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Let’s not discount what we have……SideChannel is loaded with a bunch of talented individuals.
What is a CISO?
A chief information security officer, or CISO, is a senior-level executive responsible for an organization’s information and data security. CISOs need to have a solid understanding of IT infrastructure and the myriad of potential threats to technology systems. A CISO usually reports to the company’s chief executive officer (CEO), works closely with the chief information officer (CIO), and manages a team of IT and security employees.
CISOs may also be referred to as chief security architects, security managers, information security managers, and corporate security officers, depending on the company’s structure and existing titles.
Responsibilities of a CISO
The primary role of a CISO is to develop and implement an information security program, which includes policies and procedures to protect business communications, systems, and assets from both internal and external threats. CISOs must work with other executives in different departments to align security initiatives with larger business goals and objectives. A CISO’s job duties include:
Assessing the company’s information security and its vulnerabilities
Analyzing IT security threats in real-time and mitigating these threats
Planning, designing, and implementing an IT and network strategy for the company
Sourcing the necessary hardware and software to implement the IT strategy and negotiate contracts
Educating employees on best information security practices and policies
Ensuring that only authorized personnel have access to restricted data and systems
Staying ahead of emerging cyber security technologies, software, and trends
Determining the cause of internal and external data breaches and responding accordingly
Meeting and sharing information regularly with executives, board members, and company stakeholders
How to Become a Chief Information Security Officer
Becoming a chief information security officer isn’t a linear path. The CISO position is for seasoned IT professionals who have worked their way up from entry-level security positions, like security administrator, to intermediate roles, such as cyber security analyst. Ideally, a CISO has both strong technical and leadership skills. A CISO candidate should have the following qualifications:
A bachelor’s degree in computer science, information technology, or related field
At least seven to 10 years of professional experience in risk management, information security, or programming
IT security certifications and training, such as Certified Authorization Professional (CAP) and Certified Information Systems Security Professional (CISSP)
Knowledge of information security management frameworks, such as ISO/IEC 27001 and NIST
Excellent understanding of current legislation and regulations relevant to the company, as well as industry trends and developments
Top Skills For CISOs
The CISO role goes beyond expertise in information security and requires an advanced set of skills to succeed. The top CISO skills to develop, list on your resume, and describe during job interviews include:
Risk Management
A CISO needs to identify, manage, and prevent all of the security risks associated with employers, partners, vendors, IT tools, and processes. They must understand these risks and how to reduce or prevent them in the future.
Compliance
Compliance is another key focus area for CISOs. They are expected to keep up with changing industry regulations to ensure policies and data practices are compliant.
Technical Skills
CISOs need to be well-versed in managing complex IT architectures. Their technical skills include data and information management, identity management, mobile and remote device management, disaster recovery planning, network security and firewall management, and application and database security.
Communication
CISOs must collaborate with fellow executives, managers, developers, stakeholders, and investors to achieve their security goals. They should be able to communicate complex technical information effectively and give well-organized presentations.
Leadership
A company’s CISO has extensive managerial experience and knows how to train and guide technical teams. When a breach occurs, they should be able to give instructions on how to resolve the situation with confidence.
Critical Thinking
CISOs are quick-witted and resourceful, having the knowledge and skills to identify problems and find the best ways to solve them.
Cyber Security for Businesses in NJ & FL
Are you looking to enhance your organization’s cyber security and stay protected against the latest cyber attacks and data breaches? Mindcore provides leading cyber security solutions in New Jersey and Florida. Please schedule a consultation with us today to speak with one of our cyber security experts.
Dammed if you do Dammed if you don’t…….I can’t stop laughing……
Quote…..
Just reread Haugli’s employment agreement. CLOK is screwed!
If he hits sales goal, he wins. If he doesn’t, he still wins.
What does he have to lose??
I'd like to know the recurring contract structure of these contracts with the 60 plus customers. What do we make at onset and yearly. What are the cisos making and how are they paid? Hopefully straight commission. What is our expected yearly revenue projected for the next 10 years. Hopefully Brian will be more involved in keeping his shareholders apprised of these questions through regular conference calls. He seems very outgoing and enthusiastic about the future of SideChannel. Almost all of his shares are locked up and out of the float. He doesn't hit it big unless we hit it big. There is absolutely no negative in my opinion. The stock price won't go any lower....only higher from here.
Over 60 clients already.
Quote from Brian….
“Startups need CISOs. Investing in a CISO early on eliminates challenges surrounding the “human element” by providing an opportunity for startups to build a culture of security from the start, so cybersecurity grows alongside the organization.
This means making sure employees embrace a “security-first” mentality in all they do, ensuring employees – from the executive suite to the mailroom – understand how their decisions impact the company’s security posture, and implementing “security by design” controls and processes that adapt and grow with the business.
Ping me if you want to learn how and why our over 60 clients at SideChannel have taken this step to build security early.”
None of these past bad characters has anything to do with the current situation. Brian seems to be legitimate and the surrounding cast is a little bit of a who’s who instead of a what’s what. The additional board members are impressive. I’m gonna just sit here and watch this develop. I’m looking for a decent return on my long long investment here. I’ve averaged down to low pennies and expect this to move quite nicely from here. Lots of eyes on SideChannel. I’ve been looking at all of their relationships on their website. Looks exciting to me. This reverse merger was expensive, yes, but I see great potential. Tons of shares are locked up also. Nasdaq is a goal. Revenue stream is positive. Let’s not forget we have about 5 million in the bank also. Good luck to all of us.
Tmos was a whole different crew. Another bad show for sure. The power of deception.
Spot on. The hour of deception brought to you by Dr Albert Carlson with special guest , son number one. Guilty as hell.
Well Dr Albert Carlson is just as guilty as the criminal was. He help the criminal in every way possible all while trying to deceive friends and even his own family members. It’s disgusting what he did. I wish he was in jail next to the criminal.
I guess that’s a good question. But why would Al Carlson help the criminal. He had nothing to gain from it other than a modest salary. He had an algorithm that was eventually proven to be solid. I just don’t get it.
Sometimes I wish Al Carlson was here to tell all of the shareholders just when he realized he was hoodwinked by the criminal and also why he decided to try and cover the criminals illegal ways up. Al should be ashamed of himself. Al Carlson ruined his name by assisting the criminal.
It’s a shame that Al Carlson turned out to be such a disappointment.
https://www.linkedin.com/in/albert-carlson-89b70654/
Restricted 88 million
“We are moving ahead swiftly on the integration process to take advantage of opportunities in our fast-growing addressable markets, which are expected to reach $500 billion by 2030. “
“As a combined entity, we believe SideChannel is uniquely positioned to offer a centralized solution tailored to the needs of the middle market. Our clients can secure critical cybersecurity services and software from the industry's most experienced CISOs on a long-term basis in a manner that works for their budgets. Our immediate goal is to achieve $5.5 million in trailing 12-month revenue as contemplated in the purchase agreement, continue to scale our business to drive value for our stockholders and position the company for an uplisting to a national stock exchange.”
https://lnkd.in/gWzMZPna
I'm a shareholder and I'm excited as can be.
I wonder what happened to that POS Al Carlson, the Criminals right hand man. For someone with all the brains it turns out he had NO brains. Turns out he was a real turd. A real pos.
“””””Cipherloc's agreement to acquire SideChannel is subject to standard closing conditions including approval by FINRA. “”””
Cipherloc can provide no assurances that these closing conditions will be satisfied or that this acquisition will occur. If the closing conditions are met, then the current shareholders of SideChannel will receive 59,900,000 shares of Cipherloc common stock and 100 shares of Cipherloc convertible preferred stock that includes a board designation right. Each preferred stock share would convert into one share of common stock. The SideChannel shareholders would receive an additional 59,900,000 shares of Cipherloc common stock if SideChannel achieves a $5.5 million revenue milestone.
Current Report Filing (8-k)
Source: Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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): July 1, 2022
SideChannel, Inc.
(Exact name of registrant as specified in its charter)
Delaware 000-28745 86-0837077
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)
6836 Bee Cave Road, Bldg. 1, S#279, Austin, Texas 78746
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (512) 772-4245
Cipherloc Corporation
(Former name or former address, if changes since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
? 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))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities 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 2.01 Completion of Acquisition or Disposition of Assets.
On July 1, 2022 (the “Closing Date”), SideChannel, Inc. (formerly known as Cipherloc Corporation) (the “Company”) completed its acquisition of all of the equity securities of SideChannel, Inc. (“SideChannel”) in exchange for shares of the Company’s equity securities (the “Acquisition”) pursuant to that certain Equity Securities Purchase Agreement dated May 16, 2022 (the “Purchase Agreement”) by and among the Company, SideChannel, SideChannel’s stockholders (collectively, the “Sellers”) and Brian Haugli, as the Sellers’ representative as previously disclosed in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 18, 2022 (the “May 8-K”).
Pursuant to the Purchase Agreement, on the Closing Date, the Sellers exchanged all of their equity securities of SideChannel for 59,900,000 shares (the “First Tranche Shares”) of the Company’s common stock, $0.001 par value (the “Common Stock”), and 100 shares of the Company’s newly designated Series A Preferred Stock, $0.001 par value (the “Series A Preferred Stock”) (which was erroneously referred to as Series B Preferred Stock in the May 8-K). In addition, the Sellers may be entitled to receive up to an additional 59,900,000 shares (the “Second Tranche Shares” and together with the First Tranche Shares and the Series A Preferred Stock, the “Shares”) at such time that the operations of SideChannel, as a subsidiary of the Company, achieve at least $5.5 million in revenue (the “Milestone”) for any twelve month period occurring after the Closing Date and before the 48 month anniversary of the execution of the Purchase Agreement.
As of the Closing Date, the Sellers acquired approximately 40.4% of the Company’s outstanding Common Stock. If SideChannel achieves the Milestone and the Sellers are issued the Second Tranche Shares, assuming the number of shares outstanding prior to the issuance of the Second Tranche Shares being issued remains the same as on the Closing Date, the Sellers will hold a total of approximately 57.5% of the Company’s outstanding Common Stock. The number of the Second Tranche Shares may be reduced or increased, based upon whether SideChannel’s working capital as of the Closing Date is less than or more than zero. The number of the Second Tranche Shares may also be subject to adjustment based upon any successful indemnification claims made by the parties pursuant to the Purchase Agreement.
As previously disclosed in the May 8-K, the Shares are subject to a Lock-Up/Leak-Out Agreement pursuant to which, subject to certain exceptions, the Sellers may not directly or indirectly offer to sell, or otherwise transfer, any of the Shares for 24 months after the Closing Date without the prior written consent of the Company. Notwithstanding the foregoing, pursuant to the Lock-Up/Leak-Out Agreement, the Sellers may sell up to 20% of their shares of Common Stock beginning 12 months after the Closing Date, and the remaining 80% of their shares of Common Stock beginning 24 months after the Closing Date.
Item 3.02 Unregistered Sales of Equity Securities.
Reference is made to the disclosure under Item 2.01 above which is hereby incorporated in this Item 3.02 by reference.
On the Closing Date, the Company issued the First Tranche Shares and the Series A Preferred Stock to the Sellers pursuant to the terms of the Purchase Agreement. The First Tranche Shares and the Series A Preferred Stock have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state, and were offered and sold in reliance on the exemption from registration under the Securities Act, afforded by Section 4(a)(2) and/or Rule 506 promulgated thereunder.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Appointments and Resignations of Officers and Directors
Immediately prior to the Closing Date, the Company’s board of directors (“Board”) was comprised of four directors. In connection with the closing of the Acquisition each of David Chasteen and Sammy Davis resigned as members of the Company’s Board. Messrs. Chasteen’s and Davis’ resignations were not the result of any disagreement with the Company, any matter related to the Company’s operations, policies or practices, the Company’s management or the Board.
The Board elected each of Deborah MacConnel and Kevin Powers to serve as members of the Company’s Board effective immediately to fill the vacancies created on the Board by the resignations of David Chasteen and Sammy Davis. The newly appointed directors will serve until the Company’s next annual meeting of stockholders or until their successors are elected and qualified or until their earlier death, resignation or removal.
2
In addition, in connection with the closing of the Acquisition, effective as of the Closing Date, David Chasteen resigned from his position as President and Chief Executive Officer of the Company and Brian Haugli was appointed as President and Chief Executive Officer of the Company. Mr. Chasteen will remain with the Company as Executive Vice President of Sales and Marketing and will receive a one-time severance payment of $100,000 pursuant to the terms of his existing offer letter.
Set forth below are the biographical summaries of the newly appointed directors.
Deborah MacConnel
Ms. MacConnel has been involved in the computer industry for 34 years, retiring recently from International Business Machines Corporation (“IBM”) (NYSE: IBM) after 28 years. Prior to her retirement, Ms. MacConnel was instrumental in transforming information technology for IBM’s human resources function, which supported up to 450,000 employees. Ms. MacConnel’s team at IBM was also responsible for transforming the succession planning process for executive selection and promotion, along with enhancing the processes for mergers and acquisition management and talent acquisition. Ms. MacConnel has a Bachelor of Science degree in Business Administration from the University of Texas. The Company believes Ms. MacConnel is qualified to serve as a member of the Company’s Board because of her experience scaling global teams for technology companies.
