Item 3. Legal Proceedings
ITEM
3. LEGAL PROCEEDINGS
As
of the filing date of this Annual Report on Form 10-K, there are no material pending legal proceedings. From time 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 the subject. In
addition, none of our officers, directors, affiliates or 5% stockholders (or any associates thereof) is a party averse to us, or has
a material interest adverse to us, in any material proceeding.
Recently
Settled Litigation
In
April 2021, Eric Marquez, the former Secretary/Treasurer and Chief Financial Officer of Cipherloc Corporation, and certain other plaintiffs,
filed a lawsuit against Cipherloc Corporation and Michael De La Garza, Cipherloc’s former Chief Executive Officer and President,
in the 20 th Judicial District for Hays County, Texas (Cause No. 20-0818). We executed a settlement agreement with the plaintiffs
on December 13, 2024, resulting in the dismissal of the lawsuit with prejudice on January 2, 2025. The settlement agreement requires
the Company to issue the plaintiffs a combined 356,400 shares of common stock and pay a total of $95 thousand in cash in six equal, quarterly
installments of approximately $16 thousand each, beginning by January 1, 2025, and ending by April 1, 2026. The expenses associated with
this settlement were included in our results for the fiscal year ended September 30, 2024. Four payments totaling approximately $63 thousand
have been made and 356,400 shares of common stock have been issued as of September 30, 2025.
ITEM
4. MINE SAFETY DISCLOSURES
Not
applicable.
26
PART
II
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.