Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issue Purchases of Equity Securities
(a) Market Information
The Company’s common stock is currently quoted on OTC Markets Pink under the symbol “CYBF”. The following table sets forth the high and low bid prices relating to our common stock on a quarterly basis for the periods indicated as quoted by the OTCQX. These quotations reflect inter-dealer prices without retail mark-up, mark-down, or commissions, and may not reflect actual transactions.
|
Fiscal Year 2018
|
|
High
|
|
|
Low
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
0.14
|
|
|
$
|
0.03
|
|
|
Second Quarter
|
|
$
|
0.3
|
|
|
$
|
0.00
|
|
|
Third Quarter
|
|
$
|
0.1
|
|
|
$
|
0.0
|
|
|
Fourth Quarter
|
|
$
|
0.1
|
|
|
$
|
0.0
|
|
|
Fiscal Year 2019
|
|
High
|
|
|
Low
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
29.00
|
|
|
$
|
1.49
|
|
|
Second Quarter
|
|
$
|
2.15
|
|
|
$
|
0.06
|
|
|
Third Quarter
|
|
$
|
0.76
|
|
|
$
|
0.06
|
|
|
Fourth Quarter
|
|
$
|
0.38
|
|
|
$
|
0.07
|
|
(b) Holders
As of July 15, 2019, there were 24 record holders of shares of the Company’s common stock. This figure does not take into account those shareholders whose certificates are held in the name of broker-dealers or other nominees.
(c) Dividends
The Company has not paid any cash dividends to date and does not anticipate or contemplate paying dividends in the foreseeable future. It is the present intention of management to utilize all available funds for the development of the Company’s business.
(d) Securities Authorized for Issuance under Equity Compensation Plans
We have no existing equity compensation plan.
Transfer Agent
Our transfer agent is Pacific Stock Transfer Inc. Located at 6725 Via Austi Pkwy, Suite 300 Las Vegas, Nevada 89119
Recent Sales of Unregistered Securities
On June 12, 2017, the Company issued 117,647 shares of its common stock for cash proceeds of $4,000.
On July 3, 2017, the Company issued 73,332 shares of its common stock for cash proceeds of $2,200
On December 12, 2017, the Company issued 500,000 shares of its common stock, par value $0.001, to Alexander Houstoun-Boswall pursuant to a board of director’s vote dated September 16, 2013.
On December 12, 2017, the Company issued 750,000 shares of its common stock, par value $0.001, to Ferlin Corp for Assignment of the Purchase and Sale Agreement dated September 20, 2016.
On April 19, 2018, the Company issued 30,000,000 shares of its common stock, par value $0.001, to the Company President as repayment for accrued compensation and accrued stock payable per his employment agreement. The shares were issued pursuant to a board of director’s vote dated April 19, 2018.
On June 19, 2018, the Company issued 1,250,000 shares of common stock from the conversion of a note payable.
On July 31, 2018, the Company issued 1,250,000 shares of its common stock for conversion of a note payable.
On October 11, 2018, the Company issued 1,250,000 shares of its common stock for conversion of a note payable.
The above issuances of shares are exempt from registration, pursuant to Section 4(2) of the Securities Act. These securities qualified for exemption under Section 4(2) of the Securities Act since the issuance of securities by us did not involve a public offering. The offering was not a “public offering” as defined in Section 4(2) due to the insubstantial number of persons involved in the deal, size of the offering, manner of the offering and number of securities offered. We did not undertake an offering in which we sold a high number of securities to a high number of investors. In addition, these stockholders had the necessary investment intent as required by Section 4(2) since they agreed to and received share certificates bearing a legend stating that such securities are restricted pursuant to Rule 144 of the Securities Act. This restriction ensures that these securities would not be immediately redistributed into the market and therefore not be part of a “public offering.” Based on an analysis of the above factors, we have met the requirements to qualify for exemption under Section 4(2) of the Securities Act for this transaction.
