Tego Cyber, Inc 10-Q for FY2021 Q3
Tego Cyber, Inc. (TGCB)
10-Q
2021-05-17
For: 2021-03-31
View Original
Added on
April 06, 2026
About this 10-Q
Tego Cyber, Inc filed this 10-Q on May 17, 2021, covering the quarter ended March 31, 2021 (FY2021 Q3).
Headline figures
Quarter ended March 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $900
- down 29.4% from $1275 a year earlier
- Net loss
- $199.53K
- compared with a net loss of $11.24K a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
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 333-248929
TEGO CYBER INC.
(Exact name of registrant as specified in its charter)
|
Nevada
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84-2678167
|
|
(State or other jurisdiction of incorporation or
organization)
|
(I.R.S. Employer Identification Number)
|
8565 South Eastern Avenue, Suite 150
Las Vegas, Nevada, 89123
(Address
of Principal Executive Offices) (Zip Code)
(855) 939-0100
(Registrant’s Telephone Number, Including Area
Code)
Not applicable
(Former
Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)
Securities registered pursuant to Section 12(b) of the Act:
None
|
Title
of each class
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Trading
Symbol(s)
|
Name of
the principal U.S. market
|
|
|
|
|
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 ☐
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 ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, smaller reporting
company, or an emerging growth company. See the definitions of
“large accelerated filer,” “accelerated
filer”, “smaller reporting company”, and
“emerging growth company” in Rule 12b-2 of the Exchange
Act.
|
|
Large
accelerated filer ☐
|
Accelerated
filer ☐
|
|
|
Non-accelerated
filer ☐
|
Smaller
reporting company ☒
|
|
|
Emerging
growth company ☐
|
|
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 ☒.
As of
May 14, 2021 there were 14,434,816 shares of common stock issued
and outstanding, par value $0.001 per share.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain
information included in this Quarterly Report on Form 10-Q and
other filings of the Registrant under the Securities Act of 1933,
as amended (the “Securities Act”), and the Securities
Exchange Act of 1934, as amended (the “Exchange Act”),
as well as information communicated orally or in writing between
the dates of such filings, contains or may contain
“forward-looking statements” within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange
Act. Forward-looking statements in this Quarterly Report on Form
10-Q, including without limitation, statements related to our
plans, strategies, objectives, expectations, intentions and
adequacy of resources, are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Such statements are subject to certain risks, trends and
uncertainties that could cause actual results to differ materially
from expected results. Among these risks, trends and uncertainties
are the availability of working capital to fund our operations, the
competitive market in which we operate, the efficient and
uninterrupted operation of our computer and communications systems,
our ability to generate a profit and execute our business plan, the
retention of key personnel, our ability to protect and defend our
intellectual property, the effects of governmental regulation, and
other risks identified in the Registrant’s filings with the
Securities and Exchange Commission from time to time.
In some
cases, forward-looking statements can be identified by terminology
such as “may,” “will,”
“should,” “could,” “expects,”
“plans,” “anticipates,”
“believes,” “estimates,”
“predicts,” “potential” or
“continue” or the negative of such terms or other
comparable terminology. Although the Registrant believes that the
expectations reflected in the forward-looking statements contained
herein are reasonable, the Registrant cannot guarantee future
results, levels of activity, performance or achievements. Moreover,
neither the Registrant, nor any other person, assumes
responsibility for the accuracy and completeness of such
statements. The Registrant is under no duty to update any of the
forward-looking statements contained herein after the date of this
Quarterly Report on Form 10-Q.
2
TEGO CYBER INC.
FORM 10-Q
MARCH 31, 2021
INDEX
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Page
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F-1
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F-1
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4
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10
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10
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11
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11
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11
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11
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11
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11
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11
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12
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13
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Certifications
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3
PART I – FINANCIAL
INFORMATION
Item 1. Financial Statements.
|
INDEX
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|
F-1
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|
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Interim
Condensed Balance Sheet
|
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F-2
|
|
|
Interim
Condensed Statement of Operations and Comprehensive
Loss
|
|
F-3
|
|
|
Interim
Condensed Statement of Changes in
Shareholders’ Equity
|
|
F-4
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|
|
Interim
Condensed Statement of Cash
Flows
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F-5
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|
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Notes
to Interim Financial Statements
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F-6
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|
TEGO CYBER INC.
INTERIM CONDENSED BALANCE
SHEET
AS AT MARCH 31, 2021 AND JUNE 30, 2020
(Expressed in US Dollars)
(Unaudited)
|
|
March 31,
2021
|
June 30,
2020
|
|
ASSETS
|
|
|
|
Current
assets
|
|
|
|
Cash
|
$106,264
|
$81,872
|
|
Accounts
receivable
|
1,150
|
150
|
|
Total current
assets
|
107,414
|
82,022
|
|
Software
|
65,750
|
21,500
|
|
TOTAL
ASSETS
|
$173,164
|
$103,522
|
|
|
|
|
|
LIABILITIES
& SHAREHOLDERS’ DEFICIT
|
|
|
|
Current
liabilities
|
|
|
|
Accounts payable
and accrued liabilities
|
$36,890
|
$15,554
|
|
Due to related
parties
|
-
|
1,358
|
|
Convertible
debts
|
84,169
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-
|
|
TOTAL
LIABILITIES
|
121,059
|
16,912
|
|
SHAREHOLDERS’
EQUITY
|
|
|
|
Common
shares
50,000,000 shares
authorized $0.001 par value 13,400,236 shares issued and
outstanding at March 31, 2021
12,406,236 shares
issued and outstanding at June 30, 2020
|
13,400
|
12,406
|
|
Additional paid in
capital
|
520,183
|
175,906
|
|
Subscriptions
receivable
|
(8,000)
|
(24,500)
|
|
Accumulated
deficit
|
(473,478)
|
(77,202)
|
|
TOTAL
SHAREHOLDERS’ EQUITY
|
52,105
|
86,610
|
|
TOTAL
LIABILITIES & SHAREHOLDERS’ EQUITY
|
$173,164
|
$103,522
|
The accompanying notes are an integral part of these financial
statements.
F-2
TEGO CYBER INC.
