SideChannel (SDCH) 10-Q 15 May 20 2020 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Mar. 31, 2020	Apr. 30, 2020
Document And Entity Information
Entity Registrant Name	CIPHERLOC Corp
Entity Central Index Key	0001022505
Document Type	10-Q
Document Period End Date	Mar. 31, 2020
Amendment Flag	false
Current Fiscal Year End Date	--09-30
Entity Current Reporting Status	No
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		40,792,510
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2020

Balance Sheets (Unaudited)

Balance Sheets (Unaudited) - USD ($)	Mar. 31, 2020	Sep. 30, 2019
Current assets
Cash	$ 3,469,849	$ 7,839,472
Prepaid expenses	55,328	121,371
Total current assets	3,525,177	7,760,843
Other assets	109,796	7,566
Operating lease ROU asset	477,105
Fixed assets, net	56,853	40,182
Total assets	4,168,931	8,008,591
Current liabilities
Accounts payable and accrued liabilities	1,079,953	650,681
Accrued compensation	184,392	142,293
Operating lease liability	180,889
Deferred revenue	22,917	28,400
Total current liabilities	1,468,151	821,374
Operating lease liability - long-term portion	749,051
Total liabilities	2,217,202	821,374
Commitments and contingencies
Series A convertible preferred stock, $0.01 par value, 1,000,000 shares authorized; 1,000,000 shares issued and outstanding as of March 31, 2020 and September 30, 2019	10,000	10,000
Common stock, $0.01 par value, 681,000,000 shares authorized; 40,642,953 and 40,792,510 shares issued and outstanding as of March 31, 2020 and September 30, 2019, respectively	407,925	407,925
Treasury stock, at cost 149,557 shares	(150,000)
Additional paid-in capital	68,316,673	68,225,828
Accumulated deficit	(66,632,869)	(61,456,536)
Total stockholders' equity	1,951,729	7,187,217
Total liabilities and stockholders' equity	$ 4,168,931	$ 8,008,591

Balance Sheets (Unaudited) (Par

Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Mar. 31, 2020	Sep. 30, 2019
Statement of Financial Position [Abstract]
Series A convertible preferred stock, par value	$ 0.01	$ 0.01
Series A convertible preferred stock, shares authorized	1,000,000	1,000,000
Series A convertible preferred stock, shares issued	1,000,000	1,000,000
Series A convertible preferred stock, shares outstanding	1,000,000	1,000,000
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	681,000,000	681,000,000
Common stock, shares issued	40,642,953	40,792,510
Common stock, shares outstanding	40,642,953	40,792,510
Treasury stock, shares	149,557	149,557

Statements of Operations (Unaud

Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
Income Statement [Abstract]
Revenues	$ 11,733		$ 30,483
Cost of revenues
Gross profit	11,733		30,483
Operating expenses
General and administrative	1,976,044	505,807	3,280,824	1,038,781
Selling and marketing	331,359	434,800	587,403	648,775
Research and development	772,577	479,677	1,338,592	825,572
Total operating expenses	3,079,980	1,420,284	5,206,819	2,513,128
Operating loss	(3,068,247)	(1,420,284)	(5,176,336)	(2,513,128)
Other income (expense)
Interest income		2,431		3,328
Net loss	$ (3,068,247)	$ (1,417,853)	$ (5,176,336)	$ (2,509,800)
Net loss per common share - basic and diluted	$ (0.08)	$ (0.03)	$ (0.13)	$ (0.06)
Weighted average common shares outstanding - basic and diluted	40,784,299	40,786,279	40,788,427	40,774,152

Statements of Cash Flows (Unaud

Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (5,176,336)	$ (2,509,800)
Adjustments to reconcile net loss to net cash flows used in operating activities:
Depreciation	12,301	4,036
Stock-based compensation	90,848	51,216
Impairment loss	447,025
Changes in operating assets and liabilities:
Prepaid expenses and other	(36,187)	(95,030)
Accounts payable and accrued liabilities	435,082	(15,231)
Accrued compensation	42,099	77,127
Deferred revenue	(5,483)
Net cash used in operating activities	(4,190,651)	(2,487,682)
CASH FLOWS FROM INVESTING ACTIVITIES:
Funding of note receivable		(401,000)
Purchases of fixed assets	(28,972)	(37,059)
Net cash used in investing activities	(28,972)	(438,059)
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock	(150,000)
Refund of over subscription		(40,000)
Net cash used in financing activities	(150,000)	(40,000)
INCREASE (DECREASE) IN CASH	(4,369,623)	(2,965,741)
CASH, BEGINNING OF PERIOD	7,839,472	14,056,346
CASH, END OF PERIOD	3,469,849	11,090,605
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Capitalization of ROU asset	929,940
ST operating lease liability recorded	180,889
LT operating lease liability recorded	$ 749,051

