Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Dec. 31, 2015 | May. 23, 2016 | |
Document And Entity Information | ||
Entity Registrant Name | CIPHERLOC CORPORATION | |
Entity Central Index Key | 1,022,505 | |
Document Type | 10-Q/A | |
Document Period End Date | Dec. 31, 2015 | |
Amendment Flag | true | |
Amendment Description | This amendment is being filed to comply with regulations | |
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 Common Stock, Shares Outstanding | 4,799,355 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,015 |
Balance Sheets
Balance Sheets - USD ($) | Dec. 31, 2015 | Sep. 30, 2015 |
CURRENT ASSETS: | ||
Cash | $ 1,131,206 | $ 1,993,406 |
Assets attributable to discontinued operations | 3,232 | |
Total current assets | $ 1,131,206 | $ 1,996,638 |
Proprietary Technology | 10,449 | |
TOTAL ASSETS | 1,141,655 | $ 1,996,638 |
LIABILITIES | ||
Accounts payable and accrued liabilities | 405,779 | $ 1,100,945 |
Due to related party | 1,205 | |
Liabilities attributable to disco ops | 18 | $ 18 |
Deferred Revenue | 1,121,185 | 1,125,000 |
TOTAL LIABILITIES | 1,528,187 | 2,225,963 |
STOCKHOLDERS' DEFICIT: | ||
Series A Convertible Preferred Stock, $0.01 par value, 10,000,000 shares authorized; 10,000,000 outstanding As of December 31, 2015 and September 30, 2015 | 100,000 | 100,000 |
Common Stock, $0.01 par value, 650,000,000 shares authorized; 4,494,421 issued and outstanding as of December 31, 2015 and 4,356,741 issued and outstanding as of September 30, 2015 | 44,942 | 43,567 |
Other equity | (50,000) | (50,000) |
Additional paid-in capital | 43,107,060 | 42,815,934 |
Accumulated deficit | (43,588,534) | (43,138,826) |
Total Equity | (386,532) | (229,325) |
TOTAL LIABILITIES & EQUITY | $ 1,141,655 | $ 1,996,638 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2015 | Sep. 30, 2015 |
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 Outstandng | 10,000,000 | 10,000,000 |
Common Stock, Par Value | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 650,000,000 | 650,000,000 |
Common Stock, Shares Issued | 4,494,421 | 4,356,741 |
Common Stock, Shares Outstanding | 4,494,421 | 4,356,741 |
Statements of Operations
Statements of Operations - USD ($) | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Statement [Abstract] | ||
Revenue | $ 3,814 | |
Cost of Revenues | ||
Gross Profit | $ 3,814 | |
Operating Expenses: | ||
General and administrative | 298,767 | $ 176,325 |
Research and development | 154,650 | 17,431 |
Total operating expenses | 453,417 | 193,756 |
Operating Loss | (449,603) | (193,756) |
Other Expenses | ||
Interest expene | (106) | (1,024) |
(Loss) from Continuing Operations | $ (449,709) | (194,780) |
Gain (Loss) from Discontinued Operations | (68,353) | |
Net Loss | $ (449,709) | $ (263,133) |
Net Loss per Common Share - Basic and diluted: | ||
Continuing operations | $ (0.10) | $ (0.07) |
Discontinued operations | 0 | (0.02) |
Total | $ (0.10) | $ (0.09) |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING Basic and diluted | 4,476,659 | 2,833,265 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 3 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (449,709) | $ (263,133) |
(Gain) Loss from discontinued operations | 68,353 | |
Net loss from continuing operations | $ (449,709) | $ (194,780) |
Adjustments to reconcile net loss from continuing operations to net cash (used in) provided by operating activities: | ||
Depreciation and amortization | ||
Stock based compensation | $ 27,500 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | ||
Deferred revenue | $ (3,814) | |
Accounts payable and accrued liabilities | (695,166) | $ (138,879) |
Net cash (used in) operating activities | (1,121,189) | $ (333,659) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Deposits with others | (10,449) | |
Net cash from investing activities | (10,449) | |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Advances from affiliates | $ 1,205 | |
Subscribed stock | $ (4,739) | |
Common stock issued for cash | $ 265,001 | |
Net cash provided by financing activities | 266,206 | $ (4,739) |
CASH FLOWS FROM DISCONTINUED OPERATIONS | ||
Operating | 3,232 | 1,249 |
Net decrease in cash from discontinued operations | 3,232 | 1,249 |
(DECREASE) INCREASE IN CASH | (862,200) | (337,149) |
CASH, BEGINNING OF YEAR | 1,993,406 | 545,650 |
