What changed in this filing

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Item 1A. Risk Factors

2022-12-20 compared with 2021-12-21 · 776 added, 704 removed, 416 unchanged (78% of the section changed)

below are some of the risks that we believe could affect our business and financial statements, some of which are beyond our control.

business, financial condition and results of operations and the market price for our common stock are subject to numerous risks, many

of which are driven by factors that we cannot control or predict.

An investment in our common stock involves a high degree of risk.

You should carefully consider the following information about these

risks, together with the other information contained in this Annual Report on Form 10-K, before investing in our common stock.

of the events anticipated by the risks described below occur, our results of operations and financial condition could be adversely affected,

which could result in a decline in the market price of our common stock, causing you to lose all or part of your investment.

risks that we do not yet know of, or that we currently think are immaterial, may also affect our business and results of operations.

should carefully consider the following information about these risks, together with the other information contained in this Annual Report

on Form 10-K, including the information regarding “Forward-Looking Statements” earlier in this Form 10-K immediately prior

to Part I, Item 1 and “Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations”,

before investing in our common stock.

If any of the events anticipated by the risks described below occur, our results of operations

and financial condition could be adversely affected, which could result in a decline in the market price of our common stock, causing

you to lose all or part of your investment.

Additional risks that we do not yet know of, or that we currently think are immaterial, may

also affect our business and results of operations.

Related to Our Financial Position and Need for Capital

have incurred net losses since our inception and may never be profitable.

have incurred net losses and may never achieve profitability.

likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered

in connection with development of a business enterprise in the technology sector.

Our net losses for the year ended September 30, 2021

were $3,104,283, and for the year ended September 30, 2020 were $6,970,072, respectively, and our aggregate accumulated deficit as of

September 30, 2021 was $71,530,891.

cannot assure you that that any of our products currently under development will be successfully commercialized, and the extent of our

future losses and the timing of our profitability, if ever achieved, are highly uncertain.

If we are unable to achieve profitability,

we may be unable to continue our operations.

in connection with development of a new business enterprise.

Our accumulated deficit as of September 30, 2022 was $11.9 million.

our most recent fiscal year, we incurred one-time charges of $11.9 million related to the Business Combination which is comprised of

$6.2 million of acquisition related expenses and $5.7 million of goodwill impairment.

Excluding these one-time charges, our accumulated

deficit as of September 30, 2022 would have been $0.

cannot assure you that that any of our new products and services currently under development will be successfully commercialized, and

the extent of our future losses and the timing of any possible profitability, if ever achieved, are highly uncertain.

If we are unable

to achieve profitability, we may be unable to continue our operations.

ability to continue as a going concern may depend upon our ability to raise additional capital and such capital may not be available

on acceptable terms, or at all.

may need to raise additional funds in order to support expansion, develop new or enhanced services and products, hire employees, respond

to competitive pressures, acquire technologies or respond to unanticipated requirements, provided that we currently believe that funds

from our recent private placement will allow us to support our operations until approximately September of 2023.

Our management’s

plans include attempting to improve our profitability and our ability to generate sufficient cash flow from operations to meet our operating

needs on a timely basis, obtaining additional working capital funds through equity and debt financing arrangements, and restructuring

on-going operations to eliminate inefficiencies to increase our cash balances.

However, we cannot assure you that these plans and arrangements

will be sufficient to fund our ongoing capital expenditures, working capital, and other requirements.

Our management intends to make

every effort to identify and develop sources of funds.

The outcome of these matters cannot be predicted at this time.

There can be no

assurance that any additional financings will be available to us on satisfactory terms and conditions, if at all.

If adequate funds are

not available on acceptable terms, we may be unable to develop or enhance our services and products, take advantage of future opportunities

or respond to competitive pressures or unanticipated requirements, which could have a material adverse effect on our business, financial

condition and operating results.

Further, we may seek to raise additional funds through the issuance of equity securities, in which case,

the percentage ownership of our stockholders will be reduced, and holders may experience additional dilution in net book value per share.

amount of capital we may need depends on many factors, including the progress, timing and scope of our product development programs;

the time and cost necessary to obtain any necessary regulatory approvals;

our ability to enter into and maintain collaborative, licensing

and other commercial relationships;

currently believe that our cash available will allow us to fund our operations into fiscal year 2024.

Nevertheless, we may need to raise

additional funds in order to support expansion, develop new or enhanced products and services, hire employees, respond to competitive

pressures, acquire technologies or respond to unanticipated events or requirements before then.

Our management’s plans include

attempting to improve our profitability and our ability to generate sufficient cash flow from operations to meet our operating needs

on a timely basis, obtaining additional working capital funds through equity and debt financing arrangements, and restructuring on-going

operations to eliminate inefficiencies to reduce our expenses.

However, we cannot assure you that these plans and arrangements will be

sufficient to fund our ongoing capital expenditures, working capital, and other requirements.

The outcome of these matters cannot be

predicted at this time.

There can be no assurance that any additional financings will be available to us on satisfactory terms and conditions,

If adequate funds are not available on acceptable terms, we may be unable to develop or enhance our products and services,

take advantage of future opportunities or respond to competitive pressures or unanticipated requirements, any of which could have a material

adverse effect on our business, financial condition and operating results.

If we raise additional funds through the issuance of equity

securities, or convertible debt, the percentage ownership of our stockholders will be reduced, and holders may experience dilution in

net book value per share.

amount of capital we may need depends on many factors, including the progress, timing, scope and market acceptance of our product development

the time and cost required to obtain any necessary regulatory approvals;

our ability to enter into and maintain collaborative,

licensing and other commercial relationships;

and our ability to secure commitment of time and resources from third parties to the development

and commercialization of our products.

capital markets have been unpredictable in the recent past for unprofitable companies such as ours.

The amount of capital that we may

be able to raise often depends on variables that are beyond our control.

As a result, we may not be able to secure financing on terms

attractive to us, or at all.

Even if we are able to consummate a financing arrangement, the amount raised may not be sufficient to meet

our future needs.

If adequate funds are not available on acceptable terms, or at all, our business, including our results of operations,

financial condition and our continued viability will be materially adversely affected.

if we can raise additional funding, we may be required to do so on terms that are dilutive to our stockholders.

issuances of new equity by us may dilute the ownership percentage of our existing stockholders.

capital markets have been unpredictable for unprofitable companies such as ours.

The amount of capital that we may be able to raise depends

on variables that are beyond our control.

As a result, we may not be able to secure financing on terms acceptable to us, or at all.

if we are able to consummate a financing arrangement, the amount raised may not be sufficient to meet our future needs.

If adequate funds

are not available on acceptable terms, or at all, our business, including our results of operations, financial condition and our continued

viability will be materially adversely affected.

we can raise additional funding, we may be required to do so on terms that are dilutive to our stockholders.

future issuances of new equity may dilute the ownership percentage of our existing stockholders.

The extent of such dilution will depend

on the number of shares issued.

The shares issued in such a transaction will be equal to the total dollars paid to us as an investment

divided by the offering price.

Neither the amount of funds that may be received in such an equity financing, nor the price per share

of our equity securities issued are known at this time.

may need to raise additional funds in order to support expansion, develop new or enhanced services and products, hire employees, respond

to competitive pressures, acquire technologies or respond to unanticipated requirements.

If such a need should arise, and issuing new

equity is the vehicle we use to secure additional funds, then such issuances will likely further dilute the ownership percentages of

our existing stockholders.

Related to Our Business and Results of Operations

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and adversely affect, our business and operations.

March 11, 2020, the World Health Organization declared the COVID-19 outbreak a pandemic.

The COVID-19 pandemic is affecting the United

States and global economies and may affect our operations and those of third parties on which we rely.

While the potential economic impact

brought by, and the duration of, the COVID-19 pandemic is difficult to assess or predict, the impact of the COVID-19 pandemic on the

global financial markets may reduce our ability to access capital, which could negatively impact our short-term and long-term liquidity.

The ultimate impact of the COVID-19 pandemic is highly uncertain and subject to change.

We do not yet know the full extent of potential

delays or impacts of the pandemic on our business, financing or the global economy as a whole.

However, these effects could have a material

impact on our liquidity, capital resources, operations and business and those of third parties on which we rely.

2021 and into 2022, the COVID-19 pandemic has interrupted our sales and marketing activities and restricted face-to-face interaction

between our representatives and our potential partners.

This slowed the pace of our development and the expansion of our deal pipeline.

Government action related to the current pandemic, or the emergence of a new viral outbreak, may negatively impact the adjustments we,

our customers (if any), the customers of our licensees, and our other business partners have made to resume business under the new protocols.

depend significantly upon the continued involvement of our present management and on our ability to attract and retain talented employees.

success depends significantly upon the involvement of our present management, who are involved in our strategic planning and operations.

We may need to attract and retain additional talented individuals in order to carry out our business objectives.

The competition for

individuals with expertise in our industry is intense, and there are no assurances that such individuals will be available to us.

business is based on successfully attracting and retaining talented employees and contractors.

The market for highly skilled people in

our industry is extremely competitive.

If we are less successful in our recruiting efforts, or if we are unable to retain key existing

employees, our ability to develop and deliver successful products and services may be adversely affected.

Effective succession planning

is also important to our long-term success.

Our failure to ensure effective transfer of knowledge and smooth transitions involving key

employees could hinder our strategic planning and execution.

products face significant competition in the applicable markets, and if they are unable to compete successfully our business will suffer.

proposed products face, and will continue to face, intense competition from larger companies, as well as from academic and research institutions.

between our representatives and our potential partners, clients and customers.

This slowed the pace of our product and service development,

and the expansion of our list of prospective customers.

Government actions related to any further acceleration of illness in the COVID-19

pandemic, or the emergence of a new viral outbreak, may negatively impact the adjustments we, our customers (if any), the customers of

our licensees and resellers, and our other business partners have made to resume business under the new protocols.

We depend significantly upon the continued involvement of our present management and on our ability to attract and retain talented employees.

success depends significantly upon our present management, who are involved in our strategic planning and operations.

Our business requires

that we successfully attract and retain talented employees and contractors.

The competition for individuals with expertise in our industry

is intense, and we cannot assure that such individuals will be available to us on acceptable terms, or at all.

we are less successful in our recruiting efforts, or if we are unable to retain key existing employees, our ability to develop and deliver

successful products and services will be adversely affected.

Effective succession planning is also important to our long-term success.

Our failure to ensure effective transfer of knowledge and smooth transitions involving key employees could hinder our strategic planning

and execution.

products and services face significant competition in our markets, and if they do not compete successfully, our business will suffer.

current and proposed products and services face, and will continue to face, intense competition from larger and smaller companies, as

well as from academic and research institutions.

We compete in an industry that is characterized by:

(i) rapid technological change, (ii) evolving industry standards, (iii) emerging

competition, and (iv) new product introductions.

Our competitors have existing products and technologies that will compete with our products

and technologies and may develop and commercialize additional products and technologies that will compete with our products and technologies.

(i) rapid technological change,

(ii) evolving industry standards, (iii) emerging competition, and (iv) new service and product introductions.

Our competitors have existing

products and technologies that will compete with our products and technologies and may develop and commercialize additional products

and technologies that will compete with our products and technologies.

Some of these new products and services may have functionality

that ours do not have.

Because many competing companies and institutions have greater financial resources than us, they may be able to:

(i) provide broader

services and product lines, (ii) make greater investments in research and development, and (iii) carry on larger research and development

Our competitors also generally have greater development capabilities than we do and have substantially greater experience

in undertaking testing of products, obtaining regulatory approvals, and manufacturing and marketing their products.

They also have greater

name recognition and better access to customers/licensees than we do.

Our chief competitors include companies such as HashiCorp, Inc.,

Palo Alto Networks, Inc., Barracuda Networks, Inc., Cisco Systems, Inc., and Cloudhesive LLC.

we are unable to develop new and enhanced products, or if we are unable to continually improve the performance, features, and reliability

of our existing products, our competitive position may weaken, and our business and operating results could be adversely affected.

(i) provide broader services and product lines, (ii) make greater investments in research and development, and (iii) carry on larger

research and development initiatives.

Our competitors also generally have greater development capabilities than we do and have greater

experience in undertaking testing of products, obtaining regulatory approvals, and manufacturing and marketing their products.

have greater name recognition and better access to customers, clients, licensees, and resellers than we do.

