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REVERSE MERGER BETWEEN CIPHERLOC CORPORATION AND SIDECHANNEL, INC. (Tables)
12 Months Ended
Sep. 30, 2022
Business Combination and Asset Acquisition [Abstract]  
SCHEDULE OF CONSIDERATION PAID

The consideration paid was determined as follows:

 

      
Shares outstanding   88,445,832 
Closing stock price on July 1, 2022  $0.10 
Market capitalization on July 1, 2022  $8,949,834 
Fair value of warrants vested at July 1, 2022  $6,222,412 
Total fair value of Cipherloc at July 1, 2022  $15,172,246 
SUMMARY OF ALLOCATION OF THE PURCHASE PRICE OF THE ASSETS AND LIABILITIES ACQUIRED RELATED TO THE ACQUISITION

The following table summarizes the allocation of the purchase price of the assets and liabilities acquired related to the acquisition as of the closing date (in thousands):

      
Cash  $3,589 
Prepaid expenses and deferred costs   583 
Intangible assets (IPR&D)   4,940 
Goodwill   7,058 
Accounts payable and accrued liabilities   (612)
Deferred Tax Liability   (211)
Accrued compensation   (175)
Consideration  $15,172 
SCHEDULE OF ESTIMATED FAIR VALUES OF THE IDENTIFIABLE INTANGIBLE ASSETS ACQUIRED, ESTIMATED USEFUL LIVES

The estimated fair values of the identifiable intangible assets acquired, estimated useful lives and related valuation methodology are as follows:

Intangible Assets:  Preliminary Fair Value (000’s)   Estimated Life in Years  Discount Rate   Valuation Method
IPR&D  $4,940   5-15   22.75%  Income (MPEEM)
SCHEDULE OF UNAUDITED PRO FORMA OPERATING RESULTS

The following presents the unaudited proforma combined results of operations of Cipherloc with SCS as if the entities were combined on October 1, 2020 and show activity for the years ended September 30, 2022 and September 30, 2021.

 

   For the Year Ended September 30, 2022  

For the Year Ended September 30, 2021

 
Revenues  $4,789   $2,814 
Cost of revenues   (2,467)   (1,537)
Gross profit   2,322    1,277 
Operating expenses (a)   4,860    4,063 
Acquisition costs and goodwill impairment (b)       11,888 
Operating income (loss)   (2,538)   (14,674)
Other income and (expenses)   13    194 
Net income (loss) before income taxes   (2,525)   (14,480)
 Income taxes   195     
Net income (loss)  $(2,720)  $(14,480)
           
Basic loss per share (c)  $(0.02)  $(0.13)

 

  (a) All costs incurred in connection with the acquisition have been removed from operating expenses in the proforma statement of operations. Cipherloc incurred $479,055 of transaction expenses and SCS incurred $108,655 of transaction expenses.
  (b) The Company deems it highly probable that SCS will achieve the Milestone which triggers contingent consideration of common stock being issued to the Sellers (59.9 million Second Tranche shares). This issuance is being recorded as a $6.1 million increase in additional paid in capital and $6.1 million of acquisition costs.
  (c) Pro forma weighted average shares outstanding are 145.1 million and 114.8 million for the years ended September 30, 2022 and 2021 respectively.