CASH, END OF YEAR | 1,131,206 | 208,501 |
CASH PAID FOR: | ||
Interest paid | $ 107 | $ 1,111 |
Taxes paid | ||
SUPPLEMENTAL DISCLOSURE OF NONCASH OPERATING AND FINANCING ACTIVITIES: | ||
Common stock issued for purchase of software | $ (6,000) | |
Cancellation of common stock |
1. DESCRIPTION OF BUSINESS
1. DESCRIPTION OF BUSINESS | 3 Months Ended |
Dec. 31, 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. CipherLoc is a data security solutions company. Our highly innovative products - based on our patented polymorphic encryption technology - are designed to enable an iron-clad layer of protection to be added to existing solutions. CipherLoc has developed technology that: Dramatically enhances data security Can be easily added to existing products Is scalable and future-proof Our solutions are not a replacement of existing encryption technologies but rather an enhancement to them. Our mobile, desktop, and server software solutions are specifically designed to be added to any third-party application, service, or product. With a highly flexible and modular technology that can be easily added other software solutions, CipherLoc can support a wide range of use cases including any-to-any security (mobile-to-mobile, mobile-to-desktop, desktop-to-cloud, etc.), dynamically-created VPNs (where no provisioning is necessary), and many others. |
2. RESTATEMENT OF PREVIOUSLY IS
2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS | 3 Months Ended |
Dec. 31, 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 Companys revenue recognition of a transaction that occurred during the quarter ended December 31, 2015. The effect of the restatement was material on the Companys Balance Sheets, Income Statement and Statement of Cash Flows. The nature and impact of these adjustments are described below. Gain recognition on the sale of certain assets of discontinued operations needed to be deferred and will be discussed in detail in Note 6. 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. When the fair value of VSOE of post contract customer support cannot be determined, the revenue is recognized ratably over the contract period. In June 2014, the Company entered into an agreement to provide software and support to a third party for which no VSOE for any elements is known. Delivery of the use of the license was not achieved until December 2015; the only remaining undelivered element was post contract support services, and accordingly, the revenues will be recognized on a pro rata basis prospectively over the remaining 30 months of the related contracts. Deferred revenue results from fees billed to or collected from customers for which revenue has not yet been recognized. During the quarter ended December 31, 2015, the Company had retrospectively restated software revenue related to the sale of a license for its Cipherloc software to a third-party. Management subsequently determined that there was an error in calculating the correct amount of revenue based upon ratable accounting to recognize during the quarter ended December 31, 2015. The Company has corrected the classification of this amount ($3,814) as a reduction to software revenue and an increase to deferred revenue. For the quarter ended December 31, 2015 The results of the restatements are summarized as follows: Balance Sheet as of December 31, 2015: As reported Restatement Adjustment As restated Deferred revenue $ 691,406 $ 429,780 $ 1,121,186 Current liabilities 1,098,408 429,780 1,528,188 Accumulated deficit (42,908,755 ) (429,780 ) (43,338,535 ) Statement of Operations for the three months ended December 31, 2015: As reported Restatement Adjustment As restated Revenue $ 433,594 $ (429,780 ) $ 3,814 Loss from continuing operations (19,929 ) (429,780 ) (449,709 ) Statement of Cash Flows for the three months ended December 31, 2015: As reported Restatement Adjustment As restated Net loss $ 230,071 $ (679,780 ) $ (449,709 ) Revenue (433,594) 429,780 (3,814 ) |
3. BASIS OF PRESENTATION OF INT
3. BASIS OF PRESENTATION OF INTERIM FINANCIAL STATEMENTS | 3 Months Ended |
Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
