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Item 5. Market for Registrant’s Common Equity

2021-12-21 compared with 2020-12-29 · 18 added, 189 removed, 5 unchanged (98% of the section changed)

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

common stock is traded on the over-the-counter market and quoted on the OTCQB Venture Market run by OTC Markets Group under the

symbol “CLOK.”

of December 23, 2020, there were 27,505,196 shares of common stock of the Company issued and outstanding, and there were

1,121 holders of the Company’s common stock.

The actual number of holders of our common stock is greater than this

number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers

or held by other nominees.

This number of holders of record also does not include stockholders whose shares may be held in trust

by other entities.

did not declare any dividends for the year ended September 30, 2020.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

common stock is traded on the over-the-counter market and is quoted on the OTCQB Venture Market run by OTC Markets Group under

the symbol “CLOK.”

of December 16, 2021, there were 82,927,311 shares of our common stock issued and outstanding, and there were 1,127 holders of our common

did not declare any dividends for the fiscal year ended September 30, 2021.

Our board of directors does not intend to declare dividends

in the foreseeable future.

The declaration, payment, and amount of any future dividends will be made at the discretion our Board

of Directors, and will depend upon, among other things, the results of our operations, cash flows and financial condition, operating

and capital requirements, and other factors as the Board of Directors considers relevant.

There is no assurance that future dividends

will be paid, and if dividends are paid, there is no assurance with respect to the amount of any such dividend.

The declaration, payment, and amount of any future dividends will be made at the discretion our board of directors,

and will depend upon, among other things, the results of our operations, cash flows and financial condition, operating and capital requirements,

and other factors as our board of directors considers relevant.

We currently expect to use all available funds to finance the future

development and expansion of our business, and do not anticipate paying dividends on our common stock in the foreseeable future.

Transfer Agent and Registrar for our common stock is Pacific Stock Transfer Company located in Las Vegas, Nevada.

1 unchanged sentence

Issued for Cash

the year ended September 30, 2020, there was no stock issued for cash.

and Stock Options Issued to Board of Directors and Officers

the year ended September 30, 2020, the Company issued 620,000 stock options to employees that were subsequently forfeited due

to employee terminations.

Stock compensation expense for $194,896 was recognized in the period.

the year ended September 30, 2019, the Company issued 9,346 shares of common stock with a fair value of $11,216 to its employees

as part of their compensation.

The Company also issued 1,100,000 stock options to members of the board of directors and officers

with a Black Scholes value of $862,000 to vest ratably over a three-year period.

Stock compensation expense for $45,942

was recognized in the period.

the year ended September 30, 2020, 300,000 stock options were cancelled due to the termination of employment.

As of September

30, 2020, 800,000 stock options are outstanding.

None of the shares are in the money and the unamortized amount of stock compensation

as of September 30, 2020 is $383,453.

Issued for Services

the year ended September 30,2020, the Company did not issue any stock for services.

the year ended September 30, 2019, the Company issued 20,000 shares of common stock with a fair value of $40,000 to a consultant

for consulting services rendered.

foregoing offers, sales and issuances were exempt from registration under Section 4(a)(2) of the Securities Act.

SELECTED FINANCIAL DATA

Company is not required to provide the information required by this Item as it is a “smaller reporting company,”

defined in Rule 229.10(f)(1).

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

following discussion and analysis should be read in conjunction with our financial statements, including the notes thereto, appearing

elsewhere in this Annual Report on Form 10-K.

are developing products and services around our patented polymorphic encryption technology designed to enable a more efficient

and stronger layer of protection to be added to existing solutions.

Through a licensing program, we anticipate offering the first

secure commercially viable advanced “Polymorphic Encryption Core”

(“PEC”) software developers kit to be

used in any commercial data security industry and/or in sensitive applications.

innovative and patented polymorphic technology eliminates the flaws and inadequacies associated with today’s encryption

Instead of dealing with large monolithic blocks of data, our approach decomposes the information to be protected into

multiple segments.

These individual segments each have a unique encryption key, utilize different encryption algorithms, are randomly

grouped into different lengths, and can be further re-encrypted.

Since segments are independent from each other and are individually

protected, our technology is not susceptible to computational attacks.

In fact, the strength of our technology improves as compute

power increases.

Accounting Policies

financial statements are prepared in accordance with accounting principles generally accepted in the United States of America

The preparation of these financial statements requires the use of estimates and assumptions that affect the reported amounts

of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and the reported

amount of revenues and expenses during the reporting period.

