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MDLG, why don't you send this to Milton in marketing and provide everyone another update?
Exhibit 1.1
Yes, things never come to fruition. The pattern of press releases and "leaked information" parallels a company that has a better chance of being on American Greed than NASDAQ or NYSE. Why? Because quote from tedpeele: "Based on the history of many things that never came to fruition".
So what are the main takeaways from everything we've seen thus far?
1) Paulson Inv has been successful in raising $18mil in exchange for a nice commission 12% + warrants?
2) CEO compensation is not tied to sales, and is completely out of control, so STOP GIVING HIM $$!!
3) CEO has repeatedly made poor mgmt decisions and does not and cannot exercise prudent fiscal control
4) The most significant and factual PR's have been about raising investor dollars. Older investors continue to be undercut and minimized. Since GAWK, there have been NO PR'S HAVE LED TO REVENUE.
5) Every potential "customer" that has been thrown around on the CLOK board has decided to do without CLOK. Why? Probably no trust in the CEO, hence, no trust in technology. How can I say that? See #3 and #4 above.
Negative? Yes. Truthful and spot on? ABSOLUTELY
Dismal Financial Performance by CLOK "CEO"
From 1/1/15 until 6/30/18, Cipherloc has expensed:
$2.644 million on R&D (it doesn't look like there are any assets on the books)
$18.748 million on Sales and G&A, most of which went to "CEO"
$6.606 million of the above was paid out in cash (the biggest recipient of cash being "CEO") and the balance was paid out in stock (most of the stock went to "CEO")
Source: https://www.otcmarkets.com/stock/CLOK/financials
When one asks, "Show me the money", please refer them to this post.
No hardware product. There's no CLOK spaceship either.
Why? Because if there was, there would be press releases, website information, and verbage in the financials....oh, and more than likely, descriptions, illustrations or diagrams of some sort.
If it was technically viable, financial statement presentation would be different, press releases would be available. Keep in mind, CLOK is a publicly traded company.
Other reasons why there is no hardware product??
There are no sales.
No pictures.
No prototype.
And no crypto wallet. Oh, and no working google play app.
CLOK puts press releases out when they hire a sales guy, or when they do a stock promo video, or when they "attend" a conference or get "invited" to a conference. CLOK put out a press release about an office lease in Arizona. CLOK will put a press release out detailing an agreement for anything. Why? Because when significant, CLOK is REQUIRED to disclose this information.
Not true. There is no CLOK-developed hardware product.
Cipherloc does not have revenue! Negative EPS will only get more negative!
Let me repeat it: Cipherloc does not have revenue. There are no revenue contracts. What is the value of a common share of a company that has no revenue and spends like CLOK??
There is only one call to make. Toll free SEC Hotline phone number (833) SEC-OIG1 (732-6441)
$0. No Revenue. GAWK revenue recognition has ended.
There are no paying contracts, nothing in the pipeline, nada. At their current burn rate, CLOK will need more money in less than 2 years. It really doesn't have to be this way.
The GAWK revenue was from money received in 2014. MDLG spent that money a long time ago. As stated in the past, the only other revenue has been from the Google Play Store. Maybe $20 bucks? As funny as this sounds, that's all that has been generated in over 3 years.
I agree with you, Black-Ops, I'm not one for the smoke and nonsense. CLOK's poor performance has everything to do with poor leadership, lack of fiduciary responsibilities, and extremely poor executive management.
I'm sure I come across as a negative forum participant, but I'm only stating the truth. Pretty much everything that MDLG claims is inaccurate. If CLOK can make $$'s with DP, more power to them. After researching DP, I really don't see how CLOK can fulfill anything without allocating a ton into hardware R&D. CLOK claims to be a software company, yet can't seem to sell software. MDLG claims to be an experienced software executive, yet he barely has limited software knowledge, and his work experience suggests short tenures with companies that were sued multiple times and are now defunct.