3. BASIS OF PRESENTATION OF INTERIM FINANCIAL STATEMENTS | NOTE 3 BASIS OF PRESENTATION OF INTERIM FINANCIAL STATEMENTS The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America. The accompanying interim unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. In our opinion, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months ended December 31, 2015 are not necessarily indicative of the results that may be expected for the year ending September 30, 2016. Notes to the unaudited interim financial statements that would substantially duplicate the disclosures contained in the audited financial statements for the year ended September 30, 2015 have been omitted; this report should be read in conjunction with the audited financial statements and the footnotes thereto for the fiscal year ended September 30, 2015 included within the Companys Form 10-K, as amended, as filed with the Securities and Exchange Commission. |
4. GOING CONCERN
4. GOING CONCERN | 3 Months Ended |
Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
4. GOING CONCERN | NOTE 4 - GOING CONCERN The accompanying 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 December 31, 2015 of $43,588,535 and needs additional cash to maintain its operations. These factors raise substantial doubt about the Companys ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Companys continued existence is dependent upon managements ability to develop profitable operations, continued contributions from the Companys 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 Companys products and business. |
5. SUMMARY OF SIGNIFICANT ACCOU
5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 5 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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 December 31, 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 December 31, 2015, $871,111 of the Companys cash balance was uninsured. The Company has not experienced any losses in such accounts. 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. When the fair value of VSOE of post contract customer support cannot be determined, the revenue is recognized ratably over the contract period. In June 2014, the Company entered into an agreement to provide software and support to a third party for which no VSOE for any elements is known. Delivery of the use of the license was not achieved until December 2015; the only remaining undelivered element was post contract support services, and accordingly, the revenues will be recognized on a pro rata basis prospectively over the remaining 30 months of the related contracts. Deferred revenue results from fees billed to or collected from customers for which revenue has not yet been recognized. The Company has deferred revenue from one customer of $1,121,185 as of December 31, 2015 and $1,125,000 as of September 30, 2015. |
6. DISCONTINUED OPERATIONS
6. DISCONTINUED OPERATIONS | 3 Months Ended |
Dec. 31, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | |
6. DISCONTINUED OPERATIONS | NOTE 6 DISCONTINUED OPERATIONS Cloud MD Sale The Companys 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. The note receivable has five annual payments of $50,000 and carries interest of 3% a year. We reviewed the need for an allowance for loan loss and estimation of impairment of the note receivable based on professional relationship and experience with the buyer and the specifics of the agreements. As it was determined that collectability of the cash was not reasonably assured, the Company has fully reserved the receivable, and the Company will record revenue in the future when and if cash is received. |
7. EQUITY
7. EQUITY | 3 Months Ended |
Dec. 31, 2015 | |
Equity [Abstract] | |
7. EQUITY | NOTE 7 EQUITY Since September 30, 2015, the Company has issued 132,500 restricted common shares through a Private Placement Memorandum for cash proceeds totaling $265,001. |
8. SUBSEQUENT EVENTS
8. SUBSEQUENT EVENTS | 3 Months Ended |
Dec. 31, 2015 | |
Subsequent Events [Abstract] | |
8. SUBSEQUENT EVENTS | NOTE 8 - SUBSEQUENT EVENTS The Company hired Mike Salas as Vice President of Sales and Marketing on April 25, The employment contract grants an annual salary of $175,000.00 and restricted common stock with an annual value of $125,000. One quarter of the stock shall be granted at the end of the first quarter anniversary of employment and a like amount each quarter as long as the contract is in effect. The Company also executed a three-year lease agreement effective April 1, 2016 for a free standing building with annual rent of $86,596 for the first year increasing annual to $90,502 for the third year. The lease is automatically renewable for two one year periods at the Companys option. The building is located in Buda, Texas. |
