What changed in this filing

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Item 1. Financial Statements

2021-11-12 compared with 2021-08-13 · 441 added, 391 removed, 462 unchanged (64% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

September 30,

Current Assets:

10 unchanged sentences

Stock payable

Lease liability

Loans payable

Lease liability, current portion

Loans payable, current portion

Line of credit

10 unchanged sentences

250,000,000 shares authorized;

117,729,971 and 116,104,971 shares issued and outstanding on June 30, 2021 and December 31, 2020, respectively

120,529,649 and

116,104,971 shares issued and outstanding on September 30, 2021 and December 31, 2020, respectively

Additional paid-in capital

7 unchanged sentences

Consolidated STATEMENTS OF OPERATIONS

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

For the Three Months Ended

For the Six Months Ended

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Managed services

Consulting services

For the Nine Months Ended

September 30, 2021

September 30, 2020

September 30, 2021

September 30, 2020

Security managed services

Professional services

Total revenue

Cost of revenue:

Managed services

Consulting services

Security managed services

Professional services

Cost of payroll

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( 6,920,167 )

( 2,418,912 )

Other income (expense):

Interest expense, net

PPP loan forgiveness

Total other income (expense)

Loss before provision for income taxes

$ ( 2,252,899 )

1 unchanged sentence

$ ( 6,146,620 )

Provision for income taxes

$ ( 2,420,446 )

$ ( 546,103 )

$ ( 3,893,721 )

$ ( 1,385,247 )

Net loss per common share - basic

4 unchanged sentences

CYBER SENTINEL CORPORATION and subsidiaries

Consolidated STATEMENTS of CHANGES IN STOCKHOLDERS’ EQUITY

THE THREE AND SIX MONTHS ENDED JUNE 30, 2021 AND 2020

Consolidated STATEMENTS of CHANGES IN STOCKHOLDERS’ DEFICIT

Balance at January 1, 2021

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Stock issued for cash

Stock based compensation - shares

Stock based compensation - shares, shares

Stock issued for VelocIT acquisition

Stock issued for VelocIT acquisition, shares

Return of treasury stock to authorized capital

Return of treasury stock to authorized capital, shares

Stock issued for Technologyville acquisition

Stock issued for Technologyville acquisition, shares

( 1,776,859 )

2 unchanged sentences

( 6,643,631 )

Balance as of March 31, 2021

( 6,643,631 )

Stock based compensation - stock options

3 unchanged sentences

( 8,760,493 )

Stock based compensation - stock options

Stock based compensation - shares

Stock issued for VelocIT acquisition

( 2,252,899 )

Balance as of September 30, 2021

$ ( 11,013,392 )

Balance at January 1, 2020

7 unchanged sentences

( 2,292,654 )

Balance as of March 31, 2020

( 2,292,654 )

Stock based compensation - stock options

2 unchanged sentences

( 2,838,757 )

Stock based compensation - stock options

Common shares issued for cash

Stock issued for Clear Skies acquisition

( 1,035,199 )

Balance as of September 30, 2020

$ ( 3,873,956 )

accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.

1 unchanged sentence

Consolidated STATEMENTS OF CASH FLOWS

June 30, 2021

June 30, 2020

September 30, 2021

September 30, 2020

Cash flows from operating activities:

8 unchanged sentences

Amortization of debt discount

Forgiveness of PPP Loan

Changes in operating assets and liabilities:

3 unchanged sentences

Lease liability

Deferred revenue

Net cash used in operating activities

( 4,312,312 )

( 1,157,976 )

Cash flows from investing activities:

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Payment on loans payable

( 2,004,528 )

Payment on notes payable, related party

Distributions to member

Net cash provided by financing activities

Net increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

( 2,467,451 )

Cash and cash equivalents - beginning of the period

4 unchanged sentences

Right of use asset and lease liability recorded

Forgiveness of PPP Loan

Common shares issued in Technologyville acquisition

Common shares issued in Clear Skies acquisition

accompanying footnotes are an integral part of these unaudited condensed consolidated financial statements.

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for an aggregate of 900,000 shares of the Company’s common stock.

August 12, 2021, the Company entered into an Agreement and Plan of Merger with Catapult Acquisition Corporation, a New Jersey corporation

(“VelocIT”), and its equity holders, pursuant to which VelocIT became a wholly owned subsidiary of the Company (the “Catapult

Acquisition”).

Under the terms of the Catapult Acquisition, all issued and outstanding equity secruities in VelocIT were exchanged

for an aggregate of 2,566,778

shares of the Company’s common stock.

of the Business

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a going concern, which contemplates realization of assets and satisfying liabilities in the normal course of business.

At June 30, 2021,

the Company had an accumulated deficit of approximately $ 8,760 ,000

At September 30,

2021, the Company had an accumulated deficit of $ 11,013,392

and working capital surplus of approximately $ 646,000 .

$ 3,532,000 .

For the six months ended June 30, 2021, the Company had a loss from

operations of approximately $ 3,762 ,000

and negative cash flows from operations of approximately $ 2,647 ,000 .

For the nine months ended September 30, 2021, the Company had a loss from operations of approximately $ 6,920,167

and negative cash flows from operations

of approximately $ 4,312,312 .

Although the Company is showing positive revenues and gross profit trends, the Company expects to incur further losses through the end

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Company’s services.

During the six months ended June 30, 2021, the Company received $ 3,250,000 from private placements of the Company’s common stock.

During the nine months ended September 30, 2021, the Company received $ 3,250,000 from private placements of

the Company’s common stock.

on its current cash resources and commitments, the Company believes it will be able to maintain its current planned development and corresponding

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of Presentation

accompanying unaudited condensed consolidated financial information as of June 30, 2021 and for the three and six months ended June 30,

2021 and 2020 has been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”)

accompanying unaudited condensed consolidated financial information as of September 30, 2021, and for the three and nine months ended

September 30, 2021 and 2020, has been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”)

for interim financial information and with the instructions to Quarterly Report on Form 10-Q and Article 10 of Regulation S-X.

1 unchanged sentence

necessary for a fair presentation of our financial position at such dates and the operating results and cash flows for such periods.

Operating results for the three and six months ended June 30, 2021 are not necessarily indicative of the results that may be expected

Operating results for the three and nine months ended September 30, 2021, are not necessarily indicative of the results that may be expected

for the entire year or for any other subsequent interim period.

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LLC (“GenResults”), TalaTek, Inc.

(“TalaTek”), Techville, Clear Skies, and Alpine.

All significant

intercompany accounts and transactions have been eliminated in consolidation.

(“TalaTek”), Techville, Clear Skies, Alpine, and VelocIT.

All significant intercompany

accounts and transactions have been eliminated in consolidation.

