| Summary of Significant Accounting Policies | Note
2 Summary of Significant Accounting Policies Basis
of presentation The
accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with United States generally
accepted accounting principles (“GAAP”) as determined by the Financial Accounting Standards Board (“FASB”) within
its Accounting Standards Codification (“ASC”) and under the rules and regulations of the SEC for interim financial information.
Accordingly, they do not include all of the information and footnotes required by GAAP for complete annual financial statements. In the
opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments, consisting only of
normal, recurring adjustments, that are necessary for the fair presentation of the Company’s balance sheet, results of operations
and statements of cash flows for the periods presented. The unaudited interim condensed consolidated financial statements are not necessarily
indicative of the results to be expected for the full year or any other period. These
unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements
and notes included in the Company’s 10-K filed with the SEC pursuant to Section 12(g) under the Securities Exchange Act of 1934,
on March 26, 2024. Principles
of consolidation These
accompanying unaudited interim condensed consolidated financial statements include the financial statements of STQN and its subsidiaries.
All significant intercompany transactions and balances between the Company and its subsidiaries are eliminated upon consolidation. Subsidiaries
are those entities in which the Company, directly or indirectly, controls more than one half of the voting power; or has the power to
govern the financial and operating policies, to appoint or remove a majority of the members of the board of directors, or to cast a majority
of votes at the meeting of directors. Use
of Estimates The
preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect certain
reported amounts and disclosures. The most significant accounting estimates inherent in the preparation of the Company’s financial
statements include calculations of the fair values of repledged borrowers’ digital asset collateral and the allowance for loan
losses. Actual results could differ from those estimates. Cash
and Cash Equivalents The
Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. The
Federal Deposit Insurance Corporation (“FDIC”) insures accounts up to $ 250,000 no Borrower
Collateral and Custody Assets The
Company requires loans to have certain collateral levels at origination and throughout the term of the loan. The loan agreement with
each borrower specifies that the borrower transfers and assigns to the Company the collateral together with all rights and interests
attached or accruing thereto (including without limitation accrued dividends and distributions declared, made or paid after the relevant
date of delivery). Borrowers deposit the collateral into a 3 rd not not When
a transfer of digital assets does not 310, Receivables 310” A
receivable is recorded to represent the obligation of the third-party lender to return the repledged collateral to the Company. A payable
is also recorded to represent the Company’s obligation to return the collateral back to the customer. The receivable and the liability
are recorded at fair value and marked to market on a quarterly basis. Allowance
for Loan Losses FASB
ASC 310, Receivables 310” 450 20, Contingencies Loss Contingencies
450” The
process for determining the amount of the allowance requires subjective and complex judgments about the future, including forecasts of
economic or market conditions that might impair the ability of borrowers to repay their loans. Changes in economic conditions affecting
borrowers, revisions to accounting rules and related guidance, new qualitative or quantitative information about existing loans, identification
of additional problem loans, changes in the size or composition of a company’s finance receivables and loan portfolio, changes
to a company’s loss estimation techniques including consideration of forecasted economic assumptions, and other factors, both within
and outside of control, may Revenue
recognition Borrower
Fee The
Company offers U.S. Dollar loans collateralized by digital assets to a broad range of customers and generates revenue from interest income
and fees earned on loans. Revenue derived from borrower fees on loans is outside the scope of ASC 606, Revenue from Contracts with
Customers 606” may Loan
administration services The
Company provides loan administration services to customers (see Note 9). The Company serves as a third party that acts as a liaison between
the lender and borrower of a loan. The Company has two performance obligations, which consist of a servicing part and a reporting part.
For servicing, the Company is generally responsible for processing loan payments, forwarding information to counterparties, responding
to inquiries, and managing banking and collateral accounts. Revenue is based on a fixed percentage of the loan principal and is recognized
at closing of a loan. For reporting, the Company is generally responsible for keeping records of a loan profile, and preparing drawdown,
disbursement, and amortization details on a monthly statement for customer’s review. Revenue is generally a fixed monthly charge
and recognized over the life of a loan until fully repaid. Income
Taxes The
Company follows Accounting Standards Codification subtopic 740, Income Taxes (“ASC 740”), which requires the Company to use
the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities
are recognized for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets
and liabilities at currently enacted tax rates. Under this accounting standard, the effect on deferred income taxes of a change in tax
rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if it is not more likely
than not that some portion, or all, of a deferred tax asset will be realized. ASC
740-10, Accounting for Uncertainty in Income Taxes, defines uncertainty in income taxes and the evaluation of a tax position as a two-step
process. The first step is to determine whether it is more likely than not that a tax position will be sustained upon examination, including
the resolution of any related appeals or litigation based on the technical merits of that tax position. The second step is to measure
a tax position that meets the more likely than not threshold to determine the amount of benefit to be recognized in the financial statements.
A tax position is measured at the largest amount of benefit that has a greater than 50 percent likelihood of being realized upon ultimate
settlement. Tax positions that previously failed to meet the more likely than not recognition threshold should be recognized in the first
subsequent period in which the threshold is met. The Company will continue to monitor its tax positions in the applicable jurisdictions
and adjust this liability accordingly. The Company has evaluated whether or not there are uncertain tax positions that require financial
statement recognition and has determined that no uncertain tax positions related to federal and state income taxes existed as of March
31, 2024 and December 31, 2023. Earnings
per Share Basic
net income (loss) per share is calculated based upon the weighted average number of shares of common stock outstanding during the relevant
period. Diluted net income (loss) per share is calculated based upon the weighted average number of shares of common stock outstanding
and dilutive securities (such as stock options, warrants and convertible debt) outstanding during the relevant period. Diluted securities
having an anti-dilutive effect on dilutive net income (loss) per share are excluded from the calculation. Recently
Issued Accounting Pronouncements The
Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting
pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequences of the change
to its financial statements and assures that there are proper controls in place to ascertain that the Company’s financial statements
properly reflect the change. In
June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (ASC 326): Measurement of Credit Losses on Financial
Instruments, that changes the impairment model for most financial assets and certain other instruments. For receivables, loans and other
instruments, entities will be required to use a new forward-looking “expected loss” model that generally will result in the
earlier recognition of the allowance for losses. In addition, an entity will have to disclose significantly more information about allowances
and credit quality indicators. The new standard was effective for the Company for fiscal years beginning after December 15, 2022. The
adoption of ASU 2019-12 did not have a significant effect on the Company’s financial statements. In
December 2019, the FASB issued ASU 2019-12, Income Taxes (ASC 740): Simplifying the Accounting for Income Taxes, which is part of the
FASB’s initiative to reduce complexity in accounting standards. The ASU eliminates certain exceptions to the general principles
of ASC 740, Income Taxes, and simplifies income tax accounting in several areas. The new standard was effective for the Company for fiscal
years beginning after December 15, 2021. The adoption of ASU 2019-12 did not have a significant effect on the Company’s financial
statements. |