Auditors will "bless" the 10-Q after all questions are responded to in a sufficient manner. They do not want the company to distribute any financials without responding to all auditor questions and concerns.
Did the auditors sign off on this 10-Q?
I would expect an amended 10-Q to be filed. I question the quality and lack of detail throughout, especially in Litigation, Subsequent Events, and Related-Party Transactions.
Search this forum and MDLG mentions 5 international patents, and several US patents, but now he states that as of July 15, 2018 (obviously holding this press release until disclosing this 10-Q!) Cipherloc has its second patent. What's the patent #? Let's look this up and see how this really compares to an OTP. What are you trying to hide?
Let's see, convert preferred to common, sketchy office lease in Arizona, Pie in the Sky deals that don't turn into revenue, lawsuits alleging fraud and misrepresentation...the truth is about to come out. No doubt about it.
I strongly advocate for all CLOK investors and followers to question everything stated by MDLG. MDLG'S HISTORY OF UNFINISHED PRODUCTS, LAWSUITS, NON-DELIVERY OF SOFTWARE, STOCK, AND PROMISES IS INDICATIVE OF PRESENT AND FUTURE ACTIONS. EVEN THOUGH HE STATES OTHERWISE, HE DOESN'T HAVE ANY PRACTICAL EXPERIENCE IN THE SOFTWARE INDUSTRY.
You left off - Intentional illegal acts...are not covered...
From your wiki definition:
Such coverage can extend to defense costs arising out of criminal and regulatory investigations/trials as well; in fact, often civil and criminal actions are brought against directors/officers simultaneously. Intentional illegal acts, however, are typically not covered under D&O policies.
And the coverage may only extend to defense costs, not from civil damages.
Either way, we can discuss in more detail as we go through the lawsuits.
;)
That's not true. E&O doesn't cover:
Intentional wrongdoing or harm.
Illegal acts.
General liabilities.
Employee injuries.
Employee lawsuits.
Property damage.
and D&O doesn't cover:
Known claims and circumstances
Fraudulent and dishonest conduct
Risks covered by other classes of insurance
Insured parties suing each other
Litigation against the company entity
Catastrophic events for the insurer
Claims the insurer is not permitted to cover
It is spot on. No revenues, no nothing.
This stock is easy to manipulate, especially knowing how easily stock and other compensation has been paid out by the current CEO.
But there is still no rational reason that supports a "real" increase in stock price. As mentioned in the prior post, I "hope" that investors get their retirement money out. It really doesn't matter to me that an honest CLOK investor makes money or loses money from buying or selling CLOK, whether long or short in their position.
My issues are about how the company is being run. I don't like to see untruths posted on iHub about CLOK. I offer counterpoints to a lot of the posts that I read that either don't make sense or lack support. And I provide tangible support for my positions taken.
My view is negative because the facts are negative. I hope that things turn out to be legit down the road, but based on what I've seen and researched, it won't happen until CLOK gets better leadership and starts making better business decisions.
Sudden increase in stock price similar to Pump&Dump.
This is on-topic and very applicable to CLOK. Characteristics shown in red are very applicable to Cipherloc. See truncated article below.
From https://geoinvesting.com/signs-of-pump-and-dump-stocks/:
Pump and Dump stocks....are speculative companies whose stock prices are generally getting pumped. Pump and Dump stocks often revolve around hyped stories that might attain a cult following. These companies may look appealing on the surface yet may still be subject to substantial doubt.
