SideChannel (SDCH) 10-K 27 Jan 16 2014 FY Annual report Financial data

Document and Entity Information

Document and Entity Information - USD ($)	12 Months Ended
	Sep. 30, 2015	Jan. 27, 2016
Entity Registrant Name	CIPHERLOC CORPORATION
Entity Central Index Key	1,022,505
Document Type	10-K
Document Period End Date	Sep. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--09-30
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Public Float		$ 11,731,143
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2,014
Common Stock
Entity Common Stock, Shares Outstanding		4,512,555
Preferred Stock
Entity Common Stock, Shares Outstanding		10,000,000

Balance Sheets

Balance Sheets - USD ($)	Sep. 30, 2015	Sep. 30, 2014
CURRENT ASSETS:
Cash	$ 1,993,406	$ 545,650
Assets attributable to discontinued operations	3,232	7,893
Total current assets	$ 1,996,638	553,543
Proprietary technology, net		21,800
Assets attributable to discontinued operations - long-term		582,501
TOTAL ASSETS	$ 1,996,638	1,157,844
CURRENT LIABILITIES:
Accounts payable and accrued liabilities	1,100,945	649,452
Liabilities attributable to discontinued operations	18	18
Deferred revenue	$ 1,125,000	1,125,000
Line of credit		53,612
Stock payable		7,000
Total current liabilities	$ 2,225,963	1,835,082
TOTAL LIABILITIES	2,225,963	1,835,082
STOCKHOLDERS' DEFICIT:
Series A Convertible Preferred stock, $0.01 par value, 10,000,000 shares authorized; 10,000,000 and 4,000,000 issued and outstanding as of September 30, 2015 and 2014	100,000	40,000
Common stock, $0.01 par value, 650,000,000 shares authorized; 4,356,741 and 2,834,737 issued and outstanding as of September 30, 2015 and 2014, respectively	43,567	28,347
Additional paid-in capital	$ 42,815,934	$ 28,635,141
Stock subscription	(50,000)
Accumulated deficit	$ (43,138,826)	$ (29,380,726)
Total stockholders' deficit	(229,325)	(677,238)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$ 1,996,638	$ 1,157,844

Balance Sheets (Parenthetical)

Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2015	Sep. 30, 2014
Statement of Financial Position [Abstract]
Preferred Stock, Par Value	$ 0.01	$ 0.01
Preferred Stock, Shares Authorized	10,000,000	10,000,000
Preferred Stock, Shares Issued	10,000,000	4,000,000
Preferred Stock, Shares Outstandng	10,000,000	4,000,000
Common Stock, Par Value	$ 0.01	$ 0.01
Common Stock, Shares Authorized	650,000,000	650,000,000
Common Stock, Shares Issued	4,356,741	2,834,737
Common Stock, Shares Outstanding	4,356,741	2,834,737

Statements of Operations

Statements of Operations - USD ($)	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
OPERATING EXPENSES:
General and administrative	$ 12,886,202	$ 2,810,606
Research and development	227,650
Total operating expenses	13,113,852	$ 2,810,606
OPERATING LOSS	(13,113,852)	(2,810,606)
OTHER EXPENSES
Interest expense, net	2,722	2,726
Total other expenses	2,722	2,726
LOSS FROM CONTINUING OPERATIONS	(13,116,574)	(2,813,332)
LOSS FROM DISCONTINUED OPERATIONS	(641,526)	(25,129)
NET LOSS	$ (13,758,100)	$ (2,838,461)
NET LOSS PER COMMON SHARE - Basic and diluted:
Continuing operations	$ (4.22)	$ (1.14)
Discontinued operations	(0.21)	(0.01)
Total	$ (4.43)	$ (1.15)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING Basic and diluted	3,105,738	2,474,774

Shareholders Equity

Shareholders Equity - USD ($)	Preferred Stock	Common Stock	Subscription Receivable	Additional Paid-In Capital	Accumulated Deficit	Total
Beginning Balance, Shares at Sep. 30, 2013	4,000,000	2,146,242
Beginning Balance, Value at Sep. 30, 2013	$ 40,000	$ 21,462		$ 26,908,503	$ (26,542,265)	$ 427,700
Common stock issued for asset acquisition, Shares		2,000
Common stock issued for asset acquisition, Value		$ 20		5,980		6,000
Stock issued to officers for services, Shares		317,500
Stock issued to officers for services, Value		$ 3,175		663,575		666,750
Common stock issued for the purchase of billing software, Shares		2,200
Common stock issued for the purchase of billing software, Value		$ 22		5,678		5,700
Common stock issued for consulting services, Shares		364,925
Common stock issued for consulting services, Value		$ 3,649		954,720		958,369
Common stock issued for cash, Shares		1,870
Common stock issued for cash, Value		$ 19		36,981		37,000
Write-off of related party debt				59,704		59,704
Net loss					(2,838,461)	(2,838,461)
Ending Balance, Shares at Sep. 30, 2014	4,000,000	2,834,737
Ending Balance, Value at Sep. 30, 2014	$ 40,000	$ 28,347		$ 28,635,141	(29,380,726)	$ (677,238)
Stock issued to officers for services, Shares	6,000,000	140,000		10,677,200		10,738,600
Stock issued to officers for services, Value	$ 60,000	$ 1,400				$ 50,000
Common stock issued for the purchase of billing software, Shares		50,000
Common stock issued for the purchase of billing software, Value		$ 500		$ 194,000		$ 194,500
Common stock issued for consulting services, Shares						161,654
Common stock issued for consulting services, Value						$ 994,665
Common stock issued for cash, Shares		1,147,500
Common stock issued for cash, Value		$ 11,475		2,271,525		2,283,000
Common stock rescinded for purchase of asset, Shares		(2,000)
Common stock rescinded for purchase of asset, Value		$ (20)		(4,732)		$ (4,752)
Cancellation of stock, Shares		(150)
Cancellation of stock, Value		$ (2)		2
Common stock issued for subscription receivable, Shares		25,000
Common stock issued for subscription receivable, Value		$ 250	$ (50,000)	49,750
Common stock issued for service, Shares		161,654
Common stock issued for service, Value		$ 1,617		993,048		$ 994,665
Write-off of related party debt
Net loss					(13,758,100)	$ (13,758,100)
Ending Balance, Shares at Sep. 30, 2015	10,000,000	4,356,741
Ending Balance, Value at Sep. 30, 2015	$ 100,000	$ 43,567	$ (50,000)	$ 42,815,934	$ (43,138,826)	$ (229,325)

Statements of Cash Flows

Statements of Cash Flows - USD ($)	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss	$ (13,758,100)	$ (2,838,461)
Loss from discontinued operations	641,526	25,129
Loss from continuing operations	(13,116,574)	(2,813,332)
Adjustments to reconcile net loss from continuing operations to net cash (used in) provided by operating activities:
Stock issued for compensation	11,733,265	1,625,119
Stock issued with licensing agreements	194,500	$ 5,700
Gain on cancellation of stock	$ (4,752)
Changes in operating assets and liabilities:
Accounts receivable		$ 6,326
Accounts payable and accrued liabilities	$ 451,511	322,787
Deferred revenue		1,125,000
Stock payable	$ (7,000)	7,000
Net cash used in operating activities	$ (749,050)	278,600
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances from affiliates		8,299
Repayment of advances from officer		8,299
Proceeds from line of credit		103,529
Repayment of line of credit	$ (53,612)	(59,713)
Common stock issued for cash	2,283,000	37,000
Net cash provided by financing activities	2,229,388	80,816
CASH FLOWS FROM DISCONTINUED OPERATIONS
Operating	$ (32,582)	202,647
Investing		(25,000)
Net cash flows from Discontinued Operation	$ (32,582)	177,647
INCREASE IN CASH	1,447,756	537,063
CASH, BEGINNING OF YEAR	545,650	8,587
CASH, END OF YEAR	1,993,406	545,650
CASH PAID FOR:
Interest paid	$ 2,836	$ 2,726
Taxes paid
SUPPLEMENTAL DISCLOSURE OF NONCASH OPERATING AND FINANCING ACTIVITIES:
Cancellation of common stock issued	$ 150
Stock Subscription receivable	$ 50,000
Write-off of debt - related parties		$ 59,704
Common stock issued for purchase of software		$ 6,000

