10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2020

or

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from _________ to _________

Commission file number: 000-56059

CERBERUS CYBER SENTINEL CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	83-4210278
(State or other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

7333 E. Doubletree, Suite D270 Scottsdale, Arizona	85258
(Address of Principal Executive Offices)	(Zip Code)

(480) 389-3444

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of exchange on which registered
None	N/A	N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a small reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” a “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	[  ]	Accelerated filer	[  ]
Non-accelerated filer	[  ]	Smaller reporting company	[X]
		Emerging growth company	[X]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act: [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

As of August 14, 2020, there were 111,654,771 shares of the registrant’s common stock outstanding.

CERBERUS CYBER SENTINEL CORPORATION

FORM 10-Q

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION		3
ITEM 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets as of June 30, 2020 (unaudited) and December 31, 2019	3
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2020 and 2019 (unaudited)	4
	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30, 2020 and 2019 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2020 and 2019 (unaudited)	6
	Notes to Condensed Consolidated Financial Statements (unaudited)	7
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	37
ITEM 4.	Controls and Procedures	37
PART II. OTHER INFORMATION		38
ITEM 1.	Legal Proceedings	38
ITEM 1A.	Risk Factors	38
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
ITEM 3.	Defaults Upon Senior Securities	39
ITEM 4.	Mine Safety Disclosures	39
ITEM 5.	Other Information	39
ITEM 6.	Exhibits	40
SIGNATURES		41

2 

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

CERBERUS CYBER SENTINEL CORPORATION and subsidiaries

CONDENSED Consolidated Balance Sheets

	June 30,			December 31,
	2020			2019
	(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	2,043,469		$	1,876,645
Accounts receivable, net of allowances for doubtful accounts of $70,847 and $40,000 , respectively		806,532			531,965
Prepaid expenses and other current assets		247,021			70,277
Total Current Assets		3,097,022			2,478,887
Property and equipment, net of accumulated depreciation of $4,138 and $758, respectively		66,460			10,900
Right of use asset		17,901			-
Intangible assets, net of accumulated amortization of $46,944 and $15,648, respectively		1,053,556			1,084,852
Goodwill		2,278,939			922,579
Total Assets	$	6,513,878		$	4,497,218
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	811,632		$	468,900
Stock payable		22,000			-
Deferred revenue		66,434			-
Lease liability		4,304			-
Line of credit		27,000			-
Loans payable		718,650			-
Note payable - related party		109,787			109,787
Total Current Liabilities		1,759,807			578,687
Long-term Liabilities:
Loans payable, net of current portion		40,858			-
Lease liability, net of current portion		13,682			-
Total Liabilities		1,814,347			578,687
Commitments and Contingencies
Stockholders’ Equity:
Common stock, $.00001 par value; 250,000,000 shares authorized; 111,654,771 and 113,912,500 shares issued and 111,654,771 and 107,912,500 outstanding at June 30, 2020 and December 31, 2019, respectively		1,117			1,139
Additional paid-in capital		7,537,171			7,770,902
Accumulated deficit		(2,838,757	)		(1,453,510	)
		4,699,531			6,318,531
Treasury stock		-			(2,400,000	)
Total Stockholders’ Equity		4,699,531			3,918,531
Total Liabilities and Stockholders’ Equity	$	6,513,878		$	4,497,218

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

3 

CERBERUS CYBER SENTINEL CORPORATION

CONDENSED Consolidated STATEMENTS OF OPERATIONS

(Unaudited)

	For The Three Months Ended						For The Six Months Ended
	June 30, 2020			June 30, 2019			June 30, 2020			June 30, 2019
Revenue:
Managed services	$	616,344		$	46,450		$	754,257		$	222,450
Consulting services		934,143			107,868			1,864,451			129,681
Total revenue		1,550,487			154,318			2,618,708			352,131
Cost of revenue:
Managed services		26,167			67,978			45,137			111,641
Consulting services		205,877			19,812			321,724			19,812
Cost of payroll		626,457			-			1,266,881			-
Total cost of revenue		858,501			87,790			1,633,742			131,453
Total gross profit		691,986			66,528			984,966			220,678
Operating expenses:
Professional fees		204,956			344,252			401,310			360,671
Salaries and benefits		413,359			-			808,671			-
Advertising and marketing		45,708			8,151			73,570			11,340
Selling, general and administrative		220,719			47,654			405,605			80,039
Stock-based compensation		343,910			186,700			669,339			186,700
Loss on write-off of account receivable		15,000			-			15,000			-
Total operating expenses		1,243,652			586,757			2,373,495			638,750
Loss from operations		(551,666	)		(520,229	)		(1,388,529	)		(418,072	)
Other income (expense):
Interest expense, net		(4,437	)		(3,052	)		(6,718	)		(6,067	)
Other income		10,000			-			10,000			-
Total other income (expense)		5,563			(3,052	)		3,282			(6,067	)
Loss before provision for income taxes		(546,103	)		(523,281	)		(1,385,247	)		(424,139	)
Provision for income taxes		-			-			-			-
Net loss	$	(546,103	)	$	(523,281	)	$	(1,385,247	)	$	(424,139	)
Net loss per common share - basic	$	(0.00	)	$	(0.01	)	$	(0.01	)	$	(0.00	)
Net loss per common share - diluted	$	(0.00	)	$	(0.01	)	$	(0.01	)	$	(0.00	)
Weighted average shares outstanding - basic		109,604,497			101,776,099			108,847,565			85,975,827
Weighted average shares outstanding - diluted		109,604,497			101,776,099			108,847,565			85,975,827

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

4 

CERBERUS CYBER SENTINEL CORPORATION

CONDENSED Consolidated STATEMENTS of CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

						Additional
	Common Stock					Paid-in			Accumulated			Treasury
	Shares		Amount			Capital			Deficit			Stock			Total
Balance at January 1, 2019		70,000,000	$	700		$	9,990		$	25,438		$	-		$	36,128
Distributions to member		-		-			-			(125,270	)		-			(125,270	)
Net income		-		-			-			99,142			-			99,142
Balance as of March 31, 2019		70,000,000		700			9,990			(690	)		-			10,000
Stock based compensation - common stock		30,000,000		300			187,390			-			-			187,690
Stock issued in VCAB merger		2,000,000		20			12,440			-			-			12,460
Stock issued for cash		1,000,000		10			399,990			-			-			400,000
Net loss		-		-			-			(523,281	)		-			(523,281	)
Balance as of June 30, 2019		103,000,000	$	1,030		$	609,810		$	(523,971	)	$	-		$	86,869
`
Balance at January 1, 2020		107,912,500	$	1,139		$	7,770,902		$	(1,453,510	)	$	(2,400,000	)	$	3,918,531
Stock based compensation		-		-			325,429			-			-			325,429
Common shares issued for cash		350,000		4			139,996			-			-			140,000
Return of treasury stock to authorized capital		-		(60	)		(2,399,940	)		-			2,400,000			-
Net loss		-		-			-			(839,144	)		-			(839,144	)
Balance as of March 31, 2020		108,262,500		1,083			5,836,387			(2,292,654	)		-			3,544,816
Stock based compensation		-		-			343,910			-			-			343,910
Stock issued for Technologyville acquisition		3,392,271		34			1,356,874			-			-			1,356,908
Net loss		-		-			-			(546,103	)		-			(546,103	)
Balance as of June 30, 2020		111,654,771	$	1,117		$	7,537,171		$	(2,838,757	)	$	-		$	4,699,531

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

5 

CERBERUS CYBER SENTINEL CORPORATION

CONDENSED Consolidated STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Six Months Ended
	June 30, 2020			June 30, 2019
Cash flows from operating activities:
Net Loss	$	(1,385,247	)	$	(424,139	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Stock based compensation - stock options		669,339			199,850
Loss on write-off of accounts receivable		15,000			-
Depreciation and amortization		34,676			57
Issuance of common stock for services		22,000			-
ROU amortization		1,492			-
Changes in operating assets and liabilities:
Accounts receivable, net		(209,278	)		5,682
Prepaid expenses and other current assets		(176,744	)		(69,055	)
Accounts payable and accrued expenses		223,615			372,554
Lease liability		(1,407	)		-
Deferred revenue		66,434			16,463
Net cash provided by (used in) operating activities		(740,120	)		101,412
Cash flows from investing activities:
Purchases of property and equipment		-			(2,555	)
Cash acquired in acquisition		65,037			-
Net cash provided by (used in) investing activities		65,037			(2,555	)
Cash flows from financing activities:
Distributions to member		-			(125,270	)
Proceeds from PPP loans		709,600			-
Proceeds from sale of common stock		140,000			400,300
Proceeds from line of credit		60,000			-
Payment on loans payable		(988	)		-
Payment on line of credit		(66,705	)		-
Net cash provided by financing activities		841,907			275,030
Net increase in cash and cash equivalents		166,824			373,887
Cash and cash equivalents - beginning of period		1,876,645			80,006
Cash and cash equivalents - end of period	$	2,043,469		$	453,893
Supplemental cash flow information:
Cash paid for:
Interest	$	169		$	-
Income taxes	$	5,882		$	-
Non-cash investing and financing activities:
Right of use asset and lease liability recorded upon adoption of ASC 842	$	19,393		$	-

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

6 

CERBERUS CYBER SENTINEL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 – NATURE OF THE ORGANIZATION AND BUSINESS

Corporate History

Cerberus Cyber Sentinel Corporation (“Cerberus Sentinel,” “Cerberus,” or the “Company”) was formed on March 5, 2019 as a Delaware corporation. The Company’s principal offices are located at 7333 E. Doubletree, Suite D270, Scottsdale, Arizona 85258.

On April 12, 2019, Cerberus acquired GenResults, LLC, an Arizona limited liability company (“GenResults”). GenResults was established on June 22, 2015. Prior to the Company’s acquisition of GenResults, GenResults was wholly-owned by an entity affiliated with David G. Jemmett, Cerberus’ Chief Executive Officer and a director of the Company. As of December 31, 2019, GenResults was a wholly-owned subsidiary of Cerberus. Due to the companies being under common control, the Company accounted for the acquisition as a reorganization.

Effective October 1, 2019, the Company entered into an Agreement and Plan of Merger (the “TalaTek Merger Agreement”) pursuant to which TalaTek, LLC, a Virginia limited liability company (“TalaTek”), became its wholly-owned subsidiary. Under the TalaTek Merger Agreement, all issued and outstanding units representing membership interests in TalaTek were converted into an aggregate of 6,200,000 shares of the Company’s common stock.

Effective May 25, 2020, the Company entered into a Stock Purchase Agreement with Technologyville, Inc., an Illinois corporation (“Techville”), and its sole shareholder, pursuant to which Techville became a wholly-owned subsidiary of the Company (the “Techville Acquisition”). Under the terms of the Techville Acquisition, all issued and outstanding common stock of Techville was converted into an aggregate of 3,392,271 shares of the Company’s common stock.

Nature of the Business

Cerberus Sentinel is a security consulting company comprised of security professionals who work with clients to create a continuously aware security culture. We do not sell cybersecurity products. We position ourselves as a trusted cybersecurity advisor and are committed to delivering tailored security solutions to organizations of different sizes and across all geographies and industries to fit their budgetary needs and limit their cyber threat exposure.

We currently provide a multitude of cybersecurity services including managed security service, cybersecurity consulting, technology consulting, compliance auditing, vulnerability assessment, penetration testing, security remediation, Security Operations Center (“SOC”) set-up and consulting and cybersecurity training. We differentiate ourselves from our competitors by staying technology agnostic. We believe that many cybersecurity service providers in the market today are committed to a specific technology solution which limits their service scope and ability to quickly respond to any emerging cybersecurity challenges. In addition, as we continue to serve our clients within our existing capacities, we plan to continue making strategic acquisitions of small-to-medium-sized engineer-led cybersecurity service firms to continue to expand our service scope and geographical coverage. We believe that having a world-class technology team with multi-faceted expertise is key to providing technology agnostic solutions to our clients and maximizing their return on investment from information technology (“IT”) and cybersecurity spending.

Liquidity

The accompanying unaudited condensed consolidated financial statements have been prepared on the basis that the Company will continue as a going concern, which contemplates realization of assets and the liabilities in the normal course of business. At June 30, 2020, the Company had an accumulated deficit of approximately $2,800,000 and working capital surplus of approximately $1,300,000. For the six months ended June 30, 2020, the Company had a loss from operations of approximately $1,390,000 and negative cash flows from operations of approximately $740,000. Although the Company is showing positive revenues and gross profit trends, the Company expects to incur further losses through the end of 2020.

7 

To date the Company has been funding operations primarily through the sale of equity in private placements and revenues generated by the Company’s services. During the six months ended June 30, 2020, the Company received $140,000 from private placements to accredited investors of the Company’s common stock and approximately $710,000 from the U.S. Small Business Administration’s Payroll Protection Program.

Based on its current cash resources and commitments, the Company believes it will be able to maintain its current planned development and corresponding level of expenditure for at least twelve months from the date of the issuance of these unaudited condensed consolidated financial statements, although no assurance can be given that it will not need additional funds prior to such time.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited financial information as of and for the three and six months ended June 30, 2020 and 2019 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. In the opinion of management, such financial information includes all adjustments (consisting only of normal recurring adjustments) considered 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 six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the entire year or for any other subsequent interim period.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to the rules of the U.S. Securities and Exchange Commission, or the SEC. These unaudited financial statements and related notes should be read in conjunction with our audited financial statements for the year ended December 31, 2019 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 30, 2020.

Consolidation

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, GenResults, TalaTek and Techville. All significant intercompany accounts and transactions have been eliminated in consolidation.

Reclassifications

Certain reclassifications have been made to the financial statements for the three and six months ended June 30, 2019 to conform to the financial statements presentation for the three and six months ended June 30 ,2020. These reclassifications had no effect on net loss or cash flows as previously reported.

Use of Estimates

Preparing financial statements in conformity with GAAP 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 amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of the accompanying unaudited condensed consolidated financial statements. Significant estimates include the allowance for doubtful accounts, the carrying value of intangible assets and goodwill, deferred tax asset and valuation allowance, assumptions used in Black-Scholes-Merton, or BSM, valuation methods, such as expected volatility, risk-free interest rate, and expected divided rate.

8 

Revenue

The Company’s revenues are derived from two major types of services to clients: Managed Services and Consulting Services. With respect to Managed Services, the Company provides culture education and enablement, tools and technology provisioning, data and privacy and regulations and compliance, remote infrastructure administration, and cybersecurity services including, but not limited to, antivirus and patch management. With respect to Consulting Services, the Company provides cybersecurity consulting, compliance auditing, vulnerability assessment and penetration testing, and disaster recovery and data backup solutions.

Practical Expedients

As part of Accounting Standards Codification (“ASC”) 606, the Company has adopted several practical expedients including the following: (i) the Company has determined that it need not adjust the promised amount of consideration for the effects of a significant financing component since the Company expects, at contract inception, that the period between when the Company transfers a promised service to the customer and when the customer pays for that service will be one year or less and (ii) the Company recognizes any incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the entity otherwise would have recognized is one year or less.

Disaggregated Revenues

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

	Managed Services		Consulting Services		Total
Primary Sector Markets
Public	$	3,250	$	1,593,598	$	1,596,848
Private		740,849		268,259		1,009,108
Not-for-Profit		10,158		2,594		12,752
	$	754,257	$	1,864,451	$	2,618,708
Major Service Lines
CISO as a Service	$	20,550	$	-	$	20,550
Gap and Risk Assessment		-		1,803,928		1,803,928
Managed Security Services		636,676		-		636,676
Tech Connect Pro		89,080		-		89,080
Tech Connect Cloud		-		22,263		22,263
Tech Connect Security		7,691		-		7,691
Hardware		-		13,253		13,253
Other		260		25,007		25,267
	$	754,257	$	1,864,451	$	2,618,708

Revenue consists of the following by service offering for the six months ended June 30, 2019:

	Managed Services		Consulting Services		Total
Primary Sector Markets
Public	$	-	$	-	$	-
Private		222,450		127,681		350,131
Not-for-Profit		-		2,000		2,000
	$	222,450	$	129,681	$	352,131
Major Service Lines
CISO as a Service	$	184,000	$	-	$	184,000
Gap and Risk Assessment		-		129,681		129,681
Managed Security Services		38,450		-		38,450
Tech Connect Pro		-		-		-
Tech Connect Cloud		-		-		-
Tech Connect Security		-		-		-
Hardware		-		-		-
Other		-		-		-
	$	222,450	$	129,681	$	352,131

9 

Contract Modifications

There were no contract modifications during the six months ended June 30, 2020. Contract modifications are not routine in the performance of the Company’s contracts.

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.

Accounts Receivable

Accounts receivable are reported at their outstanding unpaid principal balances, net of allowances for doubtful accounts. The Company periodically assesses its accounts and other receivables for collectability on a specific identification basis. The Company provides for allowances for doubtful receivables based on management’s estimate of uncollectible amounts considering age, collection history, and any other factors considered appropriate. Payments are generally due within 30 days of invoice. The Company writes off accounts receivable against the allowance for doubtful accounts when a balance is determined to be uncollectible. As of June 30, 2020 and December 31, 2019, the Company’s allowance for doubtful accounts was $70,847 and $40,000, respectively.

Property and Equipment

Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets, generally between three and five years. Expenditures that enhance the useful lives of the assets are capitalized and depreciated. Computer equipment costs for the Company are capitalized, as incurred, and depreciated on a straight-line basis over three years. TalaTek capitalizes all equipment costs over $5,000, as incurred, and depreciates these costs on a straight-line basis over three years.

Maintenance 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 will be removed from the accounts and the resulting gain or loss, if any, will be reflected in operations.

Impairment of Long-Lived Assets

The Company reviews long-lived assets, including finite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of these assets is determined by comparing the forecasted undiscounted net cash flows of the operation to which the assets relate to the carrying amount. If the operation is determined to be unable to recover the carrying amount of its assets, then these assets are written down first, followed by other long-lived assets of the operation to fair value. Fair value is determined based on discounted cash flows or appraised values, depending on the nature of the assets. During the three and six months ended June 30, 2020, the Company did not record a loss on impairment.

Intangible Assets

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

10 

Goodwill

Goodwill represents the excess of the purchase price of the acquired business over the estimated fair value of the identifiable net assets acquired. Goodwill is not amortized but is tested for impairment at least annually at year end, at the reporting unit level or more frequently if events or changes in circumstances indicate that the asset might be impaired. Goodwill is tested for impairment at the reporting unit level by first performing a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. If the reporting unit does not pass the qualitative assessment, then the reporting unit’s carrying value is compared to its fair value. The fair values of the reporting units are estimated using market and discounted cash flow approaches. Goodwill is considered impaired if the carrying value of the reporting unit exceeds its fair value. The discounted cash flow approach uses expected future operating results. Failure to achieve these expected results may cause a future impairment of goodwill at the reporting unit (See Notes 3 and 6).

Advertising and Marketing Costs

The Company expenses advertising and marketing costs as they are incurred. Advertising and marketing expenses were $45,708 and $73,570 for the three and six months ended June 30, 2020, respectively, and $8,151 and $11,340 for the three and six months ended June 30, 2019, respectively, and are recorded in operating expenses on the unaudited condensed consolidated statements of operations.

Fair Value Measurements

As defined in ASC 820, Fair Value Measurements and Disclosures, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company 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 measurement.

Level 1:	Quoted 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 basis.
Level 2:	Pricing 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.
Level 3:	Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. The significant unobservable inputs used in the fair value measurement for nonrecurring fair value measurements of long-lived assets include pricing models, discounted cash flow methodologies and similar techniques.

Net Loss per Common Share

Net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. All vested outstanding options are considered potentially outstanding common stock. The dilutive effect, if any, of stock options are 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, 2020 and 2019.

11 

The following tables summarize the securities that were excluded from the diluted per share calculation because the effect of including these potential shares was antidilutive due to the Company’s net loss position even though the exercise price could be less than the average market price of the common shares:

	June 30, 2020		June 30, 2019
Stock Options		20,820,000		1,100,000
Total		20,820,000		1,100,000

Stock-based Compensation

The Company applies the provisions of ASC 718, Compensation - Stock Compensation, which requires the measurement and recognition of compensation expense for all stock-based awards made to employees, including employee stock options, in the statements of operations.

For 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. Forfeitures are recorded as they are incurred as opposed to being estimated at the time of grant and revised. Due to the Company’s limited history and lack of public market 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.

Pursuant to Accounting Standards Update (“ASU”) 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Non-employee Share-Based Payment Accounting, the Company accounts for stock options issued to non-employees for their services in accordance with ASC 718. The Company uses valuation methods and assumptions to value the stock options that are in line with the process for valuing employee stock options noted above.

Leases

Leases 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 office space monthly with no long term agreements. The Company leases a vehicle with a remaining term of three years.

