities and at the date hereof, the Company was not and is not an “ineligible issuer,” as defined in Rule 405, without taking account of any determination by the Commission pursuant to Rule 405 that it is not necessary that the Company be considered an ineligible issuer.

(jj) Industry Data. The statistical and market-related data included in each of the Registration Statement, the Pricing Disclosure Package and the Prospectus are based on or derived from sources that the Company reasonably and in good faith believes are reliable and accurate or represent the Company’s good faith estimates that are made on the basis of data derived from such sources.

(kk) Forward-Looking Statements. No forward-looking statement (within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act) contained in the Registration Statement, the Pricing Disclosure Package or the Prospectus has been made or reaffirmed without a reasonable basis or has been disclosed other than in good faith.

(ll) Website. To the knowledge of the Company, none of the information on (or hyperlinked from) the Company’s website at www.data443.com includes or constitutes a “free writing prospectus” as defined in Rule 405 under the Securities Act.

(mm) Emerging Growth Company. From the time of the initial submission of the Registration Statement to the Commission (or, if earlier, the first date on which the Company engaged directly in or through any Person authorized to act on its behalf in any Testing-the Waters Communication) through the date hereof, the Company has been and is an “emerging growth company,” as defined in Section 2(a) of the Securities Act (an “Emerging Growth Company”).

(nn) Testing-the-Waters Communications. The Company has not (i) alone engaged in any Testing-the-Waters Communications, and (ii) authorized anyone other than the Representative to engage in Testing-the-Waters Communications. The Company confirms that the Representative has been authorized to act on its behalf in undertaking Testing-the-Waters Communications. The Company has not distributed any Written Testing-the-Waters Communications. “Testing-the-Waters Communication” means any oral or written communication with potential investors undertaken in reliance on Section 5(d) of the Securities Act. “Written Testing-the-Waters Communication” means any Testing-the-Waters Communication that is a written communication within the meaning of Rule 405 under the Securities Act.

(oo) Margin Securities. The Company owns no “margin securities” as that term is defined in Regulation U of the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”), and none of the proceeds of Offering will be used, directly or indirectly, for the purpose of purchasing or carrying any margin security, for the purpose of reducing or retiring any indebtedness which was originally incurred to purchase or carry any margin security or for any other purpose which might cause any of the Common Shares to be considered a “purpose credit” within the meanings of Regulation T, U or X of the Federal Reserve Board.

(pp) Integration. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause the Offering to be integrated with prior offerings by the Company for purposes of the Securities Act that would require the registration of any such securities issued in such prior offerings under the Securities Act.

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(qq) Confidentiality and Non-Competition. To the Company’s knowledge, no director, officer, key employee or consultant of the Company is subject to any confidentiality, non-disclosure, non-competition agreement or non-solicitation agreement with any employer (other than the Company) or prior employer that could reasonably be expected to materially affect his ability to be and act in his respective capacity of the Company or reasonably be expected to result in a Material Adverse Change.

(rr) Smaller Reporting Company. The Company is a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act Regulations.

3. Covenants of the Company. The Company covenants and agrees as follows:

(a) Amendments to Registration Statement. The Company shall deliver to the Representative, prior to filing, any amendment or supplement to the Registration Statement or Prospectus proposed to be filed after the Effective Date and not file any such amendment or supplement to which the Representative shall reasonably object in writing; provided however, that this Section 3(a) shall not be applicable with respect to any supplements to the Registration Statement filed solely for the purpose of supplementing the Registration Statement or Prospectus with a report filed with the Commission by the Company pursuant to the Exchange Act.

(b) Federal Securities Laws.

(i) Compliance. The Company shall comply with the requirements of Rule 430A of the Securities Act Regulations, and will notify the Representative promptly, and confirm the notice in writing, (i) when any amendment or supplement to the Prospectus shall have been filed; (ii) of the receipt of any comments from the Commission related to the Prospectus or Offering; (iii) of any request by the Commission for any amendment or supplement to the Prospectus or for additional information; (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any post-effective amendment or of any order preventing or suspending the use of any Preliminary Prospectus or the Prospectus, or of the suspension of the qualification of the Public Securities and Representative’s Securities for offering or sale in any jurisdiction, or of the initiation or, to the Company’s knowledge, threatening, of any proceedings for any of such purposes or of any examination pursuant to Section 8(d) or 8(e) of the Securities Act concerning the Registration Statement; and (v) if the Company becomes the subject of a proceeding under Section 8A of the Securities Act in connection with the Offering of the Public Securities and Representative’s Securities. The Company shall effect all filings required under Rule 424(b) of the Securities Act Regulations, in the manner and within the time period required by Rule 424(b) (without reliance on Rule 424(b)(8)), and shall take such steps as it deems necessary to ascertain promptly whether the form of prospectus transmitted for filing under Rule 424(b) was received for filing by the Commission and, in the event that it was not, it will promptly file such prospectus. The Company shall use its commercially reasonable efforts to prevent the issuance of any stop order, prevention or suspension and, if any such order is issued, to obtain the lifting thereof at the earliest possible moment.

(ii) Continued Compliance. The Company shall comply with the Securities Act, the Securities Act Regulations, the Exchange Act and the Exchange Act Regulations so as to permit the completion of the distribution of the Public Securities as contemplated in this Agreement and in the Registration Statement, the Pricing Disclosure Package and the Prospectus. If at any time when a prospectus relating to the Public Securities is (or, but for the exception afforded by Rule 172 of the Securities Act Regulations (“Rule 172”), would be) required by the Securities Act to be delivered in connection with sales of the Public Securities, any event shall occur or condition shall exist as a result of which it is necessary, in the opinion of counsel for the Underwriters or for the Company, to (i) amend or supplement the Pricing Disclosure Package or the Prospectus in order that the Pricing Disclosure Package or the Prospectus, as the case may be, will not include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in the light of the circumstances existing at the time it is delivered to a purchaser or (ii) amend the Registration Statement or amend or supplement the Pricing Disclosure Package or the Prospectus, as the case may be, in order to comply with the requirements of the Securities Act or the Securities Act Regulations, the Company will promptly (A) give the Representative notice of such event; (B) prepare any amendment or supplement as may be necessary to correct such statement or omission or to make the Registration Statement, the Pricing Disclosure Package or the Prospectus comply with such requirements and, a reasonable amount of time prior to any proposed filing or use, furnish the Representative with copies of any such amendment or supplement and (C) file with the Commission any such amendment or supplement; provided that the Company shall not file or use any such amendment or supplement to which the Representative or counsel for the Representative shall reasonably object. The Company will furnish to the Underwriters such number of copies of such amendment or supplement as the Underwriters may reasonably request. The Company has given the Representative notice of any filings made pursuant to the Exchange Act or the Exchange Act Regulations within 48 hours prior to the Applicable Time. The Company shall give the Representative notice of its intention to make any such filing from the Applicable Time until the later of the Closing Date and the exercise in full or expiration of the Over-allotment Option specified in Section 1(b) hereof.

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(iii) Exchange Act Registration. The Company shall use its commercially reasonable efforts to maintain the registration of the Common Shares and Warrants under the Exchange Act.

(c) Delivery to the Underwriters of Registration Statements. The Company has delivered or made available or shall deliver or make available to the Representative and counsel for the Representative, without charge, signed copies of the Registration Statement as originally filed and each amendment thereto (including exhibits filed therewith) and signed copies of all consents and certificates of experts, and will also deliver to the Underwriters, without charge, a conformed copy of the Registration Statement as originally filed and each amendment thereto (without exhibits) for each of the Underwriters. The copies of the Registration Statement and each amendment thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.

(d) Delivery to the Underwriters of Prospectuses. The Company has delivered or made available or will deliver or make available to each Underwriter, without charge, as many copies of each Preliminary Prospectus as such Underwriter reasonably requested, and the Company hereby consents to the use of such copies for purposes permitted by the Securities Act. The Company will furnish to each Underwriter, without charge, during the period when a prospectus relating to the Public Securities is (or, but for the exception afforded by Rule 172, would be) required to be delivered under the Securities Act, such number of copies of the Prospectus (as amended or supplemented) as such Underwriter may reasonably request. The Prospectus and any amendments or supplements thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.

(e) Events Requiring Notice to the Representative. During the period when a prospectus relating to the Public Securities is (or, but for the exception afforded by Rule 172, would be) required by the Securities Act to be delivered in connection with sales of the Public Securities, the Company shall notify the Representative immediately and confirm the notice in writing: (i) of the issuance by the Commission of any stop order or of the initiation, or to the Company’s knowledge, the threatening, of any proceeding for that purpose; (ii) of the issuance by any state securities commission of any proceedings for the suspension of the qualification of the Public Securities for offering or sale in any jurisdiction or of the initiation, or to the Company’s knowledge, the threatening, of any proceeding for that purpose; (iii) of the delivery to the Commission for filing of any amendment or supplement to the Prospectus; (iv) of the receipt of any comments or request for any additional information from the Commission related to the Prospectus; and (v) of the happening of any event during the period described in this Section 3(e) that, in the judgment of the Company, makes any statement of a material fact made in the Pricing Disclosure Package or the Prospectus untrue or that requires the making of any changes in in the Pricing Disclosure Package or the Prospectus in order to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Commission or any state securities commission shall enter a stop order or suspend such qualification at any time, the Company shall use its commercially reasonable efforts to obtain promptly the lifting of such order.

(f) Listing. The Company shall use its commercially reasonable efforts to maintain the listing of the shares of Common Shares and Warrants on the Exchange for a period of three (3) years.

(g) Transfer Agent; Warrant Agent. The Company shall maintain a transfer agent and registrar for the Common Stock and a Warrant Agent for the Warrants.

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(h) Payment of Expenses. The Company hereby agrees to pay on the Closing Date all expenses incident to the performance of the obligations of the Company under this Agreement, including, but not limited to: (a) all filing fees and expenses relating to the registration of the Public Securities with the Commission; (b) all FINRA Public Offering filing fees; (c) all fees and expenses relating to the listing of the Public Securities on the Exchange; (d) all fees, expenses and disbursements, if any, relating to the registration or qualification of the Public Securities under the “blue sky” securities laws of such states and other jurisdictions as the Underwriter may reasonably designate (including, without limitation, all filing and registration fees, and the reasonable fees and disbursements of “blue sky” counsel, which will be Representative’s Counsel and with such fees and expenses of Representative’s counsel to be fixed at $25,000); (e) all fees, expenses and disbursements relating to the registration, qualification or exemption of the Public Securities under the securities laws of such foreign jurisdictions as the Underwriter may reasonably designate; (f) the costs of all mailing and printing of the Offering documents; (g) transfer and/or stamp taxes, if any, payable upon the transfer of Public Securities from the Company to the Underwriters; (h) expenses related to lucite tombstones and mementos and “road show” expenses of $3,000, unless an in-person roadshow is undertaken, in which case such expenses will be limited to $10,000; and (i) diligence expenses and legal fees of Representative’s counsel of $140,000. The Representative may deduct from the net proceeds of the Offering payable to the Company on the Closing Date, the expenses set forth herein (less any amounts previously advanced against such actual reimbursable expense) to be paid by the Company to the Underwriters, provided, however, that in the event that the Offering is terminated, the Company agrees to reimburse the Underwriters pursuant to Section 8(c) hereof.

(i) Application of Net Proceeds. The Company shall apply the net proceeds from the Offering received by it in a manner consistent with the application thereof described under the caption “Use of Proceeds” in the Prospectus.

(j) Rule 158. The Company will timely file such reports pursuant to the Exchange Act as are necessary in order to make generally available to its security holders as soon as practicable an earnings statement for the purposes of, and to provide to the Underwriters the benefits contemplated by, Rule 158(a) under Section 11(a) of the Securities Act.

(k) Stabilization. Neither the Company nor, to its knowledge, any of its employees, directors or stockholders (without the consent of the Representative) has taken or shall take, directly or indirectly, any action designed to or that has constituted or that might reasonably be expected to cause or result in, under Regulation M of the Exchange Act, or otherwise, stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Public Securities.

(l) FINRA. For a period of 90 days from the later of the Closing Date or Option Closing Date, the Company shall advise the Representative (who shall make an appropriate filing with FINRA) if it has knowledge that (i) any officer or director of the Company, (ii) any beneficial owner of 5% or more of any class of the Company’s securities or (iii) any beneficial owner of the Company’s unregistered equity securities which were acquired during the 180 days immediately preceding the filing of the Registration Statement, is or becomes an affiliate or associated person of a FINRA member participating in the Offering (as determined in accordance with the rules and regulations of FINRA).

(m) No Fiduciary Duties. The Company acknowledges and agrees that the Underwriters’ responsibility to the Company is solely contractual in nature and that none of the Underwriters or their affiliates or any selling agent shall be deemed to be acting in a fiduciary capacity, or otherwise owes any fiduciary duty to the Company or any of its affiliates in connection with the Offering and the other transactions contemplated by this Agreement.

(n) OFAC. The Company will not, directly or indirectly, use the proceeds of the Offering hereunder, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.

(o) Company Lock-Up Agreement. The Company, on behalf of itself and any successor entity, agrees that, without the prior written consent of the Representative, it will not, for a period of six (6) months after the date of this Agreement (the “Lock-Up Period”), (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of capital stock of the Company or any securities convertible into or exercisable or exchangeable for shares of capital stock of the Company; (ii) file or caused to be filed any registration statement with the Commission relating to the offering of any shares of capital stock of the Company or any securities convertible into or exercisable or exchangeable for shares of capital stock of the Company, other than pursuant to existing registration rights in favor of stockholders of the Company or on Form S-8 or successor form thereto; or (iii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of capital stock of the Company, whether any such transaction described in clause (i), (ii) or (iii) above is to be settled by delivery of shares of capital stock of the Company or such other securities, in cash or otherwise. The restrictions contained in this Section 3(o) shall not apply to (i) the Common Shares and Warrants to be sold hereunder and the issuance of the Representative’s Warrant, (ii) the issuance by the Company of Common Shares upon the exercise of a stock option or warrant or the conversion of a security outstanding on the date hereof and disclosed in the Registration Statement, the Pricing Disclosure Package or the Prospectus, and (iii) the issuance by the Company of stock options or shares of capital stock of the Company under any equity compensation plan of the Company disclosed in the Registration Statement, the Pricing Disclosure Package or the Prospectus.

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4. Conditions of Underwriters’ Obligations. The obligations of the Underwriters to purchase and pay for the Public Securities, as provided herein, shall be subject to (i) the continuing accuracy of the representations and warranties of the Company as of the date hereof and as of each of the Closing Date, and any Option Closing Date; (ii) the accuracy of the statements of officers of the Company made pursuant to the provisions hereof; (iii) the performance by the Company of its obligations hereunder; and (iv) the following conditions:

(a) Regulatory Matters.

(i) Effectiveness of Registration Statement. The Registration Statement has become effective not later than 5:00 p.m., Eastern Time, on the date of this Agreement or such later date and time as shall be consented to in writing by the Representative, and, at each of the Closing Date and any Option Closing Date, no stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto shall have been issued under the Securities Act, no order preventing or suspending the use of any Preliminary Prospectus or the Prospectus shall have been issued and no proceedings for any of those purposes have been instituted or are pending or, to the Company’s knowledge, contemplated by the Commission. The Company has complied with each request (if any) from the Commission for additional information. The Prospectus containing the Rule 430A Information shall have been filed with the Commission in the manner and within the time frame required by Rule 424(b) (without reliance on Rule 424(b)(8)) or a post-effective amendment providing such information shall have been filed with, and declared effective by, the Commission in accordance with the requirements of Rule 430A.

(ii) FINRA Clearance. On or before the date of this Agreement, the Representative shall have received clearance from FINRA as to the amount of compensation allowable or payable to the Underwriters as described in the Registration Statement.

(iii) Exchange Stock Market Clearance. On the Closing Date, the Firm Shares and Firm Warrants shall have been approved for listing on the Exchange.

(b) Company Counsel Matters.

(i) Closing Date Opinion of Counsel. On the Closing Date, the Representative shall have received the favorable opinion and negative assurance letter of Pryor Cashman LLP, counsel to the Company, dated the Closing Date and addressed to the Representative, substantially in form and substance reasonably satisfactory to the Representative.

(ii) Option Closing Date Opinion of Counsel. On each Option Closing Date, if any, the Representative shall have received the favorable opinion of Pryor Cashman LLP, dated the Option Closing Date, addressed to the Representative and in form and substance reasonably satisfactory to the Representative, confirming as of the Option Closing Date, the statements made by such counsel in its respective opinions delivered on the Closing Date.

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(iii) Reliance. In rendering such opinions, such counsel may rely: (i) as to matters involving the application of laws other than the laws of the United States and jurisdictions in which they are admitted, to the extent such counsel deems proper and to the extent specified in such opinion, if at all, upon an opinion or opinions (in form and substance reasonably satisfactory to the Representative) of other counsel reasonably acceptable to the Representative, familiar with the applicable laws; and (ii) as to matters of fact, to the extent they deem proper, on certificates or other written statements of officers of the Company and officers of departments of various jurisdictions having custody of documents respecting the corporate existence or good standing of the Company; provided, that copies of any such statements or certificates shall be delivered to Representative’s Counsel if requested.

(c) Comfort Letters.

(i) Comfort Letter. At the time this Agreement is executed, the Representative shall have received from the Auditor a cold comfort letter containing statements and information of the type customarily included in accountants’ comfort letters with respect to the financial statements and certain financial information contained in the Registration Statement, the Pricing Disclosure Package and the Prospectus, addressed to the Representative and in form and substance satisfactory in all respects to the Representative and to the Auditor, dated as of the date of this Agreement.

(ii) Bring-Down Comfort Letter. At each of the Closing Date and the Option Closing Date, if any, the Representative shall have received from the Auditor a letter, dated as of the Closing Date or the Option Closing Date, as applicable, to the effect that the Auditor reaffirms the statements made in the letter furnished pursuant to Section 4(c)(i), except that the specified date referred to shall be a date not more than three (3) Business Days prior to the Closing Date or the Option Closing Date, as applicable.

(d) Officers’ Certificates.

(i) Officers’ Certificate. The Company shall have furnished to the Representative a certificate, dated the Closing Date and any Option Closing Date, as applicable, of its President and Chief Executive Officer and its Chief Financial Officer stating (on behalf of the Company and not in an individual capacity) that (i) such officers have carefully examined the Registration Statement, the Pricing Disclosure Package, and the Prospectus and, to their knowledge, the Registration Statement and each amendment thereto, as of the Applicable Time and as of the Closing Date or Option Closing Date, as applicable, did not include any untrue statement of a material fact and did not omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and the Pricing Disclosure Package, as of the Applicable Time and as of the Closing Date or Option Closing Date, as applicable, the Prospectus and each amendment or supplement thereto, as of the respective date thereof and as of the Closing Date or Option Closing Date, as applicable, did not include any untrue statement of a material fact and did not omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances in which they were made, not misleading, (ii) since the effective date of the Registration Statement, no event has occurred which should have been set forth in a supplement or amendment to the Registration Statement, the Pricing Disclosure Package or the Prospectus, (iii) to their knowledge after reasonable investigation, as of the Closing Date or Option Closing Date, as applicable, the representations and warranties of the Company in this Agreement are true and correct in all material respects (except for those representations and warranties qualified as to materiality, which shall be true and correct in all respects and except for those representations and warranties which refer to facts existing at a specific date, which shall be true and correct as of such date) and the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date or Option Closing Date, as applicable, and (iv) there has not been, subsequent to the date of the most recent audited financial statements included in the Pricing Disclosure Package, any Material Adverse Change, or any change or development that, singularly or in the aggregate, would reasonably be expected to involve a Material Adverse Change, except as set forth in the Prospectus.

(ii) Secretary’s Certificate. At each of the Closing Date or Option Closing Date, as applicable, the Representative shall have received a certificate of the Company signed by the Secretary of the Company, dated the Closing Date, or Option Closing Date, as applicable, certifying: (i) that each of the Charter and Bylaws is true and complete, has not been modified and is in full force and effect; (ii) that the resolutions of the Company’s Board of Directors relating to the Offering are in full force and effect and have not been modified; (iii) the good standing of the Company; and (iv) as to the incumbency of the officers of the Company. The documents referred to in such certificate shall be attached to such certificate.

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(e) No Material Changes. Prior to and on each of the Closing Date or Option Closing Date, as applicable: (i) there shall have been no Material Adverse Change that, singularly or in the aggregate, would reasonably be expected to involve a Material Adverse Change, from the latest dates as of which such condition is set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus; (ii) no action, suit or proceeding, at law or in equity, shall have been pending or threatened against the Company or any Insider before or by any court or federal or state commission, board or other administrative agency wherein an unfavorable decision, ruling or finding would reasonably be expected to result in a Material Adverse Change, except as set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus; (iii) no stop order shall have been issued under the Securities Act and no proceedings therefor shall have been initiated or threatened by the Commission; and (iv) the Registration Statement, the Pricing Disclosure Package and the Prospectus and any amendments or supplements thereto shall contain all material statements which are required to be stated therein in accordance with the Securities Act and the Securities Act Regulations and shall conform in all material respects to the requirements of the Securities Act and the Securities Act Regulations, and neither the Registration Statement, the Pricing Disclosure Package nor the Prospectus nor any amendment or supplement thereto shall contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

(f) Other Agreements to be Delivered. The Company has caused each of its officers and directors and certain stockholders to deliver to the Representative an executed Lock-Up Agreement, in a form substantially similar to that attached hereto as Exhibit B (the “Lock-Up Agreement”), prior to the execution of this Agreement. On the Closing Date, the Company shall have delivered to the Representative an executed copy of the Warrant Agreement and the Representative’s Warrant.

(g) Additional Documents. At the Closing Date or Option Closing Date, as applicable, Representative’s Counsel shall have been furnished with such documents and opinions as they may reasonably require for the purpose of enabling Representative’s Counsel to deliver an opinion to the Underwriters, or in order to evidence the accuracy of any of the representations or warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the Company in connection with the issuance and sale of the Public Securities and Representative’s Securities as herein contemplated shall be satisfactory in form and substance to the Representative and Representative’s Counsel.

5. Indemnification.

(a) Indemnification of the Underwriters. The Company agrees to indemnify and hold harmless each Underwriter, its affiliates and each person controlling such Underwriter (within the meaning of Section 15 of the Securities Act), and the directors, officers, agents and employees of each Underwriter, its affiliates and each such controlling person (each Underwriter, and each such entity or person hereafter is referred to as an “Indemnified Person”) from and against any losses (other than losses of profits), claims, damages, judgments, assessments, costs and other liabilities (collectively, the “Liabilities”), and shall reimburse each Indemnified Person for all fees and expenses (including the reasonable fees and expenses of counsel for the Indemnified Persons, except as otherwise expressly provided in this Agreement) (collectively, the “Expenses”) and agrees to advance payment of such Expenses as they are incurred by an Indemnified Person in investigating, preparing, pursuing or defending any actions, whether or not any Indemnified Person is a party thereto, arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in (i) the Registration Statement, the Pricing Disclosure Package, the Preliminary Prospectus, or the Prospectus (as from time to time each may be amended and supplemented); (ii) any materials or information provided to investors by, or with the approval of, the Company in connection with the marketing of the Offering, including any “road show” or investor presentations made to investors by the Company (whether in person or electronically); or (iii) any application or other document or written communication (in this Section 5, collectively called “application”) executed by the Company or based upon written information furnished by the Company in any jurisdiction in order to qualify the Public Securities and Representative’s Securities under the securities laws thereof or filed with the Commission, any state securities commission or agency, the Exchange or any other national securities exchange; or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, unless such statement or omission was made in reliance upon, and in conformity with, the Underwriters’ Information.

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(b) Procedure. Upon receipt by an Indemnified Person of notice of an action against such Indemnified Person with respect to which indemnity may reasonably be expected to be sought under this Agreement, such Indemnified Person shall promptly notify the Company in writing; provided that failure by any Indemnified Person so to notify the Company shall not relieve the Company from any obligation or liability which the Company may have on account of this Section 5 or otherwise to such Indemnified Person, except to the extent the Company is materially prejudiced as a proximate result of such failure. An Indemnified Person shall have the right to require that the Company assume the defense of any such action (including the employment of counsel designated by the Company and reasonably satisfactory to the Representative). Any Indemnified Person shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless: (i) the Company has failed promptly to assume the defense and employ counsel reasonably satisfactory to the Representative for the benefit of the Underwriters and the other Indemnified Persons or (ii) such Indemnified Person shall have been advised that in the opinion of counsel that there is an actual or potential conflict of interest that prevents (or makes it imprudent for) the counsel engaged by the Company for the purpose of representing the Indemnified Person, to represent both such Indemnified Person and any other person represented or proposed to be represented by such counsel. The Company shall not be liable for the fees and expenses of more than one separate counsel (together with local counsel), representing all Indemnified Persons who are parties to such action), which counsel (together with any local counsel) for the Indemnified Persons shall be selected by the Representative, subject to the Company’s approval (which shall not be unreasonably withheld). The Company shall not be liable for any settlement of any action effected without its written consent (which shall not be unreasonably withheld). In addition, the Company shall not, without the prior written consent of the Underwriters, settle, compromise or consent to the entry of any judgment in or otherwise seek to terminate any pending or threatened action in respect of which advancement, reimbursement, indemnification or contribution may be sought hereunder (whether or not such Indemnified Person is a party thereto) unless such settlement, compromise, consent or termination (i) includes an unconditional release of that Indemnified Person from all Liabilities arising out of such action for which indemnification or contribution may be sought hereunder and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any Indemnified Person. The advancement, reimbursement, indemnification and contribution obligations of the Company required hereby shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as every Liability and Expense is incurred and is due and payable, and in such amounts as fully satisfy each and every Liability and Expense as it is incurred (and in no event later than 30 days following the date of any invoice therefore); provided, however, that the Indemnified Persons shall repay such amounts to the extent it ultimately is determined that such persons are not entitled to indemnification hereunder.

(c) Indemnification of the Company. Each Underwriter, severally and not jointly, agrees to indemnify and hold harmless the Company, its directors, its officers, employees and persons who control the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act against any and all Liabilities, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions made in the Registration Statement, any Preliminary Prospectus, the Pricing Disclosure Package or Prospectus or any amendment or supplement thereto or in any application, in reliance upon, and in strict conformity with, the Underwriters’ Information. In case any action shall be brought against the Company or any other person so indemnified based on any Preliminary Prospectus, the Registration Statement, the Pricing Disclosure Package or Prospectus or any amendment or supplement thereto or in any application, and in respect of which indemnity may be sought against any Underwriter, such Underwriter shall have the rights and duties given to the Company, and the Company and each other person so indemnified shall have the rights and duties given to the several Underwriters by the provisions of Section 5(b). The Company agrees promptly to notify the Representative of the commencement of any litigation or proceedings against the Company or any of its officers, directors or any person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, in connection with the issuance and sale of the Public Securities or in connection with the Registration Statement, the Pricing Disclosure Package, or the Prospectus; provided that failure by the Company so to notify the Representative shall not relieve any Underwriter from any obligation or liability which such Underwriter may have on account of this Section 5 or otherwise to the Company, except to the extent such Underwriter is materially prejudiced as a proximate result of such failure.

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(d) Contribution. If the indemnification provided for in this Section 5 shall for any reason be unavailable to or insufficient to hold harmless an indemnified party under Section 5(a) or 5(c) in respect of any Liabilities and Expenses referred to therein, then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such Liabilities and Expenses, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the Company, on the one hand, and each of the Underwriters, on the other hand, from the Offering, or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company, on the one hand, and the Underwriters, on the other hand, in connection with the matters as to which such Liabilities or Expenses relate, as well as any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and the Underwriters, on the other hand, with respect to such Offering shall be deemed to be in the same proportion as the total proceeds from the Offering purchased under this Agreement (after deducting all underwriting discounts, commissions and other fees but before deducting expenses) received by the Company bear to the total underwriting discount, fees and commissions actually received by the Underwriters in connection with the Offering, in each case as set forth in the table on the cover page of the Prospectus. The relative fault of the Company, on the one hand, and the Underwriters, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company, on the one hand, or the Underwriters, on the other hand, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement, omission, act or failure to act; provided that the parties hereto agree that the written information furnished to the Company through the Representative by or on behalf of any Underwriter for use in any Preliminary Prospectus, any Registration Statement or the Prospectus, or in any amendment or supplement thereto, consists solely of the Underwriters’ Information. The Company and the Underwriters agree that it would not be just and equitable if contributions pursuant to this subsection (d) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take into account the equitable considerations referred to above in this subsection (d). Notwithstanding the above, no person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act shall be entitled to contribution from a party who was not guilty of fraudulent misrepresentation.

(e) Survival. The advancement, reimbursement, indemnity and contribution obligations set forth in this Section 5 shall remain in full force and effect regardless of any termination of, or the completion of any Indemnified Person’s services under or in connection with, this Agreement. Each Indemnified Person is an intended third-party beneficiary of this Section 5, and has the right to enforce the provisions of Section 5 as if he/she/it was a party to this Agreement.

6. Default by an Underwriter.

(a) Default Not Exceeding 10% of Public Securities. If any Underwriter or Underwriters shall default in its or their obligations to purchase the Firm Securities, and if the number of the Firm Securities with respect to which such default relates does not exceed in the aggregate 10% of the number of Firm Securities that all Underwriters have agreed to purchase hereunder, then such Firm Securities to which the default relates shall be purchased by the non-defaulting Underwriters in proportion to their respective commitments hereunder.

(b) Default Exceeding 10% of Public Securities. In the event that the default addressed in Section 6(a) relates to more than 10% of the Firm Securities, the Representative may in its discretion arrange for itself or for another party or parties to purchase such Firm Securities to which such default relates on the terms contained herein. If, within thirty six (36) hours after such default relating to more than 10% of the Firm Securities, the Representative does not arrange for the purchase of such Firm Securities, then the Company shall be entitled to a further period of thirty six (36) hours within which to procure another party or parties satisfactory to the Representative to purchase said Firm Securities on such terms. In the event that neither the Representative nor the Company arrange for the purchase of the Firm Securities to which a default relates as provided in this Section 6, this Agreement will automatically be terminated by the Representative or the Company without liability on the part of the Company (except as provided in Sections 3(f) and 5 hereof) or the several Underwriters (except as provided in Section 5 hereof); provided that if any such default occurs with respect to any Option Shares, this Agreement will not terminate in respect of the Firm Securities; and provided, further, that nothing herein shall relieve a defaulting Underwriter of its liability, if any, to the other Underwriters and to the Company for damages occasioned by its default hereunder.

(c) Postponement of Closing Date. In the event that the Firm Securities to which the default relates are to be purchased by the non-defaulting Underwriters, or are to be purchased by another party or parties as aforesaid, the Representative or the Company shall have the right to postpone the Closing Date for a reasonable period, but not in any event exceeding seven (7) Business Days, in order to effect whatever changes may thereby be made necessary in the Registration Statement, the Pricing Disclosure Package or the Prospectus or in any other documents and arrangements, and the Company agrees to file promptly any amendment to the Registration Statement, the Pricing Disclosure Package or the Prospectus that in the opinion of counsel for the Underwriter may thereby be made necessary. The term “Underwriter” as used in this Agreement shall include any party substituted under this Section 6 with like effect as if it had originally been a party to this Agreement with respect to such Securities.

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7. Additional Covenants.

(a) Prohibition on Press Releases and Public Announcements. The Company shall not issue press releases or engage in any other publicity, without the Representative’s prior written consent (such consent not to be unreasonably withheld), for a period ending at 5:00 p.m., Eastern Time, on the first (1st) Business Day following the forty-fifth (45th) day after the Closing Date, other than normal and customary releases issued in the ordinary course of the Company’s business or such press release or communication is required by law.

(b) Right of First Refusal. During the period ending 7 months after the Closing Date, if and only if the closing of the purchase of the Firm Securities hereunder actually occurs, the Company grants the Representative the right of first refusal to act as lead or joint-lead investment banker, lead or joint-lead book runner and/or lead or joint placement agent at the Representative’s discretion, for each and every future public and private equity, equity-linked or debt (excluding commercial bank debt) offering, including all equity linked financings during such 7 month period, of the Company, or any successor to or subsidiary of the Company on terms customary to the Representative. Notwithstanding the foregoing, during the 7 month period described above, if the Company make any equity, equity-linked or debt (excluding commercial bank debt) offerings, the Representative shall be permitted to participate at least at a 50% level as a placement agent or underwriter for such offering and shall be entitled to receive as its compensation at least 50% of the compensation payable to the underwriters or placement agents.

8. Effective Date of this Agreement and Termination Thereof.

(a) Effective Date. This Agreement shall become effective when both the Company and the Representative have executed the same and delivered counterparts of such signatures to the other party.

(b) Termination. The Representative shall have the right to terminate this Agreement at any time prior to any Closing Date, (i) if any domestic or international event or act or occurrence has materially disrupted, or in Representative’s opinion will in the immediate future materially disrupt, general securities markets in the United States; or (ii) if trading on the New York Stock Exchange or The Nasdaq Stock Market LLC shall have been suspended or materially limited, or minimum or maximum prices for trading shall have been fixed, or maximum ranges for prices for securities shall have been required by FINRA or by order of the Commission or any other Government Entity having jurisdiction; or (iii) if the United States shall have become involved in a new war or a material increase in major hostilities; or (iv) if a banking moratorium has been declared by a New York State or federal authority; or (v) if a moratorium on foreign exchange trading has been declared which materially adversely impacts the United States securities markets; or (vi) if the Company shall have sustained a material loss by fire, flood, accident, hurricane, earthquake, theft, sabotage or other calamity or malicious act which, whether or not such loss shall have been insured, will, in Representative’s opinion, make it inadvisable to proceed with the delivery of the Firm Securities; or (vii) if the Company is in material breach of its representations, warranties or covenants hereunder; or (viii) if the Representative shall have knowledge after the date hereof of such a Material Adverse Change in the conditions of the Company, or such adverse material change in general market conditions, in each case, as in the Representative’s reasonable judgment would make it impracticable to proceed with the offering, sale and/or delivery of the Public Securities or to enforce contracts made by the Underwriters for the sale of the Public Securities. Section 5 of this Agreement shall survive any termination of this Agreement.

(c) Expenses. Notwithstanding anything to the contrary in this Agreement, except in the case of a default by the Underwriters pursuant to Section 6(b) above, in the event that this Agreement shall not be carried out for any reason whatsoever, within the time specified herein or any extensions thereof pursuant to the terms herein, the Company shall be obligated to pay to the Representative its actual and accountable out-of-pocket expenses related to the transactions contemplated herein then due and payable and upon demand the Company shall pay the full amount thereof to the Representative (less amounts previously advanced to the Underwriters); provided tht any such reimbursement shall be subject to the the limits set forth in Section 3(h); provided, further, however, that such expense cap in no way limits or impairs the indemnification and contribution provisions of this Agreement. Notwithstanding the foregoing, any advance received by the Representative will be reimbursed to the Company to the extent not actually incurred in compliance with FINRA Rule 5110(g)(4)(A).

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(d) Indemnification. Notwithstanding any contrary provision contained in this Agreement, any election hereunder or any termination of this Agreement, and whether or not this Agreement is otherwise carried out, the provisions of Section 5 shall remain in full force and effect and shall not be in any way affected by, such election or termination or failure to carry out the terms of this Agreement or any part hereof.

(e) Representations, Warranties, Agreements to Survive. All representations, warranties and agreements contained in this Agreement or in certificates of officers of the Company submitted pursuant hereto, shall remain operative and in full force and effect regardless of (i) any investigation made by or on behalf of any Underwriter or its affiliates or selling agents, any person controlling any Underwriter, its officers or directors or any person controlling the Company or (ii) delivery of and payment for the Public Securities.

9. Miscellaneous.

(a) Notices. All communications hereunder, except as herein otherwise specifically provided, shall be in writing and addressed to the other party at its address set forth below (or to such other address that the receiving party may designate from time to time in accordance with this Section 9(a)), and shall be deemed to have been given (a) three (3) days after mailing if sent by certified mail return receipt requested, (b) one (1) day after mailing if sent by receipted overnight carrier (i.e. Federal Express), provided that proof of delivery or rejection is obtained, or (c) when delivered if by hand or sent by email to the physical address or email address set forth below.

If to the Representative:

Dawson James Securities, Inc.

101 N. Federal Highway Suite 600

Boca Raton, Florida 33432

Email: [                       ]

Attention: [               ]

With copies to (which shall not constitute notice):

ArentFox Schiff LLP

1717 K Street, NW

Washington, DC 20001

ralph.demartino@afslaw.com

Attention: Ralph V. De Martino

If to the Company:

Data443 Risk Mitigation, Inc.

4000 Sancar Drive

Triangle Research Park

North Carolina 27709

Email: jason@data443.com

Attention: Jason L.M. Remilard

With copies to (which shall not constitute notice):

Pryor Cashman LLP

7 Times Square

New York, NY 10036-6569

Email: Ali.Panjwani@pryorcashman.com

Attention: M. Ali Panjwani

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(b) Headings. The headings contained herein are for the sole purpose of convenience of reference, and shall not in any way limit or affect the meaning or interpretation of any of the terms or provisions of this Agreement.

(c) Amendment. This Agreement may only be amended by a written instrument executed by each of the parties hereto.

(d) Entire Agreement. This Agreement (together with the other agreements and documents being delivered pursuant to or in connection with this Agreement) constitutes the entire agreement of the parties hereto with respect to the subject matter hereof and thereof, and supersedes all prior agreements and understandings of the parties, oral and written, with respect to the subject matter hereof. Notwithstanding anything to the contrary set forth herein, it is understood and agreed by the parties hereto that all other terms and conditions of that certain engagement letter between the Company and Representative, dated as of August 26, 2022 shall remain in full force and effect.

(e) Binding Effect. This Agreement shall inure solely to the benefit of and shall be binding upon the Representative, the Underwriters, each Indemnified Person referred to in Section 5, the Company and the controlling persons, directors and officers referred to in Section 5 hereof, and their respective successors, legal representatives, heirs and assigns, and no other person shall have or be construed to have any legal or equitable right, remedy or claim under or in respect of or by virtue of this Agreement or any provisions herein contained. The term “successors and assigns” shall not include a purchaser, in its capacity as such, of securities from any of the Underwriters.

(f) Governing Law; Consent to Jurisdiction; Trial by Jury. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York, without giving effect to conflict of laws principles thereof. The Company hereby agrees that any action, proceeding or claim against it arising out of, or relating in any way to this Agreement shall be brought and enforced in the New York Supreme Court, County of New York, or in the United States District Court for the Southern District of New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. The Company hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum. Any such process or summons to be served upon the Company may be served by transmitting a copy thereof by registered or certified mail, return receipt requested, postage prepaid, addressed to it at the address set forth in Section 9(a) hereof. Such mailing shall be deemed personal service and shall be legal and binding upon the Company in any action, proceeding or claim. THE COMPANY (ON ITS BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS AND AFFILIATES) AND EACH OF THE UNDERWRITERS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

(g) Execution in Counterparts. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement, and shall become effective when one or more counterparts has been signed by each of the parties hereto and delivered to each of the other parties hereto. Delivery of a signed counterpart of this Agreement by email/pdf transmission shall constitute valid and sufficient delivery thereof.

(h) Waiver, etc. The failure of any of the parties hereto to at any time enforce any of the provisions of this Agreement shall not be deemed or construed to be a waiver of any such provision, nor to in any way effect the validity of this Agreement or any provision hereof or the right of any of the parties hereto to thereafter enforce each and every provision of this Agreement. No waiver of any breach, non-compliance or non-fulfillment of any of the provisions of this Agreement shall be effective unless set forth in a written instrument executed by the party or parties against whom or which enforcement of such waiver is sought; and no waiver of any such breach, non-compliance or non-fulfillment shall be construed or deemed to be a waiver of any other or subsequent breach, non-compliance or non-fulfillment.

[Signature Page Follows]

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[Signature Page]

Underwriting Agreement

If the foregoing correctly sets forth the understanding between the Underwriters and the Company, please so indicate in the space below.

Very truly yours,
Data443 Risk Mitigation, Inc.
By:
Name:	Jason L.M. Remillard
Title:	President and CEO

Confirmed as of the date first written above mentioned, on behalf of itself and as Representative of the several Underwriters named on Schedule 1 hereto:

Dawson James Securities, Inc.

By:

Name:

Title:

SCHEDULE 1

Underwriter	Total Number of Firm Securities to be Purchased
Dawson James Securities, Inc.
Total:

SCHEDULE 2

Pricing Information

Number of Firm Shares: [      ]

Number of Firm Warrants: [      ] Warrants

Number of Option Shares: [      ]

Number of Option Warrants: [      ] Warrants

Public Offering Price per one Firm Share and one Warrant: $[      ]

Underwriting Discount per one Firm Share and one Warrant: $[       ] (8.0%)

Price per Option Share: $[     ]

Underwriting Discount per Option Share: $[      ]

Price per Option Warrant: $0.01

Underwriting Discount per Option Warrant: $0.0092 (8.0%)

EXHIBIT A

Form of Representative’s Warrant

EXHIBIT B

Form of Lock-Up Agreement

EX-4.34

Exhibit 4.34

WARRANT AGENT AGREEMENT

WARRANT AGENT AGREEMENT (this “Warrant Agreement”) dated as of December [__], 2023 (the “Issuance Date”) between Data443 Risk Mitigation, Inc., a Nevada corporation (the “Company”), and Madison Stock Transfer Inc. (the “Warrant Agent”).

WHEREAS, pursuant to the terms of that certain Underwriting Agreement (“Underwriting Agreement”), dated [______], 2023, by and between the Company and Dawson James Securities, Inc., as representative of the underwriters set forth therein, the Company is engaged in a public offering (the “Offering”) of up to [____] units (the “Units”), each unit consisting of one share (each, a “Share” and collectively, the “Shares”) of common stock, par value $0.001 per share (the “Common Stock”) of the Company, and one Warrant (each, a “Warrant” and collectively the “Warrants”) to purchase one share of Common Stock (each, a “Warrant Share” and collectively the “Warrant Shares”), including up to [___] Shares and Warrants to purchase up to [_____] Warrant Shares issuable pursuant to the underwriters’ over-allotment option;

WHEREAS, the Company has filed with the Securities and Exchange Commission (the “Commission”) a Registration Statement Form S-1 (File No. 333-256785) (as the same may be amended from time to time, the “Registration Statement”), for the registration under the Securities Act of 1933, as amended (the “Securities Act”), of Units, the Shares, the Warrants, and the Warrant Shares, and such Registration Statement was declared effective by the Commission on [____], 2023;

WHEREAS, the Company desires the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing to so act, in accordance with the terms set forth in this Warrant Agreement in connection with the issuance, registration, transfer, exchange and exercise of the Warrants;

WHEREAS, the Company desires to provide for the provisions of the Warrants, the terms upon which they shall be issued and exercised, and the respective rights, limitation of rights, and immunities of the Company, the Warrant Agent, and the holders of the Warrants; and

WHEREAS, all acts and things have been done and performed which are necessary to make the Warrants the valid, binding and legal obligations of the Company, and to authorize the execution and delivery of this Warrant Agreement.

NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows:

1. Appointment of Warrant Agent. The Company hereby appoints the Warrant Agent to act as agent for the Company with respect to the Warrants, and the Warrant Agent hereby accepts such appointment and agrees to perform the same in accordance with the express terms and conditions set forth in this Warrant Agreement (and no implied terms or conditions).

2. Warrants.

2.1 Form of Warrants. The Warrants shall be registered securities and shall be initially evidenced by a global Warrant certificate (“Global Certificate”) in the form of Annex A to this Warrant Agreement, which shall be deposited on behalf of the Company with a custodian for The Depository Trust Company (“DTC”) and registered in the name of Cede & Co., as nominee of DTC. If DTC subsequently ceases to make its settlement system available for the Warrants, the Company may instruct the Warrant Agent regarding making arrangements for book-entry settlement. In the event that the Warrants are not eligible for registration, or it is no longer necessary to have the Warrants available, in the name of Cede & Co., as nominee of DTC, the Company may instruct the Warrant Agent to provide written instructions to DTC to deliver to the Warrant Agent for cancellation the Global Certificate, and the Company shall instruct the Warrant Agent to deliver to each Holder (as defined below) separate certificates evidencing Warrants (“Definitive Certificates” and, together with the Global Certificate, “Warrant Certificates”), in the form of Annex C to this Warrant Agreement. The Warrants represented by the Global Certificate are referred to as “Global Warrants.”

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2.2 Issuance and Registration of Warrants.

2.2.1 Warrant Register. The Warrant Agent shall maintain books (the “Warrant Register”) for the registration of original issuance and the registration of transfer of the Warrants.

2.2.2 Issuance of Warrants. Upon the initial issuance of the Warrants, the Warrant Agent shall issue the Global Certificate and deliver the Warrants in the DTC settlement system in accordance with written instructions delivered to the Warrant Agent by the Company. Ownership of beneficial interests in the Warrants shall be shown on, and the transfer of such ownership shall be effected through, records maintained (i) by DTC and (ii) by institutions that have accounts with DTC (each, a “Participant”), subject to a Holder’s right to elect to receive a Warrant in certificated form in the form of Annex C to this Warrant Agreement. Any Holder desiring to elect to receive a Warrant in certificated form shall make such request in writing delivered to the Warrant Agent pursuant to Section 2.2.8, and shall surrender to the Warrant Agent the interest of the Holder on the books of the Participant evidencing the Warrants which are to be represented by a Definitive Certificate through the DTC settlement system. Thereupon, the Warrant Agent shall countersign and deliver to the person entitled thereto a Warrant Certificate or Warrant Certificates, as the case may be, as so requested.

2.2.3 Beneficial Owner; Holder. Prior to due presentment for registration of transfer of any Warrant, the Company and the Warrant Agent may deem and treat the person in whose name that Warrant shall be registered on the Warrant Register (the “Holder”) as the absolute owner of such Warrant for purposes of any exercise thereof, and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Warrant Agent or any agent of the Company or the Warrant Agent from giving effect to any written certification, proxy or other authorization furnished by DTC governing the exercise of the rights of a holder of a beneficial interest in any Warrant. The rights of beneficial owners in a Warrant evidenced by the Global Certificate shall be exercised by the Holder or a Participant through the DTC system, except to the extent set forth herein or in the Global Certificate.