1. DESCRIPTION OF BUSINESS

1. DESCRIPTION OF BUSINESS	12 Months Ended
	Sep. 30, 2015
Accounting Policies [Abstract]
1. DESCRIPTION OF BUSINESS	NOTE 1- DESCRIPTION OF BUSINESS Cipherloc Corporation (the “Company”) was incorporated in Texas on June 22, 1953 as American Mortgage Company. On May 16, 1996, the Company changed its name to National Scientific Corporation. On March 15, 2015, the Company changed its name to Cipherloc Corporation. The name change became effective through the Amended Certificate as of March 23, 2015. The Company has notified the Financial Industry Regulatory Authority (FINRA) of its name change and has received FINRA’s approval for a new trading symbol CLOK reflecting its new name. The name change and the 1-100 reverse split were announced March 20, 2015 in the Daily List and became effective on March 23, 2015. The financial statements as to shares and earnings per share are restated as if the reverse split occurred on the first day of the first period being reported. On November 21, 2012, the Company purchased from CipherSmith, LLC a complete source code, intellectual property rights, all computer software or algorithm licensed or sold under CipherSmith, and appropriate copy rights, patents, mask works, trademarks, service marks, internet domain names or world wide web URS. Since 2012, the Company has tested the software application and created a commercial product for distribution of its encryption technology. The Company is will continue to develop more applications for consumer usage in the future, and is solely focused on the Cipherloc encryption products. On September 30, 2015, the Company decided to sell Cloud MD. Cloud MD was a business segment that provided cloud based medical software and services, designed for healthcare providers. The details of the sale were finalized in October 2015. By selling Cloud MD, the Company will allocate all resources towards the Cipherloc encryption development. The Cloud MD component is presented as a discontinued operation as more fully described in Note 7.

2. RESTATEMENT OF PREVIOUSLY IS

2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS	12 Months Ended
	Sep. 30, 2015
Equity [Abstract]
2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS	NOTE 2 – RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS The restatement reflects adjustments to correct errors identified by management related to the Company’s revenue recognition of a transaction that occurred during the year ended September 30, 2014. The effect of the restatement was material on the Company’s Balance Sheets, Income Statement and Statement of Cash Flows. The nature and impact of these adjustments are described below. Revenue Recognition During the year ended September 30, 2014, the Company recorded software revenue related to the sale of a license for its Cipherloc software to a third-party. Management subsequently determined that a lack of delivery of the software to the customer did not allow for revenue recognition during the year ended September 30, 2014. The Company has corrected the classification of this amount ($1,125,000) as a reduction to software revenue and an increase to deferred revenue. For the year ended September 30, 2014 The results of the restatements are summarized as follows: Consolidated Balance Sheets as of September 30, 2014: As reported Restatement Adjustment As restated Deferred revenue $ — $ 1,125,000 $ 1,125,000 Accumulated deficit (28,255,726 ) (1,125,000 ) (29,380,726 ) Consolidated Statements of Operations for the year ended September 30, 2014: As reported Restatement Discontinued Operations Adjustment As restated Revenue $ 1,339,155 $ (1,125,000 ) $ (214,155 ) $ — Cost of revenues 240,270 (40,000 ) (200,270 ) — Operating expenses (2,848,486 ) — 37,880 (2,810,606 ) Loss from continuing operations (1,752,031 ) — (1,508,575 ) (2,810,606 ) Loss from discontinuing operations 38,570 — (13,441 ) 25,129 Basic and diluted loss per common share $ (0.01 ) $ (1.14 ) $ (0.01 ) $ (1.15 ) Consolidated Statements of Cash Flows for the year ended September 30, 2014: As reported Adjustment Discontinued Operations Adjustment As restated Net loss $ (1,713,461 ) $ (1,125,000 ) $ 25,129 $ (2,813,332 ) Net cash provided by operating activities $ 481,247 ) $ — $ (202,647 ) $ 278,600 Net cash used in investing activities $ (25,000 ) $ — $ 25,000 $ —

3. BASIS OF PRESENTATION

3. BASIS OF PRESENTATION	12 Months Ended
	Sep. 30, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]
3. BASIS OF PRESENTATION	NOTE 3 – BASIS OF PRESENTATION Segment reporting change The Company’s Board of Directors approved the sale of Cloud-MD as of September 30, 2015. The sale occurred in October 2015. Since the assets of the segment are held for sale as of September 30, 2015, this has resulted in discontinued operations presentation (see Note 7) and due to the discontinued operations presentation there are no longer reportable segments.

4. GOING CONCERN

4. GOING CONCERN	12 Months Ended
	Sep. 30, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]
4. GOING CONCERN	NOTE 4 - GOING CONCERN The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. However, the Company has incurred losses from operations, has an accumulated deficit at September 30, 2015 of $43,138,826 and needs additional cash to maintain its operations. These factors raise doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company’s continued existence is dependent upon management’s ability to develop profitable operations, continued contributions from the Company’s executive officers to finance its operations and the ability to obtain additional funding sources to explore potential strategic relationships and to provide capital and other resources for the further development and marketing of the Company’s products and business.