Statements of Stockholders' Equ

Statements of Stockholders' Equity (Unaudited) - USD ($)	Preferred Stock [Member]	Common Stock [Member]	Treasury Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Deficit [Member]	Total
Balance at Sep. 30, 2018	$ 10,000	$ 407,438		$ 68,169,157	$ (54,622,513)	$ 13,964,082
Balance, shares at Sep. 30, 2018	1,000,000	40,743,917
Common stock issued for services		$ 200		39,800		40,000
Common stock issued for services, shares		20,000
Correction of common stock outstanding		$ 193		(193)
Correction of common stock outstanding, shares		19,247
Common stock issued to employee		$ 94		11,122		11,216
Common stock issued to employee, shares		9,346
Refund oversubscription				(40,000)		(40,000)
Net loss					(2,509,800)	(2,509,800)
Balance at Mar. 31, 2019	$ 10,000	$ 407,925		68,179,886	(57,132,313)	11,465,498
Balance, shares at Mar. 31, 2019	1,000,000	40,792,510
Balance at Dec. 31, 2018	$ 10,000	$ 407,831		68,208,764	(55,714,460)	12,912,135
Balance, shares at Dec. 31, 2018	1,000,000	40,783,164
Common stock issued to employee		$ 94		11,122		11,216
Common stock issued to employee, shares		9,346
Refund oversubscription				(40,000)		(40,000)
Net loss					(1,417,853)	(1,417,853)
Balance at Mar. 31, 2019	$ 10,000	$ 407,925		68,179,886	(57,132,313)	11,465,498
Balance, shares at Mar. 31, 2019	1,000,000	40,792,510
Balance at Sep. 30, 2019	$ 10,000	$ 407,925		68,225,825	(61,456,533)	7,187,217
Balance, shares at Sep. 30, 2019	1,000,000	40,792,510
Options issued to directors & employees				90,848		90,848
Purchase of treasury stock			(150,000)			(150,000)
Net loss					(5,176,336)	(5,176,336)
Balance at Mar. 31, 2020	$ 10,000	$ 407,925	(150,000)	68,316,673	(66,632,869)	1,951,729
Balance, shares at Mar. 31, 2020	1,000,000	40,792,510
Balance at Dec. 31, 2019	$ 10,000	$ 407,925		68,277,399	(63,564,622)	5,130,702
Balance, shares at Dec. 31, 2019	1,000,000	40,792,510
Options issued to directors & employees				39,274		39,274
Purchase of treasury stock			(150,000)			(150,000)
Net loss					(3,068,247)	(3,068,247)
Balance at Mar. 31, 2020	$ 10,000	$ 407,925	$ (150,000)	$ 68,316,673	$ (66,632,869)	$ 1,951,729
Balance, shares at Mar. 31, 2020	1,000,000	40,792,510

The Company

The Company	6 Months Ended
	Mar. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
The Company	NOTE 1 – THE COMPANY Cipherloc Corporation (the “Company” or “Cipherloc”) was incorporated in Texas on June 22, 1953 as American Mortgage Company. Effective August 27, 2014, the Company changed its name to Cipherloc Corporation.

Basis of Presentation of Interi

Basis of Presentation of Interim Financial Statements	6 Months Ended
	Mar. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation of Interim Financial Statements	NOTE 2 - 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 the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and six months ended March 31, 2020 are not necessarily indicative of the results that may be expected for the year ending September 30, 2020 or any future period. 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, 2019 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, 2019 included within the Company’s Form 10-K, as filed with the Securities and Exchange Commission.