Kevin Powers
Mr. Powers is the founder and director of the Master of Science in Cybersecurity Policy and Governance Programs at Boston College and has served as an Assistant Professor of the Practice at Boston College Law School and in Boston College’s Carroll School of Management’s Business Law and Society Department since November 2015. Mr. Powers has also been a Cybersecurity Research Affiliate at the MIT Sloan School of Management since June 2018. Mr. Powers has a Bachelor of Art degree in History and Business from Salem State University and a Juris Doctor degree from Suffolk University Law School. The Company believes Mr. Powers is qualified to serve as a member of the Company’s Board because of his extensive experience in cybersecurity.
Each member of the Company’s Board who is not also an executive officer of the Company will receive $10,000 for each fiscal quarter in which they serve, and an additional $5,000 per quarter for serving as the Chair of a Board committee or Chair of the Board. Such payment will be made in a combination of half cash and half shares of the Company’s common stock based upon the greater of (i) $0.18 per share and (ii) the closing price of the Company’s common stock on the first trading day of each quarter. In addition, each of Mr. Powers and Ms. MacConnel received a one-time grant of 100,000 restricted stock units pursuant to the Company’s 2021 Omnibus Equity Incentive Plan which vest over a period of three years from the date of issuance.
There are no family relationships between any of Brian Haugli, Deborah MacConnel and Kevin Powers and any of the Company’s directors or executive officers. Except as set forth herein, there is no arrangement or understanding between Brian Haugli, Deborah MacConnel or Kevin Powers and any other persons pursuant to which Messrs. Haugli or Powers or Ms. MacConnel were appointed as officers or directors of the Company, as applicable. There are no related party transactions involving Messrs. Haugli or Powers or Ms. MacConnel that are reportable under Item 404(a) of Regulation S-K.
Employment Agreement
On July 1, 2022, the Company entered into an employment agreement (the “Employment Agreement”) with Brian Haugli pursuant to which Mr. Haugli shall serve as Chief Executive Officer of the Company. Pursuant to the Employment Agreement, Mr. Haugli shall (i) receive a base salary of $300,000, which may be increased by the compensation committee of the Board in its sole discretion beginning on September 30, 2023 and on each September 30th thereafter; (ii) be eligible for an annual equity bonus (payable in shares of Common Stock or options) equal to $200,000, which may be increased or decreased by the compensation committee and/or the Board, in its sole discretion; and (iii) be eligible for a yearly discretionary cash bonus with the target amount of 50% of Mr. Haugli’s base salary. In addition, Mr. Haugli shall receive $200,000 in equity incentive compensation annually. Furthermore, Mr. Haugli shall be reimbursed for reasonable, out-of-pocket business expenses consistent with the Company’s policies and procedures, in effect from time to time, and will be entitled to unlimited paid time off. Mr. Haugli shall also be entitled to participate in any employee benefit plans or programs for which he is eligible that are provided by the Company to its management employees.
3
The Employment Agreement shall terminate upon the earliest to occur of the following: (i) Mr. Haugli’s death; (ii) upon written notice by the Company if Mr. Haugli shall suffer a physical or mental disability which renders Mr. Haugli, in the reasonable judgment of the compensation committee, unable to perform his duties and obligations under the Employment Agreement for either 90 consecutive days or 180 days in any 12-month period; (iii) upon written notice by Mr. Haugli for any reason other than Good Reason (as defined in the Employment Agreement); (iv) upon written notice by Mr. Haugli for Cause (as defined in the Employment Agreement); (v) upon written notice by Mr. Haugli for Good Reason; provided, however, prior to any such termination by Mr. Haugli for Good Reason, Mr. Haugli shall provide the Company with notice within 15 days of the occurrence of any circumstances that would constitute Good Reason, and the Company has not cured such circumstances within 15 days following receipt of such notice, with the exception of only five days written notice in the event the Company reduces Mr. Haugli salary without his consent or fails to pay Mr. Haugli any compensation due to him; and (vi) upon written notice by Mr. Haugli without Cause.
In the event Mr. Haugli’s employment is terminated for any reason (not including, however, a termination by the Company for Cause or a termination as a result of Mr. Haugli’s death or disability) (a “Change of Control Termination”) during the 12-month period following a Change of Control (as defined in the Employment Agreement) or in anticipation of a Change of Control, the Company shall pay Mr. Haugli a cash severance payment equal to 24 months of his then base salary, less applicable withholding. In addition, in the event of a Change of Control, all of Mr. Haugli’s equity-based compensation shall vest over one year regardless of whether Mr. Haugli is retained by the Company or successor following the Change of Control and any outstanding stock options held by Mr. Haugli shall be able to be exercised by Mr. Haugli until the earlier of (i) one year from the date of termination and (ii) the latest date upon which such stock options would have expired by their original terms under any circumstances. In the event Mr. Haugli’s employment is terminated for death, disability, without Good Reason by Mr. Haugli or by the Company for Cause, (i) Mr. Haugli shall be entitled to salary accrued through the termination date and (ii) any unvested stock options or equity compensation held by Mr. Haugli shall immediately terminate and be forfeited (unless otherwise provided in the applicable award) and any previously vested stock options (or if applicable equity compensation) shall be subject to terms and conditions set forth in the applicable stock incentive plan or equity compensation plan, or award agreement. In the event Mr. Haugli’s employment is terminated by Mr. Haugli for Good Reason or by the Company without Cause, (i) Mr. Haugli shall be entitled to continue to receive the salary at the rate in effect upon the termination date for 24 months following the termination date; (ii) subject to certain exceptions and provided that Mr. Haugli elects to receive continued health insurance coverage through COBRA, the Company will pay Mr. Haugli’s monthly COBRA contributions for health insurance coverage for 24 months following the termination date ((i) and (ii) are collectively referred to herein as the “Severance”); (iii) any unvested benefits (whether equity or cash benefits and bonuses will vest immediately upon such termination and any outstanding stock options or equity previously granted to Mr. Haugli will vest immediately upon such termination and shall be exercisable by Mr. Haugli until the earlier of (i) one year from the date of termination and (ii) the latest date upon which such stock options or equity would have expired by their original terms under any circumstances. As a condition to Mr. Haugli’s right to receive the Severance, Mr. Haugli will be required to execute and deliver to the Company a written release and may not breach any of the covenants and agreements set forth in the Employment Agreement. The Employment Agreement also contains covenants with respect to non-competition, confidential information and assignment of certain inventions and rights.
The foregoing description of the Employment Agreement is not complete and is qualified in its entirety by reference to the full text of the Employment Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is hereby incorporated by reference.
Consulting Agreement
On July 1, 2022, the Company entered into an independent contractor agreement (the “Independent Contractor Agreement”) with Sammy Davis, a former member of the Company’s Board, pursuant to which Mr. Davis shall serve as a consultant and strategic advisor to management and/or the Board as set forth in such agreement. Pursuant to the Independent Contractor Agreement, Mr. Davis shall receive (i) two $10,000 installments to be paid on September 30, 2022 and December 31, 2022, (ii) 100,000 shares of Common Stock which vested immediately upon the execution of the Independent Contractor Agreement and (iii) an amount equal to 2% of first year revenue under any agreement with a customer referred to the Company by Mr. Davis with which the Company had no prior relationship or contact that is executed during the Term (as defined herein) of the Independent Contractor Agreement. The Independent Contractor Agreement commenced upon Mr. Davis’ resignation from the Board and shall renew every six months beginning on January 1, 2023 until written notice of termination is provided by either Mr. Davis or the Company (the “Term”).
The foregoing description of the Independent Contractor Agreement is not complete and is qualified in its entirety by reference to the full text of the Independent Contractor Agreement, a copy of which is filed as Exhibit 10.2 to this Current Report on Form 8-K and is hereby incorporated by reference.
4
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
Series A Preferred Stock Certificate of Designation
In connection with the closing of the Acquisition, on July 1, 2022, the Company filed a Certificate of Designation of Series A Preferred Stock (the “Certificate of Designation”) with the Delaware Secretary of State.
Pursuant to the Certificate of Designation, 100 shares of the Company’s blank check preferred stock have been designated as Series A Preferred Stock. The Series A Preferred Stock have the following rights, preferences, powers, privileges and restrictions, qualifications and limitations.
Ranking. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company or any Deemed Liquidation Event (as defined in the Certificate of Designation), each share of Series A Preferred Stock shall rank on parity to the Common Stock.
Dividends. The holders of Series A Preferred Stock shall not be entitled to any cash dividends declared or paid on the Common Stock or otherwise.
Voting. Each holder of outstanding shares of Series A Preferred Stock shall be entitled to such number of votes equal to the number of shares of Common Stock that such Series A Preferred Stock are convertible into.
Conversion. Each share of the Series A Preferred Stock is convertible into one share of Common Stock, subject to adjustment as set forth in the Certificate of Designation. Upon the earliest to occur (the time of such event, the “Mandatory Conversion Time”) of (a) the issuance of the Second Tranche Shares pursuant to the terms of the Purchase Agreement, (b) the cancellation of the Second Tranche Shares pursuant to the terms of the Purchase Agreement and (c) the occurrence of an event of a liquidation, dissolution or winding up of the Company or a Deemed Liquidation Event, all outstanding shares of the Series A Preferred Stock shall automatically be converted into shares of Common Stock, at the then-applicable conversion ratio, and such shares may not be reissued by the Company.
Appointment of Directors. The holders of Series A Preferred Stock, exclusively and as a separate class, shall be entitled to elect four directors of the Company. Any director elected by holders of Series A Preferred Stock may be removed without cause by the affirmative vote of the holders of shares of Series A Preferred Stock. If the holders of shares of Series A Preferred Stock fail to elect a sufficient number of directors to fill all directorships for which they are entitled to elect directors, voting exclusively and as a separate class, then any directorship not so filled shall remain vacant until such time as the holders of the Series A Preferred Stock elect a person to fill such directorship. In the event of any vacancy of a Series A Preferred director, such vacancy shall be filled by the holders of the Series A Preferred Stock. In the event that the number of directors of the Company is increased prior to the Mandatory Conversion Time, the number of directors which the holders of the Series A Preferred Stock shall be entitled to elect, exclusively and as a separate class, shall be increased to the extent required to provide that the total number of Series A Preferred Stock directors constitutes a majority of the total number of the directors of the Company.
The foregoing description of the Certificate of Designation is not complete and is qualified in its entirety by reference to the full text of the Certificate of Designation, a copy of which is filed as Exhibit 3.1 to this Current Report and is hereby incorporated by reference.
Name Change
In connection with the closing of the Acquisition, on July 1, 2022, the Company filed a Certificate of Amendment (the “Amendment”) to its Certificate of Incorporation with the Delaware Secretary of State to change the legal name of the Company from “Cipherloc Corporation” to “SideChannel, Inc.”, effective immediately upon acceptance of the filing.
A copy of the Amendment effecting the name change, as filed with the Delaware Secretary of State is attached hereto as Exhibit 3.2.
Item 8.01 Other Events.
On July 5, 2022, the Company issued a press release announcing the closing of the Acquisition. A copy of the press release is attached to this Current Report on Form 8-K as Exhibit 99.1.
5
Item 9.01 Financial Statements and Exhibits
(a) Financial Statements of businesses acquired.
In accordance with Item 9.01(a)(3) of Form 8-K, the financial statements required under this Item 9.01 will be filed by amendment to this Current Report on Form 8-K no later than 75 days after the completion of the Acquisition of SideChannel.
Pro forma financial information.
In accordance with Item 9.01(b)(2) of Form 8-K, the financial information required under this Item 9.01 will be filed by amendment to this Current Report on Form 8-K no later than 75 days after the completion of the Acquisition of SideChannel.
(b) Exhibits.
Exhibit No. Description
3.1 Certificate of Designation of Series A Preferred Stock
3.2 Certificate of Amendment filed with the Delaware Secretary of State on July 5, 2022
10.1+ Brian Haugli Executive Employment Agreement
10.2 Independent Contractor Agreement by and between the Company and Sammy Davis dated July 1, 2022
99.1 Press Release dated July 5, 2022.
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
+ Indicates a management contract or any compensatory plan, contract or arrangement.
6
SIGNATURES
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.
SideChannel, Inc.
Date: July 6, 2022 By: /s/ Ryan Polk
Name: Ryan Polk
Title: Chief Financial Officer
7
From SideChannels Facebook page……looks like we will be SCNL
It’s morphin time! Today’s the day when @Cipherloc & SideChannel morph into one quantum-ready cybersecurity solution; purpose built for small & medium business. Find us on the exchange at SCNL
More details: https://finance.yahoo.com/news/cipherloc-completes-acquisition-announces-name-090000181.html
And yet the price will continue to rise going forward....no issue
You were right back then…..the criminal was definitely a criminal.
But I do believe that this is now a very legitimate company.
Stock_Barber
Member Level
Wednesday, June 01, 2022 10:47:00 PM
Re: clok-em-dead post# 23426
PlusOneCoin Icon
0
Post# of 23510 Go
Was I 100% correct in my assessment of the company and the players involved at the time?
YES or NO?
Everyone already KNOWS the answer
I’ve been called a cheerleader for years……
Have I always been right? No.
Have I been right at times? Yes.
Have I always had the right intentions of shareholders? Definitely.
I think we are finally on the road to success.