INTERIM CONDENSED STATEMENT OF
OPERATIONS AND COMPREHENSIVE LOSS
FOR THE PERIODS ENDED MARCH 31, 2021 AND 2020
(Expressed in US Dollars)
(Unaudited)
|
|
3-Months Ended
March 31, 2021
|
3-Months Ended
March 31, 2020
|
9-Months Ended
March 31, 2021
|
September 6,
2019
(date of
inception) to March 31, 2020
|
|
REVENUE
|
|
|
|
|
|
Consulting
fees
|
$900
|
$1,275
|
$4,700
|
$1,275
|
|
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
Adverting
& promotion
|
11,062
|
2,719
|
30,607
|
7,747
|
|
Bank
charges & fees
|
490
|
305
|
1,697
|
506
|
|
Contractors
|
3,400
|
263
|
3,400
|
263
|
|
Exchange
& listing fees
|
35,250
|
-
|
44,246
|
-
|
|
Interest on
short-term debt
|
3,324
|
-
|
3,850
|
-
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|
Investor
relations
|
2,749
|
-
|
5,498
|
-
|
|
Legal
& accounting
|
17,820
|
1,500
|
101,810
|
8,225
|
|
Management
fees
|
49,500
|
6,000
|
106,000
|
19,200
|
|
Meals
& entertainment
|
750
|
229
|
929
|
250
|
|
Office
& administration
|
430
|
200
|
1,503
|
210
|
|
Rent
& utilities
|
137
|
78
|
371
|
234
|
|
Subscriptions
& dues
|
283
|
222
|
579
|
222
|
|
Travel
& hotel
|
-
|
576
|
313
|
678
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|
Website
& internet
|
540
|
419
|
1,483
|
826
|
|
TOTAL
OPERATING EXPENSES
|
125,735
|
12,511
|
302,286
|
38,361
|
|
LOSS
FROM OPERATIONS
|
(124,835)
|
(11,236)
|
(297,587)
|
(37,086)
|
|
|
|
|
|
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|
OTHER
INCOME (EXPENSE)
|
|
|
|
|
|
Accretion
expense
|
(59,213)
|
-
|
(71,724)
|
-
|
|
Financing fees
|
(15,482)
|
-
|
(26,966)
|
-
|
|
TOTAL
OTHER INCOME (EXPENSE)
|
(74,695)
|
-
|
(98,690)
|
-
|
|
|
|
|
|
|
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NET
LOSS
|
$(199,530)
|
$(11,236)
|
$(396,276)
|
$(37,086)
|
|
BASIC AND DILUTED
LOSS PER COMMON SHARE
Basic and
diluted
|
$(0.02)
|
$(0.00)
|
$(0.03)
|
$(0.00)
|
|
WEIGHTED AVERAGE
NUMBER OF COMMON SHARES OUTSTANDING
Basic and
diluted
|
13,152,503
|
9,734,700
|
12,964,601
|
9,734,700
|
The
accompanying notes are an integral part of these financial
statements
F-3
TEGO CYBER INC.
INTERIM CONDENSED STATEMENT OF
CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE NINE-MONTHS PERIOD ENDED MARCH 31, 2021
(Expressed in US Dollars)
(Unaudited)
|
|
Number
of
Shares
|
Common
Stock
Amount
|
Additional
Paid-In Capital
|
Subscriptions
Receivable
|
Accumulated
Deficit
|
Total
Shareholders'
Equity
|
|
Balance, September
6, 2019 (date of inception)
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Shares
issued
|
9,290,380
|
9,290
|
23,229
|
-
|
-
|
32,519
|
|
Net loss for the
period ended March 31, 2020
|
-
|
-
|
-
|
-
|
(37,086)
|
(37,086)
|
|
Balance,
March 31, 2020
|
9,290,380
|
$9,290
|
$23,229
|
$-
|
$(37,086)
|
$4,567
|
|
|
|
|
|
|
|
|
|
Balance, June 30,
2020
|
12,406,236
|
12,406
|
175,906
|
(24,500)
|
(77,202)
|
86,610
|
|
Private
placement
|
696,000
|
696
|
73,304
|
16,500
|
-
|
90,500
|
|
Shares issued for
services
|
100,000
|
100
|
24,900
|
-
|
-
|
25,000
|
|
Shares issued as
transaction costs for debt
|
198,000
|
198
|
32,802
|
-
|
-
|
33,000
|
|
Equity portion of
convertible debts
|
-
|
-
|
124,453
|
-
|
-
|
124,453
|
|
Warrants issued
with convertible debts
|
-
|
-
|
88,818
|
-
|
-
|
88,818
|
|
Net loss for period
ended March 31, 2021
|
-
|
-
|
-
|
-
|
(396,276)
|
(396,276)
|
|
Balance,
March 31, 2021
|
13,400,236
|
$13,400
|
$520,183
|
$(8,000)
|
$(473,478)
|
$52,105
|
The
accompanying notes are an integral part of these financial
statements
F-4
TEGO CYBER INC.
INTERIM CONDENSED STATEMENT OF CASH
FLOWS
FOR THE PERIODS ENDED MARCH 31, 2021 AND JUNE 30, 2020
(Expressed in US Dollars)
(Unaudited)
|
|
Nine-Months
Ended
March 31,
2021
|
September
6, 2019
(date of
inception) to March 31, 2020
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
Net
loss for the period
|
$(396,276)
|
$(37,086)
|
|
Items not
affecting cash
|
|
|
|
Accretion
expense on convertible debts
|
71,725
|
-
|
|
Financing
fees
|
26,965
|
-
|
|
Shares issued
for services
|
25,000
|
18,000
|
|
Changes in
non-cash working capital items:
|
|
|
|
Accounts
receivable
|
(1,000)
|
-
|
|
Accounts
payable and accrued liabilities
|
16,336
|
-
|
|
Due
to related parties
|
(1,358)
|
1,284
|
|
Deferred
revenue
|
-
|
300
|
|
NET
CASH USED IN OPERATING ACTIVITIES
|
(258,608)
|
(17,502)
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
Acquisition
of software
|
(39,250)
|
(15,750)
|
|
NET
CASH USED IN INVESTING ACTIVITIES
|
(39,250)
|
(15,750)
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
Proceeds
from shares issued
|
74,000
|
36,735
|
|
Proceeds from
convertible debt
|
260,000
|
-
|
|
Convertible
debt issuance costs
|
(28,250)
|
-
|
|
Collection of
subscription receivable
|
16,500
|
|
|
NET
CASH PROVIDED BY FINANCING ACTIVITIES
|
322,250
|
36,735
|
|
|
|
|
|
NET
INCREASE (DECREASE) IN CASH
|
24,392
|
3,483
|
|
CASH
AT BEGINNING OF THE PERIOD
|
81,872
|
-
|
|
CASH
AT END OF THE PERIOD
|
$106,264
|
$3,483
|
|
|
|
|
|
Non-cash
investing and financing activities:
|
|
|
|
Software included
in accounts payable and accrued liabilities
|
$5,000
|
$-
|
|
Shares issued with
convertible debt
|
$33,000
|
$-
|
|
Warrants issued
with convertible debt
|
$88,818
|
$-
|
|
Equity portion of
convertible debts
|
$124,453
|
$-
|
F-5
NOTE 1 – ORGANIZATION AND DESCRIPTION OF
BUSINESS
Tego
Cyber Inc. (the “Company”) was incorporated on
September 6, 2019 in the State of Nevada. The Company has developed
a threat intelligence platform designed to source then identify
threats to an enterprise network before the threat has entered and
caused irreparable harm. Tego also offer advanced cybersecurity
consulting services including vulnerability assessments,
penetration testing, vCISO services, dark web monitoring,
cybersecurity policy creation and employee training.
The
Company’s head office is at at 8565 S. Eastern Ave. #150, Las
Vegas, Nevada, 89123.
NOTE 2 – BASIS OF PRESENTATION
The
accompanying interim condensed financial statements have been
prepared in accordance with generally accepted accounting
principles in the United States of America (“US
GAAP”).
Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with US GAAP have been condensed
or omitted pursuant to US GAAP rules and regulations for
presentation of interim financial information. Therefore, the
unaudited interim condensed financial statements should be read in
conjunction with the financial statements and the notes thereto,
included in the Company’s audited financial statements for
the year ended June 30, 2020. Current and future financial
statements may not be directly comparable to the Company’s
historical financial statements. However, except as disclosed
herein, there have been no material changes in the information
disclosed in the notes to the financial statements for the year
ended June 30, 2020. In the opinion of management, all adjustments
considered necessary for a fair presentation, consisting solely of
normal recurring adjustments, have been made. Operating results for
the nine months ended March 31, 2021 are not necessarily indicative
of the results that may be expected for the year ending June 30,
2021.