Summary of Significant Accounti

Summary of Significant Accounting Policies	6 Months Ended
	Mar. 31, 2020
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America. Significant accounting policies are as follows: Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity at the time of purchase of three months or less to be cash equivalents. At March 31, 2020 and September 30, 2019, cash includes cash on hand and cash in the bank. The Company maintains its cash in accounts held by a large, globally recognized bank, and the balance of such accounts, 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 March 31, 2020, $3,181,121 of the Company’s cash balance was uninsured. Basic and Diluted Net Loss per Common Share Basic net loss per share is computed by dividing net loss for the period 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 net loss 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. Diluted net loss per share is the same as basic net loss per share during periods where net losses are incurred because the inclusion of the potential common stock equivalents would be anti-dilutive as a result of the net loss. As of March 31, 2020, and September 30, 2019, the Company had 1,000,000 shares of preferred stock outstanding, which are convertible into 1,500,000 shares of common stock. During the three and six months ended March 31, 2020, 24,216,866 warrants and 1,000,000 as converted shares of convertible preferred stock were excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive. During the three and six months ended March 31, 2019, 25,015,866 warrants to purchase common stock and 1,500,000 as converted shares of convertible preferred stock were excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive. Research and Development and Software Development Costs The Company expenses all research and development costs, including patent and software development costs. Our research and development costs incurred for the six months ended March 31, 2020 and 2019 were $1,338,592 and $825,572, respectively. Revenue Recognition The Company recognizes revenues in accordance with the provisions of Accounting Standards Update 2014-09, “Revenue from Contracts with Customers,” and a series of amendments which together we identify as “ASC Topic 606”. This new accounting standard, which we adopted on October 1, 2018 using the permitted modified retrospective method, outlines a single comprehensive model for entities to use in accounting for revenues arising from contracts with customers. The new standard supersedes most previous revenue recognition guidance, including industry-specific guidance. The effect of the adoption of ASC Topic 606 on retained earnings as of October 1, 2018 was not material. The differences between our reported operating results for the six months ended March 31, 2020, which reflect the application of the new standard on our contracts, and the results that would have been reported if the accounting was performed pursuant to the accounting standards previously in effect, also were not material. Central to the new revenue recognition guidance is a five-step revenue recognition model that requires reporting entities to: 1. Identify the contract, 2. Identify the performance obligations of the contract, 3. Determine the transaction price of the contract, 4. Allocate the transaction price to the performance obligations, and 5. Recognize revenue. The Company accounts for a promise to provide a customer with a right to access the Company’s intellectual property as a performance obligation satisfied over time because the customer will simultaneously receive and consume the benefit from the entity’s performance of providing access to its intellectual property as the performance occurs. SoundFi – Software License Agreement The Company entered into a one-year agreement renewable for up to 4 years for an annual $50,000 Shield license fee and $25,000 watermark base license fee with SoundFi LLC (“SoundFi”). Residual income to the Company is earned based on the number of audio files downloaded per year with residual earnings of $.012 per download exceeding 3,000,001 and scaling up to $.00075 per download exceeding 100,000,000. In February 2020, the company received $25,000 for the watermark base license fee. During the six months ended March 31, 2020, the Company recognized $30,483 in licensing revenue. The Company has determined the best method for measuring licensing revenue to be the passage of time and more specifically on a monthly basis. The recognition of residual income occurs on an annual basis based on download volume provided by SoundFi. A download is defined as an audio file downloaded to a mobile device from the SoundFi servers. Recent Accounting Pronouncements The Financial Accounting Standards Board (“FASB”) issues Accounting Standards Updates (“ASU”) to amend the authoritative literature in the ASC. There have been several ASUs to date that amend the original text of the ASCs. Other than those discussed below, the Company believes those ASUs issued to date either (i) 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. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurements (Topic 820) – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718) – Improvements to Nonemployee Share-Based Payment Accounting Compensation – Stock Compensation In February 2016, the FASB issued ASU 2016-02, Leases, which aims to make leasing activities more transparent and comparable and requires substantially all leases be recognized by lessees on their balance sheet as a right-of-use asset (ROU) and corresponding lease liability, including leases currently accounted for as operating leases. Leases of mineral reserves and related land leases have been exempted from the standard. We adopted ASU 2016-02, Leases, on October 1, 2019. We elected the “package of practical expedients” within the standard which permits us not to reassess prior conclusions about lease identification, lease classification and initial direct costs. We made an accounting policy election to not separate lease and non-lease components for all leases. The adoption of this standard resulted in the recognition of right-of-use assets and lease liabilities of $0.2 million, which were not previously recorded on our balance sheet.