In accordance with ASC 842, Leases, the Company recognized a right of use (“ROU”) asset and corresponding lease liability on its unaudited condensed consolidated Balance Sheet for its vehicle operating lease agreement. See Note 13 – Leases for further discussion, including the impact on the Company’s unaudited condensed consolidated financial statements and related disclosures.

Income Taxes

Deferred 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.

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The Company utilizes ASC 740, Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the unaudited condensed consolidated financial statements or tax returns. The Company accounts for income taxes using the asset and liability method to compute the differences between the tax basis of assets and liabilities and the related financial amounts, using currently enacted tax rates. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized. At June 30, 2020 and December 31, 2019, the Company’s net deferred tax asset has been fully reserved.

For uncertain tax positions that meet a “more likely than not” threshold, the Company recognizes the benefit of uncertain tax positions in the unaudited condensed consolidated financial statements. The Company’s practice is to recognize interest and penalties, if any, related to uncertain tax positions in income tax expense in the unaudited condensed consolidated statements of operations.

Recently Issued Accounting Standards

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

NOTE 3 – ACQUISITIONS

Technologyville, Inc. Acquisition

On May 25, 2020, the Company entered into and effected a Stock Purchase Agreement (the “SPA”) with Techville, and its sole shareholder, Brian Yelm (“Yelm”). Pursuant to the terms of the SPA, Techville became a wholly owned subsidiary of the Company. Pursuant to the SPA, at the effective time of the Techville Acquisition, Techville’s outstanding common stock was exchanged for 3,392,271 shares of the Company’s common stock.

Immediately following the Techville Acquisition, the Company had 111,654,771 shares of common stock issued and outstanding. The pre-acquisition stockholders of the Company retained an aggregate of 108,262,500 shares, representing approximately 97% ownership of the post-acquisition company. Therefore, upon consummation of the Techville Acquisition, there was no change in control.

The Company accounted for this transaction in accordance with the acquisition method of accounting for business combinations. Assets and liabilities of the acquired business were included in the unaudited condensed consolidated balance sheet as of June 30, 2020, based on the retrospective 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.

Per 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 date. The Company has identified the acquisition date as May 25, 2020. 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 and the liabilities assumed for use in the purchase price allocation.

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The 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:

Consideration paid	$	1,356,908
Tangible assets acquired:
Cash		65,037
Accounts receivable, net		80,289
Vehicle		58,693
Total tangible assets		204,019
Assumed liabilities:
Line of credit		33,705
Accrued expenses		117,742
Loan payable		50,896
Other liabilities		1,128
Total assumed liabilities		203,471
Net assets acquired		548
Goodwill (a.)(b.)	$	1,356,360

a. 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. Goodwill and intangibles are not deductible for tax purposes.

b. Goodwill represents expected synergies from the merger of operations and intangible assets that do not qualify for separate recognition. Cerberus and Techville are both cybersecurity service providers. The acquisition of Techville provided Cerberus potential sales synergies resulting from Cerberus’ access to Techville’s current client-base to offer additional services. Goodwill also represents Techville’s customer list as well as Mr. Yelm’s two-year non-compete clause, which the Company is currently unable to assign a fair value. These items will be assigned a fair value upon the completion of the third-party valuation.

NOTE 4 – PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consist of:

	June 30, 2020		December 31, 2019
Prepaid expenses	$	144,114	$	57,351
Employee advances		1,883		7,150
Other current assets		101,024		5,776
Total prepaid expenses other current assets	$	247,021	$	70,277

NOTE 5 – PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

	June 30, 2020			December 31, 2019
Computer equipment	$	11,905		$	11,658
Vehicle		58,693			-
		70,598			11,658
Less: accumulated depreciation		(4,138	)		(758	)
Property and equipment, net	$	66,460		$	10,900

Total depreciation expense was $2,404 and $3,308 for the three and six months ended June 30, 2020, respectively and $57 for both the three and six months ended June 30, 2019, respectively.

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NOTE 6 – INTANGIBLE ASSETS AND GOODWILL

The below table summarizes the changes in goodwill during the six months ended June 30, 2020:

Balance December 31, 2019	$	922,579
Acquisition of goodwill		1,356,360
Impairment		-
Ending balance, June 30, 2020	$	2,278,939

The below table summarizes the identifiable intangible assets as of June 30, 2020 and December 31, 2019:

	Useful life	2020			2019
Tradenames – trademarks (1)	Indefinite	$	589,200		$	589,200
Customer base (1)	15 years		206,000			206,000
Non-compete agreements (1)	5 years		183,300			183,300
Intellectual property/technology (1)	10 years		122,000			122,000
First priority option to acquire SaaS product (the “SaaS Option”) (1)			-			100,000
			1,100,500			1,200,500
Less accumulated amortization			(46,944	)		(15,648	)
Less impairment charge (2)			-			(100,000	)
Total		$	1,053,556		$	1,084,852

⁽¹⁾ These intangible assets were acquired in the acquisition of TalaTek.

⁽²⁾ The Company concluded that the carrying amount of the SaaS Option would not be recoverable and, as a result, fully impaired the asset at December 31, 2019.

The weighted average useful life remaining of identifiable intangible assets remaining is 9.25 years.

Amortization of identifiable intangible assets for the three and six months ended June 30, 2020 was $15,648 and $31,296.

The below table summarizes the future amortization expense for the next five years and thereafter:

2020	$	31,297
2021		62,593
2022		62,593
2023		62,593
2024		53,428
Thereafter		191,852
	$	464,356

NOTE 7 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following amounts:

	June 30, 2020		December 31, 2019
Accounts payable	$	298,201	$	119,339
Accrued payroll		173,289		274,508
Accrued expenses		323,331		63,931
Accrued interest – related party		16,811		11,122
	$	811,632	$	468,900

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Note 8 - Related Party Transactions

Note Payable – Related Party

On December 31, 2018, GenResults entered into an unsecured note payable with Jemmett Enterprises, LLC, an entity under common control of the Company’s majority stockholder, for a principal amount of $200,000. The note has a maturity date of June 30, 2020, and bears an interest rate of 6% per annum. On June 30, 2020, the maturity date of the note was extended to June 15, 2021. The outstanding principal balance of this loan is $109,787 as of June 30, 2020 and December 31, 2019. At June 30, 2020 and December 31, 2019, the Company has recorded accrued interest of $16,811 and $11,122, respectively. The Company has recorded $3,060 and $5,689 and $3,060 and $6,075 for interest expense during the three and six months ended June 30, 2020 and 2019, respectively, related to the note.

Agreement with Eventus Consulting, P.C.

On 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 and advisor to the Company, is the sole shareholder, pursuant to which Eventus is to provide 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 three and six months ended June 30, 2020, Eventus was paid $37,284 and $47,818 and was owed $37,500 for accrued and unpaid services under the financial consulting agreement at June 30, 2020.

On January 1, 2020, the Company issued Mr. Reithinger options to purchase 720,000 shares of the Company’s common stock at an exercise price of $0.50 per share (See Note 10).

Note 9 - Stockholders’ Equity

Equity Transactions During the Period

During the six months ended June 30, 2020, the Company issued an aggregate of 350,000 shares of common stock with a fair value of $0.40 per share to investors for cash proceeds of $140,000.

On May 25, 2020, the Company issued 3,392,271 shares of common stock with a fair value of $0.40 per share pursuant to the Techville Acquisition (See Note 3).

Stock Payable

On January 16, 2020, the Company entered into a consulting agreement, with Eskenzi PR Limited (“Eskenzi”). As per the agreement, Eskenzi will provide various marketing and public relations services to the Company. The initial term of the agreement was for twelve months and automatically renews for an additional twelve months unless either the Company or Eskenzi provides written notice of termination in advance of at least three months.

Upon execution of the agreement the Company was to issue 120,000 shares of the Company’s restricted common stock, valued at $48,000 to Eskenzi. As of June 30, 2020, these shares had yet to be issued. As such, the Company recorded a stock payable in the amount of $22,000 representing the fair value of services performed during the six months ended June 30, 2020.

See Note 10 for disclosure of additional equity related transactions.

Note 10 – StocK-BASED COMPENSATION

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

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2019 Equity Incentive Plan

The 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 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 with a maximum term of ten years. The shares delivered under the 2019 Plan upon exercise 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.

Options

The Company granted 3,775,000 options during the six months ended June 30, 2020.

The Company granted 1,100,000 options during the six months ended June 30, 2019.

The weighted average grant date fair value of options issued and vested during the six months ended June 30, 2020 was $165,982 and $16,125, respectively. The weighted average grant date fair value of non-vested options was $1,785,954 at June 30, 2020.

The weighted average grant date fair value of options issued during the six months ended June 30, 2019 was $25,147.

Compensation-based stock option activity for qualified and unqualified stock options are summarized as follows:

				Weighted
				Average
	Shares			Exercise Price
Outstanding at January 1, 2020		17,245,000		$	0.46
Granted		3,775,000			0.50
Exercised		-			-
Expired or cancelled		(200,000	)		0.50
Outstanding at June 30, 2020		20,820,000		$	0.47

The following table summarizes information about options to purchase shares of the Company’s common stock outstanding and exercisable at June 30, 2020:

				Weighted-		Weighted-
				Average		Average
		Outstanding		Remaining Life		Exercise		Number
Exercise Prices		Options		In Years		Price		Exercisable
$	0.38		3,000,000		4.12	$	0.38		-
	0.40		3,600,000		4.06		0.40		-
	0.50		14,220,000		4.62		0.50		424,167
			20,820,000		4.45	$	0.47		424,167

The compensation expense attributed to the issuance of the options is recognized ratably over the vesting period.

Options granted under the 2019 Plan are exercisable for five to ten years from the grant date and generally vest over three years from the grant date.

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Total compensation expense related to the options was $343,910 and $669,339 for the three and six months ended June 30, 2020, respectively. As of June 30, 2020, there was future compensation cost of $2,777,590 with a weighted average recognition period of 1.82 years.

The aggregate intrinsic value totalled $60,000 and was based on the Company’s estimated fair value of the stock price of $0.40 as of June 30, 2020, respectively, which would have been received by the option holders had all option holders exercised their options as of that date.

On January 1, 2020, the Company granted options to purchase 720,000 shares of the Company’s common stock to Mr. Reithinger, with an exercise price of $0.50 per share. The options vest monthly over a three-year period. The options issued were valued using the Black-Scholes-Merton option pricing model under the following assumptions: stock price - $0.40; strike price - $0.50; expected volatility – 72%; risk free interest rate – 1.67%; dividend rate – 0%; and expected term – 5.75 years.

On January 1, 2020, the Company granted options to purchase 50,000 shares of the Company’s common stock to an employee, with an exercise price of $0.50 per share. The options for 33% 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 assumptions: stock price - $0.40; strike price - $0.50; expected volatility – 72%; risk free interest rate – 1.59%; dividend rate – 0%; and expected term – 3.49 years.

On January 29, 2020, the Company granted options to purchase 1,000,000 shares of the Company’s common stock to William Santos, Chief Operating Officer, with an exercise price of $0.50 per share. The options for 33% 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 assumptions: stock price - $0.40; strike price - $0.50; expected volatility – 72%; risk free interest rate – 1.41%; dividend rate – 0%; and expected term – 3.49 years.

On January 29, 2020, the board of directors approved the issuance of options to purchase an aggregate of 600,000 shares of the Company’s common stock to three members of the board, with an exercise price of $0.50 per share. The options for 50% of the shares vest on the one-year anniversary of the grant date and then monthly over the subsequent one-year period. The options issued were valued using the Black-Scholes-Merton option pricing model under the following assumptions: stock price - $0.40; strike price - $0.50; expected volatility – 72%; risk free interest rate – 1.41%; dividend rate – 0%; and expected term – 3.25 years.

On February 13, 2020, the Company granted 200,000 options to an employee, with an exercise price of $0.50 per share. The options for 33% of the shares vest on the one-year anniversary of the grant date and then monthly over the subsequent two-year period. The Company terminated the employee in March 2020 and, as a result, no stock-based compensation was recorded relating to these options.

On June 9, 2020, the Company granted options to purchase an aggregate of 1,205,000 shares of the Company’s common stock to various employees, with an exercise price of $0.50 per share. The options for 33% 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 assumptions: stock price - $0.40; strike price - $0.50; expected volatility – 74%; risk free interest rate – 0.40%; dividend rate – 0%; and expected term – 3.49 years.

NOTE 11 – COMMITMENTS AND CONTINGENCIES

Compensatory Arrangements of Certain Officers

Employment Agreement with Brian Yelm

On May 25, 2020, the Company entered into an Employment Agreement with Brian Yelm (the “Yelm Agreement”), pursuant to which he serves as a Managing Director of the Company.

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Under the terms of the Yelm Agreement, Mr. Yelm will earn an initial base salary of $300,000. In addition, Mr. Yelm’s salary may be increased in accordance with the Company’s policies from time to time. He is entitled to receive a guaranteed quarterly bonus of $22,000 by retaining Techville’s existing customer base and/or growing current revenues. Mr. Yelm is also eligible to receive annual bonuses in the amount of up to 20% of his base salary, at the discretion of the Board of Directors and based on mutually agreed upon performance and company objectives. Mr. Yelm also received options, under the Company’s 2019 Plan, to purchase 500,000 shares of the Company’s common stock, with an exercise price of $0.50. The stock options will vest at one-third on the one-year anniversary of the grant date and then in a series of twenty-four successive equal monthly installments, provided that Mr. Yelm is employed by the Company on each such vesting date.

Employment Agreement with William Santos

On May 15, 2019, the Company entered into an Employment Agreement with William Santos (the “Santos Agreement”), pursuant to which he serves as the Company’s Chief Operating Officer.

Under the terms of the Santos Agreement, Mr. Santos will earn an initial base salary of $185,000, which may be increased to $245,000 at such time as the Company achieves $20,000,000 of gross revenue in any calendar year. Mr. Santos’ base salary may be increased again to $300,000 at such time as the Company achieves $40,000,000 of gross revenue in any calendar year. In addition, Mr. Santos’ salary may be increased in accordance with the Company’s policies from time to time. He is entitled to receive annual bonuses in an amount up to 100% of his base salary, at the discretion of the Board of Directors and based on the recommendation by the Company’s Chief Executive Officer. Mr. Santos will also receive stock options, under the Company’s 2019 Plan, to purchase 3,000,000 shares of the Company’s common stock, with an exercise price equal to the fair market value of the Company’s common stock on the grant date. The stock options will vest at one-third on the one-year anniversary of the grant date and then in a series of twelve successive equal monthly installments, provided that Mr. Santos is employed by the Company on each such vesting date. As of June 30, 2020, 1,000,000 of these options have been granted.

Employment Agreement with David Jemmett

On September 30, 2019, the Company entered into an Employment Agreement with David Jemmett (the “Jemmett Agreement”), pursuant to which he will serve as the Company’s Chief Executive Officer.

Under the terms of the Jemmett Agreement, Mr. Jemmett will earn an initial base salary of $225,000, which increased to $250,000 at such time the Company achieves a public listing and can satisfactorily budget the salary without risk to the financial stability of the Company. In addition, Mr. Jemmett’s salary may be increased in accordance with the Company’s policies from time to time. He is entitled to receive annual bonuses in an amount up to 100% of his base salary, at the discretion of the Board of Directors.

Legal Claims

There are no material pending legal proceedings in which the Company or any of its subsidiaries is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of its voting securities, or security holder is a party adverse to us or has a material interest adverse to the Company.

NOTE 12 – LOANS PAYABLE AND LINES OF CREDIT

Lines of Credit

TalaTek, Inc.

On July 29, 2019, TalaTek entered into a secured line of credit with SunTrust Bank (“SunTrust”) for $500,000. The line of credit bears interest at LIBOR plus 2.25%. The line of credit is an open-end revolving line of credit and may be terminated at any time by SunTrust without notice to TalaTek. At June 30, 2020, no amounts were drawn on the line of credit.

19 

Technologyville, Inc.

On 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, the Prime plus 2%, with a floor rate of 6% and a maturity date of August 24, 2020. The interest rate at June 30, 2020 was 6%. 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 three and six months ended June 30, 2020 Techville drew $60,000 against the line of credit and made payments of $66,705. At June 30, 2020, $27,000 was outstanding.

Loans Payable

Technologyville, Inc.

On April 29, 2019, Techville entered into a note payable with VCI Account Services, that subsequently was assigned to U.S. Bancorp, for a principal amount of $59,905. The note has a maturity date of May 12, 2025 and bears an interest rate of 5.77% per annum. During the six months ended June 30, 2020, the Company made cash payments of $1,156, of which $988 and $169 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, 2020, $49,908 was outstanding.

On June 22, 2020, under the U.S. Small Business Administration’s Payroll Protection Program, Techville entered into a note payable with a financial institution for $179,600 at an interest rate of 1% per annum and a maturity date of June 22, 2025. Pursuant to the note, principal and interest payments are deferred for ten months, which, at that time Techville may apply for loan forgiveness. If Techville does not apply for loan forgiveness Techville will be required to make monthly payments of $3,819 starting on October 1, 2021. All remaining principal and interest is due and payable at the maturity date. At any time during the term of the note, the note holder may call all remaining amounts owed in full. At June 30, 2020, $179,600 was outstanding.

Cerberus Cyber Sentinel Corporation

On April 17, 2020, under the U.S. Small Business Administration’s Payroll Protection Program, Cerberus entered into a note payable with a financial institution for $530,000 at an interest rate of 1% per annum and a maturity date of April 17, 2022. Pursuant to the note, principal and interest payments are deferred for six months. Cerberus has 24 weeks, or until October 2, 2020, to apply for loan forgiveness. If Cerberus does not apply for loan forgiveness Cerberus will be required to make monthly payments of $29,678 starting on August 10, 2021. All remaining principal and interest is due and payable at the maturity date. At any time during the term of the note, the note holder may call the remaining amounts owed in full. At June 30, 2020, $530,000 was outstanding.

NOTE 13 – LEASES

A 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. On January 1, 2020, the Company adopted ASC 842 and it primarily affected the accounting treatment for operating lease agreements in which the Company is the lessee.

All of the Company’s leases are classified as operating leases, and as such, were previously not recognized on the Company’s unaudited condensed consolidated balance sheet. With the adoption of Topic 842, operating lease agreements are required to be recognized on the Condensed Consolidated Balance Sheet as right-of-use (ROU) assets and corresponding lease liabilities.

On May 25, 2020, the Company recognized ROU assets of $19,393 and lease liabilities of approximately $19,393. The Company elected to not recognize ROU assets and lease liabilities arising from short-term office leases, leases with initial terms of twelve months or less (deemed immaterial) on the unaudited condensed consolidated balance sheets.

ROU assets include any prepaid lease payments and exclude any lease incentives and initial direct costs incurred. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The lease terms may include options to extend or terminate the lease if it is reasonably certain that the Company will exercise that option.

20 

When measuring lease liabilities for leases that were classified as operating leases, the Company discounted lease payments using its estimated incremental borrowing rate at May 25, 2020. The weighted average incremental borrowing rate applied was 5.77%. As of June 30, 2020, the Company’s leases had a remaining weighted average term of 2 years.

Rent expense amounted to approximately $5,420 and $13,252 for the three and six months ended June 30, 2020, respectively, and $6,417 and $6,417 for the three and six months ended June 30, 2019, respectively.

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

	Six Months Ended June 30, 2020
Lease cost
Operating lease cost (cost resulting from lease payments)	$	1,591
Short term lease cost		14,857
Sublease income		-
Net lease cost	$	16,448
Operating lease – operating cash flows (fixed payments)	$	1,591
Operating lease – operating cash flows (liability reduction)	$	1,407
Non-current leases – right of use assets	$	17,901
Current liabilities – operating lease liabilities	$	4,304
Non-current liabilities – operating lease liabilities	$	13,682

Future minimum payments under non-cancelable leases for operating leases for the remaining terms of the leases following the six months ended June 30, 2020, are as follows:

Fiscal Year	Operating Leases
2020 (excluding the six months ended June 30, 2020)	$	4,772
2021		9,543
2022		4,772
Total future minimum lease payments		19,087
Amount representing interest		(1,101	)
Present value of net future minimum lease payments	$	17,986

NOTE 14 – CONCENTRATION OF CREDIT RISK

Cash Deposits

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. As of June 30, 2020 and December 31, 2019, the Company had approximately $1,139,000 and $1,377,000, respectively, in excess of the FDIC insured limit.

Revenues

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

Client A	59	%
Client B	21	%

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Two clients accounted for 90% of revenue for the six months ended June 30, 2019.

Client A	50	%
Client B	40	%

Accounts Receivable

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

Client A	32	%
Client B	20	%
Client C	18	%

There was no concentration of accounts receivable as of June 30, 2019.

Accounts Payable

Three vendors accounted for 44% of the accounts payable as of June 30, 2020, as set forth below:

Vendor A	17	%
Vendor B	14	%
Vendor C, related party	13	%

There was no concentration of accounts payable as of June 30, 2019.