2.2.4 Execution. The Warrant Certificates shall be executed on behalf of the Company by any authorized officer of the Company (an “Authorized Officer”), which need not be the same authorized signatory for all of the Warrant Certificates, either manually or by facsimile signature. The Warrant Certificates shall be countersigned by an authorized signatory of the Warrant Agent, which need not be the same signatory for all of the Warrant Certificates, and no Warrant Certificate shall be valid for any purpose unless so countersigned. In case any Authorized Officer of the Company that signed any of the Warrant Certificates ceases to be an Authorized Officer of the Company before countersignature by the Warrant Agent and issuance and delivery by the Company, such Warrant Certificates, nevertheless, may be countersigned by the Warrant Agent, issued and delivered with the same force and effect as though the person who signed such Warrant Certificates had not ceased to be such officer of the Company; and any Warrant Certificate may be signed on behalf of the Company by any person who, at the actual date of the execution of such Warrant Certificate, shall be an Authorized Officer of the Company authorized to sign such Warrant Certificate, although at the date of the execution of this Warrant Agreement any such person was not such an Authorized Officer.

2.2.5 Registration of Transfer. At any time at or prior to the Expiration Date (as defined below), a transfer of any Warrants may be registered and any Warrant Certificate or Warrant Certificates may be split up, combined or exchanged for another Warrant Certificate or Warrant Certificates evidencing the same number of Warrants as the Warrant Certificate or Warrant Certificates surrendered. Any Holder desiring to register the transfer of Warrants or to split up, combine or exchange any Warrant Certificate shall make such request in writing delivered to the Warrant Agent, and shall surrender to the Warrant Agent the Warrant Certificate or Warrant Certificates evidencing the Warrants the transfer of which is to be registered or that is or are to be split up, combined or exchanged. Thereupon, the Warrant Agent shall countersign and deliver to the person entitled thereto a Warrant Certificate or Warrant Certificates, as the case may be, as so requested. The Warrant Agent may require reasonable and customary payment, by the Holder requesting a registration of transfer of Warrants or a split-up, combination or exchange of a Warrant Certificate (but, for purposes of clarity, not upon the exercise of the Warrants and issuance of Warrant Shares to the Holder), of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with such registration of transfer, split-up, combination or exchange, together with reimbursement to the Warrant Agent of all reasonable expenses incidental thereto.

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2.2.6 Loss, Theft and Mutilation of Warrant Certificates. Upon receipt by the Company and the Warrant Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of a Warrant Certificate, and, in case of loss, theft or destruction, of indemnity or security in customary form and amount (which shall in no event include the posting of any bond by any institutional investor that holds a Definitive Certificate), and reimbursement to the Company and the Warrant Agent of all reasonable expenses incidental thereto, and upon surrender to the Warrant Agent and cancellation of the Warrant Certificate if mutilated, the Warrant Agent shall, on behalf of the Company, countersign and deliver a new Warrant Certificate of like tenor to the Holder in lieu of the Warrant Certificate so lost, stolen, destroyed or mutilated. The Warrant Agent may charge the Holder an administrative fee for processing the replacement of lost Warrant Certificates, which shall be charged only once in instances where a single surety bond obtained covers multiple certificates. The Warrant Agent may receive compensation from the surety companies or surety bond agents for administrative services provided to them.

2.2.7 Proxies. The Holder of a Warrant may grant proxies or otherwise authorize any person, including the Participants and beneficial holders that may own interests through the Participants, to take any action that a Holder is entitled to take under this Agreement or the Warrants; provided, however, that at all times that Warrants are evidenced by a Global Certificate, exercise of those Warrants shall be effected on their behalf by Participants through DTC in accordance the procedures administered by DTC.

2.2.8 Warrant Certificate Request. A Holder has the right to elect at any time or from time to time a Warrant Exchange (as defined below) pursuant to a Warrant Certificate Request Notice (as defined below). Upon written notice by a Holder to the Warrant Agent for the exchange of some or all of such Holder’s Global Warrants for a Definitive Certificate evidencing the same number of Warrants, which request shall be in the form attached hereto as Annex E (a “Warrant Certificate Request Notice” and the date of delivery of such Warrant Certificate Request Notice by the Holder, the “Warrant Certificate Request Notice Date” and the deemed surrender upon delivery by the Holder of a number of Global Warrants for the same number of Warrants evidenced by a Definitive Certificate, a “Warrant Exchange”), the Warrant Agent shall promptly effect the Warrant Exchange and shall promptly issue and deliver to the Holder a Definitive Certificate for such number of Warrants in the name set forth in the Warrant Certificate Request Notice. Such Definitive Certificate shall be dated the original issue date of the Warrants, shall be manually executed by an authorized signatory of the Company, shall be in the form attached hereto as Annex C, and shall be reasonably acceptable in all respects to such Holder. In connection with a Warrant Exchange, the Company agrees to deliver, or to direct the Warrant Agent to deliver, the Definitive Certificate to the Holder within three (3) Trading Days of the Warrant Certificate Request Notice pursuant to the delivery instructions in the Warrant Certificate Request Notice (“Warrant Certificate Delivery Date”). If the Company fails for any reason to deliver to the Holder the Definitive Certificate subject to the Warrant Certificate Request Notice by the Warrant Certificate Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares evidenced by such Definitive Certificate (based on the VWAP (as defined in the Warrants) of the Common Stock on the Warrant Certificate Request Notice Date), $10 per Business Day for each Business Day after such Warrant Certificate Delivery Date until such Definitive Certificate is delivered or, prior to delivery of such Warrant Certificate, the Holder rescinds such Warrant Exchange. The Company covenants and agrees that, upon the date of delivery of the Warrant Certificate Request Notice, the Holder shall be deemed to be the holder of the Definitive Certificate and, notwithstanding anything to the contrary set forth herein, the Definitive Certificate shall be deemed for all purposes to contain all of the terms and conditions of the Warrants evidenced by such Warrant Certificate.

2.2.9 Terms of the Warrant. The terms of the Warrants are set forth in the form of the Definitive Certificate attached hereto as Annex C, which form is incorporated by reference into this Warrant Agreement. If there is any discrepancy between any Section of this Warrant Agreement or the Global Certificate applicable to the Warrants and the form of Definitive Certificate attached hereto as Annex C, the form of Definitive Certificate shall govern and control.

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3. Terms and Exercise of Warrants.

3.1 Exercise Price. Each Warrant shall entitle the Holder, subject to the provisions of the applicable Warrant Certificate and of this Warrant Agreement, to purchase from the Company the number of shares of Common Stock stated therein, at the price of $[ ] per whole share, subject to the subsequent adjustments provided by Section 3 of the Warrant Certificate. The term “Exercise Price” as used in this Warrant Agreement refers to the price per share at which shares of Common Stock may be purchased at the time a Warrant is exercised.

3.2 Duration of Warrants. Warrants may be exercised only during the period (“Exercise Period”) commencing on the Issuance Date and terminating at 5:00 P.M., New York City time (the “close of business”) on [___], 2028 (“Expiration Date”), unless the Expiration Date is not a Business Day, in which case the Expiration Date will be the next Business Day. Each Warrant not exercised on or before the Expiration Date shall become void, and all rights thereunder and all rights in respect thereof under this Warrant Agreement shall cease at the close of business on the Expiration Date.

3.3 Exercise of Warrants.

3.3.1 Exercise and Payment. Subject to the provisions of this Warrant Agreement, a Holder (or a Participant or a designee of a Participant acting on behalf of a Holder) may exercise the purchase rights represented by the Warrants, in whole or in part, at any time or times on or before the Expiration Date by delivering to the Warrant Agent, a duly executed PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed as Annex B hereto (the “Notice of Exercise”). Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period following the date the Holder delivers the Notice of Exercise, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 3.3.7 below is specified in the applicable Notice of Exercise. Notwithstanding any other provision in this Agreement, a holder whose interest in a Global Warrant is a beneficial interest in a Global Certificate held in book-entry form through the DTC (or another established clearing corporation performing similar functions), shall effect exercises by delivering to the DTC (or such other clearing corporation, as applicable) the appropriate instruction form for exercise, and complying with the procedures to effect exercise that are required by the DTC (or such other clearing corporation, as applicable). The Company acknowledges that the bank accounts maintained by the Warrant Agent in connection with the services provided under this Agreement will be in its name and that the Warrant Agent may receive investment earnings in connection with the investment at Warrant Agent risk and for its benefit of funds held in those accounts from time to time. Neither the Company nor the Holders will receive interest on any deposits or Exercise Price. The “Exercise Date” will be the first Business Day on which the materials in the foregoing sentence are received by the Warrant Agent (if by 5:00 P.M., New York City time), or the following Trading Day (if after 5:00 P.M., New York City time), regardless of any earlier date written on the materials. If the materials discussed in this Section 3.3.1 are received or deemed to be received after the Expiration Date, the exercise thereof will be null and void and any funds delivered to the Company will be returned to the Holder or Participant, as the case may be, as soon as practicable. In no event will interest accrue on any funds deposited with the Warrant Agent or the Company in respect of an exercise or attempted exercise of the Warrants.

3.3.2 Issuance of Warrant Shares.

(a) The Warrant Agent shall on the Trading Day following the Exercise Date of any Warrant, advise the Company, the transfer agent and registrar for the Company’s Common Stock, in respect of (i) the number of Warrant Shares indicated on the Notice of Exercise as issuable upon such exercise with respect to such exercised Warrants, (ii) the instructions of the Holder or Participant, as the case may be, provided to the Warrant Agent with respect to the delivery of the Warrant Shares and the number of Warrants that remain outstanding after such exercise and (iii) such other information as the Company or such transfer agent and registrar shall reasonably request.

(b) Upon the Warrant Agent’s receipt, at or prior to the close of business on the Expiration Date, of the executed Notice of Exercise, accompanied by payment of the Exercise Price pursuant to Section 2(b) of the Warrant Certificate (other than in the case of a Cashless Exercise), the Warrant Agent shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with DTC through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by Holder or (B) the Warrant is being exercised via cashless exercise, and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise no later than the Warrant Share Delivery Date.

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3.3.3 Valid Issuance. All Warrant Shares issued by the Company upon the proper exercise of a Warrant in conformity with this Warrant Agreement shall be validly issued, fully paid and non-assessable.

3.3.4 No Fractional Exercise. No fractional Warrant Shares will be issued upon the exercise of the Warrant. As to any fraction of a share which a Holder would otherwise be entitled to purchase upon such exercise, the Company shall round up or down, as applicable, to the nearest whole Warrant Share to be issued to such Holder.

3.3.5 Charges, Taxes, and Expenses. Issuance of Warrant Shares shall be made without charge to a Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of a Holder or in such name or names as may be directed by a Holder; provided, however, that in the event that Warrant Shares are to be issued in a name other than the name of a Holder, the Warrant, when surrendered for exercise, shall be accompanied by the Assignment Form attached to the Warrant duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to DTC (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.

3.3.6 Date of Issuance. The Company will treat an exercising Holder as a beneficial owner of the Warrant Shares as of the Exercise Date of any Warrant, except that, if such date is a date when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of such shares at the open of business on the next succeeding date on which the stock transfer books are open.

3.3.7 Restrictive Legend Events; Cashless Exercise Under Certain Circumstances.

(a) The Company shall use its reasonable best efforts to maintain the effectiveness of the Registration Statement and the current status of the prospectus included therein or to file and maintain the effectiveness of another registration statement and another current prospectus covering the Warrants and the Warrant Shares at any time that the Warrants are exercisable. The Company shall provide to the Warrant Agent and each Holder prompt written notice of any time that the Company is unable to deliver the Warrant Shares via DTC transfer or otherwise without restrictive legend because (A) the Commission has issued a stop order with respect to the Registration Statement, (B) the Commission otherwise has suspended or withdrawn the effectiveness of the Registration Statement, either temporarily or permanently, (C) the Company has suspended or withdrawn the effectiveness of the Registration Statement, either temporarily or permanently, (D) the prospectus contained in the Registration Statement is not available for the issuance of the Warrant Shares to the Holder or (E) otherwise (each a “Restrictive Legend Event”). To the extent that the Warrants cannot be exercised as a result of a Restrictive Legend Event or a Restrictive Legend Event occurs after a Holder has exercised Warrants in accordance with the terms of the Warrants but prior to the delivery of the Warrant Shares, the Company shall, at the election of the Holder, which shall be given within five (5) days of receipt of such notice of the Restrictive Legend Event, either (A) rescind the previously submitted Election to Purchase and the Company shall return all consideration paid by such Holder upon such rescission or (B) treat the attempted exercise as a cashless exercise as described in paragraph (b) below and refund the cash portion of the exercise price to the Holder.

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(b) If a Restrictive Legend Event has occurred, the Warrant may be exercisable on a cashless basis pursuant to Section 2(c) of the Warrant Certificate. Notwithstanding anything herein to the contrary, the Company shall not be required to make any cash payments or net cash settlement to the Holder in lieu of delivery of the Warrant Shares. If the Warrant Shares are issued in such a cashless exercise, the Company acknowledges and agrees that, in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised and the Company agrees not to take any position contrary thereto.

Upon receipt of a Notice of Exercise for a cashless exercise, the Warrant Agent will promptly deliver a copy of the Notice of Exercise to the Company to confirm the number of Warrant Shares issuable in connection with the cashless exercise. The Company shall promptly calculate and transmit to the Warrant Agent in a written notice, and the Warrant Agent shall have no duty, responsibility or obligation under this section to calculate, the number of Warrant Shares issuable in connection with any cashless exercise. The Warrant Agent shall be entitled to rely conclusively on any such written notice provided by the Company, and the Warrant Agent shall not be liable for any action taken, suffered or omitted to be taken by it in accordance with such written instructions or pursuant to this Warrant Agreement.

3.3.8 Disputes. In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the number of Warrant Shares issuable in connection with any exercise, the Company shall promptly deliver to the Holder the number of Warrant Shares that are not disputed.

3.3.9 Beneficial Ownership Limitation. The Company and Warrant Agent shall not effect any exercise of a Warrant, and a Holder shall not have the right to exercise any portion of a Warrant, pursuant to Section 3 or otherwise, in contravention of the Beneficial Ownership Limitation set forth in Section 2(e) of the Warrant Certificate.

4. Adjustments. The Exercise Price, the number of Warrant Shares issuable upon exercise of each Warrant and the number of Warrants outstanding are subject to adjustment from time to time as provided in Section 3 of the Warrant Certificate. Upon every adjustment of the Exercise Price or the number of Warrant Shares issuable upon exercise of a Warrant, the Company shall give written notice thereof to the Warrant Agent, which notice shall state the Exercise Price resulting from such adjustment and the increase or decrease, if any, in the number of Warrant Shares purchasable at such price upon the exercise of a Warrant, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. Upon the occurrence of any event causing any such adjustment, the Company shall give written notice to each Holder, at the last address set forth for such holder in the Warrant Register, as of the record date or the effective date of the event. Failure to give such notice, or any defect therein, shall not affect the legality or validity of such event. The Warrant Agent shall be entitled to rely conclusively on, and shall be fully protected in relying on, any certificate, notice or instructions provided by the Company with respect to any adjustment of the Exercise Price or the number of shares issuable upon exercise of a Warrant, or any related matter, and the Warrant Agent shall not be liable for any action taken, suffered or omitted to be taken by it in accordance with any such certificate, notice or instructions or pursuant to this Warrant Agreement. The Warrant Agent shall not be deemed to have knowledge of any such adjustment unless and until it shall have received written notice thereof from the Company.

5. Restrictive Legends; Fractional Warrants. In the event that a Warrant Certificate surrendered for transfer bears a restrictive legend, the Warrant Agent shall not register that transfer until the Warrant Agent has received an opinion of counsel for the Company stating that such transfer may be made and indicating whether the Warrants must also bear a restrictive legend upon that transfer. The Company and the Warrant Agent shall not issue fractions of Warrants or distribute a Global Warrant or Warrant Certificates that evidence fractional Warrants. Whenever any fractional Warrant would otherwise be required to be issued or distributed, the actual issuance or distribution shall reflect a rounding of such fraction up or down, as applicable, to the nearest whole Warrant. The Warrant Agent shall not be required to effect any registration of transfer or exchange which will result in the transfer of or delivery of a Warrant Certificate for a fraction of a Warrant.

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6. Other Provisions Relating to Rights of Holders of Warrants.

6.1 No Rights as Stockholder. Except as otherwise specifically provided herein and in accordance with Section 5(a) of the Warrant Certificate, a Holder, solely in its capacity as a holder of Warrants, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the Company for any purpose, nor shall anything contained in this Warrant Agreement be construed to confer upon a Holder, solely in its capacity as the registered holder of Warrants, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of share capital, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights or rights to participate in new issues of shares, or otherwise, prior to the issuance to the Holder of the Warrant Shares which it is then entitled to receive upon the due exercise of Warrants.

6.2 Reservation of Common Stock. The Company shall at all times reserve and keep available a number of its authorized but unissued shares of Common Stock pursuant to Section 5(d) of the Warrant Certificate.

7. Concerning the Warrant Agent and Other Matters.

7.1 Any instructions given to the Warrant Agent orally, as permitted by any provision of this Warrant Agreement, shall be confirmed in writing by the Company as soon as practicable. The Warrant Agent shall not be liable or responsible and shall be fully authorized and protected for acting, or failing to act, in accordance with any oral instructions which do not conform with the written confirmation received in accordance with this Section 7.1

7.2 (a) Whether or not any Warrants are exercised, for the Warrant Agent’s services as agent for the Company hereunder, the Company shall pay to the Warrant Agent such fees as may be separately agreed between the Company and Warrant Agent and the Warrant Agent’s out of pocket expenses in connection with this Warrant Agreement, including, without limitation, the reasonable fees and expenses of the Warrant Agent’s counsel. While the Warrant Agent endeavors to maintain out-of-pocket charges (both internal and external) at competitive rates, these charges may not reflect actual out-of-pocket costs, and may include handling charges to cover internal processing and use of the Warrant Agent’s billing systems. (b) All amounts owed by the Company to the Warrant Agent under this Warrant Agreement are due within 30 days of the Company’s receipt of an invoice. Delinquent payments are subject to a late payment charge of one and one-half percent (1.5%) per month commencing 45 days from the invoice date. The Company agrees to reimburse the Warrant Agent for any reasonable attorney’s fees and any other costs associated with collecting delinquent payments. (c) No provision of this Warrant Agreement shall require Warrant Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties under this Warrant Agreement or in the exercise of its rights.

7.3 As agent for the Company hereunder the Warrant Agent: (a) shall have no duties or obligations other than those specifically set forth herein or as may subsequently be agreed to in writing by the Warrant Agent and the Company; (b) shall be regarded as making no representations and having no responsibilities as to the validity, sufficiency, value, or genuineness of the Warrants or any Warrant Shares; (c) shall not be obligated to take any legal action hereunder; if, however, the Warrant Agent determines to take any legal action hereunder, and where the taking of such action might, in its judgment, subject or expose it to any expense or liability it shall not be required to act unless it has been furnished with an indemnity reasonably satisfactory to it; (d) may rely on and shall be fully authorized and protected in acting or failing to act upon any certificate, instrument, opinion, notice, letter, telegram, telex, facsimile transmission or other document or security delivered to the Warrant Agent and believed by it to be genuine and to have been signed by the proper party or parties; (e) shall not be liable or responsible for any recital or statement contained in the Registration Statement or any other documents relating thereto; (f) shall not be liable or responsible for any failure on the part of the Company to comply with any of its covenants and obligations relating to the Warrants, including without limitation obligations under applicable securities laws; (g) may rely on and shall be fully authorized and protected in acting or failing to act upon the written, telephonic or oral instructions with respect to any matter relating to its duties as Warrant Agent covered by this Warrant Agreement (or supplementing or qualifying any such actions) of officers of the Company, and is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from the Company or counsel to the Company, and may apply to the Company, for advice or instructions in connection with the Warrant Agent’s duties hereunder, and the Warrant Agent shall not be liable for any delay in acting while waiting for those instructions; any applications by the Warrant Agent for written instructions from the Company may, at the option of the Agent, set forth in writing any action proposed to be taken or omitted by the Warrant Agent under this Warrant Agreement and the date on or after which such action shall be taken or such omission shall be effective; the Warrant Agent shall not be liable for any action taken by, or omission of, the Warrant Agent in accordance with a proposal included in such application on or after the date specified in such application (which date shall not be less than five business days after the date such application is sent to the Company, unless the Company shall have consented in writing to any earlier date) unless prior to taking any such action, the Warrant Agent shall have received written instructions in response to such application specifying the action to be taken or omitted; (h) may consult with counsel satisfactory to the Warrant Agent, including its in-house counsel, and the advice of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered, or omitted by it hereunder in good faith and in accordance with the advice of such counsel; (i) may perform any of its duties hereunder either directly or by or through nominees, correspondents, designees, or subagents, and it shall not be liable or responsible for any misconduct or negligence on the part of any nominee, correspondent, designee, or subagent appointed with reasonable care by it in connection with this Warrant Agreement; (j) is not authorized, and shall have no obligation, to pay any brokers, dealers, or soliciting fees to any person; and (k) shall not be required hereunder to comply with the laws or regulations of any country other than the United States of America or any political subdivision thereof.

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7.4 (a) In the absence of gross negligence or willful or illegal misconduct on its part, the Warrant Agent shall not be liable for any action taken, suffered, or omitted by it or for any error of judgment made by it in the performance of its duties under this Warrant Agreement. Anything in this Warrant Agreement to the contrary notwithstanding, in no event shall Warrant Agent be liable for special, indirect, incidental, consequential or punitive losses or damages of any kind whatsoever (including but not limited to lost profits), even if the Warrant Agent has been advised of the possibility of such losses or damages and regardless of the form of action. Any liability of the Warrant Agent will be limited in the aggregate to the amount of fees paid by the Company hereunder. The Warrant Agent shall not be liable for any failures, delays or losses, arising directly or indirectly out of conditions beyond its reasonable control including, but not limited to, acts of government, exchange or market ruling, suspension of trading, work stoppages or labor disputes, fires, civil disobedience, riots, rebellions, storms, electrical or mechanical failure, computer hardware or software failure, communications facilities failures including telephone failure, war, terrorism, insurrection, earthquakes, floods, acts of God or similar occurrences. (b) In the event any question or dispute arises with respect to the proper interpretation of the Warrants or the Warrant Agent’s duties under this Warrant Agreement or the rights of the Company or of any Holder, the Warrant Agent shall not be required to act and shall not be held liable or responsible for its refusal to act until the question or dispute has been judicially settled (and, if appropriate, it may file a suit in interpleader or for a declaratory judgment for such purpose) by final judgment rendered by a court of competent jurisdiction, binding on all persons interested in the matter which is no longer subject to review or appeal, or settled by a written document in form and substance satisfactory to Warrant Agent and executed by the Company and each such Holder. In addition, the Warrant Agent may require for such purpose, but shall not be obligated to require, the execution of such written settlement by all the Holders and all other persons that may have an interest in the settlement.

7.5 The Company covenants to indemnify the Warrant Agent and hold it harmless from and against any loss, liability, claim or expense (“Loss”) arising out of or in connection with the Warrant Agent’s duties under this Warrant Agreement, including the costs and expenses of defending itself against any Loss, unless such Loss shall have been determined by a court of competent jurisdiction to be a result of the Warrant Agent’s gross negligence or willful misconduct.

7.6 Unless terminated earlier by the parties hereto, this Agreement shall terminate 90 days after the earlier of the Expiration Date and the date on which no Warrants remain outstanding (the “Termination Date”). On the business day following the Termination Date, the Agent shall deliver to the Company any entitlements, if any, held by the Warrant Agent under this Warrant Agreement. The Agent’s right to be reimbursed for fees, charges and out-of-pocket expenses as provided in this Section 7 shall survive the termination of this Warrant Agreement.

7.7 If any provision of this Warrant Agreement shall be held illegal, invalid, or unenforceable by any court, this Warrant Agreement shall be construed and enforced as if such provision had not been contained herein and shall be deemed an Agreement among the parties to it to the full extent permitted by applicable law.

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7.8 The Company represents and warrants that: (a) it is duly incorporated and validly existing under the laws of its jurisdiction of incorporation; (b) the offer and sale of the Warrants and the execution, delivery and performance of all transactions contemplated thereby (including this Warrant Agreement) have been duly authorized by all necessary corporate action and will not result in a breach of or constitute a default under the articles of association, bylaws or any similar document of the Company or any indenture, agreement or instrument to which it is a party or is bound; (c) this Warrant Agreement has been duly executed and delivered by the Company and constitutes the legal, valid, binding and enforceable obligation of the Company; (d) the Warrants will comply in all material respects with all applicable requirements of law; and (e) to the best of its knowledge, there is no litigation pending or threatened as of the date hereof in connection with the offering of the Warrants.

7.9 In the event of inconsistency between this Warrant Agreement and the descriptions in the Registration Statement, as they may from time to time be amended, the terms of this Warrant Agreement shall control.

7.10 Set forth in Annex D hereto is a list of the names and specimen signatures of the persons authorized to act for the Company under this Warrant Agreement (the “Authorized Representatives”). The Company shall, from time to time, certify to you the names and signatures of any other persons authorized to act for the Company under this Warrant Agreement.

7.11 Except as expressly set forth elsewhere in this Warrant Agreement, all notices, instructions and communications under this Agreement shall be in writing, shall be effective upon receipt and shall be addressed, if to the Company, at 4000 Sancar Drive, Triangle Research Park, North Carolina 27709, Attention: Chief Executive Officer, E-mail: jason@data443.com, telephone number: (919) 526-1070 ext. 99, or, if to the Warrant Agent, to Madison Stock Transfer Inc., at 2500 Coney Island Ave, Sub Level, Brooklyn, New York 11223, a phone number of [ ] and an email address of [ ], or to such other address of which a party hereto has notified the other party.

7.12 (a) This Warrant Agreement shall be governed by and construed in accordance with the laws of the State of New York. All actions and proceedings relating to or arising from, directly or indirectly, this Warrant Agreement may be litigated in courts located within the Borough of Manhattan in the City and State of New York. The Company hereby submits to the personal jurisdiction of such courts and consents that any service of process may be made by certified or registered mail, return receipt requested, directed to the Company at its address last specified for notices hereunder. Each of the parties hereto hereby waives the right to a trial by jury in any action or proceeding arising out of or relating to this Warrant Agreement. (b) This Warrant Agreement shall inure to the benefit of and be binding upon the successors and assigns of the parties hereto. This Warrant Agreement may not be assigned, or otherwise transferred, in whole or in part, by either party without the prior written consent of the other party, which the other party will not unreasonably withhold, condition or delay; except that (i) consent is not required for an assignment or delegation of duties by Warrant Agent to any affiliate of Warrant Agent and (ii) any reorganization, merger, consolidation, sale of assets or other form of business combination by Warrant Agent or the Company shall not be deemed to constitute an assignment of this Warrant Agreement. (c) No provision of this Warrant Agreement may be amended, modified or waived, except in a written document signed by both parties. The Company and the Warrant Agent may amend or supplement this Warrant Agreement without the consent of any Holder for the purpose of curing any ambiguity, or curing, correcting or supplementing any defective provision contained herein or adding or changing any other provisions with respect to matters or questions arising under this Agreement as the parties may deem necessary or desirable and that the parties determine, in good faith, shall not adversely affect the interest of the Holders. All other amendments and supplements shall require the vote or written consent of Holders of at least 50.1% of the then outstanding Warrants, provided that adjustments may be made to the Warrant terms and rights in accordance with Section 4 without the consent of the Holders.

7.13 Payment of Taxes. The Company will from time to time promptly pay all taxes and charges that may be imposed upon the Company or the Warrant Agent in respect of the issuance or delivery of Warrant Shares upon the exercise of Warrants, but the Company may, pursuant to the terms of the Warrant, require the Holders to pay any transfer taxes in respect of the Warrants or such shares. The Warrant Agent may refrain from registering any transfer of Warrants or any delivery of any Warrant Shares unless or until the persons requesting the registration or issuance shall have paid to the Warrant Agent for the account of the Company the amount of such tax or charge, if any, or shall have established to the reasonable satisfaction of the Company and the Warrant Agent that such tax or charge, if any, has been paid.

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7.14 Resignation of Warrant Agent.

7.14.1 Appointment of Successor Warrant Agent. The Warrant Agent, or any successor to it hereafter appointed, may resign its duties and be discharged from all further duties and liabilities hereunder after giving thirty (30) days’ notice in writing to the Company and the Holders of the Warrants, or such shorter period of time agreed to by the Company. The Company may terminate the services of the Warrant Agent, or any successor Warrant Agent, after giving thirty (30) days’ notice in writing to the Warrant Agent or successor Warrant Agent and the Holders of the Warrants, or such shorter period of time as agreed. If the office of the Warrant Agent becomes vacant by resignation, termination or incapacity to act or otherwise, the Company shall appoint in writing a successor Warrant Agent in place of the Warrant Agent. If the Company shall fail to make such appointment within a period of 30 days after it has been notified in writing of such resignation or incapacity by the Warrant Agent, then the Warrant Agent or any Holder may apply to any court of competent jurisdiction for the appointment of a successor Warrant Agent at the Company’s cost. Pending appointment of a successor to such Warrant Agent, either by the Company or by such a court, the duties of the Warrant Agent shall be carried out by the Company. Any successor Warrant Agent (but not including the initial Warrant Agent), whether appointed by the Company or by such court, shall be a person organized and existing under the laws of any state of the United States of America, in good standing, and authorized under such laws to exercise corporate trust powers and subject to supervision or examination by federal or state authority. After appointment, any successor Warrant Agent shall be vested with all the authority, powers, rights, immunities, duties, and obligations of its predecessor Warrant Agent with like effect as if originally named as Warrant Agent hereunder, without any further act or deed, and except for executing and delivering documents as provided in the sentence that follows, the predecessor Warrant Agent shall have no further duties, obligations, responsibilities or liabilities hereunder, but shall be entitled to all rights that survive the termination of this Warrant Agreement and the resignation or removal of the Warrant Agent, including but not limited to its right to indemnity hereunder. If for any reason it becomes necessary or appropriate or at the request of the Company, the predecessor Warrant Agent shall execute and deliver, at the expense of the Company, an instrument transferring to such successor Warrant Agent all the authority, powers, and rights of such predecessor Warrant Agent hereunder; and upon request of any successor Warrant Agent the Company shall make, execute, acknowledge, and deliver any and all instruments in writing for more fully and effectually vesting in and confirming to such successor Warrant Agent all such authority, powers, rights, immunities, duties, and obligations.

7.14.2 Notice of Successor Warrant Agent. In the event a successor Warrant Agent shall be appointed, the Company shall give notice thereof to the predecessor Warrant Agent and the transfer agent for the Common Stock not later than the effective date of any such appointment.

7.14.3 Merger or Consolidation of Warrant Agent. Any person into which the Warrant Agent may be merged or converted or with which it may be consolidated or any person resulting from any merger, conversion or consolidation to which the Warrant Agent shall be a party or any person succeeding to the shareowner services business of the Warrant Agent or any successor Warrant Agent shall be the successor Warrant Agent under this Warrant Agreement, without any further act or deed. For purposes of this Warrant Agreement, “person” shall mean any individual, firm, corporation, partnership, limited liability company, joint venture, association, trust or other entity, and shall include any successor (by merger or otherwise) thereof or thereto.

8. Miscellaneous Provisions.

8.1 Persons Having Rights under this Warrant Agreement. Nothing in this Warrant Agreement expressed and nothing that may be implied from any of the provisions hereof is intended, or shall be construed, to confer upon, or give to, any person or corporation other than the parties hereto and the Holders any right, remedy, or claim under or by reason of this Warrant Agreement or of any covenant, condition, stipulation, promise, or agreement hereof.

8.2 Examination of the Warrant Agreement. A copy of this Warrant Agreement shall be available at all reasonable times at the office of the Warrant Agent designated for such purpose for inspection by any Holder. Prior to such inspection, the Warrant Agent may require any such holder to provide reasonable evidence of its interest in the Warrants.

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8.3 Counterparts. This Warrant Agreement may be executed in any number of original, facsimile or electronic counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

8.4 Effect of Headings. The Section headings herein are for convenience only and are not part of this Warrant Agreement and shall not affect the interpretation thereof.

9. Certain Definitions. As used herein, the following terms shall have the following meanings:

(a) “Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed; provided that banks shall not be deemed to be authorized or obligated to be closed due to a “shelter in place,” “non-essential employee” or similar closure of physical branch locations at the direction of any governmental authority if such banks’ electronic funds transfer systems (including for wire transfers) are open for use by customers on such day.

(b) “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise.

(c) “Trading Day” means any day on which the Common Stock is traded on the Trading Market.

(d) “Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange (or any successors to any of the foregoing).

(e) “Warrant Share Delivery Date” means the date that is the earliest of: (i) two (2) Trading Days after the delivery to the Company of the Notice of Exercise, and (ii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise, all subject to receipt of any cash payments required by the Holder.

[Signature Page to Follow]

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IN WITNESS WHEREOF, this Warrant Agent Agreement has been duly executed by the parties hereto as of the day and year first above written.

DATA443 RISK MITIGATION, INC.

By:

Name:

Title:

MADISON STOCK TRANSFER INC.

By:

Name:

Title:  

Annex A - Form of Global Certificate

Annex B – Notice of Exercise

Annex C - Form of Certificated Warrant

Annex D - Authorized Representatives

Annex E - Form of Warrant Certificate Request Notice

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ANNEX A

[FORM OF GLOBAL CERTIFICATE]

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

DATA443 RISK MITIGATION, INC.

GLOBAL WARRANT CERTIFICATE

NOT EXERCISABLE AFTER [    ] [    ], 2028

This certifies that the person whose name and address appears below, or registered assigns, is the registered owner of the number of Warrants set forth below. Each Warrant entitles its registered holder to purchase from DATA443 RISK MITIGATION, INC., a Nevada corporation (the “Company”), at any time prior to 5:00 P.M. (New York City time) on [ ] [ ], 2028 (the “Expiration Date”) (unless such date is not a Business Day, in which case the Expiration Date will be the next Business Day), one share of common stock, par value $0.001 per share, of the Company (each, a “Warrant Share” and collectively, the “Warrant Shares”), at an exercise price of $[ ] per share, subject to possible adjustments as provided in the Warrant Agreement (as defined below).

This Warrant Certificate, with or without other Warrant Certificates, upon surrender at the designated office of the Warrant Agent, may be exchanged for another Warrant Certificate or Warrant Certificates evidencing the same number of Warrants as the Warrant Certificate or Warrant Certificates surrendered. A transfer of the Warrants evidenced hereby may be registered upon surrender of this Warrant Certificate at the designated office of the Warrant Agent by the registered holder in person or by a duly authorized attorney, properly endorsed or accompanied by proper instruments of transfer, a signature guarantee, and such other and further documentation as the Warrant Agent may reasonably request and duly stamped as may be required by the laws of the State of New York and of the United States of America.

The terms and conditions of the Warrants and the rights and obligations of the holder of this Warrant Certificate are set forth in the Warrant Agent Agreement dated as of [______], 2023, including, but not limited to, the terms set forth in the Definitive Certificate in the form attached thereto as Annex C (the “Warrant Agreement”) by and between the Company and Madison Stock Transfer, Inc. (the “Warrant Agent”). A copy of the Warrant Agreement is available for inspection during business hours at the office of the Warrant Agent.

This Warrant Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by an authorized signatory of the Warrant Agent.

WITNESS the facsimile signature of a proper officer of the Company.

DATA443 RISK MITIGATION, INC.

By:

Name:

Title:

Dated: [_____]

Countersigned:

MADISON STOCK TRANSFER, INC.,

as Warrant Agent

By:

Name:

Title:

PLEASE DETACH HERE

Certificate No.: 1 ____________________________                            Number of Warrants ________________

WARRANT CUSIP NO.: [   ]

	DATA443 RISK MITIGATION, INC.
Cede & Co.	MADISON STOCK TRANSFER, INC.
	By Mail:
	[        ]
	By hand or overnight courier:

Annex A

ANNEX B

NOTICE OF EXERCISE

TO: DATA443 RISK MITIGATION, INC.

(1) The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

(2) Payment shall take the form of (check applicable box):

☐ in lawful money of the United States; or

☐ if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

(3) Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

The Warrant Shares shall be delivered to the following DWAC Account Number:

[SIGNATURE OF HOLDER]

Name of Investing Entity:

Signature of Authorized Signatory of Investing Entity:

Name of Authorized Signatory:

Title of Authorized Signatory:

Date:

Annex B

ASSIGNMENT FORM

(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

Name:
	(Please Print)
Address:
	(Please Print)
Phone Number:
Email Address:
Dated: _______________ __, ______
Holder’s Signature:
Holder’s Address:

[Signature Guarantee]

Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Warrant Agent, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Warrant Agent in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

ANNEX C

FORM OF CERTIFICATED WARRANT

ANNEX D

AUTHORIZED REPRESENTATIVES

Name	Title	Signature
[___]	Chief Executive Officer
[___]	Chief Financial Officer

ANNEX E

Form of Warrant Certificate Request Notice

WARRANT CERTIFICATE REQUEST NOTICE

To: Madison Stock Transfer Inc., as Warrant Agent for Data443 Risk Mitigation, Inc. (the “Company”)

The undersigned Holder of Common Stock Purchase Warrants (“Warrants”) in the form of Global Warrants issued by the Company hereby elects to receive a Definitive Certificate evidencing the Warrants held by the Holder as specified below:

1.	Name of Holder of Warrants in form of Global Warrants: ________________________________________________
2.	Name of Holder in Definitive Certificate (if different from name of Holder of Warrants in form of Global Warrants): ________________________________
3.	Number of Warrants in name of Holder in form of Global Warrants: ___________________________________________
4.	Number of Warrants for which Definitive Certificate shall be issued: _________________________________________
5.	Number of Warrants in name of Holder in form of Global Warrants after issuance of Definitive Certificate, if any: ___________
6.	Definitive Certificate shall be delivered to the following address: _______________________

The undersigned hereby acknowledges and agrees that, in connection with this Warrant Exchange and the issuance of the Definitive Certificate, the Holder is deemed to have surrendered the number of Warrants in form of Global Warrants in the name of the Holder equal to the number of Warrants evidenced by the Definitive Certificate.

[SIGNATURE OF HOLDER]

Name of Investing Entity: ___________________________________________________

Signature of Authorized Signatory of Investing Entity: _____________________________

Name of Authorized Signatory:________________________________________________

Title of Authorized Signatory:_________________________________________________

Date: _______________________________________________

EX-4.35

Exhibit 4.35

COMMON STOCK PURCHASE WARRANT

DATA443 RISK MITIGATION, INC.

Warrant Shares: [_______] Original Issuance Date: [_______], 2023

THIS COMMON STOCK PURCHASE WARRANT (this “Warrant”) certifies that, for value received, _____________ or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Original Issuance Date”) and on or prior to 5:00 p.m. (New York City time) on [_____], 2028 (the “Termination Date”) but not thereafter, to subscribe for and purchase from Data443 Risk Mitigation, Inc., a Nevada corporation (the “Company”), up to [___] shares (as subject to adjustment hereunder, the “Warrant Shares”) of common stock of the Company, par value $0.001 per share (“Common Stock”). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b). This Warrant shall initially be issued and maintained in the form of a security held in book-entry form and the Depository Trust Company or its nominee (“DTC”) shall initially be the sole registered holder of this Warrant, subject to the Holder’s right to elect to receive a Warrant in certificated form pursuant to the terms of the Warrant Agent Agreement, in which case this sentence shall not apply.

Section 1. Definitions. In addition to the terms defined elsewhere in this Warrant, the following terms have the meanings indicated in this Section 1:

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.

“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed; provided that banks shall not be deemed to be authorized or obligated to be closed due to a “shelter in place,” “non-essential employee” or similar closure of physical branch locations at the direction of any governmental authority if such banks’ electronic funds transfer systems (including for wire transfers) are open for use by customers on such day.

“Commission” means the United States Securities and Exchange Commission.

“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“Registration Statement” means the Company’s registration statement on Form S-1, as amended (File No. 333-256785).

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Trading Day” means a day on which the Common Stock is traded on a Trading Market.

“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange (or any successors to any of the foregoing).

“Transfer Agent” means Madison Stock Transfer Inc., the current transfer agent of the Company, with a mailing address of 2500 Coney Island Ave, Sub Level, Brooklyn, New York 11223, and a facsimile number of [__________________], and any successor transfer agent of the Company.

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the Common Stock is traded on OTCQB or OTCQX, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the OTC Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

“Warrant Agent Agreement” means that certain warrant agent agreement, dated on or about the Original Issuance Date, between the Company and the Warrant Agent.

“Warrant Agent” means the Transfer Agent and any successor warrant agent of the Company.

“Warrants” means this Warrant and other Common Stock purchase warrants issued by the Company and delivered to the purchasers thereof pursuant to the Registration Statement.

Section 2. Exercise.

a) Exercise of Warrant. Subject to the provisions of Section 2(e) herein, exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Original Issuance Date and on or before close of business on the Termination Date by delivery to the Company or Warrant Agent (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy or PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”). Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the Warrant Shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company or the Warrant Agent until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company or Warrant Agent for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company or Warrant Agent shall deliver any objection to any Notice of Exercise within one (1) Trading Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

Notwithstanding the foregoing in this Section 2(a), a Holder whose interest in this Warrant is a beneficial interest in certificate(s) representing this Warrant held in book-entry form through DTC (or another established clearing corporation performing similar functions), shall effect exercises made pursuant to this Section 2(a) by delivering to DTC (or such other clearing corporation, as applicable) the appropriate instruction form for exercise, complying with the procedures to effect exercise that are required by DTC (or such other clearing corporation, as applicable), subject to a Holder’s right to elect to receive a Warrant in certificated form pursuant to the terms of the Warrant Agent Agreement, in which case this sentence shall not apply.

b) Exercise Price. The exercise price per share of Common Stock under this Warrant shall be $[_____], subject to adjustment hereunder (the “Exercise Price”).

c) Cashless Exercise. If at the time of exercise hereof there is no effective registration statement registering, or the prospectus contained therein is not available for the issuance of the Warrant Shares to the Holder, then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

(A) = the last VWAP immediately preceding the time of delivery of the Notice of Exercise giving rise to the applicable “cashless exercise”, as set forth in the applicable Notice of Exercise (to clarify, the “last VWAP” will be the last VWAP as calculated over an entire Trading Day such that, in the event that this Warrant is exercised at a time that the Trading Market is open, the prior Trading Day’s VWAP shall be used in this calculation);

(B) = the Exercise Price of this Warrant, as adjusted hereunder; and

(X) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised. The Company agrees not to take any position contrary to this Section 2(c), except as permitted or required by law.

d) Mechanics of Exercise.

i. Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with DTC through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) this Warrant is being exercised via cashless exercise, and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earlier of: (i) two (2) Trading Days after the delivery to the Company or the Warrant Agent of the Notice of Exercise, and (ii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company or the Warrant Agent of the Notice of Exercise, all subject to receipt of any cash payments required by the Holder (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received by the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the fifth (5th) Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. Notwithstanding the forgoing, the Warrant Agent shall not, in any event, be subject to, or responsible for, liquidated damages as contemplated by this Section 2(d)(i). The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise.

ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

iii. Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

iv. Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date (other than any such failure that is solely due to any action or inaction by the Holder with respect to such exercise), and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof. Notwithstanding the forgoing, the Warrant Agent shall not, in any event, be subject to, or responsible for, Buy-In penalties contemplated by this Section 2(d)(iv).

v. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall round up or down, as applicable, to the nearest whole share.

vi. Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to DTC (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.

vii. Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

e) Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% (or, upon election by a Holder prior to the issuance of any Warrants, 9.99%) of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon at least [__] days’ prior notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

Section 3. Certain Adjustments.

a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

b) Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time after the issuance of this Warrant the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to all of the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

c) Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to all of the holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

d) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant in accordance with the provisions of this Section 3(d) pursuant to written agreements prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction). Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant with the same effect as if such Successor Entity had been named as the Company herein. For the avoidance of doubt, if, at any time while this Warrant is outstanding, a Fundamental Transaction occurs, pursuant to the terms of this Section 3(d), the Holder shall not be entitled to receive more than one of (i) the consideration receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction, or (ii) the assumption by the Successor Entity of all of the obligations of the Company under this Warrant and the option to receive a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant.

e) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

f) Notice to Holder.

i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

ii. Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by facsimile or email to the Holder at its last facsimile number or email address as it shall appear upon the Warrant Register of the Company, at least twenty (20) calendar days prior to the applicable record or effective date hereinafter specified, a notice (unless such information is filed with the Commission, in which case a notice shall not be required) stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

Section 4. Transfer of Warrant.

a) Transferability. This Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. The Warrant Agent may require a medallion guarantee (or other type of guarantee or notarization) to effectuate an assignment or transfer of this Warrant. In order to effectuate a transfer (in whole or in part) of this Warrant, the Holder shall surrender this Warrant to the Company or the Warrant Agent within three (3) Trading Days of the date on which the Holder delivers an assignment form to the Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

b) New Warrants. If this Warrant is not held in global form through DTC (or any successor depository), this Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the initial issuance date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

c) Warrant Register. The Warrant Agent shall register this Warrant, upon records to be maintained by the Warrant Agent for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company and the Warrant Agent may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

Section 5. Miscellaneous.

a) No Rights as Stockholder Until Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3. Without limiting the rights of a Holder to receive Warrant Shares on a “cashless exercise,” and to receive the cash payments contemplated pursuant to Sections 2(d)(i) and 2(d)(iv), in no event, including if the Company is for any reason unable to issue and deliver Warrant Shares upon exercise of this Warrant as required pursuant to the terms hereof, shall the Company be required to net cash settle an exercise of this Warrant or cash settle in any other form.

b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate. The Company agrees to secure a bond on behalf of the Holder in connection with the replacement of such Warrant Certificates, if requested by the Warrant Agent.

c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.

d) Authorized Shares.

The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

e) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Warrant (whether brought against a party hereto or their respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action, suit or proceeding to enforce any provisions of this Warrant, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for their reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.

g) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

h) Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without limitation, any Notice of Exercise, shall be in writing and delivered personally, by facsimile or e-mail, or sent by a nationally recognized overnight courier service, addressed to the Company, at 2500 Coney Island Ave, Sub Level, Brooklyn, New York 11223, Attention: [__________________], E-mail: [__________________], or such other facsimile number, email address or address as the Company may specify for such purposes by notice to the Holders. Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile or e-mail, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number, e-mail address or address of such Holder appearing on the books of the Warrant Agent. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the time of transmission, if such notice or communication is delivered via facsimile at the facsimile number or via e-mail at the e-mail address set forth in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number or via e-mail at the e-mail address set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. Notwithstanding any other provision of this Warrant, where this Warrant provides for notice of any event to the Holder, if this Warrant is held in global form by DTC (or any successor depositary), such notice shall be sufficiently given if given to DTC (or any successor depositary) pursuant to the procedures of DTC (or such successor depositary), subject to a Holder’s right to elect to receive a Warrant in certificated form pursuant to the terms of the Warrant Agent Agreement, in which case this sentence shall not apply. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.

i) Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

j) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

k) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

l) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company, on the one hand, and either: (i) the Holder or the beneficial owner of this Warrant, on the other hand, or (ii) the vote or written consent of the Holders of at least 50.1% of the then outstanding Warrants issued pursuant to the Warrant Agent Agreement, on the other hand, provided that adjustments may be made to the Warrant terms and rights of this Warrant in accordance with Section 3 of this Warrant without the consent of any Holder or beneficial owner of the Warrants.

m) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

n) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

o) Warrant Agent Agreement. If this Warrant is held in global form through DTC (or any successor depositary), this Warrant is issued subject to the Warrant Agent Agreement. To the extent any provision of this Warrant conflicts with the express provisions of the Warrant Agent Agreement, the provisions of this Warrant shall govern and be controlling.

