Replies to post #23394 on SideChannel Inc (SDCH)

[CLOKtickticktick]

Hello Brian,

I appreciate you taking the time to respond. In hindsight, it would have been more appropriate to send my concerns to your SideChannel partner and Cipherloc CEO David Chasteen, but he isn't on this message board and has never made himself available. Please convey to Mr. Chasteen that there are a number of shareholders that would like to hear from him and we would appreciate much more transparency from him. The conference call last week left many questions unanswered. While you may have yourself convinced 'that dog just don't hunt', there is a glaring conflict of interest attached to the proposed sale of your company, it shall not be so easily swept under the rug and it needs to be properly addressed in a far more transparent and comprehensive manner; perhaps not by you but definitely by your partner David Chasteen. If the conflict of interest is not properly addressed, you will be building your castle on sandy soil. After Cipherloc's colorful and checkered history, much more needs to be done to show the motives behind this pending deal are pure. Shareholders deserve it.

That said, I will not respond to your other comments other than that I have to admit your third ground rule "I value the shareholders and opinions, but I have a business to grow and don't suffer fools gladly" offended me, at first. While I submit you should discontinue using that phrase when referring to yourself or shareholders, as it may not be your intent, some may receive your words as a pompous and crafty way of saying you hold yourself in high regard while believing shareholders to be stupid. But after reflection, I am not offended in any way, to be perfectly honest: I agree I am a fool for investing in Cipherloc and I would be hard pressed to argue against a statement that all Cipherloc shareholders are suffering fools; to take offense at being called foolish for investing in Cipherhloc would be nothing more than denial. Of course, there is an exception to every rule: the Cipherloc shareholders in positions of power and control in Cipherloc, they seem be be further enriched rather than suffering...

[TronCarter]

Haugli, SEC, CLOK to SDCH, Hnatiw, Chasteen

What a mess! Timeline Summary:

- Nov 2019 Chasteen joins SideChannel (SC)
- Feb 2020 Hnatiw joins SC
- Oct 2020 Chasteen joins CLOK
- Dec 2020 Hnatiw joins CLOK
- 2022 SC acquisition by CLOK discussed
- May 2022 acquisition publicly announced

Haugli has stated that he was not a part of CLOK and not privy to CLOK discussions.

Observations:

- Haugli signed an NDA with CLOK before entering negotiations
- An offer was made by CLOK to “acquire” SC
- At some point, the offer was modified to include 59,900,000 shares of the Company’s common stock (First Tranche Shares) and an additional 59,900,000 shares (Second Tranche Shares) for achieving at least $5.5 million in revenue (milestone). This is in addition to salary, cash bonus, stock bonus and additional benefits.
- As of July 1, 2022, Haugli owns 28.8% of the Company, per his 13D.
- If the “milestone” is reached, this would give Haugli majority ownership of the Company.
- If this happens, would this be deemed an actual fraudulent conveyance from CLOK to SDCH?

Message in reply to ‘Brian Haugli’:

I'll comment on what's appropriate. Keep in mind this acquisition isn't completed and have no ability to discuss what's happened inside Cipherloc that weren't part of this deal; ie, I don't have insight into the questions you're asking about David's role as CEO, because I'm not in CLOK and not privy to those discussions. I've been building SideChannel to be a successful and growing company focused on emerging and mid-market organizations.

Regarding ownership of SideChannel, shares allocated, etc, that information would be part of the filings we made with the SEC. I won't share those here and if they are to become public, would follow the correct course of communications. It especially seems improper given the deal isn't closed to discuss information that hasn't been made public via appropriate channels.

David joined SideChannel in Nov of 2019 and Nick joined in Feb 2020. I believe (based on what LinkedIn shows) that David started at Cipherloc in Oct 2020 and Nick in December 2020. We started discussing this acquisition only recently and have made the deal public on May 18th, 2022. I don't see their start dates as that close and the idea of this deal being recent creating your suspicion "that both Chasteen and Hnatiw were brought onto SideChannel as partners just a short time before they pushed for Cipherloc to buy SideChannel". That dog just don't hunt.

I will always provide transparency as a leader and professional…