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Cipherloc Reports Third Quarter Results, Advances Partnership Activities

SDCH | August 14, 2020

Cipherloc Reports Third Quarter Results, Advances Partnership Activities

ARLINGTON, VA / ACCESSWIRE / August 14, 2020 / Cipherloc Corporation (OTCQB:CLOK) (the "Company"), a developer of advanced encryption technology, announced financial and corporate results for the third quarter ended June 30, 2020.

"We continued to advance our strategic plan in the second quarter through an almost 47% reduction of operating expenses and development of our partnership initiatives," said Ryan Polk, Chief Financial Officer. "We anticipate further reductions in operating expenses during the September quarter of 2020, providing adequate financial resources for our revenue development efforts over the next twelve months."

Milton Mattox, the Chief Operating Officer, added, "We continue to make exciting progress with multiple technology partnerships and potential sales relationships through engineering and testing of our polymorphic encryption capabilities in a number applications. For example, we recently announced our progress with Arnouse Digital Devices, Corp (ADDC) pairing Cipherloc's data-in-motion encryption with ADDC's BioDigitalPC line of products in order to offload encryption processing and improve network performance. We are engaged in a number of additional projects, which we look forward to announcing as we achieve specific milestones."

Third Quarter 2020 Financial Results

Net revenues for the quarter ended June 30, 2020, were $8,750 as compared to $27,850 for the quarter ended June 30, 2019. Revenue reflects Cipherloc's status as a development stage data security solutions company. The Company is currently engaged in efforts intended to generate future revenue growth.

General and administrative expenses were $833,260 for the three months ended June 30, 2020 as compared to $947,309 for the three months ended June 30, 2019. General and Administrative expenses for the quarter ended June 30, 2020 included approximately $295,000 in severance and other restructuring costs. Selling and marketing expenses were $107,842 for the quarter ended June 30, 2020 as compared to $728,270 for the prior year quarter. Research and developments costs were $206,613 for the three months ended June 30, 2020 as compared to $478,108 for the three months ended June 30, 2019.

Total operating expenses declined 46.8 percent year-over-year, with additional reduction expected in the third quarter as part of Cipherloc's previously announced restructuring program. Cipherloc expects that its cash position will be sufficient to fund future operations for at least the next 12 months.

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

CIPHERLOC CORPORATION AND SUBSIDIARIES
BALANCE SHEETS
(UNAUDITED)

	June 30, 2020			September 30, 2019
ASSETS
Current assets
Cash	$	2,227,830		$	7,839,472
Prepaid expenses		26,578			121,371
Total current assets		3,525,177			7,760,843

Other assets		100,000			7,566
Operating lease ROU asset		321,502			-
Fixed assets, net		31,132			40,182
Total assets	$	2,707,042		$	8,008,591

LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities	$	676,785		$	650,681
Accrued compensation		40,000			142,293
Operating lease liability		116,943			-
Paycheck Protection Program loan		365,430			-
Deferred revenue		24,167			28,400
Total current liabilities		1,223,325			821,374

Operating lease liability - long-term portion		637,706			-
Total liabilities		1,861,031			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 June 30, 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 June 30, 2020 and September 30, 2019, respectively		407,925			407,925
Treasury stock, at cost 149,557 shares		(150,000	)		-
Additional paid-in capital		68,368,697			68,225,828
Accumulated deficit		(67,790,612	)		(61,456,536	)
Total stockholders' equity		846,010			7,187,217
Total liabilities and stockholders' equity	$	2,707,042		$	8,008,591

CIPHERLOC CORPORATION AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
(UNAUDITED)

	Three Months Ended						Nine Months Ended
	June 30,						June 30,
	2020			2019			2020			2019
Revenues	$	8,750		$	27,850		$	39,233		$	27,850
Cost of revenues		-			-			-			-
Gross profit		8,750			27,850			39,233			27,850

Operating expenses
General and administrative		833,260			947,309			4,114,084			1,986,090
Selling and marketing		107,842			728,270			695,245			1,377,045
Research and development		205,613			478,108			1,544,205			1,303,680
Total operating expenses		1,146,715			2,153,687			6,353,534			4,666,815
Operating loss		(1,137,965	)		(2,125,837	)		(6,314,301	)		(4,638,965	)

Other income (expense)
Loss on disposal of asset		(19,778	)		-			(19,778	)		-
Interest income		-			2,610			-			5,938
Net loss	$	(1,157,743	)	$	(2,123,227	)	$	(6,334,079	)	$	(4,633,207	)

Net loss per common share - basic and diluted	$	(0.03	)	$	(0.05	)	$	(0.16	)	$	(0.11	)

Weighted average common shares outstanding - basic and diluted		40,642,953			40,792,510			40,740,105			40,792,510