5. SUMMARY OF SIGNIFICANT ACCOU

5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	12 Months Ended
	Sep. 30, 2015
Accounting Policies [Abstract]
5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	NOTE 5 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. Significant accounting policies are as follows: Legal The Company is subject to legal proceedings, claims and liabilities which arise in the ordinary course of business. The Company accrues for losses associated with legal claims when such losses are probable and can be reasonably estimated. These accruals are adjusted as additional information becomes available or circumstances change. Legal fees are charged to expense as they are incurred. Use of Estimates and Assumptions The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and (iii) the reported amount of net revenues and expenses recognized during the periods presented. Adjustments made with respect to the use of estimates often relate to improved information not previously available. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of financial statements; accordingly, actual results could differ from these estimates. The Company’s most significant estimates relate to the valuation of its proprietary technology and the valuation of its common stock. In management’s opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. At September 30, 2015 and 2014, cash and cash equivalents include cash on hand and cash in the bank. The Company maintains its cash in accounts held by large, globally recognized banks which, at times, may exceed federally insured limits as guaranteed by the Federal Deposit Insurance Corporation (FDIC). The FDIC insures these deposits up to $250,000. At September 30, 2015, approximately $1,743,406 of the Company’s cash balance was uninsured. At September 30, 2014, approximately $294,927 of the Company’s cash balance was uninsured. The Company has not experienced any losses in such accounts. Long-Lived Assets Long-lived assets are evaluated for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the undiscounted future cash flows to the recorded value of the asset. If impairment is indicated, the asset is written down to its estimated fair value. The Company impaired software in the amount of $347,477 associated with discontinued operations. Fair Value of Financial Instruments The Company's financial instruments consisted primarily of cash, accounts payable and accrued expenses, and debt. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments. Fair value is focused on an exit price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Within the measurement of fair value, the use of market-based information is prioritized over entity specific information and a three-level hierarchy for fair value measurements is used based on the nature of inputs used in the valuation of an asset or liability as of the measurement date. The three-level hierarchy for fair value measurements is defined as follows: • Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets; liabilities in active markets; • Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability other than quoted prices, either directly or indirectly, including inputs in markets that are not considered to be active; or directly or indirectly including inputs in markets that are not considered to be active; • Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement. Income Taxes The Company utilizes the asset and liability method in accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for operating loss and tax credit carry-forwards and for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets unless it is more likely than not that the value of such assets will be realized. The Company uses the two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not, that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount, which is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimating the Company's tax positions and tax benefits, which may require periodic adjustments. The Company did not record any liabilities for uncertain tax positions for the years ended September 30, 2015 or 2014. Revenue Recognition Software license revenue is generally recognized when a signed contract or other persuasive evidence of an arrangement exists, the software has been electronically delivered, the license fee is fixed or is measured on a paid user basis; and collection of the resulting receivable is probable. When contracts contain multiple elements wherein Vendor-Specific Objective Evidence (“VSOE”) exists for all undelivered elements, we account for the delivered elements in accordance with the “Residual Method.” VSOE of fair value for maintenance and support is established by a stated renewal rate, if substantive, included in the license arrangement or rates charged in stand-alone sales of maintenance and support. Revenue from subscription license agreements, which include software, rights to unspecified future products and maintenance, is recognized ratably over the term of the subscription period. Provided all other revenue criteria are met, the upfront, minimum, non-refundable license fees from customers are generally recognized upon delivery and on-going royalty fees are generally recognized upon reports of new licenses issued. If there is significant uncertainty about the project completion or receipt of payment for professional services, revenue is deferred until the uncertainty is sufficiently resolved. VSOE of fair value of services is based upon stand-alone sales of those services. The amortization of acquired technology for products acquired through business combinations are considered as the cost of revenues. The acquired software technologies are amortized over their useful lives of five years. Deferred Revenue Deferred revenue result from fees billed to customers for which revenue has not yet been recognized. The Company also recognizes annual subscription fees for virtual servers and subscription and small usage fees and those revenues are based on a 48-month lease, the Company would amortize the revenue over the life of the agreement of 48 months. The Company has deferred revenue of $1,125,000 as of September 30, 2015 and 2014. Sales Commissions The Company pays commissions, including sales bonuses, to the direct sales force related to revenue transactions under sales compensation plans established annually. The commission payments are typically accrued on the date of sale and paid in the month following execution of the customer contracts. The Company paid commissions of $0 and $37,000 for the years ended September 30, 2015 and 2014 respectively. Research and Development and Software Development Costs Capitalization of certain software development costs are recorded after the determination of technological feasibility. Based on our product development process, technological feasibility is determined upon the completion of a working model. To date, costs incurred by us from the completion of the working model to the point at which the product is ready for general release have been insignificant. Accordingly, we have charged all such costs to research and development expense in the period incurred. Our research and development costs incurred in our continuing operations for the years ended September 30, 2015 and 2014 were $227,650 and $0, respectively. Share-Based Compensation The Company measures the cost of services received in exchange for an award of an equity instrument based on the grant-date fair value of the award. Compensation cost is recognized over the vesting or requisite service period. The Black-Scholes option-pricing model is used to estimate the fair value of options or warrants granted. There were no options or warrants issued by the Company during the years ended September 30, 2015 and 2014. Stock issued to employees and non-employees The Company measures the compensation cost using the fair value based method. This method uses the fair value at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. Basic and Diluted Net Loss per Common Share Basic income (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the reporting period. The weighted average number of shares is calculated by taking the number of shares outstanding and weighting them by the amount of time that they were outstanding. Diluted earnings per share reflects the potential dilution that could occur if stock options, warrants, and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company. As of September 30, 2015 and 2014, the Company had 10,000,000 and 4,000,000 shares of preferred stock outstanding which are convertible into 15,000,000,000 and 6,000,000 shares of common stock. Diluted loss per share is the same as basic loss per share during periods where net losses are incurred since the inclusion of the potential common stock equivalents would be anti-dilutive as a result of the net loss. Concentration of Credit Risk All of the Company’s cash and cash equivalents are maintained in regional and national financial institutions. The Company has exposure to credit risk to the extent that its cash and cash equivalents exceed amounts covered by the U.S. federal deposit insurance; however, the Company has not experienced any losses in such accounts. In management’s opinion, the capitalization and operating history of the financial institutions are such that the likelihood of material loss is remote. Recent Accounting Announcements In May 2014, the FASB issued new accounting guidance regarding revenue recognition under GAAP. This new guidance will supersede nearly all existing revenue recognition guidance, and is effective for public entities for annual and interim periods beginning after December 31, 2016. Early adoption is not permitted. The Company is currently evaluating the impact of this new guidance on the Company's financial statements. In August 2014, the FASB issued Accounting Standards Update No. 2014-15, "Presentation of Financial Statements--Going Concern", which requires management to evaluate, at each annual and interim reporting period, whether there are conditions or events that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date the financial statements are issued and provide related disclosures. ASU 2014-15 is effective for annual periods ending after December 15, 2016 and interim periods thereafter. Early application is permitted. Management is still in the process of assessing the impact of ASU 2014-15 on the Company's financial statements. In April 2015, the FASB issued Accounting Standard Update ("ASU") 2015-03 Simplifying the Presentation of Debt Issuance Costs. This update requires capitalized debt issuance costs to be classified as a reduction to the carrying value of debt rather than a deferred charge, as is currently required. This update will be effective for the Company for all annual and interim periods beginning after December 15, 2015 and is required to be adopted retroactively for all periods presented, and early adoption is permitted. The Company is currently evaluating the expected impact of this new accounting standard on its financial statements. The FASB issues ASUs to amend the authoritative literature in ASC. There have been a number of ASUs to date that amend the original text of ASC. The Company believes those issued to date either (1) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to the Company or (iv) are not expected to have a significant impact on the Company.

6. PROPRIETARY TECHNOLOGY

6. PROPRIETARY TECHNOLOGY	12 Months Ended
	Sep. 30, 2015
Research and Development [Abstract]
6. PROPRIETARY TECHNOLOGY	NOTE 6 – PROPRIETARY TECHNOLOGY The following is a detail of software at September 30, 2015 and September 30, 2014: 2015 2014 Encryption Software Code $ 15,800 $ 15,800 Compose Rose Code 6,000 6,000 Acquisition of Doctor’s Network of America 10,000 10,000 Total intangible assets 31,800 31,800 Accumulated impairment of assets (31,800 ) (10,000 ) Total proprietary technology, net $ — $ 21,800

7. DISCONTINUED OPERATIONS - Do

7. DISCONTINUED OPERATIONS - Doctor's Network of America (DNA)	12 Months Ended
	Sep. 30, 2015
Discontinued Operations and Disposal Groups [Abstract]
7. DISCONTINUED OPERATIONS - Doctor's Network of America (DNA)	NOTE 7- DISCONTINUED OPERATIONS – Doctor’s Network of America (DNA) On March 16, 2013, the Company closed the acquisition with the final payment for DNA. Subsequent to the transaction closing, the sellers refused to pay the transaction fees for medical billing contracts that were processed. The Company filed a lawsuit against the sellers for Breach of Contract among other things in June of 2013. During that time, the Company believes the sellers began contacting all billing contract holders and interfered with the acquisition of all the assets from the transaction. Consequently, the accompanying consolidated financial statements reflect the assets, liabilities and operations of DNA as net assets attributable to discontinued operations, net liabilities attributable to discontinued operations and loss from discontinued operations. Details of the classifications for net assets, liabilities and operations are shown below. September 30, September 30, Net liabilities attributable to discontinued operations: Accounts payable $ — $ 18 Net liabilities of discontinued operations $ — $ 18 Year ended Loss From 2015 2014 Discontinued operations: Revenues $ — $ 207,980 Operating expenses — 169,410 Income from discontinued operations $ — $ 38,570 Cloud MD Sale The Company’s Board of Directors believed that it was in the best interest of the Company to discontinue the former business operation Cloud MD. During September 2015, the Cloud MD business segment was discontinued and a plan of sale of the segment was approved. The Cloud MD sale occurred in October 2015 as a $250,000 note payable from the buyer. Accordingly, the assets, which had a net book value of zero as of September 30, 2015, qualified as held for sale and the Company has presented Cloud MD as discontinued operations. Details of the classifications for revenues, operating expenses and operations are shown below. Year ended 2015 2014 Discontinued operations: Revenues $ — $ 220,000 Operating expenses (641,526 ) (283,699 ) Income from discontinued operations $ (641,526 ) $ (63,699 ) September 30, 2015 2014 Net assets attributable to discontinued operations: — — Intangible Software — 582,501 Net liabilities of discontinued operations — — The cumulative discontinued operations resulted in revenues and cost of revenues totaling $427,980, net for the year ended September 30, 2014.

8. LINE OF CREDIT

8. LINE OF CREDIT	12 Months Ended
	Sep. 30, 2015
Debt Disclosure [Abstract]
8. LINE OF CREDIT	NOTE 8 – LINE OF CREDIT In November 2013, the Company entered into a revolving line of credit with Mutual of Omaha in the amount of $65,000 at a 5.00% interest rate per annum, which renews annually. As of September 30, 2014, the Company had $53,612 outstanding against the line of credit. T he

9. RELATED PARTY TRANSACTIONS

9. RELATED PARTY TRANSACTIONS	12 Months Ended
	Sep. 30, 2015
Related Party Transactions [Abstract]
9. RELATED PARTY TRANSACTIONS	NOTE 9– RELATED PARTY TRANSACTIONS The advances from the CEO are due on demand and do not accrue interest. These advances are included in accounts payable and accrued liabilities on the balance sheet. As of September 30, 2015 and 2014, the amount owed to the CEO for advances was $1,205 and $0, respectively.