What a ride…..from Grollman and Graham Clark to years of sitting on the shelf to some criminal named delagarza and his sidekick carlson and all of his bullship to Wilkinson and his team to Brian and his company SideChannel. Let’s not forget Milton Mattox who stayed the course to finish and actually produce a product for all of us.
#rollercoasterride
This whole transaction was reviewed and APPROVED by FINRA.
“ FINRA is dedicated to protecting investors and safeguarding market integrity in a manner that facilitates vibrant capital markets “
This in itself makes it legitimate to me.
It would appear they have been working very very hard for all of US shareholders……
Quote….
Posted by: Mr Plato
In reply to: candyldy who wrote msg# 23499
Date: 07/04/2022 10:31:42 PM
Post #: 23,500 of 23,506
Wrong, they work part-time for Cipherloc.
Nasdaq here we come.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14F-1
Information Statement Required Pursuant to Section 14(f)
of the Securities Exchange Act of 1934
and Rule 14f-1 Thereunder
Cipherloc Corporation
(Exact Name of Registrant as specified in its charter)
Delaware 000-28745 86-0837077
(State or other jurisdiction
of incorporation)
Commission
File Number
(IRS Employer
Identification Number)
6836 Bee Cave Road, Bldg. 1, S#279, Austin, Texas 78746
(Address of Principal Executive Offices) (Zip Code)
(512) 772-4245
(Registrant’s telephone number, including area code)
Approximate Date of Mailing: July 5, 2022
NOTICE OF CHANGE IN THE MAJORITY OF THE BOARD OF DIRECTORS
CIPHERLOC CORPORATION
INFORMATION STATEMENT
PURSUANT TO SECTION 14(f) OF THE
SECURITIES EXCHANGE ACT OF 1934
AND RULE 14f-1 THEREUNDER
NOTICE OF CHANGE IN THE MAJORITY OF THE BOARD OF DIRECTORS
July 5, 2022
THIS INFORMATION STATEMENT IS BEING PROVIDED SOLELY FOR INFORMATIONAL PURPOSES AND NOT IN CONNECTION WITH ANY VOTE OF THE STOCKHOLDERS OF CIPHERLOC CORPORATION
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE NOT REQUIRED TO TAKE ANY ACTION.
Schedule 14f-1
You are urged to read this Information Statement carefully and in its entirety. However, you are not required to take any action in connection with this Information Statement. References throughout this Information Statement to “Company,” “we,” “us,” and “our” refer to Cipherloc Corporation.
INTRODUCTION
This Information Statement is anticipated to be mailed on or about July 5, 2022 to the holders of record at the close of business on June 30, 2022 (the “Record Date”) of common stock, $0.001 par value (the “Common Stock”), of Cipherloc Corporation, a Delaware corporation, in accordance with the requirements of Section 14(f) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 14f-1 promulgated thereunder, in connection with an anticipated change in majority control of the Company’s Board of Directors (the “Board” or “Board of Directors”) other than by a meeting of stockholders. Section 14(f) of the Exchange Act and Rule 14f-1 require the mailing to the Company’s stockholders of record the information set forth in this Information Statement at least 10 days prior to the date a change in a majority of the Company’s directors occurs (otherwise than at a meeting of the Company’s stockholders).
You are receiving this Information Statement in connection with the expected designation of new members to the Board of Directors of the Company pursuant to a change of control of the Company.
On July 1, 2022, the Company closed its previously announced acquisition, pursuant to the terms of that certain equity securities purchase agreement (the “Purchase Agreement”), dated May 16, 2022, by and among the Company, SideChannel, Inc. (“SideChannel”), SideChannel’s stockholders (collectively, the “Sellers”), and Brian Haugli, as the Sellers’ representative (the “Representative”),whereby the Company acquire all of the equity securities of SideChannel in exchange for shares of the Company’s equity securities (the “Acquisition”). The completion of the Acquisition resulted in various changes to the corporate governance and capital structure of the Company, as detailed below.
Pursuant to the Purchase Agreement, the Sellers agreed to exchange all of their securities of SideChannel for an aggregate of up to 119,800,000 shares (the “Common Shares”) of Common Stock and 100 shares of the Company’s newly designated Series A Preferred Stock, $0.001 par value (the “Preferred Shares” and, together with the Common Shares, the “Shares”). The Common Shares will be issued to the Sellers in two tranches as follows: (i) the first tranche of 59,900,000 Common Shares (the “First Tranche Shares”) were issued at the closing of the Acquisition (the “Closing”), and (ii) the second tranche of 59,900,000 Common Shares (the “Second Tranche Shares”) will be issued when the operations of SideChannel, as a subsidiary of the Company, achieve at least $5.5 million in revenue for any trailing twelve month period after the Closing and before the 48 month anniversary of the execution of the Purchase Agreement (the “Milestone”). The Sellers acquired approximately 40.6% of the outstanding Common Stock as of the closing date of the Acquisition (the “Closing Date”). If SideChannel achieves the Milestone and the Sellers are issued the Second Tranche Shares, assuming the number of shares outstanding prior to the issuance of the Second Tranche Shares being issued, remains the same as on the Closing Date, the Sellers will hold a total of approximately 57.8% of the Company’s outstanding Common Stock. The number of Second Tranche Shares may be reduced, or increased, based upon whether SideChannel’s working capital as of the Closing is less than or more than zero. The number of the Second Tranche Shares may also be subject to adjustment based upon any successful indemnification claims made by the parties pursuant to the Purchase Agreement.
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In connection with the closing of the Acquisition, on July 1, 2022, the Company filed a Certificate of Designation of Series A Preferred Stock (the “Certificate of Designation”) with the Delaware Secretary of State. The Preferred Shares were issued to the Sellers at the Closing. After the Closing, the holders of the Preferred Shares will have the right to appoint the majority of the members of the Company’s Board of Directors, provided that such appointees and the number of independent directors, after taking into consideration the appointment of the members of the Board of Directors appointed by the holders of the Preferred Shares, are consistent with the requirements for a company whose equity securities are listed on either the New York Stock Exchange or The Nasdaq Stock Market. The Preferred Shares will be convertible into shares of the Company’s Common Stock at any time, on a one-for-one basis (subject to adjustment as provided therein), and will automatically convert into shares of the Common Stock upon the earliest to occur of (i) the issuance of the Second Tranche Shares, (ii) the cancellation of the Second Tranche Shares or (iii) the liquidation, dissolution or winding up, or deemed liquidation, of the Company or a Deemed Liquidation Event (as defined in the Certificate of Designation).
The Shares are subject to a Lock-Up/Leak-Out Agreement pursuant to which, subject to certain exceptions, the Sellers may not directly or indirectly offer to sell, or otherwise transfer, any of the Shares they receive pursuant to the Purchase Agreement for 24 months after the Closing of the Acquisition without the prior written consent of the Company. Notwithstanding the foregoing, pursuant to the Lock-Up/Leak-Out Agreement, the Sellers may sell up to 20% of their shares of Common Stock beginning 12 months after the Closing, and the remaining 80% of their shares of Common Stock beginning 24 months after the Closing.
THIS INFORMATION STATEMENT IS REQUIRED BY SECTION 14(F) OF THE EXCHANGE ACT AND RULE 14F-1 PROMULGATED THEREUNDER IN CONNECTION WITH THE APPOINTMENT OF CERTAIN DIRECTOR DESIGNEES TO THE BOARD. NO ACTION IS REQUIRED BY OUR STOCKHOLDERS IN CONNECTION WITH THE RESIGNATION AND APPOINTMENT OF ANY DIRECTOR.
CHANGE IN MAJORITY OF BOARD OF DIRECTORS
The directors of the Company prior to the Closing were Tom Wilkinson, Anthony Ambrose, David Chasteen, and Sammy Davis. In connection with the Closing of the Acquisition, David Chasteen and Sammy Davis resigned from the Company’s Board of Directors. Further, upon the Closing of the Acquisition, and in replacement of Mr. Davis and Mr. Chasteen, Kevin Powers and Deborah MacConnel were appointed as directors of the Company. The Company has also agreed that, effective upon the day immediately following the tenth day following the mailing of this Information Statement to its stockholders of record on the Record Date, Brian Haugli and Hugh Regan shall be appointed as directors of the Company.
No action is required by our stockholders in connection with this Information Statement. However, Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, requires the mailing to our stockholders of the information set forth in this Information Statement.
VOTING SECURITIES
As of the Record Date, our authorized capitalization consisted of 681,000,000 shares of Common Stock and 10,000,000 shares of preferred stock, of which 88,445,832 shares of Common Stock and no shares of Preferred Stock were issued and outstanding.
Holders of our Common Stock are entitled to one vote for each share on all matters to be voted on by our stockholders. Holders of our Common Stock have no cumulative voting rights. They are entitled to share ratably in any dividends that may be declared from time to time by the Board of Directors in its discretion from funds legally available for dividends. Holders of our Common Stock have no preemptive rights to purchase our Common Stock.
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STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT BEFORE AND AFTER THE CONSUMMATION OF THE ACQUISITION
The following table sets forth certain information regarding beneficial ownership of shares of our Common Stock as of June 28, 2022 by (i) each person known to beneficially own more than 5% of our outstanding Common Stock, (ii) each of our directors, (iii) each of our named executive officers and (iv) all of our directors and named executive officers as a group.
Except as indicated in footnotes to this table, we believe that the stockholders named in this table have sole voting and investment power with respect to all shares of Common Stock shown to be beneficially owned by them, based on information provided to us by such stockholders, subject to community property laws, where applicable.
Unless otherwise indicated herein, the address of each person is c/o Cipherloc Corporation, 6836 Bee Cave Road, Bldg. 1 S#279, Austin, TX 78746.
Stock Ownership of Principal Owners and Management Before the Consummation of the Acquisition
Beneficial Owner
Shares of Common Stock Beneficially Owned
Before the Acquisition
Percent of Shares of Common Stock Beneficially Owned Before the Acquisition(1)
Series A Preferred Stock
Beneficially Owned Before the Acquisition
Percent
of
Series A Preferred Stock Beneficially Owned Before the Acquisition
Named Executive Officers and Directors:
Tom Wilkinson 281,868 (2) * - -
Anthony Ambrose 266,668 (3) * - -
David Chasteen 370,370 (4) * - -
Sammy Davis, DrPH 221,112 (5) * - -
Ryan Polk 92,592 (6) * - -
Nicholas Hnatiw 92,592 (7) * - -
Brian Haugli 12,500 (8) *
Hugh Regan - - - -
Deborah MacConnel - - - -
Kevin Powers - - - -
All executive officers and directors as a group (10 persons) 1,337,702 1.51 % - -
* Indicates less than 1%
(1) The number and percentage of shares beneficially owned are determined in accordance with Rule 13d-3 of the Exchange Act, and the information provided in the table above is not necessarily indicative of beneficial ownership for any other purpose. Under such rule, beneficial ownership includes any shares over which the individual or entity has voting power or investment power and any shares of Common Stock that the individual has the right to acquire within 60 days of the Record Date, through the exercise of any stock or other right. As of the Record Date, 88,445,832 shares of Common Stock were outstanding.
(2) Represents (i) 15,200 shares of Common Stock and (ii) 266,668 restricted stock units.
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(3) Represents 266,668 restricted stock units.
(4) Represents (i) 370,370 restricted stock units. Excludes 740,741 restricted stock units that will not vest within 60 days of the Record Date.
(5) Represents (i) 10,000 shares of Common Stock (ii) 211,112 restricted stock units.
(6) Represents 92,592 restricted stock units. Excludes 462,964 restricted stock units that will not vest within 60 days of the Record Date.
(7) Represents 92,592 restricted stock units. Excludes 462,964 restricted stock units that will not vest within 60 days of the Record Date.
(8) Represents 12,500 shares of Common Stock.
Stock Ownership of Principal Owners and Management Following the Consummation of the Acquisition
The following table sets forth certain information regarding beneficial ownership of our Common Stock and preferred stock as of the Record Date, assuming the Acquisition was consummated on such date by (i) each person known by us to be the beneficial owner of more than 5% of our outstanding Common Stock, (ii) each of our directors, (iii) each of our named executive officers and (iv) all of our directors and named executive officers as a group.
Beneficial Owner
Common Stock Beneficially Owned
After the Acquisition
Percent of Common Stock Beneficially Owned After the Acquisition(1)
Series A
Preferred Stock
Beneficially Owned
After the Acquisition
Percent
of Series A Preferred Stock Beneficially Owned After the Acquisition(2)
Named Executive Officers and Directors:
Tom Wilkinson 281,868 (3) * - -
Anthony Ambrose 266,668 (4) * - -
Ryan Polk 92,592 (5) * - -
Brian Haugli 42,541,500 (6) 28.66 % 71 71.0 %
Hugh Regan - (7) - - -
Deborah MacConnel - (8) - - -
Kevin Powers - (9) - - -
All executive officers and directors as a group (7 persons) 43,182,628 29.09 % 71 71.0 %
(1) The number and percentage of shares beneficially owned are determined in accordance with Rule 13d-3 of the Exchange Act, and the information in the table above is not necessarily indicative of beneficial ownership for any other purpose. Under such rule, beneficial ownership includes any shares over which the individual or entity has voting power or investment power and any shares of Common Stock that the individual has the right to acquire within 60 days of July 1, 2022, through the exercise of any option or other right. There were 148,445,832 shares of Common Stock were outstanding and 100 shares of Series A Preferred Stock were outstanding the day immediately after the closing of the Acquisition.