Commitments and Contingencies

Commitments and Contingencies	6 Months Ended
	Mar. 31, 2020
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	NOTE 4 – COMMITMENTS AND CONTINGENCIES Litigation The Company is currently not involved in any litigation that it believes could have a material adverse effect on its financial condition or results of operations. A disgruntled former consultant has brought an action in Texas state court against the Company and its former chief executive officer, alleging fraud and misrepresentation pertaining to stock and payments alleged to be owed to the consultant. The Company believes it has made all required payments and delivered the stock to the consultant. The consultant has also included a claim of partial ownership of certain of the Company’s patents, which management believes is without merit. The case is currently being defended by the Company and costs relating thereto have been submitted to the Company’s insurance carrier. In August 2019, the Board of Directors formed a special committee of independent directors (the “Special Committee”) to investigate certain activities of Michael De La Garza (“De La Garza”), our former chief executive officer. The Special Committee has retained legal counsel, and is authorized to retain forensic accountants, to assist the investigation. In August 2019, the Company initiated litigation against De La Garza in the District Court of Travis Country, Texas (the “Court”) in order to stop him from misappropriating the company’s trade secrets, depleting its monies and other assets, damaging the value of the company in the marketplace, and holding himself out as the company’s CEO. On September 25, 2019, the Court entered a temporary injunction against De La Garza enjoining him from numerous acts including representing himself as the Company’s CEO and from interfering with the current CEO’s management of the company. This litigation is ongoing, and its resolution is unknown. The Special Committee is investigating certain activities of De La Garza, including the Ageos, LLC Operating Agreement, the QHCI/Noun note receivable, an advance/bonus, personal expenditures, and other items. All amounts expended have been expensed as of September 30, 2019. No amounts have been recorded in these financial statements as expected recoveries. The Company has also sued De La Garza, among others, in federal court seeking to invalidate the unauthorized issuance of 6 million shares of preferred stock to him in 2015. Among other relief, this lawsuit seeks a declaratory judgment invalidating the initial issuance of 3 million shares of Cipherloc Series A Preferred Stock to De La Garza. The combined 9 million preferred stock shares were converted to 13.5 million shares of common stock by De La Garza during 2018. The Company alleges that De La Garza failed to comply with both state law and its bylaws when he caused the Company to issue the Preferred Stock to himself as purported compensation. This lawsuit is ongoing, and its resolution is unknown. Leases In March 2019, the Company guaranteed a lease on behalf of Ageos, LLC in McLean, Virginia. The lease has a term of three years for 4,359 square feet of space in McClean, Virginia. The initial rent cost is $7,991 per month and the lease agreement provides for annual rent increases of approximately 4.0%. The amount of future payments guaranteed is $267,389. The agreement with Ageos was terminated in August 2019 and the Company has made an unwritten offer to assume the lease. No amounts have been accrued for this commitment as of March 31, 2020. In February 2019, the Company and the landlord for its leased office space in Buda, Texas entered into a new lease agreement, and the Company reduced its rented space from approximately 3,900 to 1,302 square feet. The new lease was effective February 1, 2019 and has a three-year term. The initial monthly rent is $2,566, and the lease agreement provides for annual rent increases of approximately 2.7%. The lease automatically renews for a three-year term, unless either party to the lease agreement notifies the other of the intent to terminate the lease in writing at least 180 days prior to the expiration of the current term. The amount of future payments guaranteed is $58,850. In October 2018, the Company leased approximately 3,900 square feet of office space on North Scottsdale Road in Scottsdale, Arizona. The lease for this facility began on October 4, 2018 and continues until October 31, 2021. Annual rent of $77,180 was prepaid for the first year from November 1, 2018 to October 31, 2019, and the lease agreement provides for annual rent increases of approximately 5.0%. The amount of future payments guaranteed is $132,171. In February 2020, the Company leased approximately 3,666 square feet of office space on 2107 Wilson Boulevard, Arlington, Virginia. The lease for this facility began on February 1, 2020 and continues until July 31, 2025. The base annual rent is $159,471, a $100,000 security deposit was paid, and abatement of monthly rent payments was provided until August 1, 2020, and the lease provides for annual rent increases of approximately 2.5%. The amount of future payments guaranteed is $938,863. As the result of restructuring actions intended to conserve cash during the COVID-19 crisis, the landlords of the North Scottsdale Road and the Wilson Boulevard spaces were notified that the Company no longer needed the spaces and is seeking a termination of the lease agreements. Our significant accounting policies are detailed in Note 2 of our Annual Report on Form 10-K for the year ended September 30, 2019. Changes to our accounting policies as a result of adopting ASU 2016-02 are discussed below. The Company has three lease agreements for facilities. Some leases include options to extend for one or more years. These options are included in the lease term when it is reasonably certain that the option will be exercised. Leases with an initial term of 12 months or less are not recorded on our Balance Sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. Leases with initial terms in excess of 12 months are recorded as operating or financing leases in our Balance Sheet. Lease assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, we use a secured incremental borrowing rates based on the information available at commencement date, including lease term, in determining the present value of future payments. The operating lease asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. At inception, the Company determines if an arrangement contains a lease and whether that lease meets the classification criteria of a finance or operating lease. Some of the Company’s lease arrangements contain lease components (e.g. minimum rent payments) and non-lease components (e.g. maintenance, labor charges, etc.). The Company generally accounts for each component separately based on the estimated standalone price of each component. For certain leases the Company accounts for the lease and non-lease components as a single lease component. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Operating Leases Operating leases are included in operating lease ROU lease assets, and operating lease liabilities and operating long-term lease liabilities on the Balance Sheets. Lease expense for operating leases is recognized on a straight-line basis over the lease term. Variable lease expense is recognized in the period in which the obligation for those payments is incurred. Lease expense is included in general and administrative expense in the statements of operations and is reported net of lease income. Lease income is not material to the results of operations for the quarter ended March 31, 2020. The Company announced a corporate restructuring on March 31, 2020 which will result in the abandonment of certain office spaces. The Company has recorded an impairment charge of approximately $447,025 which is the estimate of the future payments less projected sublease income from the abandoned office space. Cash Flows An initial right-of-use asset of $233,751 was recognized as a non-cash asset addition with the adoption of the new lease accounting standard. Cash paid for amounts included in the present value of operating lease liabilities was $28,534 during second quarter 2020 and is included in operating cash flows. In February 2020, the Company’s new lease in Arlington, Virginia added approximately $734,000 in new lease obligations. The weighted average remaining lease terms and discount rates for all of our operating lease were as follows as of March 31, 2020: Remaining lease term and discount rate: March 31, 2020 Weighted average remaining lease terms (years) Lease facilities 2.97 Weighted average discount rate Lease facilities 4.62 % Significant Judgements Significant judgements include the discount rates applied, the expected lease terms, and lease renewal options. There are three leases with a renewal option. Using the practical expedient, the Company utilized existing lease classifications as of September 30, 2019. As a result, the lease renewal options were not changed on implementation. Future annual minimum lease obligations at March 31, 2020 are as follows: Year ending September 30 Amount 2020 $ 82,917 2021 278,914 2022 184,083 2023 170,322 2024 174,575 2025 148,870 $ 1,039,681 Rent expense totaled $63,353 and $97,685 for the six months ended March 31, 2020 and 2019, respectively