10. COMMITMENTS AND CONTINGENCI

10. COMMITMENTS AND CONTINGENCIES	12 Months Ended
	Sep. 30, 2015
Commitments and Contingencies Disclosure [Abstract]
10. COMMITMENTS AND CONTINGENCIES	NOTE 10– COMMITMENTS AND CONTINGENCIES Litigation From time to time, we may be a plaintiff or defendant in a pending or threatened legal proceeding arising in the normal course of its business. As of September 30, 2014 and 2015, we were involved in various collections matters; the defendants have asserted certain counterclaims. All known liabilities are accrued based on our best estimate of the potential loss. While the outcome and impact of currently pending legal proceedings cannot be predicted with certainty, based on the current status of the matters, our management and legal counsel believe that the resolution of these proceedings through settlement or judgment will not have a material adverse effect on our consolidated operating results, financial position or cash flows. Employment Contracts Other than the employment contract with our CEO, we have an employment agreement with Albert Carlson as our Chief Scientist (“The Agreement.”) The Agreement is for a term of one year, commencing on September 1, 2015 and expiring on August 31, 2016 with three one year extensions. The Agreement provides that, in addition to receiving paid vacation in accordance with the Company's policies as well as other customary benefits and provisions, Dr. Carlson shall receive an annual base salary of $150,000. If, at any time during the term of the Agreement, Dr. Carlson is terminated "without cause," he will be entitled to receive a cash payment equal to the aggregate compensation payable to him during the remaining term of the Agreement. The terms of the employment agreement are incorporated by reference and was filed with our Form 8-K on September 4, 2015. Sales and Marketing Agreements We have an agreement with Complete Wealth Management (“The Consultant”) to provide sales and marketing services. The consulting agreement is for 24 months, effective on May 4, 2015. As compensation for consulting services, the Company will grant to the Consultant a 10% commission. Compensation is payable 30 days after closing of a sale, and will be paid in 5% common stock bearing a restrictive legend pursuant to Rule 144 and 5% in cash. The Company entered into an employment agreement with its Chief Executive Officer on January 1, 2013. The employment agreement will expire on January 1, 2018 and shall automatically renew for another 5 years unless terminated in accordance with the provisions of the employment agreement. The employment agreement provides for: i. A monthly salary of $20,833 per month subject to an annual increase of 10% per year and consistent with the Company policy applicable to other senior executives and officers and approval by the Board of Directors. ii. A cash bonus of 25% of his annual base salary each year if the Company reaches the following milestones: a. The Company posts annual gross revenues on a consolidated basis of at least $5,000,000; b. The Company's earnings before the deduction of income taxes and amortization expenses (“EBITA”), including cash extraordinary items but before officer's bonuses, on a consolidated basis for any year is at least $1,000,000; iii. The issuance of shares equal to the greater of 1% of the then issued and outstanding shares of the Company annually, or 3,000,000 shares. The Company issued these shares in March 2014. iv. The issuance of common stock on each anniversary date of the employment agreement of 5,000,000 shares and issuance of common stock for every acquisition granting 5,000,000 shares for DNA, 5,000,000 shares for CipherSmith, LLC, and 1,000,000 shares for MediSouth, LLC. v. An automobile allowance of $1,500 per month. vi. A medical insurance allowance of $1,500 per month. vii. In the event the executive's employment is terminated without cause he will receive the entire contract remaining on the agreement. The prior CFO resigned in December 2014, so the Company is no longer obligated to abide by the former CFO’s contract.

11. EQUITY

11. EQUITY	12 Months Ended
	Sep. 30, 2015
Equity [Abstract]
11. EQUITY	NOTE 11- EQUITY As of September 30, 2015, the Company was authorized to issue 650,000,000 common shares and 10,000,000 preferred shares at a par value of $0.01. As of September 30, 2014, the Company was authorized to issue 650,000,000 common shares and 4,000,000 preferred shares at a par value of $0.01 per share. The Company issued 25,000 shares of stock for a subscription receivable for $50,000 during the year ended September 30, 2015. Preferred Stock On February 5, 2015, the Company issued 6,000,000 shares of its Series A Preferred Stock to its CEO. As of September 30, 2015, the Series A Preferred Stock is convertible into the Company’s common stock at a rate of 1 to 1.5 common shares. The Company recorded $9,900,000 as stock compensation based on the market value of the Company’s common stock on the date of grant. As of February 17, 2015, there are a total of 10,000,000 shares of the Series A Preferred Stock authorized and outstanding which are convertible into a total of 15,000,000 shares of common stock. Each share of the Preferred Stock has 150 votes on all matters presented to be voted by the holders of common stock. The holders of the Preferred A shares can only convert the shares if agreed upon by 50.1% vote of all preferred shareholders. During November 2015, the conversion rate for the Series A preferred stock was modified (See Note 13). Fiscal Year Ended September 30, 2015 During the year ended September 30, 2015, through the utilization of a Private Placement Memorandum and upon receipt of executed Subscription Agreements, the Company issued 1,147,500 shares of common stock for $2,283,000 in net cash proceeds pursuant to the exemption from the registration provisions of the Securities Act of 1933, as amended (the "Act"), afforded by Rule 506 of Regulation D. Stock Issued in Connection with acquisition of Software Licensing During the year ended September 30, 2015, the Company issued 50,000 shares of common stock valued at $194,500 based on the market price on the date of grant in regards to the purchase of a software license known as XPSS in accordance with the Software Licensing Agreement. Each of the two owners received 25,000 shares. Stock Issued for Services During the year ended September 30, 2015, the Company issued 161,654 shares of common stock as compensation. The fair value of the shares was $994,665 including stock that vested immediately and a performance base grant, and was recorded at the market price on the date of grant. The issuance of the immediately vesting stock was as follows: Date Per Share Shares Fair Value 5/5/2015 4.40 5,000 $ 22,000 5/5/2015 4.40 2,000 8,800 7/31/2015 7.00 28,750 201,250 9/18/2015 5.99 53,820 322,382 7/31/2015 7.00 5,000 35,000 9/18/2015 5.99 25,000 149,750 9/18/2015 5.99 25,000 149,750 8/28/2015 7.00 5,000 35,000 8/24/2015 6.00 5,000 30,000 8/24/2015 6.00 5,000 30,000 159,570 983,932 Stock Issued for Performance Dr. Carlson shall be entitled to a performance bonus of 50,000 shares of Cipherloc stock to be paid at such time as the CipherLoc Polymorphic Hardware Engine can be demonstrated to function as a working, complete, product capable of being manufactured in facilities that would normally produce standard Field Programmable Gate Array chips. Management has determined that it is probable that the award will vest. Accordingly, the Company recognized 2,084 shares during 2015 and compensation expense of $10,733 during the year ended September 30, 2015. The unvested portion of the award will be recognized over the implied service period of twenty-four months. Date Per Share Shares Fair Value 9/30/2015 5.15 2,084 $ 10,733 Stock Issued for Services Related Party On September 18, 2015 the Company granted 140,000 common shares to its President/CEO, Michael De La Garza. The fair value of the shares was $838,600 and was recorded at the market price on the date of grant. Fiscal Year Ended September 30, 2014 Stock Issued for Cash The Company received $7,000 for the issuance of 50,000 shares of common stock recorded as stock payable and as of September 30, 2014 the common stock has not been issued by the Company. During the year ended September 30, 2014, the Company issued 187,000 shares of common stock for $37,000 in net cash proceeds as follows: Date Number of Shares Proceeds October 21, 2013 25,000 $ 5,000 January 12, 2014 10,000 10,000 September 3, 2014 152,000 22,000 Total 187,000 $ 37,000 Stock Issued in Connection with Software Licensing and Subscription Agreements During the year ended September 30, 2014, the Company issued 220,000 shares of common stock valued at $5,700 based on the market price on the date of grant, to customers, in regards to the purchase of software from the Company in accordance with the Software Licensing and Subscription Agreements. The fair values of the shares issued were recorded as a reduction of software revenue recognized. Date Number of Shares Fair Value December 4, 2013 120,000 $ 3,600 February 21, 2014 100,000 2,100 Total 220,000 $ 5,700 Stock Issued for Asset Acquisition In October 2013, the Company through a purchase agreement with Antree Systems Limited has purchased a complete source code, intellectual property rights, all computer software, patents, or formulas, algorithm licensed or sold under a project known as Compass Rose and appropriate copyrights, patents, mask works, trademarks, service marks, internet domain names and world wide web uniform resource locators (“URLs”) from Antree Systems Limited. The Company issued 200,000 shares of its common stock as consideration for the purchase. The fair value of the consideration and the assets acquired is based on the fair value of the common stock issued in exchange for the software. The total fair value, based on the market price on the date of grant, was $6,000. The Company evaluated this acquisition and determined that it did not meet the definition of a significant business acquisition. In November 2013, the Company issued 180,000 shares of common stock as replacement shares for the 160,000 shares of common stock issued to Antree Systems Limited and 20,000 shares of common stock to Kimberly Ilicerl. The Company intends to cancel the original shares issued because the shares were lost during delivery to the shareholders. Stock Issued for Services During the year ended September 30, 2014, the Company issued 68,242,506 shares of common stock as compensation. The fair values of the shares were a total of $1,625,119 and were recorded at the market price on the date of grant. The issuances of stock were as follows: Date Number of Shares Fair Value Description of Services March 5, 2014 31,750,000 $ 666,750 Compensation to officers April 3, 2014 5,000 116 Compensation for legal services April 21, 2014 1,392,506 34,227 Compensation for CipherLoc consultants April 22, 2014 7,000,000 138,600 Marketing agreement with Hemp, Inc. May 3, 2014 5,000 115 Compensation for legal services May 5, 2014 50,000 1,150 Compensation for marketing services May 6, 2014 25,000,000 605,000 Compensation to a sales consultant June 3, 2014 5,000 111 Compensation for legal services July 7, 2014 35,000 1,750 Compensation for CipherLoc consultants September 3, 2014 3,000,000 177,300 Compensation for marketing services Total 68,242,506 $ 1,625,119 In June 2014, the Company entered into a consulting agreement with Gawk, Inc. This agreement required the issuance of 3,000,000 common shares and Gawk has agreed to assist the Company in seeking additional purchasers of CipherLoc Encryption Technology within the entertainment industry.