5. SUMMARY OF SIGNIFICANT ACC14
5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
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 December 31, 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 December 31, 2015, $871,111 of the Companys cash balance was uninsured. The Company has not experienced any losses in such accounts. |
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. When the fair value of VSOE of post contract customer support cannot be determined, the revenue is recognized ratably over the contract period. In June 2014, the Company entered into an agreement to provide software and support to a third party for which no VSOE for any elements is known. Delivery of the use of the license was not achieved until December 2015; the only remaining undelivered element was post contract support services, and accordingly, the revenues will be recognized on a pro rata basis prospectively over the remaining 30 months of the related contracts. Deferred revenue results from fees billed to or collected from customers for which revenue has not yet been recognized. The Company has deferred revenue from one customer of $1,121,185 as of December 31, 2015 and $1,125,000 as of September 30, 2015. |
2. RESTATEMENT OF PREVIOUSLY 15
2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (Tables) | 3 Months Ended |
Dec. 31, 2015 | |
Equity [Abstract] | |
Restatement of Previously Issued Financial Statements | Balance Sheet as of December 31, 2015: As reported Restatement Adjustment As restated Deferred revenue $ 691,406 $ 429,780 $ 1,121,186 Current liabilities 1,098,408 429,780 1,528,188 Accumulated deficit (42,908,755 ) (429,780 ) (43,338,535 ) Statement of Operations for the three months ended December 31, 2015: As reported Restatement Adjustment As restated Revenue $ 433,594 $ (429,780 ) $ 3,814 Loss from continuing operations (19,929 ) (429,780 ) (449,709 ) Statement of Cash Flows for the three months ended December 31, 2015: As reported Restatement Adjustment As restated Net loss $ 230,071 $ (679,780 ) $ (449,709 ) Revenue (433,594) 429,780 (3,814 ) |
2. RESTATEMENT OF PREVIOUSLY 16
2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (Details) - USD ($) | 3 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2015 | |
Deferred revenue | $ 1,121,185 | $ 1,125,000 | |
Accumulated deficit | (43,588,534) | $ (43,138,826) | |
Revenue | $ 3,814 | ||
Cost of revenues | |||
Operating expenses | $ 453,417 | $ 193,756 | |
Loss from continuing operations | $ (449,709) | (194,780) | |
Loss from discontinuing operations | $ (68,353) | ||
Basic and diluted loss per common share | $ (0.10) | $ (0.09) | |
Deferred revenue | $ (3,814) | ||
Net loss | (449,709) | $ (263,133) | |
Net cash provided by operating activities | (1,121,189) | $ (333,659) | |
Net cash used in investing activities | (10,449) | ||
As reported | |||
Deferred revenue | 691,406 | ||
Current liabilities | 1,098,408 | ||
Accumulated deficit | (42,908,755) | ||
Revenue | 433,594 | ||
Loss from continuing operations | (19,929) | ||
Deferred revenue | (433,594) | ||
Net loss | 230,071 | ||
Restatement Adjustment | |||
Deferred revenue | 429,779 | ||
Current liabilities | 429,779 | ||
Accumulated deficit | (429,779) | ||
Revenue | (429,779) | ||
Loss from continuing operations | (429,780) | ||
Deferred revenue | 429,780 | ||
Net loss | 429,780 | ||
As Restated | |||
Deferred revenue | 1,121,186 | ||
Current liabilities | 1,528,187 | ||
Accumulated deficit | (43,338,534) | ||
Revenue | 3,814 | ||
Loss from continuing operations | (449,709) | ||
Deferred revenue | (3,814) | ||
Net loss | $ (3,814) |
4. GOING CONCERN (Details Narra
4. GOING CONCERN (Details Narrative) - USD ($) | Dec. 31, 2015 | Sep. 30, 2015 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accumulated Deficit | $ (43,588,534) | $ (43,138,826) |
5. SUMMARY OF SIGNIFICANT ACC18
5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | Dec. 31, 2015 | Sep. 30, 2015 |
Accounting Policies [Abstract] | ||
Deferred Revenue | $ 1,121,185 | $ 1,125,000 |