Common Characteristics Of Pump And Dump Stocks
1) Recently completed Reverse Take Overs (RTO) can lead to pump and dump findings;
2) Flat liners. Flat historical price charts that just broke out or look like are about to break out to an uptrend can signal a pump and dump. This is very important and possibly the biggest clue that a pump and dump is forming;
3) Increased press release flow is often seen with a pump and dump;
4) Public announcement that the company has just embarked on an IR campaign;
5) Knowledge of mass email alerts by pump and dump outfits;
6) Unimpressive websites or ones that say coming soon and never materialize can often be associated with a pump and dump;
7) Over 50 million (preferably over 100 million) shares outstanding. This is a shoe in for a pump and dump due to ample liquidity. However, we still should not ignore smaller share counts. We just have to realize that less liquid a stock may be, the riskier the trade. Keep in mind that at some point the share counts will increase as dilution almost always settles in either from new capital infusions or from existing convertible securities;
8) Stocks with “sexy” stories or names are shoe-ins for pump and dumps;
9) Of course, no revenues—Development stage companies may be at times synonymous with pump and dumps;
10) Exaggerations of relationships and too good to be true revenue and contract announcements;
11) If a company is associated with the usual suspects of individuals and management teams known for being part of past pump and dumps, the higher the propensity for the stock to qualify as one (de la Garza's work history is plagued with lawsuits and questionable transactions)
The CEO has continually made false claims.
December 7, 2015 Michael de la Garza, Cipherloc CEO speaks with Stock Legends
https://ih.advfn.com/videos/stock-research/stock-legends-cipherloc-interview_kYUKRJjGxxw
Fast forward to 13:00. Michael de la Garza states that Cipherloc is doing a proof of concept with a 1) data center in Southern California. What was the company and why was there no proof of concept, no customers, no revenue? 2) De la Garza mentions another pilot program with a Florida company that has the Port of Miami as a customer, and that Cipherloc is providing a data in motion product. Was this company real, and if so, what happened? What was the data in motion product that was provided? 3) International Bank in New York City - De La Garza claims that there will be a "domino effect" once they get a proof of concept and other banks follow the technology. As of today, there are no customers, no banks interested in Cipherloc, no domino effect, and no revenues.
Later in the discussion, de la Garza claims that they are working with a tech company in Texas to move the technology to microchips, and another company/reseller in Florida that works with insurance companies and government. Again, were these "real" deals, blown deals, or imaginary deals?
And that's just one 28 minute interview with Michael de la Garza. I'm sure that many people on this forum have been provided with all kinds of information which is just as speculative. Can anyone share some Cipherloc operational news, products or projections that are actually true?
**08/07/2018 All Motions Hearing (9:00 AM) (Judicial Officer Henry, William R)**
With regard to today's bump in stock price, keep in mind that:
Past Private Placement Investors from 2015-2017 are at 0% return. And current PP investors can't sell right now.
So, the active traders must be: 1) past lawsuit settlement recipients (MS doctor group) 2) Stock Legends, other random marketers, and attorneys who were paid stock as compensation 3) current and past contractor and employees 4) "sales reps" who have been paid stock, yet have NOT produced any sales 5) other stockholders who probably the stock at or less than $2 and want out.
The buyers? I'm not sure. Maybe tax loss harvesters??? :)
No rational support for an increase in stock price.
In the prior PP, the company raised $5 million before broker commissions, the CEO took the majority of net proceeds, and the rest was blown through rather quickly with nothing to show in sales or positive increases to assets or equity.
In the current PP, the company sold 17+ million shares of CLOK at $1.00 per share, paid 12.5% cash commissions to Paulson (per 8-K) plus a ten-year warrant to purchase up to 5% of the offering at $1.20 per share. So, what will this do to stock price? Well, with everything else staying the same (ceteris paribus) continual downward pressure on the stock price.
I "hope" that something happens to stop current leadership from draining the bank account.
I "hope" that those of you who have invested your retirement into CLOK will get most of it out.
I "hope" that people are held accountable for their actions.
Wrong conclusion. Again. Increased fundraising effort.
Private Placement(PP) was increased from $15 million to $17.25 million.
I hope all of the investors are properly informed of critical company happenings.
If not, well, there may be some happy faces turning upside down.
#pleasereadfilingsallthewaythrough
#orraiseyourhandforhelp - LMAO!
The lawsuit is very serious and will be heard on 8/7.
I'm sure that many Cipherloc investors will change their opinion after 8/7.
Sorry to be the bearer of bad news...