Reclassifications

reclassifications have been made to the financial statements for the three and six months ended June 30, 2020 to conform to the financial

statements presentation for the three and six months ended June 30, 2021.

These reclassifications had no effect on net loss or cash flows

as previously reported.

reclassifications have been made to the financial statements for the three and nine months ended September 30, 2020, to conform to the

financial statements presentation for the three and nine months ended September 30, 2021.

These reclassifications had no effect on net

loss or cash flows as previously reported.

financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of

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the carrying value of intangible assets and goodwill, deferred tax asset and valuation allowance, the estimated fair value of assets

acquired, liabilities assumed and stock issued in business combinations and assumptions used in the Black-Scholes-Merton pricing model,

acquired, liabilities assumed and stock issued in business combinations and assumptions used in the Black-Scholes option pricing model,

such as expected volatility, risk-free interest rate, and expected divided rate.

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Disaggregated

consists of the following by service offering for the six months ended June 30, 2021:

OF DISAGGREGATION OF REVENUES

consists of the following by service offering for the nine months ended September 30, 2021:

SCHEDULE OF DISAGGREGATION OF REVENUES

Managed Services

Primary Sector Markets

1 unchanged sentence

Major Service Lines

Gap and Risk Assessment

Managed Security Services

consists of the following by service offering for the six months ended June 30, 2020:

Secured Managed Services

SOC Managed Services

Technical Assessments

Forensics & I/R

Other CyberSecurity Services

consists of the following by service offering for the nine months ended September 30, 2020:

Managed Services

Primary Sector Markets

1 unchanged sentence

Major Service Lines

Gap and Risk Assessment

Managed Security Services

Modifications

were no contract modifications during the six months ended June 30, 2021.

Contract modifications are not routine in the performance of

the Company’s contracts.

Secured Managed Services

SOC Managed Services

Technical Assessments

Forensics & I/R

Other CyberSecurity Services

and Cash Equivalents

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the allowance for doubtful accounts when a balance is determined to be uncollectible.

As of June 30, 2021, and December 31, 2020, the

Company’s allowance for doubtful accounts was $ 55,264 and $ 40,000 , respectively.

As of September 30, 2021, and December 31, 2020,

the Company’s allowance for doubtful accounts was $ 76,200

and $ 40,000 ,

respectively.

and Equipment

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Computer equipment costs for the Company are capitalized, as incurred, and depreciated on a straight-line basis over three years.

capitalizes all equipment costs over $ 5,000

and depreciates these costs on a straight-line basis over three years.

capitalizes all equipment costs over $ 5,000 and depreciates these costs on a straight-line basis over three years.

and repairs are charged to expense as incurred.

At the time of retirement or other disposition of property and equipment, the cost and

accumulated depreciation is removed from the accounts and the resulting gain or loss, if any, is reflected in results of operations.

accumulated depreciation are removed from the accounts and the resulting gain or loss, if any, is reflected in results of operations.

of Long-Lived Assets

8 unchanged sentences

of the assets.

During the three and six months ended

June 30, 2021, the Company did not record a loss on impairment.

During the three and nine months ended September 30, 2021, the Company did not record a loss on impairment.

Company records its intangible assets at cost in accordance with ASC 350, Intangibles – Goodwill and Other .

intangible assets are amortized over their estimated useful life using the straight-line method, which is determined by identifying

the period over which the cash flows from the asset are expected to be generated.

intangible assets are amortized over their estimated useful life using the straight-line method, which is determined by identifying the

period over which the cash flows from the asset are expected to be generated.

represents the excess of the purchase price of the acquired business over the estimated fair value of the identifiable net assets acquired.

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Company expenses advertising and marketing costs as they are incurred.

Advertising and marketing expenses were $ 172,468

for the three months ended June 30, 2021 and

2020, respectively, and are recorded in operating expenses on the unaudited condensed consolidated statements of operations.

and marketing expenses were $ 217,695

for the six months ended June 30, 2021 and 2020,

respectively, and are recorded in operating expenses on the unaudited condensed consolidated statements of operations.

Advertising and marketing expenses were $ 254,026 and $ 30,488 for

the three months ended September 30, 2021 and 2020, respectively, and are recorded in operating expenses on the unaudited condensed consolidated

statements of operations.

Advertising and marketing expenses were $ 471,721 and $ 104,058 for the nine months ended September 30, 2021

and 2020, respectively, and are recorded in operating expenses on the unaudited condensed consolidated statements of operations.

Value Measurements

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paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price).

utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about

risk and the risks inherent in the inputs to the valuation technique.

These inputs can be readily observable, market corroborated, or

generally unobservable.

ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value.

The hierarchy

gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and

the lowest priority to unobservable inputs (level 3 measurement).

This fair value measurement framework applies at both initial and subsequent

ASC 820 establishes

a fair value hierarchy that prioritizes the inputs used to measure fair value.

The hierarchy gives the highest priority to unadjusted

quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs

(level 3 measurement).

This fair value measurement framework applies at both initial and subsequent measurement.

prices are available in active markets for identical assets or liabilities as of the reporting date.

Active markets are those in

which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing

inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as

of the reported date.

Level 2 includes those financial instruments that are valued using models or other valuation methodologies.

These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities,

time value, volatility factors and current market and contractual prices for the underlying instruments, as well as other relevant

economic measures.

Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument,

can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace.

inputs include significant inputs that are generally less observable from objective sources.

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calculated using the treasury stock method.

Since the effect of common stock equivalents is anti-dilutive with respect to losses, the

options have been excluded from the Company’s computation of net loss per common share for the three and six months ended June

30, 2021 and 2020.

All outstanding convertible notes are considered common stock at the beginning of the period

or at the time of issuance, if later, pursuant to the if-converted method.

Since the effect of common stock equivalents is anti-dilutive

with respect to losses, the options have been excluded from the Company’s computation of net loss per common share for the three

and nine months ended September 30, 2021 and 2020.

following tables summarize the securities that were excluded from the diluted per share calculation because the effect of including these

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SUMMARY OF SECURITIES EXCLUDED FROM DILUTED PER SHARE CALCULATION

June 30, 2021

June 30, 2020

September 30, 2021

September 30, 2020

Stock Options

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stock options issued to employees and members of the board of directors for their services, the Company estimates the grant date fair

value of each option using the Black-Scholes-Merton option pricing model.

The use of the Black-Scholes-Merton option pricing model requires

management to make assumptions with respect to the expected term of the option, the expected volatility of the common stock consistent

with the expected life of the option, risk-free interest rates and expected dividend yields of the common stock.