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(2) Each holder of outstanding shares of Series A Preferred Stock shall be entitled to such number of votes equal to the number of shares of Common Stock that such Series A Preferred Stock are convertible into. Each share of the Series A Preferred Stock is convertible into one share of Common Stock, subject to adjustment as set forth in the Certificate of Designation.
(3) Represents (i) 15,200 shares of Common Stock and (ii) 266,668 restricted stock units. Excludes 500,000 restricted stock units that will not vest within 60 days of July 1, 2022.
(4) Represents 266,668 restricted stock units. Excludes 500,000 restricted stock units that will not vest within 60 days of July 1, 2022.
(5) Represents 277,776 restricted stock units. Excludes 277,780 restricted stock units will not vest within 60 days of July 1, 2022.
(6) Represents 42,541,500 shares of Common Stock.
(7) Excludes 100,000 restricted stock units that will not vest within 60 days of July 1, 2022.
(8) Excludes 100,000 restricted stock units that will not vest within 60 days of July 1, 2022.
(9) Excludes 100,000 restricted stock units that will not vest within 60 days of July 1, 2022.
DIRECTORS AND EXECUTIVE OFFICERS
Under the terms of the Preferred Shares, upon the issuance of the Preferred Shares at the Closing of the Acquisition, the holders of the Preferred Shares have the right to appoint the majority of the members of the Company’s Board. Accordingly, the Company and the holders of Preferred Stock have agreed that, effective upon the eleventh day following the mailing of this Information Statement to the Company’s stockholders of record on the Record Date (the “Board Appointment Date”), Brian Haugli and Hugh Regan shall be appointed as directors of the Company and that such Preferred Shareholders have also appointed each of Deborah MacConnel and Kevin Powers as directors effective as of the Closing. All newly appointed directors will serve until the Company’s next annual meeting of stockholders or until their respective successors are elected and qualified or until their earlier death, resignation or removal.
Directors and officers following the Board Appointment Date
Name Ages Position(s) with the Company
Brian Haugli 42 Chief Executive Officer, President and Director
Ryan Polk 54 Chief Financial Officer
Tom Wilkinson 52 Director (Chairman)
Anthony Ambrose 60 Director (Lead Independent Director)
Hugh Regan 62 Director
Deborah MacConnel 58 Director
Kevin Powers 55 Director
Brian Haugli, Chief Executive Officer, President and Director
Mr. Haugli has been the Managing Partner of SideChannel since September 2017. Since October 2020, Mr. Haugli has also served as the founder of RealCISO, a cybersecurity risk assessment SaaS platform, and has been the creator and host of CISOlife YouTube and Podcast since August 2019. Mr. Haugli was an Adjunct Professor at Boston College from June 2020 through January 2022, an advisor to Zscaler, Inc. (NASDAQ: ZS) from September 2019 to 2020, and worked for the Hanover Group (NYSE: THG) from May 2015 to April 2019, most recently as VP, Chief Security Officer. Mr. Haugli holds a Bachelor of Technology in Network Administration from the State University of New York at Morrisville. The Company believes Mr. Haugli is qualified to serve as a member of the Company’s Board because of his focus on data security and technology industry experience.
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Ryan Polk, Chief Financial Officer
Mr. Polk has served as the Company’s Chief Financial Officer since February 2020. Mr. Polk has served in leadership roles in both public and private companies after a brief time at accounting firm Ernst & Young. He is a part-time employee of Cipherloc and is engaged in providing CEO and CFO related services to other companies as an independent contractor. He is a graduate of Purdue University with two Bachelor of Science degrees from the Krannert School of Management. His career has focused on both the consumer products and technology industries.
Tom Wilkinson, Director (Chairman)
Mr. Wilkinson has served a director of the Company since June 2019. He is a licensed CPA in Texas and Colorado. From 2014 to October 2015 he was the Chief Financial Officer of Amherst Holdings, LLC. Mr. Wilkinson joined Xplore Technologies Corp., a Nasdaq traded company, in 2015 where he served as the Chief Financial Officer until 2017 when he took on the position of Chief Executive Officer until the sale of the company to Zebra Technologies in August 2018. He presently owns and operates Wilkinson & Company, a financial and business consulting firm focused on emerging growth pre-IPO and public companies. Mr. Wilkinson has also been a member of the board of directors of Astrotech Corporation (NASDAQ: ASTC) since October 2018. He received his Bachelor of Business Administration and Master of Professional Accounting from the University of Texas in 1992. We believe Mr. Wilkinson is qualified to serve as a member of the Company’s Board because of his financial experience.
Anthony Ambrose, Director (Lead Independent Director)
Mr. Ambrose has served as a director of the Company since June 2019. Mr. Ambrose has served as a director, President and Chief Executive Officer of Data I/O, the leading global provider of advanced data and security programming solutions, and a Nasdaq listed company (NASDAQ: DAIO). Prior to Data I/O, Mr. Ambrose was Owner and Principal of Cedar Mill Partners, LLC, a strategy consulting firm since 2011. From 2007 to 2011, he was Vice President and General Manager at RadiSys Corporation, a leading provider of embedded wireless infrastructure solutions, where he established the telecom platform business and grew it to over $125 million in annual revenues. He was previously general manager and held several other progressively responsible positions at Intel Corporation, where he led development and marketing of standards-based communications platforms and grew the industry standard server business to over $1 billion in revenues. Mr. Ambrose has a Bachelor of Science degree in Engineering from Princeton University and has completed the Stanford University Director Symposium. We believe Mr. Ambrose is qualified to serve as a member of the Company’s Board because of his data security and industry experience.
Hugh Regan, Director
In June 2021, Mr. Regan retired after just over 25 years with inTEST Corporation (NYSE MKT: INTT), a manufacturer of capital equipment used in the semiconductor industry and other markets, where he served as Secretary, Treasurer and Chief Financial Officer since 1996. Mr. Regan currently works as a private consultant to businesses, assisting them with various strategic issues. Prior to inTEST Corporation, Mr. Regan served in various financial capacities for Value Property Trust, a former publicly traded real estate investment trust, including as Vice President of Finance and Chief Financial Officer. Mr. Regan has a Bachelor of Science degree in Commerce with a concentration in Accounting and Finance from Rider University. The Company believes Mr. Regan is qualified to serve as a member of the Company’s Board because of his experience with publicly traded technology companies as chief financial officer.
Deborah MacConnel, Director
Ms. MacConnel has been involved in the computer industry and technology sector for 34 years, retiring recently from International Business Machines Corporation (“IBM”) (NYSE: IMB) after 28 years. Prior to her retirement, Ms. MacConnel was instrumental in transforming information technology for IBM’s human resources function, which supported up to 450,000 employees. Ms. MacConnel’s team at IBM was also responsible for transforming the succession planning process for executive selection and promotion, along with enhancing the processes for mergers and acquisition management and talent acquisition. Ms. MacConnel has a Bachelor of Science degree in Business Administration from the University of Texas. The Company believes Ms. MacConnel is qualified to serve as a member of the Company’s Board because of her experience scaling global teams for technology companies.
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Kevin Powers, Director
Mr. Powers is the founder and director of the Master of Science in Cybersecurity Policy and Governance Programs at Boston College and has served as an Assistant Professor of the Practice at Boston College Law School and in Boston College’s Carroll School of Management’s Business Law and Society Department since November 2015. Mr. Powers has also been a Cybersecurity Research Affiliate at the MIT Sloan School of Management since June 2018. Mr. Powers has a Bachelor of Art degree in History and Business from Salem State University and a Juris Doctor degree from Suffolk University Law School. The Company believes Mr. Powers is qualified to serve as a member of the Company’s Board because of his extensive experience in cybersecurity.
Director Independence
The Company has determined that a majority of the Board consists of members who are currently “independent” as that term is defined under the rules of the Nasdaq Stock Market LLC. As the Company’s Common Stock is traded over the counter on the OTCQB, it is not required to comply with such requirements. Nevertheless, the Company considers Anthony Ambrose, Hugh Regan, Deborah MacConnel and Kevin Powers to be “independent” under such rules.
Family Relationships
No family relationships exist between any of the people that will be our directors or executive officers as of the Board Appointment Date or any of our current or former directors and officers. Except as set forth herein, there are no arrangements or understandings between or among our executive officers and directors pursuant to which any director or executive officer was or is to be selected as a director or executive officer.
Involvement in Certain Legal Proceedings
We are not aware of any of our directors or officers being involved in any legal proceedings in the past ten years relating to any matters in bankruptcy, insolvency, criminal proceedings (other than traffic and other minor offenses), or being subject to any of the items set forth under Item 401(f) of Regulation S-K.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than 10% of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock and other equity securities. To our knowledge, based solely upon a review of Forms 3, 4, and 5 filed with the SEC during the fiscal year ended September 30, 2021, we believe that, except as set forth below, our directors, executive officers, and greater than 10% beneficial owners have complied with all applicable filing requirements during the fiscal year ended September 30, 2021.
? Nicholas Hnatiw failed to timely report his insider status on a Form 3.
Code of Business Conduct and Ethics
We have adopted a formal Code of Ethics applicable to all Board members, officers and employees. A copy of our Code of Ethics may be obtained without charge upon written request to Secretary, Cipherloc Corporation, 6836 Bee Cave Road, Bldg. 1, Suite 279, Austin, TX 78746.
Corporate Governance
Term of Office
Our directors are appointed for a one-year term to hold office until the next annual general meeting of our stockholders or until removed from office in accordance with our Bylaws. Our officers are appointed by our Board of Directors and hold office until removed by the Board, except to the extent governed by an employment agreement.
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Committees of the Board
The Company’s Board of Directors met four times during the fiscal year ended September 30, 2021. The Company’s audit committee, nominating and corporate governance committee and compensation committee met four, four and four times, respectively, during the year ended September 30, 2021.
Audit Committee
Pursuant to the audit committee charter, the committee’s responsibilities include:
? appointing, approving the compensation of, and assessing the independence of our independent registered public accounting firm;
? pre-approving auditing and permissible non-audit services, and the terms of such services, to be provided by our independent registered public accounting firm;
? reviewing the overall audit plan with our independent registered public accounting firm and members of management responsible for preparing our financial statements;
? reviewing and discussing with management and our independent registered public accounting firm our annual and quarterly financial statements and related disclosures as well as critical accounting policies and practices used by us;
? coordinating the oversight and reviewing the adequacy of our internal control over financial reporting;
? establishing policies and procedures for the receipt and retention of accounting-related complaints and concerns;
? recommending based upon the audit committee’s review and discussions with management and our independent registered public accounting firm whether our audited financial statements will be included in our Annual Reports on Form 10-K;
? monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to our financial statements and accounting matters;
? preparing the audit committee report required by SEC rules to be included in our annual proxy statement;
? reviewing all related person transactions for potential conflict of interest situations and approving all such transactions; and
? reviewing quarterly earnings releases.
Compensation Committee
Pursuant to the compensation committee charter, the committee’s responsibilities include:
? annually reviewing and approving corporate goals and objectives relevant to the compensation of our Chief Executive Officer;
? evaluating the performance of our Chief Executive Officer considering such corporate goals and objectives and determining the compensation of our Chief Executive Officer;
? reviewing and approving the compensation of our other executive officers;
? reviewing and establishing our overall management compensation, philosophy and policy;
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? overseeing and administering our compensation and similar plans;
? evaluating and assessing potential and current compensation advisors in accordance with the independence standards identified in the applicable Nasdaq rules;
? retaining and approving the compensation of any compensation advisors;
? reviewing and making recommendations to our Board about our policies and procedures for the grant of equity-based awards;
? evaluating and making recommendations to the Board about director compensation;
? preparing the compensation committee report required by SEC rules, if and when required, to be included in our annual proxy statement; and
? reviewing and approving the retention or termination of any consulting firm or outside advisor to assist in the evaluation of compensation matters.
Nominating and Corporate Governance Committee
Pursuant to the nominating and corporate governance committee charter, the committee’s responsibilities include:
? developing and recommending to the Board criteria for Board and committee membership;
? establishing procedures for identifying and evaluating Board candidates, including nominees recommended by stockholders;
? reviewing the size and composition of the Board to ensure that it is composed of members containing the appropriate skills and expertise to advise us;
? identifying individuals qualified to become members of the Board;
? recommending to the Board the persons to be nominated for election as directors and to each of the Board’s committees;
? developing and recommending to the Board a code of business conduct and ethics and a set of corporate governance guidelines; and
? overseeing the evaluation of our Board and management.
Director Nominations Process
Our nominating and corporate governance committee is responsible for recommending candidates to serve on the Board and its committees. In considering whether to recommend any particular candidate to serve on the Board or its committees or for inclusion in the Board’s slate of recommended director nominees for election at the annual meeting of shareholders, the nominating and corporate governance committee considers the criteria set forth in the nominating and corporate governance committee charter. Specifically, the nominating and corporate governance committee may take into account many factors, including personal and professional integrity, experience relevant to the Company’s industry, diversity of background and perspective including, but not limited to, with respect to gender and ethnicity and any other relevant qualifications, attributes or skills.