Our chief competitors include

companies such as Optiv, NCC, Coalfire, PwC, EY, Deloitte, and GuidePoint.

we are unable to develop new and enhanced products and services, or if we are unable to continually improve the performance, features,

and reliability of our existing products and services, our competitive position would weaken, and our business and operating results

could be adversely affected.

future success depends on our ability to effectively respond to evolving threats to consumers and potential customers, as well as competitive

technological developments and industry changes, by developing or introducing new and enhanced products on a timely basis.

we have incurred significant research and development expenses.

We expect to continue to incur research and development expenses, but

at a lower rate, as we strive to remain competitive, and as we focus on organic growth through internal innovation.

If we are unable

to anticipate or react to competitive challenges or if existing or new competitors gain market share in any of our markets, our competitive

position could weaken, and we could experience a decline in our revenues, if any, which could adversely affect our business and operating

If we do not achieve the benefits anticipated from these investments, or if the achievement of these benefits is delayed, our

operating results may be adversely affected.

Additionally, we must continually address the challenges of dynamic and accelerating market

trends and competitive developments.

Customers may require features and capabilities that our current products do not have.

to develop new products and improve our existing products to satisfy customer preferences and effectively compete with other market offerings

in a timely and cost-effective manner may harm our ability to retain our customers (if any), and the ability of our licensees to retain

their customers, and to create or increase demand for our products, which may adversely impact our operating results.

The development

and introduction of our new products will involve a significant commitment of time and resources and will be subject to a number of risks

technological developments and industry changes, by developing or introducing new and enhanced products and services on a timely basis.

In the past, Cipherloc, has incurred significant research and development expenses.

As a result of the Business Combination, we expect

to continue to incur research and development expenses as we strive to remain competitive, and as we focus on organic growth through

internal innovation.

If we are unable to anticipate or react to competitive challenges or if existing or new competitors gain market

share in any of our markets, our competitive position would weaken, and we could experience a decline in our revenues and net income,

if any, which could adversely affect our business and operating results.

Additionally, we must continually address the challenges of

dynamic and accelerating market trends, increasingly sophisticated cyber-attacks and intrusions and competitive developments.

may require features and capabilities that our current products do not have.

Our failure to develop new products and improve our existing

products to satisfy customer preferences and needs and effectively compete with other market offerings in a timely and cost-effective

manner will harm our ability to retain our customers (if any), and the ability of our licensees or resellers to retain their customers,

and to create or increase demand for our products, which may adversely impact our operating results.

The development and introduction

of our new or enhanced products will involve a significant commitment of time and resources and will be subject to a number of risks

and challenges, including but not limited to:

development cycles;

industry and regulatory standards and technological developments by our competitors and customers (if any), and the customers of

our licensees;

changing customer preferences;

platforms, operating systems, and hardware products, such as mobile devices, and related product and service interoperability challenges;

into new or unproven markets;

new product and service strategies.

we are not successful in managing these risks and challenges, or if our new or improved products are not technologically competitive

in the market, or do not achieve market acceptance, our business and operating results could be adversely affected.

operating results may vary significantly from period to period and can be unpredictable, which could cause the market price of our common

stock to decline.

operating results, in particular, our revenues, gross margins, operating margins, and operating expenses, have historically varied from

period to period, and we expect such variation to continue as a result of a number of factors, many of which are outside of our control

and may be difficult to predict, including:

ability to attract and retain customers (if any), and/or the ability of our licensees to retain customers or sell products;

budgeting cycles, seasonal buying patterns, and purchasing practices of potential customers;

timing and success of new product and service introductions by us or our competitors or any other change in the competitive landscape

of our industry, including consolidation among our competitors, licensees or customers, and strategic relationships entered into

Lengthy development cycles;

Evolving industry and regulatory

standards and technological developments by our competitors and customers (if any), and the customers of our licensees and resellers;

Rapidly changing customer

preferences and needs;

Evolving platforms, operating

systems, and hardware products, such as mobile devices, and related product and service interoperability challenges;

Entering into new or unproven

Executing new product and

service strategies.

we are not successful in managing these risks and challenges, or if our new or improved products and services are not technologically

competitive in the market, or do not achieve market acceptance, our business and operating results would be adversely affected, our market

share would decline, and our margins would contract.

operating results may vary significantly from period to period and have been unpredictable, which has and might continue to cause the

market price of our common stock to be volatile.

operating results, in particular, our revenues, gross margins, operating margins, and operating expenses, have historically varied significantly

from period to period, and we expect such variation to continue as a result of a number of factors, many of which are outside of our

control and may be difficult to predict, including:

our ability to attract

and retain customers (if any), and/or the ability of our licensees and resellers to retain customers or sell products and services;

the budgeting cycles, seasonal

buying patterns, and purchasing practices of potential customers and customers of our licensees and resellers;

price competition;

the timing and success

of our new product and service introductions by us or our competitors or any other change in the competitive landscape of our industry,

including consolidation among our competitors, licensees, resellers, clients, or customers, and strategic relationships entered into

by and between our competitors;

in the mix of our products and support;

in the growth rate of the encryption technology market;

timing and costs related to the development or acquisition of technologies or businesses or strategic partnerships;

of synergy, or the inability to realize expected synergies, resulting from any acquisitions or strategic partnerships;

inability to execute, complete or integrate efficiently any acquisitions that we may undertake;

expenses, unforeseen liabilities, or write-downs and any impact on our operating results from any acquisitions we may consummate;

ability to create a sizeable and productive distribution channel;

by potential customers (if any), or the customers of our licensees, to purchase encryption solutions from larger, more established

security vendors, or from their primary network vendors;

of any revenue recognition and any revenue deferrals;

or credit difficulties confronting customers (if any), our licensees, or the customers of our licensees, which could adversely affect

their ability to purchase or pay for our products and offerings;

cost and potential outcomes of any litigation, which could have a material adverse effect on our business;

or cyclical fluctuations in our markets;

accounting pronouncements or changes in our accounting policies, including the potential impact of the adoption and implementation

of the Financial Accounting Standards Board’s new standard regarding revenue recognition;

macroeconomic conditions, in some or all regions in which we operate.

changes in the mix of our

services, products and support;

changes in the growth rate

of the cybersecurity technology market;

the timing and costs related

to the development or acquisition of technologies or businesses or strategic partnerships;

lack of synergy, or the

inability to realize expected synergies, resulting from any acquisitions or strategic partnerships;

our inability to execute,

complete or integrate efficiently any acquisitions that we have or may hereafter undertake;

increased expenses, unforeseen

liabilities, or write-downs and any impact on our operating results from any acquisitions we may consummate;

our ability to create sizeable

and productive distribution channels for our proprietary software;

decisions by potential

customers, or the customers of our licensees and resellers, to purchase cybersecurity solutions from larger, more established cybersecurity

software and service vendors, or from their sales channel partners;

timing of revenue recognition

from the delivery of existing and future statements of work;

Insolvency or credit difficulties

confronting customers (if any), our licensees and resellers, or the customers of our licensees and resellers, which could adversely

affect their ability to purchase or pay for our products and services and offerings;

the cost and potential

outcomes of any litigation, which could have a material adverse effect on our business;

seasonality or cyclical

fluctuations in our markets due to holiday schedules, industry events, or customer funding policies that may impact our ability to

secure new clients or deliver services to existing clients;

future accounting pronouncements

or changes in our accounting policies, including the potential impact of the adoption and implementation of the Financial Accounting

Standards Board’s new standard regarding revenue recognition;

general macroeconomic conditions,

in some or all regions in which we operate.

one of the factors above, or the cumulative effect of some of the factors referred to above, may result in significant fluctuations in

our financial and other operating results.

This variability and unpredictability could result in our failure to meet our revenue, margin,

or other operating result expectations, or those of securities analysts or investors for a particular period.

,If we fail to meet or

exceed such expectations for these or any other reasons, the market price of our common stock could fall substantially, and we could

face costly lawsuits, including securities class action suits.

our operating results including our revenue and net income.

This variability and unpredictability could result in our failure to meet

our revenue, margin, or other operating result expectations, or those of securities analysts or investors for a particular period.

we fail to meet or exceed such expectations for these or any other reasons, the market price of our common stock could decline substantially,

and we could face costly lawsuits, including securities class action suits.

face intense competition in our market, especially from larger, well-established companies, and we may lack sufficient financial or other

resources to maintain or improve our competitive position.

market for encryption technologies is intensely competitive, and we expect competition to increase in the future from established competitors

and new market entrants.

market for cybersecurity technologies is intensely competitive, and we expect competition to increase in the future from established

competitors and new market entrants.

Our main competitors fall into three categories:

companies that incorporate security or encryption features in their products, such as Google’s Cloud Platform, Amazon’s

AWS services, and Microsoft’s Azure, or those that have acquired, or may acquire, encryption products or technologies and have

the technical and financial resources to bring competitive solutions to the market;

security vendors, such as HashiCorp, that offer encryption products;

and large companies that offer encryption technologies that compete with some of the features proposed for our products.

companies that incorporate security or encryption features in their services and products, such as Google’s Cloud Platform,

Amazon’s AWS services, and Microsoft’s Azure, or those that have acquired, or may acquire, cybersecurity services, products

or technologies and have the technical and financial resources to bring competitive solutions to the market;

security vendors, such as Optiv and Coalfire, that offer cybersecurity products;

and large companies that offer cybersecurity technologies that compete with some of the features proposed for our services and products.

of our existing competitors have, and some of our potential competitors may have, substantial competitive advantages such as:

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sales and marketing budgets and resources;

distribution and established relationships with distributors and customers (if any), or the customers of our licensees;

distribution and established relationships with distributors and customers (if any), or the customers of our licensees and resellers;

customer support resources;

resources to make strategic acquisitions or enter into strategic partnerships;

substantially

greater financial, technical, and other resources.

addition, some of our larger competitors have substantially broader and more diverse product and services offerings, which may make them

less susceptible to downturns in a particular market and allow them to leverage their relationships based on other products or incorporate

functionality into existing products to gain business in a manner that discourages users from purchasing our products and subscriptions,

including through selling at zero or negative margins, offering concessions, product bundling, or closed technology platforms.

our smaller competitors that specialize in providing protection from a single type of security threat are often able to deliver these

specialized encryption or security products to the market more quickly than we can.

resources to make strategic acquisitions or enter strategic partnerships;

financial, technical, and other resources.

addition, some of our larger competitors have substantially broader and more diverse product and service offerings, which may make them

less susceptible to downturns in a particular market and allow them to leverage their relationships based on other services and products

or incorporate functionality into existing services and products to gain business in a manner that discourages users from purchasing

our services, products and subscriptions, including through selling at zero or negative margins, offering concessions, product bundling,

or closed technology platforms.

Many of our smaller competitors that specialize in providing protection from a single type of security

threat are often able to deliver these specialized cybersecurity or security products to the market more quickly than we can.

Organizations

that use legacy products and services may believe that these products and services are sufficient to meet their security needs, or that

our platform only serves the needs of a portion of the encryption technology market.

Accordingly, many organizations have invested substantial

personnel and financial resources to design and operate their networks and have established deep relationships with other providers of

encryption products.

As a result, these organizations may prefer to purchase from their existing suppliers rather than add or switch

to a new supplier such as us, regardless of product performance, features, or greater services offerings, or may be more willing to incrementally

add solutions to their encryption infrastructure from existing suppliers than to replace it wholesale with our solutions.

in our market could change rapidly and significantly as a result of technological advancements, partnering or acquisitions by our competitors,

our platform only serves the needs of a portion of the cybersecurity technology market.

Accordingly, many organizations have invested

substantial personnel and financial resources to design and operate their networks and have established deep relationships with other

providers of cybersecurity services and products.

As a result, these organizations may prefer to purchase from their existing suppliers

rather than add or switch to a new supplier such as us, regardless of product performance, features, or greater services offerings, or

may be more willing to incrementally add solutions to their cybersecurity infrastructure from existing suppliers than to replace it wholesale

with our solutions.

in our market could change rapidly and significantly because of technological advancements, partnering or acquisitions by our competitors,

or continuing market consolidation.