********************

(Signature Page Follows)

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

DATA443 RISK MITIGATION, INC.

By:

Name:

Title:

NOTICE OF EXERCISE

To: DATA443 RISK MITIGATION, INC.

(1) The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

(2) Payment shall take the form of (check applicable box):

[ ] in lawful money of the United States; or

[ ] if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

(3) Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

_______________________________

The Warrant Shares shall be delivered to the following DWAC Account Number:

_______________________________

_______________________________

_______________________________

[SIGNATURE OF HOLDER]

Name of Investing Entity:

Signature of Authorized Signatory of Investing Entity:

Name of Authorized Signatory:

Title of Authorized Signatory:

Date:

ASSIGNMENT FORM

(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

Name:
	(Please Print)
Address:
Phone Number: Email Address:	(Please Print) ______________________________________ __________________________________
Dated: ,
Holder’s Signature:
Holder’s Address:

[Signature Guarantee]

Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Warrant Agent, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Warrant Agent in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

EX-4.36

Exhibit 4.36

THE REGISTERED HOLDER OF THIS PURCHASE WARRANT BY ITS ACCEPTANCE HEREOF, AGREES THAT IT WILL NOT SELL, TRANSFER OR ASSIGN THIS PURCHASE WARRANT EXCEPT AS HEREIN PROVIDED AND THE REGISTERED HOLDER OF THIS PURCHASE WARRANT AGREES THAT IT WILL NOT SELL, TRANSFER, ASSIGN, PLEDGE OR HYPOTHECATE THIS PURCHASE WARRANT FOR A PERIOD OF ONE HUNDRED EIGHTY DAYS FOLLOWING [              ], 2023, WHICH IS THE COMMENCEMENT DATE OF SALES IN THE OFFERING (THE “EFFECTIVE DATE”) TO ANYONE OTHER THAN (I) DAWSON JAMES SECURITIES, INC., OR A SELECTED DEALER IN CONNECTION WITH THE OFFERING FOR WHICH THIS PURCHASE WARRANT WAS ISSUED TO THE UNDERWRITER AS CONSIDERATION (THE “OFFERING”), OR (II) THE OFFICERS OR PARTNERS, REGISTERED PERSONS OR AFFILIATES OF DAWSON JAMES SECURITIES, INC.

THIS PURCHASE WARRANT IS NOT EXERCISABLE PRIOR TO [       ], 2023. VOID AFTER 5:00 P.M., EASTERN TIME, [      ], 2028.

COMMON STOCK PURCHASE WARRANT

For the Purchase of [      ] Shares of Common Stock

of

Data443 Risk Mitigation, Inc.

1. Purchase Warrant. THIS CERTIFIES THAT, in consideration of funds duly paid by or on behalf of [      ] (“Holder”), as registered owner of this Purchase Warrant, to Data443 Risk Mitigation, Inc., a Nevada corporation (the “Company”), Holder is entitled, at any time or from time to time beginning [       ], 2023 (the “Commencement Date”), and at or before 5:00 p.m., Eastern time, [      ], 2028 (the “Expiration Date”), but not thereafter, to subscribe for, purchase and receive, in whole or in part, up to [      ] shares of common stock of the Company, par value $0.001 per share (the “Shares”), subject to adjustment as provided in Section 6 hereof. If the Expiration Date is a day on which banking institutions are authorized by law to close, then this Purchase Warrant may be exercised on the next succeeding day which is not such a day in accordance with the terms herein. During the period ending on the Expiration Date, the Company agrees not to take any action that would terminate this Purchase Warrant. This Purchase Warrant is initially exercisable at $[      ] per Share; provided, however, that upon the occurrence of any of the events specified in Section 6 hereof, the rights granted by this Purchase Warrant, including the exercise price per Share and the number of Shares to be received upon such exercise, shall be adjusted as therein specified. The term “Exercise Price” shall mean the initial exercise price or the adjusted exercise price, depending on the context.

2. Exercise.

2.1 Exercise Form. In order to exercise this Purchase Warrant, the exercise form attached hereto must be duly executed and completed and delivered to the Company, together with this Purchase Warrant and payment of the Exercise Price for the Shares being purchased payable in cash by wire transfer of immediately available funds to an account designated by the Company or by certified check or official bank check. If the subscription rights represented hereby shall not be exercised at or before 5:00 p.m., Eastern time, on the Expiration Date, this Purchase Warrant shall become and be void without further force or effect, and all rights represented hereby shall cease and expire. Each exercise hereof shall be irrevocable.

2.2 Cashless Exercise. In lieu of exercising this Purchase Warrant by payment of cash or check payable to the order of the Company pursuant to Section 2.1 above, Holder may elect to receive the number of Shares equal to the value of this Purchase Warrant (or the portion thereof being exercised), by surrender of this Purchase Warrant to the Company, together with the exercise form attached hereto, in which event the Company will issue to Holder Shares in accordance with the following formula:

X	=	Y(A-B)
		A

Where,
	X	=	The number of Shares to be issued to Holder;
	Y	=	The number of Shares for which the Purchase Warrant is being exercised if such exercise were by means of a cash exercise rather than a cashless exercise;
	A	=	as applicable: (i) the VWAP on the Trading Day immediately preceding  the date of the applicable exercise form if such exercise form is (1) both executed and delivered pursuant to Section 2.2 hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2.2 hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b)(68) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Exercise Form or (z) the Bid Price of the Common Stock on the principal Trading Market as reported by Bloomberg L.P. as of the time of the Holder’s execution of the applicable Exercise Form if such Exercise Form is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2.2 hereof, which Bid Price shall be shown on supporting documents provided by the Holder to the Company within two Trading Days of delivery of the exercise form, or (iii) the VWAP on the date of the applicable exercise form if the date of such exercise form is a Trading Day and such exercise form is both executed and delivered pursuant to Section 2.2 hereof after the close of “regular trading hours” on such Trading Day; and
	B	=	The Exercise Price.

“Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holder and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date), or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holder and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

“Trading Day” means a day on which the New York Stock Exchange is open for trading.

“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or the New York Stock Exchange (or any successors to any of the foregoing).

3. Transfer.

3.1 General Restrictions. The registered Holder of this Purchase Warrant agrees by his, her or its acceptance hereof, that such Holder will not: (a) sell, transfer, assign, pledge or hypothecate this Purchase Warrant for a period of one hundred eighty (180) days following the Effective Date to anyone other than: (i) Dawson James Securities, Inc. (“Dawson”) or an underwriter or a selected dealer participating in the Offering, or (ii) the officers or partners, registered persons or affiliates of Dawson or of any such underwriter or selected dealer, in each case in accordance with FINRA Conduct Rule 5110(e), and (b) cause this Purchase Warrant or the securities issuable hereunder to be the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of this Purchase Warrant or the securities hereunder, except as provided for in FINRA Rule 5110(e)(2). After 180 days after the Effective Date, transfers to others may be made subject to compliance with or exemptions from applicable securities laws. In order to make any permitted assignment, the Holder must deliver to the Company the assignment form attached hereto duly executed and completed, together with the Purchase Warrant and payment of all transfer taxes, if any, payable in connection therewith. The Company shall within five (5) Business Days transfer this Purchase Warrant on the books of the Company and shall execute and deliver a new Purchase Warrant or Purchase Warrants of like tenor to the appropriate assignee(s) expressly evidencing the right to purchase the aggregate number of Shares purchasable hereunder or such portion of such number as shall be contemplated by any such assignment.

2

3.2 Restrictions Imposed by the Act. The securities evidenced by this Purchase Warrant shall not be transferred unless and until: (i) if required by applicable law, the Company has received the opinion of counsel for the Company that the securities may be transferred pursuant to an exemption from registration under the Act and applicable state securities laws, or (ii) a registration statement or a post-effective amendment to the Registration Statement relating to the offer and sale of such securities has been filed by the Company and declared effective by the U.S. Securities and Exchange Commission (the “Commission”) and compliance with applicable state securities law has been established.

4. Reserved.

5. New Purchase Warrants to be Issued.

5.1 Partial Exercise or Transfer. Subject to the restrictions in Section 3 hereof, this Purchase Warrant may be exercised or assigned in whole or in part. In the event of the exercise or assignment hereof in part only, upon surrender of this Purchase Warrant for cancellation, together with the duly executed exercise or assignment form, the Company shall cause to be delivered to the Holder without charge a new Purchase Warrant of like tenor to this Purchase Warrant in the name of the Holder evidencing the right of the Holder to purchase the number of Shares purchasable hereunder as to which this Purchase Warrant has not been exercised or assigned.

5.2 Lost Certificate. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Purchase Warrant and of reasonably satisfactory indemnification or the posting of a bond, determined in the sole discretion of the Company, the Company shall execute and deliver a new Purchase Warrant of like tenor and date. Any such new Purchase Warrant executed and delivered as a result of such loss, theft, mutilation or destruction shall constitute a substitute contractual obligation on the part of the Company.

6. Adjustments.

6.1 Adjustments to Exercise Price and Number of Securities. The Exercise Price and the number of Shares underlying the Purchase Warrant shall be subject to adjustment from time to time as hereinafter set forth:

6.1.1 Share Dividends; Split Ups. If, after the date hereof, and subject to the provisions of Section 6.3 below, the number of outstanding Shares is increased by a stock dividend payable in Shares or by a split up of Shares or other similar event, then, on the effective day thereof, the number of Shares purchasable hereunder shall be increased in proportion to such increase in outstanding Shares, and the Exercise Price shall be proportionately decreased.

6.1.2 Aggregation of Shares. If, after the date hereof, and subject to the provisions of Section 6.3 below, the number of outstanding Shares is decreased by a consolidation, combination or reclassification of Shares or other similar event, then, on the effective date thereof, the number of Shares purchasable hereunder shall be decreased in proportion to such decrease in outstanding Shares, and the Exercise Price shall be proportionately increased.

6.1.3 Replacement of Securities upon Reorganization, etc. In case of any reclassification or reorganization of the outstanding Shares other than a change covered by Section 6.1.1 or 6.1.2 hereof or that solely affects the par value of such Shares, or in the case of any share reconstruction or amalgamation or consolidation or merger of the Company with or into another corporation (other than a consolidation or share reconstruction or amalgamation or merger in which the Company is the continuing corporation and that does not result in any reclassification or reorganization of the outstanding Shares), or in the case of any sale or conveyance to another corporation or entity of the property of the Company as an entirety or substantially as an entirety in connection with which the Company is dissolved, the Holder of this Purchase Warrant shall have the right thereafter (until the expiration of the right of exercise of this Purchase Warrant) to receive upon the exercise hereof, for the same aggregate Exercise Price payable hereunder immediately prior to such event, the kind and amount of shares of stock or other securities or property (including cash) receivable upon such reclassification, reorganization, share reconstruction or amalgamation, or consolidation, or upon a dissolution following any such sale or transfer, by a Holder of the number of Shares of the Company obtainable upon exercise of this Purchase Warrant immediately prior to such event; and if any reclassification also results in a change in Shares covered by Section 6.1.1 or 6.1.2, then such adjustment shall be made pursuant to Sections 6.1.1, 6.1.2 and this Section 6.1.3. The provisions of this Section 6.1.3 shall similarly apply to successive reclassifications, reorganizations, share reconstructions or amalgamations, or consolidations, sales or other transfers.

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6.1.4 Changes in Form of Purchase Warrant. This form of Purchase Warrant need not be changed because of any change pursuant to this Section 6.1, and Purchase Warrants issued after such change may state the same Exercise Price and the same number of Shares as are stated in the Purchase Warrants initially issued pursuant to this Agreement. The acceptance by any Holder of the issuance of new Purchase Warrants reflecting a required or permissive change shall not be deemed to waive any rights to an adjustment occurring after the Commencement Date or the computation thereof.

6.2 Substitute Purchase Warrant. In case of any consolidation of the Company with, or share reconstruction or amalgamation or merger of the Company with or into, another corporation (other than a consolidation or share reconstruction or amalgamation or merger which does not result in any reclassification or change of the outstanding Shares), the corporation formed by such consolidation or share reconstruction or amalgamation shall execute and deliver to the Holder a supplemental Purchase Warrant providing that the holder of each Purchase Warrant then outstanding or to be outstanding shall have the right thereafter (until the stated expiration of such Purchase Warrant) to receive, upon exercise of such Purchase Warrant, the kind and amount of shares of stock and other securities and property receivable upon such consolidation or share reconstruction or amalgamation, by a holder of the number of Shares of the Company for which such Purchase Warrant might have been exercised immediately prior to such consolidation, share reconstruction or amalgamation or merger, sale or transfer. Such supplemental Purchase Warrant shall provide for adjustments which shall be identical to the adjustments provided for in this Section 6. The above provision of this Section shall similarly apply to successive consolidations or share reconstructions or amalgamations or mergers.

6.3 Elimination of Fractional Interests. The Company shall not be required to issue certificates representing fractions of Shares upon the exercise of the Purchase Warrant, nor shall it be required to issue scrip or pay cash in lieu of any fractional interests, it being the intent of the parties that all fractional interests shall be eliminated by rounding any fraction up or down, as the case may be, to the nearest whole number of Shares or other securities, properties or rights.

7. Reservation. The Company shall at all times reserve and keep available out of its authorized Shares, solely for the purpose of issuance upon exercise of the Purchase Warrants, such number of Shares or other securities, properties or rights as shall be issuable upon the exercise thereof. The Company covenants and agrees that, upon exercise of the Purchase Warrants and payment of the Exercise Price therefor, in accordance with the terms hereby, all Shares and other securities issuable upon such exercise shall be duly and validly issued, fully paid and non-assessable and not subject to preemptive rights of any shareholder.

8. Certain Notice Requirements.

8.1 Holder’s Right to Receive Notice. Nothing herein shall be construed as conferring upon the Holders the right to vote or consent or to receive notice as a shareholder for the election of directors or any other matter, or as having any rights whatsoever as a shareholder of the Company. If, however, at any time prior to the expiration of the Purchase Warrants and their exercise, any of the events described in Section 8.2 shall occur, then, in one or more of said events, the Company shall deliver to each Holder a copy of each notice relating to such events given to the other shareholders of the Company at the same time and in the same manner that such notice is given to the shareholders.

8.2 Events Requiring Notice. The Company shall be required to give the notice described in this Section 8 upon one or more of the following events: (i) if the Company shall take a record of the holders of its Shares for the purpose of entitling them to receive a dividend or distribution payable otherwise than in cash, or a cash dividend or distribution payable otherwise than out of retained earnings, as indicated by the accounting treatment of such dividend or distribution on the books of the Company, or (ii) the Company shall offer to all the holders of its Shares any additional shares of capital stock of the Company or securities convertible into or exchangeable for shares of capital stock of the Company, or any option, right or warrant to subscribe therefor.

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8.3 Notice of Change in Exercise Price. The Company shall, promptly after an event requiring a change in the Exercise Price pursuant to Section 6 hereof, send notice to the Holders of such event and change (“Price Notice”). The Price Notice shall describe the event causing the change and the method of calculating same.

8.4 Transmittal of Notices. All notices, requests, consents and other communications under this Purchase Warrant shall be in writing and shall be deemed to have been duly made when hand delivered, or mailed by express mail or private courier service: (i) if to the registered Holder of the Purchase Warrant, to the address of such Holder as shown on the books of the Company, or (ii) if to the Company, to following address or to such other address as the Company may designate by notice to the Holders:

If to the Holder:

Dawson James Securities, Inc.

101 N. Federal Highway, Suite 600

Newport Beach, CA 92660

Attention: [ ]

with a copy (which shall not constitute notice) to:

ArentFox Schiff LLP

1717 K Street NW

Washington, DC 20006

Attn: Ralph DeMartino, Esq.

If to the Company:

Data443 Risk Mitigation, Inc.

4000 Sancar Drive

Triangle Research Park

North Carolina 27709

Attention: Jason Remillard

With copies to (which shall not constitute notice):

Pryor Cashman LLP

7 Times Square

New York, NY

10036-6569

Attention: M. Ali Panjwani

9. Miscellaneous.

9.1 Amendments. The Company and Dawson may from time to time supplement or amend this Purchase Warrant without the approval of any of the Holders in order to cure any ambiguity, to correct or supplement any provision contained herein that may be defective or inconsistent with any other provisions herein, or to make any other provisions in regard to matters or questions arising hereunder that the Company and Dawson may deem necessary or desirable and that the Company and Dawson deem shall not adversely affect the interest of the Holders. All other modifications or amendments shall require the written consent of and be signed by (i) the Company and (ii) the Holder(s) of Purchase Warrants then-exercisable for at least a majority of the Shares then-exercisable pursuant to all then-outstanding Purchase Warrants.

9.2 Headings. The headings contained herein are for the sole purpose of convenience of reference, and shall not in any way limit or affect the meaning or interpretation of any of the terms or provisions of this Purchase Warrant.

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9.3. Entire Agreement. This Purchase Warrant (together with the other agreements and documents being delivered pursuant to or in connection with this Purchase Warrant) constitutes the entire agreement of the parties hereto with respect to the subject matter hereof, and supersedes all prior agreements and understandings of the parties, oral and written, with respect to the subject matter hereof.

9.4 Binding Effect. This Purchase Warrant shall inure solely to the benefit of and shall be binding upon, the Holder and the Company and their permitted assignees, respective successors, legal representative and assigns, and no other person shall have or be construed to have any legal or equitable right, remedy or claim under or in respect of or by virtue of this Purchase Warrant or any provisions herein contained.

9.5 Governing Law; Submission to Jurisdiction; Trial by Jury. This Purchase Warrant shall be governed by and construed and enforced in accordance with the laws of the State of New York, without giving effect to conflict of laws principles thereof. The Company hereby agrees that any action, proceeding or claim against it arising out of, or relating in any way to this Purchase Warrant shall be brought and enforced in the courts located in New York, New York, or in the United States District Court located in New York, New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. The Company hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum. Any process or summons to be served upon the Company may be served by transmitting a copy thereof by registered or certified mail, return receipt requested, postage prepaid, addressed to it at the address set forth in Section 8 hereof. Such mailing shall be deemed personal service and shall be legal and binding upon the Company in any action, proceeding or claim. The Company and the Holder agree that the prevailing party(ies) in any such action shall be entitled to recover from the other party(ies) all of its reasonable attorneys’ fees and expenses relating to such action or proceeding and/or incurred in connection with the preparation therefor. The Company (on its behalf and, to the extent permitted by applicable law, on behalf of its stockholders and affiliates) and the Holder hereby irrevocably waive, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.

9.6 Waiver, etc. The failure of the Company or the Holder to at any time enforce any of the provisions of this Purchase Warrant shall not be deemed or construed to be a waiver of any such provision, nor to in any way affect the validity of this Purchase Warrant or any provision hereof or the right of the Company or any Holder to thereafter enforce each and every provision of this Purchase Warrant. No waiver of any breach, non-compliance or non-fulfillment of any of the provisions of this Purchase Warrant shall be effective unless set forth in a written instrument executed by the party or parties against whom or which enforcement of such waiver is sought; and no waiver of any such breach, non-compliance or non-fulfillment shall be construed or deemed to be a waiver of any other or subsequent breach, non-compliance or non-fulfillment.

9.7 Exchange Agreement. As a condition of the Holder’s receipt and acceptance of this Purchase Warrant, Holder agrees that, at any time prior to the complete exercise of this Purchase Warrant by Holder, if the Company and Dawson enter into an agreement (“Exchange Agreement”) pursuant to which they agree that all outstanding Purchase Warrants will be exchanged for securities or cash or a combination of both, then Holder shall agree to such exchange and become a party to the Exchange Agreement.

[Signature Page Follows]

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IN WITNESS WHEREOF, the Company has caused this Purchase Warrant to be signed by its duly authorized officer as of the [      ] day of [       ], 2023.

Data443 Risk Mitigation, Inc.
By:
Name:	Jason Remillard
Title:	President and Chief Executive Officer

[Form to be used to exercise Purchase Warrant]

Date: __________, 20___

The undersigned hereby elects irrevocably to exercise the Purchase Warrant for ______ shares of common stock, par value $0.001 per share (the “Shares”), of Data443 Risk Mitigation, Inc., a Nevada corporation (the “Company”), and hereby makes payment of $____ (at the rate of $____ per Share) in payment of the Exercise Price pursuant thereto. Please issue the Shares as to which this Purchase Warrant is exercised in accordance with the instructions given below and, if applicable, a new Purchase Warrant representing the number of Shares for which this Purchase Warrant has not been exercised.

or

The undersigned hereby elects irrevocably to convert its right to purchase ___ Shares of the Company under the Purchase Warrant for ______ Shares, as determined in accordance with the following formula:

X	=	Y(A-B)
		A

Where,
	X	=	The number of Shares to be issued to Holder;
	Y	=	The number of Shares for which the Purchase Warrant is being exercised;
	A	=	The fair market value of one Share which is equal to $_____; and
	B	=	The Exercise Price which is equal to $______ per share

The undersigned agrees and acknowledges that the calculation set forth above is subject to confirmation by the Company and any disagreement with respect to the calculation shall be resolved by the Company in its sole discretion.

Please issue the Shares as to which this Purchase Warrant is exercised in accordance with the instructions given below and, if applicable, a new Purchase Warrant representing the number of Shares for which this Purchase Warrant has not been converted.

Signature _________________________________________________

Signature Guaranteed _______________________________________

INSTRUCTIONS FOR REGISTRATION OF SECURITIES

Name:
	(Print in Block Letters)
Address:

NOTICE: The signature to this form must correspond with the name as written upon the face of the Purchase Warrant without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank, other than a savings bank, or by a trust company or by a firm having membership on a registered national securities exchange.

[Form to be used to assign Purchase Warrant]

ASSIGNMENT

(To be executed by the registered Holder to effect a transfer of the within Purchase Warrant):

FOR VALUE RECEIVED, __________________ does hereby sell, assign and transfer unto the right to purchase shares of Common Stock, par value $0.001 per share, of Data443 Risk Mitigation, Inc., a Nevada corporation (the “Company”), evidenced by the Purchase Warrant and does hereby authorize the Company to transfer such right on the books of the Company.

Dated: __________, 2022

Signature ______________________________________________

Signature Guaranteed ____________________________________

NOTICE: The signature to this form must correspond with the name as written upon the face of the within Purchase Warrant without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank, other than a savings bank, or by a trust company or by a firm having membership on a registered national securities exchange.

EX-14.1

Exhibit 14.1

CODE OF CONDUCT AND BUSINESS ETHICS

OF

DATA443 RISK MITIGATION, INC.

Adopted: November 7, 2022

The Board of Directors of Data443 Risk Mitigation, Inc. (the “Company”) has adopted this Code of Conduct and Business Ethics (this “Code”) to provide value for our stockholders; and

● To encourage honest and ethical conduct, including fair dealing and the ethical handling of conflicts of interest;

● To prompt full, fair, accurate, timely and understandable disclosure;

● To comply with applicable laws and governmental rules and regulations;

● To prompt internal reporting of violations of this Code;

● To protect the Company’s legitimate business interests, including corporate opportunities, assets and confidential information; and

● To deter wrongdoing.

All directors, officers, employees and independent contractors of the Company are expected to be familiar with this Code and to adhere to the principles and procedures set forth in this Code. For purposes of this Code, all directors, officers, employees and independent contractors are referred to collectively as “employees” or “you” throughout this Code.

I. Honest and Ethical Conduct

All directors, officers, employees and independent contractors owe duties to the Company to act with integrity. Integrity requires, among other things, being honest and ethical. This includes the ethical handling of actual or apparent conflicts of interest between personal and professional relationships. Deceit and subordination of principle are inconsistent with integrity.

All directors, officers, employees and independent contractors have the following duties:

● To conduct business with professional courtesy and integrity, and act honestly and fairly without prejudice in all commercial dealings;

● To work in a safe, healthy and efficient manner, using skills, time and experience to the maximum of abilities;

● To comply with applicable awards, Company policies and job requirements, and adhere to a high standard of business ethics;

● To observe both the form and spirit of laws, governmental rules, regulations and accounting standards;

● Not to knowingly make any misleading statements to any person or to be a party to any improper practice in relation to dealings with or by the Company;

● To ensure that Company resources and properties are used properly;

● To maintain the confidentiality of information where required or consistent with Company policies; and

● Not to disclose information or documents relating to the Company or its business, other than as required by law, not to make any unauthorized public comment on Company affairs and not to misuse any information about the Company or its associates, and not to accept improper or undisclosed material personal benefits from third parties as a result of any transaction or transactions of the Company.

II. Conflicts of Interest

A “conflict of interest” arises when an individual’s personal interest interferes or appears to interfere with the interests of the Company. A conflict of interest can arise when a director, officer or employee takes actions or has personal interests that may make it difficult to perform his or her Company work objectively and effectively.

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There are a variety of situations in which a conflict of interest may arise. While it would be impractical to attempt to list all possible situations, some common types of conflicts may be:

● To serve as a director, employee or contractor for a company that has a business relationship with, or is a competitor of, the Company;

● To have a financial interest in a competitor, supplier or customer of the Company;

● To receive improper personal benefits from a competitor, supplier or customer, as a result of any transaction or transactions of the Company;

● To accept financial interest beyond entertainment or nominal gifts in the ordinary course of business, such as a meal or a coffee mug;

● To present at a conference where the conference sponsor has a real or potential business relationship with the Company (e.g. vendor, customer, or investor), and, the conference sponsor offers travel or accommodation arrangements or other benefits materially in excess of the Company’s standard; or

● To use for personal gain, rather than for the benefit of the Company, an opportunity that you discovered through your role with the Company.

Fidelity or service to the Company should never be subordinated to or dependent on personal gain or advantage. Conflicts of interest should be avoided.

In most cases, anything that would constitute a conflict for a director, officer or employee also would present a conflict if it is related to a member of his or her family.

Interests in other companies, including potential competitors and suppliers, that are purely for management of the other entity, or where an otherwise questionable relationship is disclosed to the Board and any necessary action is taken to ensure there will be no effect on the Company, are not considered conflicts unless otherwise determined by the Board.

Evaluating whether a conflict of interest exists can be difficult and may involve a number of considerations. Please refer to other policies, such as the employee handbook, for further information. We also encourage you to seek guidance from your manager, the Chief Executive Officer or the Chief Financial Officer, or their equivalents, when you have any questions or doubts.

III. Disclosure

Each director, officer or employee, to the extent involved in the Company’s disclosure process, including the Chief Executive Officer or Chief Financial Officer, or their equivalents (the “Senior Financial Officers”), is required to be familiar with the Company’s disclosure controls and procedures applicable to him or her so that the Company’s public reports and documents comply in all material respects with the applicable securities laws and rules. In addition, each such person having direct or supervisory authority regarding these securities filings or the Company’s other public communications concerning its general business, results, financial condition and prospects should, to the extent appropriate within his or her area of responsibility, consult with other Company officers and employees and take other appropriate steps regarding these disclosures with the goal of making full, fair, accurate, timely and understandable disclosure.

Each director, officer or employee, to the extent involved in the Company’s disclosure process, including the Senior Financial Officers, must:

● Familiarize himself or herself with the disclosure requirements applicable to the Company as well as the business and financial operations of the Company; and

● Not knowingly misrepresent, or cause others to misrepresent, facts about the Company to others, whether within or outside the Company, including to the Company’s independent auditors, governmental regulators and self-regulatory organizations.

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IV. Compliance

It is the Company’s policy to comply with all applicable laws, rules and regulations. It is the personal responsibility of each employee, officer and director to adhere to the standards and restrictions imposed by those laws, rules and regulations in the performance of their duties for the Company, including those relating to accounting and auditing matters and insider trading.

The Board endeavors to ensure that the directors, officers and employees of the Company act with integrity and observe the highest standards of behavior and business ethics in relation to their corporate activities.

Specifically, directors, officers and employees must:

● Comply with the law;

● Act in the best interests of the Company;

● Be responsible and accountable for their actions; and

● Observe the ethical principles of fairness, honesty and truthfulness, including disclosure of potential conflicts.

Generally, it is against Company policies for any individual to profit from undisclosed information relating to the Company or any other company in violation of insider trading or other laws. Anyone who is aware of material nonpublic information relating to the Company, our customers, or other companies may not use the information to purchase or sell securities in violation of securities laws.

If you are uncertain about the legal rules involving your purchase or sale of any Company securities or any securities in companies with which you are familiar by virtue of your work for the Company, you should consult with the Chief Executive Officer or Chief Financial Officer, or their equivalents, before making any such purchase or sale. Other policies issued by the Company also provide guidance as to certain of the laws, rules and regulations that apply to the Company’s activities.

V. Reporting and Accountability

The Board of Directors has the authority to interpret this Code in any particular situation. Any director, officer or employee who becomes aware of any violation of this Code is required to notify the Chief Executive Officer or Chief Financial Officer, or their equivalents, promptly.

Any questions relating to how these policies should be interpreted or applied should be addressed to your manager, the Chief Executive Officer or the Chief Financial Officer, or their equivalents. Any material transaction or relationship that could reasonably be expected to give rise to a conflict of interest, as discussed in Section II of this Code, should be discussed with your manager, the Chief Executive Officer or the Chief Financial Officer, or their equivalents. A director, officer or employee who is unsure of whether a situation violates this Code should discuss the situation with the Chief Executive Officer or Chief Financial Officer, or their equivalents, to prevent possible misunderstandings and embarrassment at a later date.

Each director, officer or employee must:

● Notify the Chief Executive Officer or Chief Financial Officer, or their equivalents, promptly of any existing or potential violation of this Code.

● Not retaliate against any other director, officer or employee for reports of potential violations.

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The Company will follow the following procedures in investigating and enforcing this Code and in reporting on the Code:

● The Chief Executive Officer or Chief Financial Officer, or their equivalents, as the case may be, will take all appropriate action to investigate any violations reported. In addition, the Chief Executive Officer or Chief Financial Officer, or their equivalents, as appropriate, shall report each violation and alleged violation involving a director or an executive officer to the Chairman of the Board of Directors. To the extent he or she deems appropriate, the Chairman of the Board of Directors shall participate in any investigation of a director or executive officer. After the conclusion of an investigation of a director or executive officer, the conclusions shall be reported to the Board of Directors.

● The Board of Directors will conduct such additional investigation as it deems necessary. The Board will determine that a director or executive officer has violated this Code. Upon being notified that a violation has occurred, the Chief Executive Officer or Chief Financial Officer, or their equivalents, as the case may be, will take such disciplinary or preventive action as deemed appropriate, up to and including dismissal or, in the event of criminal or other serious violations of law, notification of appropriate law enforcement authorities.

VI. Corporate Opportunities

Employees, officers and directors are prohibited from taking (or directing to a third party) a business opportunity that is discovered through the use of corporate property, information or position, unless the Company has already been offered the opportunity and turned it down. More generally, employees, officers and directors are prohibited from using corporate property, information or position for personal gain and from competing with the Company.

Sometimes, the line between personal and Company benefits is difficult to draw, and sometimes there are both personal and Company benefits in certain activities. Employees, officers and directors who intend to make use of Company property or services in a manner not solely for the benefit of the Company should consult beforehand with your manager, the Chief Executive Officer or the Chief Financial Officer, or their equivalents.

VII. Confidentiality

In carrying out the Company’s business, employees, officers and directors often learn confidential or proprietary information about the Company, its customers, suppliers, or joint venture parties. Employees, officers and directors must maintain the confidentiality of all information so entrusted to them, except when disclosure is authorized or legally mandated. Confidential or proprietary information of our Company, and of other companies, includes any non-public information that would be harmful to the relevant company or useful or helpful to competitors if disclosed.

VIII. Fair Dealing

Our core value of operating is based on responsiveness, openness, honesty and trust with our members, business partners, employees and stockholders. We do not seek competitive advantages through illegal or unethical business practices. Each employee, officer and director should endeavor to deal fairly with the Company’s customers, service providers, suppliers, competitors and employees. No employee, officer or director should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any unfair dealing or practice.

IX. Protection and Proper Use of Company Assets

All employees, officers and directors should protect the Company’s assets and ensure their efficient use. All Company assets should be used only for legitimate business purposes. Theft, carelessness and waste have a direct impact on our profit.

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XI. Waivers and Amendments

From time to time, the Company may waive provisions of this Code. Any employee or director who believes that a waiver may be called for should discuss the matter with your manager, the Chief Executive Officer or the Chief Financial Officer, or their equivalents.

Any waiver of the Code for executive officers (including Senior Financial Officers) or directors of the Company may be made only by the Board of Directors and must be promptly disclosed to stockholders along with the reasons for such waiver in a manner as required by applicable law or the rules of the applicable stock exchange. Any amendment or waiver of any provision of this Code must be approved in writing by the Board or, if appropriate, its delegate(s) and promptly disclosed pursuant to applicable laws and regulations.

Any waiver or modification of the Code for a Senior Financial Officer will be promptly disclosed to stockholders if and as required by applicable law or the rules of the applicable stock exchange.

The Company is committed to continuously reviewing and updating its policies, and therefore reserves the right to amend this Policy at any time, for any reason, subject to applicable law.

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EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the reference of our firm under the caption “Experts” in this registration statement (Form S-1) of Data443 Risk Mitigation, Inc. and to the use of our report dated February 24, 2023 and August 23, 2023, with respect to the consolidated financial statements, of Data443 Risk Mitigation, Inc. (included in its Annual Report on Form 10-K/A) for the years ended December 31, 2022 and 2021 filed with the Securities and Exchange Commission. Our report dated February 24, 2023 and August 23, 2023, contains an explanatory paragraph regarding the Company’s ability to continue as a going concern and restatement of previously issued Form 10-K as of and for the year ended December 31, 2022. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ TPS Thayer, LLC

Sugar Land, Texas

August 24, 2023

EX-99.1

Exhibit 99.1

CONSENT OF DIRECTOR NOMINEE

DATA443 RISK MITIGATION, INC. (the “Company”) intends to file a Registration Statement on Form S-1 (together with any amendments or supplements thereto, the “Registration Statement”) registering securities for issuance. As required by Rule 438 under the Securities Act of 1933, as amended, the undersigned hereby consents to being named in the Registration Statement as a Director Nominee.

Dated: August 16, 2023	By:	/s/ Anthony Palma
		Anthony Palma

EX-99.2

Exhibit 99.2

CONSENT OF DIRECTOR NOMINEE

DATA443 RISK MITIGATION, INC. (the “Company”) intends to file a Registration Statement on Form S-1 (together with any amendments or supplements thereto, the “Registration Statement”) registering securities for issuance. As required by Rule 438 under the Securities Act of 1933, as amended, the undersigned hereby consents to being named in the Registration Statement as a Director Nominee.

Dated: August 16, 2023	By:	/s/ Lewis Jaffe
		Lewis Jaffe

EX-99.3

Exhibit 99.3

CONSENT OF DIRECTOR NOMINEE

DATA443 RISK MITIGATION, INC. (the “Company”) intends to file a Registration Statement on Form S-1 (together with any amendments or supplements thereto, the “Registration Statement”) registering securities for issuance. As required by Rule 438 under the Securities Act of 1933, as amended, the undersigned hereby consents to being named in the Registration Statement as a Director Nominee.

Dated: August 16, 2023	By:	/s/ Michael Favish
		Michael Favish

EX-99.4

Exhibit 99.4

DATA443 RISK MITIGATION, INC.
AUDIT COMMITTEE CHARTER

(As adopted on November 7, 2022)

The Board of Directors (the “Board”) of Data443 Risk Mitigation, Inc. (the “Company”) has established the Audit Committee of the Board (the “Committee”) with the purpose, responsibilities and specific duties as described in this Audit Committee Charter.

I. PURPOSE AND OBJECTIVES

The primary function of the Committee is to assist the Board in fulfilling its oversight responsibilities to the stockholders and the investment community relating to the accounting, reporting practices and quality and integrity of the financial reports of the Company.

The purpose of the Committee is to:

1. Review the Company’s auditing, accounting and financial reporting processes generally;

2. Review and appraise the audit efforts of the Company’s independent auditor;

3. Review the Company’s system of internal controls regarding finance, accounting, legal compliance and ethics that management and the Board have established;

4. Prepare the committee report required by the rules of the Securities and Exchange Commission (the “SEC”) to be included in the Company’s Annual Report on Form 10-K or Proxy Statement; and

5. Review and approve annual or other budgets of the Company.

Consistent with this function, the Committee should maintain free and open lines of communication between the Board, the independent auditor and the Company’s accounting and financial management. In this regard, the Committee’s objectives are to:

1. Serve as an independent and objective party to monitor the Company’s financial reporting process and internal control system;

2. Provide an open avenue of communication among the independent auditor, financial and senior management and the Board; and

3. Monitor compliance with legal and regulatory requirements, including, but not limited to, the Sarbanes-Oxley Act of 2002, and subsequent amendments thereto.

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II. MEMBERSHIP

The members of the Committee shall be appointed by the Board. The Committee shall have at least three members who will be financially literate, as the Board interprets such qualifications in its business judgment. In addition, each member shall be independent in accordance with applicable law, including NASDAQ Rule 5605(a)(2) and the more rigorous SEC independence requirements for audit committee members set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). At least one member will have accounting or related financial management expertise and shall be deemed the “audit committee financial expert” as defined by applicable SEC rules. Notwithstanding the foregoing membership requirements, no action of the Committee shall be invalid by reason of such requirement not being met at the time such action was taken.

The Board may designate a Chairman of the Committee. In the absence of such designation, the Committee may designate the Chairman by majority vote of the Committee.

The entire Committee or any individual member of the Committee may be removed with or without cause by the affirmative vote of a majority of the Board.

Members of the Committee shall serve until their successors are duly elected and qualified or their earlier resignation or removal.

The members of the Committee will be non-employee members of the Board who have no relationship that may interfere with the exercise of their independence from management and the Company. A person may not serve as a member of the Committee if:

i) That person is or was at any time during the previous three years an employee of the Company, its affiliates, or its subsidiaries.

ii) That person, currently or at any time during the previous three years (1) has or has had a direct business relationship, including commercial, industrial, banking, consulting, legal, accounting or other relationships, with the Company, or (2) is or has been a partner, controlling shareholder, officer or employee of an organization that has a business relationship, including commercial, industrial, banking, consulting, legal, accounting or other relationships, with the Company, unless the Board determines in its business judgment that the relationship described in either (1) or (2) above does not interfere with the member’s exercise of independent judgment.

iii) That person is an executive of another corporation, in which corporation any executive of the Company currently serves on its compensation committee.

iv) That person serves on the audit committees of more than two other public companies.

v) That person is a child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, sister-in-law or shares a home with a person who is or has been at any time during the previous three years an executive officer of the Company, any of its affiliates, or its subsidiaries.

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Notwithstanding the foregoing, the Board may appoint to the Committee one non-employee director that would otherwise be disqualified under (i) or (ii) above but who satisfies the requirements of Rule 10A-3 under the Exchange Act, and is not a current officer or employee or an immediate family member of such officer or employee, if the Board determines, under exceptional and limited circumstances and in its business judgment, such director’s membership on the Committee will serve the best interests of the Company and its stockholders. In such an event, the Company must disclose in its next Annual Report on Form 10-K or Proxy Statement subsequent to such determination, the nature of the relationship and the reasons for that determination. A director appointed to the Committee pursuant to this exception may not serve in excess of two consecutive years and may not chair the Committee.

III. PROCEDURES

The Committee shall meet at least four times per year, and thereafter as often as it deems appropriate to perform its duties and responsibilities under this charter. As part of its job to foster open communication, the Committee should meet at least annually with management and the independent auditor in separate executive sessions to discuss any matters that the Committee or each of these groups believe should be discussed privately. In addition, the Committee or at least its designated financial expert should meet with the independent auditor and management quarterly to review the Company’s financial statements.

The Chairman of the Committee, two or more members of the Committee or the Chairman of the Board may call meetings of the Committee. Meetings of the Committee may be in person, by conference call, by video conference or by unanimous written consent, in accordance with the Company’s Bylaws. The Committee may meet in executive sessions when it deems necessary or appropriate.

The Committee shall report regularly to the Board. This report shall include a review of any issues that arise with respect to the quality and integrity of the Company’s financial statements, the Company’s compliance with legal or regulatory requirements, the independence and performance of the Company’s independent auditor and any other matters that the Committee deems appropriate or is required to include by the Board. The Committee shall maintain written minutes of its meetings, which will be filed with the meeting minutes of the Board.

The Chairman of the Committee, in consultation with the appropriate members of the Committee and management, will develop the agenda for each Committee meeting to be provided in advance to members, along with appropriate briefing materials. Committee members may suggest the inclusion of items on the agenda and may raise at any Committee meeting subjects related to the Committee’s duties that are not on the agenda for that meeting.

A majority of the Committee’s members shall constitute a quorum. The Committee shall act on the affirmative vote of a majority of members present at a meeting at which a quorum is present.

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IV. AUTHORITY AND RESOURCES

The Committee may request any officer or employee of the Company, the Company’s outside counsel or independent auditor to attend a Committee meeting or to meet with any members of, or consultants to, the Committee. The Committee shall have the power to conduct or authorize investigations into any matters within the Committee’s scope of responsibilities. The Committee has the right at any time to obtain advice, reports or opinions from internal and external counsel and expert advisors and has the authority to hire and terminate independent legal, financial and other advisors as it may deem necessary or appropriate, at the Company’s expense.

V. RESPONSIBILITIES AND DUTIES

The following responsibilities of the Committee are set forth as a guide to the Committee with the understanding that the Committee may alter or supplement the below as appropriate, to the extent permitted by applicable laws and listing standards.

Pursuant to delegated authority from the Board, the Committee shall:

1. Document/Reports Review

i) Review the Company’s annual financial statements and any reports or other financial information submitted to any governmental body, or the public, including any certification, report, opinion or review rendered by the independent auditor.

2. Financial Statements

i) Meet with management and the independent auditor to review, discuss, and provide oversight with respect to the annual and quarterly financial statements and associated disclosures in filings with the SEC and the release of earnings. Such review and discussion will include matters required to be communicated to the Committee by the independent auditor under the standards of the Public Company Accounting Oversight Board and any other applicable laws, regulations, or listing standards.

ii) Meet with management and the independent auditor to review, discuss, and provide oversight with respect to the following:

● all critical accounting policies and practices;

● any significant changes in the Company’s selection and application of accounting principles;

4

● significant issues regarding accounting principles and financial statement presentation;

● significant issues as to the adequacy of the Company’s internal controls and any special audit steps adopted in light of material control deficiencies;

● any analyses prepared by management or the independent auditor setting forth significant financial reporting issues;

● the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on the Company’s financial statements;

● judgments made in connection with the preparation of the financial statements, including analyses of the effects of non-GAAP methods on the financial statements; and

● other material written communications between the independent auditor and management, including, but not limited to, the management letter and schedule of audit differences.

iii) On at least an annual basis, review the adequacy of the Company’s system of internal controls over financial reporting, including the reliability of its financial reporting systems; confer with the Company’s independent auditors with respect to their consideration of such controls and systems; and review management’s response and special audit steps adopted in light of any significant deficiencies and material weaknesses in the Company’s internal controls over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize, and report financial data.

iv) Review and approve annual or other budgets of the Company and review projections of future financial performances.

3. Independent Auditor

i) Recommend to the Board the selection of the independent auditor, considering independence and effectiveness and approve the fees and other compensation to be paid to the independent auditor.

ii) Ensure its receipt from the independent auditor of a formal written statement delineating all relationships between the auditor and the issuer, consistent with The Public Company Accounting Oversight Board Rule 3526, and actively engage in a dialogue with the auditor with respect to any disclosed relationships or services that may impact the objectivity and independence of the auditor and take, or recommend that the full Board take, appropriate action to oversee the independence of the outside auditor.

iii) Review and pre-approve both audit and non-audit services to be provided by the independent auditor.

5

iv) Review the performance of the independent auditor and approve any proposed discharge of the independent auditor when circumstances warrant.

v) Review and evaluate the lead partner of the independent auditor and ensure the rotation of the audit partners as required by law.

vi) Periodically consult with the independent auditor out of the presence of management about internal controls and the fullness and accuracy of the Company’s financial statements.

vii) At least annually, review with the independent auditor any problems or difficulties the independent auditor may have encountered during the course of the audit work, including any restrictions on the scope of activities or access to required information or any significant disagreements with management and management’s responses to such matters.

4. Related Party Transactions

i) Review and approve all related-party transactions, including transactions between the Company and its officers or directors or affiliates of officers or directors, unless this responsibility has been assigned or delegated to another committee of independent directors.

5. Financial Reporting Processes

i) In consultation with the independent auditor and financial management, review the integrity of the Company’s financial reporting processes, both internal and external.

ii) Consider the independent auditor’s judgments about the quality and appropriateness of the Company’s accounting principles as applied in its financial reporting.

iii) Discuss with financial management the Company’s major financial risk exposures and the steps taken to monitor and control such exposure.

6. Process Improvement

i) Establish regular and separate systems of reporting to the Committee by management and the independent auditor regarding any significant judgments made in management’s preparation of the financial statements and the view of each as to appropriateness of such judgments.

6

ii) Review any significant disagreement among management and the independent auditor in connection with the preparation of the financial statements.

iii) Review with the independent auditor and financial management the extent to which changes or improvements in financial or accounting practices as approved by the Committee have been implemented. This review should be conducted at an appropriate time subsequent to implementation of changes or improvements, as decided by the Committee.

7. Ethical and Legal Compliance

i) Establish, review and update periodically a Code of Business Ethics (the “Code”) and ensure that management has established a system to enforce this Code.

ii) Review management’s monitoring of the Company’s compliance with the Code and ensure that management has the proper review system in place to ensure that the Company’s financial statements, reports, and other financial information disseminated to governmental organizations, and the public satisfy legal requirements.

iii) Review with the Company’s counsel legal compliance matters including corporate securities trading policies.

iv) Review the material findings of any examinations by regulatory agencies and any auditor observations brought to the Committee’s attention.

v) Direct the production of the report of the Committee required to be included in the Company’s Annual Report or Proxy Statement filed with the SEC.

vi) Review with the Company’s counsel any legal matter that could have a significant impact on the Company’s financial statements.

vii) Conduct an annual performance evaluation of the Committee, which evaluation shall compare the performance of the Committee with the requirements of this charter. The result of such evaluation shall be reported to the Board and recommend to the Board any improvements to the Committee’s charter deemed necessary or desirable by the Committee. The report to the Board may take the form of an oral report by the Chairman. The performance evaluation by the Committee shall be conducted in such manner as the Committee deems appropriate.

viii) Perform any other activities consistent with the Company’s governing documents and applicable law, as the Committee or the Board deems necessary or appropriate.