12. INCOME TAXES

12. INCOME TAXES	12 Months Ended
	Sep. 30, 2015
Income Tax Disclosure [Abstract]
12. INCOME TAXES	NOTE 12 - INCOME TAXES Deferred income taxes result from temporary differences in the recognition of income and expenses for the financial reporting purposes and for tax purposes. The Company has a net operating loss carryforward of approximately $27.9 million available to offset future taxable income. For income tax reporting purposes, the Company’s aggregate unused net operating losses are subject to limitations of Section 382 of the Internal Revenue Code, as amended. Under the Tax Reform Act of 1986, the benefits from net operating losses carried forward may be impaired or limited on certain circumstances. Events which may cause limitations in the amount of net operating losses that the Company may utilize in any one year include, but are not limited to, a cumulative ownership change of more than 50% over a three-year period The Company has provided a valuation reserve against the full amount of the net operating loss benefit, because in the opinion of management based upon the earning history of the Company; it is more likely than not that the benefits will not be realized. For the years ended September 30, 2015 and 2014, the difference between the amounts of income tax expense or benefit that would result from applying the statutory rates to pretax income to the reported income tax expense of $0 is the result of the net operating loss carryforward and the related valuation allowance. The Company anticipates it will continue to record a valuation allowance against the losses of certain jurisdictions, primarily federal and state, until such time as it is able to determine it is “more-likely-than-not” the deferred tax asset will be realized. Such position is dependent on whether there will be sufficient future taxable income to realize such deferred tax assets. The Company’s effective tax rate may vary from period to period based on changes in estimated taxable income or loss by jurisdiction, changes to the valuation allowance, changes to federal, state or foreign tax laws, future expansion into areas with varying country, state, and local income tax rates, deductibility of certain costs and expenses by jurisdiction.

13. SUBSEQUENT EVENTS

13. SUBSEQUENT EVENTS	12 Months Ended
	Sep. 30, 2015
Subsequent Events [Abstract]
13. SUBSEQUENT EVENTS	NOTE 13 - SUBSEQUENT EVENTS On October 1, 2015, a promissory note for $250,000 was signed and delivered to the Company for the sale of Cloud MD business component. The terms of the promissory note are that $50,000 will be paid annually over 5 years with interest at 3% per annum. Between October 1, 2015 and January 27, 2016, the Company sold 132,500 shares for cash in the amount of $265,000 in private placement deposits and also issued 5,000 shares for services. During November 2015, the Company had a modification of a preferred stock grant. The old grant is preferred convertible at a 1.5 to 1 ratio and the new grant is preferred convertible at a 30 to 1 ratio. In accordance with ASC 718-20-25-3, a modification of a stock grant is treated as an exchange of the old grant (at a 1.5 to 1 ratio) for a new grant (at a 30 to 1 ratio). Thus, the fair value of the new grant, computed on the date of grant will be compared with the fair value of the old grant. If the fair value of the new grant exceeds the fair value of the old grant, the difference will be recognized as incremental expense.