NOTE 3 – GOING CONCERN UNCERTAINTY
The
accompanying unaudited interim condensed financial statements have
been prepared on a going concern basis, which contemplates the
realization of assets and satisfaction of liabilities in the normal
course of the business. The Company has incurred material losses
from operations and has an accumulated deficit. At March 31, 2021,
the Company had a working capital deficit of $13,645 (June 30, 2020
- surplus of $65,110). For the nine-month period ended March 31,
2021, the Company sustained net losses and generated negative cash
flows from operations. In March 2020, the World Health Organization
recognized the outbreak of COVID-19 as a global pandemic. The
COVID-19 pandemic and government actions implemented to contain the
further spread of COVID-19 have severely restricted economic
activity around the world. These factors, among others, raise
substantial doubt about the Company’s ability to continue as
a going concern. The interim condensed financial statements do not
include any adjustments relating to the recoverability and
classification of recorded asset amounts or the amounts and
classification of liabilities that may be necessary should the
Company be unable to continue as a going concern. These adjustments
could be material. The Company’s continuation as a going
concern is contingent upon its ability to earn adequate revenues
from operations and to obtain additional financing. There is no
assurance that the Company will be able to obtain such financing or
obtain them on favorable terms.
NOTE 4 – SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
This
summary of significant accounting policies is presented to assist
in understanding the interim condensed financial statements. The
interim condensed financial statements and notes are
representations of the Company’s management, who are
responsible for their integrity and objectivity. These accounting
policies conform to US GAAP and have been consistently applied in
the preparation of the interim condensed financial
statements.
Basis of Preparation
The
accompanying interim condensed financial statements have been
prepared to present the balance sheet, the statement of operations
and comprehensive loss, statement of changes in shareholders’
equity and statement of cash flows of the Company for the nine
month period ended March 31, 2021, and have been prepared in
accordance with US GAAP.
F-6
NOTE 4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Use of Estimates
In
preparing the interim condensed financial statements in conformity
with US GAAP, management makes estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the dates of
the interim condensed financial statements, as well as the reported
amounts of revenues and expenses during the reporting periods.
Management makes these estimates using the best information
available at the time the estimates are made. However, actual
results could differ materially from those estimates.
Concentrations of Credit Risk
Financial
instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash and
accounts receivable. As at March 31, 2021, substantially all of the
Company’s cash was held by major financial institutions
located in the United States, which management believes are of high
credit quality. With respect to accounts receivable, the Company
extended credit based on an evaluation of the customer’s
financial condition. The Company generally did not require
collateral for accounts receivable and maintained an allowance for
doubtful accounts of accounts receivable if necessary.
Cash
Cash
consists of cash held at major financial institutions and is
subject to insignificant risk of changes in value.
Receivables and Allowance for Doubtful Accounts
Trade
accounts receivable are recorded at net realizable value and do not
bear interest. No allowance for doubtful accounts was made during
the nine month period ended March 31, 2021, based on
management’s best estimate of the amount of probable credit
losses in accounts receivable. The Company evaluates its allowance
for doubtful accounts based upon knowledge of its customers and
their compliance with credit terms. The evaluation process includes
a review of customers’ accounts on a regular basis. The
review process evaluates all account balances with amounts
outstanding for more than 60 days and other specific amounts for
which information obtained indicates that the balance may be
uncollectible. As of March 31, 2021, there was no allowance for
doubtful accounts and the Company does not have any
off-balance-sheet credit exposure related to its
customers.
Software
Software
is stated at cost less accumulated amortization and is depreciated
using the straight-line method over the estimated useful life of
the asset. The estimated useful life of the asset is 5 years and is
not depreciated until it is available for use by the
Company.
Leases
The
Company determines if an arrangement is a lease at inception.
Operating and financing right-of-use assets and lease liabilities
are included on the balance sheet. Right-of-use assets represent
the Company’s right to use an underlying asset for the lease
term and lease liabilities represent the Company’s obligation
to make lease payments arising from the lease. Right-of-use assets
and liabilities are recognized at commencement date based on the
present value of lease payments over the lease term. The Company
uses its incremental borrowing rate, based on the information
available at the commencement date, in determining the present
value of future lease payments. Right-of-use assets include any
prepaid lease payments and exclude any lease incentives and initial
direct costs incurred. Operating lease expenses are recognized on a
straight-line basis over the term of the lease, consisting of
interest accrued on the lease liability and depreciation of the
right-of-use asset. The lease terms may include options to extend
or terminate the lease is it is reasonably certain the Company will
exercise that option. As at March 31, 2021, the Company had no
leases.
Fair Value of Financial Instruments
Accounting
Standards Codification (“ASC”) 820 “Fair Value
Measurements and Disclosures”, adopted January 1, 2008,
defines fair value, establishes a three-level valuation hierarchy
for disclosures of fair value measurement and enhances disclosure
requirements for fair value measures. The Company’s financial
instruments include cash, current receivables and payables,
convertible debts, and warrants. These financial instruments are
measured at their respective fair values.
F-7
NOTE 4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
The
three levels are defined as follows:
Fair Value of Financial Instruments (continued)
Level 1
- inputs to the valuation methodology are quoted prices for
identical assets or liabilities in active markets.
Level 2
- inputs to the valuation methodology include quoted prices for
similar assets and liabilities in active markets, and inputs that
are observable for the assets or liability, either directly or
indirectly, for substantially the full term of the financial
instruments.
Level 3
- inputs to the valuation methodology are unobservable and
significant to the fair value.
For
cash, accounts receivable, accounts payable and accrued liabilities
and due to related parties, it is management’s opinion that
the carrying values are a reasonable estimate of fair value because
of the short period of time between the origination of such
instruments and their expected realization and if applicable, their
stated interest rate approximates current rates
available.
For
convertible debts, the carrying values, excluding any unamortized
discounts, approximate the respective fair value. The convertible
debts have been discounted to reflect their net present value as at
March 31, 2021. The carrying values of embedded conversion features
not considered to be derivative instruments were determined by
allocating the remaining carrying value of the convertible debt
after deducting the estimated carrying value of the liability
portion.
Estimating
fair value for warrants require determining the most appropriate
valuation model which is dependent on the terms and conditions of
the grant. This estimate requires determining the most appropriate
inputs to the valuation model including the expected life of the
warrant, volatility, dividend yield, and rate of forfeitures and
making assumptions about them.
Revenue Recognition
Revenue
from providing consulting and management services is recognized in
a manner that reasonably reflects the delivery of services to
customers in return for expected consideration and includes the
following elements:
executed contracts
with the Company’s customers that it believes are legally
enforceable;
identification of
performance obligations in the respective contract;
determination of
the transaction price for each performance obligation in the
respective contract;
allocation of the
transaction price to each performance obligation; and
recognition of
revenue only when the Company satisfies each performance
obligation.
These
five elements as applied to the Company’s consulting services
results in revenue recorded as services are provided.