For awards subject to

service-based vesting conditions, including those with a graded vesting schedule, the Company recognizes stock-based compensation expense

equal to the grant date fair value of stock options on a straight-line basis over the requisite service period, which is generally the

vesting term.

value of each option using the Black-Scholes option pricing model.

The use of the Black-Scholes option pricing model requires management

to make assumptions with respect to the expected term of the option, the expected volatility of the common stock consistent with the

expected life of the option, risk-free interest rates and expected dividend yields of the common stock.

For awards subject to service-based

vesting conditions, including those with a graded vesting schedule, the Company recognizes stock-based compensation expense equal to

the grant date fair value of stock options on a straight-line basis over the requisite service period, which is generally the vesting

Forfeitures are recorded as they are incurred as opposed to being estimated at the time of grant and revised.

Company’s limited history and lack of public trading volume for its common stock, the Company used the average of historical

share prices of similar companies within its industry to calculate volatility for use in the Black-Scholes-Merton option pricing model.

Due to the Company’s

limited history and lack of public trading volume for its common stock, the Company used the average of historical share prices of similar

companies within its industry to calculate volatility for use in the Black-Scholes option pricing model.

to Accounting Standards Update (“ASU”) 2018-07, Compensation – Stock Compensation (Topic 718):

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Share-Based Payment Accounting , the Company accounts for stock options issued to non-employees for their services in accordance with

The Company uses valuation methods and assumptions to value stock options that are in line with the process for valuing

employee stock options noted above.

The Company uses valuation methods and assumptions to value stock options that are in line with the process for valuing employee

stock options noted above.

in which the Company is the lessee are comprised of corporate offices and property and equipment.

All of the leases are classified

as operating leases.

The Company leases multiple office spaces with a remaining weighted average term of 1.42

The Company leases a vehicle with a remaining term of 0.92 years.

All of the leases are classified as

operating leases.

The Company leases multiple office spaces with a remaining weighted average term of 1.17 years.

The Company leases

a vehicle with a remaining term of 0.67 years.

accordance with ASC 842, Leases , the Company recognized a right-of-use (“ROU”) asset and corresponding lease liability

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and related disclosures.

tax assets and liabilities are recognized for the future tax consequences attributable to differences between the unaudited condensed

consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred tax assets,

including tax loss and credit carry forwards, 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.

The effect on deferred tax assets and liabilities

of a change in tax rates is recognized in income in the period that includes the enactment date.

tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement

carrying amounts of existing assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities, including tax

loss and credit carry forwards, 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.

The effect on deferred tax assets and liabilities of a change in tax rates

is recognized in income in the period that includes the enactment date.

Company utilizes ASC 740, Income Taxes , which requires the recognition of deferred tax assets and liabilities for the expected

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likely than not” that a deferred tax asset will not be realized.

At June 30, 2021 and December 31, 2020, the Company’s net

deferred tax asset has been fully reserved.

At September 30, 2021, and December 31, 2020, the Company’s

net deferred tax asset has been fully reserved.

uncertain tax positions that meet a “more likely than not” threshold, the Company recognizes the benefit of uncertain tax

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Issued Accounting Standards

March 2021, the FASB issued ASU No.

2021-03, Intangibles – Goodwill and Other (Topic 350).

ASU 2021-03 requires an entity to identify

and evaluate goodwill impairment triggering events when they occur to determine whether it is more likely than not that the fair value

of a reporting unit (or entity, if the entity has elected the accounting alternative for amortizing goodwill and chosen that option)

is less than its carrying amount.

If an entity determines that it is more likely than not that the goodwill is impaired.

goodwill for impairment using the triggering event date as the measurement date.

An entity is required to disclose the amount assigned

to goodwill in total and by major business combination, or by reorganization event resulting in fresh-start reporting.

Also, the entity

must disclose the weighted average amortization period in total and the amortization period by major business combination, or by reorganization

event resulting in fresh-start reporting.

ASU 2021-03 was effective for the Company on January 1, 2021 and did not have a significant

impact on our unaudited condensed consolidated financial statements.

May 2021, the FASB issued ASU No.

2021-04, Earnings Per Share (Topic 260), Debt — Modifications and Extinguishments (Subtopic 470-50),

Compensation — Stock Compensation (Topic 718), and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic

Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus

of the Emerging Issues Task Force).

The ASU requires issuers to account for modifications or exchanges of freestanding equity-classified

written call options that remain equity classified after the modification or exchange based on the economic substance of the modification

Under the ASU, an issuer determines the accounting for the modification or exchange based on whether the transaction was

done to issue equity, to issue or modify debt, or for other reasons.

The ASU is applied prospectively and is effective for the Company

for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years.

Early adoption is permitted.

is currently evaluating the impact that adopting this standard will have on the unaudited condensed consolidated financial statements.

newly issued but not yet effective accounting pronouncements have been deemed to be not applicable or immaterial to the Company.

3 – ACQUISITIONS

Acquisition Corporation

August 12, 2021, the Company effected an Amended and Restated Agreement and Plan of Merger (the “Merger Agreement”) with

Catapult Acquisition Merger Sub, LLC (“Merger Sub”), Catapult Acquisition Corporation (d/b/a VelocIT) (“VelocIT”),

the shareholders of VelocIT and Derek Hahn, in his capacity as the shareholder representative.

Pursuant to the Merger Agreement, the

Merger Sub merged with and into VelocIT, with VelocIT surviving the Merger as a wholly-owned subsidiary of the Company (the “VelocIT

Acquisition”).

At the effective time of the VelocIT Acquisition, VelocIT’s outstanding common stock was exchanged for 2,566,778

shares of the Company’s common stock.

following the VelocIT Acquisition, the Company had 120,296,749 shares of common stock issued and outstanding.

The pre-acquisition stockholders

of the Company retained an aggregate of 117,729,971 shares, representing approximately 98 % ownership of the post-acquisition company.

Therefore, upon consummation of the VelocIT Acquisition, there was no change in control.

Company accounted for this transaction in accordance with the acquisition method of accounting for business combinations.

liabilities of the acquired business were included in the consolidated balance sheet as of September 30, 2021, based on the respective

estimated fair value on the date of acquisition as determined in a purchase price allocation using available information and making assumptions

management believed are reasonable.

ASC 805, Business Combinations , the measurement period is the period after the acquisition date during which the acquirer may

adjust the provisional amounts recognized for a business combination.

The measurement period shall not exceed one year from the acquisition

The Company has identified the acquisition date as August 12, 2021 .

Subsequent to the issuance of these financial statements, the

Company expects to obtain a third-party valuation on the fair value of the assets acquired, including identifiable intangible assets,

and the liabilities assumed for use in the purchase price allocation.

the period subsequent to the effective date of the acquisition, VelocIT recorded revenue of $ 985,146 and a net loss of $ 1,695,276 for

the period from August 12, 2021 to September 30, 2021.

following table summarizes the allocation of the purchase price to the fair values of the assets acquired and the liabilities assumed

as of the transaction date:

SUMMARY OF SIGNIFICANT FAIR VALUE ASSETS ACQUIRED AND LIABILITIES

August 12,2021

Consideration paid

Tangible assets acquired:

Accounts receivable

Prepaid expenses

Property and equipment

Capitalizable expenses

Total tangible assets

Intangible assets acquired:

Intellectual property

Total intangible assets

Assumed liabilities:

Accounts payable

Accrued expenses

Loans payable

SBA loan payoff

Total assumed liabilities

Net liabilities assumed

( 1,422,987 )

Goodwill (a.)(b.)

Goodwill is the excess of the purchase price over the fair

value of the underlying net tangible and identifiable intangible assets.

In accordance with applicable accounting standards, goodwill

is not amortized but instead is tested for impairment at least annually or more frequently if certain indicators are present.

and intangibles are not deductible for tax purposes.

Goodwill represents expected synergies from the merger of operations

and intangible assets that do not qualify for separate recognition.

Cerberus and VelocIT are both cybersecurity service providers.

acquisition of VelocIT provided Cerberus potential sales synergies resulting from Cerberus’ access to VelocIT’s current client-base

to offer additional services.

These items will be assigned a fair value upon the completion of the third-party valuation and are not

expected to change significantly.

4 – PREPAID EXPENSES AND OTHER CURRENT ASSETS

expenses and other current assets consist of:

SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS

OF PREPAID EXPENSES AND OTHER CURRENT ASSETS

September 30,

Prepaid expenses

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SCHEDULE OF PROPERTY AND EQUIPMENT

September 30,

Computer equipment

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Property and equipment, net

depreciation expense was $ 4,424 and $ 2,404 for the three months ended June 30, 2021 and 2020, respectively.

depreciation expense was $ 6,989 and $ 5,361 for the three months ended September 30, 2021 and 2020, respectively.

Total depreciation expense

was $ 8,848 and $ 3,308 for the six months ended June 30, 2021 and 2020, respectively.

was $ 15,837 and $ 8,668 for the nine months ended September 30, 2021 and 2020, respectively.

6 – INTANGIBLE ASSETS AND GOODWILL

following table summarizes the changes in goodwill during the six months ended June 30, 2021:

following table summarizes the changes in goodwill during the nine months ended September 30, 2021:

SCHEDULE OF CHANGES IN GOODWILL

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Acquisition of goodwill

Ending balance, June 30, 2021 (1)

of June 30, 2021, the Company has not obtained a third-party valuation for the December

16, 2020 acquisition of Alpine.

Reclassification based on valuation report (1)

Ending balance, September 30, 2021 (2)

to September 30, 2021, the Company obtained

a third-party valuation for the December 16, 2020, acquisition of Alpine.

As such, the purchase price allocation disclosed in the Company’s

Annual Report in Form 10-K for December 31, 2020, filed on March 31, 2021, may change and,

therefore, goodwill resulting from the acquisition may change.

following table summarizes the identifiable intangible assets as of June 30, 2021 and December 31, 2020:

OF IDENTIFIABLE INTANGIBLE ASSETS

Annual Report in Form 10-K for December 31, 2020, filed on March 31, 2021, changed and, therefore, goodwill changed.

As of September 30, 2021, the Company had not obtained a third-party valuation for the August 12, 2021, acquisition of VelocIT.

such, the purchase price allocation disclosed in this Quarterly Report for September 30, 2021, may change and, therefore, goodwill from

the acquisition may change.

following table summarizes the identifiable intangible assets as of September 30, 2021, and December 31, 2020:

SUMMARY OF IDENTIFIABLE INTANGIBLE ASSETS

September 30, 2021

December 31, 2020

Tradenames – trademarks (1)

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Less accumulated amortization

(1) These intangible

assets were acquired in the acquisitions of TalaTek, Techville and Clear Skies.

weighted average remaining useful life of identifiable amortizable intangible assets remaining is 8.18

of identifiable intangible assets for the three months ended June 30, 2021 and 2020, was $ 34,994 and $ 15,648 , respectively.

of identifiable intangible assets for the six months ended June 30, 2021 and 2020, was $ 69,988 and $ 31,296 , respectively.

below table summarizes the future amortization expense for the remainder of 2021 following June 30, 2021, and the next four years thereafter:

OF FUTURE AMORTIZATION EXPENSE

intangible assets were acquired in the acquisitions of TalaTek, Techville, Clear Skies, Alpine and VelocIT.

weighted average remaining useful life of identifiable amortizable intangible assets remaining is 8.24 years.

of identifiable intangible assets for the three months ended September 30, 2021 and 2020, was $ 40,506 and $ 15,648 , respectively.

Amortization of identifiable intangible assets for the nine months ended September 30, 2021 and 2020, was $ 110,495 and $ 46,944 ,

respectively.

below table summarizes the future amortization expense for the remainder of 2021 and the next four years thereafter:

SCHEDULE OF FUTURE AMORTIZATION EXPENSE

Remainder of 2021

Amortization Expense

7 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

payable and accrued expenses consist of the following amounts:

OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES

June 30, 2021

SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES

September 30, 2021

December 31, 2020

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Payable – Related Party

December 31, 2018, GenResults entered into an unsecured note payable with Jemmett Enterprises, LLC which is controlled by the

Company’s Chief Executive Officer and is the Company’s majority stockholder, in the original principal amount of $ 200,000 .

The note has a maturity date of June

15, 2021 , and bears an interest rate at

The outstanding principal balance

of this loan was $ 9,787

as of June 30, 2021 and December 31, 2020 (See

On May 30, 2021 the Company paid $ 50,000

towards the outstanding principal balance of

At June 30, 2021 and December 31, 2020, the Company has recorded accrued interest of $ 23,154

and $ 23,934 ,

respectively, with respect to this note payable.

The Company has recorded interest expense of $ 1,426

during the three months ended June 30, 2021 and

2020, respectively.

The Company has recorded interest expense of $ 4,409

during the six months ended June 30, 2021 and

2020, respectively.

December 31, 2018, GenResults entered into an unsecured note payable with Jemmett Enterprises, LLC, the Company’s majority stockholder

that is controlled by the Company’s Chief Executive Officer, in the original principal amount of $ 200,000 .

The note has a maturity

date of June 15, 2021 , and bears interest at 6 % per annum.

There was no remaining balance at September 30, 2021, The outstanding principal

balance of this loan was $ 9,787 at December 31, 2020.

At September 30, 2021, and December 31, 2020, the Company has recorded accrued

interest of $ 5,079 and $ 23,934 , respectively, with respect to this note payable.

The Company has recorded interest expense related to

this note of $ 186 and $ 3,669 during the three months ended September 30, 2021 and 2020, respectively, and $ 4,595 and $ 9,358 during the

nine months ended September 30, 2021 and 2020, respectively.

Note Payable, Accounts Receivable and Revenue – Related Party

December 23, 2020, the Company issued to a related party a convertible note in the principal amount of $ 3,000,000

bearing interest at 6 %

per annum, payable at maturity,

with a maturity date of December 31, 2021 and a conversion price of $2.00 per share.

The outstanding principal balance of this

loan was $ 3,000,000

at June 30, 2021 and December 31, 2020, respectively.

See Note 11 for additional details.

June 30, 2021, the Company had $ 29,321 in outstanding accounts receivable from a related party.

In addition, during the six months ended

June 30, 2021, the Company generated $ 122,791 in revenues from the related party.

with Eventus Consulting, P.C.

November 8, 2019, the Company entered into a financial consulting agreement with Eventus Consulting, P.C., an Arizona corporation, (“Eventus”),

of which Neil Reithinger, Chief Financial Officer advisor to the Company, is the sole shareholder, pursuant to which Eventus provides

financial and accounting consulting services to the Company.

In consideration for Eventus’ services, the Company agreed to

pay Eventus according to its standard hourly rate structure.

The term of the agreement is perpetual unless otherwise terminated upon

thirty days’ notice by either Eventus or the Company.

For the six months ended June 30, 2021, Eventus was paid $ 82,557

and was owed $ 37,543

for accrued and unpaid services under the financial

consulting agreement at June 30, 2021.

December 23, 2020, the Company issued to a related party a convertible note in the principal amount of $ 3,000,000 bearing interest at

6 % per annum, payable at maturity, with a maturity date of December 31, 2021 and a conversion price of $2.00 per share.

The outstanding

principal balance of this loan was $ 3,000,000 at September 30, 2021, and December 31, 2020, respectively.

See Note 12 for additional

September 30, 2021, the Company had $ 48,270 in outstanding accounts receivable from a related party.

In addition, during the nine months

ended September 30, 2021, the Company generated $ 305,127 in revenues from the related party.

9 - STOCKHOLDERS’ EQUITY

Transactions During the Period

the six months ended June 30, 2021, the Company issued an aggregate of 1,625,000 shares of common stock with a fair value of $ 2.00 per

share, respectively, to investors for cash proceeds of $ 3,250,000 .

the nine months ended September 30, 2021, the Company issued an aggregate of 1,625,000 shares of common stock with a fair value of $ 2.00

per share, respectively, to investors for cash proceeds of $ 3,250,000 .

On August 12, 2021, the Company

issued an aggregate of 2,566,778 shares of common stock with a fair value of $ 6.00 per share, to VelocIT pursuant to the Acquisition

(See Note 3).

On August 16, 2021, the Company

issued an aggregate of 232,900

shares of common stock with a fair value of $ 2.05

per share to a consultant for services rendered (See Note 10).

January 16, 2020, the Company entered into a consulting agreement, with Eskenzi PR Limited (“Eskenzi”).

5 unchanged sentences

On January 16, 2021, the consulting agreement was automatically renewed per the terms of the agreement.

execution of the consulting agreement the Company was to issue 120,000

shares of the Company’s restricted common

stock, valued at $ 48,000

Upon the renewal of the consulting

agreement the Company was to issue 312,000

shares of the Company’s restricted

stock, valued at $ 639,600 .

As of June 30, 2021, these shares have yet to be issued.

As such, the Company recorded a stock payable in the amount of $ 160,750 and $ 46,000 representing

the fair value of services performed through the six months and year ended June 30, 2021 and December 31, 2020, respectively.

execution of the consulting agreement the Company was to issue 120,000 shares of the Company’s restricted common stock, valued

at $ 48,000 to Eskenzi.

Upon the renewal of the consulting agreement the Company was to issue 312,000 shares of the Company’s restricted

stock, valued at $ 639,600 , for a two-year period.

On August 16, 2021, the Company issued 232,900 shares of vested common stock under

the consulting agreement.

As of September 30, 2021, 39,000 of vested shares have yet to be issued.

As such, the Company recorded

a stock payable in the amount of $ 79,950 and $ 46,000 representing the fair value of services performed through the nine months

and year ended September 30, 2021 and December 31, 2020, respectively.

Note 10 for disclosure of additional equity related transactions.

10 – StocK-BASED COMPENSATION

Company accounts for its stock-based compensation in accordance with the fair value recognition provisions of ASC 718.

Equity Incentive Plan

Board of Directors approved the Company’s 2019 Equity Incentive Plan (the “2019 Plan”) on June 6, 2019 and the stockholders

of the Company holding a majority of the outstanding shares of common stock of the Company approved and adopted the 2019 Plan.

number of shares of the Company’s common stock that may be issued under the Company’s 2019 Plan is 25,000,000 shares.

2019 Plan has a term of ten years from the date it was adopted.

Shares issued under the 2019 Plan shall be made available from (i) authorized

but unissued shares of common stock, (ii) common stock held in treasury of the Company, or (iii) previously issued shares of common stock

reacquired by the Company, including shares purchased on the open market.

Company granted options for the purchase of 1,400,000 shares of common stock during the six months ended June 30, 2021.

Company granted options for the purchase of 3,775,000 shares of common stock during the six months ended June 30, 2020.

weighted average grant date fair value of options issued and vested during the six months ended June 30, 2021 was $ 587,143 and $ 243,534 ,

respectively.

The weighted average grant date fair value of non-vested options was $ 8,147,973 at June 30, 2021.

weighted average grant date fair value of options issued during the six months ended June 30, 2020 was $ 165,982 .

The weighted average

non-vested grant date fair value of non-vested options was $ 1,785,954 at June 30, 2020.

Board of Directors and stockholders of the Company approved the Company’s 2019 Equity Incentive Plan (the “2019 Plan”)

on June 6, 2019.

The maximum number of shares of the Company’s common stock that may be issued under the Company’s 2019 Plan

is 25,000,000 shares.

The 2019 Plan has a term of ten years from the date it was adopted.

Shares issued under the 2019 Plan shall be

made available from (i) authorized but unissued shares of common stock, (ii) common stock held in treasury of the Company, or (iii) previously

issued shares of common stock reacquired by the Company, including shares purchased on the open market.

Company granted options for the purchase of 3,236,340 shares of common stock during the nine months ended September 30, 2021.