Cipherloc Legal Proceedings. Disclosure in 10-Q anticipated.
08/07/2018 All Motions Hearing (9:00 AM)
In my opinion, I would expect significant damages/settlement awarded to plaintiff and many more lawsuits to follow.
Register of Actions
Case No. 18-0005
ROBERT LEBLANC V. MICHAEL DE LA GARZA AND CIPHERLOC CORPORATION
§
§
§
§
Case Type: Other Civil Cases - District
Date Filed: 12/29/2017
Location: 207th District Court
Party Information
Defendant CipherLoc Corporation
c/o Registered Agent, Michael De La Garza
825 Main Street, Suite 100
Buda, TX 78610
Defendant De La Garza, Michael
Plaintiff LeBlanc, Robert
06/21/2018 Motion To Set, 7.25.18 @ 9:00 a.m.
07/19/2018 Plaintiff's Response
07/23/2018 Notice of Filing-Discovery
07/24/2018 Answer, Defendants' Reply
07/25/2018 Motion To Dismiss (9:00 AM)
08/07/2018 All Motions Hearing (9:00 AM)
NO need-past decisions by Besser speak volumes.
He lost almost $3 million in a very short amount of time.
If you feel good following someone who blew that amount of jack in that short of a time, more power to you. For me, I’d rather model my investment behavior on someone or something that is more aligned with making money.
Tax harvesting would be more applicable for a rather long hold, not a short term 13G. Would hate to see Besser make the same mistake with CLOK.
Besser lost almost $3million with CCTC!
Seriously, a 13G investor who invests $3.6million and gets back $850k is not a good reference to use in why one should invest in Cipherloc. Or at least that wouldn't be a sound reason to buy CLOK stock.
Facts will lead you to the truth. Everything else will make you dizzy. #homework #imbeingserious
James E. Besser lost $2.8 million in a recent 13G holding.
So, if you choose to follow 13G investors who invest $3.6million and get back $850k, then I have to say that I don't understand your investment methodology!
Good luck to all in your decision to buy or sell! More facts to follow!!
And less than 2 weeks to go until the hearing in Hays County!!!
Why not just post factual information??
The CLOK message board would be more useful to followers if the information didn't have to be fact-checked.
It would be nice if CLOK common shares o/s, preferred shares o/s, shareholders of record, float, warrants were current as of the last quarter.
The truth needs to be told. Wouldn't you agree?
It's not that difficult to confirm my statements, you just have to be willing to take the time to go to the source and search.
Just for kicks n giggles, I'll provide an example:
Inaccurate statement: "CipherLoc Corporation is a Technology and Services based Solutions Company for the rapidly expanding Cloud based Cyber Security industry that grows through a combination of acquisitions and organic growth and is successful in doing so. CipherLoc is based in Henderson, Nevada with satellite offices in Houston, Texas and Phoenix, Arizona. It was founded in 2006 as Cloud Medical Doctor Software Corporation and underwent a name change to CipherLoc Corporation in September 2014."
from Cipherloc's 3/31/18 10-Q:
NOTE 1 - DESCRIPTION OF BUSINESS
Cipherloc Corporation (the “Company”) was incorporated in Texas on June 22, 1953 as American Mortgage Company. On March 15, 2015, the Company changed its name to Cipherloc Corporation. The name change became effective by the Amended Certificate as of March 23, 2015.
Cipherloc is a data security solutions company. Our highly innovative, polymorphic encryption technology is designed to enable an iron-clad layer of protection to be added to existing solutions.
* It used to be called National Scientific Corporation, and traded as NSCT, but I'm sure that anyone can search this message board and see all of the history if interested.
The support of the inaccuracies in the Cipherloc business description on this forum come from one or more of the following:
-Required financials and disclosures in 10-Q's, 10-K's, 8-K's, etc
-Secretary of State filings in Nevada and Texas
-Press releases by Cipherloc
-Cipherloc website
-Patent search
Lots of inaccurate information on this forum. For example, everything in red is inaccurate, except for what is underlined.