NOTE 15 – SUBSEQUENT EVENTS

On July 31, 2020, the Company entered into a Share Purchase Agreement (“SPA”) with Clear Skies Security, LLC (“Clear Skies”) and its equity holders. Pursuant to the SPA, all of Clear Skies’ outstanding equity securities were acquired by the Company in exchange for the issuance of 2,330,000 shares of the Company’s common stock.

On July 27, 2020, the Company granted options to purchase 50,000 shares of the Company’s common stock with an exercise price of $2.00 to an employee under the Company’s 2019 Equity Plan.

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (“COVID-19”) as a pandemic which continues to spread throughout the United States and the World. The Company continues to monitor the outbreak of COVID-19 and the related business and travel restrictions and changes to behavior intended to reduce its spread, in addition to the impact on its employees. Due to the rapid development and fluidity of this situation, the magnitude and duration of the pandemic and its impact on the Company’s operations and liquidity is uncertain as of the date of this report. While there could ultimately be a material impact on operations and liquidity of the Company, at the time of issuance, the impact could not be determined.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q includes a number of forward-looking statements that reflect management’s current views with respect to future events and financial performance. Forward-looking statements are projections in respect of future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other comparable terminology. These statements include statements regarding the intent, belief or current expectations of us and members of our management team, as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risk and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks set forth in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 30, 2020, any of which may cause our company’s or our industry’s 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 in our forward-looking statements. These risks and factors include, by way of example and without limitation:

● our ability to achieve and sustain profitability of the existing lines of business through expansion;

● our ability to raise sufficient capital to acquire world-class engineer-owned cybersecurity companies;

● our ability to attract and retain world-class cybersecurity talent;

● our ability to identify potential acquisition targets within predetermined parameters;

● our ability to successfully execute acquisitions, integrate the acquired businesses and create synergies as a nationwide cybersecurity consolidator;

● our ability to attract and retain key technology or management personnel and to expand our management team;

● the accuracy of estimates regarding expenses, future revenue, capital requirements, profitability, and needs for additional financing;

● business interruptions resulting from geo-political actions, including war, and terrorism or disease outbreaks (such as the recent outbreak of COVID-19, or the novel coronavirus);

● our ability to attract and retain clients; and

● our ability to navigate through the increasingly complex cybersecurity regulatory environment.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, or performance. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the SEC. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events, or changes in the future operating results over time, except as required by law. We believe that our assumptions are based upon reasonable data derived from and known about our business and operations. No assurances are made that actual results of operations or the results of our future activities will not differ materially from our assumptions.

As used in this Quarterly Report on Form 10-Q and unless otherwise indicated, the terms “Company,” “we,” “us,” and “our” refer to Cerberus Cyber Sentinel Corporation, a Delaware corporation, and its wholly-owned subsidiaries including GenResults, LLC, an Arizona limited liability company (“GenResults”), TalaTek, LLC, a Virginia limited liability company (“TalaTek”) and Technologyville, Inc., an Illinois corporation (“Techville”). Unless otherwise specified, all dollar amounts are expressed in United States dollars.

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Corporate History

Cerberus Cyber Sentinel Corporation (“Cerberus Sentinel”) was formed on March 5, 2019 as a Delaware corporation. Our principal offices are located at 7333 E. Doubletree, Suite D270, Scottsdale, Arizona 85258.

Effective April 1, 2019, we acquired GenResults. GenResults was established on June 22, 2015. Prior to our acquisition of GenResults, GenResults was wholly owned by an entity affiliated with David G. Jemmett, our Chief Executive Officer and a director of the Company. As of December 31, 2019, GenResults is a wholly owned subsidiary of Cerberus Sentinel. Due to the companies being under common control, the Company accounted for the acquisition as a reorganization.

On April 12, 2019, we consummated a transaction whereby VCAB Six Corporation, a Texas corporation, (“VCAB”) merged with and into us (the “VCAB Merger”). At the time of the VCAB Merger, VCAB was subject to a bankruptcy proceeding and had minimal assets, no equity owners and no liabilities, except for approximately 1,500 holders of Class 5 Allowed General Unsecured Claims and a holder of allowed administrative expenses (collectively the “Claim Holders”). Pursuant to the terms of the VCAB Merger, and in accordance with the bankruptcy plan, we issued an aggregate of 2,000,000 shares of our common stock (the “Plan Shares”) to the Claim Holders as full settlement and satisfaction of their respective claims. As provided in the bankruptcy plan, the Plan Shares were issued pursuant to Section 1145 of the United States Bankruptcy Code. As a result of the VCAB Merger, the separate corporate existence of VCAB was terminated. We entered into the merger in order to increase our shareholder base and in order to, among other things, assist us in satisfying the listing standards of a national securities exchange.

Effective as of October 1, 2019, we entered into an Agreement and Plan of Merger (the “TalaTek Merger”) pursuant to which TalaTek became our wholly owned subsidiary. Under the TalaTek Merger, all issued and outstanding units representing membership interests in TalaTek were converted into an aggregate of 6,200,000 shares of our common stock.

Effective May 25, 2020, the Company entered into a Stock Purchase Agreement with Techville, pursuant to which Techville became a wholly-owned subsidiary of the Company (the “Techville Acquisition”). Under the terms of the Techville Acquisition, all issued and outstanding common stock of Techville was converted into an aggregate of 3,392,271 shares of the Company’s common stock.

Business Overview

We are a security consulting company comprised of highly trained security professionals who work with clients to create a continuously aware security culture. We do not sell cybersecurity products. We position ourselves as a trusted cybersecurity advisor and are committed to delivering tailored security solutions to organizations of different sizes and across all geographies and industries to fit their budgetary needs and limit their cyber threat exposure.

We currently provide a multitude of cybersecurity services including managed security service, cybersecurity consulting, technology consulting, compliance auditing, vulnerability assessment, penetration testing, security remediation, Security Operations Center (“SOC”) set-up and consulting and cybersecurity training. We differentiate ourselves from competitors by staying technology agnostic. We believe that many cybersecurity service providers in the market today are committed to a specific technology solution which limits their service scope and ability to quickly respond to any emerging cybersecurity challenges. In addition, as we continue to serve our clients within our existing capacities, we plan to continue making strategic acquisitions of small-to-medium-sized engineer-led cybersecurity service businesses to continue to expand our service scope and geographical coverage. We believe that having a world-class technology team with multi-faceted expertise is key to providing technology agnostic solutions to our clients and maximizing their return on investment from information technology (“IT”) and cybersecurity spending.

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Service Offering

We currently offer two major types of services to clients: Managed Services and Consulting Services.

Managed Services

Our Managed Services focus on a holistic approach to cybersecurity based on an upfront gap analysis of our clients’ existing cybersecurity practices. We offer multiple modules in the service portfolio including the following:

● CISO-as-a-service: Many companies are in need of cybersecurity services but do not have the capital resources or knowledge base to hire a Chief Information Security Officer (“CISO”). We offer this service to companies on an ongoing consulting basis as a resource to augment their management team. CISO-as-a-service includes road mapping the future state for the client and providing our knowledgeable and expertise to help them achieve their security needs.

● Culture education and enablement module: This targets the root cause for 75% of cyber breach events by starting with a culture of security-forward thinking;

● Tools and technology provisioning module: We provide technology-agnostic solutions catering to a client’s existing products and enhances the cyber defense system by making carefully selected additions without bias and to fit their financial profile;

● Data and privacy module: This ensures that a client’s data security and privacy are properly managed to alleviate risks of data loss and breach; and

● Regulations and compliance module: We evaluate a client’s policies and procedures and implement the appropriate compliance framework based on the latest industry regulations and obligations.

Consulting Services

Our consulting services include a wide array of tailored solutions for organizations of all sizes. Our in-depth industry expertise allows us to act as the trusted advisor of our clients to help them lower their risk profile, minimize cost impact to organizations and meet regulatory compliance demands. We specialize in:

● Cybersecurity consulting: Bringing the culture of cybersecurity to client’s leadership team and penetrating throughout the organization is a critical first step of building any cybersecurity system. Through our consulting service, we dive in both at the cultural and technical aspects of cybersecurity within the organization. We help our clients build effective policies and best practices, design or enhance a cybersecurity system and train the executive management team so that the culture at the top is set to facilitate diligent implementation of cybersecurity awareness.

● Compliance auditing: We provide auditing services under several compliance frameworks as follows:

○ Service Organization 2 (“SOC 2”) – This is an auditing procedure that focuses on a business’ non-financial reporting controls related to security, availability, processing, integrity, confidentiality, and privacy of a system;

○ Payment Card Industry Data Security Standard (“PCI DSS”) – This is a standard administered by the Payment Card Industry Security Standards Council;

○ Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) and The Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH”) – These are laws regulated by the Department of Health and Human Services (“HHS”) to secure the privacy and confidentiality of protected health information (“PHI”);

○ HITRUST CSF – This is a comprehensive security framework (“CSF”) developed by the Health Information Trust Alliance (“HITRUST”) in collaboration with healthcare, technology and information security leaders, to create, access, store and exchange sensitive and/or regulated data; and

○ The National Institute of Standards and Technology (“NIST”) – This is formally known as a National Bureau of Standards, which is a federal agency that promotes and maintains measurement standards while encouraging and assisting industry and science to develop and use these standards.

● Gap and risk assessment: We perform security risk gap analysis and advanced threat intelligence and analytics to identify potential areas of security risk and monitor potential breaches on a frequent basis. Evaluating all aspects of the business from executive management, finance, legal, human resources, compliance, operations and then IT. This is to ensure the organization has a holistic understanding of their company’s security posture.

25 

● Penetration testing: We offer network and application level penetration testing performed through industry tools and verified by certified security experts. At the network level, we conduct network scans for clients at pre-defined intervals based on their preference. Subsequent automatic scans are performed at the same IP address. We also make further attempts to exploit any vulnerability found by the network scan to eliminate false positives. At the application level, we utilize techniques such as parameter tampering, cookie poisoning, session hijacking, user privilege escalation, credential manipulation, forceful browsing, backdoors and debug options, configuration subversion, input validation bypass, SQL injection, and cross-site scripting to assess the application for known vulnerabilities.

● SOC services: We offer SOC-as-a-service, which is a subscription-based service that manages and monitors client’s logs, devices, clouds, network and assets for possible cyber threats. This service provides the clients with the knowledge and skills necessary to combat cybersecurity threats.

Results of Operations

Comparison of the Six Months Ended June 30, 2020 to the Six Months Ended June 30, 2019

Our financial results for the six months ended June 30, 2020 are summarized as follows in comparison to the six months ended June 30, 2019:

For the Six Months Ended June 30, 2020

	Cerberus			TalaTek			Techville			Total
Revenue	$	886,497		$	1,577,079		$	155,132			2,618,708
Cost of revenue		511,867			1,081,578			40,297			1,633,742
Gross profit		374,630			495,501			114,835			984,966
Operating expenses		1,662,539			560,583			150,373			2,373,495
Operating loss		(1,287,909	)		(65,082	)		(35,538	)		(1,388,529	)
Other income (expense)		4,310			73			(1,101	)		3,282
Loss before income taxes	$	(1,283,599	)	$	(65,009	)	$	(36,639	)		(1,385,247	)

For the Six Months Ended June 30, 2019

	Cerberus			TalaTek		Techville		Total
Revenue	$	352,131		$	-	$	-	$	352,131
Cost of revenue		131,453			-		-		131,453
Gross profit		220,678			-		-		220,678
Operating expenses		638,750			-		-		638,750
Operating loss		(418,072	)		-		-		(418,072	)
Other expense		(6,067	)		-		-		(6,067	)
Loss before income taxes	$	(424,139	)	$	-	$	-	$	(424,139	)

Variance

	Cerberus			TalaTek			Techville			Total
Revenue	$	534,366		$	1,577,079		$	155,132		$	2,266,577
Cost of revenue		380,414			1,081,578			40,297			1,502,289
Gross profit		153,952			495,501			114,835			764,288
Operating expenses		1,023,789			560,583			150,373			1,734,745
Operating loss		(869,837	)		(65,082	)		(35,538	)		(970,457	)
Other expense		10,377			73			(1,101	)		9,349
Loss before income taxes	$	(859,460	)	$	(65,009	)	$	(36,639	)	$	(961,108	)

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Revenues

For the Six Months Ended June 30, 2020

	Cerberus		TalaTek		Techville		Total
Managed services	$	659,388	$	260	$	94,609	$	754,257
Consulting services		227,109		1,576,819		60,523		1,864,451
Total revenue	$	886,497	$	1,577,079	$	155,132	$	2,618,708

For the Six Months Ended June 30, 2019

	Cerberus		TalaTek		Techville		Total
Managed services	$	222,450	$	-	$	-	$	222,450
Consulting services		129,681		-		-		129,681
Total revenue	$	352,131	$	-	$	-	$	352,131

Variance

	Cerberus		TalaTek		Techville		Total
Managed services	$	436,938	$	260	$	94,609	$	531,807
Consulting services		97,428		1,576,819		60,523		1,734,770
Total revenue	$	534,366	$	1,577,079	$	155,132	$	2,266,577

Revenues increased for Cerberus by $534,366, or 152%, for the six months ended June 30, 2020, as compared to the six months ended June 30, 2019, as a result of the Company having a full year of gap and risk assessment services which was introduced during the first quarter of 2019, as well as an increase of approximately $400,000 in managed security services from a major customer.

Revenues increased for TalaTek by $1,577,079, or 100%, for the six months ended June 30, 2020, as compared to the six months ended June 30, 2019, as a result of the acquisition, which was consummated on October 1, 2019. Approximately $1,550,000 of the increase was a result of TalaTek’s gap and risk assessment services that is attributable to one major customer.

Revenues increased for Techville by $155,132, or 100%, for the six months ended June 30, 2020, as compared to the six months ended June 30, 2019, as a result of the acquisition, which was consummated on May 25, 2020. Approximately $89,000 is a result of Techville’s managed service offering, Tech Connect Pro, approximately $22,000 was a result of Techville’s consulting service offering Tech Connect Cloud and approximately $13,000 was a result of miscellaneous hardware sales associated with Techville’s consulting service offerings.

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Expenses

Cost of Revenues

For the Six Months Ended June 30, 2020

	Cerberus		TalaTek		Techville		Total
Managed services	$	4,840	$	-	$	40,297	$	45,137
Consulting services		149,465		172,259		-		321,724
Cost of payroll		357,561		909,320		-		1,266,881
Total cost of revenue	$	511,866	$	1,081,579	$	40,297	$	1,633,742

For the Six Months Ended June 30, 2019

	Cerberus		TalaTek		Techville		Total
Managed services	$	111,641	$	-	$	-	$	111,641
Consulting services		19,812		-		-		19,812
Cost of payroll		-		-		-		-
Total cost of revenue	$	131,453	$	-	$	-	$	131,453

Variance

	Cerberus			TalaTek		Techville		Total
Managed services	$	(106,801	)	$	-	$	40,297	$	(66,504	)
Consulting services		129,653			172,259		-		301,912
Cost of payroll		357,561			909,320		-		1,266,881
Total cost of revenue	$	380,413		$	1,081,579	$	40,297	$	1,502,289

Cost of revenues increased for Cerberus by $380,413, or 289%, for the six months ended June 30, 2020, as compared to the six months ended June 30, 2019, and was primarily the result of an increase in payroll related costs of $357,562 due to an increase in employee and contractual labor after the reorganization.

Cost of revenues increased for TalaTek by $1,081,579 or 100%, for the six months ended June 30, 2020, as compared to the six months ended June 30, 2019, as a result of the acquisition, which was consummated on October 1, 2019. Approximately, $909,000 was attributable to TalaTek’s payroll and related services.

Cost of revenues increased for Techville by $40,297 or 100%, for the six months ended June 30, 2020, as compared to the six months ended June 30, 2019, as a result of the acquisition, which was consummated on May 25, 2020.

Operating Expenses

For the Six Months Ended June 30, 2020

	Cerberus		TalaTek		Techville		Total
Professional fees	$	381,755	$	3,005	$	16,550	$	401,310
Salaries and benefits		373,669		321,338		113,664		808,671
Advertising and marketing		21,462		52,108		-		73,570
Selling, general and administrative		201,312		184,132		20,161		405,605
Stock based compensation		669,339		-		-		669,339
Loss on write-off of account receivable		15,000		-		-		15,000
Total operating expenses	$	1,662,537	$	560,583	$	150,375	$	2,373,495

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For the Six Months Ended June 30, 2019

	Cerberus		TalaTek		Techville		Total
Professional fees	$	360,671	$	-	$	-	$	360,671
Salaries and benefits		-		-		-		-
Advertising and marketing		11,340		-		-		11,340
Selling, general and administrative		80,039		-		-		80,039
Stock based compensation		186,700		-		-		186,700
Loss on write-off of account receivable		-		-		-		-
Total operating expenses	$	638,750	$	-	$	-	$	638,750

Variance

	Cerberus		TalaTek		Techville		Total
Professional fees	$	21,084	$	3,005	$	16,550	$	40,639
Salaries and benefits		373,669		321,338		113,664		808,671
Advertising and marketing		10,122		52,108		-		62,230
Selling, general and administrative		121,273		184,132		20,161		325,566
Stock based compensation		482,639		-		-		482,639
Loss on write-off of account receivable		15,000		-		-		15,000
Total operating expenses	$	1,023,787	$	560,583	$	150,375	$	1,734,743

Operating expenses increased for Cerberus by $1,023,787, or 160%, for the six months ended June 30, 2020, as compared to the six months ended June 30, 2019, primarily as a result of (i) an increase of $373,669 in payroll and related benefits as a result of the increase in employees after the reorganization, (ii) an increase in stock-based compensation of $482,639 due to an increase in stock option grants as a result of the TalaTek and Techville acquisitions, and (iii) an increase in selling, general and administrative fees of $121,273 primarily due to an increase of approximately $57,000 in software and computer supplies expense.

Operating expenses increased for TalaTek by $560,583, or 100%, for the six months ended June 30, 2020, as compared to the six months ended June 30, 2019, as a result of the acquisition, which was consummated on October 1, 2019. Approximately $321,000 was attributable to TalaTek’s administrative payroll and benefits.

Operating expenses increased for Techville by $150,375, or 100%, for the six months ended June 30, 2020, as compared to the six months ended June 30, 2019, as a result of the acquisition, which was consummated on May 25, 2020. Approximately $114,000 was attributable to Techville’s administrative payroll and benefits.

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Comparison of the Three Months Ended June 30, 2020 to the Three Months Ended June 30, 2019

Our financial results for the three months ended June 30, 2020 are summarized as follows in comparison to the three months ended June 30, 2019:

For the Three Months Ended June 30, 2020

	Cerberus			TalaTek		Techville			Total
Revenue	$	538,781		$	856,574	$	155,132			1,550,487
Cost of revenue		277,060			541,144		40,297			858,501
Gross profit		261,721			315,430		114,835			691,986
Operating expenses		827,656			265,623		150,373			1,243,652
Operating income (loss)		(565,935	)		49,807		(35,538	)		(551,666	)
Other income (expense)		6,629			35		(1,101	)		5,563
Income (loss) before income taxes	$	(559,306	)	$	49,842	$	(36,639	)		(546,103	)

For the Three Months Ended June 30, 2019

	Cerberus			TalaTek		Techville		Total
Revenue	$	154,318		$	-	$	-	$	154,318
Cost of revenue		87,790			-		-		87,790
Gross profit		66,528			-		-		66,528
Operating expenses		586,757			-		-		586,757
Operating loss		(520,229	)		-		-		(520,229	)
Other expense		(3,052	)		-		-		(3,052	)
Loss before income taxes	$	(523,281	)	$	-	$	-	$	(523,281	)

Variance

	Cerberus			TalaTek		Techville			Total
Revenue	$	384,463		$	856,574	$	155,132		$	1,396,169
Cost of revenue		189,270			541,144		40,297			770,711
Gross profit		195,193			315,430		114,835			625,458
Operating expenses		240,899			265,623		150,373			656,895
Operating income (loss)		(45,706	)		49,807		(35,538	)		(31,437	)
Other income (expense)		9,681			35		(1,101	)		8,615
Income (loss) before income taxes	$	(36,025	)	$	49,842	$	(36,639	)	$	(22,822	)

Revenues

For the Three Months Ended June 30, 2020

	Cerberus		TalaTek		Techville		Total
Managed services	$	521,577	$	158	$	94,609	$	616,344
Consulting services		17,204		856,416		60,523		934,143
Total revenue	$	538,781	$	856,574	$	155,132	$	1,550,487

For the Three Months Ended June 30, 2019

	Cerberus		TalaTek		Techville		Total
Managed services	$	46,450	$	-	$	-	$	46,450
Consulting services		107,868		-		-		107,868
Total revenue	$	154,318	$	-	$	-	$	154,318

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Variance

	Cerberus			TalaTek		Techville		Total
Managed services	$	475,127		$	158	$	94,609	$	569,894
Consulting services		(90,664	)		856,416		60,523		826,276
Total revenue	$	384,463		$	856,574	$	155,132	$	1,396,170

Revenues increased for Cerberus by $384,463, or 249%, for the three months ended June 30, 2020, as compared to the three months ended June 30, 2019, as a result of the Company having a full year of the gap and risk assessment which was introduced during the first quarter of 2019, as well as an increase of approximately $300,000 in managed security services from a major customer.