7

EX-99.5

Exhibit 99.5

DATA443 RISK MITIGATION, INC.
COMPENSATION COMMITTEE CHARTER

(As adopted on November 7, 2022)

The Board of Directors (the “Board”) of Data443 Risk Mitigation, Inc. (the “Company”) has established the Compensation Committee of the Board (the “Committee”) with the purpose, responsibilities and specific duties as described in this Compensation Committee Charter.

I. PURPOSE AND OBJECTIVES

The purpose of the Committee is to exercise oversight of all matters of executive compensation policy on behalf of the Board. In doing so, the Committee shall:

1. Review, evaluate and approve the agreements, plans, policies and programs of the Company related to compensation of the Company’s officers and directors;

2. Review, evaluate and approve the corporate goals and objectives and any individual goals and objectives relevant to the compensation of the Company’s executive officers and directors;

3. Evaluate performance and recommend to the Board the compensation of the Company’s executive officers and directors;

4. Review and discuss with management all compensation related disclosure to be included in the Company’s Annual Report on Form 10-K and/or Proxy Statement, including the Compensation Committee Report, if required by the rules and regulations promulgated by the Securities and Exchange Commission (the “SEC”);

5. In consultation with management, oversee other regulatory compliance with respect to compensation matters, including oversight of the Company’s policies on structuring compensation programs to preserve tax deductibility;

6. Otherwise discharge the Board’s responsibilities relating to compensation of the Company’s officers and directors; and

7. Perform such other functions as the Board may assign to the Committee from time to time.

II. MEMBERSHIP

The members of the Committee shall be appointed by the Board. The Committee shall consist of at least two Board members, each of which shall meet the independence requirements of NASDAQ Rule 5605(a)(2) and applicable laws. In addition, at least two members of the Committee shall be “Non-Employee Directors” for the purposes of Rule 16b-3 under the Securities Exchange Act of 1934, as in effect from time to time, and “outside directors” for the purposes of Section 162(m) of the Internal Revenue Code, as in effect from time to time. Notwithstanding the foregoing membership requirements, no action of the Committee shall be invalid by reason of any such requirement not being met at the time such action is taken.

1

The Board may designate a Chairman of the Committee. In the absence of such designation, the Committee may designate the Chairman by majority vote of the Committee.

The entire Committee or any individual member of the Committee may be removed with or without cause by the affirmative vote of a majority of the Board.

Members of the Committee shall serve until their successors are duly elected and qualified or their earlier resignation or removal.

III. PROCEDURES

The Committee shall meet at least two times per year, and thereafter as often as it deems appropriate to perform its duties and responsibilities under this charter. The Chairman of the Committee, two or more members of the Committee or the Chairman of the Board may call meetings of the Committee. Meetings of the Committee may be in person, by conference call, by video conference or by unanimous written consent, in accordance with the Company’s Bylaws.

The Committee shall maintain written minutes of its meetings, which will be filed with the meeting minutes of the Board. The Chairman of the Committee, in consultation with the appropriate members of the Committee and management, will develop the agenda for each Committee meeting. Committee members may suggest the inclusion of items on the agenda and may raise at any Committee meeting subjects related to the Committee’s duties that are not on the agenda for that meeting.

The Committee may invite such members of management to its meetings as it deems appropriate, consistent with the maintenance of the confidentiality of compensation discussions. The Company’s Chief Executive Officer (“CEO”) should not attend any meeting where the CEO’s performance or compensation is discussed.

A majority of the Committee’s members shall constitute a quorum. The Committee shall act on the affirmative vote of a majority of members present at a meeting at which a quorum is present.

The Committee shall report its actions and recommendations to the Board at the next regularly scheduled meeting of the full Board.

The Committee has the right, in its sole discretion, at any time to retain or obtain advice, reports or opinions from such internal and external counsel, compensation consultants and other experts and advisors (each, a “Compensation Advisor”) as it deems necessary or appropriate to assist it in the full performance of its functions. The Committee shall be directly responsible for the appointment, compensation and oversight of the work of any Compensation Advisor retained by the Committee. Before selecting or receiving advice from a Compensation Advisor (other than in-house legal counsel), the Committee shall consider such factors as may be required by the rules of the Nasdaq Capital Market or other securities exchange upon which the Company’s securities may be listed or applicable rules of the SEC with respect to the independence of the Compensation Advisor. The Company shall provide for appropriate funding, as determined by the Committee, for payment of reasonable compensation to any Compensation Advisor retained by the Committee; however, anticipated expenses in excess of $25,000 will require Board approval.

2

IV. RESPONSIBILITIES AND DUTIES

The following responsibilities of the Committee are set forth as a guide to the Committee with the understanding that the Committee may alter or supplement the below as appropriate, to the extent permitted by applicable laws and listing standards.

Pursuant to delegated authority from the Board, the Committee shall:

1. Executive Compensation:

i) Review, modify (if necessary), approve and recommend to the independent members of the Board for approval the corporate goals and objectives and any individual goals and objectives, together with the applicable compensation program and the peer group used in setting compensation, if any, relevant to the compensation of the CEO;

ii) Review, modify (if necessary) and approve corporate goals and objectives and any individual goals and objectives, together with the applicable compensation program and the peer group used in setting compensation, if any, relevant to the compensation of the Company’s other executive officers;

iii) Evaluate the performance of the CEO and, in consultation with the CEO, the Company’s other executive officers in light of those goals and objectives; and

iv) Based on the aforesaid evaluation, approve and recommend to the independent members of the Board for their approval the compensation of the CEO, and approve, in consultation with the CEO, the compensation for the Company’s other executive officers, including the annual base salary levels, annual cash incentive awards, long-term incentive awards, employment agreements, severance arrangements, change-in-control agreements, and any perquisites or supplemental benefits, as applicable.

2. Regulatory Compliance:

i) Review and discuss with management (i) the Compensation Discussion & Analysis (“CD&A”), if required to be included in the Company’s Annual Report Form 10-K and/or Proxy Statement and, based on that review, determine whether to recommend to the Board that the CD&A be included in the Annual Report and/or Proxy Statement, in accordance with the rules and regulations promulgated by the SEC, (ii) the wording of the Proxy Statement disclosures for advisory votes by stockholders on executive compensation; (iii) the results of the “say on pay” vote and consider whether to make any adjustments to the Company’s policies and practice in light of the voting results.

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ii) If required by SEC rules, periodically prepare a Compensation Committee Report and publish the report in the Company’s Annual Report on Form 10-K and/or Proxy Statement, in accordance with the rules and regulations promulgated by the SEC.

3. Incentive and Equity Compensation:

i) Each year review and make recommendations to the Board with respect to incentive compensation plans and equity-based plans that are subject to Board approval. In addition, the Committee may authorize the granting of long-term incentive awards to employees who are not executive officers or other members of the Company’s senior management.

ii) Ensure that the Company’s stockholders are given the opportunity to vote on equity-compensation plans as required by law, the Company’s Certificate of Incorporation or Bylaws (as amended from time to time), and the listing standards of the Nasdaq Capital Market.

4. Director Compensation: Each year, review director compensation and make a recommendation to the Board regarding the form and amount of director compensation.

5. Other Powers and Responsibilities:

i) Review and approve, or review and recommend to the Board for its approval, any transaction in equity securities of the Company, or derivatives of those equity securities, between the Company and any officer or director of the Company who is subject to the reporting and short-swing liability provisions of Section 16 of the Securities Exchange Act of 1934, as amended.

ii) Monitor the Company’s compliance with the requirements of the Sarbanes-Oxley Act of 2002 relating to 401(k) plans and loans to directors and officers, and with all other applicable laws affecting employee compensation and benefits.

iii) Receive and review periodic reports on the Company’s compensation plans, policies and programs as they affect all employees.

iv) Conduct an annual performance evaluation of the Committee, which evaluation shall compare the performance of the Committee with the requirements of this charter. The result of such evaluation shall be reported to the Board and recommend to the Board any improvements to the Committee’s charter deemed necessary or desirable by the Committee. The report to the Board may take the form of an oral report by the Chairman. The performance evaluation by the Committee shall be conducted in such manner as the Committee deems appropriate.

v) Perform any other activities consistent with the Company’s governing documents and applicable law, as the Committee or the Board deems necessary or appropriate.

4

EX-99.6

Exhibit 99.6

DATA443 RISK MITIGATION, INC.
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE CHARTER

(As adopted on November 7, 2022)

The Board of Directors (the “Board”) of Data443 Risk Mitigation, Inc. (the “Company”) has established the Nominating and Corporate Governance Committee of the Board (the “Committee”) with the purpose, responsibilities and specific duties as described in this Nominating and Corporate Governance Committee Charter.

I. PURPOSE AND OBJECTIVES

The purpose of the Committee is to:

1. Identify individuals qualified to serve on the Board and its committees, consistent with criteria approved by the Board;

2. Recommend to the Board the director nominees for the annual meeting of the stockholders;

3. Recommend to the Board members and chairpersons for each of its committees;

4. Lead the Board in its annual performance review;

5. Periodically review the corporate governance principles and governing documents of the Company, monitor compliance with the same, and recommend changes to the Board as needed; and

6. Serve in an advisory capacity on matters of organizational and governance structure and the conduct of the Board.

II. MEMBERSHIP

The members of the Committee shall be appointed by the Board. The Committee shall consist of at least two Board members, each of which shall meet the independence requirements of NASDAQ Rule 5605(a)(2) and applicable laws. Notwithstanding the foregoing membership requirements, no action of the Committee shall be invalid by reason of any such requirement not being met at the time such action is taken. The Board may designate a Chairman of the Committee. In the absence of such designation, the Committee may designate the Chairman by majority vote of the Committee.

The entire Committee or any individual member of the Committee may be removed with or without cause by the affirmative vote of a majority of the Board.

Members of the Committee shall serve until their successors are duly elected and qualified or their earlier resignation or removal.

1

III. PROCEDURES

The Committee shall meet at least one time per year, and thereafter as often as it deems appropriate to perform its duties and responsibilities under this charter. The Chairman of the Committee, two or more members of the Committee or the Chairman of the Board may call meetings of the Committee. Meetings of the Committee may be in person, by conference call, by video conference or by unanimous written consent, in accordance with the Company’s Bylaws.

The Committee shall maintain written minutes of its meetings, which will be filed with the meeting minutes of the Board. The Chairman of the committee, in consultation with the appropriate members of the Committee and management, will develop the agenda for each Committee meeting. Committee members may suggest the inclusion of items on the agenda and may raise at any Committee meeting subjects related to the Committee’s duties that are not on the agenda for that meeting. A majority of the Committee’s members shall constitute a quorum. The Committee shall act on the affirmative vote of a majority of members present at a meeting at which a quorum is present.

The Committee shall report its actions and recommendations to the Board at the next regularly scheduled meeting of the full Board.

IV. RESPONSIBILITIES AND DUTIES

The following responsibilities of the Committee are set forth as a guide to the Committee with the understanding that the Committee may alter or supplement the below as appropriate, to the extent permitted by applicable laws and listing standards.

Pursuant to delegated authority from the Board, the Committee shall:

1. Review and periodically make recommendations to the Board regarding the composition, size, structure, practices, policies, and activities of the Board and its committees.

2. Actively seek, as necessary, individuals believed to be qualified to become Board members, consistent with criteria approved by the Board. Criteria to be considered by the Committee for Board member candidates include an attained position of leadership in the candidate’s field of endeavor, business and/or financial expertise, demonstrated sound business judgment, expertise relevant to the Company’s lines of business, diversity of the candidate, corporate governance experience, service on the boards of directors of other companies, and the ability to serve the interests of all stockholders.

3. Recommend to the Board the identified and selected nominees to stand for election as directors at the annual meeting of stockholders or, if applicable, at a special meeting of stockholders. The Committee shall consider the diversity of the slate of nominees as a whole in making its recommendation.

2

4. In the case of a vacancy in the office of a director (including a vacancy created by an increase in the size of the Board), the Committee shall recommend to the Board an individual to fill such vacancy either through appointment by the Board to serve the remainder of the term of the director position that is vacant or election by stockholders at the next annual meeting of stockholders. The Committee shall consider the diversity of, and the optimal enhancement of the current mix of talent and experience on, the Board in making its recommendation.

5. Prior to recommending to the Board an existing director to be nominated for reelection as a director at an annual meeting of stockholders, the Committee shall consider and review the director’s:

● Board and committee meeting attendance and performance;

● Length of Board service;

● Personal and professional integrity, including commitment to the Company’s core values;

● Experience, skills and contributions of the existing director in light of the Company’s business and structure; and

● Independence under applicable listing standards.

6. The Committee shall treat recommendations for director that are received from the Company’s stockholders equally with recommendations received from any other source; provided, however, that in order for such stockholder recommendations to be considered, the recommendations must comply with the procedures outlines in the Company’s proxy statement for its annual meeting and applicable law.

7. If a director tenders his or her resignation because he or she receives more votes withheld from his or her election or re-election than votes for his or her election or re-election at an annual meeting of stockholders at which such director is nominated for election or re-election to the Board, the Committee shall determine whether to accept the director’s resignation and will submit such resignation for consideration by the Board. The Committee may consider any factors it deems relevant in deciding whether to accept a director’s resignation.

8. Identify Board members qualified to fill vacancies on any committee of the Board including the Committee and to recommend that the Board appoint the identified member or members to the respective committee. In nominating a candidate for committee membership, the Committee shall take into consideration the factors set forth in the charter of that committee, if any, as well as any other factors, it deems appropriate, including without limitation the consistency of the candidate’s experience with the goals of the committee and the interplay of the candidate’s experience with the experience of other committee members.

3

9. Evaluate and recommend termination of membership of individual directors in accordance with the Company’s Bylaws, for cause or other appropriate reasons.

10. Evaluate and assess as necessary the independence of members of the Board and director nominees. The Committee shall advise the Board regarding material relationships between the Company and a director.

11. Consider matters of corporate governance and review the Company’s corporate governance practices and policies at least one time per year, recommending to the Board modifications as appropriate.

12. Review management’s monitoring of the Company’s compliance programs and Code of Conduct & Business Ethics, including a report of violations of the Code of Conduct & Business Ethics.

13. Approve waivers or amendments to the Code of Conduct & Business Ethics for executive officers, financial officers and directors. Such waivers or amendments shall be disclosed adequately and timely, to the extent required.

14. Review and periodically make recommendations to the Board regarding the Certificate of Incorporation and/or Company Bylaws relating to issues of corporate governance.

15. Assist management in the preparation of the disclosure in the Company’s annual proxy statement regarding the operations of the Committee.

16. Review and reassess the adequacy of this charter at least one time per year and recommend amendments to the Board for approval.

17. Conduct an annual performance evaluation of the Committee, which evaluation shall compare the performance of the Committee with the requirements of this charter. The result of such evaluation shall be reported to the Board and recommend to the Board any improvements to the Committee’s charter deemed necessary or desirable by the Committee. The report to the Board may take the form of an oral report by the Chairman. The performance evaluation by the Committee shall be conducted in such manner as the Committee deems appropriate.

18. Lead the Board in the annual performance review of the Board’s committees. As part of this process, the Committee will request that the Chairman of each of the Company’s committees report to the Board about the committee’s annual evaluation of its performance following the end of each fiscal year.

19. Perform any other duties or responsibilities expressly delegated to the Committee by the Board, the Company’s Certificate of Incorporation, Bylaws or assigned by law.

4

EX-FILING FEES

Exhibit 107

Calculation of Filing Fee Tables

S-1

(Form Type)

Data443 Risk Mitigation, Inc.

(Exact Name of Registrant as Specified in its Charter)

Not Applicable

(Translation of Registrant’s Name into English)

Table 1: Newly Registered and Carry Forward Securities

	Security Type	Security Class Title	Fee Calculation or Carry Forward Rule	Amount Registered		Proposed Maximum Offering Price Per Unit		Maximum Aggregate Offering Price (1)(2)			Fee Rate		Amount of Registration Fee (3)			Carry Forward Form Type	Carry Forward File Number	Carry Forward Initial effective date	Filing Fee Previously Paid In Connection with Unsold Securities to be Carried Forward
Newly Registered Securities
Fees to Be Paid
Fees Previously Paid
	Equity	Common Stock, par value $0.001 per share (“Common Stock”)	Rule 457(c)		—		—	$	13,800,000			0.0000927	$	1,279.26
	Equity	Warrants to purchase Common Stock	Rule 457(c)		—		—		—	(4)		0.0000927		—	(4)
	Equity	Common Stock underlying Warrants (5)(6)	Rule 457(c)		—		—	$	13,800,000			0.0000927	$	1,279.26
	Equity	Representative’s Warrants to purchase Common Stock (7)	Rule 457(c)		—		—		—	(4)		0.0000927		—	(4)
	Equity	Common Stock underlying representative’s warrants (8)	Rule 457(c)		—		—	$	960,000			0.0000927	$	88.99
Carry Forward Securities
Carry Forward Securities
	Total Offering Amounts							$	28,560,000				$	3,115.90
	Total Fees Previously Paid							$	28,560,000				$	3,115.90
	Total Fee Offsets
	Net Fee Due							$	0				$	0

(1)	Estimated solely for purposes of calculating the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended (the “Securities Act”). Includes the offering price of shares of common stock that the Underwriter has the option to purchase to cover over-allotments, if any.
(2)	Pursuant to Rule 416 under the Securities, the shares of common stock registered hereby also include an indeterminate number of additional shares of common stock as may from time to time become issuable by reason of stock splits, stock dividends, recapitalizations or other similar transactions.
(3)	Calculated pursuant to Rule 457(o) based on an estimate of the proposed maximum aggregate offering price.
(4)	No separate fee is required pursuant to Rule 457(i) of the Securities Act.
(5)	There will be issued Warrants to purchase one share of Common Stock for every one share of Common Stock offered. The Warrants are exercisable at a per share price equal to 100% of the Common Stock public offering price.
(6)	Includes shares of Common Stock which may be issued upon exercise of additional Warrants which may be issued upon exercise of 45-day option granted to the Underwriter to cover over-allotments, if any.
(7)	In accordance with Rule 457(g) under the Securities Act, because the Common Stock underlying the Underwriter’s Warrants are registered hereby, no separate registration fee is required with respect to the Underwriter’s Warrants registered hereby.
(8)	Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(g) under the Securities Act. The Underwriter’s warrants are exercisable into a number of shares of common stock equal to 8% of the number of shares of common stock sold in this offering, excluding upon exercise the option to purchase additional securities, at a per share exercise price equal to 100% of the public offering price. As estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(g) under the Securities Act, the proposed maximum aggregate offering price of the underwriter’s warrants is equal to 100% of $960,000 (which is 8% of $12,000,000).

Table 2: Fee Offset Claims and Sources

	Registrant or Filer Name	Form or Filing Type	File Number	Initial Filing Date	Filing Date	Fee Offset Claimed	Security Type Associated with Fee Offset Claimed	Security Title Associated with Fee Offset Claimed	Unsold Securities Associated with Fee Offset Claimed	Unsold Aggregate Offering Amount Associated with Fee Offset Claimed	Fee Paid with Fee Offset Source
Rules 457(b) and 0-11(a)(2)
Fee Offset Claims
Fee Offset Sources
Rule 457(p)
Fee Offset Claims
Fee Offset Sources

Table 3: Combined Prospectuses

Security Type Security Class Title Amount of Securities Previously
Registered Maximum Aggregate Offering
Price of Securities Previously
Registered Form
Type File
Number Initial Effective
Date

XML

Cover	6 Months Ended
	Jun. 30, 2023
Cover [Abstract]
Document Type	S-1/A
Amendment Flag	true
Amendment Description	AMENDMENT NO. 3
Entity Registrant Name	DATA443 RISK MITIGATION, INC.
Entity Central Index Key	0001068689
Entity Primary SIC Number	7372
Entity Tax Identification Number	86-0914051
Entity Incorporation, State or Country Code	NV
Entity Address, Address Line One	4000 Sancar Way,
Entity Address, Address Line Two	Suite 400
Entity Address, City or Town	Research Triangle Park
Entity Address, State or Province	NC
Entity Address, Postal Zip Code	27709
City Area Code	919
Local Phone Number	526-1070
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false

XML

Condensed Consolidated Balance Sheets - USD ($)	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Current assets
Cash	$ 15,904	$ 1,712	$ 1,204,933
Accounts receivable, net	3,147	31,978	21,569
Prepaid expense and other current assets	273,159	91,204	70,802
Total current assets	292,210	124,894
Total current assets		2,851,082	1,297,304
Property and equipment, net	503,242	427,031	288,406
Operating lease right-of-use assets, net	249,796	405,148	174,282
Advance payment for acquisition	2,726,188	2,726,188
Intellectual property, net of accumulated amortization	204,997	454,331	1,269,819
Deposits	45,673	45,673	31,440
Total Assets	4,022,106	4,183,265	3,061,251
Current Liabilities
Accounts payable and accrued liabilities	2,221,000	1,031,931	115,673
Deferred revenue	1,814,620	1,704,249	1,035,185
Interest payable	616,593	478,712	204,915
Notes payable, net of unamortized discount	2,267,658	918,785	1,720,777
Convertible notes payable, net of unamortized discount	2,721,171	4,134,155	993,931
Due to a related party	320,486	112,062	247,366
Operating lease liability	338,818	213,831	112,322
Finance lease liability		10,341	72,768
Total Current Liabilities	10,300,348	8,604,066	4,502,937
Series B Preferred Stock, 80,000 shares designated; $0.001 par value; Stated value $10.00, 0 and 29,750 shares issued and outstanding, net of discount, respectively			278,811
Notes payable, net of unamortized discount - non-current	1,605,855	3,104,573	1,770,989
Convertible notes payable, net of unamortized discount - non-current	97,946	97,946	22,357
Deferred revenues - non-current	515,000	788,902	573,411
Operating lease liability - non-current		354,631	125,640
Finance lease liability - non-current			10,341
Total Liabilities	12,519,149	12,950,118	7,284,486
Commitments and Contingencies
Stockholders’ Deficit
Preferred stock: 337,500 authorized; $0.001 par value Series A Preferred Stock, 150,000 shares designated; $0.001 par value; 149,892 and 150,000 shares issued and outstanding, respectively	150	150	150
Common stock: 125,000,000 authorized; $0.001 par value; 2,615,737 and 122,044 shares issued and outstanding, respectively	59,360	2,611	122
Additional paid in capital	43,503,928	42,642,514	37,810,380
Accumulated deficit	(52,060,481)	(51,412,128)	(42,033,887)
Total Stockholders’ Deficit	(8,497,043)	(8,766,853)	(4,223,235)
Total Liabilities and Stockholders’ Deficit	4,022,106	4,183,265	3,061,251
Series A Preferred Stock [Member]
Stockholders’ Deficit
Preferred stock: 337,500 authorized; $0.001 par value Series A Preferred Stock, 150,000 shares designated; $0.001 par value; 149,892 and 150,000 shares issued and outstanding, respectively	150	150
Series B Preferred Stock [Member]
Stockholders’ Deficit
Preferred stock: 337,500 authorized; $0.001 par value Series A Preferred Stock, 150,000 shares designated; $0.001 par value; 149,892 and 150,000 shares issued and outstanding, respectively
Related Party [Member]
Current Liabilities
Due to a related party	$ 320,488	$ 112,062	$ 247,366

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2022	Dec. 31, 2021
Preferred stock, shares authorized	337,500	337,500
Preferred stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	500,000,000	125,000,000
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares issued	2,615,737	122,044
Common stock, shares outstanding	2,615,737	122,044
Series A Preferred Stock [Member]
Preferred stock, shares authorized	150,000	150,000
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares issued	149,892	150,000
Preferred stock, shares outstanding	149,892	150,000
Series B Preferred Stock [Member]
Preferred stock, shares authorized	80,000
Preferred stock, par value	$ 10
Preferred stock, shares issued	0	29,750
Preferred stock, shares outstanding	0	29,750
Temporary equity,share authorized	80,000	80,000
Temporary Equity, Par or Stated Value Per Share	$ 0.001	$ 0.001
Temporary equity, per share	$ 10.00	$ 10.00
Temporary equity, shares issued	0	29,750
Temporary equity, shares outstanding	0	29,750

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Condensed Consolidated Statements of Operations - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Income Statement [Abstract]
Revenue	$ 619,040	$ 750,989	$ 1,998,846	$ 1,363,505	$ 2,627,123	$ 3,609,494
Cost of revenue	244,881	78,593	453,863	278,272	518,843	546,888
Gross profit	374,159	672,396	1,544,983	1,085,233	2,108,280	3,062,606
Operating expenses
General and administrative	1,635,499	2,116,220	3,036,308	3,089,782	5,552,936	5,433,113
Sales and marketing	64,379	59,635	96,553	180,030	231,472	266,732
Total operating expenses	1,699,878	2,175,855	3,132,861	3,269,812	5,784,408	5,699,845
Net loss from operations	(1,325,719)	(1,503,459)	(1,587,878)	(2,184,579)	(3,676,128)	(2,637,239)
Other income (expense)
Interest expense	(3,488,822)	(942,753)	(3,964,556)	(2,037,069)	(5,979,456)	(3,334,413)
Loss on impairment of intangible asset						(75,000)
Gain (loss) on settlement of debt	4,904,081		4,904,081			186,156
Change in fair value of derivative liability				(57,883)	(57,883)	(614,658)
Total other expense	1,415,259	(942,753)	939,525	(2,094,952)	(6,037,339)	(3,837,915)
Loss before income taxes	89,540	(2,446,212)	(648,353)	(4,279,531)	(9,713,467)	(6,475,154)
Provision for income taxes
Net loss	89,540	(2,446,212)	(648,353)	(4,279,531)	(9,713,467)	(6,475,154)
Dividend on Series B Preferred Stock				(104,631)	(104,631)	(40,149)
Net loss attributable to common stockholders	$ 89,540	$ (2,446,212)	$ (648,353)	$ (4,384,162)	$ (9,818,098)	$ (6,515,303)
Basic loss per Common Share	$ 0.00	$ (25.10)	$ (0.04)	$ (9.62)	$ (3.75)	$ (68.79)
Diluted loss per Common Share	$ 0.00	$ (25.10)	$ (0.04)	$ (9.62)	$ (3.75)	$ (68.79)
Basic weighted average number of common shares outstanding	28,510,444	97,477	16,334,701	444,824	2,140,198	94,708
Diluted weighted average number of common shares outstanding	28,510,444	97,477	16,334,701	444,824	2,140,198	94,708

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Condensed Consolidated Statements of Stockholders' Deficit - USD ($)	Preferred Stock [Member] Series A Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Beginning balance, value at Dec. 31, 2020	$ 150	$ 66	$ 32,027,696	$ (35,518,584)	$ (3,490,672)
Beginning balance, shares at Dec. 31, 2020	150,000	65,308
Common stock issued for conversion of debt		$ 25	1,842,828		1,842,853
Common stock issued for conversion of debt, shares		24,536
Stock-based compensation		$ 1	968,469		968,470
Stock-based compensation, shares		1,227
Net loss				(6,515,303)	(6,515,303)
Common stock issued for conversion of preferred stock		$ 18	827,088		827,106
Common stock issued for conversion of preferred stock, shares		18,024
Common stock issued in conjunction with convertible notes		$ 1	133,662		133,663
Common stock issued in conjunction with convertible notes, shares		1,414
Common stock issued for exercised cashless warrants		$ 1	(1)
Common stock issued for exercised cashless warrant, shares		1,116
Resolution of derivative liability upon exercise of warrants			139,067		139,067
Warrants issued in conjunction with debts			1,024,780		1,024,780
Common stock issued for cash		$ 10	846,791		846,801
Common stock issued for cash, shares		10,419
Ending balance at Dec. 31, 2021	$ 150	$ 122	37,810,380	(42,033,887)	(4,223,235)
Ending balance, shares at Dec. 31, 2021	150,000	122,044
Common stock issued for conversion of debt		$ 165	29,160		29,325
Common stock issued for conversion of debt, shares		165,273
Stock-based compensation			(45,511)		(45,511)
Net loss				(4,384,162)	(4,384,162)
Cumulative-effect adjustment from adoption of ASU 2020-06			(517,500)	439,857	(77,643)
Common stock issued for acquisition of Centurion assets		$ 381	2,475,807		2,476,188
Common stock issued for acquisition of Centurion assets, shares		380,952
Common stock issued for conversion of preferred stock		$ 108	(108)
Common stock issued for conversion of preferred stock, shares	(108)	108,000
Common stock issued in conjunction with convertible notes		$ 18	140,918		140,936
Common stock issued in conjunction with convertible notes, shares		18,170
Common stock issued for exercised cashless warrants		$ 7	(7)
Common stock issued for exercised cashless warrant, shares		6,631
Common stock issued for service		$ 153	844,048		844,201
Common stock issued for service, shares		153,491
Resolution of derivative liability upon exercise of warrants			57,883		57,883
Warrants issued in conjunction with debts			47,628		47,628
Ending balance at Jun. 30, 2022	$ 150	$ 954	40,842,698	(45,978,192)	(5,134,390)
Ending balance, shares at Jun. 30, 2022	149,892	954,561
Beginning balance, value at Dec. 31, 2021	$ 150	$ 122	37,810,380	(42,033,887)	(4,223,235)
Beginning balance, shares at Dec. 31, 2021	150,000	122,044
Common stock issued for conversion of debt		$ 995	652,801		653,796
Common stock issued for conversion of debt, shares		998,899
Stock-based compensation			879,671		879,671
Net loss				(9,818,098)	(9,818,098)
Common stock issued for acquisition of Centurion assets		$ 380	2,475,808		2,476,188
Common stock issued for acquisition of Centurion assets, shares		380,952
Common stock issued for conversion of preferred stock		$ 108	(108)
Common stock issued for conversion of preferred stock, shares	(108)	108,000
Common stock issued in conjunction with convertible notes		$ 18	140,919		140,937
Common stock issued in conjunction with convertible notes, shares		18,170
Common stock issued for exercised cashless warrants		$ 7	(7)
Common stock issued for exercised cashless warrant, shares		6,631
Common stock issued for service		$ 50	164,970		165,020
Common stock issued for service, shares		50,041
Resolution of derivative liability upon exercise of warrants			57,883		57,883
Warrants issued in conjunction with debts			47,628		47,628
Cumulative-effect adjustment from adoption of ASU 2020-06			(517,500)	439,857	(77,643)
Subscription for share issuance		$ 931	930,069		931,000
Subscription for share issuance, shares		931,000
Ending balance at Dec. 31, 2022	$ 150	$ 2,611	42,642,514	(51,412,128)	(8,766,853)
Ending balance, shares at Dec. 31, 2022	149,892	2,615,737
Beginning balance, value at Mar. 31, 2022	$ 150	$ 148	37,353,357	(43,531,980)	(6,178,325)
Beginning balance, shares at Mar. 31, 2022	150,000	148,367
Common stock issued for conversion of debt		$ 151	1,361		1,512
Common stock issued for conversion of debt, shares		151,200
Stock-based compensation			42,174		42,174
Net loss				(2,446,212)	(2,446,212)
Common stock issued for acquisition of Centurion assets		$ 381	2,475,807		2,476,188
Common stock issued for acquisition of Centurion assets, shares		380,952
Common stock issued for conversion of preferred stock		$ 108	(108)
Common stock issued for conversion of preferred stock, shares	(108)	108,000
Common stock issued in conjunction with convertible notes		$ 13	78,431		78,444
Common stock issued in conjunction with convertible notes, shares		12,551
Common stock issued for service		$ 153	844,048		844,201
Common stock issued for service, shares		153,491
Warrants issued in conjunction with debts			47,628		47,628
Adjustment of reverse stock split
Ending balance at Jun. 30, 2022	$ 150	$ 954	40,842,698	(45,978,192)	(5,134,390)
Ending balance, shares at Jun. 30, 2022	149,892	954,561
Beginning balance, value at Dec. 31, 2022	$ 150	$ 2,611	42,642,514	(51,412,128)	(8,766,853)
Beginning balance, shares at Dec. 31, 2022	149,892	2,615,737
Subscription of stock for cash			20,000		20,000
Common stock issued for conversion of debt		$ 10,808	321,784		332,592
Common stock issued for conversion of debt, shares		10,807,823
Common stock issued for adjustment to PPM investors		$ 45,619	(45,619)
Common stock issued for adjustment to investors, shares		45,619,000
Stock-based compensation		$ 322	565,249		565,571
Stock-based compensation, shares		321,428
Net loss				(648,353)	(648,353)
Ending balance at Jun. 30, 2023	$ 150	$ 59,360	43,503,928	(52,060,481)	(8,497,043)
Ending balance, shares at Jun. 30, 2023	149,892	59,363,988
Beginning balance, value at Mar. 31, 2023	$ 150	$ 6,742	42,982,226	(52,150,021)	(9,160,903)
Beginning balance, shares at Mar. 31, 2023	149,892	6,746,764
Subscription of stock for cash			20,000		20,000
Common stock issued for conversion of debt		$ 6,677	95,926		102,603
Common stock issued for conversion of debt, shares		6,676,796
Common stock issued for adjustment to PPM investors		$ 45,619	(45,619)
Common stock issued for adjustment to investors, shares		45,619,000
Stock-based compensation		$ 322	451,395		451,717
Stock-based compensation, shares		321,428
Net loss				89,540	89,540
Ending balance at Jun. 30, 2023	$ 150	$ 59,360	$ 43,503,928	$ (52,060,481)	$ (8,497,043)
Ending balance, shares at Jun. 30, 2023	149,892	59,363,988

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Condensed Consolidated Statements of Cash Flows - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (648,353)	$ (4,279,531)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in fair value of derivative liability		57,883
Gain on settlement of debt	(4,904,081)
Stock-based compensation expense	565,571	798,690
Depreciation and amortization	340,550	540,714
Amortization of debt discount	625,783	1,549,752
Lease liability amortization	(74,292)	(14,958)
Changes in operating assets and liabilities:
Accounts receivable	28,831	(209,938)
Prepaid expenses and other assets	(181,955)	42,852
Accounts payable and accrued liabilities	1,189,069	308,642
Deferred revenue	(163,531)	973,992
Accrued interest	3,398,326	105,577
Deposit		10,414
Net Cash provided by/(used in) Operating Activities	175,918	(115,911)
CASH FLOWS FROM INVESTING ACTIVITIES:
Advance payment for acquisition		(250,000)
Purchase of property and equipment	(167,427)	(96,960)
Net Cash used in Investing Activities	(167,427)	(346,960)
CASH FLOWS FROM FINANCING ACTIVITIES:
Bank overdraft		3,781
Proceeds from issuance of convertible notes payable	564,070	1,207,800
Repayment of convertible notes payable	(146,663)	(758,346)
Proceeds from stock subscription	20,000
Proceeds from issuance of Series B Preferred Stock		75,000
Redemption of Series B Preferred Stock		(487,730)
Finance lease payments	(10,341)	(41,195)
Proceeds from issuance of notes payable	417,427	1,186,453
Repayment of notes payable	(1,047,218)	(1,957,492)
Proceeds from related parties	229,426	116,238
Repayment to related parties	(21,000)	(86,571)
Net Cash provided by/(used in) Financing Activities	5,701	(742,062)
Net change in cash	14,192	(1,204,933)
Cash, beginning of period	1,712	1,204,933
Cash, end of period	15,904
Supplemental cash flow information
Cash paid for interest	408,160	344,867
Non-cash Investing and Financing transactions:
Common stock issued for exercised cashless warrant		7
Settlement of convertible notes payable through issuance of common stock	332,592	27,812
Common stock issued in conjunction with convertible note		62,493
Resolution of derivative liability upon exercise of warrant		57,883
Settlement of convertible notes payable through issuance of preferred common stock		65,600
Note payable issued for settlement of License fee payable		$ 77,643

XML

Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (9,713,467)	$ (6,475,154)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in fair value of derivative liability	57,883	614,658
(Gain) loss on settlement of debt		(186,156)
Stock-based compensation expense	1,044,680	968,470
Loss on impairment of intangible asset		75,000
Depreciation and amortization	987,991	1,140,362
Amortization of debt discount	2,321,011	2,906,645
Bad debt		36,456
Right of use asset amortization	99,634	(26,214)
Changes in assets and liabilities:
Accounts receivable, net	(10,409)	78,478
Prepaid expenses and other current assets	(20,402)	(70,802)
Accounts payable and accrued liabilities	916,254	(291,922)
Deferred revenue	884,555	90,433
Interest payable	2,193,853	284,206
Deposit	(14,233)
Net Cash provided by/(used in) Operating Activities	(1,252,650)	(855,540)
CASH FLOWS FROM INVESTING ACTIVITIES:
Advance payment for acquisition	(250,000)
Purchase of property and equipment	(311,128)	(138,331)
Net Cash used in Investing Activities	(561,128)	(138,331)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of convertible notes payable	2,027,570	1,482,000
Repayment of convertible notes payable	(771,718)	(45,000)
Proceeds from issuance of common stock	931,000	846,801
Proceeds from issuance of Series B Preferred Stock	75,000	525,000
Redemption of Series B Preferred Stock	(487,730)	(63,999)
Finance lease payments	(78,268)	(90,565)
Proceeds from issuance of notes payable	3,458,247	4,377,226
Repayment of notes payable	(4,408,240)	(4,577,578)
Proceeds from related parties	299,280	366,943
Repayment to related parties	(434,584)	(680,807)
Net Cash provided by/(used in) Financing Activities	610,557	2,140,021
Net change in cash	(1,203,221)	1,146,150
Cash, beginning of period	1,204,933	58,783
Cash, end of period	1,712	1,204,933
Supplemental cash flow information
Cash paid for interest	5,979,456	152,643
Cash paid for taxes
Non-cash Investing and Financing transactions:
Common stock issued for acquisition of subsidiary	2,476,188
Common stock issued for exercised cashless warrant	7	1
Settlement of series B preferred stock through issuance of common stock		827,106
Settlement of convertible notes payable through issuance of common stock	653,796	1,842,853
Common stock issued in conjunction with convertible note	140,937	133,663
Warrant issued in conjunction with debts	47,628	1,024,780
Dividend Series B preferred stock	104,631	40,149
Resolution of derivative liability upon exercise of warrant	57,883	139,067
Resolution of derivative liability upon conversion of debt		531,700
Derivative liability recognized as debt discount		390,000
Settlement of convertible notes payable through issuance of preferred common stock		65,600
Note payable issued for settlement of License fee payable		1,004,880
Cumulative-effect adjustment from adoption of ASU 2020-06	$ 77,643

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Data443 Risk Mitigation, Inc. (the “Company”) was incorporated as a Nevada corporation on May 4, 1998. On October 15, 2019, the Company changed its name from LandStar, Inc. to Data443 Risk Mitigation, Inc. within the state of Nevada.

The Company delivers solutions and capabilities that businesses can use in conjunction with their use of established cloud vendors such as Microsoft® Azure, Google® Cloud Platform (GCP) and Amazon® Web Services (AWS), as well as with on-premises databases and database applications with virtualization platforms, such as those hosted or configured using VMWare®, Citrix® and Oracle® clouds/products).

Advance Payment for Acquisition

On January 19, 2022, we entered into an Asset Purchase Agreement with Centurion Holdings I, LLC (“Centurion”) to acquire the intellectual property rights and certain assets collectively known as Centurion SmartShield Home and SmartShield Enterprise, patented technology that protects and recovers devices in the event of ransomware attacks. The total purchase price of $3,400,000 consists of: (i) a $250,000 cash payment at closing; (ii) a $2,900,000 promissory note issued by Data443 in favor of Centurion (“Centurion Note”); and (iii) $250,000 in the form of a contingent payment. The Centurion Note matures January 19, 2027 but provides that Data443’s repayment obligation would accelerate on the occurrence of certain events. One of those events was a financing event that did not occur within the originally anticipated timeframe. If that event had occurred, then Data443’s repayment obligation would have been to repay the balance of the outstanding principal and interest as follows: (i) $500,000 of the then-outstanding amount due in cash; and (ii) the remaining balance, at Data443’s option, in Common stock or a combination of Common stock and cash, with the number of shares of Common stock to be determined according to a specified formula. In April 2022, Data443 and Centurion agreed that, even though the trigger for this acceleration event did not occur, Data443 would issue shares of Common stock to Centurion in an amount then-equivalent to $2,400,000, as partial repayment of the obligation due under the Centurion Note. The number of shares of Common stock Data443 issued to Centurion on April 20, 2022, was 380,952. Because Data443 still has some repayment obligations to fulfill under the Centurion Note, as of the filing date of these financial statements, the acquisition that is the subject of the Centurion Asset Purchase Agreement is still not completed, and is expected to be completed in 2023.

Basis of Presentation

These unaudited condensed consolidated financial statements have been prepared in accordance with rules and regulations of the Securities and Exchange Commission (“SEC”) and generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, the unaudited condensed consolidated financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, we have included all adjustments considered necessary for a fair presentation and such adjustments are of a normal recurring nature. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2022 and notes thereto and other pertinent information contained in our Form 10-K as filed with the SEC on February 24, 2023. The results of operations for the six months ended June 30, 2023, are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2023.

Basis of Consolidation

The accompanying unaudited consolidated financial statements as of June 30, 2023 include our accounts and those of our wholly-owned subsidiary, Data 443 Risk Mitigation, Inc., a North Carolina operating company. These unaudited consolidated financial statements have been prepared on the accrual basis of accounting in accordance with US GAAP. All inter company balances and transactions have been eliminated in consolidation.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on the net earnings (loss) or and financial position.

Accounts Receivable

Trade receivables are generally recorded at the invoice amount mostly for a one-year period, net of an allowance for bad debt. For the three months ended June 30, 2023, and June 30, 2022, we recorded bad debt expense of $0 and $0, respectively

Stock-Based Compensation

Employees – We account for stock-based compensation under the fair value method which requires all such compensation to employees, including the grant of employee stock options, to be calculated based on its fair value at the measurement date (generally the grant date), and recognized in the consolidated statement of operations over the requisite service period.

Nonemployees - Under the requirements of the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Stock-Based Payment Accounting (“ASU 2018-07”), we account for stock-based compensation to non-employees under the fair value method which requires all such compensation to be calculated based on the fair value at the measurement date (generally the grant date), and recognized in the statement of operations over the requisite service period.

We recorded approximately $565,571 in stock-based compensation expense for the six months ended June 30, 2023, compared to $798,690 in stock-based compensation expense for the six months ended June 30, 2022. Determining the appropriate fair value model and the related assumptions requires judgment. During the three months ended June 30, 2023, the fair value of each option grant was estimated using a Black-Scholes option-pricing model. The expected volatility represents the historical volatility of our publicly traded common stock. Due to limited historical data, we calculate the expected life based on the mid-point between the vesting date and the contractual term which is in accordance with the simplified method. The expected term for options granted to nonemployees is the contractual life. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of stock options. We have not paid and do not anticipate paying cash dividends on our shares of Common stock; therefore, the expected dividend yield is assumed to be zero.

Contingencies

We account for contingent liabilities in accordance with Accounting Standards Codification (“ASC”) Topic 450, Contingencies. This standard requires management to assess potential contingent liabilities that may exist as of the date of the financial statements to determine the probability and amount of loss that may have occurred, which inherently involves an exercise of judgment. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in our financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed in our financial statements. For loss contingencies considered remote, we generally would neither accrue any estimated liability nor disclose the nature of the contingent liability in our financial statements. Management has assessed potential contingent liabilities as of June 30, 2023, and based on that assessment, there are no probable or possible loss contingencies requiring accrual or establishment of a reserve.

Basic and Diluted Net Loss Per Common Share

Basic earnings per share (“EPS”) is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method and as if converted method. Dilutive potential common shares include outstanding stock options, warrant and convertible notes.

For the six months ended June 30, 2023 and 2022, respectively, the following common stock equivalents were excluded from the computation of diluted net loss per share as the result of the computation was anti-dilutive:

	Six Months Ended
	June 30,
	2023		2022
	(Shares)		(Shares)
Series A Preferred Stock		149,892,000		149,892,000
Stock options		2,838,067		1,029
Warrants		158,441		158,441
Total		152,888,508		150,051,470

Recently Adopted Accounting Guidance

In August 2020, the FASB issued ASU 2020-06, ASC Subtopic 470-20 “Debt—Debt with Conversion and Other Options” and ASC subtopic 815-40 “Hedging—Contracts in Entity’s Own Equity” (“Standard”). The Standard reduced the number of accounting models available for convertible debt instruments and convertible preferred stock. Pursuant to the Standard, convertible debt instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting; and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid in capital. The Standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Due to adoption of this Standard on January 1, 2022, we recognized a cumulative effect adjustment to increase the opening retained earnings as of January 1, 2022 by $439,857.

To compute the transition adjustment for a convertible instrument under both the modified retrospective and full retrospective methods, entities need to recompute the basis of that instrument at transition (i.e., the beginning of year of adoption for the modified retrospective method or the beginning of earliest year presented for the full retrospective method) as if the conversion option had not been separated. The Company use the modified retrospective method to adjust.

Recently Issued Accounting Pronouncements

The Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its consolidated financial statements.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements as of December 31, 2022 include the accounts of the Company and its wholly-owned subsidiary, Data 443 Risk Mitigation, Inc., a North Carolina operating company. All intercompany accounts and activities have been eliminated upon consolidation. These consolidated financial statements have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”).

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current presentation. These reclassifications had no impact on net earnings (loss) or and financial position.

Revenue Recognition

The Company derives revenue primarily from contracts for subscription to access our SaaS platforms and, to a much lesser degree, ancillary services provided in connection with subscription services. The Company’s contracts include the performance obligations that require us to provide access to the platforms, usually on an annual subscription. The Company’s contracts are for subscriptions to our data classification, movement, governance, encryption, access control and distribution software and related services. We also perform professional services consulting with specific deliverables managed primarily by statements of work. Customers typically enter into our services subscription and various statements of work concurrently. Most of the Company’s performance obligations are not considered to be distinct from the subscriptions to our software or hosting platforms and related services and are combined into a single performance obligation. New statements of work and modifications of contracts are reviewed each reporting period and to assess the nature and characteristics of the new or modified performance obligations on a contract by contract basis.