Rule 10B-18 Transactions
During the year ended March 31, 2019, there were no repurchases of the Company’s common stock by the Company.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
THE FOLLOWING DISCUSSION OF OUR PLAN OF OPERATION AND RESULTS OF OPERATIONS SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND RELATED NOTES TO THE FINANCIAL STATEMENTS INCLUDED ELSEWHERE IN THIS REPORT. THIS DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT RELATE TO FUTURE EVENTS OR OUR FUTURE FINANCIAL PERFORMANCE. THESE STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE OUR ACTUAL RESULTS, LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY THESE FORWARD-LOOKING STATEMENTS.
Overview
Cyberfort Software, Inc. plans to pursue opportunities in the cybersecurity technology business sector. The Company plans to acquire potential technologies, positioning itself to deal with the various and increasing cyber threats through innovative protection technologies for mobile, personal and business tech devices, stretching across a number of the available platforms.
On September 20, 2016, the Company entered into an Assignment Agreement with Ferlin Corp. (“Ferlin”). Ferlin had acquired the rights, title, and interest for the Vivio application, including the Vivio Source Code Application (ie., 18,277 lines of iOS) (the “Application”) from a Purchase Agreement dated June 6, 2016 with Mistrin PTY, LTD (“Mistrin”).
In the Assignment Agreement, Ferlin assigned to the Company, all of Ferlin’s rights, title, and interest for the Application in exchange for common stock of the Company and the assumption of a $150,000 note payable to Mistrin.
As of the date of filing, the Company has not made all of the required note payments. The Company is in the process of amending the note payable with Mistrin, which will restructure the remaining payments and ensure all obligations are fulfilled.
On March 6, 2019, the Company and Just Content. (“Just Content”) entered into a Purchase Agreement pursuant to which the Company bought the rights, title, and interest in the Just Content application, (the “Application”) in exchange for common stock of the Company and a cash consideration of three thousand dollars, which was made within the agreed 7 business days following the signing of the agreement. The Company shall issue the seller (Krishna Kumar) two hundred and fifty thousand (250,000) restricted shares of the Company’s common stock (“Shares”), in twelve months after signing the agreement.
Additionally, the Company agreed to invest through the calendar year 2019, to further develop the Software Product and prepare it to be fully marketed to its designated industries and markets. Furthermore, Buyer agrees to provide reasonable capital to develop other software products in the same, similar or different industries, as needed and determined by Buyer and Seller.
Pursuant to the Assignment Agreement with Mistrin and the Purchase Agreement with Just Content, the Company will now focus its business in the development of the Applications and related technology.
Description of Business
Just Content
Just content is an iOS 11 app with support for over 250,000 blocking rules, is ones of the most secure content blocker available. The blocking rules are updated regularly, devices are protected from the latest malware attacks, phishing attempts, unsafe content, hate speech found on the web, as well as, blocking adult sites, gambling sites, distractions and social media by default. Just Content makes your devices completely safe to use in a home environment with children. At work, you are free to use your devices for collaboration and presentations without the embarrassment of the wrong ad popping up at the wrong time.
With the recently release Just Content Moblie Security app, comes the introduction of machine learning and artificial intelligence to provide solutions for customer problems, which include;
* 24/7 real-time protection from robocalls, telemarketers, spam calls, phishing calls
* Spam and junk SMS will now be moved to SMS Junk folder in Messages
* Maintain blocklists and whitelists of phone numbers for full control
* Block unsafe ads, trackers, malware, phishing sites, adult sites, distractions and social media, fake news, gambling sites while browsing the web
* Monitor you data usage on wifi and cellular
* Easily maintain website whitelists with Safari Extension
* Universal iOS app for iPhone, iPad and iPod Touch
Vivio
Vivio is an iOS 10 app that allows users to experience the web the way it is supposed to be, faster and cleaner, but without compromising their online safety. Vivio not only removes ads from the websites you visit in Safari, Google Chrome Extension and Mozilla Firefox it also saves you data traffic and data traffic costs up to 50% and results in longer battery life.