Income Taxes
The
Company uses the asset and liability method of accounting for
income taxes pursuant to ASC 740 “Income Taxes”. ASC
740 requires an asset and liability approach for financial
accounting and reporting for income taxes and allows recognition
and measurement of deferred tax assets based upon the likelihood of
realization of tax benefits in future years. Under the asset and
liability approach, deferred taxes are provided for the net tax
effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes. Valuation allowances are
provided for deferred tax assets if it is more likely than not
these items will either expire before the Company is able to
realize their benefits, or that future deductibility is uncertain.
The provision for income taxes represents current taxes payable net
of the change during the period in deferred tax assets and
liabilities.
Foreign Currency Translation
The
Company’s functional and reporting currency is United States
dollars (“USD”). The Company maintains its financial
statements in the functional currency. Monetary assets and
liabilities denominated in currencies other than the functional
currency are translated into the functional currency at rates of
exchange prevailing at the balance sheet dates. Transactions
denominated in currencies other than the functional currency are
translated into the functional currency at the exchange rates
prevailing at the dates of the transaction. Exchange gains or
losses arising from foreign currency transactions are included in
the determination of net income (loss).
F-8
NOTE 4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Earnings (Loss) per Share
Basic
earnings (loss) per share is computed by dividing income (loss)
available to common shareholders by the weighted-average number of
common shares outstanding during the period. Diluted earnings
(loss) per share is computed similar to basic earnings (loss) per
share except that the denominator is increased to include the
number of additional common shares that would have been outstanding
if the potential common shares had been issued and if the
additional common shares were dilutive. If applicable, diluted
earnings (loss) per share assume the conversion, exercise or
issuance of all common stock instruments unless the effect is to
reduce a loss or increase earnings per share.
Recently Issued Accounting Pronouncements
Recent
accounting pronouncements issued by the FASB (including its
Emerging Issues Task Force) did not or are not expected to have a
material impact on the Company's present or future financial
statements.
NOTE 5 – SOFTWARE
|
Balance, September
6, 2019
|
$-
|
|
Additions
|
21,500
|
|
Depreciation
|
-
|
|
Balance, June 30,
2020
|
21,500
|
|
Additions
|
44,250
|
|
Depreciation
|
-
|
|
Balance, March 31,
2021
|
$65,750
|
As of
June 30, 2020 and March 31, 2021, the software is not in use and no
depreciation has been recorded for the periods then
ended.
NOTE 6 – RELATED PARTY TRANSACTIONS
Related
party transactions are measured at the exchange amount, which is
the amount of consideration established and agreed to by the
related parties. Related parties are natural persons or other
entities that have the ability, directly, or indirectly, to control
another party or exercise significant influence over the party in
making financial and operating decisions. Related parties include
other parties that are subject to common control or that are
subject to common significant influences.
On the
date of incorporation 8,000,000 shares were issued to directors and
founders at par value as per the following in exchange for concept
and services valued at $8,000: Shannon Wilkinson, Director, CEO,
CFO, Secretary, Treasurer: 3,000,000; Troy Wilkinson, Director,
President: 3,000,000; Michael De Valera, Director: 1,000,000; and
Stephen Seminew, Co-Founder: 1,000,000.
During
the three month and nine month period ended March 31, 2021, there
were transactions incurred between the Company and Shannon
Wilkinson, Director, CEO, CFO, Secretary and Treasurer for
management fees of $24,500 (three months ended March 31, 2020 -
$6,000) and $81,000 (nine months ended March 31, 2020 -
$11,200).
On
March 29, 2021, 100,000 shares were issued to Chris White, a
director of the Company at a value of $0.25 per share for a total
value of $25,000 in exchange for services.
At
March 31, 2021, there was a balance of $Nil (June 30, 2020 -
$1,358) due to directors of the Company.
NOTE 7 – COMMON SHARES
At
March 31, 2021, the Company’s authorized capital consisted of
50,000,000 of common shares with a $0.001 par value and 13,400,236
shares were issued and outstanding.
During the period ended June 30, 2020, the Company incurred the
following transactions:
On
November 4, 2019, the Company issued 8,000,000 shares to the
founders with a fair value of $8,000 in exchange for
services.
On
November 15, 2019, the Company issued 1,000,000 shares to two
non-related parties with a fair value of $10,000 in exchange for
services.
During
the period from November 21, 2019 to March 31, 2020, the Company
completed various private placements whereby a total of 290,380
common shares were issued at a price of $0.05 per share for a total
value of $14,519.
During the nine- month period ended March 31, 2021, the Company
incurred the following transactions:
During
the period from July 2, 2020 to July 31, 2020, the Company
completed various private placements whereby a total of 500,000
common shares were issued at a price of $0.05 per share for a total
value of $25,000.
During
the period from November 24, 2020 to March 31, 2021, the Company
completed various private placements whereby a total of 196,000
common shares were issued at a price of $0.25 per share for a total
value of $49,500.
As at
March 31, 2021, the Company had a remaining balance of share
subscriptions received of $8,000 for shares to be
issued.
F-9
NOTE 7 – COMMON SHARES (CONTINUED)
On
December 28, 2020, the Company issued 110,000 shares to a
non-related party at a price of $0.10 per share for a total value
of $11,000 as commitment shares in exchange for services related to
the issuance of convertible debt on Note 8 (b).
On
March 29, 2021, the Company issued 88,000 shares to a non-related
party at a price of $0.25 per share for a total value of $12,000 as
debt issuance costs related to the issuance of convertible debt on
Note 8 (c).
On
March 29, 2021, the Company issued 100,000 shares to a director of
the Company at a price of $0.25 per share for a total value of
$25,000 in exchange for services.
Warrants
During
the nine-month period ended March 31, 2021, the Company granted an
aggregate of 2,200,000 warrants with a contractual life of two
years and exercise price of $0.25 per share to lenders as part of
the convertible debt financing transaction (Note 8
(b)).
The
warrants were valued at $88,818 using the Black Scholes Option
Pricing Model with the assumptions outlined below. The stock price
was based on recent issuances. Expected life was based on the
expiry date of the warrants as the Company did not have historical
exercise data of such warrants.
|
|
March 31, 2021
|
|
Stock
price
|
$0.25
|
|
Risk-free interest
rate
|
1.06%
|
|
Expected
life
|
2 years
|
|
Expected dividend
rate
|
0%
|
|
Expected
volatility
|
102.03%
|
Continuity
of the Company’s common stock purchase warrants issued and
outstanding is as follows:
|
|
Number of
Warrants
|
Weighted Average
Exercise Price
|
|
Outstanding, June
30, 2020
|
-
|
$-
|
|
Granted
|
2,200,000
|
0.25
|
|
Exercised
|
-
|
-
|
|
Expired
|
-
|
-
|
|
Outstanding, March
31, 2021
|
2,200,000
|
$0.25
|
As at
March 31, 2021, the weighted average remaining contractual life of
warrants outstanding was 1.24 years with an intrinsic value of
$0.13.
NOTE 8 – CONVERTIBLE DEBTS
(a)
On November 10,
2020, the Company issued two convertible debts in the principal
amount of $20,000 each in exchange for cash. Each convertible debt
is unsecured, bears interest at 8% per annum compounded on the
basis of a 365-day year and actual days lapsed, is convertible at
$0.10 per 1 common share, and matures in six months on May 10,
2021. The carrying value of beneficial conversion features not
considered to be derivative instruments were determined by
allocating the intrinsic value of the conversion features from
proceeds. As a result, all of $40,000 proceeds were allocated to
the beneficial conversion feature, recorded as equity portions of
convertible debt and there were no remaining proceeds available for
allocation to the liability portion of the convertible debt. Each
convertible debt was discounted by the amounts allocated to the
conversion features. As at March 31, 2021, the carrying value of
each convertible debt was $15,580 for a total of $31,160 (December
31, 2019 - $Nil).
(b)
On December 28,
2020, the Company entered into a securities purchase agreement with
a non-related party. Pursuant to this agreement, the Company issued
a convertible debt in the principal amount of $120,000 at $110,000
with $10,000 original issue discount. In connection with this note,
the Company paid an additional $15,000 in cash transaction costs,
issued 110,000 common shares valued at $11,000 in transaction
costs, and issued 1,100,000 warrants exercisable at $0.25 per
share, expiring on December 28, 2022. The warrants were calculated
to have a relative fair value of $67,555, which was reduced by the
equity components of the transaction costs of $20,657, leaving a
value of $46,898 as at March 31, 2021. This convertible debt is
unsecured, bears interest at 8% per annum compounded on the basis
of a 365-day year and actual days lapsed, is convertible at $0.10
per 1 common share, and matures in nine months on September 28,
2021.
The
proceeds were allocated between the convertible debt and warrants
on a relative fair value basis, and the issuance costs were
proportioned accordingly. The fair value of the convertible debt
was calculated using the present value of the debt and related
interest at 12% incremental borrowing rate as the discount rate.
The warrants were valued using the Black Scholes Option Pricing
Model (Note 7).
F-10
The
carrying value of beneficial conversion features not considered to
be derivative instruments was determined by allocating $41,961 for
the intrinsic value of the conversion features from the remaining
proceeds allocated to the convertible debt after conducting the
amount allocated to the warrants. As such, there were no remaining
proceeds available for allocating to the liability portion of the
convertible debt. As at March 31, 2020, the carrying value of this
convertible debt was $45,106 (December 31, 2019 - $Nil) net of
$74,894 unamortized discounts.
(c)
On March 25, 2021,
the Company entered into a securities purchase agreement with a
non-related party. Pursuant to this agreement, the Company issued a
convertible debt in the principal amount of $120,000 at $110,000
with $10,000 original issue discount. In connection with this note,
the Company paid an additional $13,250 in cash transactions, issued
88,000 common shares valued at $22,000 in transaction costs, and
issued 1,100,000 warrants exercisable at $0.25 per share, expiring
on March 25, 2023. The warrants were calculated to have a relative
fair value of $74,026, which was reduced by the equity components
of the transaction costs of $32,106, leaving a value of $41,920 as
at March 31, 2021. This convertible debt is unsecured, bears
interest at 8% per annum compounded on the basis of a 365-day year
and actual days lapsed, is convertible at $0.10 per 1 common share,
and matures in nine months on December 25, 2021.
The
proceeds were allocated between the convertible debt and warrants
on a relative fair value basis, and the issuance costs were
proportioned accordingly. The fair value of the convertible debt
was calculated using the present value of the debt and related
interest at 12% incremental borrowing rate as the discount rate.
The warrants were valued using the Black Scholes Option Pricing
Model (Note 7).
The
carrying value of beneficial conversion features not considered to
be derivative instruments was determined by allocating $42,492 for
the intrinsic value of the conversion features from the remaining
proceeds allocated to the convertible debt after conducting the
amount allocated to the warrants. As such, there were no remaining
proceeds available for allocating to the liability portion of the
convertible debt. As at March 31, 2020, the carrying value of this
convertible debt was $7,903 (December 31, 2019 - $Nil) net of
$112,097 unamortized discounts.
NOTE 9 – COMMITMENTS AND CONTINGENCIES
The
Company leases its corporate office located at 8565 S. Eastern Ave.
#150, Las Vegas, Nevada. The initial lease term is for 12 months
commencing on September 8, 2019 after which the term is on a
month-to-month basis. After the initial term, the Company may
cancel the lease agreement at any time by providing 30 days written
notice. The Company has elected the short-term lease practical
expedient of 12 months and has not recorded a lease.
NOTE 10 – INCOME TAXES
As of
March 31, 2021, the Company was in a loss position; therefore, no
deferred tax liability was recognized related to the undistributed
earnings subject to withholding tax.
Net
operating loss carry forward of the Company, amounted to $473,478
for the nine month period ended March 31, 2021 (March 31 2020 -
$37,086). The net operating loss carry forwards are available to be
utilized against future taxable income for years through calendar
year 2041. In assessing the reliability of deferred income tax
assets, management considers whether it is more likely than not
that some portion or all of the deferred income tax assets will not
be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible.
Management considers the scheduled projected future taxable income,
and tax planning strategies in making this assessment.
F-11
Item 2. Management’s Discussion and
Analysis of Financial Condition and Results of
Operations.
The following discussion and analysis of our financial condition
and results of operations should be read in conjunction with our
unaudited interim condensed financial statements and related notes
included in this Quarterly Report on Form 10-Q.
Overview
Tego Cyber, Inc. (the “Company”) was incorporated in
the State of Nevada on September 6, 2019. We are an
early-stage provider of advanced cyberthreat intelligence
applications for larger business enterprises. The Company has
developed a cyber threat intelligence application that integrates
with top end security platforms to gather, analyze, then
proactively identify threats to an enterprise network. The Tego
Threat Intelligence Platform (TTIP) takes in vetted and curated
threat data and after utilizing a proprietary process, the platform
compiles, analyzes, and then delivers that data to an enterprise
network in a format that is timely, informative, and relevant. The
threat data provides additional context including specific details
needed to identify and counteract threats so that security teams
can spend less time searching for disparate information. The first
version of the TTIP will integrate with the widely accepted SPLUNK
platform to provide real-time threat intelligence to macro
enterprises using the SPLUNK architecture. The Company plans on
developing future versions of the TTIP for integration with other
established SIEM systems and platforms including: Elastic, IBM
QRadar, AT&T AlienVault, Exabeam, and
LogRhythm.
Results of Operations for the three months ended March 31, 2021 and
March 31, 2020
The Company was incorporated on September 6, 2019 with a June
30 year-end, and therefore has
limited comparable history.
Revenues
We are in our development stage and only generated $900 of revenue
for the three months ended March 31, 2021 compared to $1,275
revenue for the comparable period ended March 31, 2020. The revenue
came from consulting services.
4
Operating Expenses
We incurred total operating expenses of $125,734 for the three
months ended March 31, 2021 compared to $12,511 operating expenses
for the comparable period ended March 31, 2020. All of these
expenses related to general and administrative
expenses.
Net Loss
We incurred a net loss from operations of $124,834 for the three
months ended March 31, 2021 compared to a net loss of $11,236 for
the comparable period ended March 31, 2020.
Results of Operations for the nine months ended March 31, 2021 and
March 31, 2020
The Company was incorporated on September 6, 2019 and has a June
30 year-end, and therefore has
limited comparable history.
Revenues
We are in our development stage and only generated $4,700 of
revenue for the nine months ended March 31, 2021 compared to $1,275
revenue for the comparable period ended March 31, 2020. The revenue
came from consulting services.