Revenues increased for TalaTek by $856,575, or 100%, for the three months ended June 30, 2020, as compared to the three months ended June 30, 2019, as a result of the acquisition, which was consummated on October 1, 2019. Approximately $843,000 was a result of TalaTek’s gap and risk assessment services that was attributable to one major customer.

Revenues increased for Techville by $155,132, or 100%, for the three months ended June 30, 2020, as compared to the three months ended June 30, 2019, as a result of the acquisition, which was consummated on May 25, 2020. Approximately $87,000 was a result of Techville’s managed service offering Tech Connect Pro, approximately $22,000 was a result of Techville’s consulting service offering Tech Connect Cloud and approximately $13,000 was a result of miscellaneous hardware sales associated with Techville’s consulting service offerings.

Expenses

Cost of Revenues

For the Three Months Ended June 30, 2020

	Cerberus			TalaTek		Techville		Total
Managed services	$	(14,130	)	$	-	$	40,297	$	26,167
Consulting services		122,979			82,898		-		205,877
Cost of payroll		168,210			458,247		-		626,457
Total cost of revenue	$	277,059		$	541,145	$	40,297	$	858,501

For the Three Months Ended June 30, 2019

	Cerberus		TalaTek		Techville		Total
Managed services	$	67,978	$	-	$	-	$	67,978
Consulting services		19,812		-		-		19,812
Cost of payroll		-		-		-		-
Total cost of revenue	$	87,790	$	-	$	-	$	87,790

Variance

	Cerberus			TalaTek		Techville		Total
Managed services	$	(82,108	)	$	-	$	40,297	$	(41,811	)
Consulting services		103,167			82,898		-		186,065
Cost of payroll		168,210			458,247		-		626,457
Total cost of revenue	$	189,269		$	541,145	$	40,297	$	770,711

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Cost of revenues increased for Cerberus by $189,269, or 215%, for the three months ended June 30, 2020, as compared to the three months ended June 30, 2019, and was primarily the result of an increase in payroll related costs of $168,211 due to an increase in employee and contractual labor after the reorganization.

Cost of revenues increased for TalaTek by $541,145, or 100%, for the three months ended June, 2020, as compared to the three months ended June 30, 2019, as a result of the acquisition, which was consummated on October 1, 2019. Approximately, $458,000 was attributable to TalaTek’s payroll and related services.

Cost of revenues increased for Techville by $40,297 or 100%, for the three months ended June 30, 2020, as compared to the three months ended June 30, 2019, as a result of the acquisition, which was consummated on May 25, 2020.

Operating Expenses

For the Three Months Ended June 30, 2020

	Cerberus		TalaTek		Techville		Total
Professional fees	$	186,504	$	1,902	$	16,550	$	204,956
Salaries and benefits		159,838		139,857		113,664		413,359
Advertising and marketing		16,024		29,684		-		45,708
Selling, general and administrative		106,378		94,180		20,161		220,719
Stock based compensation		343,910		-		-		343,910
Loss on write-off of account receivable		15,000		-		-		15,000
Total operating expenses	$	827,654	$	265,623	$	150,375	$	1,243,652

For the Three Months Ended June 30, 2019

	Cerberus		TalaTek		Techville		Total
Professional fees	$	344,252	$	-	$	-	$	344,252
Salaries and benefits		-		-		-		-
Advertising and marketing		8,151		-		-		8,151
Selling, general and administrative		47,654		-		-		47,654
Stock based compensation		186,700		-		-		186,700
Loss on write-off of account receivable		-		-		-		-
Total operating expenses	$	586,757	$	-	$	-	$	586,757

Variance

	Cerberus			TalaTek		Techville		Total
Professional fees	$	(157,748	)	$	1,902	$	16,550	$	(139,296	)
Salaries and benefits		159,838			139,857		113,664		413,359
Advertising and marketing		7,873			29,684		-		37,557
Selling, general and administrative		58,724			94,180		20,161		173,065
Stock based compensation		157,210			-		-		157,210
Loss on write-off of account receivable		15,000			-		-		15,000
Total operating expenses	$	240,897		$	265,623	$	150,375	$	656,895

32 

Operating expenses increased for Cerberus by $240,897 or 41%, for the three months ended June 30, 2020, as compared to the three months ended June 30, 2019, primarily as a result of (i) a decrease of $157,748 in professional fees due to auditing and accounting consulting fees, (ii) an increase in salaries and benefits fees of $159,838 due primarily to the increase in employees after the reorganization, and (iii) an increase in stock-based compensation of $157,210 due to an increase in stock option grants as a result of the TalaTek and Techville acquisitions.

Operating expenses increased for TalaTek by $265,623, or 100%, for the three months ended June 30, 2020, as compared to the three months ended June 30, 2019, as a result of the acquisition, which was consummated on October 1, 2019. Approximately $140,000 was attributable to TalaTek’s administrative payroll and benefits. Approximately $38,000 was attributable an increase in TiGRIS program spending and approximately $16,000 was attributable to amortization expense related to intangible assets.

Operating expenses increased for Techville by $150,375, or 100%, for the three months ended June 30, 2020, as compared to the three months ended June 30, 2019, as a result of the acquisition, which was consummated on May 25, 2020. Approximately $114,000 was attributable to Techville’s administrative payroll and benefits.

Working Capital Surplus

Our working capital surplus as of June 30, 2020, in comparison to our working capital surplus as of December 31, 2019, can be summarized as follows:

	As of
	June 30,		December 31,
	2020		2019
Current assets	$	3,097,022	$	2,478,887
Current liabilities		1,759,807		578,687
Working capital surplus	$	1,337,215	$	1,900,200

The increase in current assets is primarily due to increases in accounts receivable and prepaid expenses and other current assets of $274,567 and $176,744, respectively, which was partially offset by a decrease in cash and cash equivalents of $166,824. The increase in current liabilities is primarily due to increases in accounts payable and accrued expenses and loans payable of $342,732 and $759,508, respectively.

Cash Flows

Our cash flows for the six months ended June 30, 2020, in comparison to our cash flows for the six months ended June 30, 2019, can be summarized as follows:

	Six Months Ended June 30,
	2020			2019
Net cash provided by (used in) operating activities	$	(740,120	)	$	101,412
Net cash provided by (used in) investing activities		65,037			(2,555	)
Net cash provided by financing activities		841,907			275,030
Increase in cash	$	166,824		$	373,887

Operating Activities

Net cash used in operating activities was $740,120 for the six months ended June 30, 2020 and was primarily due to the net loss of $1,385,247 and an increase in accounts receivable of approximately $209,000. This was partially offset by non-cash expenses of approximately $670,000 related to stock-based compensation and an increase in accounts payable and accrued expenses of approximately $224,000. Net cash provided by operating activities was $101,412 for the six months ended June 30, 2019, primarily due to net loss of $424,139, which was partially offset by non-cash expenses of approximately $200,000 related to stock-based compensation and an increase in accounts payable and accrued expenses of $372,554.

33 

Investing Activities

Net cash provided by investing activities of $65,037 for the six months ended June 30, 2020 was due to cash acquired in the Techville Acquisition. Net cash used in investing activities of $2,555 for the six months ended June 30, 2019 was due to purchases of computer equipment.

Financing Activities

Net cash provided by financing activities for the six months ended June 30, 2020 was $841,907, which was primarily due to cash received from the sale of the Company’s common stock of $140,000 and cash received as loans from the U.S. Small Business Administration’s Payroll Protection Program of $709,600. Net cash provided by financing activities for the six months ended June 30, 2019, was $275,030 and was due to cash received from the sale of the Company’s common stock of $400,300, which was offset by cash distributions to member of $125,270.

Effects of Inflation

We do not believe that inflation has had a material impact on our business, revenues or operating results during the periods presented.

Significant Accounting Policies and Estimates

Our significant accounting policies are more fully described in the notes to our financial statements included herein for the quarter ended June 30, 2020 and in the notes to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the SEC on March 30, 2020.

Fair Value Measurement

The fair value measurement guidance clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in the valuation of an asset or liability. It establishes a fair value hierarchy that prioritizes the inputs to valuation techniques 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 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under the fair value measurement guidance are described below:

Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;

Level 2 - Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; or

Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

34 

Business Combination

The Company allocates the purchase price of an acquired business to the tangible and intangible assets acquired and liabilities assumed based upon their estimated fair values on the acquisition date. Any excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill. The purchase price allocation process requires management to make significant estimates and assumptions, especially at the acquisition date with respect to intangible assets. Direct transaction costs associated with the business combination are expensed as incurred. The allocation of the consideration transferred in certain cases may be subject to revision based on the final determination of fair values during the measurement period, which may be up to one year from the acquisition date. The Company includes the results of operations of the business that it has acquired in its consolidated results prospectively from the date of acquisition.

If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognized in profit or loss.

Goodwill

Goodwill represents the excess of the purchase price of the acquired business over the estimated fair value of the identifiable net assets acquired. Goodwill is not amortized but is tested for impairment at least annually at year end, at the reporting unit level or more frequently if events or changes in circumstances indicate that the asset might be impaired. Goodwill is tested for impairment at the reporting level by first performing a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. If the reporting unit does not pass the qualitative assessment, then the reporting unit’s carrying value is compared to its fair value. The fair values of the reporting units are estimated using market and discounted cash flow approaches. Goodwill is considered impaired if the carrying value of the reporting unit exceeds its fair value. The discounted cash flow approach uses expected future operating results. Failure to achieve these expected results may cause a future impairment of goodwill at the reporting unit.

Impairment of Long-lived Assets

We will periodically evaluate the carrying value of long-lived assets to be held and used when events and circumstances warrant such a review and at least annually. The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair values are reduced for the cost to dispose.

Revenue Recognition

The Company’s agreements with its clients are primarily service contracts that range in duration from a few months to one year. The Company recognizes revenue when control of these services is transferred to the client for an amount, referred to as the transaction price, which reflects the consideration to which the Company is expected to be entitled in exchange for those goods or services.

A contract with a client exists only when:

● the parties to the contract have approved it and are committed to perform their respective obligations;

● the Company can identify each party’s rights regarding the distinct services to be transferred (“performance obligations”);

● the Company can determine the transaction price for the services to be transferred; and

● the contract has commercial substance and it is probable that the Company will collect the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the client.

For the majority of its contracts, the Company receives non-refundable upfront payments. The Company does not adjust the promised amount of consideration for the effects of a significant financing component since the Company expects, at contract inception, that the period between the time of transfer of the promised goods or services to the client and the time the client pays for these goods or services to be generally one year or less. The Company’s credit terms to clients generally average thirty days, although in some cases there are payments required in 15 days.

35 

The Company does not disclose the value of unsatisfied performance obligations for contracts with original expected duration of one year or less.

Disaggregation of Revenue

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

	Managed Services		Consulting Services		Total
Primary Sector Markets
Public	$	3,250	$	1,593,598	$	1,596,848
Private		740,849		268,259		1,009,108
Not-for-Profit		10,158		2,594		12,752
	$	754,257	$	1,864,451	$	2,618,708
Major Service Lines
CISO as a Service	$	20,550	$	-	$	20,550
Gap and Risk Assessment		-		1,803,928		1,803,928
Managed Security Services		636,676		-		636,676
Tech Connect Pro		89,080		-		89,080
Tech Connect Cloud		-		22,263		22,263
Tech Connect Security		7,691		-		7,691
Hardware		-		13,253		13,253
Other		260		25,007		25,267
	$	754,257	$	1,864,451	$	2,618,708

Revenue consists of the following by service offering for the six months ended June 30, 2019:

	Managed Services		Consulting Services		Total
Primary Sector Markets
Public	$	-	$	-	$	-
Private		222,450		127,681		350,131
Not-for-Profit		-		2,000		2,000
	$	222,450	$	129,681	$	352,131
Major Goods/Service Lines
CISO as a Service	$	184,000	$	-	$	184,000
Gap and Risk Assessment		-		129,681		129,681
Managed Security Services		38,450		-		38,450
Tech Connect Pro		-		-		-
Tech Connect Cloud		-		-		-
Tech Connect Security		-		-		-
Hardware		-		-		-
Other		-		-		-
	$	222,450	$	129,681	$	352,131

Practical Expedients

As part of ASC 606, the Company has adopted several practical expedients including the following: (i) the Company has determined that it need not adjust the promised amount of consideration for the effects of a significant financing component since the Company expects, at contract inception, that the period between when the Company transfers a promised service to the customer and when the customer pays for that service will be one year or less and (ii) the Company recognizes any incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the entity otherwise would have recognized is one year or less.

36 

Reimbursed Expenses

The Company includes reimbursed expenses in revenues and costs of revenue as the Company is primarily responsible for fulfilling the promise to provide the specified service, including the integration of the related services into a combined output to the client, which are inseparable from the integrated service. These costs include such items as consumables, transportation and travel expenses, over which the Company has discretion in establishing prices.

Costs of Revenue

Costs of revenue include (i) compensation and benefits for billable employees and consultants directly involved with delivering services offerings and engagements; (ii) consumables used for the services; and (iii) other expenses directly related to service contracts such as professional services, meals and travel expenses.

Volatility in Stock-Based Compensation

The volatility is based on historical volatilities of companies in comparable stages as well as the historical volatility of companies in the industry and, by statistical analysis of the daily share-pricing model. The volatility of stock-based compensation at any point in time is based on historical volatility of similar companies in the industry for the last two to five years.

New and Recently Adopted Accounting Pronouncements

Any new and recently adopted accounting pronouncements are more fully described in Note 2 to our unaudited condensed consolidated financial statements herein for the quarter ended June 30, 2020.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not Applicable. As a smaller reporting company, we are not required to provide the information required by this Item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. In designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives.

37 

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation and subject to the foregoing, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective due to the material weakness(es) in internal control over financial reporting disclosed in our annual report on Form 10-K for the fiscal year ended December 31, 2019.

Our management will continue to monitor and evaluate the relevance of our risk-based approach and the effectiveness of our internal controls and procedures over financial reporting on an ongoing basis and is committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended June 30, 2020 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our Company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

Item 1A. Risk Factors

An investment in our common stock involves a number of very significant risks. You should carefully consider the risk factors included in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the SEC on March 30, 2020, in addition to other information contained in those reports and in this quarterly report in evaluating the Company and its business before purchasing shares of our common stock. The Company’s business, operating results and financial condition could be adversely affected due to any of those risks. In addition:

A pandemic, epidemic or outbreak of an infectious disease in the United States or elsewhere may adversely affect our business.

If a pandemic, epidemic or outbreak of an infectious disease occurs in the United States or elsewhere, our business may be adversely affected. The spread of COVID-19 has caused many countries around the world to impose quarantines and restrictions on travel and mass gatherings to slow the spread of the virus. Employers (including us) are also required to prepare and increase, as much as possible, the capacity and arrangement for employees to work remotely. In addition, on March 11, 2020, the President of the United States issued a proclamation to restrict travel to the United States from foreign nationals who have recently been in certain European countries. We are still assessing the effect on our business, from the spread of COVID-19 and the actions implemented by the government of the United States and elsewhere across the globe.

The spread of an infectious disease, including COVID-19, may also result in a period of business disruption, and in reduced operations, any of which could materially affect our business, financial condition and results of operations. The extent to which COVID-19 impacts our business, and the business of our clients, will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others.

38 

The COVID-19 outbreak and mitigation measures also have had and may continue to have an adverse impact on global economic conditions which could have an adverse effect on our business and financial condition. The extent to which the COVID-19 outbreak impacts our business and operations will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of the virus and the actions to contain its impact.

We will need to grow the size and capabilities of our organization, and we may experience difficulties in managing this growth.

As our business plan and strategies develop, we must add additional managerial, operational, financial and other personnel. Future growth will impose significant added responsibilities on members of management, including:

● identifying, recruiting, integrating, maintaining, and motivating additional personnel;

● managing our internal development efforts effectively, including those of our current and future acquirees, while complying with our contractual obligations to contractors and other third parties; and

● improving our operational, financial and management controls, reporting systems, and procedures.

Our future financial performance will depend, in part, on our ability to effectively manage any future growth, which might be impacted by the COVID-19 outbreak, and our management may also have to divert a disproportionate amount of its attention away from day-to-day activities in order to devote a substantial amount of time to managing these growth activities. This lack of long-term experience working together may adversely impact our senior management team’s ability to effectively manage our business and growth.

We currently rely, and for the foreseeable future will continue to rely, in substantial part on certain independent organizations, advisors and consultants to provide certain services. There can be no assurance that the services of these independent organizations, advisors and consultants will continue to be available to us on a timely basis when needed, or that we can find qualified replacements. In addition, if we are unable to effectively manage our outsourced activities or if the quality or accuracy of the services provided by consultants is compromised for any reason, we may not be able to advance our business. There can be no assurance that we will be able to manage our existing consultants or find other competent outside contractors and consultants on economically reasonable terms, if at all. If we are not able to effectively expand our organization by hiring new employees and expanding our groups of consultants and contractors, we may not be able to successfully implement the tasks necessary to further scale our business or effectively integrate acquisitions.

These and other risks associated with our operations may materially adversely affect our ability to attain or maintain profitable operations.

Item 2. Unregistered Sales of Equity Securities and Use Of Proceeds

None.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None.

39 

Item 6. Exhibits

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	Exhibit	Filing Date
3.1	Certificate of Amendment of Certificate of Incorporation of the Registrant effective September 26, 2019	10-12G	3.3	10/2/2019
3.2	By-laws of the Registrant	10-12G	3.4	10/2/2019
4.1	Form of Common Stock Certificate of the Registrant	10-K	4.1	3/30/2020
4.2	Description of Securities Registered under Section 12 of the Exchange Act	10-K	4.2	3/30/2020
10.1	Agreement for the Purchase and Sale of Limited Liability Company Interests of GenResults, LLC effective April 12, 2019	10-12G	10.1	10/2/2019
10.2	Agreement and Plan of Merger by and among the Registrant, TalaTek, LLC, TalaTek Merger Sub and Baan Alsinawi effective September 23, 2019	10-K	10.2	3/30/2020
10.3	Unsecured Note Agreement between the Registrant and Jemmett Enterprises, LLC effective December 31, 2018	10-K	10.3	3/30/2020
10.4	Stock Repurchase Agreement between the Registrant and Alan Kierman effective September 1, 2019	10-K	10.4	3/30/2020
10.5	2019 Equity Incentive Plan	10-K	10.5	3/30/2020
10.6	Employment Agreement between the Registrant and David G. Jemmett effective September 30, 2019	10-12G	10.2	10/2/2019
10.7	Employment Agreement between the Registrant and William Santos effective August 13, 2019	10-12G	10.3	10/2/2019
10.8	Engagement for Financial Services dated November 8, 2019 between the Registrant and Eventus Consulting, P.C.	10-K	10.8	3/30/2020
10.9	Stock Purchase Agreement by and among the Registrant, Technologyville, Inc. and Brian Yelm effective May 25, 2020	8-K	10.1	5/29/2020
31.1*	Rule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer
32.1**	Section 1350 Certification of Chief Executive Officer
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

*          Filed herewith.

