01 Quantum Inc. — Interim / Quarterly Report 2020

Jun 11, 2020

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01 Communique Provides Quarterly Update on Business Developments, Launch of IronCAP X and Second Quarter Fiscal 2020 Results

TORONTO, ON – June 11, 2020. 01 Communique Laboratory Inc. (the "Company") (ONE:TSX-V) is pleased to report that the Company has made significant developments during the Second Quarter with the launch of the IronCAP X cybersecurity product for email/file encryption, made commercially available on April 23, 2020. The Company is continuing with plans for the development and commercialization of wider product offerings. The development team is continuing work on the IronCAP family of encryption products with applications for remote access / VPN vendors, cloud storage vendors, credit card security vendors, password management and increased web site security.

Andrew Cheung, 01 Communique CEO, stated, “I am pleased with the successful launch of our new IronCAP X email encryption product on April 23rd and the receipt of our patent application number to facilitate seamless sending of encrypted emails to a recipient. We are now continuing with the development of our other products towards commercialization. Our goal is to offer products with the most advanced and secure quantum safe cryptographic system available. The funds from our recent financing will be used to develop these products.”

Business Development Highlights:

The Company has continued with work to help ensure the successful commercialization of IronCAP X and IronCAP API. During the Second Quarter, the Company focused on the marketing and successful launch of IronCAP X which was made commercially availability on April 23, 2020. Part of the marketing strategy included a virtual demo after the Company's annual shareholder meeting and a free downloadable personal usage platform. To download the free version of IronCAP X, click on the following link: https://www.ironcap.ca/ironcap-x/personal As well as completing and launching IronCAP X, the development team continued to make improvements to IronCAP API which has been available to vendors since the summer of 2019.

In April, the Company announced that it has entered into a Memorandum of Understanding (“MOU”) with Nexusguard Consulting Limited to work towards a formal business partnership in bringing quantum-safe IronCAP cryptography technology (ICC) to customers in the Asia Pacific including Mainland China and Hong Kong. The MOU will see Nexusguard Consulting Limited and 01 Communique working together on cybersecurity offerings as well as marketing initiatives in the various markets operated by both companies.

On May 29[th] subsequent to the end of the quarter the Company strengthened its balance sheet completing a nonbrokered private placement of units ("Units"). Pursuant to the offering the Company issued a total of 1,683,334 Units raising aggregate gross proceeds of $202,000. Following the closing of the offering, the Company has 81,918,806 common shares issued and outstanding. Each Unit was issued at a price $0.12 and consists of one common share in the capital of the Company (a "Common Share") and one-half of one common share purchase warrant. The Company will use the gross proceeds of the offering of Units for product development and general working capital purposes.

On June 9th the Company announced that the United States Patent and Trademark Office (“USPTO”) has issued the Company a receipt for its Patent Application No.16/893,709 for a Cryptographic System and Method that facilitates sending encrypted emails to a recipient. 01 Communique has filed a patent application directed to an invention that is being used in a future version of IronCAP X (to be released very soon) and facilitates sending encrypted emails to a recipient without having to first ask the recipient to become a registered user of IronCAP X. This invention enables a seamless plug-and-play mechanism to automatically invite new IronCAP X users fueling a viral growth pattern.

Second Quarter 2020 Fiscal Results

The Company reported a loss for its second quarter 2020, which ended April 30, 2020 of $249,133 compared to a loss in 2019 of $196,043. As at April 30[th] the Company had $225,454 of cash and cash equivalents and GIC.

The adjusted loss for the quarter, which excludes stock-based compensation and depreciation which are non-cash expenses, was $205,924 (2019 - $150,199). Revenue for the quarter of $73,297 (2019 - $74,685) was fairly consistent year over year.

The cash operating expenses, which excludes stock-based compensation, were $251,114 (2019 - $200,222) an increase of $50,892 reflecting the Company’s ongoing investment in the development of products based on the IronCAP technology. In addition, the Company is now preparing sales and marketing activities to commercialize the recently released IronCAP X as well as continuing in efforts to build partnerships with companies for the integration of the IronCAP API with third party applications.