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We consider diversity a meaningful factor in identifying director nominees, but do not have a formal diversity policy. The Board evaluates each individual in the context of the Board as a whole, with the objective of assembling a group that has the necessary tools to perform its oversight function effectively in light of the Company’s business and structure. In determining whether to recommend a director for re-election, the nominating and corporate governance committee may also consider potential conflicts of interest with the candidates, other personal and professional pursuits, the director’s past attendance at meetings and participation in and contributions to the activities of the Board.
In identifying prospective director candidates, the nominating and corporate governance committee may seek referrals from other members of the Board or shareholders. The nominating and corporate governance committee also may, but need not, retain a third-party search firm in order to assist it in identifying candidates to serve as directors of the Company. The nominating and corporate governance committee uses the same criteria for evaluating candidates regardless of the source of the referral or recommendation. When considering director candidates, the nominating and corporate governance committee seeks individuals with backgrounds and qualities that, when combined with those of our incumbent directors, provide a blend of skills and experience to further enhance the Board’s effectiveness.
The nominating and corporate governance committee will also consider potential nominees submitted by stockholders in accordance with the procedures set forth in our Bylaws and other processes adopted from time to time for submission of director nominees by stockholders, and such candidates will be considered and evaluated under the same criteria described above. stockholders wishing to propose a candidate for consideration may do so by submitting the above information to the attention of the Corporate Secretary, Cipherloc Corporation, 6836 Bee Cave Road, Bldg. 1, Suite 279, Austin, TX 78746.
Anti-hedging
As of the date hereof, the Company has not adopted a formal written Insider Trading Policy.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following tables set forth certain information concerning all compensation paid, earned or accrued for service by (i) our Principal Executive Officer, and (ii) two additional executive officers of the Company who earned in excess of $100,000 in during fiscal year ended September 30, 2021 (collectively, the “named executive officers”):
Name and Position Year Salary ($) Bonus ($) Stock
Awards ($) All Other Compensation ($) (1) Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) Total ($)
David Chasteen(3)
Chief Executive Officer & Director 2021 $ 125,000 100,000 $ - $ 15,100 - $ 240,100
2020 - - - $ 15,100 - $ 15,100
Ryan Polk,
Chief Financial Officer(2) 2021 $ 75,000 100,000 - $ - - $ 175,000
2020 $ 49,760 - - - - $ 49,760
Nicholas Hnatiw,
Chief Technology Officer(4)
2021 $ 66,667 25,000 - $ 149,450 - $ 241,117
2020 - - - - - -
(1) All other compensation consists primarily of remunerations for legal settlements, severance, auto and health insurance costs.
(2) Mr. Polk was appointed as Chief Financial Officer on February 1, 2020.
(3) Mr. Chasteen was appointed as Chief Executive Officer on November 1, 2020.
(4) Mr. Hnatiw was appointed as Chief Technology Officer on June 1, 2021.
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Employment Agreements
Other than as set forth herein, there are no employment agreements between the Company and any named executive officer, and there are no employment agreements or other compensating plans or arrangements with regard to any named executive officer which provide for specific compensation in the event of resignation, retirement, other termination of employment or from a change of control of the Company or from a change in a named executive officer’s responsibilities following a change in control.
David Chasteen
On May 12, 2021, the Company entered into a letter agreement with David Chasteen pursuant to which Mr. Chasteen serves as the Company’s Chief Executive Officer. Pursuant to the letter agreement, Mr. Chasteen (i) receives a $200,000 annual salary; (ii) may receive a $200,000 annual bonus based upon the achievement of certain objectives; and (iii) received restricted stock units valued at $300,000, subject to vesting terms. In addition, Mr. Chasteen shall be eligible shall be entitled to paid time off pursuant to the Company’s policies and certain benefits.
In the event Mr. Chasteen’s employment is terminated by the Company other than for Cause (as defined in that certain Executive Agreement dated October 19, 2020 by and between the Company and David Chasteen (the “October Employment Agreement”)) or Mr. Chasteen resigns for Good Reason (as defined in the October Employment Agreement), Mr. Chasteen shall receive his then salary for a period of six months. Furthermore, in the event the Company consummates a Company Sale (as defined in the October Employment Agreement), Mr. Chasteen will receive a bonus equal to 5% of the Net Proceeds(as defined in the October Employment Agreement).
Ryan Polk
On September 30, 2021, the Company entered into an employment agreement (the “Employment Agreement”) with Ryan Polk pursuant to which Mr. Polk serves as Chief Financial Officer of the Company. Pursuant to the Employment Agreement, Mr. Polk shall (i) receive a base salary of $150,000, which may be increased by the compensation committee of the Board in its sole discretion beginning on May 31, 2021 and on each May 31st thereafter; (ii) be eligible for an annual equity bonus (payable in shares of Common Stock or options) equal to $50,000, which may be increased or decreased by the compensation, in its sole discretion; and (iii) be eligible for a yearly discretionary cash bonus with the target amount of $100,000. In addition, Mr. Polk received [insert award under restricted stock agreement]. Furthermore, Mr. Polk shall be reimbursed for reasonable, out-of-pocket business expenses consistent with the Company’s policies and procedures, in effect from time to time, and will be entitled to unlimited paid time off. Mr. Polk shall also be entitled to participate in any employee benefit plans or programs for which he is eligible that are provided by the Company to its management employees.
The Employment Agreement shall terminate upon the earliest to occur of the following: (i) Mr. Polk’s death; (ii) upon written notice by the Company if Mr. Polk shall suffer a physical or mental disability which renders Mr. Polk, in the reasonable judgment of the [compensation] committee, unable to perform his duties and obligations under the Employment Agreement for either 90 consecutive days or 180 days in any 12-month period; (iii) upon written notice by Mr. Polk for any reason other than Good Reason (as defined in the Employment Agreement); (iv) upon written notice by Mr. Polk for Cause (as defined in the Employment Agreement); (v) upon written notice by Mr. Polk for Good Reason; provided, however, prior to any such termination by Mr. Polk for Good Reason, Mr. Polk shall provide the Company with notice within 15 days of the occurrence of any circumstances that would constitute Good Reason, and the Company has not cured such circumstances within 15 days following receipt of such notice, with the exception of only five days written notice in the event the Company reduces Mr. Polk salary without his consent or fails to pay Mr. Polk any compensation due to him; or (vi) upon written notice by Mr. Polk without Cause.
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In the event Mr. Polk’s employment is terminated for any reason (not including, however, a termination by the Company for Cause or a termination as a result of Mr. Polk’s death or disability) (a “Change of Control Termination”) during the 12-month period following a Change of Control (as defined in the Employment Agreement) or in anticipation of a Change of Control (as defined in the Employment Agreement), the Company shall pay Mr. Polk a cash severance payment equal to six months of his then base salary, less applicable withholding. In addition, in the event of a Change of Control, all of Mr. Polk’s equity-based compensation shall vest immediately regardless of whether Mr. Polk is retained by the Company or successor following the Change of Control and any outstanding stock options held by Mr. Polk shall be able to be exercised by Mr. Polk until the earlier of (i) one year from the date of termination and (ii) the latest date upon which such stock options would have expired by their original terms under any circumstances. In the event Mr. Polk’s employment is terminated for death, disability, without Good Reason by Mr. Polk or by the Company for Cause, (i) Mr. Polk shall be entitled to salary accrued through the termination date and (ii) any unvested stock options or equity compensation held by Mr. Polk shall immediately terminate and be forfeited (unless otherwise provided in the applicable award) and any previously vested stock options (or if applicable equity compensation) shall be subject to terms and conditions set forth in the applicable stock incentive plan or equity compensation plan, or award agreement. In the event Mr. Polk’s employment is terminated by Mr. Polk for Good Reason or by the Company without Cause, (i) Mr. Polk shall be entitled to continue to receive the salary at the rate in effect upon the termination date for six months following the termination date; (ii) subject to certain exceptions and provided that Mr. Polk elects to receive continued health insurance coverage through COBRA, the Company will pay Mr. Polk’s monthly COBRA contributions for health insurance coverage for six months following the termination date ((i) and (ii) are collectively referred to herein as the “Severance”); (iii) any unvested benefits (whether equity or cash benefits and bonuses will vest immediately upon such termination and any outstanding stock options or equity previously granted to Mr. Polk will vest immediately upon such termination and shall be exercisable by the Mr. Polk until the earlier of (A) one year from the date of termination and (B) the latest date upon which such stock options or equity would have expired by their original terms under any circumstances. As a condition to Mr. Polk’s right to receive the Severance, Mr. Polk will be required to execute and deliver to the Company a written release and may not breach any of the covenants and agreements set forth in the Employment Agreement. The Employment Agreement also contains covenants with respect to non-competition, confidential information and assignment of certain inventions and rights.
Nicholas Hnatiw
On June 1, 2021, the Company entered into an employment agreement (the “Hnatiw Employment Agreement”) with Nicholas Hnatiw pursuant to which Mr. Hnatiw serves as Chief Technology Officer of the Company. Pursuant to the Hnatiw Employment Agreement, Mr. Hnatiw shall (i) receive a base salary of $200,000, which may be increased by the compensation committee of the Board in its sole discretion beginning on May 31, 2021 and on each May 31st thereafter; (ii) be eligible for an annual equity bonus (payable in shares of Common Stock or options) equal to $50,000, which may be increased or decreased by the compensation, in its sole discretion; and (iii) be eligible for a yearly discretionary cash bonus with the target amount of $100,000. In addition, Mr. Hnatiw received [insert award under restricted stock agreement]. Furthermore, Mr. Hnatiw shall be reimbursed for reasonable, out-of-pocket business expenses consistent with the Company’s policies and procedures, in effect from time to time, and will be entitled to unlimited paid time off. Mr. Hnatiw shall also be entitled to participate in any employee benefit plans or programs for which he is eligible that are provided by the Company to its management employees.
The Hnatiw Employment Agreement shall terminate upon the earliest to occur of the following: (i) Mr. Hnatiw’s death; (ii) upon written notice by the Company if Mr. Hnatiw shall suffer a physical or mental disability which renders Mr. Hnatiw, in the reasonable judgment of the [compensation] committee, unable to perform his duties and obligations under the Hnatiw Employment Agreement for either 90 consecutive days or 180 days in any 12-month period; (iii) upon written notice by Mr. Hnatiw for any reason other than Good Reason (as defined in the Hnatiw Employment Agreement); (iv) upon written notice by Mr. Hnatiw for Cause (as defined in the Hnatiw Employment Agreement); (v) upon written notice by Mr. Hnatiw for Good Reason; provided, however, prior to any such termination by Mr. Hnatiw for Good Reason, Mr. Hnatiw shall provide the Company with notice within 15 days of the occurrence of any circumstances that would constitute Good Reason, and the Company has not cured such circumstances within 15 days following receipt of such notice, with the exception of only five days written notice in the event the Company reduces Mr. Hnatiw salary without his consent or fails to pay Mr. Hnatiw any compensation due to him; or (vi) upon written notice by Mr. Hnatiw without Cause.
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In the event Mr. Hnatiw’s employment is terminated for any reason (not including, however, a termination by the Company for Cause or a termination as a result of Mr. Hnatiw’s death or disability) (a “Change of Control Termination”) during the 12-month period following a Change of Control (as defined in the Hnatiw Employment Agreement) or in anticipation of a Change of Control (as defined in the Hnatiw Employment Agreement), the Company shall pay Mr. Hnatiw a cash severance payment equal to six months of his then base salary, less applicable withholding. In addition, in the event of a Change of Control, all of Mr. Hnatiw’s equity-based compensation shall vest immediately regardless of whether Mr. Hnatiw is retained by the Company or successor following the Change of Control and any outstanding stock options held by Mr. Hnatiw shall be able to be exercised by Mr. Hnatiw until the earlier of (i) one year from the date of termination and (ii) the latest date upon which such stock options would have expired by their original terms under any circumstances. In the event Mr. Hnatiw’s employment is terminated for death, disability, without Good Reason by Mr. Hnatiw or by the Company for Cause, (i) Mr. Hnatiw shall be entitled to salary accrued through the termination date and (ii) any unvested stock options or equity compensation held by Mr. Hnatiw shall immediately terminate and be forfeited (unless otherwise provided in the applicable award) and any previously vested stock options (or if applicable equity compensation) shall be subject to terms and conditions set forth in the applicable stock incentive plan or equity compensation plan, or award agreement. In the event Mr. Hnatiw’s employment is terminated by Mr. Hnatiw for Good Reason or by the Company without Cause, (i) Mr. Hnatiw shall be entitled to continue to receive the salary at the rate in effect upon the termination date for six months following the termination date; (ii) subject to certain exceptions and provided that Mr. Hnatiw elects to receive continued health insurance coverage through COBRA, the Company will pay Mr. Hnatiw’s monthly COBRA contributions for health insurance coverage for six months following the termination date ((i) and (ii) are collectively referred to herein as the “Hnatiw Severance”); (iii) any unvested benefits (whether equity or cash benefits and bonuses will vest immediately upon such termination and any outstanding stock options or equity previously granted to Mr. Hnatiw will vest immediately upon such termination and shall be exercisable by the Mr. Hnatiw until the earlier of (A) one year from the date of termination and (B) the latest date upon which such stock options or equity would have expired by their original terms under any circumstances. As a condition to Mr. Hnatiw’s right to receive the Hnatiw Severance, Mr. Hnatiw will be required to execute and deliver to the Company a written release and may not breach any of the covenants and agreements set forth in the Hnatiw Employment Agreement. The Hnatiw Employment Agreement also contains covenants with respect to non-competition, confidential information and assignment of certain inventions and rights.