**       In accordance with SEC Release 33-8238, Exhibit 32.1 is being furnished and not filed.

40 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CERBERUS CYBER SENTINEL CORPORATION

By:	/s/ David G. Jemmett
	David G. Jemmett
	Chief Executive Officer
	(Principal Executive Officer and Principal Financial Officer)
Date:	August 14, 2020

41 

EX-31.1

Exhibit 31.1

CERBERUS CYBER SENTINEL CORPORATION

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, David G. Jemmett, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Cerberus Cyber Sentinel Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:
	(a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	(a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ David G. Jemmett
	David G. Jemmett
	Chief Executive Officer
	(Principal Executive Officer and Principal Financial Officer)
Date:	August 14, 2020

EX-32.1

Exhibit 32.1

CERBERUS CYBER SENTINEL CORPORATION

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this Quarterly Report on Form 10-Q of Cerberus Cyber Sentinel Corporation (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1.       The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.       The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

By:	/s/ David G. Jemmett
	David G. Jemmett
	Chief Executive Officer
	(Principal Executive Officer and Principal Financial Officer)
Date:	August 14, 2020

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2020	Aug. 14, 2020
Cover [Abstract]
Entity Registrant Name	CERBERUS CYBER SENTINEL CORP
Entity Central Index Key	0001777319
Document Type	10-Q
Document Period End Date	Jun. 30, 2020
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Reporting Status Current	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		111,654,771
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2020

XML

Condensed Consolidated Balance Sheets - USD ($)	Jun. 30, 2020	Dec. 31, 2019
Current Assets:
Cash and cash equivalents	$ 2,043,469	$ 1,876,645
Accounts receivable, net of allowances for doubtful accounts of $70,847 and $40,000 , respectively	806,532	531,965
Prepaid expenses and other current assets	247,021	70,277
Total Current Assets	3,097,022	2,478,887
Property and equipment, net of accumulated depreciation of $4,138 and $758, respectively	66,460	10,900
Right of use asset	17,901
Intangible assets, net of accumulated amortization of $46,944 and $15,648, respectively	1,053,556	1,084,852
Goodwill	2,278,939	922,579
Total Assets	6,513,878	4,497,218
Current Liabilities:
Accounts payable and accrued expenses	811,632	468,900
Stock payable	22,000
Deferred revenue	66,434
Lease liability	4,304
Line of credit	27,000
Loans payable	718,650
Note payable - related party	109,787	109,787
Total Current Liabilities	1,759,807	578,687
Long-term Liabilities:
Loans payable, net of current portion	40,858
Lease liability, net of current portion	13,682
Total Liabilities	1,814,347	578,687
Commitments and Contingencies
Stockholders' Equity:
Common stock, $.00001 par value; 250,000,000 shares authorized; 111,654,771 and 113,912,500 shares issued and 111,654,771 and 107,912,500 outstanding at June 30, 2020 and December 31, 2019, respectively	1,117	1,139
Additional paid-in capital	7,537,171	7,770,902
Accumulated deficit	(2,838,757)	(1,453,510)
Stockholders' Equity before treasury stock	4,699,531	6,318,531
Treasury stock		(2,400,000)
Total Stockholders' Equity	4,699,531	3,918,531
Total Liabilities and Stockholders' Equity	$ 6,513,878	$ 4,497,218

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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Jun. 30, 2020	Dec. 31, 2019
Statement of Financial Position [Abstract]
Allowances for doubtful accounts	$ 70,847	$ 40,000
Property plant and equipment, accumulated depreciation	4,138	758
Intangible assets, accumulated depreciation	$ 46,944	$ 15,648
Common stock, par value	$ .00001	$ .00001
Common stock, shares authorized	250,000,000	250,000,000
Common stock, shares issued	111,654,771	113,912,500
Common stock, shares outstanding	111,654,771	107,912,500

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Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Revenue:
Total revenue	$ 1,550,487	$ 154,318	$ 2,618,708	$ 352,131
Cost of revenue:
Total cost of revenue	858,501	87,790	1,633,742	131,453
Total gross profit	691,986	66,528	984,966	220,678
Operating expenses:
Professional fees	204,956	344,252	401,310	360,671
Salaries and benefits	413,359		808,671
Advertising and marketing	45,708	8,151	73,570	11,340
Selling, general and administrative	220,719	47,654	405,605	80,039
Stock-based compensation	343,910	186,700	669,339	186,700
Loss on write-off of account receivable	15,000		15,000
Total operating expenses	1,243,652	586,757	2,373,495	638,750
Loss from operations	(551,666)	(520,229)	(1,388,529)	(418,072)
Other income (expense):
Interest expense, net	(4,437)	(3,052)	(6,718)	(6,067)
Other income	10,000		10,000
Total other income (expense)	5,563	(3,052)	3,282	(6,067)
Loss before provision for income taxes	(546,103)	(523,281)	(1,385,247)	(424,139)
Provision for income taxes
Net loss	$ (546,103)	$ (523,281)	$ (1,385,247)	$ (424,139)
Net loss per common share - basic	$ (0.00)	$ (0.01)	$ (0.01)	$ (0.00)
Net loss per common share - diluted	$ (0.00)	$ (0.01)	$ (0.01)	$ (0.00)
Weighted average shares outstanding - basic	109,604,497	101,776,099	108,847,565	85,975,827
Weighted average shares outstanding - diluted	109,604,497	101,776,099	108,847,565	85,975,827
Managed Services [Member]
Revenue:
Total revenue	$ 616,344	$ 46,450	$ 754,257	$ 222,450
Cost of revenue:
Total cost of revenue	26,167	67,978	45,137	111,641
Consulting Services [Member]
Revenue:
Total revenue	934,143	107,868	1,864,451	129,681
Cost of revenue:
Total cost of revenue	205,877	19,812	321,724	19,812
Cost of Payroll [Member]
Cost of revenue:
Total cost of revenue	$ 626,457		$ 1,266,881

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Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($)	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Deficit [Member]	Treasury Stock [Member]	Total
Balance at Dec. 31, 2018	$ 700	$ 9,990	$ 25,438		$ 36,128
Balance, shares at Dec. 31, 2018	70,000,000
Distributions to member			(125,270)		(125,270)
Net Income/(loss)			99,142		99,142
Balance at Mar. 31, 2019	$ 700	9,990	(690)		10,000
Balance, shares at Mar. 31, 2019	70,000,000
Balance at Dec. 31, 2018	$ 700	9,990	25,438		36,128
Balance, shares at Dec. 31, 2018	70,000,000
Net Income/(loss)					(424,139)
Balance at Jun. 30, 2019	$ 1,030	609,810	(523,971)		86,869
Balance, shares at Jun. 30, 2019	103,000,000
Balance at Mar. 31, 2019	$ 700	9,990	(690)		10,000
Balance, shares at Mar. 31, 2019	70,000,000
Stock based compensation - common stock	$ 300	187,390			187,690
Stock based compensation - common stock, shares	30,000,000
Stock issued in VCAB merger	$ 20	12,440			12,460
Stock issued in VCAB merger, shares	2,000,000
Common shares issued for cash	$ 10	399,990			400,000
Common shares issued for cash, shares	1,000,000
Net Income/(loss)			(523,281)		(523,281)
Balance at Jun. 30, 2019	$ 1,030	609,810	(523,971)		86,869
Balance, shares at Jun. 30, 2019	103,000,000
Balance at Dec. 31, 2019	$ 1,139	7,770,902	(1,453,510)	(2,400,000)	3,918,531
Balance, shares at Dec. 31, 2019	107,912,500
Stock based compensation			325,429		325,429
Common shares issued for cash	$ 4	139,996			140,000
Common shares issued for cash, shares	350,000
Return of treasury stock to authorized capital	$ (60)	(2,399,940)		2,400,000
Net Income/(loss)			(839,144)		(839,144)
Balance at Mar. 31, 2020	$ 1,083	5,836,387	(2,292,654)		3,544,816
Balance, shares at Mar. 31, 2020	108,262,500
Balance at Dec. 31, 2019	$ 1,139	7,770,902	(1,453,510)	(2,400,000)	3,918,531
Balance, shares at Dec. 31, 2019	107,912,500
Common shares issued for cash					$ 140,000
Common shares issued for cash, shares					350,000
Net Income/(loss)					$ (1,385,247)
Balance at Jun. 30, 2020	$ 1,117	7,537,171	(2,838,757)		4,699,531
Balance, shares at Jun. 30, 2020	111,654,771
Balance at Mar. 31, 2020	$ 1,083	5,836,387	(2,292,654)		3,544,816
Balance, shares at Mar. 31, 2020	108,262,500
Stock based compensation		343,910			343,910
Stock issued for Technologyville acquisition	$ 34	1,356,874			1,356,908
Stock issued for Technologyville acquisition, shares	3,392,271
Net Income/(loss)			(546,103)		(546,103)
Balance at Jun. 30, 2020	$ 1,117	$ 7,537,171	$ (2,838,757)		$ 4,699,531
Balance, shares at Jun. 30, 2020	111,654,771

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Cash flows from operating activities:
Net Loss	$ (1,385,247)	$ (424,139)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Stock based compensation - stock options	669,339	199,850
Loss on write-off of accounts receivable	15,000
Depreciation and amortization	34,676	57
Issuance of common stock for services	22,000
ROU amortization	1,492
Changes in operating assets and liabilities:
Accounts receivable, net	(209,278)	5,682
Prepaid expenses and other current assets	(176,744)	(69,055)
Accounts payable and accrued expenses	223,615	372,554
Lease liability	(1,407)
Deferred revenue	66,434	16,463
Net cash provided by (used in) operating activities	(740,120)	101,412
Cash flows from investing activities:
Purchases of property and equipment		(2,555)
Cash acquired in acquisition	65,037
Net cash provided by (used in) investing activities	65,037	(2,555)
Cash flows from financing activities:
Distributions to member		(125,270)
Proceeds from PPP loans	709,600
Proceeds from sale of common stock	140,000	400,300
Proceeds from line of credit	60,000
Payment on loans payable	(988)
Payment on line of credit	(66,705)
Net cash provided by financing activities	841,907	275,030
Net increase in cash and cash equivalents	166,824	373,887
Cash and cash equivalents - beginning of period	1,876,645	80,006
Cash and cash equivalents - end of period	2,043,469	453,893
Supplemental cash flow information:
Interest	169
Income taxes	5,882
Non-cash investing and financing activities:
Right of use asset and lease liability recorded upon adoption of ASC 842	$ 19,393

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Nature of the Organization and Business

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Nature of the Organization and Business

NOTE 1 – NATURE OF THE ORGANIZATION AND BUSINESS

Corporate History

Cerberus Cyber Sentinel Corporation (“Cerberus Sentinel,” “Cerberus,” or the “Company”) was formed on March 5, 2019 as a Delaware corporation. The Company’s principal offices are located at 7333 E. Doubletree, Suite D270, Scottsdale, Arizona 85258.

On April 12, 2019, Cerberus acquired GenResults, LLC, an Arizona limited liability company (“GenResults”). GenResults was established on June 22, 2015. Prior to the Company’s acquisition of GenResults, GenResults was wholly-owned by an entity affiliated with David G. Jemmett, Cerberus’ Chief Executive Officer and a director of the Company. As of December 31, 2019, GenResults was a wholly-owned subsidiary of Cerberus. Due to the companies being under common control, the Company accounted for the acquisition as a reorganization.

Effective October 1, 2019, the Company entered into an Agreement and Plan of Merger (the “TalaTek Merger Agreement”) pursuant to which TalaTek, LLC, a Virginia limited liability company (“TalaTek”), became its wholly-owned subsidiary. Under the TalaTek Merger Agreement, all issued and outstanding units representing membership interests in TalaTek were converted into an aggregate of 6,200,000 shares of the Company’s common stock.

Effective May 25, 2020, the Company entered into a Stock Purchase Agreement with Technologyville, Inc., an Illinois corporation (“Techville”), and its sole shareholder, pursuant to which Techville became a wholly-owned subsidiary of the Company (the “Techville Acquisition”). Under the terms of the Techville Acquisition, all issued and outstanding common stock of Techville was converted into an aggregate of 3,392,271 shares of the Company’s common stock.

Nature of the Business

Cerberus Sentinel is a security consulting company comprised of security professionals who work with clients to create a continuously aware security culture. We do not sell cybersecurity products. We position ourselves as a trusted cybersecurity advisor and are committed to delivering tailored security solutions to organizations of different sizes and across all geographies and industries to fit their budgetary needs and limit their cyber threat exposure.

We currently provide a multitude of cybersecurity services including managed security service, cybersecurity consulting, technology consulting, compliance auditing, vulnerability assessment, penetration testing, security remediation, Security Operations Center (“SOC”) set-up and consulting and cybersecurity training. We differentiate ourselves from our competitors by staying technology agnostic. We believe that many cybersecurity service providers in the market today are committed to a specific technology solution which limits their service scope and ability to quickly respond to any emerging cybersecurity challenges. In addition, as we continue to serve our clients within our existing capacities, we plan to continue making strategic acquisitions of small-to-medium-sized engineer-led cybersecurity service firms to continue to expand our service scope and geographical coverage. We believe that having a world-class technology team with multi-faceted expertise is key to providing technology agnostic solutions to our clients and maximizing their return on investment from information technology (“IT”) and cybersecurity spending.

Liquidity

The accompanying unaudited condensed consolidated financial statements have been prepared on the basis that the Company will continue as a going concern, which contemplates realization of assets and the liabilities in the normal course of business. At June 30, 2020, the Company had an accumulated deficit of approximately $2,800,000 and working capital surplus of approximately $1,300,000. For the six months ended June 30, 2020, the Company had a loss from operations of approximately $1,390,000 and negative cash flows from operations of approximately $740,000. Although the Company is showing positive revenues and gross profit trends, the Company expects to incur further losses through the end of 2020.

To date the Company has been funding operations primarily through the sale of equity in private placements and revenues generated by the Company’s services. During the six months ended June 30, 2020, the Company received $140,000 from private placements to accredited investors of the Company’s common stock and approximately $710,000 from the U.S. Small Business Administration’s Payroll Protection Program.

Based on its current cash resources and commitments, the Company believes it will be able to maintain its current planned development and corresponding level of expenditure for at least twelve months from the date of the issuance of these unaudited condensed consolidated financial statements, although no assurance can be given that it will not need additional funds prior to such time.

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited financial information as of and for the three and six months ended June 30, 2020 and 2019 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. In the opinion of management, such financial information includes all adjustments (consisting only of normal recurring adjustments) considered 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 six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the entire year or for any other subsequent interim period.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to the rules of the U.S. Securities and Exchange Commission, or the SEC. These unaudited financial statements and related notes should be read in conjunction with our audited financial statements for the year ended December 31, 2019 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 30, 2020.

Consolidation

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, GenResults, TalaTek and Techville. All significant intercompany accounts and transactions have been eliminated in consolidation.

Reclassifications

Certain reclassifications have been made to the financial statements for the three and six months ended June 30, 2019 to conform to the financial statements presentation for the three and six months ended June 30 ,2020. These reclassifications had no effect on net loss or cash flows as previously reported.

Use of Estimates

Preparing financial statements in conformity with GAAP 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 amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of the accompanying unaudited condensed consolidated financial statements. Significant estimates include the allowance for doubtful accounts, the carrying value of intangible assets and goodwill, deferred tax asset and valuation allowance, assumptions used in Black-Scholes-Merton, or BSM, valuation methods, such as expected volatility, risk-free interest rate, and expected divided rate.

Revenue

The Company’s revenues are derived from two major types of services to clients: Managed Services and Consulting Services. With respect to Managed Services, the Company provides culture education and enablement, tools and technology provisioning, data and privacy and regulations and compliance, remote infrastructure administration, and cybersecurity services including, but not limited to, antivirus and patch management. With respect to Consulting Services, the Company provides cybersecurity consulting, compliance auditing, vulnerability assessment and penetration testing, and disaster recovery and data backup solutions.

Practical Expedients

As part of Accounting Standards Codification (“ASC”) 606, the Company has adopted several practical expedients including the following: (i) the Company has determined that it need not adjust the promised amount of consideration for the effects of a significant financing component since the Company expects, at contract inception, that the period between when the Company transfers a promised service to the customer and when the customer pays for that service will be one year or less and (ii) the Company recognizes any incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the entity otherwise would have recognized is one year or less.

Disaggregated Revenues

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

	Managed Services		Consulting Services		Total
Primary Sector Markets
Public	$	3,250	$	1,593,598	$	1,596,848
Private		740,849		268,259		1,009,108
Not-for-Profit		10,158		2,594		12,752
	$	754,257	$	1,864,451	$	2,618,708
Major Service Lines
CISO as a Service	$	20,550	$	-	$	20,550
Gap and Risk Assessment		-		1,803,928		1,803,928
Managed Security Services		636,676		-		636,676
Tech Connect Pro		89,080		-		89,080
Tech Connect Cloud		-		22,263		22,263
Tech Connect Security		7,691		-		7,691
Hardware		-		13,253		13,253
Other		260		25,007		25,267
	$	754,257	$	1,864,451	$	2,618,708

Revenue consists of the following by service offering for the six months ended June 30, 2019:

	Managed Services		Consulting Services		Total
Primary Sector Markets
Public	$	-	$	-	$	-
Private		222,450		127,681		350,131
Not-for-Profit		-		2,000		2,000
	$	222,450	$	129,681	$	352,131
Major Service Lines
CISO as a Service	$	184,000	$	-	$	184,000
Gap and Risk Assessment		-		129,681		129,681
Managed Security Services		38,450		-		38,450
Tech Connect Pro		-		-		-
Tech Connect Cloud		-		-		-
Tech Connect Security		-		-		-
Hardware		-		-		-
Other		-		-		-
	$	222,450	$	129,681	$	352,131

Contract Modifications

There were no contract modifications during the six months ended June 30, 2020. Contract modifications are not routine in the performance of the Company’s contracts.

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.

Accounts Receivable

Accounts receivable are reported at their outstanding unpaid principal balances, net of allowances for doubtful accounts. The Company periodically assesses its accounts and other receivables for collectability on a specific identification basis. The Company provides for allowances for doubtful receivables based on management’s estimate of uncollectible amounts considering age, collection history, and any other factors considered appropriate. Payments are generally due within 30 days of invoice. The Company writes off accounts receivable against the allowance for doubtful accounts when a balance is determined to be uncollectible. As of June 30, 2020 and December 31, 2019, the Company’s allowance for doubtful accounts was $70,847 and $40,000, respectively.

Property and Equipment

Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets, generally between three and five years. Expenditures that enhance the useful lives of the assets are capitalized and depreciated. Computer equipment costs for the Company are capitalized, as incurred, and depreciated on a straight-line basis over three years. TalaTek capitalizes all equipment costs over $5,000, as incurred, and depreciates these costs on a straight-line basis over three years.

Maintenance 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 will be removed from the accounts and the resulting gain or loss, if any, will be reflected in operations.

Impairment of Long-Lived Assets

The Company reviews long-lived assets, including finite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of these assets is determined by comparing the forecasted undiscounted net cash flows of the operation to which the assets relate to the carrying amount. If the operation is determined to be unable to recover the carrying amount of its assets, then these assets are written down first, followed by other long-lived assets of the operation to fair value. Fair value is determined based on discounted cash flows or appraised values, depending on the nature of the assets. During the three and six months ended June 30, 2020, the Company did not record a loss on impairment.

Intangible Assets

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

Goodwill

Goodwill represents the excess of the purchase price of the acquired business over the estimated fair value of the identifiable net assets acquired. Goodwill is not amortized but is tested for impairment at least annually at year end, at the reporting unit level or more frequently if events or changes in circumstances indicate that the asset might be impaired. Goodwill is tested for impairment at the reporting unit level by first performing a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. If the reporting unit does not pass the qualitative assessment, then the reporting unit’s carrying value is compared to its fair value. The fair values of the reporting units are estimated using market and discounted cash flow approaches. Goodwill is considered impaired if the carrying value of the reporting unit exceeds its fair value. The discounted cash flow approach uses expected future operating results. Failure to achieve these expected results may cause a future impairment of goodwill at the reporting unit (See Notes 3 and 6).

Advertising and Marketing Costs

The Company expenses advertising and marketing costs as they are incurred. Advertising and marketing expenses were $45,708 and $73,570 for the three and six months ended June 30, 2020, respectively, and $8,151 and $11,340 for the three and six months ended June 30, 2019, respectively, and are recorded in operating expenses on the unaudited condensed consolidated statements of operations.

Fair Value Measurements

As defined in ASC 820, Fair Value Measurements and Disclosures, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company 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 measurement.

Level 1:	Quoted 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 basis.
Level 2:	Pricing 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.
Level 3:	Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. The significant unobservable inputs used in the fair value measurement for nonrecurring fair value measurements of long-lived assets include pricing models, discounted cash flow methodologies and similar techniques.

Net Loss per Common Share

Net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. All vested outstanding options are considered potentially outstanding common stock. The dilutive effect, if any, of stock options are 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, 2020 and 2019.

The following tables summarize the securities that were excluded from the diluted per share calculation because the effect of including these potential shares was antidilutive due to the Company’s net loss position even though the exercise price could be less than the average market price of the common shares:

	June 30, 2020		June 30, 2019
Stock Options		20,820,000		1,100,000
Total		20,820,000		1,100,000

Stock-based Compensation

The Company applies the provisions of ASC 718, Compensation - Stock Compensation, which requires the measurement and recognition of compensation expense for all stock-based awards made to employees, including employee stock options, in the statements of operations.

For 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. Forfeitures are recorded as they are incurred as opposed to being estimated at the time of grant and revised. Due to the Company’s limited history and lack of public market 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.

Pursuant to Accounting Standards Update (“ASU”) 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Non-employee Share-Based Payment Accounting, the Company accounts for stock options issued to non-employees for their services in accordance with ASC 718. The Company uses valuation methods and assumptions to value the stock options that are in line with the process for valuing employee stock options noted above.

Leases

Leases 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 office space monthly with no long term agreements. The Company leases a vehicle with a remaining term of three years.

In accordance with ASC 842, Leases, the Company recognized a right of use (“ROU”) asset and corresponding lease liability on its unaudited condensed consolidated Balance Sheet for its vehicle operating lease agreement. See Note 13 – Leases for further discussion, including the impact on the Company’s unaudited condensed consolidated financial statements and related disclosures.

Income Taxes

Deferred 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.

The Company utilizes ASC 740, Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the unaudited condensed consolidated financial statements or tax returns. The Company accounts for income taxes using the asset and liability method to compute the differences between the tax basis of assets and liabilities and the related financial amounts, using currently enacted tax rates. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized. At June 30, 2020 and December 31, 2019, the Company’s net deferred tax asset has been fully reserved.

