SideChannel, Inc 8-K, filed May 15, 2020
SideChannel, Inc. (SDCH)
About this 8-K
SideChannel, Inc filed this 8-K on May 15, 2020.
Items reported
- Item 2.02: Financial results
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 15, 2020
CipherLoc Corporation
(Exact name of registrant as specified in its charter)
| Texas | 000-28745 | 86-0837077 | ||
(State or other jurisdiction of incorporation or organization) |
(Commission File Number) |
IRS Employer Identification No.) |
825 Main St, Suite 100
Buda, TX 78610
(Address of principal executive offices)
Registrant’s telephone number, including area code: (512) 772-4245
(Former name or former address, if changed since last report)
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act: None.
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. [ ]
| Item 2.02 | Results of Operations and Financial Condition. |
On May 15, 2020, CipherLoc Corporation issued a press release announcing company highlights and financial results for the second quarter ended March 31, 2020. A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K.
The information disclosed under this Item 2.02, including Exhibit 99.1 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, except as expressly set forth in such filing.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits.
| Exhibit Number | Description | |
| 99.1 | Press Release dated May 15, 2020 |
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SIGNATURE
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 hereunto duly authorized.
Dated: May 15, 2020
| CIPHERLOC CORPORATION | ||
| By: | /s/ Ryan Polk | |
| Ryan Polk | ||
| Chief Financial Officer | ||
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Exhibit 99.1
Cipherloc Reports Second Quarter Results, Reduces Operating Expenses
Arlington, VA – May 15, 2020 – Cipherloc Corporation (OTCQB:CLOK) (the “Company”), a developer of advanced encryption technology, announced financial and corporate results for the second quarter ended March 31, 2020.
“While the first quarter generated significant progress on our broader strategic plan, the onset of the COVID-19 pandemic in the US during March caused Cipherloc to respond quickly with adjustments refocusing all development efforts on our commercial platform,” said Ryan Polk, Chief Financial Officer. “We completed the March 31, 2020 quarter with $3.5 million in cash, and believe the restructuring announced on March 31, 2020 will conserve cash sufficient to fund future operations for at least the next 12 months.”
Milton Mattox, the Chief Operating Officer, added, “We are focused on the engineering and development tasks needed to guide Cipherloc’s technology through the current phase of critical testing. We continue to engage with a number of companies in our sales pipeline and look forward to progressing through the process with them.”
Second Quarter 2020 Financial Results
Net revenues for the quarter ended March 31, 2020, were $11,733 as compared to $0 for the quarter ended March 31, 2019. Revenue reflects Cipherloc’s status as a development stage data security solutions company. The Company is currently engaged with a number of parties in its sales pipeline, with a goal of generating future revenue growth.
General and administrative expenses were $1.98 million for the three months ended March 31, 2020 as compared to $505,807 for the three months ended March 31, 2019. General and administrative expenses for the three months ended March 31, 2020 reflect an increase in legal expense of $650,000 as a result of pending litigation, an increase in impairment loss on the ROU assets of $447,025 and an increase in headcount related expenses of $230,000. Selling and marketing expenses were $331,359 for the quarter ended March 31, 2020 as compared to $434,800 for the quarter ended March 31, 2019, reflecting lower consultant fees of $297,000 offset by an increase in headcount related expenses of $161,000. Research and developments costs were $772,577 for the three months ended March 31, 2020 as compared to $479,677 for the three months ended March 31, 2019.
On March 31, 2020, the Company announced a restructuring and operating expense reduction program designed to significantly reduce operating expenses in the third quarter ending June 30, 2020, and onwards. As a result of the restructuring program, Cipherloc expects that its cash position will be sufficient to fund future operations for at least the next 12 months.
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At March 31, 2020, the Company had cash of $3.47 million. The Company received loan proceeds of $365,430 on April 22, 2020 pursuant to the “Paycheck Protection Program” created under Section 1102 of the Coronavirus Aid, Relief and Economic Security Act.