Compensation of Directors
The Company’s compensation policy for directors includes quarterly fees as well as stock options. Annual director compensation will be $60,000 for the Chairman of the Board and Lead Independent Director, $40,000 for directors with an additional $20,000 for additional committees chairmanships. In July 2020, the Board temporarily deferred cash payments to its members. The Company restored cash payments to directors in April 2021.
Beginning with the quarter ended September 30, 2021, the Company’s directors received one-half of their compensation in cash and the remaining half in Common Stock. During the years ended September 30, 2021, and 2020, the Company paid $220,000 and $170,000 in Board fees, respectively.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There are no transactions which occurred during our fiscal years ended September 30, 2021 and 2020 to which we have been a party, including transactions in which the amount involved in the transaction exceeds the lesser of $120,000 or 1% of the average of our total assets at year-end for the last two completed fiscal years, and in which any of our directors, executive officers or, to our knowledge, beneficial owners of more than 5% of our capital stock or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest, other than equity and other compensation, termination, change in control and other arrangements, which are described elsewhere in this Information Statement. We are not otherwise a party to a current related party transaction, and no transaction is currently proposed, in which the amount of the transaction exceeds the lesser of $120,000 or 1% of the average of our total assets at year-end for the last two completed fiscal years and in which a related person had or will have a direct or indirect material interest.
REVIEW, APPROVAL AND RATIFICATION OF RELATED PARTY TRANSACTIONS
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
WHERE YOU CAN OBTAIN ADDITIONAL INFORMATION
The Company is subject to the informational requirements of the Exchange Act, and in accordance therewith files reports, proxy statements and other information including annual and quarterly reports on Forms 10-K and 10-Q, respectively, with the SEC. Copies of such material can be obtained on the SEC’s website (http://www.sec.gov) that contains the filings of issuers with the SEC through the EDGAR system.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this Information Statement on Schedule 14f-1 to be signed on its behalf by the undersigned hereunto duly authorized.
CIPHERLOC CORPORATION
Dated: July 5, 2022
By: /s/ Ryan Polk
Ryan Polk
Chief Financial Officer
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A NEW DAY HAS ARRIVED. THE FUTURE IS SO LEGIT FOR THIS COMPANY. KICKING THE CRIMINAL AND HIS SIDEKICK TO THE CURB WAS THE BEST THING WILKINSON AND HIS TEAM COULD HAVE DONE. THIS IS FANTASTIC NEWS FOR SHAREHOLDERS. YES IT HAS CAUSED SOME DILUTION BUT WE ARE HEADED TO A NEW TRADING PLATFORM AND WE CAN ALL THANK WILKINSON FOR HIS GREAT JOB OF FORMING A TEAM AND TAKING US FROM THE GRIPS OF THE CRIMINAL AND ALL THE WAY TO THE HANDS OF BRIAN. ALL WHILE BEING RIDICULED. MR. WILKINSON, I THANK YOU FOR SAVING US. THE ADDITIONAL BOARD MEMBERS LOOK UNBELIEVABLE. CONTINUING THE LEGITIMACY OF OUR COMPANY.
We are moving ahead swiftly on the integration process to take advantage of opportunities in our fast-growing addressable markets, which are expected to reach $500 billion by 2030," said Haugli. "As a combined entity, we believe SideChannel is uniquely positioned to offer a centralized solution tailored to the needs of the middle market. Our clients can secure critical cybersecurity services and software from the industry's most experienced CISOs on a long-term basis in a manner that works for their budgets. Our immediate goal is to achieve $5.5 million in trailing 12-month revenue as contemplated in the purchase agreement, continue to scale our business to drive value for our stockholders and position the company for an uplisting to a national stock exchange."
Cipherloc Completes Acquisition, Announces Name Change to SideChannel Inc.
Appoints Haugli as CEO, Expands Board
AUSTIN, TX / ACCESSWIRE / July 5, 2022 / Cipherloc Corporation (OTCQB:CLOK) ("Cipherloc"), a developer of advanced encryption technology, today announced that it has completed the acquisition of SideChannel Inc. ("SideChannel"), a cybersecurity services company providing virtual Chief Information Security Officer ("vCISO") services augmented by additional privacy management tools and capabilities. The combined entity pairs highly skilled cybersecurity talent and software tools with a focus on clients in the robust and growing middle-market.
Additionally, Cipherloc announced a change in the Company's name to SideChannel, Inc., effective July 1, 2022, and that it has appointed Brian Haugli, Founder and CEO of SideChannel, as CEO of the combined entity effective immediately. David Chasteen, Cipherloc's outgoing CEO, will become Executive Vice President of Sales and Marketing.
"We are moving ahead swiftly on the integration process to take advantage of opportunities in our fast-growing addressable markets, which are expected to reach $500 billion by 2030," said Haugli. "As a combined entity, we believe SideChannel is uniquely positioned to offer a centralized solution tailored to the needs of the middle market. Our clients can secure critical cybersecurity services and software from the industry's most experienced CISOs on a long-term basis in a manner that works for their budgets. Our immediate goal is to achieve $5.5 million in trailing 12-month revenue as contemplated in the purchase agreement, continue to scale our business to drive value for our stockholders and position the company for an uplisting to a national stock exchange."
Cipherloc also expanded its board to six members to facilitate the appointment of additional security, finance and technology industry experts as directors. The Company announced the appointment of Hugh Regan, Debbie MacConnel and Kevin Powers as independent directors, and the appointment of Mr. Haugli as President and an inside director. In order to facilitate these appointments, Mr. Chasteen and Sammy Davis have resigned as directors. Tom Wilkinson will continue as a director and Chairman of the Board; Anthony Ambrose will continue as Cipherloc's lead independent director.
"We believe the combination of SideChannel and Cipherloc creates the industry's best platform for middle market cybersecurity needs, combining highly experienced CISO talent, industry standard software and custom subscription software development capabilities to create tailored solutions specifically crafted with the middle market in mind," said Wilkinson. "We have now expanded and reconstituted our board with a deep bench of industry talent in finance, software and information security to support the leadership team as it executes our business plan."
Mr. Regan recently retired from his role as Secretary, Treasurer and Chief Financial Officer of inTEST Corporation, a publicly traded manufacturer of capital equipment used in the semiconductor industry and other markets, and currently works as a private consultant to businesses, assisting them with various strategic issues. Mr. Regan served in his roles at inTEST for just over 25 years, from April 1996 until June 2021. From 1985 to April 1996, Mr. Regan served in various financial capacities for Value Property Trust, a publicly traded real estate investment trust, including Vice President of Finance from 1989 to September 1995 and Chief Financial Officer from September 1995 until April 1996. Mr. Regan qualifies as an independent member of the Company's Board of Directors and will serve as the Chairperson of the Company's Audit Committee.
Ms. MacConnel has been involved in the computer industry for 34 years, retiring recently from the IBM Corporation after 28 years. Prior to her retirement, Ms. MacConnel was instrumental in transforming information technology for IBM's human resources function, which supported up to 450,000 employees. Ms. MacConnel's team at IBM was also responsible for transforming the succession planning process for executive selection and promotion, along with enhancing the processes for mergers and acquisition management and talent acquisition. Ms. MacConnel qualifies as an independent member of the Company's Board of Directors.
Mr. Powers is the founder and director of the Master of Science in Cybersecurity Policy and Governance Programs at Boston College and is an Assistant Professor of the Practice at Boston College Law School and in Boston College's Carroll School of Management's Business Law and Society Department. Mr. Powers is also a Cybersecurity Research Affiliate at the MIT Sloan School of Management, and he has taught courses at the U.S. Naval Academy, where he was also the Deputy General Counsel to the Superintendent. Mr. Powers qualifies as an independent member of the Company's Board of Directors.
Mr. Haugli has been the Managing Partner of SideChannel since September 2017. Since October 2020, Mr. Haugli has been the founder of RealCISO, a cybersecurity risk assessment SaaS platform, and has been the creator and host of #CISOlife YouTube and Podcast since August 2019. Mr. Haugli was an Adjunct Professor at Boston College from June 2020 through January 2022, an advisor to Zscaler from September 2019 to 2020, and worked for the Hanover Group from May 2015 to April 2019, most recently as VP, Chief Security Officer.
Two of the new appointees, Ms. MacConnel and Mr. Powers, join the Cipherloc Board immediately. Mr. Regan and Mr. Haugli will become Directors following the completion of a shareholder notification about the board expansion. The Company expects to complete the expansion notification during July 2022.
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About SideChannel Inc.
SideChannel is committed to helping mid-market companies create top-tier cybersecurity programs, to protect all they have built. SideChannel deploys the field's most skilled and experienced talent to harden their defenses against cybercrime, in its many forms. The collective of 20+ C-suite level information security officers possess a combined 450 years of experience between them. To date, SideChannel has created more than 50 multi-layered cybersecurity programs for its clients. Learn more at sidechannel.com.
About Cipherloc Corporation
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. Cipherloc Enclave, the Company's micro segmentation product, is the simple, effective and secure way to protect data and reduce risk while enhancing team productivity. Built with the user in mind, Cipherloc Enclave makes encryption accessible and available. Learn more at www.cipherloc.net.
Forward-Looking Statements
This press release may contain forward-looking statements, including information about management's view of Cipherloc's future expectations, plans and prospects, including within the safe harbor provisions under The Private Securities Litigation Reform Act of 1995 (the "Act"). In particular, when used in the preceding discussion, the words "believes," "hopes," "expects," "intends," "plans," "anticipates," or "may," and similar conditional expressions are intended to identify forward-looking statements within the meaning of the Act, and are subject to the safe harbor created by the Act and otherwise. Any statements made in this news release other than those of historical fact, about an action, event or development, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors, which may cause the results of Cipherloc, its divisions and concepts to be materially different than those expressed or implied in such statements. These risk factors include, but are not limited to, our ability to satisfy the closing conditions of the acquisition, our ability to integrate the operations of SideChannel into our company; that we have incurred net losses since inception, our need for additional funding, the substantial doubt about our ability to continue as a going concern, and the terms of any future funding we raise; that COVID-19 has materially adversely affected our operations and may continue to have a material adverse impact on our operating results in the future; our dependence on current management and our ability to attract and retain qualified employees; competition for our products; our ability to develop new products, improve current products and innovate; unpredictability in our operating results; our ability to retain existing licensees and add new licensees; our ability to manage our growth; our ability to protect our intellectual property (IP), enforce our IP rights and defend against claims that we infringed on the IP of others; and other risk factors included from time to time in documents Cipherloc files with the Securities and Exchange Commission, including, but not limited to, its Form 10-Ks, Form 10-Qs and Form 8-Ks. These reports are available at www.sec.gov. Other unknown or unpredictable factors also could have material adverse effects on Cipherloc's future results. The forward-looking statements included in this press release are made only as of the date hereof. Cipherloc cannot guarantee future results, levels of activity, performance or achievements. Accordingly, you should not place undue reliance on these forward-looking statements. Finally, Cipherloc undertakes no obligation to update these statements after the date of this release, except as required by law, and takes no obligation to update or correct information prepared by third parties that are not paid for by Cipherloc. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.
Investor Contact:
Matt Kreps
Darrow Associates Investor Relations
214-597-8200
mkreps@darrowir.com
SOURCE: Cipherloc Corporation
View source version on accesswire.com:
https://www.accesswire.com/707476/Cipherloc-Completes-Acquisition-Announces-Name-Change-to-SideChannel-Inc
Absolutely 100% Correct
Quote.....
If the BOD and management make money so do shareholders.
I have a feeling actual shareholders are feeling just fine about everything going on with Cipherloc. It is possible that some shareholders sold off their shares and are not so happy now that things appear to be heading in a positive direction. As for me...Im smiling everyday.
Voted on and approved by shareholders
From the Schedule 14A Voted on in 2021
https://www.sec.gov/Archives/edgar/data/1022505/000149315221017246/formdef14a.htm
PROPOSAL 3:
ADOPTION OF 2021 OMNIBUS EQUITY INCENTIVE PLAN
Summary
On May 12, 2021, our Board adopted our 2021 Omnibus Equity Incentive Plan (the “2021 Plan”). The 2021 Plan will become effective, if at all, on the date that it is approved by our stockholders (the “Effective Date”).
The Company does not currently have any equity compensation plans.
Under the 2021 Plan, 8,000,000 shares of Company common stock are initially available for grant.
Our administrator may grant incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards to participants to acquire shares of Company common stock under the 2021 Plan. The 2021 Plan will be administered by the Compensation Committee of our Board. The closing price per-share of Company common stock on June 1, 2021, was $0.2150. The following table sets forth, as of June 1, 2021, the approximate number of each class of participants eligible to participate in the 2021 Plan and the basis of such participation.
Class and Basis of Participation Approximate
Number of
Class
Employees 4
Directors(1) 4
Independent Contractors 2
(1) One (1) of the four (4) directors is an employee of the Company.
Rationale for Adoption of the 2021 Plan
Grants of options, stock appreciation rights, restricted shares of common stock, restricted stock units and other stock-based awards to our employees, directors and independent contractors are an important part of our long-term incentive compensation program, which we use in order to strengthen the commitment of such individuals to us, motivate them to faithfully and diligently perform their responsibilities and attract and retain competent and dedicated individuals whose efforts are expected to result in our long-term growth and profitability.