About IronCAP and IronCAP X:

IronCAP is at the forefront of the cyber security market and is designed to protect our customers from cyberattacks. IronCAP’s patent-pending cryptographic system is designed to protect users and enterprises against the ever-evolving illegitimate and malicious means of gaining access to their data today as well as in the future with the introduction of powerful quantum computers. Based on improved Goppa code-based encryption it is designed to be faster and more secure than current standards. It operates on conventional computer systems so users are protected today while being secure enough to safeguard against future attacks from the world of quantum computers. An IronCAP API is available which allows vendors of a wide variety of vertical applications to easily transform their products to ensure their customers are safe from cyber-attacks today and from quantum computers in the future.

IronCAP X, a new cybersecurity product for email/file encryption, incorporating our patent-pending technology was made available for commercial use on April 23, 2020. The new product has two major differentiations from what is in the market today. Firstly, many offerings in today’s market store users secured emails on email-servers for recipients to read, making email-servers a central target of cyber-attack. Our new product, on the other hand, delivers each encrypted message end-to-end to the recipients such that only the intended recipients can decrypt and read the message. Consumer’s individual messages are protected, eliminating the hackers’ incentive to attack email servers of email providers. Secondly, powered by our patent-pending IronCAP technology, we believe our new product will be the world’s first quantum-safe end-to-end email encryption system; secured against cyberattacks from today’s systems and from quantum computers in the future. Consumers and businesses using our new products will have tomorrow’s cybersecurity today.

About 01 Communique

Established in 1992, 01 Communique Laboratory Inc. (TSX-V: ONE) has always been at the forefront of technology. In early 2018 the Company announced the transition of its business focusing on post-quantum cybersecurity with the development of its IronCAP technology. IronCAP is an advanced Goppa code-based postquantum cryptographic technology that can be implemented on classical computer systems as we know them today while at the same time can also safeguard against attacks in the future post-quantum world of computing. The Company's legacy business provides its customers with a suite of secure remote access services and products. The Company's legacy products are protected in the U.S.A. by its patents #6,928,479 / #6,938,076 / #8,234,701; in Canada by its patents #2,309,398 / #2,524,039 and in Japan by its patent #4,875,094. For more information, visit the Company's web site at www.ironcap.ca and www.01com.com

Cautionary Note Regarding Forward-looking Statements.

Certain statements in this news release may constitute “forward-looking” statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this news release, such statements use such words as “may”, “will”, “expect”, “believe”, “plan”, “intend”, “are confident” and other similar terminology. Such statements include statements regarding the timing of the release of IronCAP X, the future of quantum computers and their impact on the Company's product offering, the functionality of the Company's products and the intended product lines for the Company's technology, the execution of a memorandum of understanding signed with Hitachi Solutions Create, Ltd., the potential licensing of the Company's technology and the ability to close the proposed financing. These statements reflect current expectations regarding future events and operating performance and speak only as of the date of this news release. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to, the

factors discussed under “Risk and Uncertainties” in the Company’s Management`s Discussion and Analysis document filed on SEDAR. Although the forward-looking statements contained in this news release are based upon what management of the Company believes are reasonable assumptions, the Company cannot assure investors that actual results will be consistent with these forward looking statements. These forward-looking statements are made as of the date of this news release, and the Company assumes no obligation to update or revise them to reflect new events or circumstances.

Neither TSX Venture Exchange (“TSX-V“) nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

INVESTOR CONTACT: Andrew Cheung Chief Executive Officer 01 Communique (905) 795-2888 x206 Andrew.cheung@01com.com

01 Communique Laboratory Inc. SELECTED FINANCIAL INFORMATION Consolidated Statements of Financial Position As at April 30, 2020 and October 31, 2019