New start-up companies that innovate and large competitors that are making significant investments

in research and development may invent similar or superior products and technologies that compete with our products.

Some of our competitors

have made or could make acquisitions of businesses that may allow them to offer more directly competitive and comprehensive solutions

than they had previously offered and adapt more quickly to new technologies and changing needs.

Our current and potential competitors

may also establish cooperative relationships among themselves or with third parties that may further enhance their resources.

These competitive

pressures in our market or our failure to compete effectively may result in price reductions, fewer orders, reduced revenue and gross

margins, and loss of market share.

Any failure to meet and address these factors could seriously harm our business and operating results.

currently have only two licensees and have no direct end users and will need to obtain additional licensees and/or end users in the future

to generate revenues.

of the filing of this report, we don’t have any significant revenue generating licensees or customers.

In order to generate revenue

to support our operations we will need to obtain additional licensees and/or customers for our products in the future.

If we are unable

to obtain such licensees and/or customers, we will not be able to generate revenues and the value of our stock may decline in value or

become worthless.

future revenue and operating results will depend significantly on our ability to retain licensees and the ability of those licensees

to retain customers, and add new customers, and any decline in our retention rates or failure to add new customers will harm our future

revenue and operating results.

anticipate that our future revenue and operating results will depend significantly on our ability to retain licensees and the ability

of those licensees to retain customers and add new customers.

In addition, we may not be able to predict or anticipate accurately future

trends in customer/licensee retention or effectively respond to such trends.

Our retention rates may decline or fluctuate due to a variety

of factors, including the following:

licensees or their customers’ levels of satisfaction or dissatisfaction with our products;

quality, breadth, and prices of our products;

general reputation and events impacting that reputation;

services and related pricing offered by our competitors;

by new services or changes in law are regulations that impact the need for efficacy of our products and services;

customer service activities and responsiveness to any customer complaints;

dissatisfaction if they do not receive the full benefit of our services due to their failure to provide all relevant data;

dissatisfaction with the methods or extent of our remediation services;

in target customers’ spending levels as a result of general economic conditions or other factors.

we do not retain our existing licensees, or they do not retain their existing customers and add new customers, we may not generate revenue

and/or our revenue may grow more slowly than expected, or decline, and our operating results and gross margins will be negatively impacted.

In addition, our business and operating results may be harmed if we are unable to increase our retention rates.

also must continually add new licensees and/or customers, both to replace licensees who cancel or elect not to renew their agreements

with us and to grow our business beyond our current base.

If we are unable to attract new licensees in numbers greater than the percentage

who cancel or elect not to renew their agreements with us, our licensee base will decrease, and our business, operating results, and

financial condition could be adversely affected.

in research and development may invent similar or superior services, products and technologies that compete with our services and products.

Some of our competitors have made or could make acquisitions of businesses that may allow them to offer more directly competitive and

comprehensive solutions than they had previously offered and adapt more quickly to innovative technologies and changing needs.

and potential competitors may also establish cooperative relationships among themselves or with third parties that may further enhance

their resources and reduce their expenses.

These competitive pressures in our market or our failure to compete effectively may result

in price reductions, fewer orders, reduced revenue and gross margins, and loss of market share.

Any failure to meet and address these

factors could materially harm our business and operating results.

future revenue and operating results will depend significantly on our ability to retain clients and customers and the ability to add

new clients and customers.

Any decline in our retention rates or failure to add new clients and customers will harm our business prospects

and operating results.

anticipate that our future revenue and operating results will depend significantly on our ability to retain clients and customers and

our ability add new clients and customers.

In addition, we may not be able to predict or anticipate accurately future trends in retention

or effectively respond to such trends.

Our retention rates may decline or fluctuate due to a variety of factors, including the following:

our clients and customers’

levels of satisfaction or dissatisfaction with our products and services;

the quality, breadth, and

prices of our products and services;

our general reputation

and events impacting that reputation;

the products and services

and related pricing offered by our competitors;

disruption by new services

or changes in law or regulations that impact the need for or efficacy of our products and services;

our customer service activities

and responsiveness to any customer issues;

customer dissatisfaction

if they do not receive the full benefit of our services due to their failure to provide all relevant data;

customer dissatisfaction

with the methods or sufficiency of our remediation services;

changes in target customers’

planned spending levels as a result of general economic conditions or other factors such as inflation.

we do not retain our existing clients and customers, or add new clients and customers, we may not generate revenue and/or our revenue

may grow more slowly than expected, or decline, and our operating results and gross margins will be negatively impacted.

our business and operating results may be harmed if we are unable to increase our retention rates or if they decline.

also must continually add new clients and customers, both to replace those who cancel or elect not to renew their agreements with us

and to grow our business beyond our current level.

If we are unable to attract new clients and customers in numbers greater than number

that cancel or elect not to renew their agreements with us, our client base will decrease, and our business, operating results, and financial

condition would be adversely affected.

network or data security incident may allow unauthorized access to our or our end users’ network or data, harm our reputation,

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Despite significant efforts to create security barriers to such threats, it is virtually impossible for us to entirely mitigate

We, and our third-party service providers, may face security threats and attacks from a variety of sources.

Our data, corporate

systems, third-party systems and security measures and/or those of our end users may be breached due to the actions of outside parties,

employee error, malfeasance, a combination of these, or otherwise, and, as a result, an unauthorized party may obtain access to our data.

Furthermore, as a provider of encryption technologies, we may be a more attractive target for such attacks.

A breach in our data security

or an attack against our service availability, or that of our third-party service providers, could impact our networks or networks secured

by our products and subscriptions, creating system disruptions or slowdowns and exploiting security vulnerabilities of our products,

and the information stored on our networks or those of our third-party service providers could be accessed, publicly disclosed, altered,

lost, or stolen, which could subject us to liability and cause us financial harm.

Any actual or perceived breach of network security

in our systems or networks, or any other actual or perceived data security incident we or our third-party service providers suffer, could

result in damage to our reputation, negative publicity, loss of channel partners, licensees, customers and sales, loss of competitive

advantages over our competitors, increased costs to remedy any problems and otherwise respond to any incident, regulatory investigations

and enforcement actions, costly litigation, and other liability.

In addition, we may incur significant costs and operational consequences

of investigating, remediating, eliminating and putting in place additional tools and devices designed to prevent actual or perceived

security incidents, as well as the costs to comply with any notification obligations resulting from any security incidents.

negative outcomes could adversely impact the market perception of our products and customer and investor confidence in our company and,

moreover, could seriously harm our business or operating results.

is essential to our business strategy that our technology and network infrastructure remain secure and are perceived by our potential

licensees, their customers, any customers we have, and others to be secure.

Despite security measures, however, any network infrastructure

may be vulnerable to cyber-attacks by hackers and other security threats.

We may face cyber-attacks that attempt to penetrate our network

security, sabotage or otherwise disable our research, products and services, misappropriate our proprietary information, or that of our

licensees, or their or our customers’ and partners’, which may include personally identifiable information, or cause interruptions

of our internal systems and services.

Any cyber-attacks could negatively affect our reputation, damage our network infrastructure and

our ability to deploy our products and services, harm our business relationships, and expose us to financial liability.

products, systems, and website and the data on these sources may be subject to intentional disruption that could materially harm our

reputation and future sales.

our precautions and significant ongoing investments to protect against security risks, data protection breaches, cyber-attacks, and other

intentional disruptions of our products, we expect to be an ongoing target of attacks specifically designed to impede the performance

We, and our third-party software and service providers, may face security threats and attacks from a variety of sources.

Our data, corporate systems, third-party systems and security measures and/or those of our licensees, resellers, clients, customers,

software providers, independent contractors, employees, end users may be breached due to the actions of outside parties, employee error,

malfeasance, a combination of these, or otherwise, and, as a result, an unauthorized party may obtain access to our or our customers’

Furthermore, as a provider of cybersecurity technologies, we may be a more attractive target for such attacks.

A breach in our

data security or an attack against our service availability, or that of our third-party service providers, could impact our networks

or networks secured by our services, products and subscriptions, creating system disruptions or slowdowns and exploiting security vulnerabilities

of our services, products, and the information stored on our networks or those of our third-party service providers could be accessed,

publicly disclosed, altered, lost, or stolen, which could subject us to liability and cause us financial harm.

Any actual or perceived

breach of network security in our systems or networks, or any other actual or perceived data security incident we or our third-party

service providers suffer, could result in damage to our reputation, negative publicity, loss of channel partners, licensees, resellers,

clients, customers, and sales, loss of competitive advantages over our competitors, increased costs to remedy any problems and otherwise

respond to any incident, regulatory investigations and enforcement actions, costly litigation, and other liability.

In addition, we may

incur significant costs and operational consequences of investigating, remediating, eliminating and putting in place additional tools

and devices designed to prevent actual or perceived security incidents, as well as the costs to comply with any notification obligations

resulting from any security incidents.

Any of these negative outcomes could adversely impact the market perception of our services, products

and customer and investor confidence in our company and, moreover, could seriously harm our business or operating results.

is essential to our business strategy that our technology and network infrastructure remain secure and are perceived by any clients and

customers we have, and others, to be secure.

Despite security measures, however, any network infrastructure may be vulnerable to cyber-attacks

by hackers and other security threats.

We may face cyber-attacks that attempt to penetrate our network security, sabotage or otherwise

disable our research, products and services, misappropriate our proprietary information, or that of our licensees and resellers, or their

or our customers and partners, which may include personally identifiable information, or cause interruptions of our internal systems

and services.

Any cyber-attacks could negatively affect our reputation, damage our network infrastructure and our ability to deploy our

products and services, harm our business relationships, and expose us to financial liability.

services, products, systems, and website and the data on these sources may be subject to intentional disruption that could materially

harm our reputation and future sales.

our precautions and ongoing investments to protect against security risks, data protection breaches, cyber-attacks, and other intentional

disruptions of our products and services, we expect to be an ongoing target of attacks specifically designed to impede the performance

and availability of our offerings and harm our reputation as a company.

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and third-party service providers, may attempt to penetrate our network security or the security of our systems and websites and misappropriate

proprietary information or cause interruptions of our services, including the operation of the global civilian cyber intelligence threat

This risk may be increased during the current COVID-19 pandemic as more individuals are working from home and utilize home networks

for the transmission of sensitive information.

Such attempts are increasing in number and in technical sophistication, and if successful

could expose us and the affected parties, to risk of loss or misuse of proprietary or confidential information or disruptions of our

business operations.

While we engage in a number of measures aimed to protect against security breaches and to minimize problems if a

data breach were to occur, our information technology systems and infrastructure may be vulnerable to damage, compromise, disruption,

and shutdown due to attacks or breaches by hackers or due to other circumstances, such as error or malfeasance by employees or third-party

service providers or technology malfunction.

The occurrence of any of these events, as well as a failure to promptly remedy these events

should they occur, could compromise our systems, and the information stored in our systems could be accessed, publicly disclosed, lost,

stolen, or damaged.

Any such circumstance could adversely affect our ability to attract and maintain licensees, and/or for us or our

licensees to retain customers, as well as strategic partners, cause us to suffer negative publicity, and subject us to legal claims and

liabilities or regulatory penalties.

In addition, unauthorized parties might alter information in our databases, which would adversely

affect both the reliability of that information and our ability to market and perform our services.

Techniques used to obtain unauthorized

access or to sabotage systems change frequently, are constantly evolving and generally are difficult to recognize and react to effectively.

We may be unable to anticipate these techniques or to implement adequate preventive or reactive measures.

Several recent, highly publicized

data security breaches at other companies have heightened consumer awareness of this issue and may embolden individuals or groups to

target our systems or those of our licensees or strategic partners, or our or their customers.

proprietary information or cause interruptions of our services.

This risk may be increased during the current COVID-19 pandemic as more

individuals are working from home and utilize home networks for the transmission of sensitive information.

Such attempts are increasing

in number and in technical sophistication, and if successful could expose us and the affected parties, to risk of loss or misuse of proprietary

or confidential information or disruptions of our business operations.

While we engage in a number of measures aimed to protect against

security breaches and to minimize problems if a data breach were to occur, our information technology systems and infrastructure may

be vulnerable to damage, compromise, disruption, and shutdown due to attacks or breaches by hackers or due to other circumstances, such

as error or malfeasance by employees or third-party service providers or technology malfunction.