The Vivio enterprise suite will include a range of privacy centric, data/bandwith optimizations and permission based controls for companies to ensure the safety of devices used by their employee’s to safeguard against advertising malware and usage options. Some of the features will feature current Vivio technology provided in the consumer version with enterprise made enhancements which will include:
|
|
·
|
ad blocking (enhanced malware detection)
|
|
|
·
|
privacy protection
|
|
|
·
|
reduction of data costs and bandwidth usage
|
|
|
·
|
faster website browsing
|
|
|
·
|
better battery performance
|
|
|
·
|
cloud based ad blocking rule updates
|
|
|
·
|
url blocking with the ability to optimize preferences on a company basis
|
|
|
·
|
cloud based management suite to send application for download to employee’s enabling visibility on device usage, browsing and a range of analytical tools
|
|
|
·
|
API to integrate into existing mobile enterprise management companies, who can add on Vivio’s proprietary ad blocking engine to their suite of features
|
Plan of Operation
The Company’s overall plan is to identify and acquire potential technologies, positioning itself to deal with the various and increasing cyber threats through innovative protection technologies for mobile, personal and business tech devices, stretching across a number of the available platforms. The Company plans to concentrate on completing the final development stage and marketing of the Vivio and Just Content Applications.
Results of Operations
Comparison of the year ended March 31, 2019 and 2018
Revenues
During the year ended March 31, 2019 and 2018, we generated no revenues.
Operating Expenses
We incurred operating expenses in the amount of $581,047 during the year ended March 31, 2019 compared to $236,596 for the year ended March 31, 2018. The increase in net operating expenses is due primarily to the $344,285 in non-recurring charges expensed for a loss incurred upon conversion of accrued compensation due to our sole officer. This increase in our operating costs was offset by a decrease in general and administrative expenses of $96,858 from the prior year which consisted of legal, accounting, business development and marketing expenses.
Net Other Gain (Loss)
We had net other losses during the year ended March 31, 2019 of $75,630 in interest costs compared to $1,028 for the year ended March 31, 2018.
Net Loss
We incurred a net loss of $656,677 during the year ended March 31, 2019 compared to a net loss of $237,624 for the year ended March 31, 2018. The increase in net loss is primarily due to costs incurred upon conversion of accrued compensation due to our sole officer.
Liquidity and Capital Resources
As reflected in the accompanying financial statements, the Company had a net loss of $656,677 as of March 31, 2019, a working capital deficit of $710,650 and accumulated deficit of $4,812,849 at March 31, 2019. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
We are a technology driven company. We are subject to all the substantial risks inherent in the development of a new business enterprise within an extremely competitive industry. Due to the absence of a long standing operating history and the emerging nature of the markets in which we compete, we anticipate operating losses until we can successfully implement our business strategy, which includes all associated revenue streams. Our revenue model is new and evolving, and we cannot be certain that it will be successful. The potential profitability of this business model is unproven. We may never achieve profitable operations or generate significant revenues. Our future operating results depend on many factors, including demand for our products, the level of competition, and the ability of our officers to manage our business and develop a substantial and stable revenue base. Additional development expenses may delay or negatively impact the ability of the Company to generate profits. Accordingly, we cannot assure you that our business model will be successful or that we can sustain revenue growth, achieve or sustain profitability, or continue as a going concern. The growth and development of our business will require significant amounts of additional working capital. There is no certainty that the Company will be able to raise the amount of funds needed or at a price that it finds acceptable. The Company may need to incur liabilities with certain related parties to sustain the Company’s existence.
Net cash used in our operating activities during the year ended March 31, 2019 was $43,815 as compared to $62,412 for the same period ended March 31, 2018 a decrease of $18,597. This decrease is due to the reduced expenses incurred regarding the payment of accrued compensation due our sole officer, along with added, accounting, business development and marketing expenses.
The Company had no cash provided or used by investing activities in the years ending March 31, 2019 and 2018 due to the lack of cash available for growth.
Net cash provided by financing activities in the year ended March 31, 2019 was $43,163 as compared to $58,640 for the same period ended March 31, 2018. This decrease was primarily due to less proceeds from notes payable and common stock in the year ended March 31, 2019.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements as of March 31, 2019, including arrangements that would affect our liquidity, capital resources, market risk support and credit risk support or other benefits.
Item 8. Financial Statements and Supplementary Data.
Cyberfort Software, Inc.
Index to the Financial Statements
March 31, 2019 and 2018
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Cyberfort Software, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Cyberfort Software, Inc. (the Company) as of March 31, 2019 and 2018, and the related statements of operations, stockholders’ deficit, and cash flows for each of the years in the two-year period ended March 31, 2019, 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 March 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the two-year period ended March 31, 2019, in conformity with accounting principles generally accepted in the United States of America.
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 audit 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.
As discussed in Note 3 to the financial statements, the Company’s absence of significant revenues, recurring losses from operations, and its need for additional financing in order to fund its projected loss in 2020 raise substantial doubt about its ability to continue as a going concern. The 2019 financial statements do not include any adjustments that might result from the outcome of this uncertainty.
|
/S/ LBB & ASSOCIATES LTD., LLP
|
|
We have served as the Company’s auditor since 2013.
|
|
Houston, Texas
|
|
July 15, 2019
|
|
Cyberfort Software, Inc.
Balance Sheets
|
|
|
March 31,
2019
|
|
|
March 31,
2018
|
|
|
ASSETS
|
|
|
Current assets
|
|
|
|
|
|
|
|
Cash
|
|
$
|
-
|
|
|
$
|
652
|
|
|
Total current assets
|
|
|
-
|
|
|
|
652
|
|
|
TOTAL ASSETS
|
|
$
|
-
|
|
|
$
|
652
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES & STOCKHOLDERS’ DEFICIT
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
147,789
|
|
|
$
|
115,841
|
|
|
Accrued expense
|
|
|
282,257
|
|
|
|
399,907
|
|
|
Stock Payable
|
|
|
50,000
|
|
|
|
100,000
|
|
|
Notes payable - convertible
|
|
|
95,604
|
|
|
|
52,441
|
|
|
Note Payable
|
|
|
135,000
|
|
|
|
150,000
|
|
|
Total current liabilities
|
|
|
710,650
|
|
|
|
818,189
|
|
|
Total liabilities
|
|
|
710,650
|
|
|
|
818,189
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ deficit:
|
|
|
|
|
|
|
|
|
|
Common stock, $0.001 par value - 100,000,000 share authorized, 33,758,612 shares issued and outstanding at March 31, 2019 and 8,612 at March 31, 2018
|
|
|
33,759
|
|
|
|
9
|
|
|
Additional paid-in capital
|
|
|
4,068,440
|
|
|
|
3,338,626
|
|
|
Accumulated deficit
|
|
|
(4,812,849
|
)
|
|
|
(4,156,172
|
)
|
|
Total stockholders’ deficit
|
|
|
(710,650
|
)
|
|
|
(817,537
|
)
|
|
TOTAL LIABILITIES & STOCKHOLDERS’ DEFICIT
|
|
$
|
-
|
|
|
$
|
652
|
|
See accompanying notes to the financial statements.
Cyberfort Software, Inc.
Statements of Operations
|
|
|
For the Years Ended
|
|
|
|
|
March 31,
|
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
Net revenue
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
General and admin. expenses
|
|
|
186,762
|
|
|
|
186,596
|
|
|
Conversion of accrued compensation
|
|
|
344,285
|
|
|
|
-
|
|
|
Stock compensation expense
|
|
|
50,000
|
|
|
|
50,000
|
|
|
Total operating expenses
|
|
|
581,047
|
|
|
|
236,596
|
|
|
Loss from operations
|
|
|
(581,047
|
)
|
|
|
(236,596
|
)
|
|
Other (expenses)/income
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(75,630
|
)
|
|
|
(1,028
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(656,677
|
)
|
|
$
|
(237,624
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Loss per common share - basic and diluted
|
|
$
|
(0.02
|
)
|
|
$
|
(27.71
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding - basic and diluted
|
|
|
30,830,694
|
|
|
|
8,576
|
|
See accompanying notes to the financial statements.
Cyberfort Software, Inc.
Statement of Stockholders’ Equity (Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
Accumulated
|
|
|
Stockholders’
|
|
|
|
|
Common Stock
|
|
|
Paid-In
|
|
|
Deficit
|
|
|
Equity
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Stage
|
|
|
(Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance March 31, 2017
|
|
|
8,576
|
|
|
$
|
9
|
|
|
$
|
3,272,426
|
|
|
$
|
(3,918,548
|
)
|
|
$
|
(646,113
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock for cash
|
|
|
36
|
|
|
|
-
|
|
|
|
66,200
|
|
|
|
-
|
|
|
|
66,200
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(237,624
|
)
|
|
|
(237,624
|
)
|
|
Balance March 31, 2018
|
|
|
8,612
|
|
|
|
9
|
|
|
|
3,338,626
|
|
|
|
(4,156,172
|
)
|
|
|
(817,537
|
)
|
|
Issuance of common stock for repayment to officer for accrued compensation and accrued stock payable
|
|
|
30,000,000
|
|
|
|
30,000
|
|
|
|
648,814
|
|
|
|
-
|
|
|
|
678,814
|
|
|
Issuance of common stock for note conversion
|
|
|
1,250,000
|
|
|
|
1,250
|
|
|
|
27,000
|
|
|
|
-
|
|
|
|
28,250
|
|
|
Issuance of common stock for note conversion
|
|
|
1,250,000
|
|
|
|
1,250
|
|
|
|
27,000
|
|
|
|
-
|
|
|
|
28,250
|
|
|
Issuance of common stock for note conversion
|
|
|
1,250,000
|
|
|
|
1,250
|
|
|
|
27,000
|
|
|
|
-
|
|
|
|
28,250
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(656,677
|
)
|
|
|
(656,677
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance March 31, 2019
|
|
|
33,758,612
|
|
|
$
|
33,759
|
|
|
$
|
4,068,440
|
|
|
$
|
(4,812,849
|
)
|
|
$
|
(710,650
|
)
|
See accompanying notes to the financial statements.
Cyberfort Software, Inc.
Statements of Cash Flows
|
|
|
Years Ended
|
|
|
|
|
March 31,
|
|
|
|
|
2019
|
|
|
2018
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(656,677
|
)
|
|
$
|
(237,624
|
)
|
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
Stock based compensation
|
|
|
50,000
|
|
|
|
50,000
|
|
|
Loss on conversion of accrued compensation
|
|
|
344,285
|
|
|
|
-
|
|
|
Debt conversion expense
|
|
|
69,750
|
|
|
|
-
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Prepaid expenses
|
|
|
-
|
|
|
|
4,167
|
|
|
Accounts payable
|
|
|
31,948
|
|
|
|
7,917
|
|
|
Accrued expenses
|
|
|
116,879
|
|
|
|
113,128
|
|
|
Net cash used in operating activities
|
|
|
(43,815
|
)
|
|
|
(62,412
|
)
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Net cash provided by investing activities
|
|
|
-
|
|
|
|
-
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Proceeds from notes payable
|
|
|
43,163
|
|
|
|
54,140
|
|
|
Payment of principle on notes payable
|
|
|
-
|
|
|
|
(1,700
|
)
|
|
Issuance of common stock for cash
|
|
|
-
|
|
|
|
66,200
|
|
|
Stock subscription payable
|
|
|
-
|
|
|
|
(60,000
|
)
|
|
Net cash provided by financing activities
|
|
|
43,163
|
|
|
|
58,640
|
|
|
Net change in cash
|
|
|
(652
|
)
|
|
|
(3,772
|
)
|
|
Cash at the beginning of the period
|
|
|
652
|
|
|
|
4,424
|
|
|
Cash at the end of the period
|
|
$
|
-
|
|
|
$
|
652
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
|
Cash paid for income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Cash paid for interest
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Non-cash investing and financing transactions:
|
|
|
|
|
|
|
|
|
|
Common stock issued for conversion of note payable
|
|
$
|
15,000
|
|
|
$
|
-
|
|
See accompanying notes to the financial statements.
Cyberfort Software, Inc.
