Cipherloc Settles Litigation with Former CEO, Reclaims 13.1 Million Shares, De La Garza Resigns from Board of Directors

Rhea-AI Summary

Cipherloc Corporation (OTCQB:CLOK) announced the return of over 13.1 million shares, approximately 31% of its outstanding shares, to the company following a settlement with former Chairman and CEO, Michael De La Garza, who has resigned from the board. The settlement includes a five-year prohibition on De La Garza seeking control of the company. Cipherloc will pay $300,000 upfront, plus $100,000 over the next four quarters. This move aims to enhance shareholder value and reduce future litigation costs while the company focuses on generating revenue through its advanced encryption technology.

Positive

• Return of 13.1 million shares enhances shareholder value.
• Elimination of future litigation costs associated with former CEO.
• A strategic shift towards revenue generation leveraging advanced encryption technology.

Negative

• Resignation of the CEO could raise concerns about leadership continuity.

ARLINGTON, VA / ACCESSWIRE / September 1, 2020 / Cipherloc Corporation (OTCQB:CLOK) (the "Company"), a developer of advanced encryption technology, announced the return of more than 13.1 million shares, more than 31% of the basic shares outstanding, to the company as part of a settlement with its previous Chairman and Chief Executive Officer, Michael De La Garza. Additionally, De La Garza has resigned from the board of directors, effective immediately, and entered into an agreement prohibiting him and his affiliates from seeking to acquire any assets or securities of Cipherloc or seeking any control or board representation pertaining to Cipherloc for five years. The agreement includes the appointment of Tom Wilkinson as irrevocable proxy for five years in voting any shares De La Garza continues to hold. As consideration in the settlement, Cipherloc agreed to pay $300,000 as a lump sum, plus an additional $100,000 divided equally over the next four quarters.

"This settlement returns almost one-third of Cipherloc's outstanding common stock to the Company and eliminates future litigation costs for this matter, both of which we believe to be a significant benefit of our stockholders," said Tom Wilkinson, Chairman at Cipherloc Corporation. "Even as we are pleased to conclude this chapter in our history, Cipherloc continues to focus fully on transitioning to revenue as we work closely with multiple partners leveraging Cipherloc's technology across a variety of market opportunities. We have made exciting progress in these efforts under our new lean operating cost structure implemented earlier this year and continue to expand our partnership and testing programs as we work to bring Cipherloc's polymorphic encryption technologies to market."

As part of the settlement, De La Garza De La Garza resigned from his seat on the board of directors, of his own free will and volition, agreed that he has no disagreements or other disputes with the Board of Directors relating to the governance or conduct of business of the Company, and acknowledged that the current Board of Directors and its committees was properly constituted, appointed and elected.

About Cipherloc Corporation (OTCQB:CLOK)

Cipherloc Corporation provides advanced technology and expertise to secure your data and safeguard your privacy with the speed you need today and the agility you'll need tomorrow. Our patented Polymorphic Encryption technology provides a layer of security that is stronger, adaptable, and scalable across a variety of applications and systems. Learn more at www.quantanova.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All forward-looking statements are inherently uncertain as they are based on current expectations and assumptions concerning future events or future performance of the Company. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. In evaluating such statements, prospective investors should review carefully various risks and uncertainties identified in this release and matters set forth in the Company's SEC filings. These risks and uncertainties could cause the Company's actual results to differ materially from those indicated in the forward-looking statements.

Cipherloc Investor Contact:

Matt Kreps
Darrow Associates, Investor Relations
214-597-8200
mkreps@darrowir.com

SOURCE: CipherLoc Corporation

View source version on accesswire.com:
https://www.accesswire.com/604112/Cipherloc-Settles-Litigation-with-Former-CEO-Reclaims-131-Million-Shares-De-La-Garza-Resigns-from-Board-of-Directors

FAQ

What does the settlement with Michael De La Garza entail for Cipherloc?

Cipherloc agreed to pay $300,000 plus $100,000 over four quarters to settle with De La Garza, with over 13.1 million shares being returned to the company.

How does the return of shares impact Cipherloc's outstanding shares?

The return of over 13.1 million shares represents more than 31% of Cipherloc's basic shares outstanding, improving the value for existing shareholders.

What are the implications of De La Garza's resignation for Cipherloc?

De La Garza's resignation eliminates potential conflicts and litigation but raises concerns regarding leadership continuity.

What is Cipherloc's strategy moving forward after this settlement?

Cipherloc aims to focus on transitioning to revenue by leveraging its technology across various market opportunities.

What is the stock symbol for Cipherloc Corporation?

The stock symbol for Cipherloc Corporation is CLOK.