The occurrence of any of these events,

as well as a failure to promptly remedy these events should they occur, could compromise our systems, and the information stored in our

systems could be accessed, publicly disclosed, lost, stolen, or damaged.

Any such circumstance could adversely affect our ability to

attract and maintain licensees and resellers, and/or for us or our licensees and resellers to retain customers, as well as strategic

partners, cause us to suffer negative publicity, and subject us to legal claims and liabilities or regulatory penalties.

unauthorized parties might alter information in our databases, which would adversely affect both the reliability of that information

and our ability to market and perform our services.

Techniques used to obtain unauthorized access or to sabotage systems change frequently,

are constantly evolving and generally are difficult to recognize and react to effectively.

We may be unable to anticipate these techniques

or to implement adequate preventive or reactive measures.

Several recent, highly publicized data security breaches at other companies

have heightened consumer awareness of this issue and may embolden individuals or groups to target our systems or those of our licensees,

resellers, or strategic partners, or our or their customers.

products are complex and operate in a wide variety of environments, systems and configurations, which could result in failures of our

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an acceptable period of time.

Interruptions in our products could impact our revenues or cause licensees/customers to cease doing business

Our operations are dependent upon our ability to protect our technology infrastructure against damage from business continuity

events that could have a significant disruptive effect on our operations.

We could potentially lose end user/customer data or experience

material adverse interruptions to our operations or delivery of products to our clients in a disaster recovery scenario.

business would be harmed if any of these types of events caused our licensees or customers, or our licensees’ customers or potential

customers, to believe that our products are unreliable.

We believe that our brand recognition and reputation are critical aspects of

our business, to retaining existing licensees and customers, and attracting new licensees and customers.

Furthermore, negative publicity,

whether or not justified, relating to events or activities attributed to us, our employees, our strategic partners, our affiliates, or

others associated with any of these parties, may tarnish our reputation and reduce the value of our brands.

Damage to our reputation

may reduce demand for our products and have an adverse effect on our business, operating results, and financial condition.

any attempts to rebuild our reputation and restore the value of our brands after such an event may be costly and time consuming, and

such efforts may not ultimately be successful.

our products do not work properly, our business, financial condition and financial results could be negatively affected, and we could

experience negative publicity, declining sales and legal liability.

Interruptions in our products could impact our revenues or cause licensees, resellers, clients, and customers

to cease doing business with us.

Our operations are dependent upon our ability to protect our technology infrastructure against damage

from business continuity events that could have a significant disruptive effect on our operations.

We could potentially lose end user/customer

data or experience material adverse interruptions to our operations or delivery of products and services to our clients in a disaster

recovery scenario.

Further, our business would be harmed if any of these types of events caused our licensees, resellers, or customers,

or our licensees’ and resellers’ customers or potential customers, to believe that our products are unreliable.

that our brand recognition and reputation are critical to retaining existing licensees, resellers, clients and customers, and attracting

new licensees, resellers, clients, and customers.

Furthermore, negative publicity, whether or not justified, relating to events or activities

attributed to us, our employees, our strategic partners, our affiliates, or others associated with any of these parties, may tarnish

our reputation and reduce the value of our brands.

Damage to our reputation may reduce demand for our products and have an adverse effect

on our business, operating results, and financial condition.

Moreover, any attempts to rebuild our reputation and restore the value of

our brands after such an event may be costly and time consuming, and such efforts may not ultimately be successful.

our products and services do not work properly, our business, financial condition and financial results could be negatively affected,

and we could experience negative publicity, declining sales and legal liability.

produce complex products that incorporate leading-edge technology that must operate in a wide variety of technology environments.

may contain defects or “bugs” that can interfere with expected operations.

There can be no assurance that our testing programs

will be adequate to detect all defects prior to the product being introduced, which might decrease customer satisfaction with our products

and services.

The product reengineering cost to remedy a product defect could be material to our operating results.

Our inability to

cure a product defect could result in the temporary or permanent withdrawal of a product or service, negative publicity, damage to our

reputation, failure to achieve market acceptance, lost revenue and increased expense, any of which could have a material adverse effect

on our business, financial condition and financial results.

may contain defects or “bugs” that can interfere with expected operations in these varying technological environments.

can be no assurance that our testing programs will be adequate to detect all defects prior to the product being introduced, which might

decrease customer satisfaction with our products and services.

The product reengineering cost to remedy a product defect could be material

to our operating results.

Our inability to cure a product defect could result in the temporary or permanent withdrawal of a product or

service, negative publicity, damage to our reputation, failure to achieve market acceptance, lost revenue and increased expense, any

of which could have a material adverse effect on our business, financial condition and financial results.

or problems with systems and infrastructure supplied by third parties could negatively affect our business, financial condition and financial

business relies on third-party suppliers of the telecommunications infrastructure.

We and our licensees, and their customers, will use

various communications service suppliers and the global internet to provide network access between our data centers and end-users of

our services.

If those suppliers do not enable us to provide our licensees and their customers with reliable, real-time access to our

systems (to the extent required), we may be unable to gain or retain licensees.

These suppliers periodically experience outages or other

operational problems as a result of internal system failures or external third-party actions.

Supplier outages or other problems could

materially adversely affect our business, financial condition and financial results.

We, our clients and customers and our licensees and

resellers, and their customers, will use various communications service suppliers and the global internet to provide network access between

our data centers and our customers and end-users of our services.

If those suppliers do not enable us to provide our clients and customers,

or our licensees’ and resellers’ customers with reliable, real-time access to our systems (to the extent required), we may

be unable to gain or retain clients, customers, licensees and resellers.

These suppliers periodically experience outages or other operational

problems as a result of internal system failures or external third-party actions.

Supplier outages or other problems could materially

adversely affect our business, financial results and financial condition.

global financial conditions have been characterized by increased volatility, which could negatively impact our business, prospects, liquidity

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the credit and capital markets has reduced the amount of available liquidity and overall economic activity.

We cannot guaranty that debt

or equity financing, or the ability to generate cash from operations, will be available or sufficient to meet or satisfy our initiatives,

We cannot guarantee that

debt or equity financing, or the ability to generate cash from operations, will be available or sufficient to meet or satisfy our initiatives,

objectives or requirements.

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Delays in payments may require us to make a working capital investment.

Defaults by any of our licensees or their customers could have a significant adverse effect on our revenues, profitability and cash flow.

Our licensees or their customers may in the future default on their obligations to us or them due to bankruptcy, lack of liquidity, operational

failure or other reasons deriving from the current general economic environment.

If a customer defaults on its obligations to us or our

licensee, or a licensee defaults in its payments to us, it could have a material adverse effect on our business, financial condition,

results of operations or cash flows.

Defaults by any of our clients, customers, licensees, and resellers could have a significant adverse effect on our revenues, profitability

and cash flow.

Our clients, customers, licensees, and resellers may in the future default on their obligations to us or them due to bankruptcy,

lack of liquidity, operational failure or other reasons deriving from the current general economic environment.

If a client, customer,

or licensee defaults on its obligations to us or our licensee, or a licensee or reseller defaults in its payments to us, it could have

a material adverse effect on our business, financial condition, results of operations or cash flows.

Related to Our Industry

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In addition, barriers

to entry in our businesses generally are low, and products, once developed, can be distributed broadly and quickly at a relatively low

Open-source software vendors are devoting considerable efforts to developing software that mimics the features and functionality

of our anticipated products.

These competitive pressures may result in decreased sales volumes, price reductions, and/or increased operating

costs, such as for marketing and sales incentives, resulting in lower revenue, gross margins, and operating income.

to entry in our businesses generally are low, and products and services, once developed, can be distributed broadly and quickly at a

relatively low cost.

Open-source software vendors are devoting considerable efforts to developing software that mimics the features and

functionality of our current and anticipated products.

These competitive pressures may result in decreased sales volumes, price reductions,

and/or increased operating costs, such as for marketing and sales incentives, resulting in lower revenue, gross margins, and operating

in product development schedules may adversely affect our revenues.

development of encryption products is a complex and time-consuming process.

New products can require long development and testing periods.

Future revenues may include the sale of new products that may not yet be developed.

Significant delays in product development, including

quality assurance testing or significant problems in creating new products, could adversely affect our revenue recognition from new products.

Revenue in certain reporting periods could be lower than anticipated because product development problems could cause the loss of a competitive

deal, a delay in invoicing a licensee/customer, or the renegotiation of terms to retain a deal.

development of cybersecurity products and services is a complex and time-consuming process.

New products and services can require long

development and testing periods.

Future revenues may include the sale of new products and services that may not yet be developed.

delays in product development, including quality assurance testing or significant problems in creating new products and services, could

adversely affect our revenue recognition from new products and services.

Revenue in certain reporting periods could be lower than anticipated

because product development problems could cause the loss of a competitive sale transaction, a delay in invoicing a client, customer,

licensee, or reseller or the renegotiation of terms to retain a sale transaction.

we do not accurately predict, prepare for, and respond promptly to rapidly evolving technological and market developments and successfully

manage product introductions and transitions to meet changing needs in the encryption technology market, our competitive position and

prospects will be harmed.

encryption technologies market has grown quickly and is expected to continue to evolve rapidly.

manage product introductions and transitions to meet changing needs in the cybersecurity technology market, our competitive position,

financial results and prospects will be harmed.

cybersecurity technologies market has grown quickly and is expected to continue to evolve rapidly.

Moreover, many of our potential licensees

and their customers operate in markets characterized by rapidly changing technologies and business plans, which require them to add numerous

network access points and adapt increasingly complex enterprise networks, incorporating a variety of hardware, software applications,

operating systems, and networking protocols.

If we fail to accurately predict potential changing needs and emerging technological trends

in the encryption technology industry, including in the areas of mobility, virtualization, and cloud computing, our business could be

The technology in our platform is especially complex because it needs to effectively identify and respond to new and increasingly

sophisticated methods of attack, while minimizing the impact on network performance.

If we experience unanticipated delays in the availability

of new products, platform features, and subscriptions, and fail to meet expectations for such availability, our competitive position

and business prospects will be harmed.

and resellers and their customers operate in markets characterized by rapidly changing technologies and business plans, which require

them to add numerous network access points and adapt increasingly complex enterprise networks, incorporating a variety of hardware, software

applications, operating systems, and networking protocols.

If we fail to accurately predict potential changing needs and emerging technological

trends in the cybersecurity technology industry, including in the areas of mobility, virtualization, and cloud computing, our business

could be harmed.

If we experience unanticipated delays in the availability of new services, products, platform features, and subscriptions,

or fail to meet expectations for such availability, our competitive position, financial results, and business prospects will be harmed.

Additionally,

we must commit significant resources to developing new platform features before knowing whether our investments will result in products,

subscriptions, and platform features that the market will accept.

we must commit significant resources to developing new products and services before knowing whether our investments will result in services,

products, subscriptions, and features that the market will accept.

The success of new platform features depends on several factors, including

appropriate new product definition, differentiation of new products, subscriptions, and platform features from those of our competitors,

and market acceptance of these products, services and platform features.

Moreover, successful new product introduction and transition

depends on a number of factors including, our ability to manage the risks associated with new product production ramp-up issues, the

availability of application software for new products, the effective management of purchase commitments and inventory, the availability

of products in appropriate quantities and costs to meet anticipated demand, and the risk that new products may have quality or other

defects or deficiencies, especially in the early stages of introduction.

We cannot assure you that we will successfully identify opportunities

for new products and subscriptions, develop and bring new products and subscriptions to market in a timely manner, or achieve market

acceptance of our products and subscriptions, or that products, subscriptions, and technologies developed by others will not render our

products, subscriptions, or technologies obsolete or noncompetitive.

appropriate new product definition, differentiation of new services, products, subscriptions, and platform features from those of our

competitors, and market acceptance of these products, services and platform features.

Moreover, successful new product introduction and

transition depends on a number of factors including, our ability to manage the risks associated with new product production ramp-up issues,

the availability of application software for new products, and the risk that new products may have quality or other defects or deficiencies,

especially in the early stages of introduction.