Notes to the Financial Statements
NOTE 1 - ORGANIZATION
Cyberfort Software, Inc. (formerly known as Patriot Berry Farms, Inc.) (Cyberfort or “The “Company”) was incorporated in the State of Nevada on December 15, 2010 under the name of Gaia Remedies, Inc. On September 26, 2016, the board of directors and the majority shareholders of the Patriot Berry Farms, Inc. approved an amendment to the Articles of Incorporation of the Company to change its name from Patriot Berry Farms, Inc. to Cyberfort Software, Inc. Cyberfort is in the business of developing, marketing, and acquiring software security technology.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States 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 the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s periodic filings with the Securities and Exchange Commission include, where applicable, disclosures of estimates, assumptions, uncertainties and markets that could affect the financial statements and future operations of the Company.
FAIR VALUE MEASUREMENT
Our financial instruments consist principally of accounts payable and accrued liabilities and notes payable. The carrying amounts of such financial instruments in the accompanying financial statements approximate their fair values due to their relatively short-term nature. It is management’s opinion that the Company is not exposed to any significant currency or credit risks arising from these financial instruments.
INCOME TAXES
The Company accounts for income taxes under FASB ASC 740
“Income Taxes.”
Under the asset and liability method of FASB ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under FASB ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.
STOCK-BASED COMPENSATION
The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC 505-50
“Equity - Based Payments to Non-Employees.”
Measurement of share-based payment transactions with non-employees shall be based on the fair value of whichever is more reliably measurable: (
a
) the goods or services received; or (
b
) the equity instruments issued. The fair value of the share-based payment transaction should be determined at the earlier of performance commitment date or performance completion date.
RESEARCH AND DEVELOPMENT COSTS
The Company expenses the cost of research and development as incurred. Research and development costs totaled approximately $3,000 and $0 for the years ended March 31, 2019 and 2018, respectively.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)
NET INCOME OR (LOSS) PER SHARE OF COMMON STOCK
The Company has adopted ASC 260
“Earnings per Share,”
(“EPS”) which requires presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. In the accompanying financial statements, basic earnings (loss) per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period.
The Company has no potentially dilutive securities, such as options or warrants, currently issued and outstanding.
NOTE 3 - GOING CONCERN
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. As of March 31, 2019 and 2018, the Company has an accumulated deficit of $4,812,849 and $4,156,172. The Company intends to fund operations through equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the next twelve months.
The ability of the Company to emerge from the development stage is dependent upon, among other things, obtaining additional financing to continue operations. In response to this and other potential problems, management intends to raise additional funds through public or private placement offerings. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 4 - RELATED PARTY TRANSACTIONS
As of March 31, 2019 and March 31, 2018, the Company did not have any related party transactions, respectively.
NOTE 5 - NOTE PAYABLE
The Company assumed a non-interest bearing note payable to Mistrin of $150,000 with a maturity date of March 18, 2017 as a part of the acquisition of the Vivio App in September 2016. On June 19, 2018, $5,000 of the note was converted into 1,250,000 shares of the Company’s common stock. On July 31, 2018, $5,000 of the note was converted into 1,250,000 shares of the Company’s common stock. On October 11, 2018, $5,000 of the note was converted into 1,250,000 shares of the Company’s common stock. As of March 31, 2019, the balance of the note was $135,000. The note is in default. The Company is negotiating with the note holder to amend the note’s terms.
NOTE 6 - CONVERTIBLE NOTES PAYABLE
On October 4, 2017, the Company entered into an unsecured convertible loan agreement for $12,500 with an interest rate of 8% per annum and a maturity date of October 3, 2018. The loan is convertible into the Company’s common stock at the market value on the date of conversion. This note is in default.
On November 10, 2017, the Company entered into an unsecured convertible loan agreement for $5,466 with an interest rate of 8% per annum and a maturity date of November 9, 2018. The loan is convertible into the Company’s common stock at the market value on the date of conversion. This note is in default.
On November 24, 2017, the Company entered into an unsecured convertible loan agreement for $1,700 with an interest of 8% per annum and a maturity date of November 23, 2018. The loan is convertible into the Company’s common stock at the market value on at the date of conversion. The loan was paid in full during the prior year.