5. SUMMARY OF SIGNIFICANT ACC20

5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	12 Months Ended
	Sep. 30, 2015
Accounting Policies [Abstract]
Legal	Legal The Company is subject to legal proceedings, claims and liabilities which arise in the ordinary course of business. The Company accrues for losses associated with legal claims when such losses are probable and can be reasonably estimated. These accruals are adjusted as additional information becomes available or circumstances change. Legal fees are charged to expense as they are incurred.
Use of Estimates and Assumptions	Use of Estimates and Assumptions The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and (iii) the reported amount of net revenues and expenses recognized during the periods presented. Adjustments made with respect to the use of estimates often relate to improved information not previously available. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of financial statements; accordingly, actual results could differ from these estimates. The Company’s most significant estimates relate to the valuation of its proprietary technology and the valuation of its common stock. In management’s opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.
Cash and Cash Equivalents	Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. At September 30, 2015 and 2014, cash and cash equivalents include cash on hand and cash in the bank. The Company maintains its cash in accounts held by large, globally recognized banks which, at times, may exceed federally insured limits as guaranteed by the Federal Deposit Insurance Corporation (FDIC). The FDIC insures these deposits up to $250,000. At September 30, 2015, approximately $1,743,406 of the Company’s cash balance was uninsured. At September 30, 2014, approximately $294,927 of the Company’s cash balance was uninsured. The Company has not experienced any losses in such accounts.
Long-Lived Assets	Long-Lived Assets Long-lived assets are evaluated for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the undiscounted future cash flows to the recorded value of the asset. If impairment is indicated, the asset is written down to its estimated fair value. The Company impaired software in the amount of $347,477 associated with discontinued operations.
Fair Value of Financial Instruments	Fair Value of Financial Instruments The Company's financial instruments consisted primarily of cash, accounts payable and accrued expenses, and debt. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments. Fair value is focused on an exit price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Within the measurement of fair value, the use of market-based information is prioritized over entity specific information and a three-level hierarchy for fair value measurements is used based on the nature of inputs used in the valuation of an asset or liability as of the measurement date. The three-level hierarchy for fair value measurements is defined as follows: • Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets; liabilities in active markets; • Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability other than quoted prices, either directly or indirectly, including inputs in markets that are not considered to be active; or directly or indirectly including inputs in markets that are not considered to be active; • Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement.
Income Taxes	Income Taxes The Company utilizes the asset and liability method in accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for operating loss and tax credit carry-forwards and for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets unless it is more likely than not that the value of such assets will be realized. The Company uses the two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not, that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount, which is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimating the Company's tax positions and tax benefits, which may require periodic adjustments. The Company did not record any liabilities for uncertain tax positions for the years ended September 30, 2015 or 2014.
Revenue Recognition	Revenue Recognition Software license revenue is generally recognized when a signed contract or other persuasive evidence of an arrangement exists, the software has been electronically delivered, the license fee is fixed or is measured on a paid user basis; and collection of the resulting receivable is probable. When contracts contain multiple elements wherein Vendor-Specific Objective Evidence (“VSOE”) exists for all undelivered elements, we account for the delivered elements in accordance with the “Residual Method.” VSOE of fair value for maintenance and support is established by a stated renewal rate, if substantive, included in the license arrangement or rates charged in stand-alone sales of maintenance and support. Revenue from subscription license agreements, which include software, rights to unspecified future products and maintenance, is recognized ratably over the term of the subscription period. Provided all other revenue criteria are met, the upfront, minimum, non-refundable license fees from customers are generally recognized upon delivery and on-going royalty fees are generally recognized upon reports of new licenses issued. If there is significant uncertainty about the project completion or receipt of payment for professional services, revenue is deferred until the uncertainty is sufficiently resolved. VSOE of fair value of services is based upon stand-alone sales of those services. The amortization of acquired technology for products acquired through business combinations are considered as the cost of revenues. The acquired software technologies are amortized over their useful lives of five years.
Deferred Revenue	Deferred Revenue Deferred revenue result from fees billed to customers for which revenue has not yet been recognized. The Company also recognizes annual subscription fees for virtual servers and subscription and small usage fees and those revenues are based on a 48-month lease, the Company would amortize the revenue over the life of the agreement of 48 months. The Company has deferred revenue of $1,125,000 as of September 30, 2015 and 2014.
Sales Commissions	Sales Commissions The Company pays commissions, including sales bonuses, to the direct sales force related to revenue transactions under sales compensation plans established annually. The commission payments are typically accrued on the date of sale and paid in the month following execution of the customer contracts. The Company paid commissions of $0 and $37,000 for the years ended September 30, 2015 and 2014 respectively.
Research and Development and Software Development Costs	Research and Development and Software Development Costs Capitalization of certain software development costs are recorded after the determination of technological feasibility. Based on our product development process, technological feasibility is determined upon the completion of a working model. To date, costs incurred by us from the completion of the working model to the point at which the product is ready for general release have been insignificant. Accordingly, we have charged all such costs to research and development expense in the period incurred. Our research and development costs incurred in our continuing operations for the years ended September 30, 2015 and 2014 were $227,650 and $0, respectively.
Share-Based Compensation	Share-Based Compensation The Company measures the cost of services received in exchange for an award of an equity instrument based on the grant-date fair value of the award. Compensation cost is recognized over the vesting or requisite service period. The Black-Scholes option-pricing model is used to estimate the fair value of options or warrants granted. There were no options or warrants issued by the Company during the years ended September 30, 2015 and 2014.
Stock issued to employees and non-employees	Stock issued to employees and non-employees The Company measures the compensation cost using the fair value based method. This method uses the fair value at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period.
Basic and Diluted Net Loss per Common Share	Basic and Diluted Net Loss per Common Share Basic income (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the reporting period. The weighted average number of shares is calculated by taking the number of shares outstanding and weighting them by the amount of time that they were outstanding. Diluted earnings per share reflects the potential dilution that could occur if stock options, warrants, and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company. As of September 30, 2015 and 2014, the Company had 10,000,000 and 4,000,000 shares of preferred stock outstanding which are convertible into 15,000,000,000 and 6,000,000 shares of common stock. Diluted loss per share is the same as basic loss per share during periods where net losses are incurred since the inclusion of the potential common stock equivalents would be anti-dilutive as a result of the net loss.
Concentration of Credit Risk	Concentration of Credit Risk All of the Company’s cash and cash equivalents are maintained in regional and national financial institutions. The Company has exposure to credit risk to the extent that its cash and cash equivalents exceed amounts covered by the U.S. federal deposit insurance; however, the Company has not experienced any losses in such accounts. In management’s opinion, the capitalization and operating history of the financial institutions are such that the likelihood of material loss is remote.
Recent Accounting Announcements	Recent Accounting Announcements In May 2014, the FASB issued new accounting guidance regarding revenue recognition under GAAP. This new guidance will supersede nearly all existing revenue recognition guidance, and is effective for public entities for annual and interim periods beginning after December 31, 2016. Early adoption is not permitted. The Company is currently evaluating the impact of this new guidance on the Company's financial statements. In August 2014, the FASB issued Accounting Standards Update No. 2014-15, "Presentation of Financial Statements--Going Concern", which requires management to evaluate, at each annual and interim reporting period, whether there are conditions or events that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date the financial statements are issued and provide related disclosures. ASU 2014-15 is effective for annual periods ending after December 15, 2016 and interim periods thereafter. Early application is permitted. Management is still in the process of assessing the impact of ASU 2014-15 on the Company's financial statements. In April 2015, the FASB issued Accounting Standard Update ("ASU") 2015-03 Simplifying the Presentation of Debt Issuance Costs. This update requires capitalized debt issuance costs to be classified as a reduction to the carrying value of debt rather than a deferred charge, as is currently required. This update will be effective for the Company for all annual and interim periods beginning after December 15, 2015 and is required to be adopted retroactively for all periods presented, and early adoption is permitted. The Company is currently evaluating the expected impact of this new accounting standard on its financial statements. The FASB issues ASUs to amend the authoritative literature in ASC. There have been a number of ASUs to date that amend the original text of ASC. The Company believes those issued to date either (1) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to the Company or (iv) are not expected to have a significant impact on the Company.

2. RESTATEMENT OF PREVIOUSLY 21

2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (Tables)	12 Months Ended
	Sep. 30, 2015
Equity [Abstract]
Restatement of Previously Issued Financial Statements	As reported Restatement Adjustment As restated Deferred revenue $ — $ 1,125,000 $ 1,125,000 Accumulated deficit (28,255,726 ) (1,125,000 ) (29,380,726 ) Consolidated Statements of Operations for the year ended September 30, 2014: As reported Restatement Discontinued Operations Adjustment As restated Revenue $ 1,339,155 $ (1,125,000 ) $ (214,155 ) $ — Cost of revenues 240,270 (40,000 ) (200,270 ) — Operating expenses (2,848,486 ) — 37,880 (2,810,606 ) Loss from continuing operations (1,752,031 ) — (1,508,575 ) (2,810,606 ) Loss from discontinuing operations 38,570 — (13,441 ) 25,129 Basic and diluted loss per common share $ (0.01 ) $ (1.14 ) $ (0.01 ) $ (1.15 ) Consolidated Statements of Cash Flows for the year ended September 30, 2014: As reported Adjustment Discontinued Operations Adjustment As restated Net loss $ (1,713,461 ) $ (1,125,000 ) $ 25,129 $ (2,813,332 ) Net cash provided by operating activities $ 481,247 ) $ — $ (202,647 ) $ 278,600 Net cash used in investing activities $ (25,000 ) $ — $ 25,000 $ —

6. PROPRIETARY TECHNOLOGY (Tabl

6. PROPRIETARY TECHNOLOGY (Tables)	12 Months Ended
	Sep. 30, 2015
Research and Development [Abstract]
Proprietary Technology	2015 2014 Encryption Software Code $ 15,800 $ 15,800 Compose Rose Code 6,000 6,000 Acquisition of Doctor’s Network of America 10,000 10,000 Total intangible assets 31,800 31,800 Accumulated impairment of assets (31,800 ) (10,000 ) Total proprietary technology, net $ — $ 21,800

7. DISCONTINUED OPERATIONS - 23

7. DISCONTINUED OPERATIONS - Doctor's Network of America (DNA) (Tables)	12 Months Ended
	Sep. 30, 2015
Discontinued Operations and Disposal Groups [Abstract]
Discontinued Operations - Doctor's Network of America (DNA)	September 30, September 30, Net liabilities attributable to discontinued operations: Accounts payable $ — $ 18 Net liabilities of discontinued operations $ — $ 18 Year ended Loss From 2015 2014 Discontinued operations: Revenues $ — $ 207,980 Operating expenses — 169,410 Income from discontinued operations $ — $ 38,570 Cloud MD Sale The Company’s Board of Directors believed that it was in the best interest of the Company to discontinue the former business operation Cloud MD. During September 2015, the Cloud MD business segment was discontinued and a plan of sale of the segment was approved. The Cloud MD sale occurred in October 2015 as a $250,000 note payable from the buyer. Accordingly, the assets, which had a net book value of zero as of September 30, 2015, qualified as held for sale and the Company has presented Cloud MD as discontinued operations. Details of the classifications for revenues, operating expenses and operations are shown below. Year ended 2015 2014 Discontinued operations: Revenues $ — $ 220,000 Operating expenses (641,526 ) (283,699 ) Income from discontinued operations $ (641,526 ) $ (63,699 ) September 30, 2015 2014 Net assets attributable to discontinued operations: — — Intangible Software — 582,501 Net liabilities of discontinued operations — —

