Mr. Andrew Cheung reports

01 COMMUNIQUE PROVIDES UPDATE ON BUSINESS DEVELOPMENTS AND FOURTH QUARTER FISCAL 2023 RESULTS

01 Communique Laboratory Inc. has released its fourth quarter fiscal 2023 results, which ended Oct. 31, 2023.

Andrew Cheung, chief executive officer of the company, commented: "With the announcement from IBM in December, 2023, breaking the barrier of 1,000 qubits, global recognition of the threat from quantum computers has never been higher. The National Institute of Standards and Technologies (NIST) has published a number of standards in respect of postquantum cryptography (PQC) which we incorporated in the development of IronCAP. We are confident IronCAP will withstand any threat posed by quantum computers. We have completed development of a number of very practical PQC applications such as our quantum-safe e-mail, quantum-safe blockchain, quantum-safe remote access, etc., I am confident that IronCAP will add significant value to help our partners provide enhanced security against bad actors using quantum computers."

Mr. Cheung continued: "As previously announced, now that the major portion of our development efforts having been completed, we have reduced our operating expenses. We have also changed our focus to revenue-generating integrations and feature enhancements for our partners. The reduction in expenses is reflected in our results. Going forward, we plan to monitor operating expenses closely with a goal to keep them in line with our ongoing recuring royalty revenue."

Operational highlights:

• In July, 2023, the company announced a technology partnership with Keyfactor, providing an identity-first security solution for modern enterprises. The partnership calls for development and joint marketing of quantum-safe X.509 certificates for the enterprise certification authority solution, EJBCA, as well as cybersecurity solutions for global businesses, organizations and governments to help them achieve cyber-resilience. This partnership marks a significant step toward a secure digital landscape, ensuring peace of mind for organizations and individuals in the face of evolving cyberthreats.
• In June, 2023, the company's quantum-safe blockchain end points protection patent was officially issued in the U.S. (patent No. 11,669,833). The patent can be found on the USPTO site.
• In June, 2023, the company received a notice of allowance for its Japanese patent application No. 2020-534978 about the IronCAP Modern McEliece code-based postquantum cryptography technology. The official patent issuance is in process.
• In June, 2023, the company announced the release of IronCAP X v2.0, the world's first quantum-safe encryption service for business e-mail that provides end-to-end security. IronCAP X v2.0 was developed with simplicity and security in mind. The underlying technology is patent-protected providing end-to-end security for e-mails against attacks by any bad actor. From the time the e-mail is sent until the time it is received and read by the authenticated recipient it remains fully encrypted without any decryption along the way. Using National Institute of Standards and Technology (NIST) approved algorithms IronCAP X v2.0 is safe from attacks by sophisticated hackers including those using quantum computers. Incorporating an IronCAP protected e-mail digital signature ensures the sender is the real sender and not an impersonated one. This provides an extra layer of security which helps solve the infamous e-mail phishing issue, which is the major way used by hackers to hijack e-mails gaining access to computer systems and being held for ransom. IronCAP X v2.0 is offered in two versions. A free version is available for personal usage and a business version is available with central management tools for IT managers which can be subscribed at $9.95 per month or $99.95 per year.
• In January, 2023, the company completed the integration of IronCAP into one of the company's partners' military-grade hardware security modules (HSM) providing military-grade protection for users' data and critical applications. This partnership was designed to develop and joint-market quantum-safe cybersecurity solutions for global businesses, organizations and governments to ensure cyber-resilience in the postquantum environment. Now the company's partner can add IronCAP FM making PQC functionality seamless while conforming with the latest standards set by NIST. The parties have commenced joint-marketing activities.

Financial highlights:

• The loss for the fourth quarter was $167,660 (2022 -- $181,242). The adjusted loss excluding stock-based compensation and depreciation, which are non-cash expenses, for the fourth quarter was $125,457 (2022 -- $161,352), a reduction of $35,895. The company completed the year with $352,540 of cash and a GIC.
• Revenue for the fourth quarter of 2023 was $133,709 (2022 -- $244,183), a decrease of $110,474. In 2022, revenue included a one-time royalty from the company's remote access server business. In addition, revenue was negatively impacted by a weakening of the Japanese yen to the Canadian dollar. Recurring royalties from the company's remote access service have levelled off in the latter part of fiscal 2023. For the third quarter 2023, revenue was $102,205 compared with $130,310 for the fourth quarter 2023, an increase of $28,105.
• Cash operating expenses which exclude stock-based compensation and depreciation for the fourth quarter were $248,254 (2022 -- $443,811), a reduction of $195,557:
  • Product development expenses decreased by $204,586 with expenses being curtailed during fiscal 2023 as a number of development projects were completed.
  • SG&A expenses, net of stock-based compensation were $199,459 (2022 -- $189,312). In fiscal 2023, included is a one-time charge of $31,500 for the write down of the investment in Talent Summit as a precaution for a prolonged crypto winter.
  • The company has reduced continuing cash operating expenses with a goal to keep them in line with continuing recurring revenue.

Conference call reminder and information

01 Communique will host a live teleconference allowing for questions and answers later today at 10 a.m. EST (Jan. 25, 2024) to discuss the company's results, as well as providing an update on the business prospects for IronCAP and IronCAP X.

About 01 Communique Laboratory Inc.

Established in 1992, 01 Communique has always been at the forefront of technology. The company's cybersecurity business unit focuses on postquantum cybersecurity with the development of its IronCAP product line.

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