Our management periodically evaluates the estimates and judgments

Management bases its estimates and judgments on historical experience and on various factors that are believed to be reasonable

under the circumstances.

Actual results may differ from these estimates as a result of different assumptions or conditions.

methods, estimates, and judgment we use in applying our most critical accounting policies have a significant impact on the results

we report in our financial statements.

The SEC has defined “critical accounting policies”

as those accounting policies

that are most important to the portrayal of our financial condition and results and require us to make our most difficult and

subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain.

Based upon this

definition, our most critical estimates are accounting for convertible debt and embedded derivatives, software revenue recognition,

and stock issued to employees and non-employees.

Our most critical accounting policies applicable to the periods presented are

For additional information see Note 2, “Significant Accounting Policies”

in the notes to our financial

statements appearing elsewhere in this report.

Although we believe that our estimates and assumptions are reasonable, they are

based upon information presently available, and actual results may differ significantly from these estimates.

critical accounting policies and estimates are those related to revenue recognition, deferred income taxes, accounting for share-based

payments, and litigation.

Recognition .

We adopted the new accounting revenue standard for revenue recognition effective October 1, 2018 using the modified

retrospective transition method applied to those contracts which were not completed as of October 1, 2018.

Results for reporting

periods beginning after October 1, 2018 are presented under this new guidance, while prior period amounts are not adjusted and

continue to be reported in accordance with our historic accounting under previous revenue guidance.

See Note (1) Summary of Significant

Accounting Policies.

Company’s contracts with customers often include promises to transfer multiple products and services to a customer.

whether products and services are considered distinct performance obligations that should be accounted for separately versus together

may require significant judgment.

is required to determine the standalone selling price (“SSP”) for each distinct performance obligation.

and services aside from maintenance and support, the Company estimates SSP by adjusting the list price by historical discount

SSP for software and hardware maintenance and support fees is based on the stated percentages of the fees charged

for the respective products.

Company’s perpetual and term software licenses have significant standalone functionality and therefore revenue allocated

to these performance obligations are recognized at a point in time upon electronic delivery of the download link and the license

For certain arrangements revenue is recognized based on usage or ratably over the term of the arrangement.

maintenance and support services are satisfied over time as they are stand-ready obligations throughout the support period.

a result, revenues associated with maintenance services are deferred and recognized as revenue ratably over the term of the contract.

associated with professional services are recognized at a point in time upon customer acceptance.

for Share-Based Payments .

As discussed further in Note (10) Share-Based Payment Arrangements , to our consolidated financial

statements, we account for share-based awards in accordance with the authoritative guidance issued by the FASB on stock compensation.

have used and expect to continue to use the Black-Scholes option-pricing model to compute the estimated fair value of share-based

compensation expense.

The Black-Scholes option-pricing model includes assumptions regarding dividend yields, expected volatility,

expected option term and risk-free interest rates.

The assumptions used in computing the fair value of share-based compensation

expense reflect our best estimates, but involve uncertainties relating to market and other conditions, many of which are outside

of our control.

We estimate expected volatility based primarily on historical daily price changes of our stock and other factors.

The expected option term is the number of years that we estimate that the stock options will be outstanding prior to exercise.

The estimated expected term of the stock awards issued has been determined pursuant to SEC Staff Accounting Bulletin SAB No.

If other assumptions or estimates had been used, the share-based compensation expense that was recorded for the years ended September

30, 2019 and 2018 could have been materially different.

Furthermore, if different assumptions or estimates are used in future

periods, share-based compensation expense could be materially impacted in the future.

ASC 718-20-35-7, Repurchase or Cancellation of equity awards, the amount of cash or other assets transferred (or liabilities incurred)

to repurchase an equity award shall be charged to equity, to the extent that the amount paid does not exceed the fair value of

the equity instruments repurchased at the repurchase date.

Any excess of the repurchase price over the fair value of the instruments

repurchased shall be recognized as additional compensation cost.

of Operations

Year Ended September 30, 2020 Compared to Fiscal Year Ended September 30, 2019

increased to $47,983 for the year ended September 30, 2020 from $46,600 for the year ended September 30, 2019.