Operating Expenses
We incurred total operating expenses of $302,286 for the nine
months ended March 31, 2021 compared to $38,361 total operating
expenses for the comparable period ended March 31, 2020. All of
these expenses related to general and administrative
expenses.
Net Loss
We incurred a net operating loss of $297,587 for the nine months
ended March 31, 2021 compared to a net loss of $37,086 for the
comparable period ended March 31, 2020.
Liquidity and Capital Resources
As at March 31, 2021, the Company has a working capital deficit of
$13,645, has an accumulated deficit of $473,478 and has earned
limited revenue to cover its operating costs. We have $106,264 cash
on hand and our burn rate is approximately $50,000 per month.
Presently, our operations are being funded by funds previously
raised and we believe our currently available capital resources are
sufficient to sustain our operations for a minimum of two (2)
months. The Company intends to fund future operations through
equity financing arrangements. The ability of the Company to
realize its business plan is dependent upon, among other things,
obtaining additional financing to continue operations, and
development of its business plan. In response to these problems,
management intends to raise additional funds through public or
private placement offerings. These factors, among others, raise
substantial doubt about the Company’s ability to continue as
a going concern. The accompanying financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
Cash Flow from Operating Activities
For the nine months ended March 31, 2021, the net cash
provided by financing activities by the Company was $322,250. The
cash provided by financing activities is related to proceeds
received from the issuance of our common stock and proceeds from
convertible debts.
Cash Flow from Investing Activities
For the nine months ended March 31, 2021, the net cash used in
investing activities by the Company was $39,250.
5
Cash Flow from Financing Activities
For the nine months ended March 31, 2021, the net cash
provided by financing activities by the Company was $322,250. The
cash provided by financing activities is related to proceeds
received from the issuance of our common stock and proceeds from
convertible debts.
Going Concern
We have not attained profitable operations and are dependent upon
obtaining financing to pursue any extensive activities. For these
reasons, our auditors stated in their report on our unaudited
financial statements that they have substantial doubt that we will
be able to continue as a going concern without further
financing.
Contractual Obligations
We are a smaller reporting company as defined by Rule 12b-2 of the
Securities Exchange Act of 1934 and are not required to provide the
information under this item.
Future
Financings
We will continue to rely on equity sales of our common shares and
debt proceeds in order to continue to fund our business operations.
Issuances of additional shares will result in dilution to existing
stockholders. There is no assurance that we will achieve any
additional sales of the equity securities or arrange for debt or
other financing to fund our operations and other
activities.
Expected Purchase or Sale of Significant Equipment
We do not anticipate the purchase or sale of any significant
equipment, as such items are not required by us at this time or in
the next twelve months.
Off-Balance Sheet Arrangements
We have no significant 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 are material to stockholders.
Disagreements with Accountants on Accounting and Financial
Disclosure
In connection with the review of the financial statements of the
Company for the three months ended March 31, 2021, there were no
disagreements on any matter of accounting principles or practices,
financial statement disclosures, or scope or procedures, which
disagreements if not resolved to their satisfaction would have
caused them to make reference in connection with Harbourside
CPA’s opinion to the subject matter of the
disagreement.
In connection with the financial statements of the Company for the
three months ended March 31, 2021, there have been no reportable
events with the Company as set forth in Item 304(a)(1)(v) of
Regulation S-K.
Critical Accounting Policies
This summary of significant accounting policies is presented to
assist in understanding the financial statements. The financial
statements and notes are representations of the Company’s
management, who are responsible for their integrity and
objectivity. These accounting policies conform to US GAAP and have
been consistently applied in the preparation of the financial
statements.
6
Basis of Preparation
The accompanying financial statements have been prepared to present
the statements of financial position, the statements of operations
and comprehensive loss, statements of changes in
shareholders’ deficit and cash flows of the Company for the
three months ended March 31, 2021 and have been prepared in
accordance with US GAAP.
Use of Estimates
In
preparing the interim condensed financial statements in conformity
with US GAAP, management makes estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the dates of
the interim condensed financial statements, as well as the reported
amounts of revenues and expenses during the reporting periods.
Management makes these estimates using the best information
available at the time the estimates are made. However, actual
results could differ materially from those estimates. Significant
estimates made by management affecting the consolidated financial
statements include:
(i)
Discount rates used
for convertible debt
The
Company estimates the fair value of the convertible debt by
calculating the present value of the debt and related interest,
using a discounted rate equal to the incremental borrowing rate
that would be given for similar debt.
(ii)
Fair value of
warrants
Estimating the fair
value for warrants requires determining the most appropriate
valuation model which is dependent on the terms and conditions of
the grant. This estimate also requires determining the most
appropriate model including the expected life of the warrant,
volatility, dividend yield, and rate of forfeitures and making
assumptions about them.
(iii)
Recovery of
deferred tax assets
Valuation
allowances are provided for deferred tax assets if it is more
likely than not these items will either expire before the Company
is able to realize their benefits, or that future deductibility is
uncertain.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to
significant concentrations of credit risk consist principally of
cash and accounts receivable. During the three-month period ended
March 31, 2021, substantially all of the Company’s cash was
held by major financial institutions located in the United States,
which management believes are of high credit quality. With respect
to accounts receivable, the Company extended credit based on an
evaluation of the customer’s financial condition. The Company
generally did not require collateral for accounts receivable and
maintained an allowance for doubtful accounts of accounts
receivable if necessary.
Cash
Cash consists of cash held at major financial institutions and is
subject to insignificant risk of changes in value.
7
Receivables and Allowance for Doubtful Accounts
Trade accounts receivable are recorded at net realizable value and
do not bear interest. No allowance for doubtful accounts was made
during the three-month period ended March 31, 2021, based on
management’s best estimate of the amount of probable credit
losses in accounts receivable. The Company evaluates its allowance
for doubtful accounts based upon knowledge of its customers and
their compliance with credit terms. The evaluation process includes
a review of customers’ accounts on a regular basis. The
review process evaluates all account balances with amounts
outstanding for more than 60 days and other specific amounts for
which information obtained indicates that the balance may be
uncollectible. As of March 31, 2021, there was no allowance for
doubtful accounts and the Company does not have any
off-balance-sheet credit exposure related to its
customers.
Software
Software
is stated at cost less accumulated amortization and is depreciated
using the straight-line method over the estimated useful life of
the asset. The estimated useful life of the asset is 5 years and is
not depreciated until it is available for use by the
Company.
Fair Value of Financial Instruments
Accounting Standards Codification (“ASC”) 820
“Fair Value Measurements and Disclosures”, adopted
January 1, 2008, defines fair value, establishes a three-level
valuation hierarchy for disclosures of fair value measurement and
enhances disclosure requirements for fair value measures. The
Company’s financial instruments include cash, current
receivables and payables, convertible debts, and warrants.
These financial instruments are
measured at their respective fair values. The three levels are
defined as follows:
Level 1 - inputs to the valuation methodology are quoted prices for
identical assets or liabilities in active markets.
Level 2 - inputs to the valuation methodology include quoted prices
for similar assets and liabilities in active markets, and inputs
that are observable for the assets or liability, either directly or
indirectly, for substantially the full term of the financial
instruments.
Level 3 - inputs to the valuation methodology are unobservable and
significant to the fair value.
For cash, accounts receivables, subscription receivables, and
accounts payable and accrued liabilities, it is management’s
opinion that the carrying values are a reasonable estimate of fair
value because of the short period of time between the origination
of such instruments and their expected realization and if
applicable, their stated interest rate approximates current rates
available.