11. EQUITY (Tables)

11. EQUITY (Tables)	12 Months Ended
	Sep. 30, 2015
Equity [Abstract]
Stock Issuances	Date Per Share Shares Fair Value 5/5/2015 4.40 5,000 $ 22,000 5/5/2015 4.40 2,000 8,800 7/31/2015 7.00 28,750 201,250 9/18/2015 5.99 53,820 322,382 7/31/2015 7.00 5,000 35,000 9/18/2015 5.99 25,000 149,750 9/18/2015 5.99 25,000 149,750 8/28/2015 7.00 5,000 35,000 8/24/2015 6.00 5,000 30,000 8/24/2015 6.00 5,000 30,000 159,570 983,932 Stock Issued for Performance Dr. Carlson shall be entitled to a performance bonus of 50,000 shares of Cipherloc stock to be paid at such time as the CipherLoc Polymorphic Hardware Engine can be demonstrated to function as a working, complete, product capable of being manufactured in facilities that would normally produce standard Field Programmable Gate Array chips. Management has determined that it is probable that the award will vest. Accordingly, the Company recognized 2,084 shares during 2015 and compensation expense of $10,733 during the year ended September 30, 2015. The unvested portion of the award will be recognized over the implied service period of twenty-four months. Date Per Share Shares Fair Value 9/30/2015 5.15 2,084 $ 10,733 Stock Issued for Services Related Party On September 18, 2015 the Company granted 140,000 common shares to its President/CEO, Michael De La Garza. The fair value of the shares was $838,600 and was recorded at the market price on the date of grant. Fiscal Year Ended September 30, 2014 Stock Issued for Cash The Company received $7,000 for the issuance of 50,000 shares of common stock recorded as stock payable and as of September 30, 2014 the common stock has not been issued by the Company. During the year ended September 30, 2014, the Company issued 187,000 shares of common stock for $37,000 in net cash proceeds as follows: Date Number of Shares Proceeds October 21, 2013 25,000 $ 5,000 January 12, 2014 10,000 10,000 September 3, 2014 152,000 22,000 Total 187,000 $ 37,000 Stock Issued in Connection with Software Licensing and Subscription Agreements During the year ended September 30, 2014, the Company issued 220,000 shares of common stock valued at $5,700 based on the market price on the date of grant, to customers, in regards to the purchase of software from the Company in accordance with the Software Licensing and Subscription Agreements. The fair values of the shares issued were recorded as a reduction of software revenue recognized. Date Number of Shares Fair Value December 4, 2013 120,000 $ 3,600 February 21, 2014 100,000 2,100 Total 220,000 $ 5,700 Stock Issued for Asset Acquisition In October 2013, the Company through a purchase agreement with Antree Systems Limited has purchased a complete source code, intellectual property rights, all computer software, patents, or formulas, algorithm licensed or sold under a project known as Compass Rose and appropriate copyrights, patents, mask works, trademarks, service marks, internet domain names and world wide web uniform resource locators (“URLs”) from Antree Systems Limited. The Company issued 200,000 shares of its common stock as consideration for the purchase. The fair value of the consideration and the assets acquired is based on the fair value of the common stock issued in exchange for the software. The total fair value, based on the market price on the date of grant, was $6,000. The Company evaluated this acquisition and determined that it did not meet the definition of a significant business acquisition. In November 2013, the Company issued 180,000 shares of common stock as replacement shares for the 160,000 shares of common stock issued to Antree Systems Limited and 20,000 shares of common stock to Kimberly Ilicerl. The Company intends to cancel the original shares issued because the shares were lost during delivery to the shareholders. Stock Issued for Services During the year ended September 30, 2014, the Company issued 68,242,506 shares of common stock as compensation. The fair values of the shares were a total of $1,625,119 and were recorded at the market price on the date of grant. The issuances of stock were as follows: Date Number of Shares Fair Value Description of Services March 5, 2014 31,750,000 $ 666,750 Compensation to officers April 3, 2014 5,000 116 Compensation for legal services April 21, 2014 1,392,506 34,227 Compensation for CipherLoc consultants April 22, 2014 7,000,000 138,600 Marketing agreement with Hemp, Inc. May 3, 2014 5,000 115 Compensation for legal services May 5, 2014 50,000 1,150 Compensation for marketing services May 6, 2014 25,000,000 605,000 Compensation to a sales consultant June 3, 2014 5,000 111 Compensation for legal services July 7, 2014 35,000 1,750 Compensation for CipherLoc consultants September 3, 2014 3,000,000 177,300 Compensation for marketing services Total 68,242,506 $ 1,625,119

2. RESTATEMENT OF PREVIOUSLY 25

2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS - Restatement of Previously Issued Financial Statements (Details) - USD ($)	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Deferred revenue	$ 1,125,000	$ 1,125,000
Accumulated deficit	(43,138,826)	(29,380,726)
Operating expenses	13,113,852	2,810,606
Loss from continuing operations	(13,116,574)	(2,813,332)
Loss from discontinuing operations	$ (641,526)	$ (25,129)
Basic and diluted loss per common share	$ (4.43)	$ (1.15)
Net loss	$ (13,758,100)	$ (2,838,461)
Net cash provided by operating activities	$ (749,050)	$ 278,600
Scenario, Previously Reported [Member]
Deferred revenue
Accumulated deficit		$ (28,255,726)
Revenue		1,339,155
Cost of revenues		240,270
Operating expenses		(2,848,486)
Loss from continuing operations		(1,752,031)
Loss from discontinuing operations		$ 38,570
Basic and diluted loss per common share		$ (0.01)
Net loss		$ (1,713,461)
Net cash provided by operating activities		481,247
Net cash used in investing activities		(25,000)
Scenario, Adjustment [Member]
Deferred revenue		1,125,000
Accumulated deficit		(1,125,000)
Revenue		(1,125,000)
Cost of revenues		$ (40,000)
Operating expenses
Loss from continuing operations
Loss from discontinuing operations
Basic and diluted loss per common share		$ (1.14)
Net loss		$ (1,125,000)
Net cash provided by operating activities
Net cash used in investing activities
Discontinued Operations [Member]
Revenue		$ (214,155)
Cost of revenues		(200,270)
Operating expenses		37,880
Loss from continuing operations		(1,508,575)
Loss from discontinuing operations		$ (13,441)
Basic and diluted loss per common share		$ (0.01)
Net loss		$ 25,129
Net cash provided by operating activities		(202,647)
Net cash used in investing activities		25,000
As Restated
Deferred revenue		1,125,000
Accumulated deficit		$ (29,380,726)
Revenue
Cost of revenues
Operating expenses		$ (2,810,606)
Loss from continuing operations		(2,810,606)
Loss from discontinuing operations		$ 25,129
Basic and diluted loss per common share		$ (1.15)
Net loss		$ (2,813,332)
Net cash provided by operating activities		$ 278,600
Net cash used in investing activities

2. RESTATEMENT OF PREVIOUSLY 26

2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (Details Narrative)	12 Months Ended
	Sep. 30, 2015USD ($)
Equity [Abstract]
Reduction to Software Revenue	$ (1,125,000)
Increase in Deferred Revenue	$ 1,125,000

4. GOING CONCERN (Details Narra

4. GOING CONCERN (Details Narrative) - USD ($)	Sep. 30, 2015	Sep. 30, 2014
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Accumulated Deficit	$ (43,138,826)	$ (29,380,726)

5. SUMMARY OF SIGNIFICANT ACC28

5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Accounting Policies [Abstract]
FDIC Insured Cash	$ 250,000
Deferred Revenue	1,125,000	$ 1,125,000
Sales Commissions	0	$ 37,000
Research and Development Costs	227,650
Cash held in excess of FDIC Insured Amount	1,743,406	$ 294,927
Software, Impairment	$ 347,477
Preferred Stock, Shares Outstanding	10,000,000	4,000,000
Preferred Stock, Shares Convertible	15,000,000,000	6,000,000

6. PROPRIETARY TECHNOLOGY - Pro

6. PROPRIETARY TECHNOLOGY - Proprietary Technology (Details) - USD ($)	Sep. 30, 2015	Sep. 30, 2014
Total Intangible Assets	$ 31,800	$ 31,800
Accumulated impairment of assets	$ (31,800)	(10,000)
Total Proprietary Technology, Net		21,800
Encryption Software Code
Total Intangible Assets	$ 15,800	15,800
Compose Rose Code
Total Intangible Assets	6,000	6,000
Acquisition of Doctor's Network of America
Total Intangible Assets	$ 10,000	$ 10,000