There was no cost

of revenues for the years ended September 30, 2020 or September 30, 2019.

and administrative expenses increased to $4,573,673 for the year ended September 30, 2020 from $3,372,047 for the year ended September

The increases in general and administrative expenses primarily resulted from higher legal expenses of $1,043,820, an

impairment loss related to the operating leases of $382,962, increase in stock compensation of $153,355 , an increase in

corporate insurance of $142,197 and an increase in salary expense of $101,099 offset by decrease in payroll taxes of $236,369

along with, the decrease in miscellaneous expense over last year that included payments totaling $416,000 to Quality Healthcare

International, Inc.

(“QHI”) and Noun Energy.

and marketing expenses decreased to $710,595 for the year ended September 30, 2020 from $1,772,197 for the year ended September

Sales and marketing expenses decreased primarily due to non-recurring payments made to Ageos during 2019 to hire individual

sales consultants under contract with the Company for $1,217,072 and a decrease in travel related costs of $49,559 offset by an

increase in salary expense of $205,029.

and development expenses decreased to $1,689,455 for the year ended September 30, 2020 from $1,744,480 for the year ended September

Research and development expenses decreased primarily as a result lower salary expense of $604,489, a decrease in stock

compensation of $15,615 offset by an increase in consulting expense of $565,079

other expenses, net, increased to $44,332 for the year ended September 30, 2020 from $8,101 for the year ended September 30, 2019.

The increase is a result of losses on the disposal of fixed assets.

and Capital Resources

had an accumulated deficit as of September 30, 2020 of $68,426,608.

We expect to generate continued operating losses until

we generate revenues sufficient to exceed our operating expenses.

At September 30, 2020, we had $1,079,839 in cash.

believe that our existing cash balances are sufficient to fund future operations for the next 12 months.

We are considering options

to issue additional equity as a means to increase liquidity sufficient to fund operations through December 31, 2021.

following table summarizes, for the periods indicated, selected items in our Statements of Cash Flows:

Ended September 30,

Net cash (used in) provided by:

Investing activities

Financing activities

For the year ended September 30, 2020, cash

used in operating activities was $6,646,091, primarily attributable to a net loss of $6,970,072 non-cash items of $640,433

and a net change in net operating assets and liabilities of $316,452.

Non-cash items primarily consisted of an impairment

loss of $382,961 related to operating leases, stock compensation expense of $194,896, a net loss on disposal of assets of $44,332

and depreciation of $18,243.

The change in our net operating assets and liabilities was primarily due to an increase in prepaid

and other assets of $322,912 and an increase in accounts payable and accrued liabilities of $6,460.

The Company used cash

during the year to pay for the cost of general and administrative, sales and marketing, and research and development activities

which combined to be $6,973,723.

the year ended September 30, 2019, cash used in operating activities was $6,139,815, primarily attributable to a net loss of $6,834,023,

partially offset by the net change in our net operating assets and liabilities of $580,123 and non-cash charges of $114,085.

change in our net operating assets and liabilities was primarily due to an increase in prepaid expenses and other assets of $116,719

and an increase in accounts payable and accrued liabilities of $696,842.

Non-cash charges consisted of stock compensation of $57,158,

shares issued in exchange for services of $40,000 and depreciation of $16,927.

used in investing activities was $28,972 and $37,059, attributable to the purchases of property and equipment for the years ended

September 30, 2020 and 2019, respectively.

the year ended September 30, 2020, cash provided by financing activities was $215,430, primarily derived from the proceeds from

the PPA loan of $365,430, offset by a payment of $450,000 for the repurchase of treasury stock.

the years ended September 30, 2019, cash used in financing activities was $40,000, was due to a payout related to an oversubscription

on a capital raise.

Sheet Arrangements

did not have during the periods presented, nor do we currently have, any off-balance sheet arrangements as defined under applicable

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Company is not required to provide the information required by this Item as it is a “smaller reporting company,”

defined in Rule 229.10(f)(1).

March 31, 2021 and April 16, 2021, we sold an aggregate of 55,549,615 shares of our common stock, and warrants to purchase an equal number

shares of our common stock, for $0.18 per share of common stock sold, in a private placement.

We received gross proceeds of from the

private placement of $9,998,931, $8,558,339 net of issuance costs.

The offer and sale of these securities were exempt from registration

under Section 4(a)(2) of the Securities Act.

The resale of the shares were registered under the Securities Act through the filing of

a registration statement on Form S-1, which became effective on May 7, 2021.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity