LEGAL PROCEEDINGS
−Removed: As of the filing date of this Annual Report on Form 10-K, there are no material pending legal proceedings.
−Removed: to time, we may be involved in ordinary routine litigation incidental to our business, to which we are a party or which our property is
−Removed: In addition, none of our officers, directors, affiliates or 5% stockholders (or any associates thereof) is a party adverse
−Removed: to us, or has a material interest adverse to us, in any material proceeding.
+Added: of the filing date of this Annual Report on Form 10-K, there are no material pending legal proceedings.
+Added: From time to time, we may be
+Added: involved in ordinary routine litigation incidental to our business, to which we are a party or which our property is the subject.
+Added: addition, none of our officers, directors, affiliates or 5% stockholders (or any associates thereof) is a party averse to us, or has
+Added: a material interest adverse to us, in any material proceeding.
Pending Litigation
−Removed: April 2021, Eric Marquez, the former Secretary/Treasurer and Chief Financial Officer of the Company, and certain other plaintiffs, filed
−Removed: a lawsuit against Cipherloc Corporation, our predecessor, and Michael De La Garza, Cipherloc’s former Chief Executive Officer and President, in the
−Removed: 20 th Judicial District for Hays County, Texas (Case No.
−Removed: The lawsuit alleges causes of action for fraud against Mr.
+Added: April 2021, Eric Marquez, the former Secretary/Treasurer and Chief Financial Officer of the Company, and certain other plaintiffs,
+Added: filed a lawsuit against Cipherloc Corporation, our predecessor, and Michael De La Garza, Cipherloc’s former Chief Executive
+Added: Officer and President, in the 20 th Judicial District for Hays County, Texas (Case No.
+Added: The lawsuit alleges
+Added: causes of action for fraud against Mr.
De La Garza (for misrepresentations allegedly made by Mr.
De La Garza);
−Removed: breach of contract, for alleged breaches of Mr.
−Removed: alleged oral employment agreement, which Mr.
−Removed: Marquez claims required Cipherloc pay him cash and shares of stock;
+Added: breach of contract,
+Added: for alleged breaches of Mr.
+Added: Marquez’s alleged oral employment agreement, which Mr.
+Added: Marquez claims required Cipherloc pay him
+Added: cash and shares of stock;
unjust enrichment;
−Removed: and rescission of certain stock purchases made by certain of the plaintiffs, as well as declaratory relief and fraud.
−Removed: sought exceed $1,000,000.
−Removed: The Company believes Cipherloc made all required payments and delivered the stock to the plaintiffs.
−Removed: is currently being defended by the Company.
−Removed: The Company believes it has meritorious defenses to the allegations, and the Company intends
−Removed: to continue to vigorously defend against the litigation.
+Added: quantum meruit;
+Added: and rescission of certain stock purchases made by certain of the
+Added: plaintiffs, as well as declaratory relief and fraud.
+Added: Damages sought exceeded $1 million.
+Added: We reached a preliminary agreement with the
+Added: plaintiffs on November 13, 2024.
+Added: A formal settlement agreement was negotiated and circulated to the plaintiffs on November 25, 2024.
+Added: The execution of the settlement agreement is in progress and, when complete, will trigger the formal dismissal of the lawsuit.
+Added: terms of the agreement require the Company to issue the plaintiffs a combined 356,400 shares of common stock and pay a total of $95
+Added: thousand in cash in six equal, quarterly installments of approximately $16 thousand beginning on January 1, 2025, and ending on
+Added: April 1, 2026.
+Added: We estimate the cost of the settlement fee paid as stock to be approximately $15 thousand using the closing price of
+Added: our common stock at September 30, 2024.
+Added: A total of $110 thousand of expense has been recognized in our results for the year ended
+Added: September 30, 2024.
MINE SAFETY DISCLOSURES
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.