Revenue related to contracts with customers is evaluated utilizing the following steps: (i) Identify the contract, or contracts, with a customer; (ii) Identify the performance obligations in the contract; (iii) Determine the transaction price; (iv) Allocate the transaction price to the performance obligations in the contract; (v) Recognize revenue when the Company satisfies a performance obligation.

Revenues from professional services consist mostly of time and material services. The performance obligations are satisfied, and revenues are recognized, when the services are provided or over the time of the service term until it expires.

Subscription software that is sold on-premises is recognized at the point of time when the software license has been delivered and the benefit of the asset has transferred. Maintenance associated with subscription licenses is recognized ratably over the term of the agreement. Our SaaS offerings allow customers to use hosted software, and our revenue is recognized ratably over the associated contract time period.

Cash and Cash Equivalents

For purposes of balance sheet presentation and reporting of cash flows, the Company considers all unrestricted demand deposits, money market funds and highly liquid debt instruments with an original maturity of less than 90 days to be cash and cash equivalents. The Company had no cash equivalents at December 31, 2022 and 2021.

Accounts Receivable

Accounts receivable are recorded in accordance with ASC 310, “Receivables.” Accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable.

Deferred Revenue

Deferred revenue mostly consists of service subscriptions received from users in advance of revenue recognition. The increase in the deferred revenue balance for the year ended December 31, 2022 and 2021 was driven by cash payments from customers in advance of satisfying our performance obligations, offset by revenue recognized that was included in the deferred revenue balance at the beginning of the period.

Convertible Financial Instruments

The Company account for our convertible financial instruments in accordance with ASC 470-20 “Debt with Conversion and Other Options.” Prior to the adoption of ASU 2020-06 on January 1, 2022, we separated the convertible notes into liability and equity components. The carrying amounts of the liability component of the convertible notes were calculated by measuring the fair value of similar debt instruments that do not have an associated convertible feature. The carrying amounts of the equity components, representing the conversion option, were determined by deducting the fair value of the liability components from the par value of the convertible notes. This difference represents the debt discount that is amortized to interest expense over the terms of the convertible notes using the effective interest rate method.

Following the adoption of ASU 2020-06 on January 1, 2022, which we elected to adopt using a modified retrospective approach, we no longer separate the convertible notes into liability and equity components. Now convertible notes are recorded and disclosed as convertible notes payable, net of unamortized discount.

Share-Based Compensation

Employees - The Company accounts for share-based compensation under the fair value method which requires all such compensation to employees, including the grant of employee stock options, to be calculated based on its fair value at the measurement date (generally the grant date), and recognized in the consolidated statement of operations over the requisite service period.

Nonemployees - During June 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”) to simplify the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees. The Company elected to adopt ASU 2018-07 early. Under the requirements of ASU 2018-07, the Company accounts for share-based compensation to non-employees under the fair value method which requires all such compensation to be calculated based on the fair value at the measurement date (generally the grant date), and recognized in the statement of operations over the requisite service period.

The Company recorded approximately $879,671 in share-based compensation expense for the year ended December 31, 2022, compared to approximately $968,470 in share-based compensation expense for the year ended December 31, 2021.

Determining the appropriate fair value model and the related assumptions requires judgment. During the year ended December 31, 2022 and 2021, the fair value of each option grant was estimated using a Black-Scholes option-pricing model.

The expected volatility represents the historical volatility of the Company’s publicly traded common stock. Due to limited historical data, the Company calculates the expected life based on the mid-point between the vesting date and the contractual term which is in accordance with the simplified method. The expected term for options granted to nonemployees is the contractual life. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of stock options. The Company has not paid and does not anticipate paying cash dividends on its shares of common stock; therefore, the expected dividend yield is assumed to be zero.

Income Taxes

The asset and liability method is used in the Company’s accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse.

Deferred tax assets and liabilities are determined based on the temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities using the enacted tax rates in effect in the years in which the differences are expected to reverse. In estimating future tax consequences, all expected future events are considered other than enactment of changes in the tax law or rates.

The Company adopted ASC 740 “Income Taxes,” which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. ASC 740 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company had no material adjustments to its liabilities for unrecognized income tax benefits.

The determination of recording or releasing tax valuation allowance is made, in part, pursuant to an assessment performed by management regarding the likelihood that the Company will generate future taxable income against which benefits of its deferred tax assets may or may not be realized.

Intellectual Property

The cost of intangible assets with determinable useful lives is amortized to reflect the pattern of economic benefits consumed on a straight-line basis over the estimated periods benefited. Patents, technology and other intangibles with contractual terms are generally amortized over their respective legal or contractual lives. When certain events or changes in operating conditions occur, an impairment assessment is performed and lives of intangible assets with determinable lives may be adjusted.

Long-Lived Assets

Long-lived assets are evaluated for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the undiscounted future cash flows to the recorded value of the asset. If impairment is indicated, the asset is written down to its estimated fair value.

Property and Equipment

Property and equipment, consisting mostly of computer equipment, is recorded at cost reduced by accumulated depreciation and impairment, if any. Depreciation expense is recognized over the assets’ estimated useful lives of three - seven years using the straight-line method. Major additions and improvements are capitalized as additions to the property and equipment accounts, while replacements, maintenance and repairs that do not improve or extend the life of the respective assets, are expensed as incurred. Estimated useful lives are periodically reviewed and, when appropriate, changes are made prospectively. When certain events or changes in operating conditions occur, asset lives may be adjusted and an impairment assessment may be performed on the recoverability of the carrying amounts.

Fair Value Measurements

The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value. The three tiers are defined as follows:

● Level 1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets;

● Level 2—Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and

● Level 3—Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions.

Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The carrying amounts of cash and cash equivalents, marketable securities, trade receivables, short-term deposits and trade payables approximate their fair value due to the short-term maturity of such instruments. This valuation technique involves management’s estimates and judgment based on unobservable inputs and is classified in level 3.

Basic and Diluted Net Loss Per Common Share

Basic earnings per share (“EPS”) is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method and as if converted method. Dilutive potential common shares include outstanding stock options, warrant and convertible notes.

For the year ended December 31, 2022 and 2021, respectively, the following common stock equivalents were excluded from the computation of diluted net loss per share as the result of the computation was anti-dilutive.

	Years Ended
	December 31,
	2022		2021
	(Shares)		(Shares)
Series A Preferred Stock		149,892,000		150,000,000
Stock options		867,237		2,121
Warrants		159,974		146,842
Convertible notes		-		-
Preferred B stock		-		3,955
Total		150,919,211		150,152,918

Leases

We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities - current, and operating lease liabilities - noncurrent on the balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities in our balance sheets.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Segments

Operating segments are defined as components of an enterprise engaging in business activities for which discrete financial information is available and regularly reviewed by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company operates and manages its business as one operating segment and all of the Company’s revenues and operations are currently in the United States.

Recently Adopted Accounting Guidance

In August 2020, the FASB issued ASU 2020-06, ASC Subtopic 470-20 “Debt—Debt with Conversion and Other Options” and ASC subtopic 815-40 “Hedging—Contracts in Entity’s Own Equity”. The standard reduced the number of accounting models for convertible debt instruments and convertible preferred stock. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting; and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. The amendments in this update are effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Due to adoption of this accounting policy on January 1, 2022, we recognized a cumulative effect adjustment to increase the opening retained earnings as of January 1, 2022 by $77,643.

Recently Issued Accounting Pronouncements

The Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its consolidated financial statements.

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LIQUIDITY AND GOING CONCERN

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

LIQUIDITY AND GOING CONCERN

NOTE 2: LIQUIDITY AND GOING CONCERN

The accompanying financial statements have been prepared assuming that we will continue as a going concern. As reflected in the financial statements, we have incurred significant current period losses of $648,353 for the six months ended June 30, 2023 and we have negative working capital of $10,008,138 and an accumulated deficit $52,060,481 as of June 30, 2023. We have relied upon loans and issuances of our equity to fund our operations. These conditions, among others, raise substantial doubt about our ability to continue as a going concern. Management’s plans regarding these matters, include raising additional debt or equity financing, the terms of which might not be acceptable. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

NOTE 3: LIQUIDITY AND GOING CONCERN

The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern. As reflected in the financial statements, we have incurred significant current period losses and negative cash flows from operating activities, and we have negative working capital and an accumulated deficit. We have relied upon loans and issuances of our equity to fund our operations. These conditions, among others, raise substantial doubt about our ability to continue as a going concern. Management’s plans regarding these matters, include raising additional debt or equity financing, the terms of which might not be acceptable. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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PROPERTY AND EQUIPMENT

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT

NOTE 3: PROPERTY AND EQUIPMENT

The following table summarizes the components of our property and equipment as of the dates presented:

	June 30,			December 31,
	2023			2022
Furniture and Fixtures	$	6,103		$	6,103
Computer Equipment		1,035,097			867,670
		1,041,200			873,773
Accumulated depreciation		(537,958	)		(446,742	)
Property and equipment, net of accumulated depreciation	$	503,242		$	427,031

Depreciation expense for the six months ended June 30, 2023 and 2022, was $91,216 and $80,170, respectively.

During the six months ended June 30, 2023 and 2022, we purchased property and equipment of $167,427 and $96,960, respectively.

NOTE 4: PROPERTY AND EQUIPMENT

The following table summarizes the components of the Company’s property and equipment as of the dates presented:

	December 31,			December 31,
	2022			2021
Furniture and Fixtures	$	6,103		$	2,991
Computer Equipment		867,670			559,654
		873,773			562,645
Accumulated depreciation		(446,742	)		(274,239	)
Property and equipment, net of accumulated depreciation	$	427,031		$	288,406

Depreciation expense for the years ended December 31, 2022 and 2021, was $172,503 and $174,274, respectively, and recorded in general and administrative expenses.

During the years ended December 31, 2022 and 2021, the Company acquired property and equipment of $311,128 and $138,331, respectively.

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INTELLECTUAL PROPERTY

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

INTELLECTUAL PROPERTY

NOTE 4: INTELLECTUAL PROPERTY

The following table summarizes the components of our intellectual property as of the dates presented:

	June 30, 2023			December 31, 2022
Intellectual property:
WordPress® GDPR rights	$	46,800		$	46,800
ARALOC®		1,850,000			1,850,000
ArcMail®		1,445,000			1,445,000
DataExpress®		1,388,051			1,388,051
FileFacets®		135,000			135,000
IntellyWP™		60,000			60,000
Resilient Network Systems		305,000			305,000
		5,229,851			5,229,851
Accumulated amortization		(5,024,854	)		(4,775,520	)
Intellectual property, net of accumulated amortization	$	204,997		$	454,331

We recognized amortization expense of $249,334 and $460,544 for the six months ended June 30, 2023, and 2022, respectively.

Based on the carrying value of definite-lived intangible assets as of June 30, 2023, we estimate our amortization expense for the next five years will be as follows:

	Amortization
	Expense
Year ended December 31,
2023 (excluding the six months ended June 30, 2023)	$	162,247
2024		27,000
2025		15,750
Thereafter		-
	$	204,997

NOTE 5: INTELLECTUAL PROPERTY

On February 7, 2019, the Company entered into an Exclusive License and Management Agreement (the “License Agreement”) with WALA, INC., which conducts business under the name ArcMail Technology (“ArcMail”). Under the License Agreement, the Company was granted the exclusive right and license to receive all benefits from the marketing, selling and licensing, of the ArcMail business products, including, without limitation, the good will of the business. The term of the License Agreement is twenty-seven (27) months, with the following payments to be made by the Company to ArcMail: (i) $200,000 upon signing the License Agreement; (ii) monthly payments starting 30 days after the execution of the License Agreement in the amount of $25,000 per month during months 1-6; (iii) monthly payments in the amount of $30,000 per month during months 7-17; and (iii) in month 18, final payment in the amount of $765,000. As of December 31, 2019, the balance of payments due under the License Agreement was $1,094,691. In connection with the execution of the License Agreement, two other agreements were also executed: (a) a Stock Purchase Rights Agreement, under which the Company has the right, though not the obligation, to acquire 100% of the issued and outstanding shares of stock of ArcMail from Rory Welch, the CEO of ArcMail (the right can be exercised over a period of 27 months); and (b) a Business Covenants Agreement, under which ArcMail and Mr. Welch agreed to not compete with the Company’s use of the ArcMail business under the License Agreement for a period of twenty-four (24) months. Mr. Welch shall continue to serve as ArcMail’s CEO. The Company has not purchased any outstanding shares under the Stock Purchase Rights Agreement. As of September 30, 2020, the Company terminated all agreements with Mr. Welch and ArcMail. The Company continued to use all assets under the License Agreement and was finalizing an agreement with the creditors of Mr. Welch and ArcMail (the creditors have taken ownership of the assets) for the Company’s continued use of all assets. During the year ended December 31. 2021, the Company reached the agreement and issued notes payable of $1,404,000 to settle license fee payable of $1,094,691. As a result, the Company recorded a loss on settlement of debt of $309,309.

On August 13, 2020, the Company entered into an Asset Purchase Agreement to acquire certain assets collectively known as FileFacets^™, a Software-as-a-Service (SaaS) platform that performs sophisticated data discovery and content search of structured and unstructured data within corporate networks, servers, content management systems, email, desktops and laptops. The total purchase price was $135,000, which amount was paid in full at the closing of the transaction.

On September 21, 2020, the Company entered into an Asset Purchase Agreement with the owners of a business known as IntellyWP™, to acquire the intellectual property rights and certain assets collectively known as IntellyWP™, an Italy-based developer that produces WordPress plug-ins that enhance the overall user experience for webmaster and end users. The total purchase price of $135,000 consists of: (i) a $55,000 cash payment at closing; (ii) a cash payment of $40,000 upon completion of certain training; and, (iii) a cash payment of $40,000 upon the Company collecting $25,000 from the assets acquired in the subject transaction.

On October 8, 2020, the Company entered into an Asset Purchase Agreement with Resilient Network Systems, Inc. (“RNS”) to acquire the intellectual property rights and certain assets collectively known as Resilient Networks™, a Silicon Valley based SaaS platform that performs SSO and adaptive access control “on the fly” with sophisticated and flexible policy workflows for authentication and authorization. The total purchase price of $305,000 consists of: (i) a $125,000 cash payment at closing; and, (ii) the issuance of 19,148,936 shares of our common stock to RNS.

The following table summarizes the components of the Company’s intellectual property as of the dates presented:

	December 31,			December 31,
	2022			2021
Intellectual property:
WordPress® GDPR rights	$	46,800		$	46,800
ARALOC™		1,850,000			1,850,000
ArcMail License		1,445,000			1,445,000
DataExpressTM		1,388,051			1,388,051
FileFacetsTM		135,000			135,000
IntellyWP™		60,000			135,000
Resilient Network Systems		305,000			305,000
		5,229,851			5,304,851
Accumulated amortization		(4,775,520	)		(3,960,032	)
Impairment		-			(75,000	)
Intellectual property, net of accumulated amortization	$	454,331		$	1,269,819

The Company recognized amortization expense of approximately $815,488 and $966,088 for the years ended December 31, 2022 and 2021, respectively, recorded as general and administrative expense.

During the year ended December 31, 2021 the Company determined that IntellyWP^TM should be impaired because of the reduction in sales from this service. Accordingly, the Company estimated the undiscounted future cash flows to be generated by IntellyWP^TM to be an immaterial amount, which was less than the carrying amount of IntellyWP^TM of $75,000. This resulted in a $75,000 write-down of the assets, which was reflected as a separate line item in the income statement.

Based on the carrying value of definite-lived intangible assets as of December 31, 2022, we estimate our amortization expense for the next five years will be as follows:

	Amortization
Year Ended December 31,	Expense
2023		411,581
2024		27,000
Thereafter		15,750
		454,331

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ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Payables and Accruals [Abstract]

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

NOTE 5: ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

The following table summarizes the components of our accounts payable and accrued liabilities as of the dates presented:

	June 30,		December 31,
	2023		2022
Accounts payable	$	1,370,015	$	427,553
Credit cards		72,374		50,302
Accrued liabilities		778,611		554,076
	$	2,221,000	$	1,031,931

NOTE 6: ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

The following table summarizes the components of the Company’s accounts payable and accrued liabilities as of the dates presented:

	December 31,		December 31,
	2022		2021
Accounts payable	$	427,553	$	75,628
Credit cards		50,302		28,492
Accrued dividend - preferred stock		-		6,849
Accrued liabilities		554,076		4,704
Balance, end of year	$	1,031,931	$	115,673

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DEFERRED REVENUE

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Revenue from Contract with Customer [Abstract]

DEFERRED REVENUE

NOTE 6: DEFERRED REVENUE

For the six months ended June 30, 2023 and as of December 31, 2022, changes in deferred revenue were as follows:

	June 30,			December 31,
	2023			2022
Balance, beginning of period	$	2,493,151		$	1,608,596
Deferral of revenue		1,186,955			3,511,678
Recognition of deferred revenue		(1,350,486	)		(2,627,123	)
Balance, end of period	$	2,329,620		$	2,493,151

As of June 30, 2023 and December 31, 2022, deferred revenue is classified as follows:

	June 30,		December 31,
	2023		2022
Current	$	1,814,620	$	1,704,249
Non-current		515,000		788,902
	$	2,329,620	$	2,493,151

NOTE 7: DEFERRED REVENUE

For the years ended December 31, 2022 and 2021, changes in deferred revenue were as follows:

	December 31,			December 31,
	2022			2021
Balance, beginning of year	$	1,608,596		$	1,518,163
Deferral of revenue		3,511,678			2,581,801
Recognition of deferred revenue		(2,627,123	)		(2,491,368	)
Balance, end of year	$	2,493,151		$	1,608,596

As of December 31, 2022 and 2021, is classified as follows:

	December 31,		December 31,
	2022		2021
Current	$	1,704,249	$	1,035,185
Non-current		788,902		573,411
Balance, end of year	$	2,493,151	$	1,608,596

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LEASES

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Leases

LEASES

NOTE 7: LEASES

Operating lease

We have two noncancelable operating leases for office facilities, one that we entered into January 2019 and that expires January 10, 2024 and another that we entered into in April 2022 and that expires April 30, 2024. Each operating lease has a renewal option and a rent escalation clause. In the summer of 2022, we relocated to the expanded square footage of the premises that are the subject of the April 2022 lease to support our growing operations, and entered into a commission agreement with the landlord of the building to sublet the premises that are the subject of the January 2019 lease.

We recognized total lease expense of approximately $146,994 and $83,339 for the six months ended June 30, 2023 and 2022, respectively, primarily related to operating lease costs paid to lessors from operating cash flows. As of June 30, 2023 and December 31, 2022, we recorded a security deposit of $33,467.

At June 30, 2023, future minimum lease payments under operating leases that have initial noncancelable lease terms in excess of one year were as follows:

	Total
Year Ended December 31,
2023 (excluding the six months ended June 30, 2023)		242,379
2024		121,406
Thereafter		-
		363,785
Less: Imputed interest		(24,967	)
Operating lease liabilities		338,818
Operating lease liability - current		338,818
Operating lease liability - non-current	$	-

The following summarizes other supplemental information about our operating leases as of June 30, 2023:

Weighted average discount rate	8	%
Weighted average remaining lease term (years)	.70

Financing leases

We do not have any financing leases as June 30, 2023 and $10,341 as of December 31, 2022.

NOTE 8: LEASES

Operating lease

We have two noncancelable operating leases for office facilities, one that we entered into January 2019 and that expires January 10, 2024 and another that we entered into in April 2022 and that expires April 30, 2024. Each operating lease has a renewal option and a rent escalation clause. In the summer of 2022, we relocated to the expanded square footage of the premises that are the subject of the April 2022 lease to support our growing operations, and entered into a commission agreement with the landlord of the building to sublet the premises that are the subject of the January 2019 lease.

Lease right-of-use assets represent the right to use an underlying asset pursuant to the lease for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Lease right-of-use assets and lease liabilities are recognized at the commencement of an arrangement where it is determined at inception that a lease exists. These assets and liabilities are initially recognized based on the present value of lease payments over the lease term calculated using our estimated incremental borrowing rate generally applicable to the location of the lease right-of-use asset, unless an implicit rate is readily determinable. We combine lease and certain non-lease components in determining the lease payments subject to the initial present value calculation. Lease right-of-use assets include upfront lease payments and exclude lease incentives, if applicable. When lease terms include an option to extend the lease, we have not assumed the options will be exercised.

Lease expense for operating leases generally consist of both fixed and variable components. Expense related to fixed lease payments are recognized on a straight-line basis over the lease term. Variable lease payments are generally expensed as incurred, where applicable, and include agreed-upon changes in rent, certain non-lease components, such as maintenance and other services provided by the lessor, and other charges included in the lease. Leases with an initial term of twelve months or less are not recorded on the balance sheet. We recognized total lease expense of approximately $240,492 and $97,385 for the years ended December 31, 2022 and 2021, respectively, primarily related to operating lease costs paid to lessors from operating cash flows. As of December 31, 2022 and 2021, the Company recorded security deposit of $10,000. We entered into our operating lease in January 2019.

Future minimum lease payments under operating leases that have initial noncancelable lease terms in excess of one year at December 31, 2022 were as follows:

	Total
Year Ended December 31,
2023		484,759
2024		121,405
Thereafter		-
		606,164
Less: Imputed interest		(37,702	)
Operating lease liabilities		568,462
Operating lease liability - current		213,831
Operating lease liability - non-current	$	354,631

The following summarizes other supplemental information about the Company’s operating lease as of December 31, 2022:

Weighted average discount rate	8	%
Weighted average remaining lease term (years)	1.17

Finance lease

The Company leases computer and hardware under non-cancellable capital lease arrangements. The term of those capital leases is 3 years and annual interest rate is 12%. At December 31, 2022 and 2021, capital lease obligations included in current liabilities were $10,341 and $72,768, respectively, and capital lease obligations included in long-term liabilities were $-0- and $10,341, respectively. As of December 31, 2022 and 2021, the Company recorded security deposit of $33,467. During the years ended December 31, 2022 and 2021, the Company paid interest expense of $7,047 and $15,967, respectively.

At December 31, 2022, future minimum lease payments under the finance lease obligations, are as follows:

	Total
2023		10,341
Thereafter		-
		10,341
Less: Imputed interest		(5,300	)
Finance lease liabilities		5,041
Finance lease liability		10,341
Finance lease liability - non-current	$	-

As of December 31, 2022 and 2021, finance lease assets are included in property and equipment as follows:

	December 31,			December 31,
	2022			2021
Finance lease assets	$	267,284		$	267,284
Accumulated depreciation		(258,506	)		(192,928	)
Finance lease assets, net of accumulated depreciation	$	8,778		$	74,356

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CONVERTIBLE NOTES PAYABLE

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Debt Disclosure [Abstract]

CONVERTIBLE NOTES PAYABLE

NOTE 8: CONVERTIBLE NOTES PAYABLE

Convertible notes payable consists of the following:

	June 30,			December 31,
	2023			2022
Convertible Notes - Issued in fiscal year 2020		97,946			97,946
Convertible Notes - Issued in fiscal year 2021		414,690			600,400
Convertible Notes - Issued in fiscal year 2022		1,891,083			3,710,440
Convertible Notes - Issued in fiscal year 2023		534,454			-
		2,938,173			4,408,786
Less debt discount and debt issuance cost		(119,056	)		(176,685	)
		2,819,117			4,232,101
Less current portion of convertible notes payable		2,721,171			4,134,155
Long-term convertible notes payable	$	97,946		$	97,946

During the six months ended June 30, 2023 and the year ended December 31, 2022, we recognized interest expense of $3,964,556 and $374,938, respectively, and amortization of debt discount expense of $145,837 and $636,010, respectively. During the six months ended June 30, 2022 we recognized interest expense of $346,348 and amortization of debt discount, included in interest expense of $625,783.

Conversion

During the six months ended June 30, 2023, we converted notes with principal amounts and accrued interest of $332,592 into 10,807,823 shares of common stock.

Convertible notes payable consists of the following:

Promissory Notes - Issued in fiscal year 2020

In 2020, we issued convertible promissory notes with principal amounts totaling $100,000. The 2020 Promissory Notes have the following key provisions:

● Terms 60 months.

● Annual interest rates of 5%.

● Conversion price fixed at $0.01.

Promissory Notes - Issued in fiscal year 2021

In 2021, we issued convertible promissory notes with principal amounts totaling $1,696,999, which resulted in cash proceeds of $1,482,000 after financing fees of $214,999 were deducted. The 2021 Convertible Notes have the following key provisions:

● Terms ranging from 90 days to 12 months.

● Annual interest rates of 5% to 12%.

● Convertible at the option of the holders after varying dates.

● Conversion price based on a formula corresponding to a discount (39% discount) off the average closing price or lowest trading price of our Common stock for the 20 prior trading days including the day on which a notice of conversion is received.

● The Mast Hill Fund, LLC convertible promissory note matured on October 19, 2022. The default annual interest rate of 16% becomes the effective interest rate on the past due principal and interest. As of June 30, 2023 the note had a principle balance of $414,690 and accrued interest of $39,822. The note is currently in default.

The 2021 Convertible Notes also were associated with the following:

● The issuance of 1,414 shares of Common stock valued at $133,663.

● The issuance of 117,992 warrants to purchase shares of Common stock with an exercise price a range from $7.44 to 36.00. The term in which the warrants can be exercised is 5 years from issue date. (Note 12)

During the six months ended June 30, 2023, in connection with the 2021 Convertible Notes, we repaid principal in the amount of $38,490 and interest expense of $39,822.

Promissory Notes - Issued in fiscal year 2022

During the year ended December 31, 2022, we issued convertible promissory notes with principal amounts totaling $2,120,575, which resulted in cash proceeds of $1,857,800 after deducting a financing fee of $262,775. The 2022 Convertible Notes have the following key provisions:

● Terms ranging from 3 to 12 months.

● Annual interest rates of 9% to 20%.

● Convertible at the option of the holders after varying dates.

● Conversion price based on a formula corresponding to a discount (20% or 39% discount) off the lowest trading price of our Common stock for the 20 prior trading days including the day on which a notice of conversion is received, although one of the 2022 Convertible Notes establishes a fixed conversion price of $4.50 per share.

● 554,464 shares of common stock valued at $473,691 issued in conjunction with convertible notes.

● On June 30, 2023, the Company entered into a Note Exchange Agreement (the “Note Exchange Agreement”) with Westland Properties LLC (the “Noteholder”), pursuant to which the Company agreed with Westland Properties LLC to exchange one outstanding note with a total outstanding balance of $5,398,299 for a new note with an aggregate value of $665,000 (the “New Note”). The New Note matures on June 1, 2024, and calls for payments of (i) $115,000 on or prior to July 25, 2023, (ii) nine monthly payments to the noteholder in the amount of $38,889 each, with the first payment beginning September 1, 2023 and (iii) $200,000 on the earlier of (a) three business days following the Company’s successful listing on any of the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange or (b) the receipt of not less than $4,000,000 in funding from a single transaction. If the conditions for payment of the above $200,000 are not met, but the Company raises capital in excess of $500,000 in a single closing, then 25% of any capital raised in such closing shall be used to satisfy the $200,000 payment. The Company followed ASC470 Trouble Debt Restructuring, to record a gain on settlement of debt for $4,904,081.

In connection with the adoption of ASU 2020-06 on January 1, 2022, we reclassified $517,500, previously allocated to the conversion feature, from additional paid-in capital to convertible notes on our balance sheet. The reclassification was recorded to combine the two legacy units of account into a single instrument classified as a liability. As of January 1, 2022, we also recognized a cumulative effect adjustment of $439,857 to accumulated deficit on our balance sheet, that was primarily driven by the derecognition of interest expense related to the accretion of the debt discount as required under the legacy accounting guidance. Under ASU 2020-06, we will no longer incur non-cash interest expense related to the accretion of the debt discount associated with the embedded conversion option.

Promissory Notes - Issued in fiscal year 2023

During the six months ended June 30, 2023, we issued convertible promissory notes with principal amounts totaling $637,858, which resulted in cash proceeds of $520,000 after deducting a financing fee of $117,858. The 2023 Convertible Notes have the following key provisions:

● Terms ranging from 9 to 12 months.

● Annual interest rates of 9% to 20%.

● Convertible at the option of the holders after varying dates.

● Conversion price based on a formula corresponding to a discount (20% or 30% discount) off the lowest trading price of our Common stock for the 20 prior trading days including the day on which a notice of conversion is received, although one of the 2023 Convertible Notes establishes a fixed conversion price of $.50 per share.

● As of the six months ended June 30, 2023, there were no derivative liabilities.

NOTE 9: CONVERTIBLE NOTES PAYABLE

Convertible notes payable consists of the following:

	December 31,			December 31,
	2022			2021
Convertible Notes - Issued in fiscal year 2020		97,946			100,000
Convertible Notes - Issued in fiscal year 2021		600,400			1,607,857
Convertible Notes - Issued in fiscal year 2022		3,710,440			-
		4,408,786			1,707,857
Less debt discount and debt issuance cost		(176,685	)		(691,569	)
		4,232,101			1,016,288
Less current portion of convertible notes payable		4,134,155			993,931
Long-term convertible notes payable	$	97,946		$	22,357

During the years ended December 31, 2022 and 2021, the Company recognized interest expense on convertible notes payable of $3,795,591 and $131,623, and amortization of debt discount, included in interest expense of $911,020 and $478,582, respectively.

Replacement of note 

During the year ended December 31, 2020, the Company assigned a portion of note with outstanding principal amounts of $150,000 to a lender. Our CEO paid $135,000 to repay a principal amount of $81,000 on behalf of the company. As a result, the Company recorded due to related party of $135,000 and loss on settlement of debt of $54,000.

Effective September 30, 2020, the Company exchanged (i) its convertible promissory note originally issued on March 20, 2020 in the amount of $125,000 (referred to herein as the Granite Note); and, (ii) the Common Stock Purchase Warrant dated 18 March 2020 for the issuance of sixteen (16) shares of Company Common Stock (the “Granite Warrant”) for the issuance of a new convertible promissory note issued in favor of Blue Citi LLC in the amount of $325,000 (the “Exchange Note”). Both the Granite Note and the Granite Warrant were cancelled as a result of the exchange and the issuance of the Exchange Note. Terms of the Exchange Note include, without limitation, the following:

a.	Principal balance of $325,000, which includes all accrued and unpaid interest on the Granite Note;
b.	No further interest shall accrue so long as there is no event of default;
c.	Conversions into common stock under the Exchange Note shall be effected at the lowest closing stock price during the five (5) days preceding any conversion, with -0- discount and a conversion price not below $112;
d.	No prepayment premiums or penalties; and
e.	Maturity date of September 30, 2021. Notes were fully converted in February 2021

Effective November 17, 2020, the Company entered into a Settlement and Release Agreement (the “Settlement Agreement”) with an existing lender to, among things, settle all dispute regarding a convertible promissory note, and exchanged that note for a newly issued note. The disputed note, referred to herein as the “Smea2z Note”, was originally issued on October 23, 2018 in favor of Smea2z LLC in the original principal amount of Two Hundred Twenty Thousand Dollars ($220,000). Subsequent to the issuance of the Smea2z Note, a series of agreements were executed which amended various terms and conditions of the Smea2z Note, resulting in, among other things, a purported principal balance of Six Hundred Thousand Eight Hundred Fifty Dollars ($608,850). As a result of the Settlement Agreement, the Smea2z Note was cancelled, and a new note was issued (the “Exchange Note”) in exchange for the Smea2z Note. The Exchange Note was issued as of November 17, 2020 in the reduced original principal amount of Four Hundred Thousand Dollars ($400,000). The Exchange Note further provides as follows:

a.	No further interest shall accrue so long as there is no event of default;
b.	Maturity date remains the same: 30 June 2021;
c.	No right to prepay;
d.	Conversion price is fixed at $56;
e.	Typical events of default for such a note, as well as a default in the event the closing price for the Company’s common stock is less than $56 for at least 5-consecutive days; and

f. Leak out provision:

1.	One conversion per week, for no more than forty million shares;
2.	If the trading volume for the Company’s common stock exceeds fifty million shares on any day, a second conversion may be exercised during that week, again for no more than forty million shares (a total of eighty million shares for that week). Notes were fully converted in February 2021

Effective November 18, 2020, the Company entered into an agreement with three existing investors in the Company

(the “Warrant Holders”), each of which was the holder of warrants issued the Company. The total number of warrants (collectively, the “Exchanged Warrants”) held by the Warrant Holders totaled 39. The Company and the Warrant Holders agreed to exchange the Exchanged Warrants for three newly issued promissory notes (the “Warrant Exchange Notes”). As a result of the exchange, the Exchanged Warrants were cancelled and of no further force and effect. The Warrants Exchange Notes were issued as of November 18, 2020, in the total original principal amount of One Hundred Thousand Dollars ($100,000). The Warrant Exchange Notes further provide as follows: (i) interest accrues at 5% per annum; (ii) maturity date of November 18, 2025; (iii) no right to prepay; (iv) fixed conversion price of $160; and, (v) typical events of default for such a note.

Conversion

During the year ended December 31, 2022, the Company converted notes with principal amounts and accrued interest of $653,796 into 998,899 shares of common stock.

During the year ended December 31, 2021, the Company converted notes with principal amounts and accrued interest of $1,450,150 into 24,536 shares of common stock. The corresponding derivative liability at the date of conversion of $392,703 was credited to additional paid in capital.

Convertible notes payable consists of the following:

Promissory Notes - Issued in fiscal year 2020

During the twelve months ended December 31, 2020, the Company issued a total of $2,466,500 of notes with the following terms:

● Terms ranging from 5 months to 60 months.

● Annual interest rates of 0% - 25%.

● Convertible at the option of the holders at issuance date, after maturity date or 6 months after issuance date.

● Conversion prices are typically based on the discounted (25% to 50% discount) average closing prices or lowest trading prices of the Company’s shares during various periods prior to conversion. Certain note has a fixed conversion price ranging from $16 to $112. Certain note has a fixed conversion price of $0.5 for a first 5 months Certain note allows the principal amount will increase by $15,000 and the discount rate of conversion price will decrease by 18% if the conversion price is less than $160.

As of December 31, 2021, $100,000 notes that were issued in fiscal year 2020 were outstanding.

Promissory Notes - Issued in fiscal year 2021

During the year ended December 31, 2021, the Company issued convertible notes of $1,696,999 for cash proceeds of $1,482,000 after deducting financing fee of $214,999 with the following terms;

● Terms ranging from 90 days to 12 months.

● Annual interest rates of 5% to 12%.

● Convertible at the option of the holders after varying dates.

● Conversion prices are typically based on the discounted (39% discount) average closing prices or lowest trading prices of the Company’s shares during 20 periods prior to conversion.

● 1,414 shares of common stock valued at $133,663 issued in conjunction with convertible notes.

● 117,992 warrants to purchase shares of common stock with an exercise price a range from $7.44 to 36.00 granted in conjunction with convertible notes. The term of warrant is 5 years from issue date. (Note 12)

● The convertible note on October 19, 2021 by the Company in favor of Mast Hill Fund matured on October 19, 2022 which triggered the conversion provision, the default interest rate of 16% and penalty of 125% additional principal based on the outstanding principal balance and accrued interest. As a result of additional principal penalty, the outstanding principal balance increase $91,311 and the effective interest rate increased to 16%.

● The convertible note on December 21, 2021 by the Company in favor of Westland Properties, LLC matured on December 21, 2022 which triggered the default interest rate of 24% and penalty of 125% additional principal based on the outstanding principal balance and accrued interest. The Company broke certain covenants of the convertible note related to the failure of the Company uplist 60 days from the note issuance date that triggered a 10% penalty of the outstanding principal and additional 5% of the outstanding principal every 10 calendar days until the uplist is completed or the note is paid off. The conversion provision triggered on the 6 month anniversary of the note as a result of not completing the uplist. As a result of the covenants, outstanding principal increased by $1,974,914 and the effective interest rate increased to 24% with an additional 5% every 10 days until uplist.

As of December 31, 2021, $1,607,857 notes that were issued in fiscal year 2021 were outstanding.

Convertible note with outstanding balance $361,869 is in default as of October 19, 2022 with a default interest rate of 16%. We are in communication with the lender.

Convertible note with outstanding balance $238,532 is in default as of December 21, 2022 with a default interest rate of 24%. We are in communication with the lender.

Promissory Notes - Issued in fiscal year 2022

During the year ended December 31, 2022, we issued convertible promissory notes with principal amounts totaling $2,120,575, which resulted in cash proceeds of $1,857,800 after deducting a financing fee of $262,775. The 2022 Convertible Notes have the following key provisions:

● Terms ranging from 3 to 12 months.

● Annual interest rates of 9% to 20%.

● Convertible at the option of the holders after varying dates.

● Conversion price based on a formula corresponding to a discount (20% or 39% discount) off the lowest trading price of our Common stock for the 20 prior trading days including the day on which a notice of conversion is received, although one of the 2022 Convertible Notes establishes a fixed conversion price of $4.50 per share.

● 554,464 shares of common stock valued at $473,691 issued in conjunction with convertible notes.

In connection with the adoption of ASU 2020-06 on January 1, 2022, we reclassified $517,500, previously allocated to the conversion feature, from additional paid-in capital to convertible notes on our balance sheet. The reclassification was recorded to combine the two legacy units of account into a single instrument classified as a liability. As of January 1, 2022, we also recognized a cumulative effect adjustment of $439,857 to accumulated deficit on our balance sheet, that was primarily driven by the derecognition of interest expense related to the accretion of the debt discount as required under the legacy accounting guidance. Under ASU 2020-06, we will no longer incur non-cash interest expense related to the accretion of the debt discount associated with the embedded conversion option.

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DERIVATIVE LIABILITIES

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE LIABILITIES

NOTE 9: DERIVATIVE LIABILITIES

We analyzed the conversion option of convertible notes for derivative accounting consideration under ASC 815, Derivatives and Hedging, and hedging, and determined that the instrument should be classified as a liability since the conversion option becomes effective at issuance resulting in there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.

ASC 815 requires we assess the fair market value of derivative liability at the end of each reporting period and recognize any change in the fair market value as other income or expense item.

We determined our derivative liabilities to be a Level 3 fair value measurement during the year based on management’s estimate of the expected future cash flows required to settle the liabilities, and used the Binomial pricing model to calculate the fair value as of June 30, 2023. The Binomial model requires six basic data inputs: the exercise or strike price, time to expiration, the risk-free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each convertible note and warrant is estimated using the Binomial valuation model. As of the six months ended June 30, 2023, there were no derivative liabilities.

For the six months ended June 30, 2023 there was no derivative outstanding, and no loss recorded. For the six months ended June 30, 2022, the change in fair value of the derivative liability was $57,883 and the loss on the derivative was $57,883.

The fair value of the derivative liability for all the notes that became convertible, including the notes issued in prior years, during the year ended December 31, 2022 amounted to $57,883 recognized as a derivative loss.

The inputs used to calculate the derivative values are as follows:

	Six months ended			Year ended
	June 30,			December 31,
	2023			2022
Expected term		-			-	*
Expected average volatility		-	%		280	%
Expected dividend yield		-			-
Risk-free interest rate		-	%		3.65	%

* There is no excepted term on the convertible notes.

NOTE 10: DERIVATIVE LIABILITIES

We analyzed the conversion option for derivative accounting consideration under ASC 815, Derivatives and Hedging, and hedging, and determined that the instrument should be classified as a liability since the conversion option becomes effective at issuance resulting in there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options.

ASC 815 requires we assess the fair market value of derivative liability at the end of each reporting period and recognize any change in the fair market value as other income or expense item.

We determined our derivative liabilities to be a Level 3 fair value measurement during the year based on management’s estimate of the expected future cash flows required to settle the liabilities, and used the Binomial pricing model to calculate the fair value as of December 31, 2022. As of the year ended December 31, 2022, there were no derivative liabilities. The Binomial model requires six basic data inputs: the exercise or strike price, time to expiration, the risk-free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each convertible note and warrant is estimated using the Binomial valuation model.

For the year ended December 31, 2022 and year ended December 31, 2021, the estimated fair values of the liabilities measured on a recurring basis are as follows:

The fair value of the derivative liability for all the notes that became convertible, including the notes issued in prior years, during the year ended December 31, 2022 amounted to $57,883 recognized as a derivative loss.

For the year ended December 31, 2022 and year ended December 31, 2021, the estimated fair values of the liabilities measured on a recurring basis are as follows:

	Year ended		Year ended
	December 31,		December 31,
	2022		2021
Expected term	-	*	0.48 - 5.00 years
Expected average volatility	280	%	160%- 302	%
Expected dividend yield	-		-
Risk-free interest rate	3.65	%	0.04% - 1.24	%

* There is no excepted term on the convertible notes.

The following table summarizes the changes in the derivative liabilities during the years ended December 31, 2022 and 2021:

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Derivative liability as of December 31, 2020	$	-
Addition of new derivatives recognized as debt discounts		390,000
Addition of new derivatives recognized as day-one loss		559,939
Derivative liabilities settled upon conversion of convertible note		(1,004,658	)
Change in derivative liabilities recognized as loss on derivative		54,719
Derivative liability as of December 31, 2021	$	-
Addition of new derivatives recognized as debt discounts		-
Addition of new derivatives recognized as day-one loss		57,883
Derivative liabilities settled upon conversion of convertible note		(57,883	)
Change in derivative liabilities recognized as loss on derivative		-
Derivative liability as of December 31, 2022	$	-

The aggregate loss on derivatives during the years ended December 31, 2022 and 2021 was $57,883 and $614,658, respectively.

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NOTES PAYABLE

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Notes Payable

NOTES PAYABLE

NOTE 10: NOTES PAYABLE

Notes payable consists of the following:

	June 30,			December 31,				Interest
	2023			2022			Maturity	Rate
Economic Injury Disaster Loan - originated in May 2020 (1, 2)	$	500,000		$	500,000		30 years		3.75	%
Promissory note - originated in September 2020		7,568			20,182		$2,873.89 monthly payment for 36 months		14.0	%
Promissory note - originated in December 2020		7,551			16,047		$1,854.41 monthly payment for 36 months		8.0	%
Promissory note - originated in January 2021		11,268			22,243		$2,675.89 monthly payment for 36 months		18.0	%
Promissory note - originated in February 2021 (3)		1,305,373			1,305,373		5 years		4.0	%
Promissory note - originated in April 2021(4)		866,666			866,666		1 year		12	%
Promissory note - originated in July 2021(4)		352,500			352,500		1 year		12	%
Promissory note - originated in September 2021		37,712			43,667		$1,383.56 monthly payment for 60 months		28	%
Promissory note - originated in April 2022		64,680			73,204		$1,695.41 monthly payment for 36 months		16.0	%
Promissory note - originated in April 2022		64,053			239,858		$7,250 daily payment for 168 days		25	%
Promissory note – originated in June 2022		-			149,011		$20,995 weekly payment for 30 weeks		49	%
Promissory note - originated in July 2022		48,569			54,557		$1,485.38 monthly payment for 60 months		18	%
Promissory note - originated in July 2022		76,514			94,878		$3,546.87 monthly payment for 36 months		10	%
Promissory note - originated in August 2022		22,710			26,538		$589.92 monthly payment for 60 months		8	%
Promissory note - originated in October 2022		1,193,612			635,745		$1,749.00 daily payment for 30 days		66	%
Promissory note - originated in January 2023		5,160			-		$237.03 monthly payment for 36 months		25	%
Promissory note - originated in March 2023		53,519			-		$1,521.73 monthly payment for 60 months		18	%
Promissory note - originated in March 2023		13,495			-		$559.25 monthly payment for36 months		17	%
Promissory note - originated in April 2023		31,672			-		$3,999.00 monthly payment for 12 months		12	%
Promissory note - originated in April 2023		40,400			-		$3,918.03 monthly payment for 12 months		6	%
Promissory note - originated in May 2023		250,000			-		3 months		29	%
		4,953,022			4,400,469
Less debt discount and debt issuance cost		(1,079,509	)		(377,111	)
		3,873,513			4,023,358
Less current portion of promissory notes payable		2,267,658			918,785
Long-term promissory notes payable	$	1,605,855		$	3,104,573

During the six months ended June 30, 2023 and 2022, we recognized interest expense of $630,192 and $113,693, and amortization of debt discount, of $479,946 and $625,621, respectively, included in interest expense.

During the six months ended June 30, 2023 and 2022, we issued promissory notes for a total of $1,599,772 and $1,840,518, less discount of $1,182,344 and $654,065, and repaid $1,047,218 and $1,957,492, respectively.

NOTE 11: NOTES PAYABLE

Notes payable consists of the following:

	December 31,			December 31,				Interest
	2022			2021			Maturity	Rate
Economic Injury Disaster Loan - originated in May 2020 (1, 2)	$	500,000		$	500,000		30 years		3.75	%
Promissory note - originated in September 2020		20,182			50,456		$2,873.89 monthly payment for 36 months		14.0	%
Promissory note - originated in December 2020		16,047			33,039		$1,854.41 monthly payment for 36 months		8.0	%
Promissory note - originated in January 2021		22,243			48,583		$2,675.89 monthly payment for 36 months		18.0	%
Promissory note - originated in February 2021 (3)		1,305,373			1,328,848		5 years		4.0	%
Promissory note - originated in April 2021(4)		866,666			832,000		1 year		12	%
Promissory note - originated in July 2021(4)		352,500			282,000		1 year		12	%
Promissory note - originated in September 2021		43,667			55,576		$1,383.56 monthly payment for 60 months		28	%
Promissory note - originated in December 2021		-			406,300		$20,050 weekly payment for 28 weeks		49	%
Promissory note - originated in December 2021		-			241,716		$10,071.45 weekly payment for 28 weeks		4.94	%
Promissory note - originated in December 2021		-			189,975		$2,793.75 daily payment for 80 days		7	%
Promissory note - originated in April 2022		73,204			-		$1,695.41 monthly payment for 36 months		16.0	%
Promissory note - originated in April 2022		239,858			-		$7,250 daily payment for 168 days		25	%
Promissory note – originated in June 2022		149,011			-		$20,995 weekly payment for 30 weeks		49	%
Promissory note - originated in July 2022		54,557			-		$1,485.38 monthly payment for 60 months		18	%
Promissory note - originated in July 2022		94,878			-		$3,546.87 monthly payment for 36 months		10	%
Promissory note - originated in August 2022		26,538			-		$589.92 monthly payment for 60 months		8	%
Promissory note - originated in October 2022		635,745			-		$1,749.00 daily payment for 30 days		66	%
		4,400,469			3,968,493
Less debt discount and debt issuance cost		(377,111	)		(476,727	)
		4,023,358			3,491,766
Less current portion of promissory notes payable		918,785			1,720,777
Long-term promissory notes payable	$	3,104,573		$	1,770,989

(1)	We received an advance under the Economic Injury Disaster Loan (EIDL) program.
(2)	We received a second advance under the EIDL program in fiscal year 2021.
(3)	On February 12, 2021, we issued notes payable of $1,404,000 to settle license fee payable of $1,094,691. As a result, we recorded loss on settlement of debt of $186,156 in fiscal year 2021.
(4)	Note payable with outstanding balance of $866,666 matured on April 22, 2022. Note payable with outstanding balance of $352,500 matured on July 27, 2022. The default annual interest rate of 16% becomes the effective interest rate on the past due principal and interest. A penalty of 125% of the outstanding principal and accrued interest was triggered and as a result $173,333 and $70,500, respectively, additional principal was added to the outstanding balance. We are in communication with the lender.

