Certain statements in our Management's Discussion and Analysis of Financial
Condition and Results of Operations, including estimates, projections,
statements relating to our business plans, objectives and expected operating
results, and the assumptions upon which those statements are based, are
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. These forward-looking
statements generally are identified by the words "believe," "project," "expect,"
"anticipate," "estimate," "intend," "strategy," "plan," "may," "should," "will,"
"would," "will be," "will continue," "will likely result," and similar
expressions. Forward-looking statements are based on current expectations and
assumptions that are subject to risks and uncertainties which may cause actual
results to differ materially from the forward-looking statements. A detailed
discussion of risks and uncertainties that could cause actual results and events
to differ materially from such forward-looking statements is included in the
section entitled "Risk Factors" in our Annual Report on Form 10-K for the fiscal
year ended
This information should be read in conjunction with the interim unaudited
financial statements and the notes thereto included in this Quarterly Report on
Form 10-Q, and the audited financial statements and notes thereto and "Part II.
Other Information - Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations", contained in our Annual Report on Form
10-K for the year ended
Our logo and some of our trademarks and tradenames are used in this Report. This Report also includes trademarks, tradenames and service marks that are the property of others. Solely for convenience, trademarks, tradenames, and service marks referred to in this Report may appear without the ®, ™ and SM symbols. References to our trademarks, tradenames and service marks are not intended to indicate in any way that we will not assert to the fullest extent under applicable law our rights or the rights of the applicable licensors if any, nor that respective owners to other intellectual property rights will not assert, to the fullest extent under applicable law, their rights thereto. We do not intend the use or display of other companies' trademarks and trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies.
The market data and certain other statistical information used throughout this
Report are based on independent industry publications, reports by market
research firms or other independent sources that we believe to be reliable
sources. Industry publications and third-party research, surveys and studies
generally indicate that their information has been obtained from sources
believed to be reliable, although they do not guarantee the accuracy or
completeness of such information. We are responsible for all of the disclosures
contained in this Report, and we believe these industry publications and
third-party research, surveys and studies are reliable. While we are not aware
of any misstatements regarding any third-party information presented in this
Report, their estimates, in particular, as they relate to projections, involve
numerous assumptions, are subject to risks and uncertainties, and are subject to
change based on various factors, including those discussed under, and
incorporated by reference in, the section entitled "Item 1A. Risk Factors" of
this Report. These and other factors could cause our future performance to
differ materially from our assumptions and estimates. Some market and other data
included herein, as well as the data of competitors as they relate to
Unless the context requires otherwise, references to the "Company," "we," "us,"
"our," "Cipherloc", and "
In addition, unless the context otherwise requires and for the purposes of this report only:
? "Exchange Act" refers to the Securities Exchange Act of 1934, as amended; ? "SEC" or the "Commission" refers to theUnited States Securities and Exchange Commission ; and ? "Securities Act" refers to the Securities Act of 1933, as amended. 13 Table of Contents Introduction
This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is provided in addition to the accompanying financial statements and notes to assist readers in understanding our results of operations, financial condition, and cash flows. This MD&A is organized as follows:
? Business Strategy and Plan of Operations. Discussion of our strategy moving forward. ? Results of Operations. An analysis of our financial results comparing the three months endedDecember 31, 2021 with the three months endedDecember 31, 2020 . ? Liquidity and Capital Resources. A discussion of changes in our consolidated balance sheets, cash flows and a discussion of our financial condition. ? Critical Accounting Policies and Estimates. Accounting estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts.
The following discussion should be read in conjunction with our financial statements and accompanying notes included elsewhere in this report.
All references to years relate to the fiscal year ended
Overview
We are developing products and services around our core encryption technology, which is designed to enable secure and private data transmission in a post-quantum computing world. We plan to offer a new suite of products that can be used in virtually any commercial data security industry. We believe that our products will allow our customers to securely send sensitive data to others, with little setup time required.
Beginning in calendar 2019, we retained an entirely new management team. That
management team restructured our business to focus our resources on only
products and services that we believe will be deliverable, will have viable
economic potential, and may be publicly disseminated without adversely affecting
our competitive position. The core of our product and service offerings will be
built around our patents and proprietary encryption technology. We believe that
we have developed a highly secure data protection technology, which has received
a validation certificate from the
We have focused our product development efforts on the commercial application of our technology by advancing what we call a Software Development Kit, or "SDK." We believe that our product development efforts have advanced our technology to be ready for commercial application, in the form of products we have named Sentinel, Armor, and Shield. We intend to make these products available to our future licensees through our SDK.
In the past, we have primarily marketed our products through indirect sales efforts. We are currently developing new products and services designed for direct sales to customers, rather than sales through third parties.
On
We have six patents related to our core technology, which expire between 2034 and 2037.
14 Table of Contents Results of Operations
Three Months Ended
Comparison of Results
Our revenue decreased to zero for the three months ended
Our general and administrative expenses were
Our sales and marketing expenses were
Our research and development expenses were
We had a net loss of
Liquidity and Capital Resources
We had an accumulated deficit of
We had working capital of
Cash Flows
The following table summarizes, for the periods indicated, selected items in our condensed Statements of Cash Flows:
Three Months Ended December, 2021 2020 Net cash provided by (used in): Operating activities$ (712,406 ) $ (629,963 ) Investing activities $ - $ - Financing activities $ -$ (50,000 ) 15 Table of Contents Operating Activities
We used cash in operating activities in the amounts of
Our uses of cash during the quarter ended
Investing Activities
Cash used in investing activities was zero and zero for the three months ended
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements, as defined under applicable
Critical Accounting Policies and Estimates
Our financial statements are prepared in accordance with accounting principles
generally accepted in
See Note 4 of the unaudited financial statements included in "Part I-Item 1. Financial Statements", above, for a discussion of our significant accounting policies.
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