Stockholders' Equity

Stockholders' Equity	6 Months Ended
	Mar. 31, 2020
Stockholders' Equity Note [Abstract]
Stockholders' Equity	NOTE 5 - STOCKHOLDERS’ EQUITY The Company is authorized to issue 681,000,000 common shares and 10,000,000 preferred shares at a par value of $0.01 per share. Common Stock Management determines the fair value of stock issuances using the closing stock price on the grant date. During the six months ended March 31, 2020, the Company came to a settlement with First Fire and purchased back 149,557 shares and recorded such shares as Treasury Stock. Preferred Stock Each outstanding share of preferred stock is convertible into the Company’s common stock at a rate of one preferred share to 1.5 common shares. Each share of preferred stock has 1.5 votes on all matters presented to be voted by the holders of common stock. The holders of preferred stock can only convert the shares upon approval of the Company’s board of directors. If declared by the board of directors, holders of preferred stock are entitled to receive dividends prior and in preference to any declaration or payment of any dividend on the common stock of the Company. In the event of liquidation or dissolution of the Company, holders of preferred stock shall be paid out of the assets of the Company prior and in preference to any payment or distribution to holders of common stock of the Company.

Related Party Transactions

Related Party Transactions	6 Months Ended
	Mar. 31, 2020
Related Party Transactions [Abstract]
Related Party Transactions	NOTE 6- RELATED PARTY TRANSACTIONS There were no related party transactions.