Business Description:
CipherLoc Corporation is a Technology and Services based Solutions Company for the rapidly expanding Cloud based Cyber Security industry that grows through a combination of acquisitions and organic growth and is successful in doing so. CipherLoc is based in Henderson, Nevada with satellite offices in Houston, Texas and Phoenix, Arizona. It was founded in 2006 as Cloud Medical Doctor Software Corporation and underwent a name change to CipherLoc Corporation in September 2014. As a result of its reverse merger into the then valueless National Scientific Corporation in late 2010, CipherLoc has become a publicly traded company (OTCQB-CLOK). Senior Management has achieved this primarily through prudent use of its own internal funds to return the company to a full reporting status as of March, 2014. CipherLoc has fully audited financials and publicly available information that is easily accessible on our website at www.CipherLoc.net.
CipherLoc is poised to become a leader in the ultra-sophisticated electronic digital security industry. The company has introduced an innovative and revolutionary new type of encryption technology and has five international patents and two US patents pending and is the industry's first Polymorphic Cipher Engine, called CipherLoc. It is the first secure commercially viable advanced Polymorphic Key Progression Algorithmic Cipher Engine (PKPA). This morphing cipher can be used (but is not being used) in any commercial data security industry and/or in sensitive applications: Banks, Financial transactions, Credit Cards, Securities, Stock and Bonds transactions, Emails, Phones, tablets, Servers and or computers, etc...
Disillusioned is probably more appropriate.
Facts will follow. Stay tuned.
Nice ad hominem fallacy, by the way.
Argumentum ad Ignorantiam. Appeal to Ignorance fallacy.
Don't worry,
"res ipsa loquitur"...the thing speaks for itself.
Cipherloc & Michael De La Garza lawsuit:
Set for 7.25.18 @ 9:00 a.m.
Register of Actions
Case No. 18-0005
ROBERT LEBLANC V. MICHAEL DE LA GARZA AND CIPHERLOC CORPORATION
Case Type: Other Civil Cases - District
Date Filed: 12/29/2017
Location: 207th District Court
Party Information
Lead Attorneys
Defendant CipherLoc Corporation
c/o Registered Agent, Michael De La Garza
825 Main Street, Suite 100
Buda, TX 78610
Defendant De La Garza, Michael
320 Lynden Loop
Driftwood, TX 78619
Plaintiff LeBlanc, Robert Donald R Taylor
Retained
(512) 473-2257(W)
Events & Orders of the Court
OTHER EVENTS AND HEARINGS
12/29/2017 Court's Docket Sheet
12/29/2017 Plaintiffs Original Petition (Open Case)
and Jury Demand
12/29/2017 Civil Case Information Sheet (TRCP 78a)
01/02/2018 Request for Issuance of Process
01/02/2018 Request for Issuance of Process
01/03/2018
Citation
De La Garza, Michael
Served 01/10/2018
Returned 02/06/2018
CipherLoc Corporation
Served 01/10/2018
Returned 02/06/2018
02/06/2018 Affidavit of Service/Return Of Service
02/06/2018 Affidavit of Service/Return Of Service
02/14/2018 Original Answer
Defendant's Plea to the Jurisdiction, And in the Alternative Original Answer, Special Exceptions & Request for Disclosure
04/02/2018 Motion To Set
June 12, 2018 @ 9am
06/05/2018 Notice Appearance Of Counsel
Charles Soechting for Plaintiff
06/12/2018 CANCELED Final Hearing (9:00 AM) (Judicial Officer Henry, William R)
Other
06/21/2018 Motion To Set
Set for 7.25.18 @ 9:00 a.m.
http://public.co.hays.tx.us/CaseDetail.aspx?CaseID=13032595
2 year anniversary since these unfulfilled dreams and misstatements:
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=123656963
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=123681959
Spot on here...