On December 14, 2017, the Company entered into an unsecured convertible loan agreement for $13,300 with an interest rate of 8% per annum and a maturity date of December 13, 2018. The loan is convertible into the Company’s common stock at the market value on the date of conversion. This note is in default.
On January 24, 2018, the Company entered into an unsecured convertible loan agreement for $3,000 with an interest rate of 8% per annum and a maturity date of January 23, 2019. The loan is convertible into the Company’s common stock at the market value on the date of conversion. This note is in default.
On February 13, 2018, the Company entered into an unsecured convertible loan agreement for $11,000 with an interest rate of 8% per annum and a maturity date of February 12, 2019. The loan is convertible into the Company’s common stock at the market value on the date of conversion. This note is in default.
On March 26, 2018, the Company entered into an unsecured convertible loan agreement for $2,200 with an interest rate of 8% per annum and a maturity date of March 25, 2019. The loan is convertible into the Company’s common stock at the market value on the date of conversion. This note is in default.
On March 31, 2018, the Company entered into an unsecured convertible loan agreement for $4,974 with an interest rate of 8% per annum and a maturity date of March 30, 2019. The loan is convertible into the Company’s common stock at the market value on the date of conversion. This note is in default.
On June 28, 2018, the Company entered into an unsecured convertible loan agreement for $18,540 with an interest rate of 8% per annum and a maturity date of June 27, 2019. The loan is convertible into the Company’s common stock at the market value on the date of conversion. This note is in default subsequent to year end.
On September 28, 2018, the Company entered into an unsecured convertible loan agreement for $15,890 with an interest rate of 8% per annum and a maturity date of September 27, 2019. The loan is convertible into the Company’s common stock at the market value on the date of conversion.
On December 12, 2018, the Company entered into an unsecured convertible loan agreement for $1,000 with an interest rate of 8% per annum and a maturity date of December 11, 2019. The loan is convertible into the Company’s common stock at the market value on the date of conversion.
On December 31, 2018, the Company entered into an unsecured convertible loan agreement for $6,612 with an interest rate of 8% per annum and a maturity date of January 1, 2020. The loan is convertible into the Company’s common stock at the market value on the date of conversion.
Notes payable - convertible totaled $95,604 and $52,441 at March 31, 2019 and 2018, respectively.
NOTE 7 - STOCKHOLDERS’ EQUITY
On April 19, 2018, the Company underwent a reverse stock split at a ratio of 10,000 to 1 share, reducing the issued and outstanding shares from 86,123,796 to 8,612 shares issued and outstanding as of the date of the reverse split. All share amounts in these financial statements and footnotes reflect the reverse stock split.
On April 19, 2018, the Company issued 30,000,000 shares, post-split, to the Company’s President as repayment for accrued compensation and accrued stock payable.
On June 19, 2018, the Company issued 1,250,000 shares of its common stock for conversion of a note payable.
On July 31, 2018, the Company issued 1,250,000 shares of its common stock for conversion of a note payable.
On October 11, 2018, the Company issued 1,250,000 shares of its common stock for conversion of a note payable.
Under the employment agreement with the CEO, the Company is required to grant shares of restricted stock after each anniversary date. At March 31, 2019 and March 31, 2018, the company has accrued a stock payable for shares earned but not issued of $50,000 and $100,000, respectively. The number of shares will be determined based upon market value of the stock at the point in time of issuance.
NOTE 8 - COMMITMENTS
On September 28, 2016, the Company entered into four consulting agreements with consultants to act in the role of Technology Development Manager, Chief Technology Officer, Corporate Development Officer, and Advisory Director and to provide consulting services as part of the Purchase and Sale Agreement with Mistrin. The term of the agreements shall be one year and shall be a rolling contract until terminated or extended. The Company shall issue each consultant a total of 200,000 shares of common stock per annum to a total of 800,000 shares per annum. The consulting agreements can be terminated after 90 days by either party for any reason and the consultant is entitled to receive the entire consideration. The 800,000 shares due under these consulting agreements were issued during the year ended March 31, 2018 and the contracts have been cancelled.