Company granted options for the purchase of 4,390,700 shares of common stock during the nine months ended September 30, 2020.

applying the Black-Scholes option pricing model to stock options granted, the Company used the following assumptions:

SCHEDULE OF BLACK-SCHOLES STOCK OPTIONS GRANTED

For the Nine Months Ended

September 30, 2021

September 30, 2020

Risk free interest rate

0.42 % - 0.86 %

0.22 % - 0.33 %

Contractual term (years)

Expected volatility

73.43 % - 83.28 %

73.61 % - 73.93 %

total weighted average grant date fair value of options issued and vested during the nine months ended September 30, 2021, was $ 1,554,909

and $ 267,818 , respectively.

The weighted average grant date fair value of non-vested options was $ 15,713,025 at September 30, 2021.

total weighted average grant date fair value of options issued during the nine months ended September 30, 2020, was $ 157,384 .

average non-vested grant date fair value of non-vested options was $ 1,871,528 at September 30, 2020.

Compensation-based

4 unchanged sentences

Expired or cancelled

Outstanding at June 30, 2021

Outstanding at September 30, 2021

following table summarizes information about options to purchase shares of the Company’s common stock outstanding and exercisable

at June 30, 2021:

at September 30, 2021:

SUMMARY OF OPTIONS TO PURCHASE SHARES OF COMMON STOCK OUTSTANDING AND EXERCISABLE

4 unchanged sentences

over three to four years from the grant date.

compensation expense related to the options was $ 891,126

and $ 343,910

for the three months ended June 30, 2021 and

2020, respectively.

Total compensation expense related to the options was $ 1,729,888

and $ 669,339

for the six months ended June 30, 2021 and 2020,

compensation expense related to the options was $ 1,251,635 and $ 392,661 for the three months ended September 30, 2021 and 2020, respectively.

Total compensation expense related to the options was $ 2,981,523 and $ 1,062,000 for the nine months ended September 30, 2021 and 2020,

respectively.

As of June 30, 2021, there was future compensation expense of $ 6,525,546

with a weighted average recognition period

years related to the options.

aggregate intrinsic value totaled $ 186,672,318 and $ 95,695,130 , for total outstanding and exercisable options, respectively, and

was based on the Company’s estimated fair value of the common stock of $ 8.14 as of June 30, 2021, which is the aggregate fair value

of the common stock that would have been received by the option holders had all option holders exercised their options as of that date,

net of the aggregate exercise price.

February 1, 2021, the Company granted options to purchase 500,000 shares of the Company’s common stock to an employee, with an

exercise price of $ 2.00 per share.

The options for 30 % of the shares vest on the one-year anniversary of the grant date and then monthly

over the subsequent two-year period.

The options issued were valued using the Black-Scholes-Merton option pricing model under the following

stock price - $ 2.05 ;

strike price - $ 2.00 ;

expected volatility – 74 % ;

risk free interest rate – 0.42 % ;

and expected term – 3.53 years.

February 1, 2021, the Company granted options to purchase 200,000 shares of the Company’s common stock to a board member, with

an exercise price of $ 2.00 per share.

The options vest monthly over a two-year period.

The options issued were valued using the Black-Scholes-Merton

option pricing model under the following assumptions:

stock price - $ 2.05 ;

strike price - $ 2.00 ;

expected volatility – 74 % ;

free interest rate – 0.42 % ;

dividend rate – 0 % ;

and expected term – 3.25 years.

February 8, 2021, the Company granted options to purchase 500,000 shares of the Company’s common stock to an employee, with an

exercise price of $ 2.00 per share.

The options for 30 % of the shares vest on the one-year anniversary of the grant date and then monthly

over the subsequent two-year period.

The options issued were valued using the Black-Scholes-Merton option pricing model under the following

stock price - $ 2.05 ;

strike price - $ 2.00 ;

expected volatility – 74 % ;

risk free interest rate – 0.48 % ;

and expected term – 3.53 years.

May 5, 2021, the Company granted options to purchase 200,000 shares of the Company’s common stock to an employee, with an exercise

price of $ 2.00 per share.

The options vest monthly over a two-year period.

The options issued were valued using the Black-Scholes-Merton

option pricing model under the following assumptions:

stock price - $ 2.25 ;

strike price - $ 2.00 ;

expected volatility – 73 % ;

free interest rate – 0.80 % ;

dividend rate – 0 % ;

and expected term – 3.25 years.

As of September 30, 2021, there was future compensation expense of $ 12,863,247 with a weighted average recognition period

of 2.58 years related to the options.

aggregate intrinsic value totaled $ 129,067,956 and $ 75,702,225 , for total outstanding and exercisable options, respectively, and was

based on the Company’s estimated fair value of the common stock of $ 5.80 as of September 30, 2021, which is the aggregate fair

value of the common stock that would have been received by the option holders had all option holders exercised their options as of that

date, net of the aggregate exercise price.

Options Pending

As of September 30, 2021,

the Company has approximately 3,400,000 options to be awarded to employees upon their acceptance of employment.

The majority of these

employees work for VelocIT.

The options will be granted with an exercise price equal to the trading price on the date of grant, and will

be valued utilizing a Black-Scholes valuation.

The expense will be amortized over the term of the options vesting period, although the

amount of the expense has yet to be determined.

11 – COMMITMENTS AND CONTINGENCIES

8 unchanged sentences

without notice to TalaTek.

At June 30, 2021, no amounts were drawn on the line of credit.

At September 30, 2021, the line of credit remained open and no amounts were drawn on the line of credit.

Technologyville,

August 24, 2017, Techville entered into a secured revolving line of credit with Wintrust Bank (“Wintrust”) for $ 75,000 .

The line of credit bears interest at 1.99 %

for the first twelve (12) months, then Prime

with a floor rate of 6 %

and a maturity date of August

The interest rate at June 30, 2021

The line of credit is collateralized by all of Techville’s assets.

There are no financial covenants requiring the Company to maintain

specific financial ratios.

During the six months ended June 30, 2021 Techville drew $ 221,346

against the line of credit and made payments

of $ 224,346 .

At June 30, 2021 and December 31, 2020 there was zero

and $ 3,000 outstanding,

respectively.

August 24, 2017, Techville entered into a secured revolving line of credit with Wintrust Bank (“Wintrust”) for a maximum

amount of $ 75,000 .

The line of credit bears interest at 1.99 % for the first twelve (12) months, then Prime plus 2 % , with a floor rate

of 6 % and a maturity date of August 24, 2021 .

The line of credit was collateralized by all of Techville’s assets.

During the nine

months ended September 30, 2021, Techville drew $ 221,346 against the line of credit and made payments of $ 224,346 .