For uncertain tax positions that meet a “more likely than not” threshold, the Company recognizes the benefit of uncertain tax positions in the unaudited condensed consolidated financial statements. The Company’s practice is to recognize interest and penalties, if any, related to uncertain tax positions in income tax expense in the unaudited condensed consolidated statements of operations.

Recently Issued Accounting Standards

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

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Acquisitions

6 Months Ended

Jun. 30, 2020

Business Combinations [Abstract]

Acquisitions

NOTE 3 – ACQUISITIONS

Technologyville, Inc. Acquisition

On May 25, 2020, the Company entered into and effected a Stock Purchase Agreement (the “SPA”) with Techville, and its sole shareholder, Brian Yelm (“Yelm”). Pursuant to the terms of the SPA, Techville became a wholly owned subsidiary of the Company. Pursuant to the SPA, at the effective time of the Techville Acquisition, Techville’s outstanding common stock was exchanged for 3,392,271 shares of the Company’s common stock.

Immediately following the Techville Acquisition, the Company had 111,654,771 shares of common stock issued and outstanding. The pre-acquisition stockholders of the Company retained an aggregate of 108,262,500 shares, representing approximately 97% ownership of the post-acquisition company. Therefore, upon consummation of the Techville Acquisition, there was no change in control.

The Company accounted for this transaction in accordance with the acquisition method of accounting for business combinations. Assets and liabilities of the acquired business were included in the unaudited condensed consolidated balance sheet as of June 30, 2020, based on the retrospective 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.

Per 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 date. The Company has identified the acquisition date as May 25, 2020. 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 and the liabilities assumed for use in the purchase price allocation.

The 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:

Consideration paid	$	1,356,908
Tangible assets acquired:
Cash		65,037
Accounts receivable, net		80,289
Vehicle		58,693
Total tangible assets	$	204,019
Assumed liabilities:
Line of credit		33,705
Accrued expenses		117,742
Loan payable		50,896
Other liabilities		1,128
Total assumed liabilities		203.471
Net assets acquired		548
Goodwill (a.)(b.)	$	1,356,360

a. 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. Goodwill and intangibles are not deductible for tax purposes.

b. Goodwill represents expected synergies from the merger of operations and intangible assets that do not qualify for separate recognition. Cerberus and Techville are both cybersecurity service providers. The acquisition of Techville provided Cerberus potential sales synergies resulting from Cerberus’ access to Techville’s current client-base to offer additional services. Goodwill also represents Techville’s customer list as well as Mr. Yelm’s two-year non-compete clause, which the Company is currently unable to assign a fair value. These items will be assigned a fair value upon the completion of the third-party valuation.

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Prepaid Expenses and Other Current Assets

6 Months Ended

Jun. 30, 2020

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Prepaid Expenses and Other Current Assets

NOTE 4 – PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consist of:

	June 30, 2020		December 31, 2019
Prepaid expenses	$	144,114	$	57,351
Employee advances		1,883		7,150
Other current assets		101,024		5,776
Total prepaid expenses other current assets	$	247,021	$	70,277

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Property and Equipment

6 Months Ended

Jun. 30, 2020

Property, Plant and Equipment [Abstract]

Property and Equipment

NOTE 5 – PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

	June 30, 2020			December 31, 2019
Computer equipment	$	11,905		$	11,658
Vehicle		58,693			-
		70,598			11,658
Less: accumulated depreciation		(4,138	)		(758	)
Property and equipment, net	$	66,460		$	10,900

Total depreciation expense was $2,404 and $3,308 for the three and six months ended June 30, 2020, respectively and $57 for both the three and six months ended June 30, 2019, respectively.

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Intangible Assets and Goodwill

6 Months Ended

Jun. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets and Goodwill

NOTE 6 – INTANGIBLE ASSETS AND GOODWILL

The below table summarizes the changes in goodwill during the six months ended June 30, 2020:

Balance December 31, 2019	$	922,579
Acquisition of goodwill		1,356,360
Impairment		-
Ending balance, June 30, 2020	$	2,278,939

The below table summarizes the identifiable intangible assets as of June 30, 2020 and December 31, 2019:

	Useful life	2020			2019
Tradenames – trademarks (1)	Indefinite	$	589,200		$	589,200
Customer base (1)	15 years		206,000			206,000
Non-compete agreements (1)	5 years		183,300			183,300
Intellectual property/technology (1)	10 years		122,000			122,000
First priority option to acquire SaaS product (the “SaaS Option”) (1)			-			100,000
			1,100,500			1,200,500
Less accumulated amortization			(46,944	)		(15,648	)
Less impairment charge (2)			-			(100,000	)
Total		$	1,053,556		$	1,084,852

⁽¹⁾ These intangible assets were acquired in the acquisition of TalaTek.

⁽²⁾ The Company concluded that the carrying amount of the SaaS Option would not be recoverable and, as a result, fully impaired the asset at December 31, 2019.

The weighted average useful life remaining of identifiable intangible assets remaining is 9.25 years.

Amortization of identifiable intangible assets for the three and six months ended June 30, 2020 was $15,648 and $31,296.

The below table summarizes the future amortization expense for the next five years and thereafter:

2020	$	31,297
2021		62,593
2022		62,593
2023		62,593
2024		53,428
Thereafter		191,852
	$	464,356

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Accounts Payable and Accrued Expenses

6 Months Ended

Jun. 30, 2020

Payables and Accruals [Abstract]

Accounts Payable and Accrued Expenses

NOTE 7 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following amounts:

	June 30, 2020		December 31, 2019
Accounts payable	$	298,201	$	119,339
Accrued payroll		173,289		274,508
Accrued expenses		323,331		63,931
Accrued interest – related party		16,811		11,122
	$	811,632	$	468,900

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Related Party Transactions

6 Months Ended

Jun. 30, 2020

Related Party Transactions [Abstract]

Related Party Transactions

Note 8 - Related Party Transactions

Note Payable – Related Party

On December 31, 2018, GenResults entered into an unsecured note payable with Jemmett Enterprises, LLC, an entity under common control of the Company’s majority stockholder, for a principal amount of $200,000. The note has a maturity date of June 30, 2020, and bears an interest rate of 6% per annum. On June 30, 2020, the maturity date of the note was extended to June 15, 2021. The outstanding principal balance of this loan is $109,787 as of June 30, 2020 and December 31, 2019. At June 30, 2020 and December 31, 2019, the Company has recorded accrued interest of $16,811 and $11,122, respectively. The Company has recorded $3,060 and $5,689 and $3,060 and $6,075 for interest expense during the three and six months ended June 30, 2020 and 2019, respectively, related to the note.

Agreement with Eventus Consulting, P.C.

On 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 and advisor to the Company, is the sole shareholder, pursuant to which Eventus is to provide 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 three and six months ended June 30, 2020, Eventus was paid $37,284 and $47,818 and was owed $37,500 for accrued and unpaid services under the financial consulting agreement at June 30, 2020.

On January 1, 2020, the Company issued Mr. Reithinger options to purchase 720,000 shares of the Company’s common stock at an exercise price of $0.50 per share (See Note 10).

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Stockholders' Equity

6 Months Ended

Jun. 30, 2020

Equity [Abstract]

Stockholders' Equity

Note 9 - Stockholders’ Equity

Equity Transactions During the Period

During the six months ended June 30, 2020, the Company issued an aggregate of 350,000 shares of common stock with a fair value of $0.40 per share to investors for cash proceeds of $140,000.

On May 25, 2020, the Company issued 3,392,271 shares of common stock with a fair value of $0.40 per share pursuant to the Techville Acquisition (See Note 3).

Stock Payable

On January 16, 2020, the Company entered into a consulting agreement, with Eskenzi PR Limited (“Eskenzi”). As per the agreement, Eskenzi will provide various marketing and public relations services to the Company. The initial term of the agreement was for twelve months and automatically renews for an additional twelve months unless either the Company or Eskenzi provides written notice of termination in advance of at least three months.

Upon execution of the agreement the Company was to issue 120,000 shares of the Company’s restricted common stock, valued at $48,000 to Eskenzi. As of June 30, 2020, these shares had yet to be issued. As such, the Company recorded a stock payable in the amount of $22,000 representing the fair value of services performed during the six months ended June 30, 2020.

See Note 10 for disclosure of additional equity related transactions.

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Stock-based Compensation

6 Months Ended

Jun. 30, 2020

Compensation Related Costs [Abstract]

Stock-based Compensation

Note 10 – StocK-BASED COMPENSATION

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

2019 Equity Incentive Plan

The 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 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 with a maximum term of ten years. The shares delivered under the 2019 Plan upon exercise 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.

Options

The Company granted 3,775,000 options during the six months ended June 30, 2020.

The Company granted 1,100,000 options during the six months ended June 30, 2019.

The weighted average grant date fair value of options issued and vested during the six months ended June 30, 2020 was $165,982 and $16,125, respectively. The weighted average grant date fair value of non-vested options was $1,785,954 at June 30, 2020.

The weighted average grant date fair value of options issued during the six months ended June 30, 2019 was $25,147.

Compensation-based stock option activity for qualified and unqualified stock options are summarized as follows:

				Weighted
				Average
	Shares			Exercise Price
Outstanding at January 1, 2020		17,245,000		$	0.46
Granted		3,775,000			0.50
Exercised		-			-
Expired or cancelled		(200,000	)		0.50
Outstanding at June 30, 2020		20,820,000		$	0.47

The following table summarizes information about options to purchase shares of the Company’s common stock outstanding and exercisable at June 30, 2020:

				Weighted-		Weighted-
				Average		Average
		Outstanding		Remaining Life		Exercise		Number
Exercise Prices		Options		In Years		Price		Exercisable
$	0.38		3,000,000		4.12	$	0.38		-
	0.40		3,600,000		4.06		0.40		-
	0.50		14,220,000		4.62		0.50		424,167
			20,820,000		4.45	$	0.47		424,167

The compensation expense attributed to the issuance of the options is recognized ratably over the vesting period.

Options granted under the 2019 Plan are exercisable for five to ten years from the grant date and generally vest over three years from the grant date.

Total compensation expense related to the options was $343,910 and $669,339 for the three and six months ended June 30, 2020, respectively. As of June 30, 2020, there was future compensation cost of $2,777,590 with a weighted average recognition period of 1.82 years.

The aggregate intrinsic value totalled $60,000 and was based on the Company’s estimated fair value of the stock price of $0.40 as of June 30, 2020, respectively, which would have been received by the option holders had all option holders exercised their options as of that date.

On January 1, 2020, the Company granted options to purchase 720,000 shares of the Company’s common stock to Mr. Reithinger, with an exercise price of $0.50 per share. The options vest monthly over a three-year period. The options issued were valued using the Black-Scholes-Merton option pricing model under the following assumptions: stock price - $0.40; strike price - $0.50; expected volatility – 72%; risk free interest rate – 1.67%; dividend rate – 0%; and expected term – 5.75 years.

On January 1, 2020, the Company granted options to purchase 50,000 shares of the Company’s common stock to an employee, with an exercise price of $0.50 per share. The options for 33% 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 assumptions: stock price - $0.40; strike price - $0.50; expected volatility – 72%; risk free interest rate – 1.59%; dividend rate – 0%; and expected term – 3.49 years.

On January 29, 2020, the Company granted options to purchase 1,000,000 shares of the Company’s common stock to William Santos, Chief Operating Officer, with an exercise price of $0.50 per share. The options for 33% 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 assumptions: stock price - $0.40; strike price - $0.50; expected volatility – 72%; risk free interest rate – 1.41%; dividend rate – 0%; and expected term – 3.49 years.

On January 29, 2020, the board of directors approved the issuance of options to purchase an aggregate of 600,000 shares of the Company’s common stock to three members of the board, with an exercise price of $0.50 per share. The options for 50% of the shares vest on the one-year anniversary of the grant date and then monthly over the subsequent one-year period. The options issued were valued using the Black-Scholes-Merton option pricing model under the following assumptions: stock price - $0.40; strike price - $0.50; expected volatility – 72%; risk free interest rate – 1.41%; dividend rate – 0%; and expected term – 3.25 years.

On February 13, 2020, the Company granted 200,000 options to an employee, with an exercise price of $0.50 per share. The options for 33% of the shares vest on the one-year anniversary of the grant date and then monthly over the subsequent two-year period. The Company terminated the employee in March 2020 and, as a result, no stock-based compensation was recorded relating to these options.

On June 9, 2020, the Company granted options to purchase an aggregate of 1,205,000 shares of the Company’s common stock to various employees, with an exercise price of $0.50 per share. The options for 33% 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 assumptions: stock price - $0.40; strike price - $0.50; expected volatility – 74%; risk free interest rate – 0.40%; dividend rate – 0%; and expected term – 3.49 years.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

NOTE 11 – COMMITMENTS AND CONTINGENCIES

Compensatory Arrangements of Certain Officers

Employment Agreement with Brian Yelm

On May 25, 2020, the Company entered into an Employment Agreement with Brian Yelm (the “Yelm Agreement”), pursuant to which he serves as a Managing Director of the Company.

Under the terms of the Yelm Agreement, Mr. Yelm will earn an initial base salary of $300,000. In addition, Mr. Yelm’s salary may be increased in accordance with the Company’s policies from time to time. He is entitled to receive a guaranteed quarterly bonus of $22,000 by retaining Techville’s existing customer base and/or growing current revenues. Mr. Yelm is also eligible to receive annual bonuses in the amount of up to 20% of his base salary, at the discretion of the Board of Directors and based on mutually agreed upon performance and company objectives. Mr. Yelm also received options, under the Company’s 2019 Plan, to purchase 500,000 shares of the Company’s common stock, with an exercise price of $0.50. The stock options will vest at one-third on the one-year anniversary of the grant date and then in a series of twenty-four successive equal monthly installments, provided that Mr. Yelm is employed by the Company on each such vesting date.

Employment Agreement with William Santos

On May 15, 2019, the Company entered into an Employment Agreement with William Santos (the “Santos Agreement”), pursuant to which he serves as the Company’s Chief Operating Officer.

Under the terms of the Santos Agreement, Mr. Santos will earn an initial base salary of $185,000, which may be increased to $245,000 at such time as the Company achieves $20,000,000 of gross revenue in any calendar year. Mr. Santos’ base salary may be increased again to $300,000 at such time as the Company achieves $40,000,000 of gross revenue in any calendar year. In addition, Mr. Santos’ salary may be increased in accordance with the Company’s policies from time to time. He is entitled to receive annual bonuses in an amount up to 100% of his base salary, at the discretion of the Board of Directors and based on the recommendation by the Company’s Chief Executive Officer. Mr. Santos will also receive stock options, under the Company’s 2019 Plan, to purchase 3,000,000 shares of the Company’s common stock, with an exercise price equal to the fair market value of the Company’s common stock on the grant date. The stock options will vest at one-third on the one-year anniversary of the grant date and then in a series of twelve successive equal monthly installments, provided that Mr. Santos is employed by the Company on each such vesting date. As of June 30, 2020, 1,000,000 of these options have been granted.

Employment Agreement with David Jemmett

On September 30, 2019, the Company entered into an Employment Agreement with David Jemmett (the “Jemmett Agreement”), pursuant to which he will serve as the Company’s Chief Executive Officer.

Under the terms of the Jemmett Agreement, Mr. Jemmett will earn an initial base salary of $225,000, which increased to $250,000 at such time the Company achieves a public listing and can satisfactorily budget the salary without risk to the financial stability of the Company. In addition, Mr. Jemmett’s salary may be increased in accordance with the Company’s policies from time to time. He is entitled to receive annual bonuses in an amount up to 100% of his base salary, at the discretion of the Board of Directors.

Legal Claims

There are no material pending legal proceedings in which the Company or any of its subsidiaries is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of its voting securities, or security holder is a party adverse to us or has a material interest adverse to the Company.

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Loans Payable and Line of Credit

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

Loans Payable and Line of Credit

NOTE 12 – LOANS PAYABLE AND LINES OF CREDIT

Lines of Credit

TalaTek, Inc.

On July 29, 2019, TalaTek entered into a secured line of credit with SunTrust Bank (“SunTrust”) for $500,000. The line of credit bears interest at LIBOR plus 2.25%. The line of credit is an open-end revolving line of credit and may be terminated at any time by SunTrust without notice to TalaTek. At June 30, 2020, no amounts were drawn on the line of credit.

Technologyville, Inc.

On 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, the Prime plus 2%, with a floor rate of 6% and a maturity date of August 24, 2020. The interest rate at June 30, 2020 was 6%. 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 three and six months ended June 30, 2020 Techville drew $60,000 against the line of credit and made payments of $66,705. At June 30, 2020, $27,000 was outstanding.

Loans Payable

Technologyville, Inc.

On April 29, 2019, Techville entered into a note payable with VCI Account Services, that subsequently was assigned to U.S. Bancorp, for a principal amount of $59,905. The note has a maturity date of May 12, 2025 and bears an interest rate of 5.77% per annum. During the six months ended June 30, 2020, the Company made cash payments of $1,156, of which $988 and $169 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, 2020, $49,908 was outstanding.

On June 22, 2020, under the U.S. Small Business Administration’s Payroll Protection Program, Techville entered into a note payable with a financial institution for $179,600 at an interest rate of 1% per annum and a maturity date of June 22, 2025. Pursuant to the note, principal and interest payments are deferred for ten months, which, at that time Techville may apply for loan forgiveness. If Techville does not apply for loan forgiveness Techville will be required to make monthly payments of $3,819 starting on October 1, 2021. All remaining principal and interest is due and payable at the maturity date. At any time during the term of the note, the note holder may call all remaining amounts owed in full. At June 30, 2020, $179,600 was outstanding.

Cerberus Cyber Sentinel Corporation

On April 17, 2020, under the U.S. Small Business Administration’s Payroll Protection Program, Cerberus entered into a note payable with a financial institution for $530,000 at an interest rate of 1% per annum and a maturity date of April 17, 2022. Pursuant to the note, principal and interest payments are deferred for six months. Cerberus has 24 weeks, or until October 2, 2020, to apply for loan forgiveness. If Cerberus does not apply for loan forgiveness Cerberus will be required to make monthly payments of $29,678 starting on August 10, 2021. All remaining principal and interest is due and payable at the maturity date. At any time during the term of the note, the note holder may call the remaining amounts owed in full. At June 30, 2020, $530,000 was outstanding.

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Leases

6 Months Ended

Jun. 30, 2020

Leases [Abstract]

Leases

NOTE 13 – LEASES

A 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. On January 1, 2020, the Company adopted ASC 842 and it primarily affected the accounting treatment for operating lease agreements in which the Company is the lessee.

All of the Company’s leases are classified as operating leases, and as such, were previously not recognized on the Company’s unaudited condensed consolidated balance sheet. With the adoption of Topic 842, operating lease agreements are required to be recognized on the Condensed Consolidated Balance Sheet as right-of-use (ROU) assets and corresponding lease liabilities.

On May 25, 2020, the Company recognized ROU assets of $19,393 and lease liabilities of approximately $19,393. The Company elected to not recognize ROU assets and lease liabilities arising from short-term office leases, leases with initial terms of twelve months or less (deemed immaterial) on the unaudited condensed consolidated balance sheets.

ROU assets include any prepaid lease payments and exclude any lease incentives and initial direct costs incurred. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The lease terms may include options to extend or terminate the lease if it is reasonably certain that the Company will exercise that option.

When measuring lease liabilities for leases that were classified as operating leases, the Company discounted lease payments using its estimated incremental borrowing rate at May 25, 2020. The weighted average incremental borrowing rate applied was 5.77%. As of June 30, 2020, the Company’s leases had a remaining weighted average term of 2 years.

Rent expense amounted to approximately $5,420 and $13,252 for the three and six months ended June 30, 2020, respectively, and $6,417 and $6,417 for the three and six months ended June 30, 2019, respectively.

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

	Six Months Ended June 30, 2020
Lease cost
Operating lease cost (cost resulting from lease payments)	$	1,591
Short term lease cost		14,857
Sublease income		-
Net lease cost	$	16,448
Operating lease – operating cash flows (fixed payments)	$	1,591
Operating lease – operating cash flows (liability reduction)	$	1,407
Non-current leases – right of use assets	$	17,901
Current liabilities – operating lease liabilities	$	4,304
Non-current liabilities – operating lease liabilities	$	13,682

Future minimum payments under non-cancelable leases for operating leases for the remaining terms of the leases following the six months ended June 30, 2020, are as follows:

Fiscal Year	Operating Leases
2020 (excluding the six months ended June 30, 2020)	$	4,772
2021		9,543
2022		4,772
Total future minimum lease payments		19,087
Amount representing interest		(1,101	)
Present value of net future minimum lease payments	$	17,986

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Concentration of Credit Risk

6 Months Ended

Jun. 30, 2020

Risks and Uncertainties [Abstract]

Concentration of Credit Risk

NOTE 14 – CONCENTRATION OF CREDIT RISK

Cash Deposits

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. As of June 30, 2020 and December 31, 2019, the Company had approximately $1,139,000 and $1,377,000, respectively, in excess of the FDIC insured limit.