The Company has a $54,000 commitment to provide developing and marketing costs related to the acquisition of the Vivio Application.
NOTE 9 - INCOME TAXES
We did not provide any current or deferred U.S. federal income tax provision or benefit for any of the periods presented because we have experienced operating losses since inception. When it is more likely than not that a tax asset cannot be realized through future income the Company must allow for this future tax benefit. We provided a full valuation allowance on the net deferred tax assets, consisting of net operating loss carryforwards and intangible assets, because management has determined that it is more likely than not that we will not earn income sufficient to realize the deferred tax assets during the carryforward period.
The Company has not taken a tax position that, if challenged, would have a material effect on the financial statements for the years ended March 31, 2019 and 2018, respectively, under ASC 740. We did not recognize any adjustment to the liability for uncertain tax position and therefore did not record any adjustment to the beginning balance of accumulated deficit on the balance sheet.
The Company is subject to United States income taxes at a rate of 21%. Operating loss carry forwards totaled approximately $2,576,239 and $1,972,000, as of March 31, 2019 and 2018, respectively, and will begin to expire in 2032. The Company has not complied with annual filings of federal tax returns and accordingly utilization on the NOL may be impaired. Deferred tax assets of approximately $1,144,000 and $760,000, respectively, were offset by a valuation allowance.
Actual income tax expense for the years ended March 31, 2019 and 2018 is reconciled from the amount computed by applying the U.S. federal income tax rate of 21% to losses before income taxes as follows:
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
Expected tax benefit
|
|
$
|
(137,300
|
)
|
|
$
|
(81,000
|
)
|
|
Reconciling items:
|
|
|
|
|
|
|
|
|
|
Impact in change in tax rate
|
|
|
-
|
|
|
|
31,000
|
|
|
Permanent Differences Stock compensation
|
|
|
10,500
|
|
|
|
17,000
|
|
|
Change in Valuation Allowance
|
|
|
126,800
|
|
|
|
33,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Total tax expense
|
|
$
|
-
|
|
|
$
|
-
|
|
NOTE 10 - SUBSEQUENT EVENTS
On June 27, 2019, the unsecured convertible loan agreement for $18,540 with an interest rate of 8% per annum that is convertible into the Company’s common stock at the market value on the date of conversion was in default.
On June 30, 2019, the Company entered into an unsecured convertible loan agreement for $12,437 with an interest rate of 8% per annum and a maturity date of June 29, 2020. The loan is convertible into the Company’s common stock at the market value on the date of conversion.
Item 9A. Controls and Procedures.
(a) Evaluation of Disclosure and Control Procedures
As required by Rule 13a-15 under the Exchange Act, our management evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2019.
Based upon an evaluation of the effectiveness of our disclosure controls and procedures performed by our management, with participation of our Chief Executive Officer as of the end of the period covered by this report, our Chief Executive officer concluded that our disclosure controls and procedures have not been effective as a result of a weakness in the design of internal control over financial reporting.
Certain internal control weaknesses became evident that, in the aggregate, represent material weaknesses, including: (i) lack of segregation of incompatible duties; and (ii) insufficient Board of Directors representation.
As used herein, “disclosure controls and procedures” mean controls and other procedures of our company that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosures.
(b) Managements’ Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f) under the Securities Exchange Act of 1934.
Internal control over financial reporting cannot provide absolute assurance of achieving their objectives. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgement and breakdowns resulting from human failures. Due to their inherent limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. It is possible to design safeguards to reduce, but not eliminate, this risk. Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.
Management has used the framework set forth in the report entitled Internal Control—Integrated Framework published by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), known as COSO, to evaluate 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 the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Based on such evaluation, our CEO and Principal Financial Officer have concluded that, as of March 31, 2019, our internal controls over financial reporting were not effective.
This Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to Section 404(c) of the Sarbanes-Oxley Act of 2002, as amended, which provides that issuers that are not an “accelerated filer” or “large accelerated filer” are exempt from the requirement to provide an auditor attestation report.
(c) Changes to Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.