We cannot assure you that we will successfully identify opportunities for new products

and services, develop and bring new products and subscriptions to market in a timely manner, or achieve market acceptance of our products

and subscriptions, or that products, subscriptions, and technologies developed by others will not render our products, subscriptions,

or technologies obsolete or noncompetitive.

possible or perceived defects or vulnerabilities in our products or services, the failure of our products or services to detect or prevent

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We are also susceptible to errors, defects, vulnerabilities or attacks that

may arise at, or be inserted into our products in, different stages in our supply chain, or manufacturing processes, and which are out

of our control.

Attacks may target specific unidentified or unresolved vulnerabilities that exist or arrive only in the supply chain,

making these attacks virtually impossible to anticipate and difficult to defend against.

Different users deploy and use encryption products

in different ways, and certain deployments and usages may subject our products to adverse conditions that may negatively impact the effectiveness

may arise at, or be inserted into our products which are out of our control.

Different users deploy and use cybersecurity products in

different ways, and certain deployments and usages may subject our products to adverse conditions that may negatively impact the effectiveness

and useful lifetime of our products.

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could result in negative press coverage and negatively affect our reputation, even if we take reasonable measures to prevent any improper

shipment of our products or if our products are provided by an unauthorized third party.

actual, possible or perceived defects, errors or vulnerabilities in our products, or misuse of our products, could result in:

expenditure of significant financial and product development resources in efforts to analyze, correct, eliminate or work around errors

or defects or to address and eliminate vulnerabilities;

loss of potential licensees, customers or distribution partners;

or lost revenue;

or failure to attain market acceptance;

publicity and harm to our reputation;

regulatory inquiries or investigations that may be costly and harm our reputation and, in some instances, subject us to potential

liability that is not contractually limited.

shipment of our products or if our products are being used improperly or provided by an unauthorized third party.

actual, possible or perceived defects, errors or vulnerabilities in our products and services, or misuse of our products and services,

could result in:

the expenditure of significant

financial and development resources in efforts to analyze, correct, eliminate or work around errors or defects or to address and

eliminate vulnerabilities;

the loss of potential clients,

customers, licensees, resellers, or distribution partners;

delayed or lost revenue;

delay or failure to attain

market acceptance;

negative publicity and

harm to our reputation;

litigation, regulatory

inquiries or investigations that may be costly and harm our reputation and, in some instances, subject us to potential liability

that is not contractually limited.

Related to Our Intellectual Property

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our technology.

Valid patents may not issue from our pending applications, and the claims eventually allowed on any patents may not be

sufficiently broad to protect our technology or products.

Any issued patents may be challenged, invalidated or circumvented, and any

rights granted under these patents may not actually provide adequate defensive protection or competitive advantages to us.

Patent applications

in the United States are typically not published until at least 18 months after filing, or, in some cases, not at all, and publications

of discoveries in industry-related literature lag behind actual discoveries.

We cannot be certain that we were the first to make the

inventions claimed in our pending patent applications, or that we were the first to file for patent protection.

Additionally, the process

of obtaining patent protection is expensive and time-consuming, and we may not be able to prosecute all necessary or desirable patent

applications at a reasonable cost or in a timely manner.

In addition, recent changes to the patent laws in the United States, including

but not limited to “first to file” and “post-grant review” provisions, may bring into question the validity of

certain software patents and may make it more difficult and costly to prosecute patent applications.

As a result, we may not be able

to obtain adequate patent protection or effectively enforce our issued patents.

The claims eventually allowed on any patents issued in the future may not be sufficiently broad to protect our technology

Any issued patents may be challenged, invalidated or circumvented, and any rights granted under these patents may not actually

provide adequate offensive scope, defensive protection or competitive advantages to us.

Patent applications in the United States are

typically not published until at least 18 months after filing, or, in some cases, not at all, and publications of discoveries in industry-related

literature lag behind actual discoveries.

We cannot be certain that we were the first to make the inventions claimed in our pending patent

applications, or that we were the first to file for patent protection.

Additionally, the process of obtaining patent protection is expensive

and time-consuming, and we may not be able to prosecute all necessary or desirable patent applications at a reasonable cost or in a timely

In addition, recent changes to the patent laws in the United States, including but not limited to “adversary proceedings,”

“first to file” and “post-grant review” provisions, may bring into question the validity of certain software

patents and may make it more difficult and costly to prosecute patent applications.

As a result, we may not be able to obtain adequate

patent protection or effectively enforce our issued patents.

our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our products or obtain and use information

that we regard as proprietary.

We generally enter into confidentiality or license agreements with our employees, consultants, vendors

and licensees, as the case may be, and generally limit access to and distribution of our proprietary information.

However, we cannot

guarantee that the steps taken by us will prevent misappropriation of our technology.

Policing unauthorized use of our technology or

products is difficult.

In addition, the laws of some foreign countries do not protect our proprietary rights to as great an extent as

the laws of the United States, and many foreign countries do not enforce these laws as diligently as government agencies and private

parties in the United States.

From time to time, legal action by us may be necessary to enforce our patents and other intellectual property

rights, to protect our trade secrets, to determine the validity and scope of the proprietary rights of others or to defend against claims

of infringement or invalidity.

We generally enter into confidentiality or non-solicitation agreements with our employees, consultants,

and vendors, as the case may be, and generally limit access to and distribution of our proprietary information.

However, we cannot guarantee

that the steps taken by us will prevent misappropriation of our technology.

Policing unauthorized use of our technology or products is

In addition, the laws of some foreign countries do not protect our proprietary rights to as great an extent as the laws of

the United States, and many foreign countries do not enforce these laws as diligently as government agencies and private parties in the

United States.

From time to time, legal action by us may be necessary to enforce our patents and other intellectual property rights,

to protect our trade secrets, to determine the validity and scope of the proprietary rights of others or to defend against claims of

infringement or invalidity.

Such litigation could result in substantial costs and diversion of resources and could negatively affect

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third parties to, our end users’ files or data, could have serious negative consequences for our business, including reduced demand

for our services, an unwillingness of our licensees or their customers to use our services, harm to our brand and reputation.

The techniques

used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, often are not recognized until

launched against a target, and may originate from less regulated or remote areas around the world.

As a result, our end users may be

unable to proactively prevent these techniques, implement adequate preventative or reactionary measures, or enforce the laws and regulations

that govern such activities.

If our end users experience any data loss, data disruption, or any data corruption or inaccuracies, whether

caused by security breaches or otherwise, our brand, reputation and business could be harmed.

insurance (if any) may be inadequate or may not be available in the future on acceptable terms, or at all.

In addition, our policy may

not cover claims against us for loss of data or other indirect or consequential damages.

Defending a suit based on any data loss or system

disruption, regardless of its merit, could be costly and divert our management’s attention.

for our services, an unwillingness of our clients and customers, and our licensees and resellers or their customers to use our products

or services, harm to our brand and reputation.

The techniques used to obtain unauthorized access, disable or degrade service, or sabotage

systems change frequently, often are not recognized until launched against a target, and may originate from less regulated or remote

areas around the world.

As a result, our end users may be unable to proactively prevent these techniques, implement adequate preventative

or remedial measures, or enforce the laws and regulations that govern such activities.

If our end users experience any data loss, data

disruption, or any data corruption or inaccuracies, whether caused by security breaches or otherwise, our brand, reputation and business

could be harmed.

insurance may not be available now or in the future on acceptable terms, or at all.

In addition, our policy may not cover claims against

us for loss of data or other indirect or consequential damages.

Defending a suit based on any data loss or system disruption, regardless

of its merit, could be costly and divert our management’s attention.

by others that we infringe their proprietary technology or other litigation matters could harm our business.

and other intellectual property disputes are common in the encryption and technology industries.

and other intellectual property disputes are common in the cybersecurity and technology industries.

Third parties may in the future assert

claims of infringement of intellectual property rights against us.

They may also assert such claims against our licensees, end users

or partners whom we may have to indemnify against claims that our products infringe the intellectual property rights of third parties.

As the number of products and competitors in our market increases and overlaps occur, infringement claims may increase.

infringement by a third party, even those without merit, could cause us to incur substantial costs defending against the claim and could

distract our management from our business.

In addition, litigation may involve patent holding companies, non-practicing entities or other

adverse patent owners who have no relevant product revenue and against whom our own patents may therefore provide little or no deterrence

or protection.

They may also assert such claims against our licensees, resellers,

end users or distribution partners whom we may have to indemnify against claims that our products infringe the intellectual property

rights of third parties.

As the number of products and competitors in our market increases and overlaps in service and functionality

occur, infringement claims may increase.

Any claim of infringement by a third party, even those without merit, could cause us to incur

substantial costs defending against the claim and could distract our management from our business.

In addition, litigation may involve

patent holding companies, non-practicing entities or other adverse patent owners who have no relevant product revenue and against whom

our own patents may therefore provide little or no deterrence to such plaintiffs we will counter-claim for infringement and invalidation

of their patent(s).

third parties may offer a license to their technology, the terms of any offered license may not be acceptable, and the failure to obtain

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that prevents us from distributing certain products or performing certain services or that requires us to pay substantial damages (including

treble damages if we are found to have willfully infringed such claimant’s patents or copyrights), royalties or other fees.

of these events could seriously harm our business, financial condition and results of operations.

treble damages if we are found to have willfully infringed such claimant’s patents), royalties or other fees.

Any of these events

could seriously harm our business, financial condition and results of operations.

may be subject to lawsuits claiming patent infringement.

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Litigation, with or without merit, could negatively impact our business,

reputation and sales in a material fashion.

reputation and sales in a material adverse fashion.

rely on the availability of third-party licenses and our inability to maintain those licenses could harm our business.

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or the need to engage in litigation regarding these matters, could result in delays in product releases until equivalent technology can

be identified, licensed or developed, if at all, and integrated into our products and may result in significant license fees and have

a material adverse effect on our business, operating results, and financial condition.

Moreover, the inclusion in our products of software

or other intellectual property licensed from third parties on a non-exclusive basis could limit our ability to differentiate our products

from those of our competitors.

be identified, licensed or developed, if at all, and integrated into our products.

Further such events may result in significant license

fees and have a material adverse effect on our business, operating results, and financial condition.

Moreover, the inclusion in our products

of software or other intellectual property licensed from third parties on a non-exclusive basis or the inclusion in our products of opensource

software may limit our ability to differentiate our products from those of our competitors.

Not differentiating our products from those

of our competitors may adversely affect our results of operations, including reducing our revenue and net income.

also rely on technologies licensed from third parties in order to operate functions of our business.

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basis, or to make generally available, in source code form, our proprietary code, any of which could adversely affect our business, operating

results, and financial condition.

results, financial condition and ability to differentiate our products and services.

addition to risks related to license requirements, usage of open-source software can lead to greater risks than use of third-party commercial

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section and elsewhere are:

of our common stock by our stockholders, executives, and directors;

and limitations in trading volumes of our shares of common stock;

ability to obtain financings to conduct and complete research and development activities and other business activities;

timing and success of introductions of new products by us or our competitors or any other change in the competitive dynamics of our

industry, including consolidation among competitors;

ability to attract new licensees;

in the development status of our products;

in our capital structure or dividend policy, future issuances of securities, sales of large blocks of common stock by our stockholders;

cash position;

announcements

and events surrounding financing efforts, including debt and equity securities;

inability to enter into new markets or develop new products;

announcements

of acquisitions, partnerships, collaborations, joint ventures, new products, capital commitments, or other events by us or our competitors;

in industry conditions or perceptions;

research reports, recommendation and changes in recommendations, price targets, and withdrawals of coverage;

and additions of key personnel;

and litigations related to intellectual properties, proprietary rights, and contractual obligations;

in applicable laws, rules, regulations, or accounting practices and other dynamics;

events or factors, many of which may be out of our control.

sale of our common stock

by our stockholders, executives, and directors;

volatility in price and

level of trading volumes of our shares of common stock;

our ability to obtain financings

to conduct and complete research and development activities and other business activities;

the timing and success

of introductions of new products and services by us or our competitors or any other change in the competitive dynamics of our industry,

including consolidation among competitors;

Our ability to attract

new customers, clients, licensees, and resellers;

changes in the development

status of our products and services;

changes in our capital

structure, future issuances of securities, sales of large blocks of common stock by our stockholders;

our cash position;

announcements and events

surrounding financing efforts, including debt and equity securities;

our inability to enter

into new markets or develop new products and services;

reputational issues;

announcements of acquisitions,

partnerships, collaborations, joint ventures, new products and services, capital commitments, or other events by us or our competitors;

changes in industry conditions

or perceptions;

our ability to attract

analyst to initiate research coverage and once obtained, having such analysts issue research reports, recommendations and any changes

in recommendations, price targets, and withdrawals of coverage;

departures and additions

of key personnel;

disputes and litigations

related to intellectual properties, proprietary rights, and contractual obligations;

changes in applicable laws,

rules, regulations, or accounting practices and other dynamics;

other events or factors,

many of which may be out of our control.

addition, if the market for stock of companies in our industry or industries related to our industry, or the stock market in general,

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of our common stock have a risk of potential dilution if we issue additional shares of common stock in the future.

exercise of outstanding options and warrants to purchase our common stock will dilute existing stockholders’ ownership percentage.

We currently have outstanding warrants to purchase 87,628,920 shares of our common stock, with a weighted average exercise price of $0.55.

Our board of directors has authorized, and our stockholders have approved, an employee stock option plan, under which we

may issue options to purchase or grant up to an aggregate of 8,000,000 shares of common stock.

In the future, we may grant additional

stock options, warrants, preferred stock or convertible securities.

The exercise or conversion of stock options, warrants, preferred

stock, or convertible securities will dilute the ownership percentage of our then existing stockholders.

The dilutive effect of the exercise

or conversion of these securities may adversely affect our ability to obtain additional capital.

The holders of these securities may

be expected to exercise or convert their securities when we are able to obtain additional equity capital on terms more favorable than

these securities.

exercise of outstanding options and warrants to purchase our common stock will dilute existing stockholders’ ownership

We currently have outstanding warrants to purchase 87,628,920 shares of our common stock, with a weighted average

exercise price of $0.56.

On September 13, 2021, our stockholders approved an employee stock option plan authorized by our Board of

Directors under which we may issue options to purchase or grant up to an aggregate of 8,000,000 shares of common stock plus annual

increases on the first day of each calendar year beginning with the first January 1 following May 12, 2021 and ending with the last

January 1, 2031 up to five percent (5%) of the fully diluted shares outstanding.

Annual increases are subject to the approval by the

Board of Directors.

In the future, we may grant additional stock options, warrants, preferred stock or convertible securities.

exercise or conversion of stock options, warrants, preferred stock, or convertible securities will dilute the ownership percentage

of our then existing stockholders.

The dilutive effect of the exercise or conversion of these securities may adversely affect our

ability to obtain additional capital.

The holders of these securities may be expected to exercise or convert their securities when

we are able to obtain additional equity capital on terms more favorable than these securities.

Second Tranche, should the Company achieve the Milestone prior to June 30, 2026, will increase outstanding shares of common stock by

59.9 million.

anti-dilutive rights of certain warrants could result in significant dilution to our existing stockholders and/or require us to issue

a substantially greater number of shares, which may adversely affect the market price of our common stock.

warrants to purchase 55,549,615 shares of our common stock issued to investors in our recent private placement contain anti-dilution

rights such that if we issue, or are deemed to have issued, common stock or common stock equivalents at a price less than the then exercise

price of those warrants, the exercise price of those warrants will automatically be reduced to such lower value, and the number of shares

of common stock issuable upon exercise thereafter will be adjusted proportionately, so that the aggregate exercise price payable upon

exercise of such warrants is the same prior to and after such reduction in exercise price.

As a result, the effect of the anti-dilution

right may cause significant dilution to our other stockholders.

The warrants to purchase 8,332,439 shares of our common stock issuable

upon exercise of warrants issued to the placement agent in the private placement include a weighted average anti-dilution right in the

event we issue any shares of common stock or equivalents with a value less than the then exercise price.

As a result, the effect of the

anti-dilution right may cause significant dilution to our other stockholders.

The triggering of the anti-dilution rights in the warrants

issued in the private placement may result in such securities being exercisable for a significant number of additional shares of common

stock and/or exercisable for a reduced exercise price.

As a result, the number of shares issuable could prove to be significantly greater

than they are currently and could result in substantial dilution to our other stockholders.

warrants to purchase 55,549,615 shares of our common stock issued to investors in a private placement transaction that closed on April

16, 2021 contain anti-dilution rights such that if we issue, or are deemed to have issued, common stock or common stock equivalents at

a price less than the then exercise price of those warrants, the exercise price of those warrants will automatically be reduced to such

lower value, and the number of shares of common stock issuable upon exercise thereafter will be adjusted proportionately, so that the

aggregate exercise price payable upon exercise of such warrants is the same prior to and after such reduction in exercise price.

result, the effect of the anti-dilution right may cause significant dilution to our other stockholders.

The warrants to purchase 8,332,439

shares of our common stock issuable upon exercise of warrants issued to the placement agent in the private placement include a weighted

average anti-dilution right in the event we issue any shares of common stock or equivalents with a value less than the then exercise

As a result, the effect of the anti-dilution right may cause significant dilution to our other stockholders.

The triggering of

the anti-dilution rights in the warrants issued in the private placement may result in such securities being exercisable for a significant

number of additional shares of common stock and/or exercisable for a reduced exercise price.

As a result, the number of shares issuable

could prove to be significantly greater than they are currently and could result in substantial dilution to our other stockholders.

of September 30, 2022, no anti-dilution triggers have occurred.

common shares are thinly traded, and in the future may continue to be thinly traded, and you may be unable to sell your shares at or

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that could better absorb those sales without adverse impact on its share price.

As a consequence of this enhanced risk, more risk-adverse

As a consequence of this enhanced risk, more risk-averse

investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined

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common stock.

As of September 30, 2021,

we had 82,927,311 shares of common stock outstanding.

In November of this year, we filed a registration statement that registers

the resale of 55,549,615 shares of our common stock and warrants to purchase an additional 63,882,054 shares of our common stock.

of September 30, 2021, the 55,549,615 registered shares constitute approximately 67.0% of our outstanding shares of common

stock, and the 63,882,054 warrants shares would constitute 37.5% of our outstanding common stock, assuming the exercise of all of

the total outstanding warrants for the purchase of 87,628,920 shares are exercised in full for cash.

Sales of a significant

number of shares of our common stock in the public market, or the potential or expectation of such sales, could harm the market price

of our common stock.

As large numbers of our common stock are sold, it would increase the supply of our common stock, which would thereby

cause a decrease in its price.

addition, the shares of our common stock that has been registered for resale and/or is issuable upon exercise of the warrants issued

in the private placement may represent overhang that may also adversely affect the market price of our common stock.

of September 30, 2022, we had 148,724,056 shares of common stock outstanding and total warrants issued for 87,628,920 shares of common

If all 87,628,920 warrants are exercised in full for cash, then they would represent 37% of the total shares outstanding.

Second Tranche, should the Company achieve the Milestone prior to June 30, 2026, will increase outstanding shares of common stock by

59.9 million.

Sales of a significant number of shares of our common stock in the public market, or the potential or expectation of such

sales, could harm the market price of our common stock.

As large numbers of our common stock are sold, it would increase the supply of

our common stock, which would thereby cause a decrease in its price.

addition, the shares of our common stock that have been registered for resale and/or are issuable upon exercise of the warrants issued

in the private placement may represent an overhang that may also adversely affect the market price of our common stock.

Overhang occurs

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When this happens, the price

of the company’s stock will decrease, and any additional shares that stockholders attempt to sell in the market will only further

of a company’s stock will decrease, and any additional shares that stockholders attempt to sell in the market will only further

decrease the share price.

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the extent that we raise additional capital by issuing equity securities, our existing stockholders may experience substantial dilution.

We may sell common stock, convertible securities or other equity securities in one or more transactions, at prices and in a manner in

which we determine from time to time.

If we sell common stock, convertible securities or other equity securities in more than one transaction,

investors may be materially diluted by subsequent sales.

Such sales may also result in material dilution to our existing stockholders,

and new investors could gain rights superior to our existing stockholders.

We may sell common stock, convertible securities or other equity securities in one or more transactions, at prices and in a manner that

we determine from time to time, in our discretion.

If we sell common stock, convertible securities or other equity securities in more

than one transaction, investors may be materially diluted by subsequent sales.

Such sales may also result in material dilution to our

existing stockholders, and new investors could gain rights superior to our existing stockholders.

common stock is subject to restrictions on sales by broker-dealers and penny stock rules, which may be detrimental to investors.

common stock is subject to Rules 15g-1 through 15g-9 under the Exchange Act, which imposes certain sales practice requirements on broker-dealers

common stock is subject to Rules 15g-1 through 15g-9 under the Exchange Act, which impose certain sales practice requirements on broker-dealers

who sell our common stock to persons other than established customers and “accredited investors” (as defined in Rule 501(a)

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Accordingly, our stockholders may not be able to realize a fair price for their shares when they determine

to sell them, or may have to hold them for a substantial period of time until the market for our common stock improves.

to sell them or may have to hold them for a substantial period of time until the liquidity of the market for our common stock improves.

Related to Regulations and Our Compliance with Such Regulations

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reliable financial statements.

While our disclosure controls and procedures and internal controls over financial reporting are currently

effective, they have in the past been ineffective and subject to material weaknesses.

A material weakness is a deficiency, or a combination

of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement

of a company’s annual or interim financial statements will not be prevented or detected on a timely basis.

A control deficiency

exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned

functions, to prevent or detect misstatements on a timely basis.

effective disclosure controls and procedures and effective internal control over financial reporting are necessary for us to produce

reliable financial statements and we are committed to remediating our material weaknesses in such controls as promptly as possible.

we cannot assure you as to when these material weaknesses will be remediated or that additional material weaknesses will not arise in

Any failure by us to remediate material weaknesses, or the development of new material weaknesses in our internal control

over financial reporting, could result in material misstatements in our financial statements and cause us to fail to meet our reporting

and financial obligations, which in turn could have a material adverse effect on our financial condition and the trading price of our

common stock, and/or result in litigation against us or our management.

Our disclosure controls and procedures and internal controls over financial reporting are currently ineffective

and have in the past been subject to material weaknesses.

A material weakness is a deficiency, or a combination of deficiencies, in internal

control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual

or interim financial statements will not be prevented or detected on a timely basis.

A control deficiency exists when the design or operation

of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect

misstatements on a timely basis.

cannot assure you that additional material weaknesses will not arise in the future.

The development of new material weaknesses in our

internal control over financial reporting, could result in material misstatements in our financial statements and cause us to fail to

meet our reporting and financial obligations, which in turn could have a material adverse effect on our financial condition and the trading

price of our common stock, and/or result in litigation against us or our management.

are subject to changing laws and regulations.

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These regulations have both positive and negative impacts,

with much remaining uncertainty as to how various provisions will ultimately affect our licensees, end users and our business.

prospective legislation and regulation concerning collection, transmission, storage and use of personal data, we cannot determine what

effect additional state or federal governmental legislation, regulations, or administrative orders would have on our business in the

New legislation or regulation may require the reformulation of our business to meet new standards, require us to cease operations,

impose stricter qualification and/or registration standards, impose additional record keeping, or require expanded consumer protection

measures (such as heightened notification procedures and data subject access rights).

with much remaining uncertainty as to how various provisions will ultimately affect our customers, clients, licensees, resellers, end

users and our business.

As to prospective legislation and regulation concerning collection, transmission, storage and use of personal

data, we cannot determine what effect additional state or federal governmental legislation, regulations, or administrative orders would

have on our business in the future.

New legislation or regulation may require the reformulation of our business to meet new standards,

require us to cease operations, impose stricter qualification and/or registration standards, impose additional record keeping, or require

expanded consumer protection measures (such as heightened notification procedures and data subject access rights).

failure to comply with laws and regulations applicable to our business could subject us to fines and penalties and could also cause us

to lose potential licensees and/or for them to lose potential customers in the public sector or negatively impact our ability to contract

with the public sector.

to lose potential customers, clients, licensees, resellers and/or for licensees and resellers to lose potential customers in the public

sector or negatively impact our ability to contract with the public sector.

business is subject to regulation by various federal, state, regional, local and foreign governmental agencies, including agencies responsible

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to any legal action will likely result in a significant diversion of our management’s attention and resources and an increase in

professional fees.

professional fees and expenses.

Enforcement actions and sanctions could harm our business, operating results and financial condition.

Additionally,

we may be subject to other legal regimes throughout the world governing data handling, protection and privacy.

For example, in June of

2018, California passed the California Consumer Privacy Act, or the “CCPA,” which provides new data privacy rights for consumers

and new operational requirements for companies became effective in 2020, and in March 2021 Virginia passed a consumer data protection

law, the “VCDPA,” which includes similar rights as set forth in the CCPA.

Fines for noncompliance may be up to $7,500 per

The costs of compliance with, and other burdens imposed by, the CCPA, the VCDPA and other state or foreign laws, may limit

the use and adoption of our products and services and could have an adverse impact on our business.

These laws and regulations impose

added costs on our business, and failure to comply with these or other applicable regulations and requirements, including non-compliance

in the past, could lead to claims for damages from our channel partners, penalties, termination of contracts, loss of exclusive rights

in our intellectual property and temporary suspension or permanent debarment from government contracting.

Any such damages, penalties,

disruptions or limitations in our ability to do business with the public sector could have an adverse effect on our business and operating

we may be subject to other laws and regulations throughout the world governing data handling, protection and privacy.

For example, in

June of 2018, California passed the California Consumer Privacy Act, or the “CCPA,” which provides new data privacy rights

for consumers and new operational requirements for companies, became effective in 2021, and in March 2022 Virginia passed a consumer

data protection law, the “VCDPA,” which includes similar rights as set forth in the CCPA.

Fines for noncompliance may be

up to $7,500 per violation.

Additionally, many other states have passed differing privacy and data protection laws in recent years.

Significantly,

several bills are being worked on in the Senate and the House dealing with these issues, and while it is uncertain that any of them will

reach the floor of either chamber, if they do so they will likely impose substantial additional burdens on companies.

The costs of compliance

with, and other burdens imposed by, the CCPA, the VCDPA and other state or foreign laws, may limit the use and adoption of our products

and services and would have an adverse impact on our business.

These laws and regulations impose added costs on our business, and failure

to comply with these or other applicable regulations and requirements, including non-compliance in the past, could lead to claims for

damages from our channel partners, penalties, termination of contracts, loss of exclusive rights in our intellectual property and temporary

suspension or permanent debarment from government contracting.

Any such damages, penalties, disruptions or limitations in our ability

to do business with the public sector could have an adverse effect on our business and operating results.

restrictions on the sale of our products and services in non-U.S.

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financial results.

of software products and services using encryption technology such as ours are generally restricted by the U.S.

some countries impose restrictions on the use of encryption products and services such as ours.

of software products and services using cybersecurity technology such as ours are generally restricted by the U.S.

some countries impose restrictions on the use of cybersecurity products and services such as ours.

The cost of compliance with U.S.

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Related to Our Contractual Agreements

owe amounts to our Chief Executive Officer upon the occurrence of certain change of control transactions.

to the employment agreement of our chief executive officer, David Chasteen, if we sell all or substantially all of our assets or consummate

a merger, reorganization or similar transaction in which a majority of the equity in the surviving company is not owned by our stockholders

immediately prior to such a transaction, then Mr.

Chasteen will receive a bonus equal to 5% of the “Net Proceeds” we receive

from such a transaction.

Net Proceeds are defined as the purchase price, less costs incurred to complete the sale, including but not

limited to accounting, legal, due diligence, commissions, investment banking fees or similar costs that are necessitated by the applicable

The requirement to pay 5% of the net proceeds to Mr.

Chasteen may prevent a change of control that could be accretive to

stockholders or decrease the amount of funds available to be paid to stockholders upon a change of control.

accounting treatment of the recently issued warrants could have a material adverse impact on our financial statements.

provisions of the warrants we issued in the recent private placement, including, but not limited to, various price reset and anti-dilution

provisions, will cause these instruments to be treated as derivative liabilities.

As a result, we will be forced to value those warrants

at the end of each fiscal quarter based upon complex accounting methods for the treatment of derivative liabilities, such as Monte Carlo

or other similar valuation models, which will calculate the value of those warrants based upon a variety of factors, including price

volatility in the market price of our common stock.

We cannot predict the financial impact of the issuance of the warrants on our financial

statements, specifically our balance sheet, and the deviation in the impact from quarter to quarter.

accounting treatment of the recently issued warrants could have a material adverse impact on our financial statements and reduce our

warrants we issued in the 2021 private placement described in Part II, Item 8, Financial Statements, Note 8 , contain various provisions

including, but not limited to, various price reset and anti-dilution provisions.

We cannot predict the financial impact of the issuance

of the warrants on our financial statements, specifically our balance sheet.

We also cannot predict the financial impact of the various

provisions included in the warrant agreements.

stockholders are subject to significant dilution upon the occurrence of certain events which could result in a decrease in our stock

of the date of this report, we had approximately 87,628,920 shares of our common stock reserved or designated for future issuance upon

the exercise of outstanding options and warrants, and conversion of convertible instruments.

Further, we may from time to time make an

offer to our warrant holders to exchange their outstanding warrants for shares of our common stock, a fewer number of warrants with more

favorable terms, or a combination thereof, subject to applicable rules and requirements.

the exercise of outstanding warrants.

Further, we may from time to time make an offer to our warrant holders to exchange their outstanding

warrants for shares of our common stock, a fewer number of warrants with more favorable terms, or a combination thereof, subject to applicable

rules and requirements.

warrants issued in the recent private placement contain provisions that, subject to certain exceptions, reset the exercise price of such

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dilutive effect on our existing stockholders and could result in a decrease in our stock price.

purchase agreement related to our recent private placement includes various covenants, such that if we don’t comply with such covenants,

we may suffer potential monetary and other penalties.

securities purchase agreement we entered into in connection with the recent private placement contains certain covenants.

comply with these covenants, we will be in breach of our obligations under the securities purchase agreement, which may lead to exercise

by the investors of the remedies available to them under the securities purchase agreement, which may cause a material impact upon our

financial condition.

charter allows us to issue “blank check” preferred stock without stockholder approval.

As of September 30, 2022 no resets of

warrant exercise prices has occurred.

Second Tranche, should the Company achieve the Milestone prior to June 30, 2026, will increase outstanding shares of common stock by

59.9 million.

purchase agreement related to our 2021 private placement includes customary covenants that we must comply with, or we may suffer potential

monetary and other penalties.

securities purchase agreement we entered into in connection with the recent private placement contains certain customary covenants.

we do not comply with these covenants, we will be in breach of our obligations under the securities purchase agreement, which may lead

to exercise by the investors of the remedies available to them under the securities purchase agreement, which may cause a material impact

upon our financial condition.

charter allows us to issue “blank check” preferred stock, and establish its terms, conditions, rights, powers and preferences

without stockholder approval.

to our certificate of incorporation, our Board of Directors has the authority to issue up to 10 million shares of “ blank check ”

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without any additional vote or action by our stockholders.

Because our board of directors is able to designate the powers and preferences

of the preferred stock without the vote of a majority of our stockholders, our stockholders will have no control over what designations

and preferences our preferred stock will have.

The issuance of shares of preferred stock or the rights associated therewith, could cause

substantial dilution to our existing stockholders.

Additionally, the dilutive effect of any preferred stock that we may issue may be

exacerbated given the fact that such preferred stock may have voting rights and/or other rights or preferences that could provide the

preferred stockholders with substantial voting control over us and/or give those holders the power to prevent or cause a change in control.

As a result, the issuance of shares of preferred stock may cause the value of our common stock to decrease.]

Because our Board of Directors is able to designate the terms, conditions,

rights, powers and preferences of the preferred stock without the vote of a majority of our stockholders, our stockholders will have

no control over what designations and preferences our preferred stock will have.

The issuance of shares of preferred stock or the rights

associated therewith, could cause substantial dilution to our existing stockholders.

Additionally, the dilutive effect of any preferred

stock that we may issue may be exacerbated given the fact that such preferred stock may have voting rights, liquidation and/or other

rights or preferences that could provide the preferred stockholders with substantial voting control over us and/or give those holders

the power to prevent or cause a change in our control.

As a result, the issuance of shares of preferred stock may cause the value of

our common stock to decrease.

July 1, 2022, 100 shares of Series A Preferred Stock were issued to five (5) individuals with a Board Designation Right in the Series

A Preferred Stock Designation that entitles the holders of a majority of the Series A Preferred Stock (i) present and voting at a meeting

at which a quorum of the Series A Preferred Stock is present, or (ii) executing a written Series A Preferred Stock Consent in Lieu of

a Meeting, to elect for (4) members of our Board of Directors, and if the number of directors on our Board of Directors is increased

above a total of six (6), then the holders of the series A Preferred Stock shall be entitled to elect a majority of the members of our

Board of Directors.

will continue to incur increased costs as a result of being a reporting company and, given our limited capital resources, such additional

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to continue as a going concern.

In addition, the Sarbanes Oxley Act of 2002, as well as a variety of related rules implemented by the

SEC, have required changes in corporate governance practices and generally increased the disclosure requirements of public companies.

For example, as a result of being a reporting company, we are required to file periodic and current reports and other information with

the SEC, and we have adopted policies regarding disclosure controls and procedures and regularly evaluate those controls and procedures.

additional costs we continue to incur in connection with being a reporting company (expected to be approximately a hundred thousand dollars

per year) will continue to further stretch our limited capital resources.

Due to our limited resources, we have to allocate resources

away from other productive uses in order to continue to comply with our obligations as an SEC reporting company.

Further, there is no

guarantee that we will have sufficient resources to continue to meet our reporting and filing obligations with the SEC as they come due.

securities or industry analysts do not publish research or reports, or publish unfavorable research or reports, about our business, our

stock price and trading volume may decline.

In addition, the Sarbanes Oxley Act of 2002, as well as a variety of new related and unrelated rules

implemented by the SEC, have required changes in corporate governance practices and generally increased the disclosure requirements of

public companies.

For example, as a result of being a reporting company, we are required to file periodic and current reports and other

information with the SEC, and we are adopting and revising policies regarding disclosure controls and procedures, internal control over

financial reporting.

additional costs we continue to incur in connection with being a reporting company (expected to be approximately seven to eight hundred

thousand dollars per year) will continue to further stretch our limited capital resources.

Due to our limited resources, we have to allocate

resources away from other productive uses in order to continue to comply with our obligations as an SEC reporting company.

Further, there

is no guarantee that we will have sufficient resources to continue to meet our reporting and filing obligations with the SEC as they

securities or industry analysts do not initiate research coverage on us and if initiated fail to publish research or reports, or publish

unfavorable research or reports, about our business, our stock price and trading volume may decline.

trading market for our common stock will rely in part on the research and reports that industry or financial analysts publish about us,

our business, our markets and our competitors.

We do not control these analysts.

If securities analysts do not cover our common stock,

the lack of research coverage may adversely affect the market price of our common stock.

Furthermore, if one or more of the analysts

who do cover us downgrade our stock, or if those analysts issue other unfavorable commentary about us or our business, our stock price

would likely decline.

If one or more of these analysts cease coverage of us or fails to regularly publish reports on us, we could lose

visibility in the market, and interest in our stock could decrease, which in turn could cause our stock price or trading volume to decline

and may also impair our ability to expand our business and attract new licensees.

We do not currently have any securities or industry analysts that have initiated research

coverage on our business.

If and when any securities or industry analysts initiate research coverage on our business, we will not control

these analysts.

If securities analysts do not cover our common stock, the lack of research or other coverage may adversely affect the

market price and decrease the trading volume of our common stock.

Furthermore, if one or more of the analysts who do cover us downgrade

our stock, or if those analysts issue other unfavorable commentary about us or our business, our stock price would likely decline.

one or more of these analysts cease coverage of us or fails to regularly publish reports on us, we could lose visibility in the market,

and interest in our stock could decrease, which in turn could cause our stock price or trading volume to decline and may also impair

our ability to expand our business and attract new clients and customers to purchase our cybersecurity products and services.

and economic conditions may negatively impact our business, financial condition and share price.

over inflation, energy costs, geopolitical issues, unstable global credit markets and financial conditions, and volatile oil prices have

in the past led to periods of significant economic instability, diminished liquidity and credit availability, declines in consumer confidence

and discretionary spending, diminished expectations for the global economy and expectations of slower global economic growth going forward,

increased unemployment rates, and increased credit defaults.

Our general business strategy may be adversely affected by any such economic

downturns, volatile business environments and continued unstable or unpredictable economic and market conditions.

If these conditions

continue to deteriorate, or do not improve once they occur, it may make any necessary debt or equity financing by us more difficult to

complete, more costly, and more dilutive.

Failure to secure any necessary financing in a timely manner and on favorable terms could have

a material adverse effect on our growth strategy, financial performance, and share price, and could require us to delay or abandon development

or commercialization plans.

over increasing inflation, increasing energy costs, geopolitical issues, unstable global credit markets and financial conditions, and

volatile oil prices have in the past led to periods of significant economic instability, diminished liquidity and credit availability,

declines in consumer confidence and discretionary spending, diminished expectations for the global economy and expectations of slower

global economic growth going forward, increased unemployment rates, and increased credit defaults.

Our general business strategy may

be adversely affected by any such economic downturns, volatile business environments and continued unstable or unpredictable economic

and market conditions.

If these conditions continue to deteriorate, or do not improve once they occur, it may make any necessary debt

or equity financing needed by us more difficult to complete, more costly, if possible, at all, and more dilutive.

Failure to secure any

necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial

performance, and share price, and could require us to delay or abandon development or commercialization plans.

to adequately manage our planned aggressive growth strategy may harm our business or increase our risk of failure.

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Our ability to rapidly expand our operations will depend upon many factors, including our ability to work

in a regulated environment, market value-added products effectively to our target markets, establish and maintain strategic relationships

with suppliers, and obtain adequate capital resources on acceptable terms.

in a regulated environment, market value-added products effectively to mid-market and emerging companies and organizations, establish

and maintain strategic relationships with suppliers, acquire companies or establish joint ventures to add new features, services or products

to our offerings, and obtain adequate capital resources on acceptable terms.

Any restrictions on our ability to expand may have a materially

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Additionally,

our growth may place a significant strain on our managerial, administrative, operational, and financial resources and our infrastructure.

Our future success will depend, in part, upon the ability of our management to manage growth effectively.

This will require us to, among

other things:

additional management information systems;

develop our operating, administrative, legal, financial, and accounting systems and controls;

additional personnel;

additional levels of management within our company;

additional office space;

close coordination among our engineering, operations, legal, finance, sales and marketing, and client service and support organizations;

our expanding international operations.

our growth may place a significant strain on our managerial, administrative, operational, and financial resources.

Our future success

will depend, in part, upon the ability of our management to manage growth effectively.

This will require us to, among other things:

implement additional management

information systems;

further develop our operating,

administrative, legal, financial, and accounting systems and controls;

hire additional personnel;

develop additional levels

of management within our company;

locate additional office

maintain close coordination

among our engineering, operations, legal, finance, sales and marketing, and client service and support organizations.

a result, we may lack the resources to deploy our services on a timely and cost-effective basis.

Failure to accomplish any of these requirements

could impair our ability to deliver services in a timely fashion or attract and retain new licensees.

could impair our ability to deliver our products and services in a timely fashion or attract and retain new licensees and resellers.

we do not successfully implement any acquisition strategies, our operating results and prospects could be harmed.

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Furthermore, if we enter into

negotiations that are not ultimately consummated, those negotiations could result in diversion of management time and significant out-of-pocket

negotiations that are not ultimately consummated, those negotiations would result in diversion of management time and significant out-of-pocket

Even if we are able to complete such acquisitions, we may additionally expend significant amounts of cash or incur substantial

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If we are unable

to successfully address any of these risks, our business, financial condition or operating results could be harmed.

to successfully address any of these risks, our business, financial condition, and operating results could be harmed.

we make any acquisitions, they may disrupt or have a negative impact on our business.

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integrating the acquired company’s assets, personnel and operations with our own.

We do not anticipate that any acquisitions or

mergers we may enter into in the future would result in a change of control of us.

In addition, the key personnel of the acquired business

may not be willing to work for us.

We do not anticipate that any further acquisitions

or mergers we may enter into in the future would result in a change of control of the Company.

In addition, the key personnel of the

acquired business may not be willing to work for us.

We cannot predict the effect any expansion may have on our core business.

Regardless of whether we

are successful in making an acquisition, the negotiations could disrupt our ongoing business, distract our management and employees and

increase our expenses.

In addition to the risks described above, acquisitions are accompanied by a number of inherent risks, including,

without limitation, the following:

difficulty of integrating acquired products, services or operations;

potential disruption of the ongoing businesses and distraction of our management and the management of any acquired companies;

in maintaining uniform standards, controls, procedures and policies;

potential impairment of relationships with employees, licensees, and customers as a result of any integration of new management personnel;

potential inability or failure to achieve additional sales and enhance our licensee and customer base through cross-marketing of

the products to new and existing licensees and customers;

effect of any government regulations that relate to the business acquired;

unknown liabilities associated with acquired businesses or product lines, or the need to spend significant amounts to retool, reposition

or modify the marketing and sales of acquired products or operations, or the defense of any litigation, whether or not successful,

resulting from actions of the acquired company prior to our acquisition;

expenses under the labor, environmental and other laws of various jurisdictions.

of whether we are successful in making an acquisition, the negotiations could disrupt our ongoing business, distract our management and

employees and increase our expenses.

In addition to the risks described above, acquisitions are accompanied by a number of inherent risks,

including, without limitation, the following:

the difficulty of integrating

acquired products, services or operations;

the potential disruption

of the ongoing businesses and distraction of our management and the management of any acquired companies;

difficulties in maintaining

uniform standards, controls, procedures and policies;

the potential impairment

of relationships with employees, licensees, resellers, clients, and customers as a result of any integration of new management personnel;

the potential inability

or failure to achieve additional sales and enhance our client, customer, licensee, and reseller base through cross-marketing of the

products to new and existing clients, customers, licensees and resellers;

the effect of any government

regulations which we are unfamiliar with that relate to the business acquired;

potential unknown liabilities

associated with acquired businesses or product lines, or the need to spend significant amounts to retool, reposition or modify the

marketing and sales of acquired products or operations, or the defense of any litigation, whether or not successful, resulting from

actions of the acquired company prior to our acquisition;

potential expenses under

the labor, environmental and other laws of various jurisdictions.

business could be severely impaired if and to the extent that we are unable to succeed in addressing any of these risks or other problems

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These risks and problems could disrupt our

ongoing business, distract our management and employees, increase our expenses and adversely affect our results of operations.

may apply working capital and future funding to uses that ultimately do not improve our operating results or increase the value of our

general, we have complete discretion over the use of our working capital and any new investment capital we may obtain in the future.

Because of the number and variety of factors that could determine our use of funds, our ultimate expenditure of funds (and their uses)

may vary substantially from our current intended operating plan for such funds.

intend to use existing working capital and future funding to support the development of our products and services, product purchases

in our wholesale distribution division, the expansion of our marketing, or the support of operations to educate our end users.

also use capital for market and network expansion, acquisitions, and general working capital purposes.

However, we do not have more specific

plans for the use and expenditure of our capital.

ongoing business, distract our management and employees, increase our expenses and adversely affect our results of operations, including

reducing our revenue and net income.

may apply working capital and future funding to uses that ultimately do not improve our operating results or increase the market price

of our securities.

general, we have complete discretion over the use of our working capital and any new investment capital we may obtain in the future that

has no dedicated use of proceeds.

Because of the number and variety of factors that could determine our use of funds, our ultimate expenditure

of funds (and their uses) may vary substantially from our current intended operating plan for such funds.

intend to use existing working capital and future funding to support the development of our products and services, the expansion of our

marketing, or the support of operations to educate the end users of the software we sell.

We will also use capital for market and network

expansion, acquisitions, and general working capital purposes.

However, we do not have more specific plans for the use and expenditure

of our capital.

Our management has broad discretion to use any or all of our available capital reserves.

Our capital could be applied in ways that do not improve our operating results or otherwise increase the value of a stockholder’s

Our capital could be applied

in ways that do not improve our operating results or otherwise increase the market value of a stockholder’s shares.

websites may encounter technical problems and service interruptions.

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delays and interruptions resulting from failure to maintain Internet service connections to our site could frustrate visitors and reduce

our future web site traffic, which could have a material adverse effect on our business.

sale of shares by our directors and officers may adversely affect the market price for our shares.

of significant amounts of shares held by our officers and directors, or the prospect of such sales, could adversely affect the market

price of our common stock.

Our management’s stock ownership may discourage a potential acquirer from making a tender offer or otherwise

attempting to obtain control of us, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over

our stock price.

our future web site traffic, which could have a material adverse effect on our business including a reduction in our sales and net income.

sale of shares of our common stock by our directors and officers may adversely affect the market price for our common stock.

of significant amounts of shares of common stock by our officers and directors, or the prospect of such sales, could adversely affect

the market price of our common stock.

Our management’s stock ownership may discourage a potential acquirer from making a tender

offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price or prevent our stockholders from realizing

a premium over our stock’s market price.

may be diluted significantly through our efforts to obtain financing and satisfy obligations through the issuance of additional shares

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existing management.

we do not effectively manage our growth, our existing infrastructure may become strained, and we may be unable to increase revenue growth.

past growth that we have experienced, and in the future may experience, may provide challenges to our organization, requiring us to expand

our personnel and our operations.

we do not effectively manage our growth, our business resources and systems may become strained, and we may be unable to increase revenue

plan to grow aggressively and, if successful, our future growth may provide challenges to our organization, requiring us to expand our

personnel and our operations.

Future growth may strain our infrastructure, operations and other managerial and operating resources.

If our business resources become strained, our earnings may be adversely affected, and we may be unable to increase revenue growth.

our business resources become strained, our earnings may be adversely affected, and we may be unable to increase revenue growth.

we may undertake contractual commitments that exceed our labor resources, which could also adversely affect our earnings and our ability

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In addition, acquisitions of our business partners by our competitors could result in a decrease

in the number of our current and potential licensees and end users.

If we are unsuccessful in establishing or maintaining our relationships

with third parties, our ability to compete in the marketplace or to grow our revenue could be impaired and our results of operations

Even if we are successful, we cannot assure you that these relationships will result in increased use of our products or

increased revenue.

in the number of our current and potential clients, customers, licensees, resellers, and end users.

If we are unsuccessful in establishing

or maintaining our relationships with third parties, our ability to compete in the marketplace or to grow our revenue could be impaired

and our results of operations may suffer.

Even if we are successful, we cannot assure you that these relationships will result in increased

use of our products or increased revenue.

litigation, government investigations, and other proceedings may adversely affect our business and results of operations.

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or services, require us to change our business practices in a manner materially adverse to our business, requiring development of non-infringing

or otherwise altered products or technologies, damaging our reputation, or otherwise having a material effect on our operations.

or otherwise altered products or technologies, damaging our reputation, or otherwise having a material adverse effect on our operations.

have never paid or declared any dividends on our common stock.

have never paid or declared any dividends on our common stock or preferred stock;

Likewise, we do not anticipate paying, in the near

future, dividends or distributions on our common stock.

Any future dividends on our common stock will be declared at the discretion of

our board of directors and will depend on, among other things, our earnings, our financial requirements for future operations and growth,

and other facts as we may then deem appropriate.

Since we do not anticipate paying cash dividends on our common stock, return on your

investment, if any, will depend solely on an increase, if any, in the market value of our common stock.

however, prior to December 29, 2021 we operated as

a limited liability company (“LLC”) and made distributions of profits to our members.

There were equity distributions to

LLC members of $210,000 in 2021 and $461,000 in 2022.

do not anticipate paying, in the near future, dividends or distributions on our common stock.

Any future dividends on our common stock

will be declared at the discretion of our Board of Directors and will depend on, among other things, our earnings, our financial requirements

for future operations and growth, and other facts as we may then deem appropriate.

Since we do not anticipate paying cash dividends on

our common stock, return on your investment, if any, will depend solely on an increase, if any, in the market value of our common stock.

all of the foregoing reasons and others set forth herein, an investment in our securities involves a high degree of risk.

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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 1A. Risk Factors