Revenues

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

Client A	59	%
Client B	21	%

Two clients accounted for 90% of revenue for the six months ended June 30, 2019.

Client A	50	%
Client B	40	%

Accounts Receivable

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

Client A	32	%
Client B	20	%
Client C	18	%

There was no concentration of accounts receivable as of June 30, 2019.

Accounts Payable

Three vendors accounted for 44% of the accounts payable as of June 30, 2020, as set forth below:

Vendor A	17	%
Vendor B	14	%
Vendor C, related party	13	%

There was no concentration of accounts payable as of June 30, 2019.

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Subsequent Events

6 Months Ended

Jun. 30, 2020

Subsequent Events [Abstract]

Subsequent Events

NOTE 15 – SUBSEQUENT EVENTS

On July 31, 2020, the Company entered into a Share Purchase Agreement (“SPA”) with Clear Skies Security, LLC (“Clear Skies”) and its equity holders. Pursuant to the SPA, all of Clear Skies’ outstanding equity securities were acquired by the Company in exchange for the issuance of 2,330,000 shares of the Company’s common stock.

On July 27, 2020, the Company granted options to purchase 50,000 shares of the Company’s common stock with an exercise price of $2.00 to an employee under the Company’s 2019 Equity Plan.

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (“COVID-19”) as a pandemic which continues to spread throughout the United States and the World. The Company continues to monitor the outbreak of COVID-19 and the related business and travel restrictions and changes to behavior intended to reduce its spread, in addition to the impact on its employees. Due to the rapid development and fluidity of this situation, the magnitude and duration of the pandemic and its impact on the Company’s operations and liquidity is uncertain as of the date of this report. While there could ultimately be a material impact on operations and liquidity of the Company, at the time of issuance, the impact could not be determined.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited financial information as of and for the three and six months ended June 30, 2020 and 2019 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. In the opinion of management, such financial information includes all adjustments (consisting only of normal recurring adjustments) considered 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 six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the entire year or for any other subsequent interim period.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to the rules of the U.S. Securities and Exchange Commission, or the SEC. These unaudited financial statements and related notes should be read in conjunction with our audited financial statements for the year ended December 31, 2019 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 30, 2020.

Consolidation

Consolidation

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, GenResults, TalaTek and Techville. All significant intercompany accounts and transactions have been eliminated in consolidation.

Reclassifications

Reclassifications

Certain reclassifications have been made to the financial statements for the three and six months ended June 30, 2019 to conform to the financial statements presentation for the three and six months ended June 30 ,2020. These reclassifications had no effect on net loss or cash flows as previously reported.

Use of Estimates

Use of Estimates

Preparing financial statements in conformity with GAAP 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 amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of the accompanying unaudited condensed consolidated financial statements. Significant estimates include the allowance for doubtful accounts, the carrying value of intangible assets and goodwill, deferred tax asset and valuation allowance, assumptions used in Black-Scholes-Merton, or BSM, valuation methods, such as expected volatility, risk-free interest rate, and expected divided rate.

Revenue

Revenue

The Company’s revenues are derived from two major types of services to clients: Managed Services and Consulting Services. With respect to Managed Services, the Company provides culture education and enablement, tools and technology provisioning, data and privacy and regulations and compliance, remote infrastructure administration, and cybersecurity services including, but not limited to, antivirus and patch management. With respect to Consulting Services, the Company provides cybersecurity consulting, compliance auditing, vulnerability assessment and penetration testing, and disaster recovery and data backup solutions.

Practical Expedients

As part of Accounting Standards Codification (“ASC”) 606, the Company has adopted several practical expedients including the following: (i) the Company has determined that it need not adjust the promised amount of consideration for the effects of a significant financing component since the Company expects, at contract inception, that the period between when the Company transfers a promised service to the customer and when the customer pays for that service will be one year or less and (ii) the Company recognizes any incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the entity otherwise would have recognized is one year or less.

Disaggregated Revenues

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

	Managed Services		Consulting Services		Total
Primary Sector Markets
Public	$	3,250	$	1,593,598	$	1,596,848
Private		740,849		268,259		1,009,108
Not-for-Profit		10,158		2,594		12,752
	$	754,257	$	1,864,451	$	2,618,708
Major Service Lines
CISO as a Service	$	20,550	$	-	$	20,550
Gap and Risk Assessment		-		1,803,928		1,803,928
Managed Security Services		636,676		-		636,676
Tech Connect Pro		89,080		-		89,080
Tech Connect Cloud		-		22,263		22,263
Tech Connect Security		7,691		-		7,691
Hardware		-		13,253		13,253
Other		260		25,007		25,267
	$	754,257	$	1,864,451	$	2,618,708

Revenue consists of the following by service offering for the six months ended June 30, 2019:

	Managed Services		Consulting Services		Total
Primary Sector Markets
Public	$	-	$	-	$	-
Private		222,450		127,681		350,131
Not-for-Profit		-		2,000		2,000
	$	222,450	$	129,681	$	352,131
Major Service Lines
CISO as a Service	$	184,000	$	-	$	184,000
Gap and Risk Assessment		-		129,681		129,681
Managed Security Services		38,450		-		38,450
Tech Connect Pro		-		-		-
Tech Connect Cloud		-		-		-
Tech Connect Security		-		-		-
Hardware		-		-		-
Other		-		-		-
	$	222,450	$	129,681	$	352,131

Contract Modifications

There were no contract modifications during the six months ended June 30, 2020. Contract modifications are not routine in the performance of the Company’s contracts.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.

Accounts Receivable

Accounts Receivable

Accounts receivable are reported at their outstanding unpaid principal balances, net of allowances for doubtful accounts. The Company periodically assesses its accounts and other receivables for collectability on a specific identification basis. The Company provides for allowances for doubtful receivables based on management’s estimate of uncollectible amounts considering age, collection history, and any other factors considered appropriate. Payments are generally due within 30 days of invoice. The Company writes off accounts receivable against the allowance for doubtful accounts when a balance is determined to be uncollectible. As of June 30, 2020 and December 31, 2019, the Company’s allowance for doubtful accounts was $70,847 and $40,000, respectively.

Property and Equipment

Property and Equipment

Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets, generally between three and five years. Expenditures that enhance the useful lives of the assets are capitalized and depreciated. Computer equipment costs for the Company are capitalized, as incurred, and depreciated on a straight-line basis over three years. TalaTek capitalizes all equipment costs over $5,000, as incurred, and depreciates these costs on a straight-line basis over three years.

Maintenance 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 will be removed from the accounts and the resulting gain or loss, if any, will be reflected in operations.

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

The Company reviews long-lived assets, including finite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of these assets is determined by comparing the forecasted undiscounted net cash flows of the operation to which the assets relate to the carrying amount. If the operation is determined to be unable to recover the carrying amount of its assets, then these assets are written down first, followed by other long-lived assets of the operation to fair value. Fair value is determined based on discounted cash flows or appraised values, depending on the nature of the assets. During the three and six months ended June 30, 2020, the Company did not record a loss on impairment.

Intangible Assets

Intangible Assets

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

Goodwill

Goodwill

Goodwill represents the excess of the purchase price of the acquired business over the estimated fair value of the identifiable net assets acquired. Goodwill is not amortized but is tested for impairment at least annually at year end, at the reporting unit level or more frequently if events or changes in circumstances indicate that the asset might be impaired. Goodwill is tested for impairment at the reporting unit level by first performing a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. If the reporting unit does not pass the qualitative assessment, then the reporting unit’s carrying value is compared to its fair value. The fair values of the reporting units are estimated using market and discounted cash flow approaches. Goodwill is considered impaired if the carrying value of the reporting unit exceeds its fair value. The discounted cash flow approach uses expected future operating results. Failure to achieve these expected results may cause a future impairment of goodwill at the reporting unit (See Notes 3 and 6).

Advertising and Marketing Costs

Advertising and Marketing Costs

The Company expenses advertising and marketing costs as they are incurred. Advertising and marketing expenses were $45,708 and $73,570 for the three and six months ended June 30, 2020, respectively, and $8,151 and $11,340 for the three and six months ended June 30, 2019, respectively, and are recorded in operating expenses on the unaudited condensed consolidated statements of operations.

Fair Value Measurements

Fair Value Measurements

As defined in ASC 820, Fair Value Measurements and Disclosures, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company 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 measurement.

Level 1:	Quoted 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 basis.
Level 2:	Pricing 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.
Level 3:	Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. The significant unobservable inputs used in the fair value measurement for nonrecurring fair value measurements of long-lived assets include pricing models, discounted cash flow methodologies and similar techniques.

Net Loss Per Common Share

Net Loss per Common Share

Net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. All vested outstanding options are considered potentially outstanding common stock. The dilutive effect, if any, of stock options are 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, 2020 and 2019.

The following tables summarize the securities that were excluded from the diluted per share calculation because the effect of including these potential shares was antidilutive due to the Company’s net loss position even though the exercise price could be less than the average market price of the common shares:

	June 30, 2020		June 30, 2019
Stock Options		20,820,000		1,100,000
Total		20,820,000		1,100,000

Stock-Based Compensation

Stock-based Compensation

The Company applies the provisions of ASC 718, Compensation - Stock Compensation, which requires the measurement and recognition of compensation expense for all stock-based awards made to employees, including employee stock options, in the statements of operations.

For 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. Forfeitures are recorded as they are incurred as opposed to being estimated at the time of grant and revised. Due to the Company’s limited history and lack of public market 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.

Pursuant to Accounting Standards Update (“ASU”) 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Non-employee Share-Based Payment Accounting, the Company accounts for stock options issued to non-employees for their services in accordance with ASC 718. The Company uses valuation methods and assumptions to value the stock options that are in line with the process for valuing employee stock options noted above.

Leases

Leases

Leases 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 office space monthly with no long term agreements. The Company leases a vehicle with a remaining term of three years.

In accordance with ASC 842, Leases, the Company recognized a right of use (“ROU”) asset and corresponding lease liability on its unaudited condensed consolidated Balance Sheet for its vehicle operating lease agreement. See Note 13 – Leases for further discussion, including the impact on the Company’s unaudited condensed consolidated financial statements and related disclosures.

Income Taxes

Income Taxes

Deferred 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.

The Company utilizes ASC 740, Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the unaudited condensed consolidated financial statements or tax returns. The Company accounts for income taxes using the asset and liability method to compute the differences between the tax basis of assets and liabilities and the related financial amounts, using currently enacted tax rates. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized. At June 30, 2020 and December 31, 2019, the Company’s net deferred tax asset has been fully reserved.

For uncertain tax positions that meet a “more likely than not” threshold, the Company recognizes the benefit of uncertain tax positions in the unaudited condensed consolidated financial statements. The Company’s practice is to recognize interest and penalties, if any, related to uncertain tax positions in income tax expense in the unaudited condensed consolidated statements of operations.

Recent Accounting Pronouncements

Recently Issued Accounting Standards

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

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Schedule of Disaggregation of Revenues

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

	Managed Services		Consulting Services		Total
Primary Sector Markets
Public	$	3,250	$	1,593,598	$	1,596,848
Private		740,849		268,259		1,009,108
Not-for-Profit		10,158		2,594		12,752
	$	754,257	$	1,864,451	$	2,618,708
Major Service Lines
CISO as a Service	$	20,550	$	-	$	20,550
Gap and Risk Assessment		-		1,803,928		1,803,928
Managed Security Services		636,676		-		636,676
Tech Connect Pro		89,080		-		89,080
Tech Connect Cloud		-		22,263		22,263
Tech Connect Security		7,691		-		7,691
Hardware		-		13,253		13,253
Other		260		25,007		25,267
	$	754,257	$	1,864,451	$	2,618,708

Revenue consists of the following by service offering for the six months ended June 30, 2019:

	Managed Services		Consulting Services		Total
Primary Sector Markets
Public	$	-	$	-	$	-
Private		222,450		127,681		350,131
Not-for-Profit		-		2,000		2,000
	$	222,450	$	129,681	$	352,131
Major Service Lines
CISO as a Service	$	184,000	$	-	$	184,000
Gap and Risk Assessment		-		129,681		129,681
Managed Security Services		38,450		-		38,450
Tech Connect Pro		-		-		-
Tech Connect Cloud		-		-		-
Tech Connect Security		-		-		-
Hardware		-		-		-
Other		-		-		-
	$	222,450	$	129,681	$	352,131

Summary of Securities That Were Excluded from the Diluted Per Share Calculation

The following tables summarize the securities that were excluded from the diluted per share calculation because the effect of including these potential shares was antidilutive due to the Company’s net loss position even though the exercise price could be less than the average market price of the common shares:

	June 30, 2020		June 30, 2019
Stock Options		20,820,000		1,100,000
Total		20,820,000		1,100,000

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Acquisitions (Tables)

6 Months Ended

Jun. 30, 2020

Business Combinations [Abstract]

Schedule of Fair Values of the Assets Acquired and Liabilities Assumed

The 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:

Consideration paid	$	1,356,908
Tangible assets acquired:
Cash		65,037
Accounts receivable, net		80,289
Vehicle		58,693
Total tangible assets	$	204,019
Assumed liabilities:
Line of credit		33,705
Accrued expenses		117,742
Loan payable		50,896
Other liabilities		1,128
Total assumed liabilities		203.471
Net assets acquired		548
Goodwill (a.)(b.)	$	1,356,360

a. 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. Goodwill and intangibles are not deductible for tax purposes.

b. Goodwill represents expected synergies from the merger of operations and intangible assets that do not qualify for separate recognition. Cerberus and Techville are both cybersecurity service providers. The acquisition of Techville provided Cerberus potential sales synergies resulting from Cerberus’ access to Techville’s current client-base to offer additional services. Goodwill also represents Techville’s customer list as well as Mr. Yelm’s two-year non-compete clause, which the Company is currently unable to assign a fair value. These items will be assigned a fair value upon the completion of the third-party valuation.

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Prepaid Expenses and Other Current Assets (Tables)

6 Months Ended

Jun. 30, 2020

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Schedule of Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of:

	June 30, 2020		December 31, 2019
Prepaid expenses	$	144,114	$	57,351
Employee advances		1,883		7,150
Other current assets		101,024		5,776
Total prepaid expenses other current assets	$	247,021	$	70,277

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Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2020

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment

Property and equipment consists of the following:

	June 30, 2020			December 31, 2019
Computer equipment	$	11,905		$	11,658
Vehicle		58,693			-
		70,598			11,658
Less: accumulated depreciation		(4,138	)		(758	)
Property and equipment, net	$	66,460		$	10,900

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Intangible Assets and Goodwill (Tables)

6 Months Ended

Jun. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Change in Goodwill

The below table summarizes the changes in goodwill during the six months ended June 30, 2020:

Balance December 31, 2019	$	922,579
Acquisition of goodwill		1,356,360
Impairment		-
Ending balance, June 30, 2020	$	2,278,939

Summary of Identifiable Intangible Assets

The below table summarizes the identifiable intangible assets as of June 30, 2020 and December 31, 2019:

	Useful life	2020			2019
Tradenames – trademarks (1)	Indefinite	$	589,200		$	589,200
Customer base (1)	15 years		206,000			206,000
Non-compete agreements (1)	5 years		183,300			183,300
Intellectual property/technology (1)	10 years		122,000			122,000
First priority option to acquire SaaS product (the “SaaS Option”) (1)			-			100,000
			1,100,500			1,200,500
Less accumulated amortization			(46,944	)		(15,648	)
Less impairment charge (2)			-			(100,000	)
Total		$	1,053,556		$	1,084,852

⁽¹⁾ These intangible assets were acquired in the acquisition of TalaTek.

⁽²⁾ The Company concluded that the carrying amount of the SaaS Option would not be recoverable and, as a result, fully impaired the asset at December 31, 2019.

Schedule of Future Amortization Expense

The below table summarizes the future amortization expense for the next five years and thereafter:

2020	$	31,297
2021		62,593
2022		62,593
2023		62,593
2024		53,428
Thereafter		191,852
	$	464,356

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Accounts Payable and Accrued Expenses (Tables)

6 Months Ended

Jun. 30, 2020

Payables and Accruals [Abstract]

Schedule of Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consist of the following amounts:

	June 30, 2020		December 31, 2019
Accounts payable	$	298,201	$	119,339
Accrued payroll		173,289		274,508
Accrued expenses		323,331		63,931
Accrued interest – related party		16,811		11,122
	$	811,632	$	468,900

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Stock-based Compensation (Tables)

6 Months Ended

Jun. 30, 2020

Compensation Related Costs [Abstract]

Schedule of Stock Option Activity

Compensation-based stock option activity for qualified and unqualified stock options are summarized as follows:

				Weighted
				Average
	Shares			Exercise Price
Outstanding at January 1, 2020		17,245,000		$	0.46
Granted		3,775,000			0.50
Exercised		-			-
Expired or cancelled		(200,000	)		0.50
Outstanding at June 30, 2020		20,820,000		$	0.47

Summary of Options to Purchase Shares of Common Stock Outstanding and Exercisable

The following table summarizes information about options to purchase shares of the Company’s common stock outstanding and exercisable at June 30, 2020:

				Weighted-		Weighted-
				Average		Average
		Outstanding		Remaining Life		Exercise		Number
Exercise Prices		Options		In Years		Price		Exercisable
$	0.38		3,000,000		4.12	$	0.38		-
	0.40		3,600,000		4.06		0.40		-
	0.50		14,220,000		4.62		0.50		424,167
			20,820,000		4.45	$	0.47		424,167

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Leases (Tables)

6 Months Ended

Jun. 30, 2020

Leases [Abstract]

Schedule of Lease Cost and Other Supplement Lease Information

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

	Six Months Ended June 30, 2020
Lease cost
Operating lease cost (cost resulting from lease payments)	$	1,591
Short term lease cost		14,857
Sublease income		-
Net lease cost	$	16,448
Operating lease – operating cash flows (fixed payments)	$	1,591
Operating lease – operating cash flows (liability reduction)	$	1,407
Non-current leases – right of use assets	$	17,901
Current liabilities – operating lease liabilities	$	4,304
Non-current liabilities – operating lease liabilities	$	13,682

Schedule of Future Minimum Under Non-Cancellable Leases for Operating Leases

Future minimum payments under non-cancelable leases for operating leases for the remaining terms of the leases following the six months ended June 30, 2020, are as follows:

Fiscal Year	Operating Leases
2020 (excluding the six months ended June 30, 2020)	$	4,772
2021		9,543
2022		4,772
Total future minimum lease payments		19,087
Amount representing interest		(1,101	)
Present value of net future minimum lease payments	$	17,986

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Concentration of Credit Risk (Tables)

6 Months Ended

Jun. 30, 2020

Revenues [Member]

Schedules of Concentration of Risk, by Risk Factor

Revenues

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

Client A	59	%
Client B	21	%

Two clients accounted for 90% of revenue for the six months ended June 30, 2019.