For
convertible debts, the carrying values, excluding any unamortized
discounts, approximate the respective fair value. The convertible
debts have been discounted to reflect their net present value as at
March 31, 2021.
Estimating
fair value for warrants require determining the most appropriate
valuation model which is dependent on the terms and conditions of
the grant. This estimate requires determining the most appropriate
inputs to the valuation model including the expected life of the
warrant, volatility, dividend yield, and rate of forfeitures and
making assumptions about them.
Management believes it is not practical to estimate the fair value
of related party receivables and payables because the transactions
cannot be assumed to have been consummated at arm’s length,
the terms are not deemed to be market terms, there are no quoted
values available for these instruments, and an independent
valuation would not be practical due to the lack of data regarding
similar instruments, if any, and the associated potential
costs.
Revenue Recognition
Accounting Standards Update (“ASU”) No. 2014-09,
Revenue from Contracts with Customers (“Topic 606”),
was adopted by the Company as of September 6, 2019. The
Company’s revenue recognition disclosure reflects its updated
accounting policies that are affected by this new standard. The
Company applied the “modified retrospective” transition
method for open contracts for the implementation of Topic 606. As
revenues are and have been primarily from consulting and management
services, and the Company has no significant post-delivery
obligations, this new standard did not result in a material
recognition of revenue on the Company’s accompanying
financial statements for the cumulative impact of applying this new
standard. The Company made no adjustments to its previously
reported total revenues, as those periods continue to be presented
in accordance with its historical accounting practices under Topic
605, Revenue Recognition.
8
Revenue from providing consulting and management services under
Topic 606 is recognized in a manner that reasonably reflects the
delivery of services to customers in return for expected
consideration and includes the following elements:
●
executed
contracts with the Company’s customers that it believes are
legally enforceable;
●
identification
of performance obligations in the respective contract;
●
determination
of the transaction price for each performance obligation in the
respective contract;
●
allocation
of the transaction price to each performance obligation;
and
●
recognition
of revenue only when the Company satisfies each performance
obligation.
These five elements as applied to the Company’s consulting
and management services results in revenue recorded as services are
provided.
Income Taxes
The Company uses the asset and liability method of accounting for
income taxes pursuant to ASC 740 “Income Taxes”. ASC
740 requires an asset and liability approach for financial
accounting and reporting for income taxes and allows recognition
and measurement of deferred tax assets based upon the likelihood of
realization of tax benefits in future years. Under the asset and
liability approach, deferred taxes are provided for the net tax
effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes. Valuation allowances are
provided for deferred tax assets if it is more likely than not
these items will either expire before the Company is able to
realize their benefits, or that future deductibility is uncertain.
The provision for income taxes represents current taxes payable net
of the change during the period in deferred tax assets and
liabilities.
Foreign Currency Translation
The Company’s functional and reporting currency is United
States dollars (“USD”). The Company maintains its
financial statements in the functional currency. Monetary assets
and liabilities denominated in currencies other than the functional
currency are translated into the functional currency at rates of
exchange prevailing at the balance sheet dates. Transactions
denominated in currencies other than the functional currency are
translated into the functional currency at the exchange rates
prevailing at the dates of the transaction. Exchange gains or
losses arising from foreign currency transactions are included in
the determination of net income (loss) for the respective
periods.
Earnings (Loss) per Share
Basic earnings (loss) per share are computed by dividing income
(loss) available to common shareholders by the weighted-average
number of common shares outstanding during the period. Diluted
earnings (loss) per share is computed similar to basic earnings
(loss) per share except that the denominator is increased to
include the number of additional common shares that would have been
outstanding if the potential common shares had been issued and if
the additional common shares were dilutive. If applicable, diluted
earnings (loss) per share assume the conversion, exercise or
issuance of all common stock instruments unless the effect is to
reduce a loss or increase earnings per share.
Recently Issued Accounting Pronouncements
Recent accounting pronouncements issued by the FASB (including its
Emerging Issues Task Force) did not or are not expected to have a
material impact on the Company's present or future financial
statements.
9
Effect of Covid-19 Outbreak on Business Operations
In December 2019, Covid-19 was first identified, and in March 2020,
the World Health Organization categorized Covid-19 as a
pandemic. The Covid-19
pandemic is affecting our customers, service providers and
employees, and the ultimate impacts of Covid-19 on our business,
results of operations, liquidity and prospects are not fully known
at this time. However, the Covid-19 outbreak has had a relatively
minimal impact on our business to date. We currently do not
anticipate any significant asset impairments resulting from the
Covid-19 pandemic. We believe that we have the resources
required to attain our growth objectives and to meet any unforeseen
difficulties resulting from the Covid-19 pandemic. However, we will
continue to closely monitor the Covid-19 pandemic and its impact on
our business in the coming months. There have been recent spikes in
Covid-19 cases, and some health experts have predicted that the
Covid-19 pandemic will worsen during the winter
months.
Item 3. Quantitative and Qualitative
Disclosures about Market Risk.
We are
a smaller reporting company as defined by Rule 12b-2 of the
Securities Exchange Act of 1934 and are not required to provide the
information under this item.
Item 4. Controls and
Procedures.
Evaluation of Disclosure Controls and Procedures
Disclosure
controls and procedures are controls and procedures that are
designed to ensure that information required to be disclosed in our
reports filed under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the
SEC's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that
information required to be disclosed by our company in the reports
that it files or submits under the Exchange Act is accumulated and
communicated to our management, including its principal executive
and principal financial officers, or persons performing similar
functions, as appropriate to allow timely decisions regarding
required disclosure. Our management carried out an evaluation
under the supervision and with the participation of our Principal
Executive Officer and Principal Financial Officer, of the
effectiveness of the design and operation of our disclosure
controls and procedures pursuant to Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934 ("Exchange
Act"). Based upon that evaluation, our Principal Executive Officer
and Principal Financial Officer have concluded that our disclosure
controls and procedures were not effective as of March 31,
2021.
Changes in Internal Control over Financial Reporting
There
have been no changes in our internal control over financial
reporting subsequent to the fiscal year ended June 30, 2020, which
were identified in connection with our management’s
evaluation required by paragraph (d) of rules 13a-15 and 15d-15
under the Exchange Act, that have materially affected, or are
reasonably likely to materially affect, our internal control over
financial reporting.
The
Company is not required by current SEC rules to include, and does
not include, an auditor's attestation report. The Company's
registered public accounting firm has not attested to Management's
reports on the Company's internal control over financial
reporting.
Limitations of the Effectiveness of Disclosure Controls and
Internal Controls
Our
management, including our Principal Executive Officer and Principal
Financial Officer, does not expect that our disclosure controls and
internal controls will prevent all error and all fraud. A control
system, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the
control system are met. Further, the design of a control system
must reflect the fact that there are resource constraints, and the
benefits of controls must be considered relative to their costs.
Because of inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within the Company
have been detected. These inherent limitations include the
realities that judgments in decision-making can be faulty, and that
breakdowns can occur because of a simple error or mistake.
Additionally, controls can be circumvented by the individual acts
of some persons, by collusion of two or more people, or by
management override of the control.
