Management Plans Capital Resources	9 Months Ended
Sep. 30, 2022
Management Plans Capital Resources
Management Plans - Capital Resources	Note 2. Management Plans - Capital Resources The Company reported net losses of $2,788,725 and $838,536 for the nine months ended September 30, 2022 and 2021, respectively, and stockholders’ deficiencies of $6,367,284 and $4,097,889 at September 30, 2022 and December 31, 2021, respectively. The Company had a working capital deficit of approximately $5.46 million at September 30, 2022. Accordingly, there is substantial doubt about the Company’s ability to continue as a going concern within one year of issuance of the financial statements. The Company’s mission is to drive shareholder value by developing and bringing to market automated, cost effective, and innovative cybersecurity technologies. The Company’s strategy is to build its business by designing, developing, and marketing IT security-based products and solutions that fill technology gaps in cybersecurity. The Company’s goal is to increase sales and generate cash flow from operations on a consistent basis. The Company’s business plans require improving the results of its operations in future periods. The Company has renegotiated the terms of certain obligations, using operational cash flow to pay down balances and extending terms, and provided financing with the issuance of new loans. At September 30, 2022, the Company is in default on principal and interest payments on the Mast Hill Fund, L.P. and Talos Victory Fund, LLC, financing arrangements. The noteholders have been notified of the failure to pay and have taken no action against the Company at this time. During the first quarter of 2022, the Company filed an S-1 for a public offering of $15 million of common stock and redeemable warrants, a portion of the net proceeds of which was expected to be used for the Pratum Acquisition. Following the termination of the Pratum Agreement, the Company determined to proceed with the offering. In October 2022, the Company filed an amended S-1 for a public offering of $15.3 million of common stock and redeemable warrants, which was expected to be used for working capital needs including software development and repayment of debt. The completion of this offering did not occur. The Company is reevaluating its capital needs and anticipates that it will continue to scale down spending to reduce costs and to increase cash flow while continuing to grow the operations at a slower pace. The Company believes the capital resources generated by anticipated improving operational results due to reduction of expenses, increased bookings and deposits in our Services business, and an influx of new Nodeware orders under contract at September 30, 2022 as well as cash available from additional funding from the public and private markets including related party loans, if needed, provide sources to fund its ongoing operations and to support the internal growth of the Company. The Company is evaluating and is in process of extending existing debt agreements in order to provide resources for other purposes. If the Company experiences significant growth in its sales, the Company believes that this may require it to increase its financing line, finance additional accounts receivable, or obtain additional working capital from other sources to support its sales growth. The Company plans to continue to evaluate alternatives which may include continuing to renegotiate the terms of other notes, seeking conversion of the notes to shares of common stock and seeking funds to repay the notes. The Company continues to evaluate repayment of its remaining notes payable based on its cash flow. Therefore, unless the Company is successful with some of these alternatives, the substantial doubt about our ability to continue as a going concern will not be alleviated.

Management Plans Capital Resources

9 Months Ended

Sep. 30, 2022

Note 2. Management Plans - Capital Resources

The Company reported net losses of $2,788,725 and $838,536 for the nine months ended September 30, 2022 and 2021, respectively, and stockholders’ deficiencies of $6,367,284 and $4,097,889 at September 30, 2022 and December 31, 2021, respectively. The Company had a working capital deficit of approximately $5.46 million at September 30, 2022. Accordingly, there is substantial doubt about the Company’s ability to continue as a going concern within one year of issuance of the financial statements.

The Company’s mission is to drive shareholder value by developing and bringing to market automated, cost effective, and innovative cybersecurity technologies. The Company’s strategy is to build its business by designing, developing, and marketing IT security-based products and solutions that fill technology gaps in cybersecurity.

The Company’s goal is to increase sales and generate cash flow from operations on a consistent basis. The Company’s business plans require improving the results of its operations in future periods. The Company has renegotiated the terms of certain obligations, using operational cash flow to pay down balances and extending terms, and provided financing with the issuance of new loans.

At September 30, 2022, the Company is in default on principal and interest payments on the Mast Hill Fund, L.P. and Talos Victory Fund, LLC, financing arrangements. The noteholders have been notified of the failure to pay and have taken no action against the Company at this time.

During the first quarter of 2022, the Company filed an S-1 for a public offering of $15 million of common stock and redeemable warrants, a portion of the net proceeds of which was expected to be used for the Pratum Acquisition. Following the termination of the Pratum Agreement, the Company determined to proceed with the offering.

In October 2022, the Company filed an amended S-1 for a public offering of $15.3 million of common stock and redeemable warrants, which was expected to be used for working capital needs including software development and repayment of debt. The completion of this offering did not occur. The Company is reevaluating its capital needs and anticipates that it will continue to scale down spending to reduce costs and to increase cash flow while continuing to grow the operations at a slower pace.

The Company believes the capital resources generated by anticipated improving operational results due to reduction of expenses, increased bookings and deposits in our Services business, and an influx of new Nodeware orders under contract at September 30, 2022 as well as cash available from additional funding from the public and private markets including related party loans, if needed, provide sources to fund its ongoing operations and to support the internal growth of the Company. The Company is evaluating and is in process of extending existing debt agreements in order to provide resources for other purposes. If the Company experiences significant growth in its sales, the Company believes that this may require it to increase its financing line, finance additional accounts receivable, or obtain additional working capital from other sources to support its sales growth.

The Company plans to continue to evaluate alternatives which may include continuing to renegotiate the terms of other notes, seeking conversion of the notes to shares of common stock and seeking funds to repay the notes. The Company continues to evaluate repayment of its remaining notes payable based on its cash flow. Therefore, unless the Company is successful with some of these alternatives, the substantial doubt about our ability to continue as a going concern will not be alleviated.