SideChannel, Inc.

SideChannel, Inc. Material Event - Investor Summary

This summary cuts through the financial jargon to explain a recent significant event at SideChannel, Inc., helping retail investors understand its implications without needing a finance background.

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1. Event Description: The Reverse Stock Split

SideChannel has announced a 1-for-52 reverse stock split of its common stock. This means that for every 52 shares of SideChannel stock you currently own, they will combine into one single share. For example, if you owned 5,200 shares, you would now own 100 shares.

The price per share is expected to increase proportionally. If SideChannel's stock traded at, say, $0.10 per share before the split, each new share would theoretically be worth $5.20 (52 x $0.10) immediately after the split. While your number of shares decreases and the price per share increases, your total investment value should theoretically remain the same right after the split, before market forces take effect.

A key detail: initially, the company stated fractional shares would be rounded to the nearest whole share. SideChannel later corrected this, and all fractional shares resulting from the split will now be rounded up to the nearest whole share. This offers a small benefit for shareholders, ensuring no loss of value for odd share counts.

2. Event Date/Timeline

This process has unfolded in several stages:

• February 12, 2025: SideChannel's stockholders approved the general concept of a reverse stock split.
• August 21, 2025: The Board of Directors determined the specific 1-for-52 ratio.
• January 12, 2026: SideChannel filed the necessary paperwork (Certificate of Amendment) with the State of Delaware to implement the split.
• January 16, 2026: A Certificate of Correction was filed to clarify the fractional share rounding policy.
• January 22, 2026 (4:00 p.m. ET): The reverse split officially becomes effective for state law purposes, after market close.
• January 23, 2026 (Market Open): SideChannel's common stock is expected to begin trading on the OTCQB market under the new, post-split share price.

3. Financial Impact

The reverse stock split will proportionally decrease the number of SideChannel's common shares outstanding. While the number of shares decreases and the per-share price increases, the aggregate par value of the common stock outstanding immediately after the split will remain unchanged. Similarly, each stockholder will retain the same proportionate ownership interest in SideChannel, subject to the treatment of fractional shares.

The company will also proportionally adjust the number of authorized shares of common stock to reflect the reverse stock split. This corporate action does not alter SideChannel's assets, liabilities, or equity on a consolidated basis, apart from changes to the par value and capital accounts reflecting the reduced number of shares. It does not change the fundamental value of the company.

4. Why This Happened: Strategic Intent and Common Motivations

While the filing does not explicitly detail SideChannel's specific strategic rationale, companies typically execute reverse stock splits for several reasons, likely applicable here:

• Improve Stock Price and Market Perception: SideChannel, which operates in the cybersecurity sector, may aim to increase its per-share trading price. The market often perceives stocks trading at very low prices (often called "penny stocks") as less stable or reputable. A higher price can improve the company's image and make it appear more "serious."
• Attract Institutional Investors: Many institutional investors (like mutual funds or pension funds) have internal policies preventing them from investing in stocks below a certain price threshold. A higher share price could open SideChannel's stock to a broader range of potential investors, potentially increasing demand and liquidity.
• Potential Future Exchange Listing: Although SideChannel currently trades on the OTCQB market, which has less stringent listing requirements, a higher stock price could position the company for a potential future uplisting to a major exchange (like Nasdaq or NYSE), which typically have minimum share price requirements.
• Enhanced Marketability: A higher share price can make a stock more appealing to a wider investor base, as some investors prefer not to deal with very low-priced shares.

It's crucial to remember that a reverse split is primarily a structural change to the stock; it does not directly alter SideChannel's underlying business operations, assets, liabilities, or its fundamental value as a company.

5. Impact Assessment (Who/What is Affected)

This reverse stock split carries several implications:

• Higher Share Price, Fewer Shares: You will immediately see a significantly higher per-share price, offset by a proportional reduction in the number of shares you own. Your theoretical total investment value should remain the same immediately after the split.
• Potential for Increased Investor Interest: A higher price might attract new institutional investors and improve market perception, potentially leading to increased trading volume and liquidity.
• Fractional Share Benefit: The rounding up of fractional shares is a positive for existing shareholders, ensuring no value is lost due to odd share counts.
• No Change to Fundamentals: The split itself does not change SideChannel's business model, revenue, profitability, or competitive position in the cybersecurity market. Investors should continue to evaluate the company based on its financial performance and strategic outlook.
• Potential for Negative Perception: The market sometimes views reverse stock splits negatively, as they can signal underlying financial challenges or a company struggling to maintain its stock price. The stock price, despite the split, risks declining again if the company's fundamentals don't improve or market sentiment remains weak.
• Volatility: The period immediately following a reverse split can sometimes be volatile as the market adjusts to the new price and share structure.

Who is Affected?

• Existing Shareholders: You will own fewer shares, but each share will be worth more. Your brokerage account will automatically reflect these changes. The fractional share rounding-up policy is a direct benefit.
• Potential Investors: The higher share price might influence your investment decision, potentially making the stock more attractive if you avoid "penny stocks," but also requiring a higher initial investment per share.
• SideChannel Itself: The company hopes this move will improve its market standing, attract new capital, and potentially support its long-term growth strategy in the competitive cybersecurity landscape.
• Employees and Customers: Generally, this action does not directly affect employees' day-to-day work or customer services, unless employees hold company stock.

6. Key Takeaways for Investors

• Immediate Action: Effective January 23, 2026, SideChannel's stock will trade at its new, higher per-share price on the OTCQB. Verify your brokerage account accurately reflects your updated share count and value.
• Monitor Performance: Observe the market's reaction to the new share price. Pay attention to trading volume and price stability.
• Conduct Due Diligence: The reverse split is a structural event, not a fundamental one. Investors should thoroughly research SideChannel's recent financial statements (revenue, profitability, cash flow), its competitive landscape in cybersecurity, and its strategic plans for growth and profitability. Understand why the company sought to improve its stock price and how it plans to leverage this change for long-term success.
• Consider Risks: Be aware of potential continued volatility and the market's perception of reverse splits. A higher stock price does not guarantee sustained value or future growth.

This reverse stock split is a significant corporate action designed to reposition SideChannel's stock in the market. For investors, it prompts a re-evaluation of the company's fundamentals and strategic direction, beyond just the share price adjustment.