	30-Apr-20 31-Oct-19
Assets Current assets Cash and cash equivalents Guaranteed investment certificate Accounts receivable Prepaid expenses and other assets Right-of-use asset Plant and equipment Total assets Liabilities and Shareholders' Deficit Current liabilities Accounts payable and accrued liabilities Deferred revenue Lease liability Liability component of debenture Non-current liabilities Lease liability Shareholders' deficit Share capital Contributed surplus Share purchase warrants Agent compensation options Deficit Total liabilities and shareholders' deficit	$ 115,454 $ 283,712 110,000 300,000 76,007 96,055 23,516 11,124
	324,977 690,891 41,461 - 15,534 16,335
	$381,972 $707,226
	$ 134,231 $ 140,962 9,809 8,907 33,938 - 383,062 390,703
	561,040 540,572 7,715 - 41,414,233 41,414,233 5,742,066 5,668,916 615,185 598,247 99,200 99,200 (48,057,467) (47,613,942)
	(186,783) 166,654
	$381,972 $707,226

01 Communique Laboratory Inc. SELECTED FINANCIAL INFORMATION

Consolidated Statements of Operations and Comprehensive Income For the 3 and 6 month periods ended April 30, 2020 and 2019

Revenue Expenses: Selling, general and administrative Researchand development	for the 3 months ended 30-Apr-20 30-Apr-19 $ 73,297 $ 74,685 162,918 151,137 131,404 94,930	for the 6 months ended 30-Apr-20 30-Apr-19
		$ 114,667 $ 124,720 304,570 281,149 202,499 179,178
	294,324 246,066	507,069 460,327
Loss before accretion on liability component of debenture, interest, other income, and taxes Interest on debenture Accretionon liability portionofdebenture	(221,027) (171,381) 15,000 15,000 4,762 4,762	(392,402) (335,607) 30,000 30,000 9,297 9,297
Loss before other income, expense and taxes	(240,789) (191,143)	(431,699) (374,904)
Interest income Interest expense	150 1,913 679 -	875 2,710 1,429 -
Loss before taxes	(241,317) (189,230)	(432,253) (372,194)
Withholding taxes	7,816 6,813	11,272 11,158
Loss for theperiod and comprehensive loss	$ (249,133) $ (196,043)	$ (443,525) $ (383,352)
Basic Diluted Weighted average number of common shares Basic Diluted	$ (0.00) $ (0.00) $ (0.00) $ (0.00) 80,235,472 76,543,807 80,235,472 76,543,807	$ (0.00) $ (0.00) $ (0.00) $ (0.00) 80,235,472 76,543,807 80,235,472 76,543,807

01 Communique Laboratory Inc. SELECTED FINANCIAL INFORMATION Consolidated Statements of Cash Flows For the 3 and 6 month periods ended April 30, 2020 and 2019

Cash provided by (used in): Operating activities: Comprehensive loss for the period Adjustments to reconcile loss for the period to net cash flows from operating activities: Depreciation of property and equipment Amortization of right-of-use asset Stock-based compensation expense Accretion on liability portion of debenture Interest income Change in non-cash working capital Interest income received Financing activities: Increase in lease liabilities Proceeds from guaranteed investment certificate Total cash provided by financing activities Investing activities: Right-of-use asset Purchase of property and equipment Total cash used in investing activities Increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period	three months ending 30-Apr-20 30-Apr-19 $ (249,133) $ (196,043) 1,459 1,294 11,061 41,750 44,550 4,762 4,762 (150) (1,913) 2,247 (986) (188,004) (148,336) 150 1,913 (187,854) (146,423) - - (60,000) 200,000 (60,000) 200,000 - - (1,443) (3,845) (1,443) (3,845) (249,297) 49,732 364,751 62,294 $115,454 $112,026	six months ending 30-Apr-20 30-Apr-19
		$ (443,525) $ (383,352) 2,952 2,696 22,122 - 73,150 83,496 9,297 9,297 (875) (2,710) 35,765 (58,626)
		(301,114) (349,199) 875 2,710
		(300,239) (346,489) 7,715 - 190,000 350,000
		197,715 350,000 (63,583) - (2,151) (5,245)
		(65,734) (5,245) (168,258) (1,734) 283,712 113,760
		$115,454 $112,026

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