7. DISCONTINUED OPERATIONS - 30

7. DISCONTINUED OPERATIONS - Doctor's Network of America (DNA) - Discontinued Operations - Doctor's Network of America (DNA) (Details) - USD ($)	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Net liabilities of discontinued operations	$ 18	$ 18
Net assets attributable to discontinued operations:	1,996,638	1,157,844
Operating expenses	13,113,852	2,810,606
Income from discontinued operations	$ (641,526)	(25,129)
Doctor's Network of America
Accounts payable		18
Net liabilities of discontinued operations		18
Revenues		207,980
Operating expenses		169,410
Income from discontinued operations		$ 38,570
Cloud MD
Net liabilities of discontinued operations
Net assets attributable to discontinued operations:
Intangible Software		$ 582,501
Revenues		220,000
Operating expenses	$ (641,526)	(283,699)
Income from discontinued operations	$ (641,526)	$ (63,699)

7. DISCONTINUED OPERATIONS - 31

7. DISCONTINUED OPERATIONS - Doctor's Network of America (DNA) (Details Narrative)	12 Months Ended
	Sep. 30, 2014USD ($)
Discontinued Operations and Disposal Groups [Abstract]
Cumulative Discontinued Operations, Revenue and Cost of Revenue, Net	$ 427,980

8. LINE OF CREDIT (Details Narr

8. LINE OF CREDIT (Details Narrative)	12 Months Ended
	Sep. 30, 2015USD ($)
Debt Disclosure [Abstract]
Revolving Line of Credit, Borrowing Capacity	$ 65,000
Line of Credit Interest Rate	5.00%
Line of Credit, Amount Outstanding	$ 53,612

9. RELATED PARTY TRANSACTIONS (

9. RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)	Sep. 30, 2015	Sep. 30, 2014
Related Party Transactions [Abstract]
Due to CEO for Advances	$ 1,205	$ 0

10. COMMITMENTS AND CONTINGEN34

10. COMMITMENTS AND CONTINGENCIES (Details Narrative)	12 Months Ended
	Sep. 30, 2015USD ($)
Annual Base Salary	$ 150,000
Employment Contracts [Member]
Employment Agreement	We have an agreement with Complete Wealth Management (“The Consultant”) to provide sales and marketing services. The consulting agreement is for 24 months, effective on May 4, 2015. As compensation for consulting services, the Company will grant to the Consultant a 10% commission. Compensation is payable 30 days after closing of a sale, and will be paid in 5% common stock bearing a restrictive legend pursuant to Rule 144 and 5% in cash. The Company entered into an employment agreement with its Chief Executive Officer on January 1, 2013. The employment agreement will expire on January 1, 2018 and shall automatically renew for another 5 years unless terminated in accordance with the provisions of the employment agreement. The employment agreement provides for: i. A monthly salary of $20,833 per month subject to an annual increase of 10% per year and consistent with the Company policy applicable to other senior executives and officers and approval by the Board of Directors. ii. A cash bonus of 25% of his annual base salary each year if the Company reaches the following milestones: a. The Company posts annual gross revenues on a consolidated basis of at least $5,000,000; b. The Company's earnings before the deduction of income taxes and amortization expenses (“EBITA”), including cash extraordinary items but before officer's bonuses, on a consolidated basis for any year is at least $1,000,000; iii. The issuance of shares equal to the greater of 1% of the then issued and outstanding shares of the Company annually, or 3,000,000 shares. The Company issued these shares in March 2014. iv. The issuance of common stock on each anniversary date of the employment agreement of 5,000,000 shares and issuance of common stock for every acquisition granting 5,000,000 shares for DNA, 5,000,000 shares for CipherSmith, LLC, and 1,000,000 shares for MediSouth, LLC. v. An automobile allowance of $1,500 per month. vi. A medical insurance allowance of $1,500 per month. vii. In the event the executive's employment is terminated without cause he will receive the entire contract remaining on the agreement.

11. EQUITY - Stock Issuances (D

11. EQUITY - Stock Issuances (Details) - USD ($)	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Stock Issued for Services 1
Date	May 5, 2015	Mar. 5, 2014
Per Share	$ 4.40
Shares	5,000	31,750,000
Fair Value	$ 22,000	$ 666,750
Description of Services		Compensation to officers
Stock Issued for Services 2
Date	May 5, 2015	Apr. 3, 2014
Per Share	$ 4.40
Shares	2,000	5,000
Fair Value	$ 8,800	$ 116
Description of Services		Compensation for legal services
Stock Issued for Services 3
Date	Jul. 31, 2015	Apr. 21, 2014
Per Share	$ 7
Shares	28,750	1,392,506
Fair Value	$ 201,250	$ 34,227
Description of Services		Compensation for CipherLoc consultants
Stock Issued for Services 4
Date	Sep. 18, 2015	Apr. 22, 2014
Per Share	$ 5.99
Shares	53,820	7,000,000
Fair Value	$ 322,382	$ 138,600
Description of Services		Marketing agreement with Hemp, Inc.
Stock Issued for Services 5
Date	Jul. 31, 2015	May 3, 2014
Per Share	$ 7
Shares	5,000	5,000
Fair Value	$ 35,000	$ 115
Description of Services		Compensation for legal services
Stock Issued for Services 6
Date	Sep. 18, 2015	May 5, 2014
Per Share	$ 5.99
Shares	25,000	50,000
Fair Value	$ 149,750	$ 1,150
Description of Services		Compensation for marketing services
Stock Issued for Services 7
Date	Sep. 18, 2015	May 6, 2014
Per Share	$ 5.99
Shares	25,000	25,000,000
Fair Value	$ 149,750	$ 605,000
Description of Services		Compensation to a sales consultant
Stock Issued for Services 8
Date	Aug. 28, 2015	Jun. 3, 2014
Per Share	$ 7
Shares	5,000	5,000
Fair Value	$ 35,000	$ 111
Description of Services		Compensation for legal services
Stock Issued for Services 9
Date	Aug. 24, 2015	Jul. 7, 2014
Per Share	$ 6
Shares	5,000	35,000
Fair Value	$ 30,000	$ 1,750
Description of Services		Compensation for CipherLoc consultants
Stock Issued for Services 10
Date	Aug. 24, 2015	Sep. 3, 2014
Per Share	$ 6
Shares	5,000	3,000,000
Fair Value	$ 30,000	$ 177,300
Description of Services		Compensation for marketing services
Stock Issued for Performance 1
Date	Sep. 30, 2015
Per Share	$ 5.15
Shares	2,084
Fair Value	$ 10,733
Stock Issued for Cash 1
Date		Oct. 21, 2013
Shares		25,000
Fair Value		$ 5,000
Stock Issued for Cash 2
Date		Jan. 12, 2014
Shares		10,000
Fair Value		$ 10,000
Stock Issued for Cash 3
Date		Sep. 3, 2014
Shares		152,000
Fair Value		$ 22,000
Stock Issued for Software Licensing 1
Date		Dec. 4, 2013
Shares		120,000
Fair Value		$ 3,600
Stock Issued for Software Licensing 2
Date		Feb. 21, 2014
Shares		100,000
Fair Value		$ 2,100

11. EQUITY (Details Narrative)

11. EQUITY (Details Narrative) - USD ($)	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Equity [Abstract]
Common Stock, Shares Authorized	650,000,000	650,000,000
Preferred Stock Shares Authorized	10,000,000	10,000,000
Common Stock, Par Value	$ 0.01	$ 0.01
Preferred Stock, Par Value	$ 0.01	$ 0.01
Preferred Stock, Shares Issued	10,000,000	4,000,000
Preferred Stock, Shares Outstandng	10,000,000	4,000,000
Stock Issued to CEO	10,738,600
Stock based compensation	$ 50,000	$ 666,750
Stock Issued for Cash, Shares	1,147,500
Stock Issued for Cash, Value	$ 194,500	5,700
Stock Issued for Services	161,654
Stock Issued for Services, Value	$ 994,665	$ 958,369

12. INCOME TAXES (Details Narra

12. INCOME TAXES (Details Narrative) - USD ($)	12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Income Tax Disclosure [Abstract]
Net Operating Loss Carryforward	$ 27,900,000
Income Tax Expense	$ 0	$ 0

13. SUBSEQUENT EVENTS (Details

13. SUBSEQUENT EVENTS (Details Narrative) - USD ($)	4 Months Ended	12 Months Ended
	Jan. 27, 2016	Sep. 30, 2015	Oct. 02, 2015
Stock Issued, Services, Shares		161,654
Subsequent Event [Member]
Promissory Note, Value			$ 250,000
Promissory Note, Terms	The terms of the promissory note are that $50,000 will be paid annually over 5 years with interest at 3% per annum.
Stock Issued, Private Placement, Shares	132,500
Stock Issued, Private Placement, Value	$ 265,000
Stock Issued, Services, Shares	5,000