At September 30, 2021,

and December 31, 2020, there was $ - and $ 3,000 outstanding, respectively, and has expired.

Technologyville,

2 unchanged sentences

original principal amount of $ 59,905 .

The note has a maturity date of May

12, 2025 and bears interest at 5.77 %

During the six months ended June 30,

2021, the Company made cash payments of $ 2,925 ,

of which $ 2,702

was attributed to principal and interest, respectively.

The note has a maturity date of May 12, 2025 and bears interest at 5.77 % per annum.

nine months ended September 30, 2021, the Company made cash payments of $ 8,580 , of which $ 8,054 and $ 526 was attributed to principal

and interest, respectively.

The loan is collateralized by a vehicle.

There are no financial covenants requiring the Company to maintain specific financial ratios.

At June 30, 2021, $ 43,178

was outstanding.

At September 30, 2021, $ 37,826 was outstanding.

June 22, 2020, under the U.S.

Small Business Administration’s Paycheck Protection Program, Techville entered into a note payable

with a financial institution for $ 179,600

interest at 1 %

per annum and a maturity date of June

Pursuant to the note, principal and

interest payments were deferred for ten months.

Techville applied for loan forgiveness on a timely basis, and at June 30,

2021, $ 179,600

was outstanding.

with a financial institution for $ 179,600 bearing interest at 1 % per annum and a maturity date of June 22, 2025 .

Pursuant to the note,

principal and interest payments were deferred for ten months.

Techville applied for loan forgiveness on a timely basis, and at September

30, 2021, the total amount due of $ 179,600 had been forgiven.

December 31, 2018, GenResults entered into an unsecured note payable with Jemmett Enterprises, LLC, the Company’s majority stockholder

that is controlled by the Company’s Chief Executive Officer, in the original principal amount of $ 200,000 .

The note has a maturity date of June

15, 2021 , and bears interest at 6 %

On May 30, 2021 the Company paid $50,000

towards the outstanding principal balance of the note.

The outstanding principal balance of this loan was $ 9,787

as of June 30, 2021 and December 31, 2020.

June 30, 2021 and December 31, 2020, the Company has recorded accrued interest of $ 23,154

and $ 23,934 ,

respectively, with respect to this note payable.

The Company has recorded interest expense of $ 1,426

during the three months ended June 30, 2021 and

2020, respectively.

The Company has recorded interest expense of $ 4,409

during the six months ended June 30, 2021

and 2020, respectively.

The note had a maturity

date of June 15, 2021 , and bore interest at 6 % per annum.

There was no remaining balance at September 30, 2021, The outstanding principal

balance of this loan was $ 9,787 at December 31, 2020.

At September 30, 2021, and December 31, 2020, the Company has recorded accrued

interest of $ 5,079 and $ 23,934 , respectively, with respect to this note payable.

The Company has recorded interest expense related to

this note of $ 186 and $ 3,669 during the three months ended September 30, 2021 and 2020, respectively, and $ 4,595 and $ 9,358 during the

nine months ended September 30, 2021 and 2020, respectively.

Cyber Sentinel Corporation

1 unchanged sentence

Small Business Administration’s Paycheck Protection Program, Cerberus entered into a note payable

with a financial institution for $ 530,000

interest at 1 %

per annum and a maturity date of April

Pursuant to the note, principal and

interest payments were deferred for six months.

The Company applied for loan forgiveness on a timely basis, and at June 30, 2021,

$ 530,000 was outstanding.

with a financial institution for $ 530,000 bearing interest at 1 % per annum and a maturity date of April 17, 2022 .

Pursuant to the note,

principal and interest payments were deferred for six months.

The Company applied for loan forgiveness on a timely basis, and at September

30, 2021, the total amount due of $ 530,000 had been forgiven.

Skies Security LLC

1 unchanged sentence

Small Business Administration’s Paycheck Protection Program, Clear Skies entered into a loan payable

with a financial institution for $ 134,200

interest at 1 %

per annum and a maturity date of May

Pursuant to the loan, principal and

interest payments were deferred for six months.

Clear Skies applied for loan forgiveness on a timely basis, and at June

30, 2021, $ 134,200 was outstanding.

with a financial institution for $ 134,200 bearing interest at 1 % per annum and a maturity date of May 8, 2022 .

Pursuant to the loan,

principal and interest payments were deferred for six months.

Clear Skies applied for loan forgiveness on a timely basis, and at September

30, 2021, the total amount due of $ 134,200 had been forgiven.

Security, LLC

1 unchanged sentence

Small Business Administration’s Paycheck Protection Program, Alpine entered into a loan payable

with a financial institution for $ 137,000

interest at 1 %

per annum and a maturity date of April

Pursuant to the loan, principal and

interest payments were deferred for six months.

Alpine applied for loan forgiveness on a timely basis, and at June 30,

2021, $ 137,000 was outstanding.

with a financial institution for $ 137,000 bearing interest at 1 % per annum and a maturity date of April 8, 2022 .

Pursuant to the loan,

principal and interest payments were deferred for six months.

Alpine applied for loan forgiveness on a timely basis, and at September

30, 2021, the total amount due of $ 137,000 had been forgiven.

Acquisition Corp.

July 9, 2016, Catapult Acquistion Corp.

entered into several seller notes payable with shareholders of VelocIT.

The total borrowing amount

was $ 600,000 and each loan bears interest at 5 % per annum with a maturity date of July 31, 2023 .

Pursuant to the terms of the loans,

principal and interest payments were deferred for two years on three of the loans, making up $ 150,000 of the $ 600,000 total amount borrowed.

The amount outstanding as of September 30, 2021, was $ 559,354 .

December 23, 2020, the Company issued to a related party lender a convertible note payable in the principal amount of $ 3,000,000 .

11 unchanged sentences

Total straight-line amortization of this discount totaled $ 56,501

during the six months ended June 30, 2021 and

has a remaining amortization period of 0 .50

Total interest expense on the note

for the three and six months ended June 30,

minimum payments under the above notes payable for the remainder of 2021 following June 30, 2021, and thereafter, and the amount

of loans payable, net of current portion, are as follows:

during the nine months ended September 30, 2021,

and has a remaining amortization period of 0.25

Total interest expense on the note was

and $ 135,000

for the three and nine months ended September

minimum payments under the above notes payable for the remainder of 2021 and thereafter and the amount of loans payable, net of current

portion, are as follows:

SCHEDULE OF FUTURE PAYMENTS UNDER NOTES PAYABLE

June 30, 2021

Total future minimum payments

2 unchanged sentences

payable, noncurrent

lease is defined as a contract that conveys the right to control the use of identified property, plant or equipment for a period of time

in exchange for consideration.

of the Company’s leases are classified as operating leases.