Subsequent Events

Subsequent Events	6 Months Ended
	Mar. 31, 2020
Subsequent Events [Abstract]
Subsequent Events	NOTE 7- SUBSEQUENT EVENTS Many countries around the world, after year-end, including the United States, were impacted by the coronavirus (the “virus” or “COVID-19”) outbreak. While the virus is continuing to evolve, its implications could involve interruptions to production and supply chains, unavailability of personnel, and reductions in sales, earnings, or productivity. In addition, the Company may be impacted by the broader effects of COVID-19 due to the negative impact the virus has had on the global economy and major financial markets. At this time, management is not aware of any material risk to the Company’s financial statements and cannot quantify the extent the virus may have on the Company’s financial information In response to the COVID-19 pandemic, the U.S. Small Business Administration (the “SBA”) is making available low-interest rate loans to qualified small businesses, including under its Paycheck Protection Program (the “PPP”). On April 6, 2020, to supplement its cash balance, the Company submitted their application for a loan (“SBA loan”) in the amount of $365,430. On April 12, 2020, Company’s SBA loan application was approved, and the Company received loan proceeds on April 22, 2020. The SBA loan has an interest rate of 1% and matures in April 12, 2022. Section 1106 of the CARES Act provides for forgiveness of up to the full principal amount of qualifying loans guaranteed under the PPP. The PPP and loan forgiveness are intended to provide economic relief to small businesses, such as the Company, that are adversely impacted under the COVID-19 Emergency Declaration issued by President Trump on March 13, 2020. On April 21, 2020, the Company received FIPS 140-2 Certification for Mobile Platforms (i.e., Android and iOS). The FIPS 140-2 Certification number is 3645. On Monday, May 11, 2020, in support of the Company’s plan to conserve cash in response to the COVID-19 pandemic, the Board of Directors passed a resolution to defer Director compensation for the calendar quarters ending September 30, 2020 and December 31, 2020.

Summary of Significant Accoun_2

Summary of Significant Accounting Policies (Policies)	6 Months Ended
	Mar. 31, 2020
Accounting Policies [Abstract]
Cash and Cash Equivalents	Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity at the time of purchase of three months or less to be cash equivalents. At March 31, 2020 and September 30, 2019, cash includes cash on hand and cash in the bank. The Company maintains its cash in accounts held by a large, globally recognized bank, and the balance of such accounts, 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 March 31, 2020, $3,181,121 of the Company’s cash balance was uninsured.
Basic and Diluted Net Loss Per Common Share	Basic and Diluted Net Loss per Common Share Basic net loss per share is computed by dividing net loss for the period 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 net loss 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. Diluted net loss per share is the same as basic net loss per share during periods where net losses are incurred because the inclusion of the potential common stock equivalents would be anti-dilutive as a result of the net loss. As of March 31, 2020, and September 30, 2019, the Company had 1,000,000 shares of preferred stock outstanding, which are convertible into 1,500,000 shares of common stock. During the three and six months ended March 31, 2020, 24,216,866 warrants and 1,000,000 as converted shares of convertible preferred stock were excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive. During the three and six months ended March 31, 2019, 25,015,866 warrants to purchase common stock and 1,500,000 as converted shares of convertible preferred stock were excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive.
Research and Development and Software Development Costs	Research and Development and Software Development Costs The Company expenses all research and development costs, including patent and software development costs. Our research and development costs incurred for the six months ended March 31, 2020 and 2019 were $1,338,592 and $825,572, respectively.
Revenue Recognition	Revenue Recognition The Company recognizes revenues in accordance with the provisions of Accounting Standards Update 2014-09, “Revenue from Contracts with Customers,” and a series of amendments which together we identify as “ASC Topic 606”. This new accounting standard, which we adopted on October 1, 2018 using the permitted modified retrospective method, outlines a single comprehensive model for entities to use in accounting for revenues arising from contracts with customers. The new standard supersedes most previous revenue recognition guidance, including industry-specific guidance. The effect of the adoption of ASC Topic 606 on retained earnings as of October 1, 2018 was not material. The differences between our reported operating results for the six months ended March 31, 2020, which reflect the application of the new standard on our contracts, and the results that would have been reported if the accounting was performed pursuant to the accounting standards previously in effect, also were not material. Central to the new revenue recognition guidance is a five-step revenue recognition model that requires reporting entities to: 1. Identify the contract, 2. Identify the performance obligations of the contract, 3. Determine the transaction price of the contract, 4. Allocate the transaction price to the performance obligations, and 5. Recognize revenue. The Company accounts for a promise to provide a customer with a right to access the Company’s intellectual property as a performance obligation satisfied over time because the customer will simultaneously receive and consume the benefit from the entity’s performance of providing access to its intellectual property as the performance occurs. SoundFi – Software License Agreement The Company entered into a one-year agreement renewable for up to 4 years for an annual $50,000 Shield license fee and $25,000 watermark base license fee with SoundFi LLC (“SoundFi”). Residual income to the Company is earned based on the number of audio files downloaded per year with residual earnings of $.012 per download exceeding 3,000,001 and scaling up to $.00075 per download exceeding 100,000,000. In February 2020, the company received $25,000 for the watermark base license fee. During the six months ended March 31, 2020, the Company recognized $30,483 in licensing revenue. The Company has determined the best method for measuring licensing revenue to be the passage of time and more specifically on a monthly basis. The recognition of residual income occurs on an annual basis based on download volume provided by SoundFi. A download is defined as an audio file downloaded to a mobile device from the SoundFi servers.
Recent Accounting Pronouncements	Recent Accounting Pronouncements The Financial Accounting Standards Board (“FASB”) issues Accounting Standards Updates (“ASU”) to amend the authoritative literature in the ASC. There have been several ASUs to date that amend the original text of the ASCs. Other than those discussed below, the Company believes those ASUs issued to date either (i) 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. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurements (Topic 820) – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718) – Improvements to Nonemployee Share-Based Payment Accounting Compensation – Stock Compensation In February 2016, the FASB issued ASU 2016-02, Leases, which aims to make leasing activities more transparent and comparable and requires substantially all leases be recognized by lessees on their balance sheet as a right-of-use asset (ROU) and corresponding lease liability, including leases currently accounted for as operating leases. Leases of mineral reserves and related land leases have been exempted from the standard. We adopted ASU 2016-02, Leases, on October 1, 2019. We elected the “package of practical expedients” within the standard which permits us not to reassess prior conclusions about lease identification, lease classification and initial direct costs. We made an accounting policy election to not separate lease and non-lease components for all leases. The adoption of this standard resulted in the recognition of right-of-use assets and lease liabilities of $0.2 million, which were not previously recorded on our balance sheet.