During the years ended December 31, 2022 and 2021, the Company recognized interest expense on notes payable of $505,198 and $260,155, and amortization of debt discount, included in interest expense of $2,537,167 and $2,082,875, respectively.

During the years ended December 31, 2022 and 2021, the Company issued a total of $4,840,215 and $6,094,051, less discount of $1,381,970 and $1,716,825 and repaid $4,408,240 and $4,577,578, respectively.

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 11: COMMITMENTS AND CONTINGENCIES

DMB Note Collection Action

On June 17, 2021, DMB Group, LLC (“DMB”) filed a lawsuit against our wholly-owned subsidiary, the North Carolina operating company Data443 Risk Mitigation, Inc., (the “Subsidiary”) in County Court in Denton County, Texas, naming the Subsidiary as defendant. The matter was settled September 2021 by mutual agreement of the involved parties. The Subsidiary has made all payments required pursuant to the settlement and the matter is now considered closed. The Court granted our motions for nonsuit and dismissal with prejudice on orders entered May 4 and May 5, 2022 respectively.

Employment Related Claims

We view most legal proceedings involving claims of former employees as routine litigation incidental to the business, and therefore not material.

Litigation

In the ordinary course of business, we are involved in a number of lawsuits incidental to our business, including litigation related to intellectual property, employees, and commercial matters. Although it is difficult to predict the ultimate outcome of these cases, management believes that any ultimate liability would not have a material adverse effect on our consolidated financial condition or results of operations. However, an unforeseen unfavorable development in any of these cases could have a material adverse effect on our consolidated financial condition, results of operations, or cash flows in the period in which it is recorded.

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CAPITAL STOCK AND REVERSE STOCK SPLIT

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Equity [Abstract]

CAPITAL STOCK AND REVERSE STOCK SPLIT

NOTE 12: CAPITAL STOCK AND REVERSE STOCK SPLIT

Preferred Stock

As of June 30, 2023, we are authorized to issue 337,500 shares of preferred stock with a par value of $0.001, of which 150,000 shares have been designated as Series A, and 80,000 shares have been designated as Series B.

Series A Preferred Stock

As of June 30, 2023, we are authorized to issue 150,000 of Series A Preferred Stock with par value of $0.001. Each share of Series A was (i) convertible into 1,000 shares of common stock, and (ii) entitled to vote 15,000 shares of common stock on all matters submitted to a vote by shareholders voting common stock. All issued and outstanding shares of Series A Preferred Stock are held by our Chief Executive Officer.

As of June 30, 2023 and December 31, 2022, 149,892 shares of Series A were issued and outstanding, respectively.

Series B Preferred Stock

As of June 30, 2023, we are authorized to issue 80,000 of Series A Preferred Stock with par value of $10.00. Each share of Series B (i) is convertible into Common stock at a price per share equal to sixty one percent (61%) of the lowest price for our Common stock during the twenty (20) days of trading preceding the date of the conversion; (ii) earns dividends at the rate of nine percent (9%) per annum; and, (iii) has no voting rights.

As of June 30, 2023 and December 31, 2022, 0 and 0 shares of Series B were issued and outstanding, respectively.

Common stock

As of June 30, 2023, we are authorized to issue 500,000,000 shares of Common stock with a par value of $0.001. All shares have equal voting rights, are non-assessable, and have one vote per share.

During the six months ended June 30, 2023, we issued Common stock as follows:

● 10,807,823 shares issued for conversion of debt;

● 45,619,000 shares issued for adjustment to PPM investors;

● 321,428 shares issued for stock-based compensation.

As of June 30, 2023 and December 31, 2022, 59,363,988 and 2,615,737 shares of Common stock were issued and outstanding, respectively.

Warrants

A summary of activity during the six months ended June 30, 2023 follows:

	Warrants Outstanding
			Weighted Average
	Shares		Exercise Price
Outstanding, December 31, 2022		159,974	$	22.07
Granted		-		-
Exercised		-		-
Forfeited/canceled		-		-
Outstanding, June 30, 2023		159,974	$	22.07

During the six months ended June 30, 2023, 0 warrants were exercised and we issued 0 shares of Common stock as a result.

The following table summarizes information relating to outstanding and exercisable warrants as of June 30, 2023:

Exercisable Warrants Outstanding
		Weighted Average Remaining
Number of Shares		Contractual life (in years)		Weighted Average Exercise Price
	6,250		2.45	$	160.00
	6,934		2.81	$	120.00
	15,666		3.07	$	36.00
	2,917		3.25	$	36.00
	32,837		3.04	$	9.88
	74,671		3.50	$	7.44
	20,699		3.86	$	6.00
	159,974		3.33	$	22.07

NOTE 12: CAPITAL STOCK AND REVERSE STOCK SPLIT

Changes in Authorized Shares

On March 5, 2020, the Company amended its Articles of Incorporation to increase the number of shares of authorized common stock to 250,000,000.

On April 15, 2020, the Company amended its Articles of Incorporation to increase the number of shares of authorized common stock to 750,000,000.

On August 17, 2020, the Company amended its Articles of Incorporation to increase the number of shares of authorized common stock to 1,500,000,000.

On November 25, 2020 the Company filed a Certificate of Designation to authorize and create its Series B Preferred shares, consisting of 80,000 shares, $0.001 par value.

On December 15, 2020 the Company amended its Articles of Incorporation to increase the number of shares of authorized common stock to 1,800,000,000.

On July 1, 2021, we effected a 1-for-2,000 reverse stock split of our issued and outstanding common stock. 

On March 7, 2022, the Company filed an amendment to its Articles of Incorporation to effect a 1-for-8 reverse stock split of its issued and outstanding shares of common and preferred shares, each with $0.001 par value. All per share amounts and number of shares, in the consolidated financial statements and related notes have been retroactively adjusted to reflect the reverse stock split.

Preferred Stock

Each share of Series B (i) has a stated value of Ten Dollars ($10.00) per share; (ii) is convertible into Common stock at a price per share equal to sixty one percent (61%) of the lowest price for our Common stock during the twenty (20) days of trading preceding the date of the conversion; (iii) earns dividends at the rate of nine percent (9%) per annum; and, (iv) has no voting rights.

During the year ended December 31, 2022, we issued 7,875 shares of Series B preferred stock for $78,750, less $3,750 financing fees.

During the year ended December 31, 2022, we redeemed 37,625 shares of Series B preferred stock, representing all outstanding shares of Series B preferred stock, for $487,730.

During the year ended December 31, 2022 we recorded an accrued dividend of $104,631, and amortization of debt discount, included in interest expense of $22,439.

As of December 31, 2022 and December 31, 2021, 0 and 29,750 shares of Series B were issued and outstanding, respectively.

Each share of Series A is the equivalent of 15,000 shares of Common Stock. Our Chief Executive Officer, Jason Remillard, holds 149,892 shares of our Series A Preferred Stock. Through his ownership of Series A Preferred Stock, Mr. Remillard has voting control over all matters to be submitted to a vote of our shareholders.

During the year ended December 31, 2022, we issued 108,000 shares of Common Stock for conversion of Series A Preferred Stock.

As of December 31, 2022 and December 31, 2021, 149,892 and 150,000 shares of Series A Preferred Stock were issued and outstanding, respectively.

Common Stock

As of December 31, 2022, the Company is authorized to issue 125,000,000 shares of common stock with a par value of $0.001. All shares have equal voting rights, are non-assessable, and have one vote per share. The total number of shares of Company common stock issued and outstanding as of December 31, 2022 and 2021, respectively, was 2,615,737 and 122,044 shares, respectively.

During the year ended December 31, 2022, the Company issued common stock as follows:

● 998,899 shares issued for conversion of debt;

● 6,631 shares issued upon the cash-less exercise of warrants;

● 380,952 shares issued for consideration under an asset purchase agreement;

● 108,000 shares issued for conversion of Series A Preferred Stock;

● 50,041 shares issued for services;

● 18,170 shares issued as a loan fee in connection with the issuance of promissory notes; and

● 931,000 shares were subscribed for cash pursuant to private placement offering.

During the year ended December 31, 2021, the Company issued common stock as follows:

● 24,536 shares issued for conversion of debt;

● 10,419 shares issued for cash of $1,000,000, less financing cost of $10,000, less an additional financing discount of $143,199;

● 1,227 shares issued for service;

● 1,116 shares issued upon the cash-less exercise of warrants;

● 18,024 shares issued for conversion of Series B preferred stock;

● 1,414 shares issued as a loan fee in connection with the issuance of promissory notes.

Beginning on August 25, 2022 and concluding on November 4, 2022, the Company initiated a private placement transaction with certain “accredited investors,” as defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended. In connection with the Offering, we entered into a securities purchase agreement with each investor pursuant to which we offered and sold to the investors a total of 931,000 shares of our common stock, par value $0.001 at a purchase price of $1.00 per share, for aggregate gross proceeds of approximately $931,000. The Common stock has not been registered under the Securities Act, and may not be offered or sold in the United States absent effective registration or an applicable exemption from registration requirements. For these shares, we are relying on the private placement exemption from registration provided by Section 4(a)(2) of the Securities Act and by Rule 506 of Regulation D, promulgated thereunder and on similar exemptions under applicable state laws.

Warrants

The Company identified conversion features embedded within warrants issued during the year ended December 31, 2020. The Company has determined that the conversion feature of the Warrants represents an embedded derivative since the conversion price includes a reset provision which could cause adjustments upon conversion. During the year ended December 31, 2020, 21 warrants were granted, for a period of five years from issuance, at price of $8,000 per share. However, as of September 30, 2020, 16 of these original warrants, as reset, were completely cancelled and are all null and void in all respects as part of the consideration for the issuance of the Exchange Note.

As a result of the reset features, the warrants increased by 22,919 for the year ended December 31, 2020, and the total warrants exercisable into 23,057 shares of common stock at a weighted average exercise price of $81.60 per share as of December 31, 2020. The reset feature of warrants was effective at the time that a separate convertible instrument with lower exercise price was issued. We accounted for the issuance of the Warrants as a derivative.

During the year ended December 31, 2020, the Company entered into an agreement with three existing investors in the Company (the “Holders”), each of which was the holder of warrants issued the Company. The total number of warrants (collectively, the “Warrants”) held by the Holders totaled 2. The Company and the Holders agreed to exchange the Warrants for three newly issued convertible promissory notes. As a result of the exchange, the Company recorded loss on settlement of $100,000.

On December 11, 2020, the Company entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) with Triton Funds LP, a Delaware limited partnership (“Triton”). Pursuant to the Purchase Agreement, subject to certain conditions set forth in the Purchase Agreement, Triton is obligated to purchase up to One Million Dollars ($1,000,000) of the Company’s common stock from time-to-time. The Company also granted to Triton warrants to purchase 6,250 shares of the Company’s Common Stock. The exercise price for the warrants is $160 per share, and may be exercised at any time, in whole or in part, prior to December 11, 2025. The Warrant Agreement provides for certain adjustments that may be made to the exercise price and the number of shares issuable upon exercise due to future corporate events. The Warrant Agreement also contains a limited cashless exercise feature, providing for the cashless exercise of 1,250 shares only upon the Company’s failure to secure the effectiveness of the Registration Statement, which is to include all shares under the Warrant Agreement.

During the year ended December 31, 2021, the Company issued the following warrants: (i) to acquire 6,933 shares of the Company’s common stock pursuant at an exercise price of $120, with a cashless exercise option; (ii) to acquire 6,933 shares of the Company’s common stock at an exercise price of $120, exercisable only in the event of a default under that certain Senior Secured Promissory Note issued on 23 April 2021 in the original principal amount of $832,000; (iii) to acquire 15,666 shares of the Company’s common stock at an exercise price of $36, exercisable only in the event of a default under that certain Senior Secured Promissory Note issued on July 27, 2021 in the original principal amount of $282,000; (iv) to acquire 2,917 shares of the Company’s common stock at an exercise price of $36, exercisable only in the event of a default under that certain Convertible Promissory Note issued on September 28, 2021 in the original principal amount of $282,000; (v) to acquire 40,404 shares of the Company’s common stock at an exercise price of $36, exercisable only in the event of a default under that certain Convertible Promissory Note issued on October 19, 2021 in the original principal amount of $444,444 and, (vi) to acquire 74,671 shares of the Company’s common stock at an exercise price of $7.44, exercisable only in the event of a default under that certain Convertible Promissory Note issued on December 21, 2021 in the original principal amount of $555,555. 

During the year ended December 31, 2022, the Company issued the following warrants: (i) to acquire 19,166 shares of the Company’s common stock pursuant at an exercise price of $6, with a cashless exercise option; and (ii) to acquire 1,533 shares of the Company’s common stock pursuant at an exercise price of $6, with a cashless exercise option.

A summary of activity during the period ended December 31, 2022 follows:

			Weighted Average
	Shares			Exercise Price
Outstanding, December 31, 2020	6,250		$	20.00
Granted	141,721			22.18
Reset feature	-			-
Exercised	(2,416	)		5.80
Forfeited/canceled	-			-
Outstanding, December 31, 2021	146,842		$	27.86
Granted	20,699			6.00
Reset feature	-			-
Exercised	(7,567	)		-
Forfeited/canceled	-			-
Outstanding, December 31, 2022	159,974		$	22.07

The following table summarizes information relating to outstanding and exercisable warrants as of December 31, 2022:

Warrants Outstanding						Warrants Exercisable
Number of Shares		Weighted Average Remaining Contractual life (in years)		Weighted Average Exercise Price		Number of Shares		Weighted Average Exercise Price
	6,250		2.95	$	160.00		-	$	-
	6,934		3.31	$	120.00		-	$	-
	15,666		3.57	$	36.00		-	$	-
	2,917		3.75	$	36.00		-	$	-
	32,837		3.80	$	9.88		-	$	-
	74,671		4.00	$	7.44		-	$	-
	20,699		4.36	$	6.00		-	$	-

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STOCK-BASED COMPENSATION

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Equity [Abstract]

STOCK-BASED COMPENSATION

NOTE 13: STOCK-BASED COMPENSATION

Stock Options

During the six months ended June 30, 2023, we granted options for the purchase of our Common stock to certain employees as consideration for services rendered. The terms of the stock option grants are determined by our Board of Directors consistent our 2019 Omnibus Stock Incentive Plan which the Board adopted May 16, 2019. Our stock options generally vest upon the one-year anniversary date of the grant and have a maximum term of ten years.

The following summarizes the stock option activity for the six months ended June 30, 2023:

	Options Outstanding		Weighted-Average Exercise Price
Balance as of December 31, 2022		865,983	$	1.67
Grants		1,972,728		.07
Exercised		-		-
Cancelled		644		67.40
Balance as of June 30, 2023		2,838,067	$	.57

The following summarizes certain information about stock options vested and expected to vest as of June 30, 2023:

	Number of Options		Weighted-Average Remaining Contractual Life (In Years)		Weighted- Average Exercise Price
Outstanding		2,838,067		9.07	$	.78
Exercisable		477,112		8.29	$	3.14
Expected to vest		2,838,067		9.07	$	.78

As of June 30, 2023 and December 31, 2022, there was $226,716 and $381,547, respectively, of total compensation costs related to non-vested stock-based compensation arrangements which we expect to recognized within the next 12 months.

Restricted Stock Awards

The following summarizes the restricted stock activity for the six months ended June 30, 2023:

			Weighted-Average
	Shares		Fair Value
Balance as of December 31, 2022		322,798	$	225,639
Shares of restricted stock granted		2,550,000		180,000
Exercised		-		-
Cancelled		-		-
Balance as of June 30, 2023		2,872,798	$	405,639

Number of Restricted Stock Awards	June 30, 2023		December 31, 2022
Vested		322,798		1,370
Non-vested		2,550,000		321,428

NOTE 14: SHARE-BASED COMPENSATION

Stock Options

During the years ended December 31, 2022 and 2021, the Company granted options for the purchase of the Company’s common stock to certain employees, consultants and advisors as consideration for services rendered. The terms of the stock option grants are determined by the Company’s Board of Directors. The Company’s stock options generally vest upon the one-year or two-year anniversary date of the grant and have a maximum term of ten years.

The following summarizes the stock option activity for the years ended December 31, 2022 and 2021:

	Options		Weighted-Average
	Outstanding		Exercise Price
Balance as of December 31, 2020		735	$	775.93
Grants		1,386		304.44
Exercised		-		-
Cancelled		-		-
Balance as of December 31, 2021		2,121	$	775.93
Grants		865,116		1.34
Exercised		-		-
Cancelled		1,254		67.40
Balance as of December 31, 2022		865,983	$	1.67

The weighted average grant date fair value of stock options granted during the years ended December 31, 2022 and 2021 was $1.34 and $299, respectively. The total fair value of stock options that granted during the year ended December 31, 2022 and 2021 was approximately $1,341,002 and $414,902, respectively. The fair value of each stock option is estimated on the date of grant using the Black-Scholes-Merton option pricing model with the following weighted average assumptions for stock options granted during the year ended December 31, 2022 and 2021:

	2022			2021
Expected term (years)		5			5.74
Expected stock price volatility		280.82	%		296.25	%
Weighted-average risk-free interest rate		3.65	%		0.62	%
Expected dividend	$	0.00		$	0.00

Volatility is a measure of the amount by which a financial variable such as share price has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. The Company estimates expected volatility giving primary consideration to the historical volatility of its common stock. The risk-free interest rate is based on the published yield available on U.S. Treasury issues with an equivalent term remaining equal to the expected life of the stock option. The expected lives of the stock options represent the estimated period of time until exercise or forfeiture and are based on the simplified method of using the mid-point between the vesting term and the original contractual term.

The following summarizes certain information about stock options vested and expected to vest as of December 31, 2022:

			Weighted-Average
	Number of		Remaining Contractual Life		Weighted-Average
	Options		(In Years)		Exercise Price
Outstanding		865,983		4.85	$	1.54
Exercisable		689,948		4.83	$	1.67
Expected to vest		865,983		4.85	$	1.54

As of December 31, 2022 and 2021, there was $381,547 and $381,547, respectively, of total unrecognized compensation cost related to non-vested stock-based compensation arrangements which is expected to be recognized within the next year.

Restricted Stock Awards

During the years ended December 31, 2022 and 2021, the Company issued restricted stock awards for shares of common stock which have been reserved for the holders of the awards. Restricted stock awards were issued to certain consultants and advisors as consideration for services rendered. The terms of the restricted stock units are determined by the Company’s Board of Directors. The Company’s restricted stock shares generally vest over a period of one year and have a maximum term of ten years.

The following summarizes the restricted stock activity for the years ended December 31, 2022 and 2021:

			Weighted-Average
	Shares		Fair Value
Balance as of December 31, 2020		923		748.89
Shares of restricted stock granted		447		413.33
Exercised		-		-
Cancelled		-		-
Balance as of December 31, 2021		1,370		639.22
Shares of restricted stock granted		321,428		225,000
Exercised		-		-
Cancelled		-		-
Balance as of December 31, 2022		322,798		225,639

	December 31,		December 31,
Number of Restricted Stock Awards	2022		2021
Vested		1,370		1,370
Non-vested		321,428		-

As of December 31, 2022 and 2021, there was $0 of total unrecognized compensation cost related to non-vested stock-based compensation, which is expected to be recognized over the next year.

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RELATED PARTY TRANSACTIONS

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 14: RELATED PARTY TRANSACTIONS

Jason Remillard is our president and Chief Executive Officer and the sole director. Through his ownership of Series A Preferred Shares, Mr. Remillard has voting control over all matters to be submitted to a vote of our shareholders. Greg McCraw is our Chief Financial Officer own shares of the Company.

During the six months ended June 30, 2023, the Company borrowed $19,700 from our CEO and $150,000 from our CFO. Our CEO paid operating expenses of $68,942 on behalf of the Company and the Company repaid $21,000 to our CEO.

As of June 30, 2023 and December 31, 2022, we had due to related party transactions in the amounts of $320,486 and $112,062, respectively.

NOTE 16: RELATED PARTY TRANSACTIONS

Jason Remillard is our Chief Executive Officer and sole director. Through his ownership of Series A Preferred Stock, Mr. Remillard has voting control over all matters to be submitted to a vote of our shareholders.

In January 2018 the Company acquired substantially all of the assets of Myriad Software Productions, LLC, which is owned 100% by Mr. Remillard. Those assets were comprised of the software program known as ClassiDocs, and all intellectual property associated therewith. This acquisition changed the Company’s status to no longer being a “shell” under applicable securities rules. In consideration for the acquisition, the Company agreed to a purchase price of $1,500,000 comprised of: (i) $50,000 paid at closing; (ii) $250,000 in the form of our promissory note; and (iii) $1,200,000 in shares of our common stock, valued as of the closing, which equated to 100 shares of our common stock. The shares were issued in the form of 144,000 shares of the Company’s Series A Preferred Stock as part of the consideration under the Share Settlement Agreement dated August 14, 2020.

On September 16, 2019, the Company entered into an Asset Purchase Agreement with DMBGroup, LLC. Amounts owed to DMBGroup, LLC including the note payable of $940,000 and member loans of $97,689 were recorded as amounts due to a related party. During the year ended December 31, 2022 and 2021, the Company repaid note payable of $124,985 and $281,638 including interest expense of $1,240 and $9,992, respectively. As of December 31, 2022 and 2021, the Company had recorded a liability to DMBGroup totaling $0 and $405,382, respectively.

During the year ended December 31, 2022, the Company borrowed $299,281 from our CEO, our CEO paid operating expenses of $167,653 on behalf of the Company and the Company repaid $602,237 to our CEO. During the year ended December 31, 2021, the Company borrowed $231,150 from our CEO, our CEO paid operating expenses of $135,793 on behalf of the Company and the Company repaid $399,169 to our CEO.

As of December 31, 2022 and 2021, the Company had due to related party of $112,062 and $247,366, respectively, which arose from the DMB transaction to acquire DataExpress™.

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SUBSEQUENT EVENTS

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 15: SUBSEQUENT EVENTS

The Company does not have any events subsequent to June 30, 2023 through August 14, 2023, the date the financial statements were issued for disclosure consideration, except for the following:

● On July 7, 2023, we issued 2,049,180 shares of Common Stock to Root Ventures, LLC pursuant to an agreement with Root Ventures, LLC, in exchange for $25,000 in note payable principal.

● On July 6, 2023, we received funds as result of entering into a securities purchase agreement (“Purchase Agreement #1”) with an accredited investor as purchaser (“Investor #1”). Pursuant to Purchase Agreement #1, the Company sold, and Investor #1 purchased, $812,500.00 in principal amount of secured convertible notes (the “Investor #1 Notes”) and pre-funded warrants (the “Investor #1 Warrants”). The Investor #1 Notes are convertible into shares of the Company’s common stock, par value $0.01 per share (“Common Stock”), at a conversion price per share of $0.005, subject to adjustment under certain circumstances described in the Investor #1 Notes. The Investor #1 Notes were issued with an original issue discount of 30.00%, do not bear interest, and mature twelve months from the date of issuance.

● On July 24, 2023, we received funds as result of entering into a second securities purchase agreement (“Purchase Agreement #2” and, together with Purchase Agreement #1, the “Purchase Agreements”) with an accredited investor as purchaser (“Investor #2” and, together with Investor #1, the “Investors”). Pursuant to Purchase Agreement #2, the Company sold, and Investor #2 purchased, $718,750.00 in principal amount of secured convertible notes (the “Investor #2 Notes” and, together with the Investor #1 Notes, the “Notes”) and pre-funded warrants (the “Investor #2 Warrants” and, together with the Investor #1 Warrants, the “Warrants”). The Investor #2 Notes are convertible into Common Stock, at a conversion price per share of $0.005, subject to adjustment under certain circumstances described in the Notes. The Notes were issued with an original issue discount of 15.00%, bear interest at a rate of 12%, and mature twelve months from the date of issuance.

NOTE 18: SUBSEQUENT EVENTS

In accordance with ASC 855-10, “Subsequent Events”, we analyzed our operations subsequent to December 31, 2022 to February 24, 2023, the date when these consolidated financial statements were issued. The Company did not identify any material subsequent events requiring adjustments to or disclosure in its financial statements, other than those noted below.

● On January 4, 2023, GS Capital Partners LLC converted $15,000 of principal and $1,209 of accrued interest of the convertible note into 97,761 shares of our common stock.

● On January 9, 2023, Westland Properties, LLC converted $15,000 of principal of the convertible note into 83,333 shares of our common stock.

● On January 16, 2023, Root Ventures LLC converted $23,027 of principal of the convertible note into 139,557 shares of our common stock.

● On January 20, 2023, Fast Capital, LLC converted $20,000 of principal of the convertible note into 139,500 shares of our common stock.

● On January 24, 2023, the Company issued convertible note a total of $300,000, which the term of notes is 1 year and Original Interest Discount of $50,000. Note is convertible at the option of the holder at any time and conversion price are Conversion price is $.25 per share.

● On February 1, 2023, Mast Hill Fund converted $13,023 of principal and $14,949 of accrued interest of the convertible note into 165,000 shares of our common stock.

● On February 6, 2023, Westland Properties, LLC converted $15,000 of principal of the convertible note into 118,858 shares of our common stock.

● On February 17, 2023, Mast Hill Fund converted $21,638 of principal and $4,197 of accrued interest of the convertible note into 179,000 shares of our common stock.

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BUSINESS DESCRIPTION

12 Months Ended

Dec. 31, 2022

Accounting Policies [Abstract]

BUSINESS DESCRIPTION

NOTE 1: BUSINESS DESCRIPTION

Description of Business

Data443 Risk Mitigation, Inc. (the “Company”) was incorporated as a Nevada corporation on May 4, 1998. On October 15, 2019, the Company changed its name from LandStar, Inc. to Data443 Risk Mitigation, Inc. within the state of Nevada.

We deliver solutions and capabilities that businesses can use in conjunction with their use of established cloud vendors such as Microsoft® Azure, Google® Cloud Platform (GCP) and Amazon® Web Services (AWS), as well as with on-premises databases and database applications with virtualization platforms, such as those hosted or configured using VMWare®, Citrix® and Oracle® clouds/products).

Advance Payment for Acquisition

On January 19, 2022, we entered into an Asset Purchase Agreement with Centurion Holdings I, LLC (“Centurion”) to acquire the intellectual property rights and certain assets collectively known as Centurion SmartShield Home and SmartShield Enterprise, patented technology that protects and recovers devices in the event of ransomware attacks. The total purchase price of $3,400,000 consists of: (i) a $250,000 cash payment at closing; (ii) a $2,900,000 promissory note issued by Data443 in favor of Centurion (“Centurion Note”); and (iii) $250,000 in the form of a contingent payment. The Centurion Note matures January 19, 2027 but provides that Data443’s repayment obligation would accelerate on the occurrence of certain events. One of those events was a financing event that did not occur within the originally anticipated timeframe. If that event had occurred, then Data443’s repayment obligation would have been to repay the balance of the outstanding principal and interest as follows: (i) $500,000 of the then-outstanding amount due in cash; and (ii) the remaining balance, at Data443’s option, in Common stock or a combination of Common stock and cash, with the number of shares of Common stock to be determined according to a specified formula. In April 2022, Data443 and Centurion agreed that, even though the trigger for this acceleration event did not occur, Data443 would issue shares of Common stock to Centurion in an amount then-equivalent to $2,400,000, as partial repayment of the obligation due under the Centurion Note. The number of shares of Common stock Data443 issued to Centurion on April 20, 2022, was 380,952. Because Data443 still has some repayment obligations to fulfill under the Centurion Note, as of the filing date of these financial statements, the acquisition that is the subject of the Centurion Asset Purchase Agreement is still not completed, and is expected to be completed in 2023.

Reverse Stock Splits

Effective March 7, 2022 and July 1, 2021, we effected an 8 for 1 and 2,000 for 1 reverse stock split, respectively, of our issued and outstanding common stock (the “Reverse Stock Splits”). All references to shares of our common stock in this annual report refers to the number of shares of common stock after giving retrospective effect to these Reverse Stock Splits (unless otherwise indicated).

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INCOME TAXES

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 13: INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and deferred tax liabilities are as follows as of December 31:

	December 31,			December 31,
	2022			2021
Non-operating loss carryforward	$	6,326,000		$	4,685,000
Valuation allowance		(6,326,000	)		(4,685,000	)
Net deferred tax asset	$	-		$	-

The Company has established a valuation allowance against its deferred tax assets due to the uncertainty surrounding the realization of such assets. During 2022 the valuation allowance increased by $1,641,000. The Company has net operating and economic loss carry-forwards of approximately $26,030,830 available to offset future federal and state taxable income.

A reconciliation between expected income taxes, computed at the federal income tax rate of 21% applied to the pretax accounting loss, and our blended state income tax rate of 2.0%, and the income tax net expense included in the consolidated statements of operations for the years ended December 31, 2022 and 2021 is as follows:

	Years Ended
	December 31,
	2022			2021
Loss for the year	$	(9,713,467	)	$	(6,475,154	)
Income tax (recovery) at statutory rate	$	(2,040,000	)	$	(1,360,000	)
State income tax expense, net of federal tax effect		(194,000	)		(130,000	)
Permanent difference and other		593,000			819,000
Change in valuation allowance		1,641,000			671,000
Income tax expense per books	$	-		$	-

The effective tax rate of 0% differs from our statutory rate of 21% primarily due to the effect of non-deductible income and expenses. Tax returns for the years ended 2013 – 2022, are subject to review by the tax authorities.

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INTEREST EXPENSE

12 Months Ended

Dec. 31, 2022

INTEREST EXPENSE

NOTE 15: INTEREST EXPENSE

For the years ended December 31, 2022 and 2021, the Company recorded interest expense as follows:

	Year ended		Year ended
	December 31,		December 31,
	2022		2021
Interest expense - convertible notes	$	2,884,571	$	131,623
Interest expense - notes payable		505,198		260,155
Interest expense - notes payable - related party		-		9,992
Finance lease		7,047		15,967
Other		45,473		10,031
Amortization of debt discount		2,537,167		2,906,645
	$	5,979,456	$	3,334,413

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RESTATEMENT OF PRIOR ISSUED FINANCIALS

12 Months Ended

Dec. 31, 2022

Accounting Changes and Error Corrections [Abstract]

RESTATEMENT OF PRIOR ISSUED FINANCIALS

NOTE 17: RESTATEMENT OF PRIOR ISSUED FINANCIALS

The audited financial statements for the year ended December 31, 2022 have been restated to reflect the correction of errors noted below:

Correction of errors – Subsequent to the yearend the Company noticed that a restatement was needed in the previously issued financial statements, related to the presentation of certain balances on the statement of cashflows for the year ended December 31, 2022. Specifically related to the presentation of the issuance of convertible notes from financing activities to operating activities.

Accordingly, the following table summarizes the error corrections to the Company’s consolidated statement of cashflows for the year ended December 31, 2022.

	31-Dec-22
	As Previously Reported			Impact of Adjustment			As Revised
Consolidated Statement of Cashflows
Amortization of debt discount		2,512,725			(191,714	)		2,321,011
Stock based compensation		1,044,691			(11	)		1,044,680
Accounts payable and accrued liabilities		923,107			(6,853	)		916,254
Interest payable		361,588			1,832,265			2,193,853
Net Cash used in Operating Activities		(2,886,337	)		1,633,687			(1,252,650	)
Proceeds from convertible notes issued		1,747,680			279,890			2,027,570
Repayment on convertible notes		1,146,359			(1,918,077	)		(771,718	)
Proceeds from issuance of notes payable		3,448,246			10,001			3,458,247
Proceeds from related parties		229,281			(1	)		299,280
Finance lease payments		(72,768	)		(5,500	)		(78,268	)
Net cash provided by Financing Activities		2,244,244			(1,633,687	)		610,557

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Accounting Policies [Abstract]

Description of Business

Description of Business

Data443 Risk Mitigation, Inc. (the “Company”) was incorporated as a Nevada corporation on May 4, 1998. On October 15, 2019, the Company changed its name from LandStar, Inc. to Data443 Risk Mitigation, Inc. within the state of Nevada.

The Company delivers solutions and capabilities that businesses can use in conjunction with their use of established cloud vendors such as Microsoft® Azure, Google® Cloud Platform (GCP) and Amazon® Web Services (AWS), as well as with on-premises databases and database applications with virtualization platforms, such as those hosted or configured using VMWare®, Citrix® and Oracle® clouds/products).

Advance Payment for Acquisition

Advance Payment for Acquisition

On January 19, 2022, we entered into an Asset Purchase Agreement with Centurion Holdings I, LLC (“Centurion”) to acquire the intellectual property rights and certain assets collectively known as Centurion SmartShield Home and SmartShield Enterprise, patented technology that protects and recovers devices in the event of ransomware attacks. The total purchase price of $3,400,000 consists of: (i) a $250,000 cash payment at closing; (ii) a $2,900,000 promissory note issued by Data443 in favor of Centurion (“Centurion Note”); and (iii) $250,000 in the form of a contingent payment. The Centurion Note matures January 19, 2027 but provides that Data443’s repayment obligation would accelerate on the occurrence of certain events. One of those events was a financing event that did not occur within the originally anticipated timeframe. If that event had occurred, then Data443’s repayment obligation would have been to repay the balance of the outstanding principal and interest as follows: (i) $500,000 of the then-outstanding amount due in cash; and (ii) the remaining balance, at Data443’s option, in Common stock or a combination of Common stock and cash, with the number of shares of Common stock to be determined according to a specified formula. In April 2022, Data443 and Centurion agreed that, even though the trigger for this acceleration event did not occur, Data443 would issue shares of Common stock to Centurion in an amount then-equivalent to $2,400,000, as partial repayment of the obligation due under the Centurion Note. The number of shares of Common stock Data443 issued to Centurion on April 20, 2022, was 380,952. Because Data443 still has some repayment obligations to fulfill under the Centurion Note, as of the filing date of these financial statements, the acquisition that is the subject of the Centurion Asset Purchase Agreement is still not completed, and is expected to be completed in 2023.

Basis of Presentation and Principles of Consolidation

Basis of Presentation

These unaudited condensed consolidated financial statements have been prepared in accordance with rules and regulations of the Securities and Exchange Commission (“SEC”) and generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, the unaudited condensed consolidated financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, we have included all adjustments considered necessary for a fair presentation and such adjustments are of a normal recurring nature. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2022 and notes thereto and other pertinent information contained in our Form 10-K as filed with the SEC on February 24, 2023. The results of operations for the six months ended June 30, 2023, are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2023.

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements as of December 31, 2022 include the accounts of the Company and its wholly-owned subsidiary, Data 443 Risk Mitigation, Inc., a North Carolina operating company. All intercompany accounts and activities have been eliminated upon consolidation. These consolidated financial statements have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”).

Basis of Consolidation

Basis of Consolidation

The accompanying unaudited consolidated financial statements as of June 30, 2023 include our accounts and those of our wholly-owned subsidiary, Data 443 Risk Mitigation, Inc., a North Carolina operating company. These unaudited consolidated financial statements have been prepared on the accrual basis of accounting in accordance with US GAAP. All inter company balances and transactions have been eliminated in consolidation.

Reclassifications

Reclassifications

Certain prior year amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on the net earnings (loss) or and financial position.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current presentation. These reclassifications had no impact on net earnings (loss) or and financial position.

Accounts Receivable

Accounts Receivable

Trade receivables are generally recorded at the invoice amount mostly for a one-year period, net of an allowance for bad debt. For the three months ended June 30, 2023, and June 30, 2022, we recorded bad debt expense of $0 and $0, respectively

Accounts Receivable

Accounts receivable are recorded in accordance with ASC 310, “Receivables.” Accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable.

Share-Based Compensation

Stock-Based Compensation

Employees – We account for stock-based compensation under the fair value method which requires all such compensation to employees, including the grant of employee stock options, to be calculated based on its fair value at the measurement date (generally the grant date), and recognized in the consolidated statement of operations over the requisite service period.

Nonemployees - Under the requirements of the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Stock-Based Payment Accounting (“ASU 2018-07”), we account for stock-based compensation to non-employees under the fair value method which requires all such compensation to be calculated based on the fair value at the measurement date (generally the grant date), and recognized in the statement of operations over the requisite service period.

We recorded approximately $565,571 in stock-based compensation expense for the six months ended June 30, 2023, compared to $798,690 in stock-based compensation expense for the six months ended June 30, 2022. Determining the appropriate fair value model and the related assumptions requires judgment. During the three months ended June 30, 2023, the fair value of each option grant was estimated using a Black-Scholes option-pricing model. The expected volatility represents the historical volatility of our publicly traded common stock. Due to limited historical data, we calculate the expected life based on the mid-point between the vesting date and the contractual term which is in accordance with the simplified method. The expected term for options granted to nonemployees is the contractual life. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of stock options. We have not paid and do not anticipate paying cash dividends on our shares of Common stock; therefore, the expected dividend yield is assumed to be zero.

Share-Based Compensation

Employees - The Company accounts for share-based compensation under the fair value method which requires all such compensation to employees, including the grant of employee stock options, to be calculated based on its fair value at the measurement date (generally the grant date), and recognized in the consolidated statement of operations over the requisite service period.

Nonemployees - During June 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”) to simplify the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees. The Company elected to adopt ASU 2018-07 early. Under the requirements of ASU 2018-07, the Company accounts for share-based compensation to non-employees under the fair value method which requires all such compensation to be calculated based on the fair value at the measurement date (generally the grant date), and recognized in the statement of operations over the requisite service period.

The Company recorded approximately $879,671 in share-based compensation expense for the year ended December 31, 2022, compared to approximately $968,470 in share-based compensation expense for the year ended December 31, 2021.

Determining the appropriate fair value model and the related assumptions requires judgment. During the year ended December 31, 2022 and 2021, the fair value of each option grant was estimated using a Black-Scholes option-pricing model.

The expected volatility represents the historical volatility of the Company’s publicly traded common stock. Due to limited historical data, the Company calculates the expected life based on the mid-point between the vesting date and the contractual term which is in accordance with the simplified method. The expected term for options granted to nonemployees is the contractual life. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of stock options. The Company has not paid and does not anticipate paying cash dividends on its shares of common stock; therefore, the expected dividend yield is assumed to be zero.

Contingencies

Contingencies

We account for contingent liabilities in accordance with Accounting Standards Codification (“ASC”) Topic 450, Contingencies. This standard requires management to assess potential contingent liabilities that may exist as of the date of the financial statements to determine the probability and amount of loss that may have occurred, which inherently involves an exercise of judgment. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in our financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed in our financial statements. For loss contingencies considered remote, we generally would neither accrue any estimated liability nor disclose the nature of the contingent liability in our financial statements. Management has assessed potential contingent liabilities as of June 30, 2023, and based on that assessment, there are no probable or possible loss contingencies requiring accrual or establishment of a reserve.

Basic and Diluted Net Loss Per Common Share

Basic and Diluted Net Loss Per Common Share

Basic earnings per share (“EPS”) is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method and as if converted method. Dilutive potential common shares include outstanding stock options, warrant and convertible notes.

For the six months ended June 30, 2023 and 2022, respectively, the following common stock equivalents were excluded from the computation of diluted net loss per share as the result of the computation was anti-dilutive:

	Six Months Ended
	June 30,
	2023		2022
	(Shares)		(Shares)
Series A Preferred Stock		149,892,000		149,892,000
Stock options		2,838,067		1,029
Warrants		158,441		158,441
Total		152,888,508		150,051,470

Basic and Diluted Net Loss Per Common Share

Basic earnings per share (“EPS”) is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method and as if converted method. Dilutive potential common shares include outstanding stock options, warrant and convertible notes.

For the year ended December 31, 2022 and 2021, respectively, the following common stock equivalents were excluded from the computation of diluted net loss per share as the result of the computation was anti-dilutive.

	Years Ended
	December 31,
	2022		2021
	(Shares)		(Shares)
Series A Preferred Stock		149,892,000		150,000,000
Stock options		867,237		2,121
Warrants		159,974		146,842
Convertible notes		-		-
Preferred B stock		-		3,955
Total		150,919,211		150,152,918

Recently Adopted Accounting Guidance

Recently Adopted Accounting Guidance

In August 2020, the FASB issued ASU 2020-06, ASC Subtopic 470-20 “Debt—Debt with Conversion and Other Options” and ASC subtopic 815-40 “Hedging—Contracts in Entity’s Own Equity” (“Standard”). The Standard reduced the number of accounting models available for convertible debt instruments and convertible preferred stock. Pursuant to the Standard, convertible debt instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting; and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid in capital. The Standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Due to adoption of this Standard on January 1, 2022, we recognized a cumulative effect adjustment to increase the opening retained earnings as of January 1, 2022 by $439,857.

To compute the transition adjustment for a convertible instrument under both the modified retrospective and full retrospective methods, entities need to recompute the basis of that instrument at transition (i.e., the beginning of year of adoption for the modified retrospective method or the beginning of earliest year presented for the full retrospective method) as if the conversion option had not been separated. The Company use the modified retrospective method to adjust.

Recently Adopted Accounting Guidance

In August 2020, the FASB issued ASU 2020-06, ASC Subtopic 470-20 “Debt—Debt with Conversion and Other Options” and ASC subtopic 815-40 “Hedging—Contracts in Entity’s Own Equity”. The standard reduced the number of accounting models for convertible debt instruments and convertible preferred stock. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting; and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. The amendments in this update are effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Due to adoption of this accounting policy on January 1, 2022, we recognized a cumulative effect adjustment to increase the opening retained earnings as of January 1, 2022 by $77,643.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

The Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its consolidated financial statements.

Recently Issued Accounting Pronouncements

The Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its consolidated financial statements.

Use of Estimates

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

Revenue Recognition

The Company derives revenue primarily from contracts for subscription to access our SaaS platforms and, to a much lesser degree, ancillary services provided in connection with subscription services. The Company’s contracts include the performance obligations that require us to provide access to the platforms, usually on an annual subscription. The Company’s contracts are for subscriptions to our data classification, movement, governance, encryption, access control and distribution software and related services. We also perform professional services consulting with specific deliverables managed primarily by statements of work. Customers typically enter into our services subscription and various statements of work concurrently. Most of the Company’s performance obligations are not considered to be distinct from the subscriptions to our software or hosting platforms and related services and are combined into a single performance obligation. New statements of work and modifications of contracts are reviewed each reporting period and to assess the nature and characteristics of the new or modified performance obligations on a contract by contract basis.

Revenue related to contracts with customers is evaluated utilizing the following steps: (i) Identify the contract, or contracts, with a customer; (ii) Identify the performance obligations in the contract; (iii) Determine the transaction price; (iv) Allocate the transaction price to the performance obligations in the contract; (v) Recognize revenue when the Company satisfies a performance obligation.

Revenues from professional services consist mostly of time and material services. The performance obligations are satisfied, and revenues are recognized, when the services are provided or over the time of the service term until it expires.

Subscription software that is sold on-premises is recognized at the point of time when the software license has been delivered and the benefit of the asset has transferred. Maintenance associated with subscription licenses is recognized ratably over the term of the agreement. Our SaaS offerings allow customers to use hosted software, and our revenue is recognized ratably over the associated contract time period.

Cash and Cash Equivalents

Cash and Cash Equivalents

For purposes of balance sheet presentation and reporting of cash flows, the Company considers all unrestricted demand deposits, money market funds and highly liquid debt instruments with an original maturity of less than 90 days to be cash and cash equivalents. The Company had no cash equivalents at December 31, 2022 and 2021.

Deferred Revenue

Deferred Revenue

Deferred revenue mostly consists of service subscriptions received from users in advance of revenue recognition. The increase in the deferred revenue balance for the year ended December 31, 2022 and 2021 was driven by cash payments from customers in advance of satisfying our performance obligations, offset by revenue recognized that was included in the deferred revenue balance at the beginning of the period.

Convertible Financial Instruments

Convertible Financial Instruments

The Company account for our convertible financial instruments in accordance with ASC 470-20 “Debt with Conversion and Other Options.” Prior to the adoption of ASU 2020-06 on January 1, 2022, we separated the convertible notes into liability and equity components. The carrying amounts of the liability component of the convertible notes were calculated by measuring the fair value of similar debt instruments that do not have an associated convertible feature. The carrying amounts of the equity components, representing the conversion option, were determined by deducting the fair value of the liability components from the par value of the convertible notes. This difference represents the debt discount that is amortized to interest expense over the terms of the convertible notes using the effective interest rate method.

Following the adoption of ASU 2020-06 on January 1, 2022, which we elected to adopt using a modified retrospective approach, we no longer separate the convertible notes into liability and equity components. Now convertible notes are recorded and disclosed as convertible notes payable, net of unamortized discount.

Income Taxes

Income Taxes

The asset and liability method is used in the Company’s accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse.

Deferred tax assets and liabilities are determined based on the temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities using the enacted tax rates in effect in the years in which the differences are expected to reverse. In estimating future tax consequences, all expected future events are considered other than enactment of changes in the tax law or rates.

The Company adopted ASC 740 “Income Taxes,” which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. ASC 740 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company had no material adjustments to its liabilities for unrecognized income tax benefits.

The determination of recording or releasing tax valuation allowance is made, in part, pursuant to an assessment performed by management regarding the likelihood that the Company will generate future taxable income against which benefits of its deferred tax assets may or may not be realized.

Intellectual Property

Intellectual Property

The cost of intangible assets with determinable useful lives is amortized to reflect the pattern of economic benefits consumed on a straight-line basis over the estimated periods benefited. Patents, technology and other intangibles with contractual terms are generally amortized over their respective legal or contractual lives. When certain events or changes in operating conditions occur, an impairment assessment is performed and lives of intangible assets with determinable lives may be adjusted.

Long-Lived Assets

Long-Lived Assets

Long-lived assets are evaluated for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the undiscounted future cash flows to the recorded value of the asset. If impairment is indicated, the asset is written down to its estimated fair value.