The
design of any system of controls is also 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 our stated
goals under all potential future conditions; over time, a control
may become inadequate because of changes in conditions, or the
degree of compliance with the policies or procedures may
deteriorate. Because of inherent limitations in a cost-effective
control system, misstatements due to error or fraud may occur and
not be detected.
10
PART II - OTHER INFORMATION
Item 1. Legal
Proceedings.
From
time to time, the Company may become subject to various legal
proceedings that are incidental to the ordinary conduct of its
business. Although the Company cannot accurately predict the amount
of any liability that may ultimately arise with respect to any of
these matters, it makes provision for potential liabilities when it
deems them probable and reasonably estimable. These provisions are
based on current information and legal advice and may be adjusted
from time to time according to developments.
We know
of no material, existing or pending legal proceedings against our
company, nor are we involved as a plaintiff in any material
proceeding or pending litigation. There are no proceedings in which
any of our directors, officers or affiliates, or any registered or
beneficial stockholder, is an adverse party or has a material
interest adverse to our interest.
Item 1A. Risk
Factors.
We are
a smaller reporting company as defined by Rule 12b-2 of the
Securities Exchange Act of 1934 and are not required to provide the
information under this item.
Item 2. Unregistered Sales of Equity
Securities and Use of Proceeds.
Unless otherwise indicated, all of the following sales or issuances
of Company securities were conducted under the exemption from
registration as provided under Section 4(2) of the Securities Act
of 1933 (and also qualified for exemption under 4(5), formerly 4(6)
of the Securities Act of 1933, except as noted below). All of the
shares issued were issued in transactions not involving a public
offering, are considered to be restricted stock as defined in Rule
144 promulgated under the Securities Act of 1933 and stock
certificates issued with respect thereto bear legends to that
effect.
During the period January 1, 2021 to March 31, 2021, the Company
completed various private placements whereby a total of 142,000
common shares were issued at a price of $0.25 per share for a total
value of $35,500. The Company also issued 188,000 common shares for
services valued at $47,000.
Item 3. Defaults Upon Senior
Securities.
None.
Item 4. Mine Safety
Disclosures.
Not
applicable.
Item 5. Other Information.
None.
11
Item 6. Exhibits.
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Exhibit
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|
|
|
|
|
Number
|
|
Description of Exhibit
|
|
|
|
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Articles
of Incorporation filed with the Nevada Secretary of State on
September 6, 2019
|
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Previously
filed with the SEC on September 21, 2020, as an exhibit to our S-1
Registration Statement
|
|
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Bylaws
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Previously
filed with the SEC on September 21, 2020 as an exhibit to our
S-1 Registration Statement.
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|
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Compilation
of Website or Software Development Agreement and Addendum between
Company and CISTCK dated June 4, 2020
|
|
Previously
filed with the SEC on October 27, 2020 as an exhibit to our
amendment to our S-1 Registration Statement.
|
|
|
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Compilation
of FirstFire Securities Purchase Agreement, Convertible Promissory
Note and Other Agreements
|
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Previously
filed with the SEC on December 31, 2020 as an exhibit to our Form
8-K.
|
|
|
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Compilation
of GS Capital Partner Securities Purchase Agreement, Convertible
Promissory Note and Other Agreements
|
|
Previously
filed with the SEC on March 30, 2021 as an exhibit to our Form
8-K.
|
|
|
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Certification
of the Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
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|
Filed
herewith.
|
|
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Certification
of the Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
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|
Filed
herewith.
|
|
|
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Certification
of the Chief Executive Officer and Chief Financial Officer pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
Filed
herewith.
|
|
|
|
|
|
|
|
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101.INS*
|
|
XBRL
Instance Document
|
|
Filed
herewith.
|
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101.SCH*
|
|
XBRL
Taxonomy Extension Schema Document
|
|
Filed
herewith.
|
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101.CAL*
|
|
XBRL
Taxonomy Extension Calculation Linkbase Document
|
|
Filed
herewith.
|
|
101.LAB*
|
|
XBRL
Taxonomy Extension Labels Linkbase Document
|
|
Filed
herewith.
|
|
101.PRE*
|
|
XBRL
Taxonomy Extension Presentation Linkbase Document
|
|
Filed
herewith.
|
|
101.DEF*
|
|
XBRL
Taxonomy Extension Definition Linkbase Document
|
|
Filed
herewith.
|
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*
|
Filed
herewith.
|
|
**
|
Furnished
herewith.
|
12
SIGNATURES
In
accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
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Tego Cyber Inc.
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Date:
May 17, 2021
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By:
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/s/
Shannon
Wilkinson
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Shannon
Wilkinson
|
|
|
|
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Chief
Executive Officer (Principal Executive Officer), and Chief
Financial Officer (Principal Financial and Principal Accounting
Officer)
|
|
13
EXHIBIT
31.01
CERTIFICATION OF
PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302(a) OF THE SARBANES-OXLEY ACT OF
2002
I,
Shannon Wilkinson, certify that:
1. I
have reviewed this Quarterly Report on Form 10-Q of the Registrant
for the period ended March 31, 2021;
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. As
the Registrant’s certifying officer, I am 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 (the
Registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the Registrant’s internal control over
financial reporting; and
5. As
the Registrant’s certifying officer, I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the Registrant 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.
|
|
Tego Cyber Inc.
|
||
|
|
|
||
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Date:
May 17, 2021
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By:
|
/s/
Shannon Wilkinson
|
|
|
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Name:
|
Shannon
Wilkinson
|
|
|
|
Title:
|
Chief
Executive Officer (Principal Executive Officer)
|
|
Exhibit
31.2
CERTIFICATION OF
PRINCIPAL ACCOUNTING OFFICER
PURSUANT TO SECTION 302(a) OF THE SARBANES-OXLEY ACT OF
2002
I,
Shannon Wilkinson, certify that:
1. I
have reviewed this Quarterly Report on Form 10-Q of the Registrant
for the period ended March 31, 2021;
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. As
the Registrant’s certifying officer, I am 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 (the
Registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the Registrant’s internal control over
financial reporting; and
5. As
the Registrant’s certifying officer, I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the Registrant 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.
|
|
Tego Cyber Inc.
|
||
|
Date:
May 17, 2021
|
By:
|
/s/ Shannon Wilkinson
|
|
|
|
Name:
Shannon Wilkinson
Title:
Chief Financial Officer (Principal Financial and Principal
Accounting Officer)
|
||
EXHIBIT 32.01
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Tego Cyber Inc.
(the “Company”) on Form
10-Q for the quarterly period ended March 31, 2021, as filed with
the Securities and Exchange Commission (the
“Report”), I, Shannon Wilkinson, the Chief
Executive Officer (Principal Executive Officer) and Chief Financial
Officer (Principal Financial and Accounting Officer), certify, pursuant to 18 U.S.C. §1350, as
added by §906 of the Sarbanes-Oxley Act of 2002,
that:
(1) The
Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended;
and
(2)
To my knowledge, the information
contained in the Report fairly presents, in all material respects,
the financial condition and results of operations of the Company as
of and for the period covered by the Report.
|
|
Tego Cyber Inc.
|
||
|
Date:
May 17, 2021
|
|
||
|
|
By:
|
/s/ Shannon Wilkinson
|
|
|
|
Name:
Shannon Wilkinson
Title:
Chief Executive Officer (Principal Executive Officer) and Chief
Financial Officer (Principal Financial and Principal Accounting
Officer)
|
||