The number of shares proposed to be available for grant under the 2021 Plan is designed to enable the Company to properly incentivize its employees and management teams over a number of years on a going-forward basis.
Dilution, Stock Available and Historical Stock Usage
Dilution. Subject to stockholder approval of the 2021 Plan, 8,000,000 shares of Company common stock will be reserved for issuance under the Plan, which represents approximately 9.6% of our issued and outstanding shares of Company’s common stock. The Board believes that this number of shares of Company’s common stock constitutes reasonable potential equity dilution and provides a significant incentive for employees to increase the value of the Company for all stockholders. The closing trading price of each share of Company common stock as of the Record Date was $0.18.
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As of the Record Date, we had: (i) 82,927,311 shares of Company’s common stock outstanding; and (ii) 0 (zero) stock options outstanding (vested and unvested). The new shares of Company’s common stock available under the 2021 Plan would represent an additional potential equity dilution of approximately 9.6%. Including the proposed additional shares of Company’s common stock under the 2021 Plan, the potential equity dilution from all equity incentive awards outstanding and available for grant under all of our equity plans would result in a maximum potential equity dilution of approximately 9.6%.
Shares Available; Certain Limitations. The maximum number of shares of common stock reserved and available for issuance under the 2021 Plan will be 8,000,000 shares of common stock.
New shares reserved for issuance under the 2021 Plan may be authorized but unissued shares of Company’s common stock or shares of Company’s common stock that will have been or may be reacquired by us in the open market, in private transactions or otherwise. If any shares of Company’s common stock subject to an award are forfeited, cancelled, exchanged or surrendered or if an award terminates or expires without a distribution of shares to the participant, the shares of Company common stock with respect to such award will, to the extent of any such forfeiture, cancellation, exchange, surrender, termination or expiration, again be available for awards under the Plan except that any shares of Company common stock surrendered or withheld as payment of either the exercise price of an award and/or withholding taxes in respect of an award will not again be available for awards under the Plan. If an award is denominated in shares of Company’s common stock, but settled in cash, the number of shares of common stock previously subject to the award will again be available for grants under the 2021 Plan. If an award can only be settled in cash, it will not be counted against the total number of shares of common stock available for grant under the 2021 Plan. However, upon the exercise of any award granted in tandem with any other awards, such related awards will be cancelled as to the number of shares as to which the award is exercised and such number of shares of Company’s common stock will no longer be available for grant under the 2021 Plan.
As exhibited by our responsible use of equity over the past several years and good corporate governance practices associated with equity and executive compensation practices in general, the stock reserved under the 2021 Plan will provide us with the platform needed for continued our growth, while managing program costs and share utilization levels within acceptable industry standards.
Share Usage. Cipherloc does not have an equity incentive plan currently and have not had one covering the previous three-year period. Consequently, there is no share usage by existing equity plan over the past three years.
Description of 2021 Plan
The following is a summary of the material features of the 2021 Plan. This summary is qualified in its entirety by the full text of the 2021 Plan, a copy of which is attached to this Proxy Statement as Appendix A.
Types of Awards. The 2021 Plan provides for the issuance of incentive stock options, non-statutory stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”), and other stock-based awards. Items described above in the Section called “Shares Available” are incorporated herein by reference.
Administration. The 2021 Plan will be administered by our Board, or if our Board does not administer the 2021 Plan, a committee or subcommittee of our Board that complies with the applicable requirements of Section 16 of the Exchange Act and any other applicable legal or stock exchange listing requirements (each of our Board or such committee or subcommittee, the “plan administrator”). The plan administrator may interpret the 2021 Plan and may prescribe, amend and rescind rules and make all other determinations necessary or desirable for the administration of the 2021 Plan, provided that, subject to the equitable adjustment provisions described below, the plan administrator will not have the authority to reprice or cancel and re-grant any award at a lower exercise, base or purchase price or cancel any award with an exercise, base or purchase price in exchange for cash, property or other awards without first obtaining the approval of our stockholders.
The 2021 Plan permits the plan administrator to select the eligible recipients who will receive awards, to determine the terms and conditions of those awards, including but not limited to the exercise price or other purchase price of an award, the number of shares of common stock or cash or other property subject to an award, the term of an award and the vesting schedule applicable to an award, and to amend the terms and conditions of outstanding awards.
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Restricted Stock and Restricted Stock Units. Restricted stock and RSUs may be granted under the 2021 Plan. The plan administrator will determine the purchase price, vesting schedule and performance goals, if any, and any other conditions that apply to a grant of restricted stock and RSUs. If the restrictions, performance goals or other conditions determined by the plan administrator are not satisfied, the restricted stock and RSUs will be forfeited. Subject to the provisions of the 2021 Plan and the applicable award agreement, the plan administrator has the sole discretion to provide for the lapse of restrictions in installments.
Unless the applicable award agreement provides otherwise, participants with restricted stock will generally have all of the rights of a stockholder, provided that dividends will only be paid if and when the underlying restricted stock vests. RSUs will not be entitled to dividends prior to vesting but may be entitled to receive dividend equivalents if the award agreement provides for them. The rights of participants granted restricted stock or RSUs upon the termination of employment or service to us will be set forth in the award agreement.
Options. Incentive stock options and non-statutory stock options may be granted under the 2021 Plan. An “incentive stock option” means an option intended to qualify for tax treatment applicable to incentive stock options under Section 422 of the Internal Revenue Code. A “non-statutory stock option” is an option that is not subject to statutory requirements and limitations required for certain tax advantages that are allowed under specific provisions of the Internal Revenue Code. A non-statutory stock option under the 2021 Plan is referred to for federal income tax purposes as a “non-qualified” stock option. Each option granted under the Plan will be designated as a non-qualified stock option or an incentive stock option. At the discretion of the administrator, incentive stock options may be granted only to our employees, employees of our “parent corporation” (as such term is defined in Section 424(e) of the Code) or employees of our subsidiaries.
The exercise period of an option may not exceed ten years from the date of grant and the exercise price may not be less than 100% of the fair market value of a share of common stock on the date the option is granted (110% of fair market value in the case of incentive stock options granted to ten percent stockholders). The exercise price for shares of common stock subject to an option may be paid in cash, or as determined by the administrator in its sole discretion, (i) through any cashless exercise procedure approved by the administrator (including the withholding of shares of common stock otherwise issuable upon exercise), (ii) by tendering unrestricted shares of common stock owned by the participant, (iii) with any other form of consideration approved by the administrator and permitted by applicable law or (iv) by any combination of these methods. The option holder will have no rights to dividends or distributions or other rights of a stockholder with respect to the shares of Common Stock subject to an option until the option holder has given written notice of exercise and paid the exercise price and applicable withholding taxes.
In the event of a participant’s termination of employment or service, the participant may exercise his or her option (to the extent vested as of such date of termination) for such period of time as specified in his or her option agreement.
Stock Appreciation Rights. SARs may be granted either alone (a “free-standing SAR”) or in conjunction with all or part of any option granted under the 2021 Plan (a “tandem SAR”). A free-standing SAR will entitle its holder to receive, at the time of exercise, an amount per share up to the excess of the fair market value (at the date of exercise) of a share of common stock over the base price of the free-standing SAR (which shall be no less than 100% of the fair market value of the related shares of common stock on the date of grant) multiplied by the number of shares in respect of which the SAR is being exercised. A tandem SAR will entitle its holder to receive, at the time of exercise of the SAR and surrender of the applicable portion of the related option, an amount per share up to the excess of the fair market value (at the date of exercise) of a share of common stock over the exercise price of the related option multiplied by the number of shares in respect of which the SAR is being exercised. The exercise period of a free-standing SAR may not exceed ten years from the date of grant. The exercise period of a tandem SAR will also expire upon the expiration of its related option.
The holder of a SAR will have no rights to dividends or any other rights of a stockholder with respect to the shares of Common Stock subject to the SAR until the holder has given written notice of exercise and paid the exercise price and applicable withholding taxes.
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In the event of a participant’s termination of employment or service, the holder of a SAR may exercise his or her SAR (to the extent vested as of such date of termination) for such period of time as specified in his or her SAR agreement.
Other Stock-Based Awards. The administrator may grant other stock-based awards under the 2021 Plan, valued in whole or in part by reference to, or otherwise based on, shares of common stock. The administrator will determine the terms and conditions of these awards, including the number of shares of common stock to be granted pursuant to each award, the manner in which the award will be settled, and the conditions to the vesting and payment of the award (including the achievement of performance goals). The rights of participants granted other stock-based awards upon the termination of employment or service to us will be set forth in the applicable award agreement. In the event that a bonus is granted in the form of shares of common stock, the shares of common stock constituting such bonus shall, as determined by the administrator, be evidenced in uncertificated form or by a book entry record or a certificate issued in the name of the participant to whom such grant was made and delivered to such participant as soon as practicable after the date on which such bonus is payable. Any dividend or dividend equivalent award issued hereunder shall be subject to the same restrictions, conditions and risks of forfeiture as apply to the underlying award.
Equitable Adjustment and Treatment of Outstanding Awards Upon a Change in Control
Equitable Adjustments. In the event of a merger, consolidation, reclassification, recapitalization, spin-off, spin-out, repurchase, reorganization, special or extraordinary dividend or other extraordinary distribution (whether in the form of common shares, cash or other property), combination, exchange of shares, or other change in corporate structure affecting our common stock, an equitable substitution or proportionate adjustment shall be made in (i) the aggregate number and kind of securities reserved for issuance under the 2021 Plan, (ii) the kind and number of securities subject to, and the exercise price of, any outstanding options and SARs granted under the 2021 Plan, (iii) the kind, number and purchase price of shares of common stock, or the amount of cash or amount or type of property, subject to outstanding restricted stock, RSUs and other stock-based awards granted under the 2021 Plan and (iv) the terms and conditions of any outstanding awards (including any applicable performance targets). Equitable substitutions or adjustments other than those listed above may also be made as determined by the plan administrator. In addition, the plan administrator may terminate all outstanding awards for the payment of cash or in-kind consideration having an aggregate fair market value equal to the excess of the fair market value of the shares of common stock, cash or other property covered by such awards over the aggregate exercise price, if any, of such awards, but if the exercise price of any outstanding award is equal to or greater than the fair market value of the shares of common stock, cash or other property covered by such award, the plan administrator may cancel the award without the payment of any consideration to the participant. With respect to awards subject to foreign laws, adjustments will be made in compliance with applicable requirements. Except to the extent determined by the plan administrator, adjustments to incentive stock options will be made only to the extent not constituting a “modification” within the meaning of Section 424(h)(3) of the Code.
Change in Control. The 2021 Plan provides that, unless otherwise determined by the plan administrator and evidenced in an award agreement, if a “change in control” (as defined below) occurs and a participant is employed by us or any of our affiliates immediately prior to the consummation of the change in control, then the plan administrator, in its sole and absolute discretion, may (i) provide that any unvested or unexercisable portion of an award carrying a right to exercise will become fully vested and exercisable; and (ii) cause the restrictions, deferral limitations, payment conditions and forfeiture conditions applicable to any award granted under the 2021 Plan to lapse, and the awards will be deemed fully vested and any performance conditions imposed with respect to such awards will be deemed to be fully achieved at target performance levels. The administrator shall have discretion in connection with such change in control to provide that all outstanding and unexercised options and SARs shall expire upon the consummation of such change in control.
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For purposes of the 2021 Plan, a “change in control” means, in summary, the first to occur of the following events: (i) a person or entity becomes the beneficial owner of more than 50% of our voting power; (ii) an unapproved change in the majority membership of our Board; (iii) a merger or consolidation of us or any of our subsidiaries, other than (A) a merger or consolidation that results in our voting securities continuing to represent 50% or more of the combined voting power of the surviving entity or its parent and our Board immediately prior to the merger or consolidation continuing to represent at least a majority of the board of directors of the surviving entity or its parent or (B) a merger or consolidation effected to implement a recapitalization in which no person is or becomes the beneficial owner of our voting securities representing more than 50% of our combined voting power; or (iv) stockholder approval of a plan of our complete liquidation or dissolution or the consummation of an agreement for the sale or disposition of substantially all of our assets, other than (A) a sale or disposition to an entity, more than 50% of the combined voting power of which is owned by our stockholders in substantially the same proportions as their ownership of us immediately prior to such sale or (B) a sale or disposition to an entity controlled by our Board. However, a change in control will not be deemed to have occurred as a result of any transaction or series of integrated transactions following which our stockholders, immediately prior thereto, hold immediately afterward the same proportionate equity interests in the entity that owns all or substantially all of our assets.
Tax Withholding
Each participant will be required to make arrangements satisfactory to the plan administrator regarding payment of up to the maximum statutory tax rates in the participant’s applicable jurisdiction with respect to any award granted under the 2021 Plan, as determined by us. We have the right, to the extent permitted by applicable law, to deduct any such taxes from any payment of any kind otherwise due to the participant. With the approval of the plan administrator, the participant may satisfy the foregoing requirement by either electing to have us withhold from delivery of shares of common stock, cash or other property, as applicable, or by delivering already owned unrestricted shares of common stock, in each case, having a value not exceeding the applicable taxes to be withheld and applied to the tax obligations. We may also use any other method of obtaining the necessary payment or proceeds, as permitted by applicable law, to satisfy our withholding obligation with respect to any award.