Property and Equipment

Property and Equipment

Property and equipment, consisting mostly of computer equipment, is recorded at cost reduced by accumulated depreciation and impairment, if any. Depreciation expense is recognized over the assets’ estimated useful lives of three - seven years using the straight-line method. Major additions and improvements are capitalized as additions to the property and equipment accounts, while replacements, maintenance and repairs that do not improve or extend the life of the respective assets, are expensed as incurred. Estimated useful lives are periodically reviewed and, when appropriate, changes are made prospectively. When certain events or changes in operating conditions occur, asset lives may be adjusted and an impairment assessment may be performed on the recoverability of the carrying amounts.

Fair Value Measurements

Fair Value Measurements

The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value. The three tiers are defined as follows:

● Level 1—Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets;

● Level 2—Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and

● Level 3—Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions.

Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The carrying amounts of cash and cash equivalents, marketable securities, trade receivables, short-term deposits and trade payables approximate their fair value due to the short-term maturity of such instruments. This valuation technique involves management’s estimates and judgment based on unobservable inputs and is classified in level 3.

Leases

Leases

We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities - current, and operating lease liabilities - noncurrent on the balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities in our balance sheets.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Segments

Segments

Operating segments are defined as components of an enterprise engaging in business activities for which discrete financial information is available and regularly reviewed by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company operates and manages its business as one operating segment and all of the Company’s revenues and operations are currently in the United States.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Accounting Policies [Abstract]

SCHEDULE OF ANTI-DILUTIVE BASIC AND DILUTED EARNINGS PER SHARE

For the six months ended June 30, 2023 and 2022, respectively, the following common stock equivalents were excluded from the computation of diluted net loss per share as the result of the computation was anti-dilutive:

	Six Months Ended
	June 30,
	2023		2022
	(Shares)		(Shares)
Series A Preferred Stock		149,892,000		149,892,000
Stock options		2,838,067		1,029
Warrants		158,441		158,441
Total		152,888,508		150,051,470

For the year ended December 31, 2022 and 2021, respectively, the following common stock equivalents were excluded from the computation of diluted net loss per share as the result of the computation was anti-dilutive.

	Years Ended
	December 31,
	2022		2021
	(Shares)		(Shares)
Series A Preferred Stock		149,892,000		150,000,000
Stock options		867,237		2,121
Warrants		159,974		146,842
Convertible notes		-		-
Preferred B stock		-		3,955
Total		150,919,211		150,152,918

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PROPERTY AND EQUIPMENT (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Property, Plant and Equipment [Abstract]

SUMMARY OF COMPONENTS OF PROPERTY AND EQUIPMENT

The following table summarizes the components of our property and equipment as of the dates presented:

	June 30,			December 31,
	2023			2022
Furniture and Fixtures	$	6,103		$	6,103
Computer Equipment		1,035,097			867,670
		1,041,200			873,773
Accumulated depreciation		(537,958	)		(446,742	)
Property and equipment, net of accumulated depreciation	$	503,242		$	427,031

The following table summarizes the components of the Company’s property and equipment as of the dates presented:

	December 31,			December 31,
	2022			2021
Furniture and Fixtures	$	6,103		$	2,991
Computer Equipment		867,670			559,654
		873,773			562,645
Accumulated depreciation		(446,742	)		(274,239	)
Property and equipment, net of accumulated depreciation	$	427,031		$	288,406

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INTELLECTUAL PROPERTY (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

SCHEDULE OF INTELLECTUAL PROPERTY

The following table summarizes the components of our intellectual property as of the dates presented:

	June 30, 2023			December 31, 2022
Intellectual property:
WordPress® GDPR rights	$	46,800		$	46,800
ARALOC®		1,850,000			1,850,000
ArcMail®		1,445,000			1,445,000
DataExpress®		1,388,051			1,388,051
FileFacets®		135,000			135,000
IntellyWP™		60,000			60,000
Resilient Network Systems		305,000			305,000
		5,229,851			5,229,851
Accumulated amortization		(5,024,854	)		(4,775,520	)
Intellectual property, net of accumulated amortization	$	204,997		$	454,331

The following table summarizes the components of the Company’s intellectual property as of the dates presented:

	December 31,			December 31,
	2022			2021
Intellectual property:
WordPress® GDPR rights	$	46,800		$	46,800
ARALOC™		1,850,000			1,850,000
ArcMail License		1,445,000			1,445,000
DataExpressTM		1,388,051			1,388,051
FileFacetsTM		135,000			135,000
IntellyWP™		60,000			135,000
Resilient Network Systems		305,000			305,000
		5,229,851			5,304,851
Accumulated amortization		(4,775,520	)		(3,960,032	)
Impairment		-			(75,000	)
Intellectual property, net of accumulated amortization	$	454,331		$	1,269,819

SCHEDULE OF FUTURE AMORTIZATION EXPENSE OF INTANGIBLE ASSETS

Based on the carrying value of definite-lived intangible assets as of June 30, 2023, we estimate our amortization expense for the next five years will be as follows:

	Amortization
	Expense
Year ended December 31,
2023 (excluding the six months ended June 30, 2023)	$	162,247
2024		27,000
2025		15,750
Thereafter		-
	$	204,997

Based on the carrying value of definite-lived intangible assets as of December 31, 2022, we estimate our amortization expense for the next five years will be as follows:

	Amortization
Year Ended December 31,	Expense
2023		411,581
2024		27,000
Thereafter		15,750
		454,331

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ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Payables and Accruals [Abstract]

SUMMARY OF ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

The following table summarizes the components of our accounts payable and accrued liabilities as of the dates presented:

	June 30,		December 31,
	2023		2022
Accounts payable	$	1,370,015	$	427,553
Credit cards		72,374		50,302
Accrued liabilities		778,611		554,076
	$	2,221,000	$	1,031,931

The following table summarizes the components of the Company’s accounts payable and accrued liabilities as of the dates presented:

	December 31,		December 31,
	2022		2021
Accounts payable	$	427,553	$	75,628
Credit cards		50,302		28,492
Accrued dividend - preferred stock		-		6,849
Accrued liabilities		554,076		4,704
Balance, end of year	$	1,031,931	$	115,673

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DEFERRED REVENUE (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Revenue from Contract with Customer [Abstract]

SUMMARY OF CHANGES IN DEFERRED REVENUE

For the six months ended June 30, 2023 and as of December 31, 2022, changes in deferred revenue were as follows:

	June 30,			December 31,
	2023			2022
Balance, beginning of period	$	2,493,151		$	1,608,596
Deferral of revenue		1,186,955			3,511,678
Recognition of deferred revenue		(1,350,486	)		(2,627,123	)
Balance, end of period	$	2,329,620		$	2,493,151

For the years ended December 31, 2022 and 2021, changes in deferred revenue were as follows:

	December 31,			December 31,
	2022			2021
Balance, beginning of year	$	1,608,596		$	1,518,163
Deferral of revenue		3,511,678			2,581,801
Recognition of deferred revenue		(2,627,123	)		(2,491,368	)
Balance, end of year	$	2,493,151		$	1,608,596

SUMMARY OF DEFERRED REVENUE

As of June 30, 2023 and December 31, 2022, deferred revenue is classified as follows:

	June 30,		December 31,
	2023		2022
Current	$	1,814,620	$	1,704,249
Non-current		515,000		788,902
	$	2,329,620	$	2,493,151

As of December 31, 2022 and 2021, is classified as follows:

	December 31,		December 31,
	2022		2021
Current	$	1,704,249	$	1,035,185
Non-current		788,902		573,411
Balance, end of year	$	2,493,151	$	1,608,596

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LEASES (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Leases

SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS UNDER OPERATING LEASES

At June 30, 2023, future minimum lease payments under operating leases that have initial noncancelable lease terms in excess of one year were as follows:

	Total
Year Ended December 31,
2023 (excluding the six months ended June 30, 2023)		242,379
2024		121,406
Thereafter		-
		363,785
Less: Imputed interest		(24,967	)
Operating lease liabilities		338,818
Operating lease liability - current		338,818
Operating lease liability - non-current	$	-

Future minimum lease payments under operating leases that have initial noncancelable lease terms in excess of one year at December 31, 2022 were as follows:

	Total
Year Ended December 31,
2023		484,759
2024		121,405
Thereafter		-
		606,164
Less: Imputed interest		(37,702	)
Operating lease liabilities		568,462
Operating lease liability - current		213,831
Operating lease liability - non-current	$	354,631

SCHEDULE OF OTHER SUPPLEMENTAL INFORMATION UNDER OPERATING LEASE

The following summarizes other supplemental information about our operating leases as of June 30, 2023:

Weighted average discount rate	8	%
Weighted average remaining lease term (years)	.70

The following summarizes other supplemental information about the Company’s operating lease as of December 31, 2022:

Weighted average discount rate	8	%
Weighted average remaining lease term (years)	1.17

SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS UNDER FINANCE LEASES

At December 31, 2022, future minimum lease payments under the finance lease obligations, are as follows:

	Total
2023		10,341
Thereafter		-
		10,341
Less: Imputed interest		(5,300	)
Finance lease liabilities		5,041
Finance lease liability		10,341
Finance lease liability - non-current	$	-

SCHEDULE OF FINANCE LEASE ASSETS

As of December 31, 2022 and 2021, finance lease assets are included in property and equipment as follows:

	December 31,			December 31,
	2022			2021
Finance lease assets	$	267,284		$	267,284
Accumulated depreciation		(258,506	)		(192,928	)
Finance lease assets, net of accumulated depreciation	$	8,778		$	74,356

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CONVERTIBLE NOTES PAYABLE (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Debt Disclosure [Abstract]

SCHEDULE OF CONVERTIBLE NOTES PAYABLE

Convertible notes payable consists of the following:

	June 30,			December 31,
	2023			2022
Convertible Notes - Issued in fiscal year 2020		97,946			97,946
Convertible Notes - Issued in fiscal year 2021		414,690			600,400
Convertible Notes - Issued in fiscal year 2022		1,891,083			3,710,440
Convertible Notes - Issued in fiscal year 2023		534,454			-
		2,938,173			4,408,786
Less debt discount and debt issuance cost		(119,056	)		(176,685	)
		2,819,117			4,232,101
Less current portion of convertible notes payable		2,721,171			4,134,155
Long-term convertible notes payable	$	97,946		$	97,946

Convertible notes payable consists of the following:

	December 31,			December 31,
	2022			2021
Convertible Notes - Issued in fiscal year 2020		97,946			100,000
Convertible Notes - Issued in fiscal year 2021		600,400			1,607,857
Convertible Notes - Issued in fiscal year 2022		3,710,440			-
		4,408,786			1,707,857
Less debt discount and debt issuance cost		(176,685	)		(691,569	)
		4,232,101			1,016,288
Less current portion of convertible notes payable		4,134,155			993,931
Long-term convertible notes payable	$	97,946		$	22,357

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DERIVATIVE LIABILITIES (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

SCHEDULE OF FAIR VALUE OF LIABILITIES MEASURED ON RECURRING BASIS

The inputs used to calculate the derivative values are as follows:

	Six months ended			Year ended
	June 30,			December 31,
	2023			2022
Expected term		-			-	*
Expected average volatility		-	%		280	%
Expected dividend yield		-			-
Risk-free interest rate		-	%		3.65	%

* There is no excepted term on the convertible notes.

	Year ended		Year ended
	December 31,		December 31,
	2022		2021
Expected term	-	*	0.48 - 5.00 years
Expected average volatility	280	%	160%- 302	%
Expected dividend yield	-		-
Risk-free interest rate	3.65	%	0.04% - 1.24	%

* There is no excepted term on the convertible notes.

SCHEDULE OF CHANGES IN DERIVATIVE LIABILITIES

The following table summarizes the changes in the derivative liabilities during the years ended December 31, 2022 and 2021:

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Derivative liability as of December 31, 2020	$	-
Addition of new derivatives recognized as debt discounts		390,000
Addition of new derivatives recognized as day-one loss		559,939
Derivative liabilities settled upon conversion of convertible note		(1,004,658	)
Change in derivative liabilities recognized as loss on derivative		54,719
Derivative liability as of December 31, 2021	$	-
Addition of new derivatives recognized as debt discounts		-
Addition of new derivatives recognized as day-one loss		57,883
Derivative liabilities settled upon conversion of convertible note		(57,883	)
Change in derivative liabilities recognized as loss on derivative		-
Derivative liability as of December 31, 2022	$	-

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NOTES PAYABLE (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Notes Payable

SCHEDULE OF NOTES PAYABLE

Notes payable consists of the following:

	June 30,			December 31,				Interest
	2023			2022			Maturity	Rate
Economic Injury Disaster Loan - originated in May 2020 (1, 2)	$	500,000		$	500,000		30 years		3.75	%
Promissory note - originated in September 2020		7,568			20,182		$2,873.89 monthly payment for 36 months		14.0	%
Promissory note - originated in December 2020		7,551			16,047		$1,854.41 monthly payment for 36 months		8.0	%
Promissory note - originated in January 2021		11,268			22,243		$2,675.89 monthly payment for 36 months		18.0	%
Promissory note - originated in February 2021 (3)		1,305,373			1,305,373		5 years		4.0	%
Promissory note - originated in April 2021(4)		866,666			866,666		1 year		12	%
Promissory note - originated in July 2021(4)		352,500			352,500		1 year		12	%
Promissory note - originated in September 2021		37,712			43,667		$1,383.56 monthly payment for 60 months		28	%
Promissory note - originated in April 2022		64,680			73,204		$1,695.41 monthly payment for 36 months		16.0	%
Promissory note - originated in April 2022		64,053			239,858		$7,250 daily payment for 168 days		25	%
Promissory note – originated in June 2022		-			149,011		$20,995 weekly payment for 30 weeks		49	%
Promissory note - originated in July 2022		48,569			54,557		$1,485.38 monthly payment for 60 months		18	%
Promissory note - originated in July 2022		76,514			94,878		$3,546.87 monthly payment for 36 months		10	%
Promissory note - originated in August 2022		22,710			26,538		$589.92 monthly payment for 60 months		8	%
Promissory note - originated in October 2022		1,193,612			635,745		$1,749.00 daily payment for 30 days		66	%
Promissory note - originated in January 2023		5,160			-		$237.03 monthly payment for 36 months		25	%
Promissory note - originated in March 2023		53,519			-		$1,521.73 monthly payment for 60 months		18	%
Promissory note - originated in March 2023		13,495			-		$559.25 monthly payment for36 months		17	%
Promissory note - originated in April 2023		31,672			-		$3,999.00 monthly payment for 12 months		12	%
Promissory note - originated in April 2023		40,400			-		$3,918.03 monthly payment for 12 months		6	%
Promissory note - originated in May 2023		250,000			-		3 months		29	%
		4,953,022			4,400,469
Less debt discount and debt issuance cost		(1,079,509	)		(377,111	)
		3,873,513			4,023,358
Less current portion of promissory notes payable		2,267,658			918,785
Long-term promissory notes payable	$	1,605,855		$	3,104,573

Notes payable consists of the following:

	December 31,			December 31,				Interest
	2022			2021			Maturity	Rate
Economic Injury Disaster Loan - originated in May 2020 (1, 2)	$	500,000		$	500,000		30 years		3.75	%
Promissory note - originated in September 2020		20,182			50,456		$2,873.89 monthly payment for 36 months		14.0	%
Promissory note - originated in December 2020		16,047			33,039		$1,854.41 monthly payment for 36 months		8.0	%
Promissory note - originated in January 2021		22,243			48,583		$2,675.89 monthly payment for 36 months		18.0	%
Promissory note - originated in February 2021 (3)		1,305,373			1,328,848		5 years		4.0	%
Promissory note - originated in April 2021(4)		866,666			832,000		1 year		12	%
Promissory note - originated in July 2021(4)		352,500			282,000		1 year		12	%
Promissory note - originated in September 2021		43,667			55,576		$1,383.56 monthly payment for 60 months		28	%
Promissory note - originated in December 2021		-			406,300		$20,050 weekly payment for 28 weeks		49	%
Promissory note - originated in December 2021		-			241,716		$10,071.45 weekly payment for 28 weeks		4.94	%
Promissory note - originated in December 2021		-			189,975		$2,793.75 daily payment for 80 days		7	%
Promissory note - originated in April 2022		73,204			-		$1,695.41 monthly payment for 36 months		16.0	%
Promissory note - originated in April 2022		239,858			-		$7,250 daily payment for 168 days		25	%
Promissory note – originated in June 2022		149,011			-		$20,995 weekly payment for 30 weeks		49	%
Promissory note - originated in July 2022		54,557			-		$1,485.38 monthly payment for 60 months		18	%
Promissory note - originated in July 2022		94,878			-		$3,546.87 monthly payment for 36 months		10	%
Promissory note - originated in August 2022		26,538			-		$589.92 monthly payment for 60 months		8	%
Promissory note - originated in October 2022		635,745			-		$1,749.00 daily payment for 30 days		66	%
		4,400,469			3,968,493
Less debt discount and debt issuance cost		(377,111	)		(476,727	)
		4,023,358			3,491,766
Less current portion of promissory notes payable		918,785			1,720,777
Long-term promissory notes payable	$	3,104,573		$	1,770,989

(1)	We received an advance under the Economic Injury Disaster Loan (EIDL) program.
(2)	We received a second advance under the EIDL program in fiscal year 2021.
(3)	On February 12, 2021, we issued notes payable of $1,404,000 to settle license fee payable of $1,094,691. As a result, we recorded loss on settlement of debt of $186,156 in fiscal year 2021.
(4)	Note payable with outstanding balance of $866,666 matured on April 22, 2022. Note payable with outstanding balance of $352,500 matured on July 27, 2022. The default annual interest rate of 16% becomes the effective interest rate on the past due principal and interest. A penalty of 125% of the outstanding principal and accrued interest was triggered and as a result $173,333 and $70,500, respectively, additional principal was added to the outstanding balance. We are in communication with the lender.

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CAPITAL STOCK AND REVERSE STOCK SPLIT (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Equity [Abstract]

SCHEDULE OF WARRANTS ACTIVITY

A summary of activity during the six months ended June 30, 2023 follows:

	Warrants Outstanding
			Weighted Average
	Shares		Exercise Price
Outstanding, December 31, 2022		159,974	$	22.07
Granted		-		-
Exercised		-		-
Forfeited/canceled		-		-
Outstanding, June 30, 2023		159,974	$	22.07

A summary of activity during the period ended December 31, 2022 follows:

			Weighted Average
	Shares			Exercise Price
Outstanding, December 31, 2020	6,250		$	20.00
Granted	141,721			22.18
Reset feature	-			-
Exercised	(2,416	)		5.80
Forfeited/canceled	-			-
Outstanding, December 31, 2021	146,842		$	27.86
Granted	20,699			6.00
Reset feature	-			-
Exercised	(7,567	)		-
Forfeited/canceled	-			-
Outstanding, December 31, 2022	159,974		$	22.07

SCHEDULE OF OUTSTANDING AND EXERCISABLE WARRANTS

The following table summarizes information relating to outstanding and exercisable warrants as of June 30, 2023:

Exercisable Warrants Outstanding
		Weighted Average Remaining
Number of Shares		Contractual life (in years)		Weighted Average Exercise Price
	6,250		2.45	$	160.00
	6,934		2.81	$	120.00
	15,666		3.07	$	36.00
	2,917		3.25	$	36.00
	32,837		3.04	$	9.88
	74,671		3.50	$	7.44
	20,699		3.86	$	6.00
	159,974		3.33	$	22.07

The following table summarizes information relating to outstanding and exercisable warrants as of December 31, 2022:

Warrants Outstanding						Warrants Exercisable
Number of Shares		Weighted Average Remaining Contractual life (in years)		Weighted Average Exercise Price		Number of Shares		Weighted Average Exercise Price
	6,250		2.95	$	160.00		-	$	-
	6,934		3.31	$	120.00		-	$	-
	15,666		3.57	$	36.00		-	$	-
	2,917		3.75	$	36.00		-	$	-
	32,837		3.80	$	9.88		-	$	-
	74,671		4.00	$	7.44		-	$	-
	20,699		4.36	$	6.00		-	$	-

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STOCK-BASED COMPENSATION (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2023

Dec. 31, 2022

Equity [Abstract]

SCHEDULE OF STOCK OPTION ACTIVITY

The following summarizes the stock option activity for the six months ended June 30, 2023:

	Options Outstanding		Weighted-Average Exercise Price
Balance as of December 31, 2022		865,983	$	1.67
Grants		1,972,728		.07
Exercised		-		-
Cancelled		644		67.40
Balance as of June 30, 2023		2,838,067	$	.57

The following summarizes the stock option activity for the years ended December 31, 2022 and 2021:

	Options		Weighted-Average
	Outstanding		Exercise Price
Balance as of December 31, 2020		735	$	775.93
Grants		1,386		304.44
Exercised		-		-
Cancelled		-		-
Balance as of December 31, 2021		2,121	$	775.93
Grants		865,116		1.34
Exercised		-		-
Cancelled		1,254		67.40
Balance as of December 31, 2022		865,983	$	1.67

SCHEDULE OF STOCK OPTIONS VESTED AND EXPECTED TO VEST

The following summarizes certain information about stock options vested and expected to vest as of June 30, 2023:

	Number of Options		Weighted-Average Remaining Contractual Life (In Years)		Weighted- Average Exercise Price
Outstanding		2,838,067		9.07	$	.78
Exercisable		477,112		8.29	$	3.14
Expected to vest		2,838,067		9.07	$	.78

The following summarizes certain information about stock options vested and expected to vest as of December 31, 2022:

			Weighted-Average
	Number of		Remaining Contractual Life		Weighted-Average
	Options		(In Years)		Exercise Price
Outstanding		865,983		4.85	$	1.54
Exercisable		689,948		4.83	$	1.67
Expected to vest		865,983		4.85	$	1.54

SCHEDULE OF RESTRICTED STOCK ACTIVITY

The following summarizes the restricted stock activity for the six months ended June 30, 2023:

			Weighted-Average
	Shares		Fair Value
Balance as of December 31, 2022		322,798	$	225,639
Shares of restricted stock granted		2,550,000		180,000
Exercised		-		-
Cancelled		-		-
Balance as of June 30, 2023		2,872,798	$	405,639

The following summarizes the restricted stock activity for the years ended December 31, 2022 and 2021:

			Weighted-Average
	Shares		Fair Value
Balance as of December 31, 2020		923		748.89
Shares of restricted stock granted		447		413.33
Exercised		-		-
Cancelled		-		-
Balance as of December 31, 2021		1,370		639.22
Shares of restricted stock granted		321,428		225,000
Exercised		-		-
Cancelled		-		-
Balance as of December 31, 2022		322,798		225,639

SCHEDULE OF RESTRICTED STOCK AWARD

Number of Restricted Stock Awards	June 30, 2023		December 31, 2022
Vested		322,798		1,370
Non-vested		2,550,000		321,428

	December 31,		December 31,
Number of Restricted Stock Awards	2022		2021
Vested		1,370		1,370
Non-vested		321,428		-

SCHEDULE OF WEIGHTED AVERAGE ASSUMPTIONS FOR STOCK OPTIONS GRANTED

	2022			2021
Expected term (years)		5			5.74
Expected stock price volatility		280.82	%		296.25	%
Weighted-average risk-free interest rate		3.65	%		0.62	%
Expected dividend	$	0.00		$	0.00

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INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES

	December 31,			December 31,
	2022			2021
Non-operating loss carryforward	$	6,326,000		$	4,685,000
Valuation allowance		(6,326,000	)		(4,685,000	)
Net deferred tax asset	$	-		$	-

SCHEDULE OF STATUTORY FEDERAL INCOME TAX RATE LOSSES BEFORE INCOME TAX

	Years Ended
	December 31,
	2022			2021
Loss for the year	$	(9,713,467	)	$	(6,475,154	)
Income tax (recovery) at statutory rate	$	(2,040,000	)	$	(1,360,000	)
State income tax expense, net of federal tax effect		(194,000	)		(130,000	)
Permanent difference and other		593,000			819,000
Change in valuation allowance		1,641,000			671,000
Income tax expense per books	$	-		$	-

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INTEREST EXPENSE (Tables)

12 Months Ended

Dec. 31, 2022

SUMMARY OF INTEREST EXPENSE

For the years ended December 31, 2022 and 2021, the Company recorded interest expense as follows:

	Year ended		Year ended
	December 31,		December 31,
	2022		2021
Interest expense - convertible notes	$	2,884,571	$	131,623
Interest expense - notes payable		505,198		260,155
Interest expense - notes payable - related party		-		9,992
Finance lease		7,047		15,967
Other		45,473		10,031
Amortization of debt discount		2,537,167		2,906,645
	$	5,979,456	$	3,334,413

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RESTATEMENT OF PRIOR ISSUED FINANCIALS (Tables)

12 Months Ended

Dec. 31, 2022

Accounting Changes and Error Corrections [Abstract]

SCHEDULE OF ERROR CORRECTIONS

Accordingly, the following table summarizes the error corrections to the Company’s consolidated statement of cashflows for the year ended December 31, 2022.

	31-Dec-22
	As Previously Reported			Impact of Adjustment			As Revised
Consolidated Statement of Cashflows
Amortization of debt discount		2,512,725			(191,714	)		2,321,011
Stock based compensation		1,044,691			(11	)		1,044,680
Accounts payable and accrued liabilities		923,107			(6,853	)		916,254
Interest payable		361,588			1,832,265			2,193,853
Net Cash used in Operating Activities		(2,886,337	)		1,633,687			(1,252,650	)
Proceeds from convertible notes issued		1,747,680			279,890			2,027,570
Repayment on convertible notes		1,146,359			(1,918,077	)		(771,718	)
Proceeds from issuance of notes payable		3,448,246			10,001			3,458,247
Proceeds from related parties		229,281			(1	)		299,280
Finance lease payments		(72,768	)		(5,500	)		(78,268	)
Net cash provided by Financing Activities		2,244,244			(1,633,687	)		610,557

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SCHEDULE OF ANTI-DILUTIVE BASIC AND DILUTED EARNINGS PER SHARE (Details) - shares	6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Total	152,888,508	150,051,470	150,919,211	150,152,918
Series A Preferred Stock [Member]
Total	149,892,000	149,892,000	149,892,000	150,000,000
Stock Options [Member]
Total	2,838,067	1,029	867,237	2,121
Warrant [Member]
Total	158,441	158,441	159,974	146,842
Convertible Notes [Member]
Total
Series B Preferred Stock [Member]
Total				3,955

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative)		3 Months Ended		6 Months Ended		12 Months Ended
	Jan. 19, 2022 USD ($)	Jun. 30, 2023 USD ($) shares	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) shares	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($) Number shares	Dec. 31, 2021 USD ($) shares	Apr. 20, 2022 shares	Jan. 02, 2022 USD ($)
Property, Plant and Equipment [Line Items]
Entity state of incorporation				NV
Entity date of incorporation				May 04, 1998		May 04, 1998
Payments to acquire businesses, gross					$ 250,000	$ 250,000
Notes payable		$ 3,873,513		$ 3,873,513		$ 4,023,358	$ 3,491,766
Common stock shares issued | shares		59,363,988		59,363,988		2,615,737	122,044
Bad debt expense		$ 0	$ 0				$ 36,456
Gain on share-based compensation expense				$ 565,571	$ 798,690	879,671	968,470
Cumulative effect adjustment on retained earnings									$ 439,857
Cash equivalents						$ 0	$ 0
Income tax, likelihood description						The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement
Number of operating segments | Number						1
Revision of Prior Period, Change in Accounting Principle, Adjustment [Member]
Property, Plant and Equipment [Line Items]
Cumulative effect adjustment on retained earnings									$ 77,643
Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives of property and equipment						3 years
Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives of property and equipment						7 years
Asset Purchase Agreement [Member] | Centurion Holdings I LLC [Member]
Property, Plant and Equipment [Line Items]
Business combination, consideration transferred	$ 3,400,000
Payments to acquire businesses, gross	250,000
Payment for contingent consideration liability, investing activities	250,000
Outstanding cash	500,000
Repayments of obligation related to equivalent	2,400,000
Common stock shares issued | shares								380,952
Asset Purchase Agreement [Member] | Centurion Holdings I LLC [Member] | Promissory Note [Member]
Property, Plant and Equipment [Line Items]
Notes payable	$ 2,900,000

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LIQUIDITY AND GOING CONCERN (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Net Income (Loss) Attributable to Parent	$ (89,540)	$ 2,446,212	$ 648,353	$ 4,279,531	$ 9,713,467	$ 6,475,154
[custom:WorkingCapital-0]	10,008,138		10,008,138
Retained Earnings (Accumulated Deficit)	$ 52,060,481		$ 52,060,481		$ 51,412,128	$ 42,033,887

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SUMMARY OF COMPONENTS OF PROPERTY AND EQUIPMENT (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 1,041,200	$ 873,773	$ 562,645
Accumulated depreciation	(537,958)	(446,742)	(274,239)
Property and equipment, net of accumulated depreciation	503,242	427,031	288,406
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	6,103	6,103	2,991
Computer Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 1,035,097	$ 867,670	$ 559,654

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PROPERTY AND EQUIPMENT (Details Narrative) - USD ($)	6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Impaired Assets to be Disposed of by Method Other than Sale [Line Items]
Property and equipment acquired	$ 167,427	$ 96,960	$ 311,128	$ 138,331
General and Administrative Expense [Member]
Impaired Assets to be Disposed of by Method Other than Sale [Line Items]
Depreciation	$ 91,216	$ 80,170	$ 172,503	$ 174,274

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SCHEDULE OF INTELLECTUAL PROPERTY (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Finite-Lived Intangible Assets [Line Items]
Intellectual property	$ 5,229,851	$ 5,229,851	$ 5,304,851
Accumulated amortization	(5,024,854)	(4,775,520)	(3,960,032)
Intellectual property, net of accumulated amortization	204,997	454,331	1,269,819
Impairment			(75,000)
Word Press GDPR Rights [Member]
Finite-Lived Intangible Assets [Line Items]
Intellectual property	46,800	46,800	46,800
ARALOC [Member]
Finite-Lived Intangible Assets [Line Items]
Intellectual property	1,850,000	1,850,000	1,850,000
ArcMail License [Member]
Finite-Lived Intangible Assets [Line Items]
Intellectual property	1,445,000	1,445,000	1,445,000
Data Express [Member]
Finite-Lived Intangible Assets [Line Items]
Intellectual property	1,388,051	1,388,051	1,388,051
FileFacets [Member]
Finite-Lived Intangible Assets [Line Items]
Intellectual property	135,000	135,000	135,000
IntellyWP [Member]
Finite-Lived Intangible Assets [Line Items]
Intellectual property	60,000	60,000	135,000
Resilien Network Systems [Member]
Finite-Lived Intangible Assets [Line Items]
Intellectual property	$ 305,000	$ 305,000	$ 305,000

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SCHEDULE OF FUTURE AMORTIZATION EXPENSE OF INTANGIBLE ASSETS (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Goodwill and Intangible Assets Disclosure [Abstract]
2023 (excluding the six months ended June 30, 2023)	$ 162,247
2023	27,000	$ 411,581
2024	15,750	27,000
Thereafter
Intellectual property, net of accumulated amortization	$ 204,997	454,331	$ 1,269,819
Thereafter		$ 15,750

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INTELLECTUAL PROPERTY (Details Narrative) - USD ($)							3 Months Ended		6 Months Ended		12 Months Ended
	Feb. 12, 2021	Oct. 08, 2020	Sep. 21, 2020	Aug. 13, 2020	Dec. 31, 2019	Feb. 07, 2019	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Amortization expense									$ 249,334	$ 460,544
Note payable issuable for settlement of license fee payable	$ 1,404,000
Loss on settlement of debt							$ 4,904,081		$ 4,904,081			$ 186,156
Asset Impairment Charges												75,000
General and Administrative Expense [Member]
Amortization expense											$ 815,488	966,088
Exclusive License and Management Agreement [Member] | ArcMail Technology [Member]
License agreement term						27 months
Loss on settlement of debt												309,309
Exclusive License and Management Agreement [Member] | ArcMail Technology [Member] | 1 - 6 Months [Member]
Debt Instrument, Periodic Payment						$ 25,000
Exclusive License and Management Agreement [Member] | ArcMail Technology [Member] | 7 - 17 Months [Member]
Debt Instrument, Periodic Payment						30,000
Exclusive License and Management Agreement [Member] | ArcMail Technology [Member] | Final Payment [Member]
Debt Instrument, Periodic Payment						765,000
Exclusive License and Management Agreement [Member] | ArcMail Technology [Member] | Balance Payment [Member]
Debt Instrument, Periodic Payment					$ 1,094,691
Exclusive License and Management Agreement [Member] | ArcMail Technology [Member] | License [Member]
License costs						$ 200,000
Exclusive License Agreement [Member]
Note payable issuable for settlement of license fee payable												1,404,000
License agreement, amount per month												1,094,691
Asset Purchase Agreement [Member]
Purchase price		$ 305,000
Asset Purchase Agreement [Member] | Common Stock [Member]
Amortization expense		19,148,936
Asset Purchase Agreement [Member] | Payment at Closing [Member]
Purchase price		$ 125,000
Asset Purchase Agreement [Member] | FileFacets [Member]
Purchase price				$ 135,000
Asset Purchase Agreement [Member] | IntellyWP [Member]
Purchase price			$ 135,000
Cash paid for certain training			40,000
Proceeds from acquisition			25,000
Asset Impairment Charges												75,000
Write-down assets												$ 75,000
Asset Purchase Agreement [Member] | IntellyWP [Member] | Payment at Closing [Member]
Purchase price			$ 55,000
Rory Welch [Member] | Exclusive License and Management Agreement [Member] | ArcMail Technology [Member]
Stock purchase rights agreement					Under the License Agreement, the Company was granted the exclusive right and license to receive all benefits from the marketing, selling and licensing, of the ArcMail business products, including, without limitation, the good will of the business. The term of the License Agreement is twenty-seven (27) months, with the following payments to be made by the Company to ArcMail: (i) $200,000 upon signing the License Agreement; (ii) monthly payments starting 30 days after the execution of the License Agreement in the amount of $25,000 per month during months 1-6; (iii) monthly payments in the amount of $30,000 per month during months 7-17; and (iii) in month 18, final payment in the amount of $765,000. As of December 31, 2019, the balance of payments due under the License Agreement was $1,094,691. In connection with the execution of the License Agreement, two other agreements were also executed: (a) a Stock Purchase Rights Agreement, under which the Company has the right, though not the obligation, to acquire 100% of the issued and outstanding shares of stock of ArcMail from Rory Welch, the CEO of ArcMail (the right can be exercised over a period of 27 months); and (b) a Business Covenants Agreement, under which ArcMail and Mr. Welch agreed to not compete with the Company’s use of the ArcMail business under the License Agreement for a period of twenty-four (24) months.

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SUMMARY OF ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Payables and Accruals [Abstract]
Accounts payable	$ 1,370,015	$ 427,553	$ 75,628
Credit cards	72,374	50,302	28,492
Accrued liabilities	778,611	554,076	4,704
Balance, end of year	$ 2,221,000	1,031,931	115,673
Accrued dividend - preferred stock			$ 6,849

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SUMMARY OF CHANGES IN DEFERRED REVENUE (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Revenue from Contract with Customer [Abstract]
Balance, beginning of year	$ 2,493,151	$ 1,608,596	$ 1,518,163
Deferral of revenue	1,186,955	3,511,678	2,581,801
Recognition of deferred revenue	(1,350,486)	(2,627,123)	(2,491,368)
Balance, end of year	$ 2,329,620	$ 2,493,151	$ 1,608,596

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SUMMARY OF DEFERRED REVENUE (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Revenue from Contract with Customer [Abstract]
Current	$ 1,814,620	$ 1,704,249	$ 1,035,185
Non-current	515,000	788,902	573,411
Balance, end of year	$ 2,329,620	$ 2,493,151	$ 1,608,596

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SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS UNDER OPERATING LEASES (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Leases
2023 (excluding the six months ended June 30, 2023)	$ 242,379
2023	121,406	$ 484,759
Thereafter
Total lease payment	363,785	606,164
Less: Imputed interest	(24,967)	(37,702)
Operating lease liabilities	338,818	568,462
Operating lease liability - current	338,818	213,831	$ 112,322
Operating lease liability - non-current		354,631	$ 125,640
2024		121,405
Thereafter

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SCHEDULE OF OTHER SUPPLEMENTAL INFORMATION UNDER OPERATING LEASE (Details)	Jun. 30, 2023	Dec. 31, 2022
Leases
Weighted average discount rate	8.00%	8.00%
Weighted average remaining lease term (years)	8 months 12 days	1 year 2 months 1 day

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LEASES (Details Narrative) - USD ($)	6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Leases
Lessee, operating lease, description	We have two noncancelable operating leases for office facilities, one that we entered into January 2019 and that expires January 10, 2024		We have two noncancelable operating leases for office facilities, one that we entered into January 2019 and that expires January 10, 2024 and another that we entered into in April 2022 and that expires April 30, 2024.
Lease expense	$ 146,994	$ 83,339	$ 240,492	$ 97,385
Security deposit	33,467		33,467
Finance lease liability			10,341	72,768
Security deposits			$ 10,000	10,000
Lessee, Finance Lease, Term of Contract			3 years
Capital leases annual interest rate			12.00%
Finance lease liability - non-current				10,341
Finance lease security deposit			33,467	33,467
Interest expense			$ 7,047	$ 15,967

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SCHEDULE OF CONVERTIBLE NOTES PAYABLE (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022	Dec. 21, 2022	Oct. 19, 2022	Dec. 31, 2021
Short-Term Debt [Line Items]
Less debt discount and debt issuance cost	$ (1,079,509)	$ (377,111)			$ (476,727)
Convertible notes payable	2,819,117	4,232,101			1,016,288
Less current portion of convertible notes payable	2,721,171	4,134,155			993,931
Long-term convertible notes payable	97,946	97,946	$ 238,532	$ 361,869	22,357
Convertible notes payable, Gross		4,408,786			1,707,857
Less debt discount and debt issuance cost		(176,685)			(691,569)
Convertible Notes Payable [Member]
Short-Term Debt [Line Items]
Convertible notes payable, Gross	2,938,173	4,408,786
Less debt discount and debt issuance cost	(119,056)	(176,685)
Convertible Notes Payable [Member] | Issued in Fiscal Year 2020 [Member]
Short-Term Debt [Line Items]
Convertible notes payable, Gross	97,946	97,946
Convertible Notes Payable [Member] | Issued in Fiscal Year 2021 [Member]
Short-Term Debt [Line Items]
Convertible notes payable, Gross	414,690	600,400
Convertible Notes Payable [Member] | Issued In Fiscal Year Two Thousand And Twenty Two [Member]
Short-Term Debt [Line Items]
Convertible notes payable, Gross	1,891,083	3,710,440
Convertible Notes Payable [Member] | Issued In Fiscal Year Two Thousand And Twenty Three [Member]
Short-Term Debt [Line Items]
Convertible notes payable, Gross	$ 534,454
Issued in Fiscal Year 2020 [Member]
Short-Term Debt [Line Items]
Convertible notes payable, Gross		97,946			100,000
Issued in Fiscal Year 2021 [Member]
Short-Term Debt [Line Items]
Convertible notes payable, Gross		600,400			1,607,857
Issued In Fiscal Year Two Thousand And Twenty Two [Member]
Short-Term Debt [Line Items]
Convertible notes payable, Gross		$ 3,710,440

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CONVERTIBLE NOTES PAYABLE (Details Narrative)				3 Months Ended		6 Months Ended		12 Months Ended
	Dec. 21, 2021 USD ($)	Oct. 19, 2021 USD ($)	Mar. 18, 2020 shares	Jun. 30, 2023 USD ($) shares	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) shares	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($) $ / shares shares	Dec. 31, 2021 USD ($) $ / shares shares	Dec. 31, 2020 USD ($) $ / shares	Dec. 21, 2022 USD ($)	Oct. 19, 2022 USD ($)	Jan. 01, 2022 USD ($)	Nov. 18, 2020 USD ($) $ / shares shares	Nov. 17, 2020 USD ($)	Oct. 23, 2020 USD ($)	Mar. 20, 2020 USD ($)
Short-Term Debt [Line Items]
Interest expense						$ 3,964,556	$ 346,348	$ 374,938
Amortization of debt discount						145,837	625,783	$ 636,010
Debt instrument principal amount														$ 100,000
Debt interest rate								16.00%
Debt conversion price | $ / shares														$ 160
Cash proceeds						564,070	1,207,800	$ 2,027,570	$ 1,482,000
Debt instrument interest rate											24.00%	16.00%
Interest payable current				$ 616,593		616,593		478,712	204,915
Fair value of common stock value				$ 102,603	$ 1,512	$ 332,592	29,325	653,796	1,842,853
Number of warrants agreed to exchange | shares				0		0								39
Warrants exercised term				3 years 3 months 29 days		3 years 3 months 29 days
Loss on settlement of debt				$ 4,904,081		$ 4,904,081			186,156
Addition to convertible note payable				2,819,117		2,819,117		4,232,101	1,016,288
Accumulated deficit cumulative effective adjustment				(52,060,481)		(52,060,481)		(51,412,128)	(42,033,887)
Interest expense on convertible notes payable				3,488,822	$ 942,753	3,964,556	2,037,069	5,979,456	3,334,413
Interest Expense, Debt, Excluding Amortization						479,946	625,621	911,020	478,582
Repayments for related party						21,000	86,571	434,584	680,807
Outstanding notes				1,605,855		1,605,855		3,104,573	1,770,989
Convertible notes issued						332,592	$ 27,812	$ 653,796	1,842,853
Debt instrument interest rate, increase								125.00%
Debt instrument principal, increase								$ 173,333
Convertible notes payable								4,408,786	1,707,857
Convertible notes outstanding balance				97,946		97,946		97,946	22,357		$ 238,532	$ 361,869
Additional Paid-in Capital [Member]
Short-Term Debt [Line Items]
Derivative liability									392,703
Related Party [Member]
Short-Term Debt [Line Items]
Interest expense on convertible notes payable									9,992
Chief Executive Officer [Member]
Short-Term Debt [Line Items]
Debt instrument principal amount										$ 81,000
Loss on settlement of debt										54,000
Repayments for related party										135,000
Chief Executive Officer [Member] | Related Party [Member]
Short-Term Debt [Line Items]
Due to related party										135,000
Revision of Prior Period, Accounting Standards Update, Adjustment [Member] | Accounting Standards Update 2020-06 [Member]
Short-Term Debt [Line Items]
Addition to convertible note payable													$ 517,500
Accumulated deficit cumulative effective adjustment													$ 439,857
Note Exchange Agreement [Member]
Short-Term Debt [Line Items]
Debt carry value				5,398,299		$ 5,398,299
Description of related party payments						The New Note matures on June 1, 2024, and calls for payments of (i) $115,000 on or prior to July 25, 2023, (ii) nine monthly payments to the noteholder in the amount of $38,889 each, with the first payment beginning September 1, 2023 and (iii) $200,000 on the earlier of (a) three business days following the Company’s successful listing on any of the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange or (b) the receipt of not less than $4,000,000 in funding from a single transaction. If the conditions for payment of the above $200,000 are not met, but the Company raises capital in excess of $500,000 in a single closing, then 25% of any capital raised in such closing shall be used to satisfy the $200,000 payment
Note Exchange Agreement [Member] | Westland Properties L L C [Member]
Short-Term Debt [Line Items]
Debt carry value				665,000		$ 665,000
Granite Note [Member]
Short-Term Debt [Line Items]
Debt instrument principal amount																	$ 125,000
Granite Warrant [Member]
Short-Term Debt [Line Items]
Debt converted into common stock, shares | shares			16
Exchange Note [Member]
Short-Term Debt [Line Items]
Debt instrument principal amount								$ 325,000
Debt conversion, description								Conversions into common stock under the Exchange Note shall be effected at the lowest closing stock price during the five (5) days preceding any conversion, with -0- discount and a conversion price not below $112;
Maturity date								Sep. 30, 2021
Agreement With Smea2z LLC [Member]
Short-Term Debt [Line Items]
Debt instrument principal amount															$ 400,000	$ 220,000
Agreement With Smea2z LLC Two [Member]
Short-Term Debt [Line Items]
Debt instrument principal amount																$ 608,850
Exchange Note Two [Member]
Short-Term Debt [Line Items]
Debt conversion price | $ / shares								$ 56
Debt conversion, description								Typical events of default for such a note, as well as a default in the event the closing price for the Company’s common stock is less than $56 for at least 5-consecutive days;
Minimum [Member] | Exchange Note [Member]
Short-Term Debt [Line Items]
Debt conversion price | $ / shares								$ 112
Convertible Notes Payable [Member]
Short-Term Debt [Line Items]
Debt converted into common stock						$ 332,592		$ 653,796
Debt converted into common stock, shares | shares						10,807,823		998,899
Debt carry value				2,938,173		$ 2,938,173		$ 4,408,786
Interest expense on convertible notes payable								3,795,591	131,623
Promissory Notes - Issued in Fiscal Year 2020 [Member]
Short-Term Debt [Line Items]
Debt instrument principal amount										$ 100,000
Debt instrument term										60 months
Debt interest rate										5.00%
Debt conversion price | $ / shares										$ 0.01
Debt instrument maturity date, description										Convertible at the option of the holders at issuance date, after maturity date or 6 months after issuance date.
Addition to convertible note payable										$ 2,466,500
Debt conversion, description										Conversion prices are typically based on the discounted (25% to 50% discount) average closing prices or lowest trading prices of the Company’s shares during various periods prior to conversion. Certain note has a fixed conversion price ranging from $16 to $112.
Outstanding notes									100,000
Promissory Notes - Issued in Fiscal Year 2020 [Member] | Minimum [Member]
Short-Term Debt [Line Items]
Debt instrument principal amount										$ 15,000
Debt instrument term										5 months
Debt interest rate										0.00%
Debt conversion price | $ / shares										$ 160
Debt Instrument, Convertible, Conversion Ratio										0.18
Promissory Notes - Issued in Fiscal Year 2020 [Member] | Maximum [Member]
Short-Term Debt [Line Items]
Debt instrument term										60 months
Debt interest rate										25.00%
Promissory Notes - Issued in Fiscal Year 2021 [Member]
Short-Term Debt [Line Items]
Debt instrument principal amount				414,690		414,690
Convertible outstanding amount issued									1,696,999
Cash proceeds									1,482,000
Financing fee						117,858			$ 214,999
Debt instrument maturity date, description									Convertible at the option of the holders after varying dates.
Debt conversion, description									Conversion price based on a formula corresponding to a discount (39% discount) off the average closing price or lowest trading price of our Common stock for the 20 prior trading days including the day on which a notice of conversion is received
Debt instrument interest rate	24.00%	16.00%
Interest payable current				$ 39,822		39,822
Debt conversion, description									Conversion prices are typically based on the discounted (39% discount) average closing prices or lowest trading prices of the Company’s shares during 20 periods prior to conversion.
Maturity date	Dec. 21, 2022	Oct. 19, 2022
Convertible outstanding amount issued									$ 1,696,999
Cash proceeds									$ 1,482,000
Common stock valued shares | shares									1,414
Convertible notes issued									$ 133,663
Warrants to purchase shares | shares									117,992
Warrant issue terms									5 years
Debt instrument interest rate, increase	125.00%	125.00%
Debt instrument principal, increase	$ 1,974,914	$ 91,311
Debt instrument interest rate, description	The Company broke certain covenants of the convertible note related to the failure of the Company uplist 60 days from the note issuance date that triggered a 10% penalty of the outstanding principal and additional 5% of the outstanding principal every 10 calendar days until the uplist is completed or the note is paid off.
Convertible notes payable									$ 1,607,857
Promissory Notes - Issued in Fiscal Year 2021 [Member] | Minimum [Member]
Short-Term Debt [Line Items]
Debt instrument term									90 days
Debt interest rate									5.00%
Exercise price per share | $ / shares									$ 7.44
Promissory Notes - Issued in Fiscal Year 2021 [Member] | Maximum [Member]
Short-Term Debt [Line Items]
Debt instrument term									12 months
Debt interest rate									12.00%
Exercise price per share | $ / shares									$ 36.00
Two Thousand Twenty One Convertible Notes [Member]
Short-Term Debt [Line Items]
Number of convertible securities issued | shares									1,414
Fair value of common stock value									$ 133,663
Number of warrants agreed to exchange | shares									117,992
Warrants exercised term									5 years
Debt principal amount paid						38,490
Debt interest amount paid						39,822
Two Thousand Twenty One Convertible Notes [Member] | Minimum [Member]
Short-Term Debt [Line Items]
Exercise price for warrants | $ / shares									$ 7.44
Two Thousand Twenty One Convertible Notes [Member] | Maximum [Member]
Short-Term Debt [Line Items]
Exercise price for warrants | $ / shares									$ 36.00
Promissory Notes Issued In Fiscal Year Two Thousand And Twenty Two [Member]
Short-Term Debt [Line Items]
Debt converted into common stock								$ 473,691
Debt converted into common stock, shares | shares								554,464
Cash proceeds						$ 520,000		$ 1,857,800
Financing fee								$ 262,775
Debt instrument maturity date, description						Convertible at the option of the holders after varying dates		Convertible at the option of the holders after varying dates
Debt conversion, description								Conversion price based on a formula corresponding to a discount (20% or 39% discount) off the lowest trading price of our Common stock for the 20 prior trading days including the day on which a notice of conversion is received, although one of the 2022 Convertible Notes establishes a fixed conversion price of $4.50 per share
Convertible promissory notes						$ 637,858		$ 2,120,575
Debt conversion, description						Conversion price based on a formula corresponding to a discount (20% or 30% discount) off the lowest trading price of our Common stock for the 20 prior trading days including the day on which a notice of conversion is received, although one of the 2023 Convertible Notes establishes a fixed conversion price of $.50 per share		Conversion price based on a formula corresponding to a discount (20% or 39% discount) off the lowest trading price of our Common stock for the 20 prior trading days including the day on which a notice of conversion is received, although one of the 2022 Convertible Notes establishes a fixed conversion price of $4.50 per share.
Promissory Notes Issued In Fiscal Year Two Thousand And Twenty Two [Member] | Minimum [Member]
Short-Term Debt [Line Items]
Debt instrument term						9 months		3 months
Debt interest rate				9.00%		9.00%		9.00%
Promissory Notes Issued In Fiscal Year Two Thousand And Twenty Two [Member] | Maximum [Member]
Short-Term Debt [Line Items]
Debt instrument term						12 months		12 months
Debt interest rate				20.00%		20.00%		20.00%
Convertible Notes [Member]
Short-Term Debt [Line Items]
Debt converted into common stock									$ 1,450,150
Debt converted into common stock, shares | shares									24,536
Convertible Notes [Member] | Lender [Member]
Short-Term Debt [Line Items]
Debt instrument principal amount										$ 150,000

XML

SCHEDULE OF FAIR VALUE OF LIABILITIES MEASURED ON RECURRING BASIS (Details)		12 Months Ended
		Dec. 31, 2022	Dec. 31, 2021	Jun. 30, 2023
Measurement Input, Expected Term [Member] | Fair Value, Recurring [Member]
Derivative [Line Items]
Derivative liability, measurement input	[1]
Expected term	[2]	0 years
Measurement Input, Expected Term [Member] | Fair Value, Recurring [Member] | Minimum [Member]
Derivative [Line Items]
Expected term			5 months 23 days
Measurement Input, Expected Term [Member] | Fair Value, Recurring [Member] | Maximum [Member]
Derivative [Line Items]
Expected term			5 years
Measurement Input, Price Volatility [Member] | Fair Value, Recurring [Member]
Derivative [Line Items]
Derivative liability, measurement input		280
Measurement Input, Price Volatility [Member] | Fair Value, Recurring [Member] | Minimum [Member]
Derivative [Line Items]
Derivative liability, measurement input			160
Measurement Input, Price Volatility [Member] | Fair Value, Recurring [Member] | Maximum [Member]
Derivative [Line Items]
Derivative liability, measurement input			302
Measurement Input, Expected Dividend Rate [Member] | Fair Value, Recurring [Member]
Derivative [Line Items]
Derivative liability, measurement input
Measurement Input, Risk Free Interest Rate [Member]
Derivative [Line Items]
Derivative liability, measurement input		0.0365
Measurement Input, Risk Free Interest Rate [Member] | Fair Value, Recurring [Member]
Derivative [Line Items]
Derivative liability, measurement input		3.65
Measurement Input, Risk Free Interest Rate [Member] | Fair Value, Recurring [Member] | Minimum [Member]
Derivative [Line Items]
Derivative liability, measurement input			0.04
Measurement Input, Risk Free Interest Rate [Member] | Fair Value, Recurring [Member] | Maximum [Member]
Derivative [Line Items]
Derivative liability, measurement input			1.24

[1] There is no excepted term on the convertible notes.