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=123637866
Two years later, same old sad news:
Chili Palmer Thursday, 06/30/16 07:43:28 AM
Re: clok-em-dead post# 14779
Post # 14782 of 16571
NO SALES, NO REVENUES AND NO CLIENTS.
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=123619001
CLOK CEO Comp is Grossly Excessive
Point made. Not just excessive. Ridiculously excessive.
$0 sales. $13.9 cash and stock compensation.
CEO Comp totals $13.9 million 2015-2017
Fiscal year 2015, CLOK raised $940k, CEO took $730k + $10.7mil stock
Fiscal year 2016, CLOK raised $1.45 million, CEO took $400k
Fiscal year 2017, CLOK raised $344k, CEO took $520k + $1.6mil stock
Source: 10-K, ITEM 11. EXECUTIVE COMPENSATION - Summary Compensation Table
My guess for 2018 is probably $500k to $1 million in cash
When the forum asks "Show me the Money", direct them to the 10-K's
I question: $0 sales, CEO Salary, CEO Performance
If Cipherloc gets a $100 sale, does it justify the current CEO compensation? What if it's a $500,000 sale? $5 million?
The answer is NO. It's not okay for a CEO to take this amount of compensation.
But hey, it's not my money. And keep in mind that close to $10 million (to be confirmed by 6/30 10-Q) in cash has probably been burned, it hasn't created a lick of income and there are no new assets from this money.
How much has CEO compensation totaled since 2015??
No contracts, no usage, just unsupported claims.
Cipherloc announced one contract (9/27/16) with GoSecured. https://cipherloc.net/cipherloc-debuts-to-make-encrypted-data-safe-again/
Was this even a real company????
There was one white paper released by Cipherloc that was basically a high-level overview of the difference between AES and Cipherloc. That's it.
And then, how can we forget about the Cipherloc Google Play app? It didn't work, less than 5 copies were sold, and it did nothing to prove that Cipherloc can protect data. Nothing.
Cipherloc is a publicly traded company. Facts are the only things that matter.
The truth hurts.
Cipherloc doesn't have a "proven" product. People don't understand Cipherloc because nobody is using or testing the product. There are no sales, only a couple of licensing agreements.
I agree that sales will help the company. But don't expect a front-loaded $5-10 million dollar contract. That's foolish thinking and it just won't happen.
I also find it impossible to believe that there have been any offers to buy the company. What would you value? The patent? Sorry to disappoint anyone, but the fact of the matter is Cipherloc has very little value (there should be cash in the bank, so there's the value).
I've heard the argument that "if this happens, or that happens, Cipherloc could be worth a lot of money", but that's not good investment analysis. The company is still in inception and burning through lots of cash.
Just my two cents.
Next month, next quarter, next year, something big is going to happen...
And CLOK's only sale is still in question.
CLOK investors must be mad and upset to know that so much of their hard earned money has gone into the pockets of a non-performing CEO, various brokers, and towards expensive convertible notes, non-performing sales reps, lawsuits pertaining to non-delivery of software, and other bad business decisions.
But yes, CLOK brokers are still able to find new investors.
"Caveat emptor"
What about sales?? Not sure what you're questioning.
...Add prior PPM and you're well over $14 million.
CLOK has not had a sale since 2014.
CLOK has raised over $12 million dollars since 2014...without a sale.
CLOK's CEO has been paid over $2 million dollars in cash, and
well over $22 million in stock compensation at current value.
Brokers have been paid close to $2 million dollars raising money for CLOK.
Over $2 million dollars in cash and stock (fair value) has been paid to pay-off investor lawsuits, compensate contract sales reps, and to pay for stock investment pieces (search CLOK on youtube).
The company's performance is extremely poor. Anyway you want to look at it, it's ridiculously poor. I would be surprised if an enforcement agency wouldn't consider CLOK to be acting as a shell.
These are all facts, supported by SEC enforced disclosures and financials.
See for yourself: https://www.otcmarkets.com/stock/CLOK/disclosure
It's not a contract. It's an agreement. $0 value.