About Cipherloc Corporation (OTCQB: CLOK)
Cipherloc Corporation provides advanced technology and expertise to secure your data and safeguard your privacy with the speed you need today and the agility you’ll need tomorrow. Our patented polymorphic encryption technology provides a layer of security that is stronger, adaptable, and scalable across a variety of applications and systems. Learn more at www.quantanova.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All forward-looking statements are inherently uncertain as they are based on current expectations and assumptions concerning future events or future performance of the Company. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. In evaluating such statements, prospective investors should review carefully various risks and uncertainties identified in this release and matters set forth in the Company’s SEC filings. These risks and uncertainties could cause the Company’s actual results to differ materially from those indicated in the forward-looking statements.
Cipherloc Investor Contact:
Matt Kreps
Darrow Associates, Investor Relations
214-597-8200
mkreps@darrowir.com
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CIPHERLOC CORPORATION AND SUBSIDIARIES
BALANCE SHEETS
(UNAUDITED)
March 31, 2020 | September 30, 2019 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | $ | 3,469,849 | $ | 7,839,472 | ||||
| Prepaid expenses | 55,328 | 121,371 | ||||||
| Total current assets | 3,525,177 | 7,760,843 | ||||||
| Other assets | 109,796 | 7,566 | ||||||
| Operating lease ROU asset | 477,105 | — | ||||||
| Fixed assets, net | 56,853 | 40,182 | ||||||
| Total assets | $ | 4,168,931 | $ | 8,008,591 | ||||
| LIABILITIES & STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | 1,079,953 | $ | 650,681 | ||||
| Accrued compensation | 184,392 | 142,293 | ||||||
| Operating lease liability | 180,889 | — | ||||||
| Deferred revenue | 22,917 | 28,400 | ||||||
| Total current liabilities | 1,468,151 | 821,374 | ||||||
| Operating lease liability – long-term portion | 749,051 | — | ||||||
| Total liabilities | 2,217,202 | 821,374 | ||||||
| Commitments and contingencies | ||||||||
| Series A convertible preferred stock, $0.01 par value, 1,000,000 shares authorized; 1,000,000 shares issued and outstanding as of March 31, 2020 and September 30, 2019 | 10,000 | 10,000 | ||||||
| Common stock, $0.01 par value, 681,000,000 shares authorized; 40,642,953 and 40,792,510 shares issued and outstanding as of March 31, 2020 and September 30, 2019, respectively | 407,925 | 407,925 | ||||||
| Treasury stock, at cost 149,557 shares | (150,000 | ) | — | |||||
| Additional paid-in capital | 68,316,673 | 68,225,828 | ||||||
| Accumulated deficit | (66,632,869 | ) | (61,456,536 | ) | ||||
| Total stockholders’ equity | 1,951,729 | 7,187,217 | ||||||
| Total liabilities and stockholders’ equity | $ | 4,168,931 | $ | 8,008,591 | ||||
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CIPHERLOC CORPORATION AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
(UNAUDITED)
| Three Months Ended | Six Months Ended | |||||||||||||||
| March 31, | March 31, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Revenues | $ | 11,733 | $ | — | $ | 30,483 | $ | — | ||||||||
| Cost of revenues | — | — | — | — | ||||||||||||
| Gross profit | 11,733 | — | 30,483 | — | ||||||||||||
| Operating expenses | ||||||||||||||||
| General and administrative | 1,976,044 | 505,807 | 3,280,824 | 1,038,781 | ||||||||||||
| Selling and marketing | 331,359 | 434,800 | 587,403 | 648,775 | ||||||||||||
| Research and development | 772,577 | 479,677 | 1,338,592 | 825,572 | ||||||||||||
| Total operating expenses | 3,079,980 | 1,420,284 | 5,206,819 | 2,513,128 | ||||||||||||
| Operating loss | (3,068,247 | ) | (1,420,284 | ) | (5,176,336 | ) | (2,513,128 | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Interest income | — | 2,431 | — | 3,328 | ||||||||||||
| Net loss | $ | (3,068,247 | ) | $ | (1,417,853 | ) | $ | (5,176,336 | ) | $ | (2,509,800 | ) | ||||
| Net loss per common share – basic and diluted | $ | (0.08 | ) | $ | (0.03 | ) | $ | (0.13 | ) | $ | (0.06 | ) | ||||
| Weighted average common shares outstanding – basic and diluted | 40,784,299 | 40,786,279 | 40,788,427 | 40,774,152 | ||||||||||||
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