[2] There is no excepted term on the convertible notes.

XML

DERIVATIVE LIABILITIES (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Derivative liabilities	$ 0		$ 0
[custom:FairValueOfDerivativeLiability]				$ 57,883
Change in fair value of derivative liability				$ 57,883	$ 57,883	$ 614,658
Derivative liabilities					$ 0

XML

SCHEDULE OF NOTES PAYABLE (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022		Dec. 31, 2021
Short-Term Debt [Line Items]
Promissory notes payable, Gross	$ 4,953,022	$ 4,400,469		$ 3,968,493
Interest Rate		16.00%
Less debt discount and debt issuance cost	(1,079,509)	$ (377,111)		(476,727)
Promissory notes payable	3,873,513	4,023,358		3,491,766
Less current portion of Promissory notes payable	2,267,658	918,785		1,720,777
Long-term Promissory notes payable	1,605,855	3,104,573		1,770,989
Economic Injury Disaster Loan - Originated In May 2020 [Member]
Short-Term Debt [Line Items]
Promissory notes payable, Gross	$ 500,000	$ 500,000	[1],[2]	500,000	[1],[2]
Debt instrument term	30 years	30 years	[1],[2]
Interest Rate	3.75%	3.75%	[1],[2]
Promissory Note - Originated In September 2020 [Member]
Short-Term Debt [Line Items]
Promissory notes payable, Gross	$ 7,568	$ 20,182		50,456
Debt instrument term	36 months	36 months
Interest Rate	14.00%	14.00%
Periodic payment	$ 2,873.89	$ 2,873.89
Promissory Note - Originated In December 2020 [Member]
Short-Term Debt [Line Items]
Promissory notes payable, Gross	$ 7,551	$ 16,047		33,039
Debt instrument term	36 months	36 months
Interest Rate	8.00%	8.00%
Periodic payment	$ 1,854.41	$ 1,854.41
Promissory Note - Originated In January 2021 [Member]
Short-Term Debt [Line Items]
Promissory notes payable, Gross	$ 11,268	$ 22,243		48,583
Debt instrument term	36 months	36 months
Interest Rate		18.00%
Periodic payment	$ 2,675.89	$ 2,675.89
Promissory Note - Originated In February 2021 [Member]
Short-Term Debt [Line Items]
Promissory notes payable, Gross	$ 1,305,373	$ 1,305,373	[3]	1,328,848	[3]
Debt instrument term	5 years	5 years	[3]
Interest Rate	4.00%	4.00%	[3]
Promissory Note - Originated In April 2021 [Member]
Short-Term Debt [Line Items]
Promissory notes payable, Gross	$ 866,666	$ 866,666	[4]	832,000	[4]
Debt instrument term	1 year	1 year	[4]
Interest Rate	12.00%	12.00%	[4]
Promissory Note - Originated In July 2021 [Member]
Short-Term Debt [Line Items]
Promissory notes payable, Gross	$ 352,500	$ 352,500	[4]	282,000	[4]
Debt instrument term	1 year	1 year	[4]
Interest Rate	12.00%	12.00%	[4]
Promissory Note - Originated In September 2021 [Member]
Short-Term Debt [Line Items]
Promissory notes payable, Gross	$ 37,712	$ 43,667		55,576
Debt instrument term	60 months	60 months
Interest Rate	28.00%	28.00%
Periodic payment	$ 1,383.56	$ 1,383.56
Promissory Note Originated In April 2022 [Member]
Short-Term Debt [Line Items]
Promissory notes payable, Gross	$ 64,680	$ 73,204
Debt instrument term	36 months	36 months
Interest Rate	16.00%	16.00%
Periodic payment	$ 1,695.41	$ 1,695.41
Promissory Note Originated In April 2022 One [Member]
Short-Term Debt [Line Items]
Promissory notes payable, Gross	$ 64,053	$ 239,858
Debt instrument term	168 days	168 days
Interest Rate	25.00%	25.00%
Periodic payment	$ 7,250	$ 7,250
Promissory Note Originated In June 2022 One [Member]
Short-Term Debt [Line Items]
Promissory notes payable, Gross		149,011
Debt instrument term	210 days
Interest Rate	49.00%
Periodic payment	$ 20,995
Promissory Note Originated In July 2022 [Member]
Short-Term Debt [Line Items]
Promissory notes payable, Gross	$ 48,569	$ 54,557
Debt instrument term	60 months	60 months
Interest Rate	18.00%	18.00%
Periodic payment	$ 1,485.38	$ 1,485.38
Promissory Note Originated In July 2022 Two [Member]
Short-Term Debt [Line Items]
Promissory notes payable, Gross	$ 76,514	94,878
Debt instrument term	36 months
Interest Rate	10.00%
Periodic payment	$ 3,546.87
Promissory Note Originated In August 2022 [Member]
Short-Term Debt [Line Items]
Promissory notes payable, Gross	$ 22,710	$ 26,538
Debt instrument term	60 months	60 months
Interest Rate	8.00%	8.00%
Periodic payment	$ 589.92	$ 589.92
Promissory Note Originated In October 2022 [Member]
Short-Term Debt [Line Items]
Promissory notes payable, Gross	$ 1,193,612	$ 635,745
Debt instrument term	30 days	30 days
Interest Rate	66.00%	66.00%
Periodic payment	$ 1,749.00	$ 1,749.00
Promissory Note Originated In January 2023 [Member]
Short-Term Debt [Line Items]
Promissory notes payable, Gross	$ 5,160
Debt instrument term	36 months
Interest Rate	25.00%
Periodic payment	$ 237.03
Promissory Note Originated In March 2023 [Member]
Short-Term Debt [Line Items]
Promissory notes payable, Gross	$ 53,519
Debt instrument term	60 months
Interest Rate	18.00%
Periodic payment	$ 1,521.73
Promissory Note Originated In March 2023 Two [Member]
Short-Term Debt [Line Items]
Promissory notes payable, Gross	$ 13,495
Debt instrument term	36 months
Interest Rate	17.00%
Periodic payment	$ 559.25
Promissory Note Originated In April 2023 [Member]
Short-Term Debt [Line Items]
Promissory notes payable, Gross	$ 31,672
Debt instrument term	12 months
Interest Rate	12.00%
Periodic payment	$ 3,999.00
Promissory Note Originated In April 2023 Two [Member]
Short-Term Debt [Line Items]
Promissory notes payable, Gross	$ 40,400
Debt instrument term	12 months
Interest Rate	6.00%
Periodic payment	$ 3,918.03
Promissory Note Originated In May 2023 [Member]
Short-Term Debt [Line Items]
Promissory notes payable, Gross	$ 250,000
Debt instrument term	3 months
Interest Rate	29.00%
Promissory Note - Originated In December 2021 [Member]
Short-Term Debt [Line Items]
Promissory notes payable, Gross				406,300
Debt instrument term		196 days
Interest Rate		49.00%
Periodic payment		$ 20,050
Promissory Note - Originated In December 2021 One [Member]
Short-Term Debt [Line Items]
Promissory notes payable, Gross				241,716
Debt instrument term		196 days
Interest Rate		4.94%
Periodic payment		$ 10,071.45
Promissory Note - Originated In December 2021 Two [Member]
Short-Term Debt [Line Items]
Promissory notes payable, Gross				189,975
Debt instrument term		80 days
Interest Rate		7.00%
Periodic payment		$ 2,793.75
Promissory Note Originated In June 2022 [Member]
Short-Term Debt [Line Items]
Promissory notes payable, Gross		$ 149,011
Debt instrument term		210 days
Interest Rate		49.00%
Periodic payment		$ 20,995
Promissory Note Originated In July 2022 One [Member]
Short-Term Debt [Line Items]
Promissory notes payable, Gross		$ 94,878
Debt instrument term		36 months
Interest Rate		10.00%
Periodic payment		$ 3,546.87

[1] On February 12, 2021, we issued notes payable of $1,404,000 to settle license fee payable of $1,094,691. As a result, we recorded loss on settlement of debt of $186,156 in fiscal year 2021.

[2] We received an advance under the Economic Injury Disaster Loan (EIDL) program.

[3] We received a second advance under the EIDL program in fiscal year 2021.

[4] Note payable with outstanding balance of $866,666 matured on April 22, 2022. Note payable with outstanding balance of $352,500 matured on July 27, 2022. The default annual interest rate of 16% becomes the effective interest rate on the past due principal and interest. A penalty of 125% of the outstanding principal and accrued interest was triggered and as a result $173,333 and $70,500, respectively, additional principal was added to the outstanding balance. We are in communication with the lender.

XML

NOTES PAYABLE (Details Narrative) - USD ($)	6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Short-Term Debt [Line Items]
Interest expense	$ 630,192	$ 113,693	$ 45,473	$ 10,031
Amortization of debt discount, included in interest expense	479,946	625,621	911,020	478,582
[custom:InterestExpensesDebt]			505,198	260,155
Amortization of Debt Discount (Premium)	625,783	1,549,752	2,321,011	2,906,645
Repayment of notes payable	1,047,218	1,957,492	4,408,240	4,577,578
Notes Payable, Other Payables [Member]
Short-Term Debt [Line Items]
Proceeds from notes payables	1,599,772	1,840,518	4,840,215	6,094,051
Debt discount	1,182,344	654,065
Repayment of notes payable	$ 1,047,218	$ 1,957,492
Amortization of Debt Discount (Premium)			2,537,167	2,082,875
Debt discount			1,381,970	1,716,825
Repayment of notes payable			$ 4,408,240	$ 4,577,578

XML

SCHEDULE OF WARRANT ACTIVITY (Details) - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Equity [Abstract]
Warrants Outstanding Beginning balance, Shares	159,974	146,842	6,250
Warrants Outstanding Beginning balance, Weighted Average Exercise Price	$ 22.07	$ 27.86	$ 20.00
Warrants Granted, Shares		20,699	141,721
Warrants Granted, Weighted Average Exercise Price		$ 6.00	$ 22.18
Warrants Exercised, Shares		7,567	2,416
Warrants Exercised, Weighted Average Exercise Price			$ 5.80
Warrants Forfeited/canceled, Shares
Warrants Forfeited/canceled, Weighted Average Exercise Price
Warrants Outstanding Ending balance, Shares	159,974	159,974	146,842
Warrants Outstanding Ending balance, Weighted Average Exercise Price	$ 22.07	$ 22.07	$ 27.86

XML

SCHEDULE OF OUTSTANDING AND EXERCISABLE WARRANTS (Details) - $ / shares	12 Months Ended
	Dec. 31, 2022	Jun. 30, 2023	Dec. 31, 2021	Dec. 31, 2020
Accumulated Other Comprehensive Income (Loss) [Line Items]
Number of shares,Warrants Outstanding		159,974
Weighted Average Remaining Contractual life, Warrants Outstanding		3 years 3 months 29 days
Weighted Average Exercise Price, Warrants Outstanding		$ 22.07
Number of shares,Warrants Outstanding	159,974	159,974	146,842	6,250
Weighted Average Exercise Price, Warrants Outstanding	$ 22.07	$ 22.07	$ 27.86	$ 20.00
Warrant One [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Number of shares,Warrants Outstanding		6,250
Weighted Average Remaining Contractual life, Warrants Outstanding		2 years 5 months 12 days
Weighted Average Exercise Price, Warrants Outstanding		$ 160.00
Number of shares,Warrants Outstanding	6,250
Weighted Average Remaining Contractual life (in years)	2 years 11 months 12 days
Weighted Average Exercise Price, Warrants Outstanding	$ 160.00
Number of shares,Warrants Exercisable
Weighted Average Exercise Price, Warrants Exercisable
Warrant Two [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Number of shares,Warrants Outstanding		6,934
Weighted Average Remaining Contractual life, Warrants Outstanding		2 years 9 months 21 days
Weighted Average Exercise Price, Warrants Outstanding		$ 120.00
Number of shares,Warrants Outstanding	6,934
Weighted Average Remaining Contractual life (in years)	3 years 3 months 21 days
Weighted Average Exercise Price, Warrants Outstanding	$ 120.00
Number of shares,Warrants Exercisable
Weighted Average Exercise Price, Warrants Exercisable
Warrant Three [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Number of shares,Warrants Outstanding		15,666
Weighted Average Remaining Contractual life, Warrants Outstanding		3 years 25 days
Weighted Average Exercise Price, Warrants Outstanding		$ 36.00
Number of shares,Warrants Outstanding	15,666
Weighted Average Remaining Contractual life (in years)	3 years 6 months 25 days
Weighted Average Exercise Price, Warrants Outstanding	$ 36.00
Number of shares,Warrants Exercisable
Weighted Average Exercise Price, Warrants Exercisable
Warrant Four [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Number of shares,Warrants Outstanding		2,917
Weighted Average Remaining Contractual life, Warrants Outstanding		3 years 3 months
Weighted Average Exercise Price, Warrants Outstanding		$ 36.00
Number of shares,Warrants Outstanding	2,917
Weighted Average Remaining Contractual life (in years)	3 years 9 months
Weighted Average Exercise Price, Warrants Outstanding	$ 36.00
Number of shares,Warrants Exercisable
Weighted Average Exercise Price, Warrants Exercisable
Warrant Five [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Number of shares,Warrants Outstanding		32,837
Weighted Average Remaining Contractual life, Warrants Outstanding		3 years 14 days
Weighted Average Exercise Price, Warrants Outstanding		$ 9.88
Number of shares,Warrants Outstanding	32,837
Weighted Average Remaining Contractual life (in years)	3 years 9 months 18 days
Weighted Average Exercise Price, Warrants Outstanding	$ 9.88
Number of shares,Warrants Exercisable
Weighted Average Exercise Price, Warrants Exercisable
Warrant Six [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Number of shares,Warrants Outstanding		74,671
Weighted Average Remaining Contractual life, Warrants Outstanding		3 years 6 months
Weighted Average Exercise Price, Warrants Outstanding		$ 7.44
Number of shares,Warrants Outstanding	74,671
Weighted Average Remaining Contractual life (in years)	4 years
Weighted Average Exercise Price, Warrants Outstanding	$ 7.44
Number of shares,Warrants Exercisable
Weighted Average Exercise Price, Warrants Exercisable
Warrant Seven [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Number of shares,Warrants Outstanding		20,699
Weighted Average Remaining Contractual life, Warrants Outstanding		3 years 10 months 9 days
Weighted Average Exercise Price, Warrants Outstanding		$ 6.00
Number of shares,Warrants Outstanding	20,699
Weighted Average Remaining Contractual life (in years)	4 years 4 months 9 days
Weighted Average Exercise Price, Warrants Outstanding	$ 6.00
Number of shares,Warrants Exercisable
Weighted Average Exercise Price, Warrants Exercisable

XML

CAPITAL STOCK AND REVERSE STOCK SPLIT (Details Narrative) - USD ($)										3 Months Ended		6 Months Ended		12 Months Ended
	Aug. 25, 2022	Mar. 07, 2022	Dec. 21, 2021	Oct. 19, 2021	Sep. 28, 2021	Jul. 27, 2021	Jul. 01, 2021	Apr. 23, 2021	Dec. 11, 2020	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Dec. 15, 2020	Nov. 25, 2020	Nov. 18, 2020	Aug. 17, 2020	Apr. 15, 2020	Mar. 05, 2020
Class of Stock [Line Items]
Preferred stock, shares authorized										337,500		337,500		337,500	337,500
Preferred stock, par value										$ 0.001		$ 0.001		$ 0.001	$ 0.001
Common stock, shares authorized										500,000,000		500,000,000		500,000,000	125,000,000		1,800,000,000			1,500,000,000	750,000,000	250,000,000
Common stock par value		$ 0.001								$ 0.001		$ 0.001		$ 0.001	$ 0.001
Common stock, shares issued										59,363,988		59,363,988		2,615,737	122,044
Common stock, shares outstanding										59,363,988		59,363,988		2,615,737	122,044
Warrants exercised with cashless														7,567	2,416
Number of warrants to acquire common stock, shares										0		0							39
Reverse stock split		1-for-8					1-for-2,000							Effective March 7, 2022 and July 1, 2021, we effected an 8 for 1 and 2,000 for 1 reverse stock split, respectively, of our issued and outstanding common stock (the “Reverse Stock Splits”)
Gross proceeds															$ 846,801
Accrued dividend													$ 104,631	$ 104,631	40,149
Amortization of debt discount												$ 625,783	$ 1,549,752	$ 2,321,011	2,906,645
Capital Units, Authorized														125,000,000
Common stock, voting rights description														All shares have equal voting rights, are non-assessable, and have one vote per share.
Financing cost															10,000
Financing discount															$ 143,199
Common stock issued for cashless warrant															1,116
Warrants term										3 years 3 months 29 days		3 years 3 months 29 days
Warrants weighted average exercise price										$ 22.07		$ 22.07		$ 22.07	$ 27.86	$ 20.00
Class of Warrant or Right, Number of Securities Called by Warrants or Rights														20,699	141,721
Debt Instrument, Face Amount																			$ 100,000
Warrant One [Member]
Class of Stock [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights														$ 6	$ 120
Class of Warrant or Right, Number of Securities Called by Warrants or Rights														1,533	6,933
Warrant [Member]
Class of Stock [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights					$ 36	$ 36		$ 120						$ 6
Class of Warrant or Right, Number of Securities Called by Warrants or Rights					2,917	15,666		6,933						19,166
Warrant [Member] | Secured Promissory Note [Member]
Class of Stock [Line Items]
Debt Instrument, Face Amount					$ 282,000	$ 282,000		$ 832,000
Commercial Paper [Member]
Class of Stock [Line Items]
Conversion of stock shares issued															1,414
Shares Issued for Conversion of Debt [Member]
Class of Stock [Line Items]
Stock issued for conversion of debt															24,536
Securities Purchase Agreement [Member]
Class of Stock [Line Items]
Common stock par value	$ 0.001
Number of shares issued	931,000
Gross proceeds	$ 931,000
Shares Issued, Price Per Share	$ 1.00
Coomon Stock Purchase Agreement [Member] | Triton Funds LP [Member]
Class of Stock [Line Items]
Number of warrants to acquire common stock, shares									6,250
Common stock issued for cashless warrant									1,250
Class of Warrant or Right, Exercise Price of Warrants or Rights									$ 160
Coomon Stock Purchase Agreement [Member] | Triton Funds LP [Member] | Maximum [Member]
Class of Stock [Line Items]
Warrants to purchase common stock									$ 1,000,000
Chief Executive Officer [Member]
Class of Stock [Line Items]
Debt Instrument, Face Amount																$ 81,000
Holders [Member]
Class of Stock [Line Items]
Warrants outstanding																2
Loss on settlement in exchange of warrants																$ 100,000
Common Stock [Member]
Class of Stock [Line Items]
Stock issued for conversion of debt										6,676,796	151,200	10,807,823	165,273	998,899	24,536
Stock issued for adjustment to investors										45,619,000		45,619,000
Stock-based compensation										321,428		321,428			1,227
Common stock, shares issued										59,363,988		59,363,988		2,615,737
Common stock, shares outstanding										59,363,988		59,363,988		2,615,737
Number of shares issued															10,419
Gross proceeds															$ 10
Shares issued upon exercise of warrant													6,631	6,631	1,116
Asset purchase agreement consideration shares											380,952		380,952	380,952
Stock Issued During Period, Shares, Conversion of Units											108,000		108,000	108,000	18,024
Shares issued for service											153,491		153,491	50,041
CoShares issued as loan fee											12,551		18,170	18,170	1,414
Cash pursuant to private placement offfering														931,000
Common Stock [Member] | Shares Issuance for Cash [Member]
Class of Stock [Line Items]
Number of shares issued															10,419
Gross proceeds															$ 1,000,000
Warrant [Member]
Class of Stock [Line Items]
Number of warrants to acquire common stock, shares																21
Warrants term																5 years
Class of Warrant or Right, Exercise Price of Warrants or Rights			$ 7.44	$ 36												$ 8,000
Increasein warants																22,919
Warrants exercisable																23,057
Warrants weighted average exercise price																$ 81.60
Class of Warrant or Right, Number of Securities Called by Warrants or Rights			74,671	40,404
Warrant [Member] | Convertible Promissory Note [Member]
Class of Stock [Line Items]
Debt Instrument, Face Amount			$ 555,555	$ 444,444
Series A Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock, shares authorized										150,000		150,000		150,000	150,000
Preferred stock, par value										$ 0.001		$ 0.001		$ 0.001	$ 0.001
Debt Conversion, Converted Instrument, Shares Issued												1,000
Preferred Stock, Voting Rights												entitled to vote 15,000 shares of common stock on all matters submitted to a vote by shareholders voting common stock
Preferred stock, shares issued										149,892		149,892		149,892	150,000
Preferred stock, shares outstanding										149,892		149,892		149,892	150,000
[custom:NumberOfCommonSharesEquivalentToSeriesA]														15,000
Conversion of stock shares issued														108,000
Series A Preferred Stock [Member] | Chief Executive Officer [Member]
Class of Stock [Line Items]
[custom:NumberOfSharesHolds]														149,892
Series B Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock, shares authorized										80,000		80,000		80,000				80,000
Preferred stock, par value										$ 10		$ 10		$ 10				$ 0.001
Preferred stock, shares issued										0		0		0	29,750
Preferred stock, shares outstanding										0		0		0	29,750
Preferred stock, description												Each share of Series B (i) is convertible into Common stock at a price per share equal to sixty one percent (61%) of the lowest price for our Common stock during the twenty (20) days of trading preceding the date of the conversion; (ii) earns dividends at the rate of nine percent (9%) per annum; and, (iii) has no voting rights		Each share of Series B (i) has a stated value of Ten Dollars ($10.00) per share; (ii) is convertible into Common stock at a price per share equal to sixty one percent (61%) of the lowest price for our Common stock during the twenty (20) days of trading preceding the date of the conversion; (iii) earns dividends at the rate of nine percent (9%) per annum; and, (iv) has no voting rights.
Number of shares issued														7,875
Gross proceeds														$ 78,750
Financing fees														$ 3,750
Shares redeemed, shares														37,625
Shares redeemed, value														$ 487,730
Accrued dividend														104,631
Amortization of debt discount														$ 22,439
Common Stock [Member]
Class of Stock [Line Items]
Conversion of stock shares issued															18,024
Shares issued for service															1,227

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SCHEDULE OF STOCK OPTION ACTIVITY (Details) - Employees Consultants and Advisors [Member] - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items]
Options outstanding, balance beginning	865,983	2,121	735
Options outstanding, balance beginning	$ 1.67	$ 775.93	$ 775.93
Options outstanding, grants	1,972,728	865,116	1,386
Weighted-Average exercise price, grants	$ 0.07	$ 1.34	$ 304.44
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercises in Period
Weighted-Average exercise price, exercised
Options outstanding, cancelled	644	1,254
Weighted-Average exercise price, cancelled	$ 67.40	$ 67.40
Options Outstanding, Balance Ending	2,838,067	865,983	2,121
Weighted-Average exercise price, balance ending	$ 0.57	$ 1.67	$ 775.93
Options outstanding, exercised

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SCHEDULE OF STOCK OPTIONS VESTED AND EXPECTED TO VEST (Details) - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Equity [Abstract]
Number of Options, Outstanding	2,838,067	865,983
Weighted-Average Remaining Contractual Life (In Years), Outstanding	9 years 25 days	4 years 10 months 6 days
Weighted-Average Exercise Price, Outstanding	$ 0.78	$ 1.54
Number of Options, Exercisable	477,112	689,948
Weighted-Average Remaining Contractual Life (In Years), Exercisable	8 years 3 months 14 days	4 years 9 months 29 days
Weighted-Average Exercise Price, Exercisable	$ 3.14	$ 1.67
Number of Options, Expected to vest	2,838,067	865,983
Weighted-Average Remaining Contractual Life (In Years), Expected to vest	9 years 25 days	4 years 10 months 6 days
Weighted-Average Exercise Price, Expected to vest	$ 0.78	$ 1.54

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SCHEDULE OF RESTRICTED STOCK ACTIVITY (Details) - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share-Based Compensation Arrangement by Share-Based Payment Award, Non-Option Equity Instruments, Exercised		7,567	2,416
Restricted Stock [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Restricted stock,Beginning balance, Shares	322,798	1,370	923
Restricted stock,Beginning balance, Shares	$ 225,639	$ 639.22	$ 748.89
Number of Restricted Stock, Shares of restricted stock granted	2,550,000	321,428	447
Shares of restricted stock granted	$ 180,000	$ 225,000	$ 413.33
Number of Restricted Stock, Exercised
Exercised
Number of Restricted Stock, Cancelled
Cancelled
Restricted stock, Ending balance, Shares	2,872,798	322,798	1,370
Restricted stock, Ending balance, Shares	$ 405,639	$ 225,639	$ 639.22
Share-Based Compensation Arrangement by Share-Based Payment Award, Non-Option Equity Instruments, Exercised
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Forfeited in Period

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SCHEDULE OF RESTRICTED STOCK AWARD (Details) - Restricted Stock [Member] - shares	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of Restricted Stock Awards, Vested	322,798	1,370	1,370
Number of Restricted Stock Awards, Non-vested	2,550,000	321,428

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STOCK-BASED COMPENSATION (Details Narrative) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Restricted Stock [Member]
Option Indexed to Issuer's Equity [Line Items]
Unrecognized compensation and non-vested		$ 0	$ 0
Share-based compensation, vesting period		1 year
Maximum [Member] | Restricted Stock [Member]
Option Indexed to Issuer's Equity [Line Items]
Share-based compensation, expiration term		10 years
Stock Options [Member]
Option Indexed to Issuer's Equity [Line Items]
Vesting term	one	one-year or two-year anniversary date of the grant
Unrecognized compensation and non-vested	$ 226,716	$ 381,547	$ 381,547
Weighted average granted date fair value stock options granted		$ 1.34	$ 299
Fair value of option vested		$ 1,341,002	$ 414,902
Stock Options [Member] | Maximum [Member]
Option Indexed to Issuer's Equity [Line Items]
Share-based compensation, expiration term	10 years	10 years

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RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)		1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
	Aug. 14, 2020	Jan. 31, 2018	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021	Sep. 16, 2019
Operating Expenses			$ 1,699,878	$ 2,175,855	$ 3,132,861	$ 3,269,812	$ 5,784,408	$ 5,699,845
Due to related party			320,486		320,486		112,062	247,366
Payments to Acquire Businesses, Gross						250,000	250,000
Notes payable			3,873,513		3,873,513		4,023,358	3,491,766
Proceeds from Related Party Debt					229,426	$ 116,238	299,280	366,943
Asset Purchase Agreement [Member] | DMB Group LLC [Member]
Notes payable							0	405,382	$ 940,000
Repayments of Notes Payable							124,985	281,638
Interest expenses							1,240	9,992
Series A Preferred Stock [Member] | Share Settlement Agreement [Member]
Stock Issued During Period, Shares, New Issues	144,000
Mr. Remillard [Member]
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares		100
Mr. Remillard [Member] | Myriad Software Productions, LLC [Member]
Business Combination, Consideration Transferred		$ 1,500,000
Payments to Acquire Businesses, Gross		50,000
Business Combination, Consideration Transferred, Liabilities Incurred		250,000
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable		$ 1,200,000
Related Party [Member]
Due to related party			$ 320,488		320,488		112,062	247,366
Related Party [Member] | Asset Purchase Agreement [Member] | DMB Group LLC [Member]
Due to related party									$ 97,689
Myriad Software Productions, LLC [Member] | Mr. Remillard [Member]
Equity Method Investment, Ownership Percentage		100.00%
Chief Executive Officer [Member]
Proceeds from Loans					19,700
Operating Expenses					68,942		167,653	135,793
Repayments of Debt					21,000		602,237	399,169
Proceeds from Related Party Debt							$ 299,281	$ 231,150
Chief Financial Officer [Member]
Proceeds from Loans					$ 150,000

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SUBSEQUENT EVENTS (Details Narrative) - USD ($)										3 Months Ended	6 Months Ended	12 Months Ended
	Jul. 07, 2023	Feb. 17, 2023	Feb. 06, 2023	Feb. 01, 2023	Jan. 24, 2023	Jan. 20, 2023	Jan. 16, 2023	Jan. 09, 2023	Jan. 04, 2023	Jun. 30, 2022	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021	Jul. 06, 2023	Jun. 30, 2023	Mar. 07, 2022	Nov. 18, 2020
Subsequent Event [Line Items]
Notes payable												$ 4,023,358	$ 3,491,766		$ 3,873,513
Debt face amount																	$ 100,000
Common stock par value												$ 0.001	$ 0.001		$ 0.001	$ 0.001
Debt conversion price per shares																	$ 160
Debt interest rate												16.00%
Debt Instrument, Increase, Accrued Interest												$ 70,500
Common stock issued for conversion of preferred stock													$ 827,106
Common Stock [Member]
Subsequent Event [Line Items]
Common stock issued for cash, shares													10,419
Common stock issued for conversion of preferred stock										$ 108	$ 108	$ 108	$ 18
Common stock issued for conversion of preferred stock, shares										108,000	108,000	108,000	18,024
Subsequent Event [Member]
Subsequent Event [Line Items]
Debt conversion price per shares					$ 0.25
Debt Conversion, Converted Instrument, Amount					$ 300,000
Debt Instrument, Term					1 year
Debt Conversion, Original Debt, Amount					$ 50,000
Subsequent Event [Member] | Mast Hill Fund [Member]
Subsequent Event [Line Items]
Common stock issued for conversion of preferred stock		$ 21,638		$ 13,023
Sale of stock consideration received on transaction		$ 4,197		$ 14,949
Common stock issued for conversion of preferred stock, shares		179,000		165,000
Subsequent Event [Member] | Westland Properties L L C [Member] | Common Stock [Member]
Subsequent Event [Line Items]
Sale of stock consideration received on transaction			$ 15,000
Common stock issued for conversion of preferred stock, shares			118,858
Subsequent Event [Member] | Purchase Agreement [Member] | Investor One [Member]
Subsequent Event [Line Items]
Debt face amount														$ 812,500.00
Common stock par value														$ 0.01
Debt conversion price per shares														$ 0.005
Debt interest rate														30.00%
Subsequent Event [Member] | Purchase Agreement [Member] | Investor Two [Member]
Subsequent Event [Line Items]
Debt face amount														$ 718,750.00
Debt conversion price per shares														$ 0.005
Debt interest rate														12.00%
Issuance of notes percentage														15.00%
Root Ventures L L C [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Common stock issued for cash, shares	2,049,180
Notes payable	$ 25,000
Debt face amount							$ 23,027
Debt Conversion, Converted Instrument, Shares Issued							139,557
G S Capital Partners L L C [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Debt face amount									$ 15,000
Debt Instrument, Increase, Accrued Interest									$ 1,209
Debt Conversion, Converted Instrument, Shares Issued									97,761
Westland Properties L L C [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Debt face amount								$ 15,000
Debt Conversion, Converted Instrument, Shares Issued								83,333
Fast Capital L L C [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Debt face amount						$ 20,000
Debt Conversion, Converted Instrument, Shares Issued						139,500

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SUMMARY OF DEFERRED REVENUE (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Accounting Policies [Abstract]
Current	$ 1,814,620	$ 1,704,249	$ 1,035,185
Non-current	515,000	788,902	573,411
Balance, end of year	$ 2,329,620	$ 2,493,151	$ 1,608,596

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SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS UNDER FINANCE LEASES (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Accounting Policies [Abstract]
2023		$ 10,341
Thereafter
Total finance lease payment		10,341
Less: Imputed interest		(5,300)
Finance lease liabilities		5,041
Finance lease liability		10,341	$ 72,768
Finance lease liability - non-current			$ 10,341

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SCHEDULE OF FINANCE LEASE ASSETS (Details) - USD ($)	Dec. 31, 2022	Dec. 31, 2021
Accounting Policies [Abstract]
Finance lease assets	$ 267,284	$ 267,284
Accumulated depreciation	(258,506)	(192,928)
Finance lease assets, net of accumulated depreciation	$ 8,778	$ 74,356

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SCHEDULE OF CHANGES IN DERIVATIVE LIABILITIES (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Platform Operator, Crypto-Asset [Line Items]
Derivative liability as of December 31, 2021			$ 0
Change in derivative liabilities recognized as loss on derivative				$ (57,883)	$ (57,883)	$ (614,658)
Derivative liability as of December 31, 2022					0
Fair Value, Inputs, Level 3 [Member]
Platform Operator, Crypto-Asset [Line Items]
Derivative liability as of December 31, 2021
Addition of new derivatives recognized as debt discounts						390,000
Addition of new derivatives recognized as day-one loss					57,883	559,939
Derivative liabilities settled upon conversion of convertible note					(57,883)	(1,004,658)
Change in derivative liabilities recognized as loss on derivative						54,719
Derivative liability as of December 31, 2022

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SCHEDULE OF NOTES PAYABLE (Details) (Parenthetical) - USD ($)		3 Months Ended		6 Months Ended		12 Months Ended
	Feb. 12, 2021	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022		Dec. 31, 2021
Short-Term Debt [Line Items]
Note payable issued for settlement of License fee payable	$ 1,404,000
License fee payable	$ 1,094,691
Loss on settlement of debt		$ 4,904,081		$ 4,904,081				$ 186,156
Promissory notes payable, Gross		4,953,022		4,953,022		$ 4,400,469		3,968,493
Interest Rate						16.00%
Debt instrument interest rate, increase						125.00%
Debt instrument principal, increase						$ 173,333
Accrued interest						70,500
Promissory Note - Originated In April 2021 [Member]
Short-Term Debt [Line Items]
Promissory notes payable, Gross		$ 866,666		$ 866,666		$ 866,666	[1]	832,000	[1]
Maturity date						Apr. 22, 2022
Interest Rate		12.00%		12.00%		12.00%	[1]
Promissory Note - Originated In July 2021 [Member]
Short-Term Debt [Line Items]
Promissory notes payable, Gross		$ 352,500		$ 352,500		$ 352,500	[1]	$ 282,000	[1]
Maturity date						Jul. 27, 2022
Interest Rate		12.00%		12.00%		12.00%	[1]

[1] Note payable with outstanding balance of $866,666 matured on April 22, 2022. Note payable with outstanding balance of $352,500 matured on July 27, 2022. The default annual interest rate of 16% becomes the effective interest rate on the past due principal and interest. A penalty of 125% of the outstanding principal and accrued interest was triggered and as a result $173,333 and $70,500, respectively, additional principal was added to the outstanding balance. We are in communication with the lender.

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SCHEDULE OF WARRANTS ACTIVITY (Details) - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Accounting Policies [Abstract]
Warrants Outstanding Beginning balance, Shares	159,974	146,842	6,250
Warrants Outstanding Beginning balance, Weighted Average Exercise Price	$ 22.07	$ 27.86	$ 20.00
Warrants Granted, Shares		20,699	141,721
Warrants Granted, Weighted Average Exercise Price		$ 6.00	$ 22.18
Warrants Reset feature, Shares
Warrants Reset feature, Weighted Average Exercise Price
Warrants Exercised, Shares		(7,567)	(2,416)
Warrants Exercised, Weighted Average Exercise Price			$ 5.80
Warrants Forfeited/canceled, Shares
Warrants Forfeited/canceled, Weighted Average Exercise Price
Warrants Outstanding Ending balance, Shares	159,974	159,974	146,842
Warrants Outstanding Ending balance, Weighted Average Exercise Price	$ 22.07	$ 22.07	$ 27.86

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BUSINESS DESCRIPTION (Details Narrative) - USD ($)				6 Months Ended		12 Months Ended
	Mar. 07, 2022	Jan. 19, 2022	Jul. 01, 2021	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021	Apr. 20, 2022
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Entity date of incorporation				May 04, 1998		May 04, 1998
Payments to acquire businesses, gross					$ 250,000	$ 250,000
Notes payable				$ 3,873,513		$ 4,023,358	$ 3,491,766
Common stock shares issued				59,363,988		2,615,737	122,044
Reverse stock splits description	1-for-8		1-for-2,000			Effective March 7, 2022 and July 1, 2021, we effected an 8 for 1 and 2,000 for 1 reverse stock split, respectively, of our issued and outstanding common stock (the “Reverse Stock Splits”)
Asset Purchase Agreement [Member] | Centurion Holdings I LLC [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Business combination, consideration transferred		$ 3,400,000
Payments to acquire businesses, gross		250,000
Payment for contingent consideration liability, investing activities		250,000
Outstanding cash		500,000
Repayments of obligation related to equivalent		2,400,000
Common stock shares issued								380,952
Asset Purchase Agreement [Member] | Centurion Holdings I LLC [Member] | Promissory Note [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Notes payable		$ 2,900,000

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SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES (Details) - USD ($)	Dec. 31, 2022	Dec. 31, 2021
Income Tax Disclosure [Abstract]
Non-operating loss carryforward	$ 6,326,000	$ 4,685,000
Valuation allowance	(6,326,000)	(4,685,000)
Net deferred tax asset

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SCHEDULE OF STATUTORY FEDERAL INCOME TAX RATE LOSSES BEFORE INCOME TAX (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Income Tax Disclosure [Abstract]
Loss for the year	$ 89,540	$ (2,446,212)	$ (648,353)	$ (4,279,531)	$ (9,713,467)	$ (6,475,154)
Income tax (recovery) at statutory rate					(2,040,000)	(1,360,000)
State income tax expense, net of federal tax effect					(194,000)	(130,000)
Permanent difference and other					593,000	819,000
Change in valuation allowance					1,641,000	671,000
Income tax expense per books

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SCHEDULE OF WEIGHTED AVERAGE ASSUMPTIONS FOR STOCK OPTIONS GRANTED (Details) - Stock Options [Member]	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Option Indexed to Issuer's Equity [Line Items]
Expected term (years)	5 years	5 years 8 months 26 days
Expected stock price volatility	280.82%	296.25%
Weighted-average risk-free interest rate	3.65%	0.62%
Expected dividend	0.00%	0.00%

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INCOME TAXES (Details Narrative)	12 Months Ended
	Dec. 31, 2022 USD ($)
Income Tax Disclosure [Abstract]
Valuation allowance increase (decrease)	$ 1,641,000
Net operating and economic loss carryforwards	$ 26,030,830
Federal income tax rate	21.00%
State income tax rate	2.00%
Change in effective tax rate	0.00%

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SUMMARY OF INTEREST EXPENSE (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
Defined Benefit Plan Disclosure [Line Items]
Interest expense - convertible notes					$ 2,884,571	$ 131,623
Interest expense	$ 3,488,822	$ 942,753	$ 3,964,556	$ 2,037,069	5,979,456	3,334,413
Finance lease					7,047	15,967
Other			$ 630,192	$ 113,693	45,473	10,031
Amortization of debt discount					2,537,167	2,906,645
Nonrelated Party [Member]
Defined Benefit Plan Disclosure [Line Items]
Interest expense					505,198	260,155
Related Party [Member]
Defined Benefit Plan Disclosure [Line Items]
Interest expense						$ 9,992

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SCHEDULE OF ERROR CORRECTIONS (Details) - USD ($)	6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Dec. 31, 2021
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Amortization of debt discount	$ 625,783	$ 1,549,752	$ 2,321,011	$ 2,906,645
Stock based compensation	565,571	798,690	1,044,680	968,470
Accounts payable and accrued liabilities	1,189,069	308,642	916,254	(291,922)
Interest payable			2,193,853
Net Cash used in Operating Activities	175,918	(115,911)	(1,252,650)	(855,540)
Proceeds from convertible notes issued	564,070	1,207,800	2,027,570	1,482,000
Repayment on convertible notes	(146,663)	(758,346)	(771,718)	(45,000)
Proceeds from issuance of notes payable	417,427	1,186,453	3,458,247	4,377,226
Proceeds from related parties	229,426	116,238	299,280	366,943
Finance lease payments	(10,341)	(41,195)	(78,268)	(90,565)
Net cash provided by Financing Activities	$ 5,701	$ (742,062)	610,557	$ 2,140,021
Previously Reported [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Amortization of debt discount			2,512,725
Stock based compensation			1,044,691
Accounts payable and accrued liabilities			923,107
Interest payable			361,588
Net Cash used in Operating Activities			(2,886,337)
Proceeds from convertible notes issued			1,747,680
Repayment on convertible notes			1,146,359
Proceeds from issuance of notes payable			3,448,246
Proceeds from related parties			229,281
Finance lease payments			(72,768)
Net cash provided by Financing Activities			2,244,244
Revision of Prior Period, Adjustment [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Amortization of debt discount			(191,714)
Stock based compensation			(11)
Accounts payable and accrued liabilities			(6,853)
Interest payable			1,832,265
Net Cash used in Operating Activities			1,633,687
Proceeds from convertible notes issued			279,890
Repayment on convertible notes			(1,918,077)
Proceeds from issuance of notes payable			10,001
Proceeds from related parties			(1)
Finance lease payments			(5,500)
Net cash provided by Financing Activities			$ (1,633,687)