Client A	50	%
Client B	40	%

Accounts Receivable [Member]

Schedules of Concentration of Risk, by Risk Factor

Accounts Receivable

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

Client A	32	%
Client B	20	%
Client C	18	%

Accounts Payable [Member]

Schedules of Concentration of Risk, by Risk Factor

Accounts Payable

Three vendors accounted for 44% of the accounts payable as of June 30, 2020, as set forth below:

Vendor A	17	%
Vendor B	14	%
Vendor C, related party	13	%

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Nature of the Organization and Business (Details Narrative) - USD ($)			3 Months Ended				6 Months Ended
	May 25, 2020	Oct. 01, 2019	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Accumulated deficit			$ (2,838,757)				$ (2,838,757)		$ (1,453,510)
Working capital			1,300,000				1,300,000
Net income (loss)			$ (546,103)	$ (839,144)	$ (523,281)	$ 99,142	(1,385,247)	$ (424,139)
Net cash provided by (used in) operating activities							(740,120)	$ 101,412
U.S. Small Business Administration's Payroll Protection Program [Member]
Proceeds from issuance of private placement							710,000
Accredited Investors [Member]
Proceeds from issuance of private placement							$ 140,000
TalaTek Merger Agreement [Member] | TalaTek, LLC [Member]
Number of shares converted		6,200,000
Stock Purchase Agreement [Member] | Technologyville, Inc., [Member]
Number of shares converted	3,392,271

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Summary of Significant Accounting Policies (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Accounting Policies [Abstract]
Allowance for doubtful accounts			$ 70,847		$ 40,000
Equipment costs	$ 5,000		5,000
Advertising and marketing expenses	$ 45,708	$ 8,151	$ 73,570	$ 11,340

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Summary of Significant Accounting Policies - Schedule of Disaggregation of Revenues (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Primary Sector Markets - Public			$ 1,596,848
Primary Sector Markets - Private			1,009,108	350,131
Primary Sector Markets - Not-for-Profit			12,752	2,000
Total Primary Sector Markets			2,618,708	352,131
CISO as a Service			20,550	184,000
Gap and Risk Assessment			1,803,928	129,681
Managed Security Services			636,676	38,450
Tech Connect Pro			89,080
Tech Connect Cloud			22,263
Tech Connect Security			7,691
Hardware			13,253
Other			25,267
Revenue	$ 1,550,487	$ 154,318	2,618,708	352,131
Managed Services [Member]
Primary Sector Markets - Public			3,250
Primary Sector Markets - Private			740,849	222,450
Primary Sector Markets - Not-for-Profit			10,158
Total Primary Sector Markets			754,257	222,450
CISO as a Service			20,550	184,000
Gap and Risk Assessment
Managed Security Services			636,676	38,450
Tech Connect Pro			89,080
Tech Connect Cloud
Tech Connect Security			7,691
Hardware
Other			260
Revenue	616,344	46,450	754,257	222,450
Consulting Services [Member]
Primary Sector Markets - Public			1,593,598
Primary Sector Markets - Private			268,259	127,681
Primary Sector Markets - Not-for-Profit			2,594	2,000
Total Primary Sector Markets			1,864,451	129,681
CISO as a Service
Gap and Risk Assessment			1,803,928	129,681
Managed Security Services
Tech Connect Pro
Tech Connect Cloud			22,263
Tech Connect Security
Hardware			13,253
Other			25,007
Revenue	$ 934,143	$ 107,868	$ 1,864,451	$ 129,681

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Summary of Significant Accounting Policies - Summary of Securities That Were Excluded from the Diluted Per Share Calculation (Details) - shares	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Antidilutive securities excluded from the diluted per share calculation	20,820,000	1,100,000
Stock Options [Member]
Antidilutive securities excluded from the diluted per share calculation	20,820,000	1,100,000

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Acquisitions (Details Narrative) - shares	May 25, 2020	Jun. 30, 2020	Dec. 31, 2019
Common stock issued		111,654,771	113,912,500
Common stock outstanding		111,654,771	107,912,500
Techville Acquisition [Member]
Common stock issued	111,654,771
Common stock outstanding	111,654,771
Number of common stock shares retained	108,262,500
Ownership percentage	97.00%
Stock Purchase Agreement [Member] | Techville, and Its Sole Shareholder, Brian Yelm [Member]
Number of common stock shares exchanged	3,392,271

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Acquisitions - Schedule of Fair Values of the Assets Acquired and Liabilities Assumed (Details) - USD ($)		May 25, 2020	Jun. 30, 2020	Dec. 31, 2019
Goodwill			$ 2,278,939	$ 922,579
Technologyville, Inc., [Member]
Consideration paid		$ 1,356,908
Cash		65,037
Accounts receivable, net		80,289
Vehicle		58,693
Total tangible assets		204,019
Line of credit		33,705
Accrued expenses		117,742
Loan payable		50,896
Other liabilities		1,128
Total assumed liabilities		203,471
Net assets acquired		548
Goodwill	[1],[2]	$ 1,356,360

[1] 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. Goodwill and intangibles are not deductible for tax purposes.

[2] Goodwill represents expected synergies from the merger of operations and intangible assets that do not qualify for separate recognition. Cerberus and Techville are both cybersecurity service providers. The acquisition of Techville provided Cerberus potential sales synergies resulting from Cerberus' access to Techville's current client-base to offer additional services. Goodwill also represents Techville's customer list as well as Mr. Yelm's two-year non-compete clause, which the Company is currently unable to assign a fair value. These items will be assigned a fair value upon the completion of the third-party valuation.

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Prepaid Expenses and Other Current Assets - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($)	Jun. 30, 2020	Dec. 31, 2019
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Prepaid expenses	$ 144,114	$ 57,351
Employee advances	1,883	7,150
Other current assets	101,024	5,776
Total prepaid expenses other current assets	$ 247,021	$ 70,277

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Property and Equipment (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Property, Plant and Equipment [Abstract]
Property and equipment, depreciation expense	$ 2,404	$ 57	$ 3,308	$ 57

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Property and Equipment - Schedule of Property and Equipment (Details) - USD ($)	Jun. 30, 2020	Dec. 31, 2019
Property and equipment, gross	$ 70,598	$ 11,658
Less: accumulated depreciation	(4,138)	(758)
Property and equipment, net	66,460	10,900
Computer Equipment [Member]
Property and equipment, gross	11,905	11,658
Vehicle [Member]
Property and equipment, gross	$ 58,693

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Intangible Assets and Goodwill (Details Narrative) - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2020
Goodwill and Intangible Assets Disclosure [Abstract]
Weighted average useful life remaining of identifiable intangible assets		9 years 2 months 30 days
Amortization of identifiable intangible assets	$ 15,648	$ 31,296

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Intangible Assets and Goodwill - Schedule of Change in Goodwill (Details)	6 Months Ended
	Jun. 30, 2020 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
Balance December 31, 2019	$ 922,579
Acquisition of goodwill	1,356,360
Impairment
Ending balance, June 30, 2020	$ 2,278,939

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Intangible Assets and Goodwill - Summary of Identifiable Intangible Assets (Details) - USD ($)		6 Months Ended		12 Months Ended
		Jun. 30, 2020		Dec. 31, 2019
Identifiable intangible assets, useful life		9 years 2 months 30 days
Identifiable intangible assets		$ 1,100,500		$ 1,200,500
Less accumulated amortization		(46,944)		(15,648)
Less impairment charge	[1]			(100,000)
Total		$ 1,053,556		$ 1,084,852
TalaTek, LLC [Member] | Trade Names - Trademarks [Member]
Identifiable intangible assets, useful life description	[2]	Indefinite		Indefinite
Identifiable intangible assets		$ 589,200	[2]	$ 589,200	[3]
TalaTek, LLC [Member] | Customer Base [Member]
Identifiable intangible assets, useful life	[2]	15 years		15 years
Identifiable intangible assets	[2]	$ 206,000		$ 206,000
TalaTek, LLC [Member] | Non-compete Agreements [Member]
Identifiable intangible assets, useful life	[2]	5 years		5 years
Identifiable intangible assets	[2]	$ 183,300		$ 183,300
TalaTek, LLC [Member] | Intellectual Property/Technology [Member]
Identifiable intangible assets, useful life	[2]	10 years		10 years
Identifiable intangible assets	[2]	$ 122,000		$ 122,000
TalaTek, LLC [Member] | First Priority Option to Acquire SaaS Product [Member]
Identifiable intangible assets	[2]			$ 100,000

[1] The Company concluded that the carrying amount of the SaaS Option would not be recoverable and, as a result, fully impaired the asset at December 31, 2019.

[2] These intangible assets were acquired in the acquisition of TalaTek.

[3] Management believes that the acquired tradenames/trademarks have an indefinite useful life. In accordance with applicable accounting standards, indefinite life intangibles are not amortized but instead is tested for impairment at least annually or more frequently if certain indicators are present.

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Intangible Assets and Goodwill - Schedule of Future Amortization Expense (Details)	Jun. 30, 2020 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2020	$ 31,297
2021	62,593
2022	62,593
2023	62,593
2024	53,428
Thereafter	191,852
future amortization expense	$ 464,356

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Accounts Payable and Accrued Expenses - Schedule of Accounts Payable and Accrued Expenses (Details) - USD ($)	Jun. 30, 2020	Dec. 31, 2019
Payables and Accruals [Abstract]
Accounts payable	$ 298,201	$ 119,339
Accrued payroll	173,289	274,508
Accrued expenses	323,331	63,931
Accrued interest - related party	16,811	11,122
Accounts payable and accrued expenses	$ 811,632	$ 468,900

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Related Party Transactions (Details Narrative) - USD ($)		3 Months Ended		6 Months Ended		12 Months Ended
	Jan. 02, 2020	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019	Dec. 31, 2018
Debt accrued interest				$ 16,811		$ 11,122
Interest expense related party		$ 3,060	$ 3,060	5,689	$ 6,075
Professional fees paid		204,956	$ 344,252	$ 401,310	$ 360,671
Number of stock options granted				3,775,000
Stock option, exercise price				$ 0.50
Mr. Reithinger [Member]
Number of stock options granted	720,000
Stock option, exercise price	$ 0.50
Financial Consulting Agreement [Member]
Professional fees paid		47,818		$ 37,284
Accrued and unpaid fees owed for services		37,500		$ 37,500
Jemmett Enterprises, LLC [Member]
Notes payable, principal amount							$ 200,000
Notes payable maturity date				Jun. 15, 2021			Jun. 30, 2020
Notes payable interest rate							6.00%
Loan outstanding principal balance		$ 109,787		$ 109,787		$ 109,787

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Stockholders' Equity (Details Narrative) - USD ($)		3 Months Ended		6 Months Ended
	May 25, 2020	Mar. 31, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Number of common shares issued	3,392,271			350,000
Shares issued fair value per share	$ 0.40			$ 0.40
Proceeds from issuance of common stock				$ 140,000	$ 400,300
Stock issued during period, values		$ 140,000	$ 400,000	140,000
Stock payable				$ 22,000
Eskenzi PR Limited [Member] | Restricted Stock [Member]
Number of common shares issued				120,000
Stock issued during period, values				$ 48,000

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Stock-based Compensation (Details Narrative) - USD ($)							3 Months Ended	6 Months Ended
	Jun. 09, 2020	May 25, 2020	Feb. 13, 2020	Jan. 29, 2020	Jan. 02, 2020	Jun. 06, 2019	Jun. 30, 2020	Jun. 30, 2020	Jun. 30, 2019
Number of common shares issued		3,392,271						350,000
Number of stock options granted								3,775,000
Options granted, exercise price								$ 0.50
Mr. Reithinger [Member]
Number of stock options granted					720,000
Stock price					$ 0.40
Options granted, exercise price					$ 0.50
Options vesting period					3 years
Strike price					$ 0.50
Expected volatility					72.00%
Risk-free interest rate					1.67%
Dividend rate					0.00%
Expected term					5 years 9 months
Employee [Member]
Number of stock options granted	1,205,000		200,000	1,000,000	50,000
Stock price	$ 0.40			$ 0.40	$ 0.40
Options granted, exercise price	$ 0.50		$ 0.50	$ 0.50	$ 0.50
Options vesting period, description	The options for 33% of the shares vest on the one-year anniversary of the grant date and then monthly over the subsequent two-year period.		The options for 33% of the shares vest on the one-year anniversary of the grant date and then monthly over the subsequent two-year period. The Company terminated the employee in March 2020 and, as a result, no stock-based compensation was recorded relating to these options.	The options for 33% of the shares vest on the one-year anniversary of the grant date and then monthly over the subsequent two-year period.	The options for 33% of the shares vest on the one-year anniversary of the grant date and then monthly over the subsequent two-year period.
Strike price	$ 0.50			$ 0.50	$ 0.50
Expected volatility	74.00%			72.00%	72.00%
Risk-free interest rate	0.40%			1.41%	1.59%
Dividend rate	0.00%			0.00%	0.00%
Expected term	3 years 5 months 27 days			3 years 5 months 27 days	3 years 5 months 27 days
Board Member [Member]
Number of stock options granted				600,000
Stock price				$ 0.40
Options granted, exercise price				$ 0.50
Options vesting period, description				The options for 50% of the shares vest on the one-year anniversary of the grant date and then monthly over the subsequent one-year period.
Strike price				$ 0.50
Expected volatility				72.00%
Risk-free interest rate				1.41%
Dividend rate				0.00%
Expected term				3 years 2 months 30 days
2019 Equity Incentive Plan [Member]
Number of stock options granted								3,775,000	1,100,000
Options granted, weighted average grant date fair value								$ 165,982	$ 25,147
Options vested, weighted average grant date fair value								16,125
Total compensation expense related to the options							$ 343,910	669,339
Future compensation cost								$ 2,777,590
Weighted average recognition period								1 year 9 months 25 days
Aggregate intrinsic value							$ 60,000	$ 60,000
Stock price							$ 0.40	$ 0.40
2019 Equity Incentive Plan [Member] | Non-vested Options [Member]
Options vested, weighted average grant date fair value								$ 1,785,954
2019 Equity Incentive Plan [Member] | Maximum [Member]
Number of common shares issued						25,000,000
Shares issued, term						10 years

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Stock-based Compensation - Schedule of Stock Option Activity (Details)	6 Months Ended
	Jun. 30, 2020 $ / shares shares
Compensation Related Costs [Abstract]
Shares, Outstanding beginnging | shares	17,245,000
Shares, Granted | shares	3,775,000
Shares, Exercised | shares
Shares, Expired or cancelled | shares	(200,000)
Shares, Outstanding ending | shares	20,820,000
Weighted Average Exercise Price Outstanding, beginning | $ / shares	$ 0.46
Weighted Average Exercise Price, Granted | $ / shares	0.50
Weighted Average Exercise Price, Exercised | $ / shares
Weighted Average Exercise Price, Expired or cancelled | $ / shares	0.50
Weighted Average Exercise Price Outstanding, ending | $ / shares	$ 0.47

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Stock-based Compensation - Summary of Options to Purchase Shares of Common Stock Outstanding and Exercisable (Details)	6 Months Ended
	Jun. 30, 2020 $ / shares shares
Outstanding Options	20,820,000
Weighted-Average Remaining Life In Years	4 years 5 months 12 days
Weighted-Average Exercise Price | $ / shares	$ 0.47
Number Exercisable	424,167
Exercise Price Range One [Member]
Range of exercise prices | $ / shares	$ 0.38
Outstanding Options	3,000,000
Weighted-Average Remaining Life In Years	4 years 1 month 13 days
Weighted-Average Exercise Price | $ / shares	$ 0.38
Number Exercisable
Exercise Price RangeTwo [Member]
Range of exercise prices | $ / shares	$ 0.40
Outstanding Options	3,600,000
Weighted-Average Remaining Life In Years	4 years 22 days
Weighted-Average Exercise Price | $ / shares	$ 0.40
Number Exercisable
Exercise Price RangeThree [Member]
Range of exercise prices | $ / shares	$ 0.50
Outstanding Options	14,220,000
Weighted-Average Remaining Life In Years	4 years 7 months 13 days
Weighted-Average Exercise Price | $ / shares	$ 0.50
Number Exercisable	424,167

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Commitments and Contingencies (Details Narrative) - USD ($)				6 Months Ended
	May 25, 2020	Sep. 30, 2019	May 15, 2019	Jun. 30, 2020
Number of stock options granted				3,775,000
Employment Agreement [Member]
Stock options to be received				3,000,000
Number of stock options granted				1,000,000
Employment Agreement [Member] | William Santos [Member]
Initial base salary			$ 185,000
Employment Agreement [Member] | William Santos [Member] | Gross Revenue 20,000,000 [Member]
Gross revenue			245,000
Employment Agreement [Member] | William Santos [Member] | Gross Revenue 40,000,000 [Member]
Gross revenue			$ 300,000
Employment Agreement [Member] | William Santos [Member] | Maximum [Member]
Annual bonuses, percentage			100.00%
Employment Agreement [Member] | David Jemmett [Member]
Initial base salary		$ 225,000
Employment Agreement [Member] | David Jemmett [Member] | Public Listing [Member]
Gross revenue		$ 250,000
Employment Agreement [Member] | David Jemmett [Member] | Maximum [Member] | Public Listing [Member]
Annual bonuses, percentage		100.00%
Employment Agreement [Member] | Brian Yelm [Member]
Initial base salary	$ 300,000
Yelm Agreement [Member]
Stock options to be received				500,000
Common stock exercise price				$ 0.50
Yelm Agreement [Member] | Existing Customer [Member]
Initial base salary	$ 22,000
Yelm Agreement [Member] | Existing Customer [Member] | Maximum [Member]
Annual bonuses, percentage	20.00%

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Loans Payable and Line of Credit (Details Narrative) - USD ($)						3 Months Ended	6 Months Ended
	Jun. 22, 2020	Apr. 17, 2020	Jul. 29, 2019	Apr. 29, 2019	Aug. 24, 2017	Jun. 30, 2020	Jun. 30, 2020	Jun. 30, 2019
Payments for line of credit						$ 60,000	$ 66,705
Debt cash payment							1,156
Debt principal							988
Debt interest							169
U.S. Small Business Administration's Payroll Protection Program One [Member]
Secured line of credit		$ 530,000
Debt note interest rate		1.00%
Debt, maturity date		Apr. 17, 2022
Debt outstanding						$ 530,000	$ 530,000
Debt cash payment		$ 29,678
SunTrust Bank[Member]
Secured line of credit			$ 500,000
SunTrust Bank[Member] | London Interbank Offered Rate (LIBOR) [Member]
Line of credit interest rate percentage			2.25%
Wintrust Bank [Member]
Note payable					$ 75,000
Debt note interest rate					1.99%	6.00%	6.00%
Debt, maturity date					Aug. 24, 2020
Debt outstanding						$ 27,000	$ 27,000
Wintrust Bank [Member] | Prime Rate [Member]
Debt note interest rate					2.00%
Wintrust Bank [Member] | Floor Rate [Member]
Debt note interest rate					6.00%
Technologyville, Inc., [Member]
Debt note interest rate				5.77%
Debt, maturity date				May 12, 2025
Debt outstanding						49,908	49,908
Payments to note payable				$ 59,905
Technologyville, Inc., [Member] | U.S. Small Business Administration's Payroll Protection Program [Member]
Secured line of credit	$ 179,600
Debt note interest rate	1.00%
Debt, maturity date	Jun. 22, 2025
Debt outstanding						$ 179,600	$ 179,600
Debt cash payment	$ 3,819

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Leases (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	May 25, 2020	Dec. 31, 2019
Leases [Abstract]
ROU assets	$ 17,901		$ 17,901		$ 19,393
Lease liabilities	$ 4,304		$ 4,304		$ 19,393
Weighted average incremental borrowing rate					5.77%
Remaining weighted average term	2 years		2 years
Rent expense	$ 5,420	$ 6,417	$ 13,252	$ 6,417

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Leases - Schedule of Lease Cost and Other Supplement Lease Information (Details) - USD ($)	6 Months Ended
	Jun. 30, 2020	May 25, 2020	Dec. 31, 2019
Leases [Abstract]
Operating lease cost (cost resulting from lease payments)	$ 1,591
Short term lease cost	14,857
Sublease income
Net lease cost	16,448
Operating lease - operating cash flows (fixed payments)	1,591
Operating lease - operating cash flows (liability reduction)	1,407
Non-current leases - right of use assets	17,901	$ 19,393
Current liabilities - operating lease liabilities	4,304	$ 19,393
Non-current liabilities - operating lease liabilities	$ 13,682

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Leases - Schedule of Future Minimum Under Non-Cancellable Leases for Operating Leases (Details)	Jun. 30, 2020 USD ($)
Leases [Abstract]
2020 (excluding the six months ended June 30, 2020)	$ 4,772
2021	9,543
2022	4,772
Total future minimum lease payments	19,087
Amount representing interest	(1,101)
Present value of net future minimum lease payments	$ 17,986

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Concentration of Credit Risk (Details Narrative) - USD ($)	6 Months Ended		12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
FDIC insured, value	$ 250,000
Deposits in excess of the FDIC insured	$ 1,139,000		$ 1,377,000
Accounts Receivable [Member]
Concentration risk, percentage	70.00%
Accounts Payable [Member] | One Vendor, Related Party [Member]
Concentration risk, percentage	44.00%
Revenue [Member]
Concentration risk, percentage	80.00%	90.00%

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Concentration of Credit Risk - Schedules of Concentration of Risk, by Risk Factor (Details)	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Revenue [Member]
Concentration risk percentage	80.00%	90.00%
Client A [Member] | Accounts Receivable [Member]
Concentration risk percentage	32.00%
Client A [Member] | Revenue [Member]
Concentration risk percentage	59.00%	50.00%
Client B [Member] | Accounts Receivable [Member]
Concentration risk percentage	20.00%
Client B [Member] | Revenue [Member]
Concentration risk percentage	21.00%	40.00%
Client C [Member] | Accounts Receivable [Member]
Concentration risk percentage	18.00%
Vendor A [Member] | Accounts Payable [Member]
Concentration risk percentage	17.00%
Vendor B [Member] | Accounts Payable [Member]
Concentration risk percentage	14.00%
Vendor C Related Party [Member] | Accounts Payable [Member]
Concentration risk percentage	13.00%

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Subsequent Events (Details Narrative) - $ / shares		6 Months Ended
	Jul. 31, 2020	Jun. 30, 2020	Jun. 30, 2019
Number of stock options granted		3,775,000
Stock option, exercise price		$ 0.50
2019 Equity Incentive Plan [Member]
Number of stock options granted		3,775,000	1,100,000
Subsequent Event [Member] | 2019 Equity Incentive Plan [Member]
Number of stock options granted	50,000
Stock option, exercise price	$ 2.00
Subsequent Event [Member] | Share Purchase Agreement [Member]
Number of common stock shares exchanged	2,330,000