1 unchanged sentence

to be recognized on the condensed consolidated balance sheet as ROU assets and corresponding lease liabilities.

January 1, 2021 and February 1, 2021, the Company recognized additional ROU assets and lease liabilities of $ 37,932 and $ 137,826 , respectively.

The Company elected to not recognize ROU assets and lease liabilities arising from office leases with initial terms of twelve months

or less (deemed immaterial) on the unaudited condensed consolidated balance sheets.

January 1, 2021, February 1, 2021, and August 12, 2021, the Company recognized additional ROU assets and lease liabilities of

$ 137,826 and

respectively.

The Company elected to not recognize ROU assets and lease liabilities arising from office leases with initial terms of

twelve months or less (deemed immaterial) on the unaudited condensed consolidated balance sheets.

assets include any prepaid lease payments and exclude any lease incentives and initial direct costs incurred.

6 unchanged sentences

The weighted average incremental borrowing rate applied was 6 % .

As of June 30, 2021, the

Company’s leases had a remaining weighted average term of 1.39 years.

As of September 30, 2021,

the Company’s leases had a remaining weighted average term of 1.15 years.

following table presents net lease cost and other supplemental lease information:

SCHEDULE OF LEASE COST AND OTHER SUPPLEMENT LEASE INFORMATION

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Operating lease cost (cost resulting from lease payments)

6 unchanged sentences

Non-current liabilities – operating lease liabilities

minimum payments under non-cancelable leases for operating leases for the remaining terms of the leases following the six months ended

June 30, 2021, are as follows:

minimum payments under non-cancelable leases for operating leases for the remaining terms of the leases following the nine months ended

September 30, 2021, are as follows:

SCHEDULE OF FUTURE MINIMUM UNDER NON-CANCELLABLE LEASES FOR OPERATING LEASES

Operating Leases

2021 (excluding the six months ended June 30, 2021)

2021 (excluding the nine months ended September 30, 2021)

Total future minimum lease payments

5 unchanged sentences

institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $ 250,000 .

As of June 30, 2021, and December

31, 2020, the Company had approximately $ 4,761,000 and $ 4,252,000 , respectively, in excess of the FDIC insured limit.

OF CONCENTRATION OF RISK, BY RISK FACTOR

client accounted for 30 % of revenue for the six months ended June 30, 2021 .

clients accounted for 80 % of revenue for the six months ended June 30, 2020, as set forth below:

client accounted for 16 % of the accounts receivable as of June 30, 2021.

clients accounted for 70 % of the accounts receivable as of June 30, 2020, as set forth below:

vendors accounted for 32 % of the accounts payable as of June 30, 2021, as set forth below:

vendors accounted for 44 %

of the accounts payable as of June 30, 2020,

as set forth below.

As of September 30, 2021, and

December 31, 2020, the Company had approximately $ 1,788,000 and $ 4,252,000 , respectively, in excess of the FDIC insured limit.

SCHEDULES OF CONCENTRATION OF RISK, BY RISK FACTOR

client accounted for 26 % of revenue for the nine months ended September 30, 2021.

clients accounted for 68 % of revenue for the nine months ended September 30, 2020, as set forth below:

clients accounted for 27 % of the accounts receivable as of September 30, 2021, as set forth below:

clients accounted for 56 % of the accounts receivable as of September 30, 2020, as set forth below:

vendors accounted for 21 % of the accounts payable as of September 30, 2021, as set forth below:

vendors accounted for 40 % of the accounts payable as of September 30, 2020, as set forth below.

15 – SUBSEQUENT EVENTS

June 30, 2021, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company,

Catapult Acquisition Merger Sub, LLC (“Merger Sub”), Catapult Acquisition Corporation d/b/a VelocIT (“VelocIT”),

the shareholders of Catapult Acquisition Corporation (the “Catapult Shareholders”) and Derek Hahn, in his capacity as the

shareholder representative (the “Shareholder Representative”).

Pursuant to the Merger Agreement, Catapult agreed to merge

with and into Merger Sub (the “Merger”), with Merger Sub surviving the Merger as a wholly-owned subsidiary of the Company.

July 26, 2021, the Company, Merger Sub, VelocIT, the Catapult shareholders and the Shareholder Representative entered into an Amended

and Restated Agreement and Plan of Merger to provide, among other things, that Merger Sub would merge with and into VelocIT, with VelocIT

surviving the Merger as a wholly-owned subsidiary of the Company.

All issued and outstanding shares of common stock of VelocIT immediately

prior to the Effective Time were converted into the right to receive an aggregate of up to 2,566,778

shares of common stock of the Company,

subject to a holdback of 256,678

shares of Company stock.

The effective date was August 2, 2021.

to June 30, 2021, the Company received approval from the U.S.

Small Business Adminitstration’s Paycheck Protection Program for

the forgiveness of its outstanding $ 801,200 in PPP loans.

to June 30, 2021, the Company granted options to purchase an aggregate of 854,340 of the Company’s common stock, with exercise

prices ranging from $ 3.05 to $ 6.75 per share to various employees.

The options vest at a one-year cliff and then monthly over the subsequent

Technology Systems, Inc.

October 1, 2021, the Company entered into a Stock Purchase Agreement (the “Agreement”) by and among the Company, Atlantic

Technology Systems, Inc.

(“ATS”) and Atlantic Technology Enterprises, Inc.

(“ATE”) (collectively, “Atlantic”)

and James Montagne, the sole shareholder of ATS, and James Montagne and Miriam Montagne as the sole shareholders of ATE (the “Shareholder”).

Pursuant to the Agreement, the Company purchased from the Shareholder all of the outstanding shares of Atlantic, with ATE and ATS becoming

wholly-owned subsidiaries of the Company.

The aggregate purchase price for the Atlantic shares was 200,000 shares of the Company’s

common stock, par value $ 0.00001 , and $ 75,000 in cash.

Furthermore, the Shareholder shall receive an additional 100,000 shares of the

Company’s common stock based upon Atlantic achieving certain revenue and earnings thresholds and an additional $ 150,000 in cash

upon the Company listing to a national exchange.

Note Issuance

October 27, 2021, the Company issued a 5% Unsecured Convertible Note (the “Note”) to Neil Stinchcombe (the “Lender”),

in consideration of the Lender lending the Company $ 1,500,000 (the “Principal Amount”) to provide funding for the Company’s

prospective acquisitions and other general corporate purposes.

The Principal Amount, together with accrued and unpaid interest, is due

on January 27, 2022 (the “Maturity Date”), with no prepayment option.

Interest is calculated at 6% per annum (based on a

360-day year) and is payable monthly.

The Maturity Date may be extended at the Company’s election to April 27, 2022.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements