Cipherloc Reports Second Quarter Results, Reduces Operating Expenses

CipherLoc Corporation

Companies Mentioned:

Primary Exchange: OTCQB
Under the Symbol: CLOK

Cipherloc Reports Second Quarter Results, Reduces Operating Expenses

Friday, May 15, 2020 4:04 PM

ARLINGTON, VA / ACCESSWIRE / 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.

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
[email protected]

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  
                 

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  
 
                               

SOURCE: Cipherloc Corporation 


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