Amendment and Termination of the 2021 Plan
The 2021 Plan provides our Board with authority to amend, alter or terminate the 2021 Plan, but no such action impairs the rights of any participant with respect to outstanding awards without the participant’s consent. The plan administrator may amend an award, prospectively or retroactively, but no such amendment may materially impair the rights of any participant without the participant’s consent. Stockholder approval of any such action will be obtained if required to comply with applicable law. The 2021 Plan will terminate on the tenth anniversary of the Effective Date (although awards granted before that time will remain outstanding in accordance with their terms).
Clawback. If we are required to prepare a financial restatement due to the material non-compliance with any financial reporting requirement, then the plan administrator may require any Section 16 officer to repay or forfeit to us that part of the cash or equity incentive compensation received by that Section 16 officer during the preceding three years that the plan administrator determines was in excess of the amount that such Section 16 officer would have received had such cash or equity incentive compensation been calculated based on the financial results reported in the restated financial statement. The plan administrator may take into account any factors it deems reasonable in determining whether to seek recoupment of previously paid cash or equity incentive compensation and how much of such compensation to recoup from each Section 16 officer (which need not be the same amount or proportion for each Section 16 officer). The amount and form of the incentive compensation to be recouped shall be determined by the administrator in its sole and absolute discretion.
US Federal Income Tax Consequences
The following is a summary of certain United States federal income tax consequences of awards under the 2021 Plan. It does not purport to be a complete description of all applicable rules, and those rules (including those summarized here) are subject to change.
Non-Qualified Stock Options. A participant who has been granted a non-qualified stock option will not recognize taxable income upon the grant of a non-qualified stock option. Rather, at the time of exercise of such non-qualified stock option, the participant will recognize ordinary income for income tax purposes in an amount equal to the excess of the fair market value of the shares of common stock purchased over the exercise price. We generally will be entitled to a tax deduction at such time and in the same amount that the participant recognizes ordinary income. If shares of common stock acquired upon exercise of a non-qualified stock option are later sold or exchanged, then the difference between the amount received upon such sale or exchange and the fair market value of such shares on the date of such exercise will generally be taxable as long-term or short-term capital gain or loss (if the shares are a capital asset of the participant) depending upon the length of time such shares were held by the participant.
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Incentive Stock Options. In general, no taxable income is realized by a participant upon the grant of an ISO. If shares of common stock are purchased by a participant, or option shares, pursuant to the exercise of an ISO granted under the 2021 Plan and the participant does not dispose of the option shares within the two-year period after the date of grant or within one year after the receipt of such option shares by the participant, such disposition a disqualifying disposition, then, generally (1) the participant will not realize ordinary income upon exercise and (2) upon sale of such option shares, any amount realized in excess of the exercise price paid for the option shares will be taxed to such participant as capital gain (or loss). The amount by which the fair market value of the common stock on the exercise date of an ISO exceeds the purchase price generally will constitute an item which increases the participant’s “alternative minimum taxable income.” If option shares acquired upon the exercise of an ISO are disposed of in a disqualifying disposition, the participant generally would include in ordinary income in the year of disposition an amount equal to the excess of the fair market value of the option shares at the time of exercise (or, if less, the amount realized on the disposition of the option shares), over the exercise price paid for the option shares. Subject to certain exceptions, an option generally will not be treated as an ISO if it is exercised more than three months following termination of employment. If an ISO is exercised at a time when it no longer qualifies as an ISO, such option will be treated as a nonqualified stock option as discussed above. In general, we will receive an income tax deduction at the same time and in the same amount as the participant recognizes ordinary income.
Stock Appreciation Rights. A participant who is granted an SAR generally will not recognize ordinary income upon receipt of the SAR. Rather, at the time of exercise of such SAR, the participant will recognize ordinary income for income tax purposes in an amount equal to the value of any cash received and the fair market value on the date of exercise of any shares of common stock received. We generally will be entitled to a tax deduction at such time and in the same amount, if any, that the participant recognizes as ordinary income. The participant’s tax basis in any shares of common stock received upon exercise of an SAR will be the fair market value of the shares of common stock on the date of exercise, and if the shares are later sold or exchanged, then the difference between the amount received upon such sale or exchange and the fair market value of such shares on the date of exercise will generally be taxable as long-term or short-term capital gain or loss (if the shares are a capital asset of the participant) depending upon the length of time such shares were held by the participant.
Restricted Stock. A participant generally will not be taxed upon the grant of restricted stock, but rather will recognize ordinary income in an amount equal to the fair market value of the shares of common stock at the earlier of the time the shares become transferable or are no longer subject to a substantial risk of forfeiture (within the meaning of the Code). We generally will be entitled to a deduction at the time when, and in the amount that, the participant recognizes ordinary income on account of the lapse of the restrictions. A participant’s tax basis in the shares of common stock will equal their fair market value at the time the restrictions lapse, and the participant’s holding period for capital gains purposes will begin at that time. Any cash dividends paid on the shares of common stock before the restrictions lapse will be taxable to the participant as additional compensation and not as dividend income, unless the individual has made an election under Section 83(b) of the Code. Under Section 83(b) of the Code, a participant may elect to recognize ordinary income at the time the restricted shares are awarded in an amount equal to their fair market value at that time, notwithstanding the fact that such stock is subject to restrictions or transfer and a substantial risk of forfeiture. If such an election is made, no additional taxable income will be recognized by such participant at the time the restrictions lapse, the participant will have a tax basis in the shares of common stock equal to their fair market value on the date of their award, and the participant’s holding period for capital gains purposes will begin at that time. We generally will be entitled to a tax deduction at the time when, and to the extent that, ordinary income is recognized by such participant.
Restricted Stock Units. In general, the grant of RSUs will not result in income for the participant or in a tax deduction for us. Upon the settlement of such an award in cash or shares of common stock, the participant will recognize ordinary income equal to the aggregate value of the payment received, and we generally will be entitled to a tax deduction at the same time and in the same amount.
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Other Awards. With respect to other stock-based awards, generally when the participant receives payment in respect of the award, the amount of cash and/or the fair market value of any shares of common stock or other property received will be ordinary income to the participant, and we generally will be entitled to a tax deduction at the same time and in the same amount.
New Plan Benefits
Future grants under the 2021 Plan will be made at the discretion of the plan administrator and, accordingly, are not yet determinable. In addition, benefits under the 2021 Plan will depend on a number of factors, including the fair market value of our common stock on future dates and the exercise decisions made by participants. Consequently, at this time, it is not possible to determine the future benefits that might be received by participants receiving discretionary grants under the 2021 Plan.
Interests of Officers and Directors in this Proposal
Members of our Board and our executive officers are eligible to receive awards under the terms of the 2021 Plan, including through certain outstanding employment agreements and grants, and they therefore have a substantial interest in Proposal 3.
Required Vote of Stockholders
The affirmative vote of a majority of the votes cast at the Annual Meeting is required to approve the adoption of the 2021 Plan.
Board Recommendation
The Board unanimously recommends a vote “FOR” Proposal 3.
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Securities Registration: Employee Benefit Plan (s-8)
Source: Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Cipherloc Corporation
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization) 86-0837077
(I.R.S. Employer
Identification No.)
6836 Bee Cave Road, Bldg. 1, S#279
Austin, Texas
(Address of principal executive offices)
78746
(Zip Code)
Cipherloc Corporation 2021 Omnibus Equity Incentive Plan
(Full title of the plan)
David Chasteen
Chief Executive Officer
Cipherloc Corporation
6836 Bee Cave Road, Bldg. 1, S#279
Austin, Texas 78746
(Name and address of agent for service)
(512) 772-4245
(Telephone number, including area code, of agent for service)
With a copy to:
Jeffrey Fessler, Esq.
Nazia J. Khan, Esq.
Sheppard, Mullin, Richter & Hampton LLP
30 Rockefeller Plaza
New York, NY 10112-0015
Phone: (212) 653-8700
Fax: (212) 653-8701
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ? Accelerated filer ? Non-accelerated filer ?
Smaller reporting company ? 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 7(a)(2)(B) of the Securities Act. ?
EXPLANATORY NOTE
This Registration Statement registers an additional 8,186,106 shares of the Registrant’s common stock that may be offered and sold under the Cipherloc Corporation 2021 Omnibus Equity Incentive Plan (the “Plan”). The number of shares of the Registrant’s common stock available for issuance under the stockholder-approved Plan is subject to an automatic annual increase on the first day of each of the Registrant’s fiscal years beginning on January 1, 2022 and ending on the last January 1st during the initial ten-year term of the Plan, by an amount equal to the lesser of (i) 5% of the Registrant’s shares of common stock outstanding (on an as-converted basis, which shall include shares of the Registrant’s common stock issuable upon the exercise or conversion of all outstanding securities or rights convertible into or exercisable for shares of the Registrant’s common stock, including, without limitation, preferred stock, warrants and employee options to purchase any shares of the Registrant’s common stock) on the final day of the immediately preceding calendar year and (ii) such lesser number of shares of the Registrant’s common stock as determined by the Registrant’s board of directors. For 2022, the Board authorized an increase of 8,186,106 shares of the Registrant’s common stock under the Plan, consisting of the full 5% increase allowed pursuant to the Plan’s evergreen provision. These shares are in addition to the 8,000,000 shares of common stock registered on the Registrant’s Form S-8 filed with the Securities and Exchange Commission on October 25, 2021 (File No. 333-260463) (the “Prior Registration Statement”).
In accordance with General Instruction E of Form S-8, the contents of the Prior Registration Statement are incorporated herein by reference and made part of this Registration Statement, except as amended hereby.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed by Cipherloc Corporation (the “Company”) with the Securities and Exchange Commission (“SEC”) are incorporated herein by reference:
? The Company’s Annual Report on Form 10-K for the year ended September 30, 2021, filed with the SEC on December 31, 2021;
? The Company’s Quarterly Reports on Form 10-Q for the quarters ended December 31, 2021 and March 31, 2022, filed with the SEC on February 14, 2022 and May 13, 2022, respectively;
? The Company’s Current Reports on Form 8-K filed with the SEC on October 12, 2021, January 3, 2022 and May 18, 2022;
? The Company’s definitive proxy statement on Schedule 14A filed with the SEC on July 20, 2021; and
? All other reports and documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (other than Current Reports furnished under Item 2.02 or Item 7.01 of Form 8-K and exhibits furnished on such form that relate to such items), subsequent to the date of this Registration Statement and prior to the filing of a post-effective amendment to this Registration Statement that indicates that all securities offered hereby have been sold or that deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference into this Registration Statement and to be a part hereof from the date of filing such reports and documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Registration Statement to the extent that a statement herein or in any subsequently filed document that also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not constitute a part of this Registration Statement, except as so modified or superseded.
EXHIBIT INDEX
Exhibit
Number
Description
5.1* Opinion of Sheppard, Mullin, Richter & Hampton LLP
10.1 Cipherloc Corporation 2021 Omnibus Equity Incentive Plan (incorporated by reference to Appendix A to the Company’s Proxy Statement on Schedule 14A filed on July 20, 2021)
23.1* Consent of Briggs & Veselka Co.
23.2* Consent of Sheppard, Mullin, Richter & Hampton LLP (included in Exhibit 5.1)
24.1 Power of Attorney (included on signature page)
107* Filing Fee Table
* Filed herewith
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Austin, Texas, on the 29th day of June 2022.
CIPHERLOC CORPORATION
By: /s/ David Chasteen
David Chasteen
Chief Executive Officer (Principal Executive Officer) and Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints David Chasteen as his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in their name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments), and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the date indicated.
Signature Title Date
/s/ David Chasteen Chief Executive Officer and Director June 29, 2022
David Chasteen (Principal Executive Officer)
/s/ Ryan Polk Chief Financial Officer June 29, 2022
Ryan Polk (Principal Financial and Accounting Officer)
/s/ Tom Wilkinson Chairman of the Board of Directors June 29, 2022
Tom Wilkinson
/s/ Anthony Ambrose Lead Independent Director June 29, 2022
Anthony Ambrose
/s/ Sammy Davis Director June 29, 2022
Sammy Davis
As it should be during the quiet period waiting for finra approval. The days of the criminal spewing his bullship over and over are gone. I commend management for staying silent at this time.
When you read through the BIOs of SideChannels team it’s hard not to get excited.
https://sidechannel.com/about/team/
We instantly became a real company with real employees and real revenue. This stock is so undervalued. Once we gain finra approval this stock should move north.
Some just took advantage of the low price caused by the criminal to accumulate hundreds of thousands of shares to average down to super low numbers. I know I did. I also know I am poised to hit it big very soon. Cipherloc/SideChannel will be a successful company with real revenue and real products including the quantum proof technology. Im interested to see how quickly the government contracts come in. Protecting the power grid has to be a major priority for the federal government. Finra approval has to be soon.
Good volume. Rise in share price. Can we find some rhythm and continued upward share price.
Totally Disagree……
Quote….
After selling his company to Cipherloc, SideChannel PARTNERS Haugli, Chasteen and Hnatiw will undoubtedly own significantly more shares of Cipherloc than ALL OTHER SHAREHOLDERS COMBINED.