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ASX ANNOUNCEMENT (ASX: CPT)

29 JULY 2022

QUARTERLY ACTIVITIES REPORT AND BUSINESS UPDATE AND APPENDIX 4C FOR THE QUARTER

ENDED 30 JUNE 2022

Cipherpoint Limited (Cipherpoint or the Company) (ASX:CPT) is pleased to provide the following quarterly activities report and business update and Appendix 4C for the quarter ended 30 June 2022.

Quarter Financial Highlights

The results for the Cipherpoint group (the Group), include revenues and cashflows from both of our Brace168 and VIT Cyber Security services divisions.

Financial highlights for the quarter were:

  • Customer receipts were $1.305M compared to the March quarter receipts of $1.593M reflecting a tougher market.
  • The Group held $794K in cash as of 30 June 2022. Note that the Company raised $950K, $300K of which was received in June and included in this 4C, and the balance of $650K received in July and which will be recorded in the next 4C.
  • The Company paid the final deferred cash instalment of $1M for the acquisition of Brace168 Pty Ltd.
  • The Company received the final payment of $105K in settlement for the sale of software assets to archTIS Pty Ltd (ASX:AR9)

Cipherpoint Non-Executive Chairman Mr Ted Pretty said "While the June quarter has been challenging, the benefit of the cost reduction measures will begin to be more evident in coming quarters."

During the quarter, the Company made payments to related parties of $168K which were comprised of a final payment made in April for director and related consulting fees. As previously advised to the market each of the existing non-executive directors has agreed not to take directors fees. Should additional or replacement directors be appointed this practice may need to be reviewed.

The Board is also reviewing direct and indirect accounting, accounting support, company secretarial, audit, tax and related consulting fees as part of its cost reduction program.

Activities Report and Business Update

The demand for cyber security and data protection solutions and services continues to increase but the market is competitive. During the June quarter:

  • Although the Company notes the loss of a major customer as announced to the ASX on 15 June 2022 both Brace168 and VITCS continued further consolidating their relationships with existing customers.
  • Brace168 continued to directly build on existing relationships securing 3 contract extensions and uplifts with existing customers specifically for managed detection and response services. It also secured 6 penetration test consulting assignments through its partner channels. Brace168 also performed an ISO 27001 Gap Analysis which a new area of consulting available to the business.

©2022 Cipherpoint Limited or its affiliates

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  • VITCS has made progress in deploying an additional SOC in Tasmania where we have seen demand for cyber services increase. We have secured the new office and the majority of construction is complete. This SOC will also provide redundancy for the Sydney SOC.
  • VITCS secured one new contract and built on existing relationships securing three contract extensions and uplifts with existing customers, two for professional services and one for managed services.

Outlook

Execution of the sales pipeline, organic revenue growth and strengthening of relationships with existing customers remains the focus in the near-term.

The Company's cost reduction program which commenced has achieved considerable momentum with over $1m in annualised costs having been identified and removed (including director fees) without any material adverse impact on the business. Up to a further $400,000 in costs are being targeted in a second phase of reductions.

The Company intends to further build its managed services capability and to look for options to achieve greater scale in the business through acquisitions including that of Excite IT announced on 28 July 2022.

--Ends--

This announcement has been approved for release by the Board.

©2022 Cipherpoint Limited or its affiliates

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ABN 61 120 658 497

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About Cipherpoint Group

Cipherpoint through its wholly owned subsidiaries Brace168 and VITCS is a focused managed cyber security services business. It utilizes its best of breed security operations centre and a highly trained operations and advisory team to identify and detect security vulnerabilities using Brace168's unique cyber security approach driven by the NIST framework. It provides innovative IT and cyber security solutions to a broad range of enterprise sectors and government.

Further information

For further information, please visit https://cipherpoint.com

Cipherpoint investor relations contact:

Ted Pretty

Peter Taylor

Managing Director and Executive Chairman

Investor Relations

Peter@nwrcommunications.com.au

+61 412 036 231

©2022 Cipherpoint Limited or its affiliates

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Appendix 4C

Quarterly cash flow report for entities subject to Listing Rule 4.7B

Appendix 4C

Quarterly cash flow report for entities subject to Listing Rule 4.7B

Name of entity

Cipherpoint Limited

ABN

Quarter ended ("current quarter")

61 120 658 497

30 June 2022

Consolidated statement of cash flows

Current quarter

Year to date

$A'000

(3 months)

$A'000

1.

Cash flows from operating activities

1.1

Receipts from customers

1,305

1,305

1.2

Payments for

(a)

research and development

-

-

(b) product manufacturing and operating

(186)

(186)

costs

(c)

advertising and marketing

(25)

(25)

(d)

leased assets

(119)

(119)

(e)

staff costs

(1,340)

(1,340)

(f) administration and corporate costs

(656)

(656)

1.3

Dividends received (see note 3)

-

-

1.4

Interest received

-

-

1.5

Interest and other costs of finance paid

(1)

(1)

1.6

Income taxes paid

-

-

1.7

Government grants and tax incentives

-

-

1.8

Other (provide details if material)

-

-

1.9

Net cash from / (used in) operating

(1,022)

(1,022)

activities

2.

Cash flows from investing activities

2.1

Payments to acquire or for:

(a)

entities

-

-

(b)

businesses

(1,000)

(1,000)

(c) property, plant, and equipment

(23)

(23)

(d)

investments

-

-

(e)

intellectual property

-

-

ASX Listing Rules Appendix 4C (17/07/20)

Page 4

+ See chapter 19 of the ASX Listing Rules for defined terms.

For personal use only

Appendix 4C

Quarterly cash flow report for entities subject to Listing Rule 4.7B

Consolidated statement of cash flows

Current quarter

Year to date

$A'000

(3 months)

$A'000

(f)

other non-current assets

14

14

2.2

Proceeds from disposal of:

(a)

entities

-

-

(b)

businesses

-

-

(c)

property, plant, and equipment

-

-

(d)

investments

-

-

(e)

intellectual property

-

-

(f)

other non-current assets

105

105

2.3

Cash flows from loans to other entities

-

-

2.4

Dividends received (see note 3)

-

-

2.5

Other (provide details if material)

-

-

2.6

Net cash from / (used in) investing

(904)

(904)

activities

3. Cash flows from financing activities

3.1 Proceeds from issues of equity securities

(excluding convertible debt securities)

150

150

3.2

Proceeds from issue of convertible debt

161

161

securities

3.3

Proceeds from exercise of options

-

-

3.4

Transaction costs related to issues of

-

-

equity securities or convertible debt

securities

3.5

Proceeds from borrowings

-

-

3.6

Repayment of borrowings

-

-

3.7

Transaction costs related to loans and

-

-

borrowings

3.8

Dividends paid

-

-

3.9

Other (provide details if material)

126

126

3.10

Net cash from / (used in) financing

437

437

activities

4. Net increase / (decrease) in cash and cash equivalents for the period

4.1 Cash and cash equivalents at beginning of

period

2,283

2,283

4.2

Net cash from / (used in) operating

(1,022)

(1,022)

activities (item 1.9 above)

4.3

Net cash from / (used in) investing activities

(904)

(904)

(item 2.6 above)

ASX Listing Rules Appendix 4C (17/07/20)

Page 5

+ See chapter 19 of the ASX Listing Rules for defined terms.

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Cipherpoint Limited published this content on 28 July 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 July 2022 23:53:07 UTC.