Commitments and Contingencies (

Commitments and Contingencies (Tables)	6 Months Ended
	Mar. 31, 2020
Commitments and Contingencies Disclosure [Abstract]
Schedule of Weighted Average Remaining Lease Terms and Discount Rates	The weighted average remaining lease terms and discount rates for all of our operating lease were as follows as of March 31, 2020: Remaining lease term and discount rate: March 31, 2020 Weighted average remaining lease terms (years) Lease facilities 2.97 Weighted average discount rate Lease facilities 4.62 %
Schedule of Future Annual Minimum Operating Lease Obligations	Future annual minimum lease obligations at March 31, 2020 are as follows: Year ending September 30 Amount 2020 $ 82,917 2021 278,914 2022 184,083 2023 170,322 2024 174,575 2025 148,870 $ 1,039,681

Summary of Significant Accoun_3

Summary of Significant Accounting Policies (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019	Sep. 30, 2019
FDIC insured cash	$ 250,000		$ 250,000
Cash balance uninsured	$ 3,181,121		$ 3,181,121
Preferred stock, shares outstanding	1,000,000		1,000,000		1,000,000
Number of shares issued for conversion			1,500,000		1,500,000
Research and development costs	$ 772,577	$ 479,677	$ 1,338,592	$ 825,572	$ 345,895
Software License Agreement [Member]
Agreement term description			The Company entered into a one-year agreement renewable for up to 4 years
Residual income scaling description			Residual income to the Company is earned based on the number of audio files downloaded per year with residual earnings of $.012 per download exceeding 3,000,001 and scaling up to $.00075 per download exceeding 100,000,000.
Licensing revenue			$ 30,483
Software License Agreement [Member] | Shield License Fee [Member] | SoundFi LLC [Member]
Annual license fee			50,000
Software License Agreement [Member] | Watermark Base License [Member] | SoundFi LLC [Member]
Annual license fee			$ 25,000
Warrants [Member]
Anti-dilutive common stock equivalents	24,216,866	25,015,866	24,216,866	25,015,866
Convertible Preferred Stock [Member]
Anti-dilutive common stock equivalents	1,000,000	1,500,000	1,000,000	1,500,000

Commitments and Contingencies_2

Commitments and Contingencies (Details Narrative)	1 Months Ended				6 Months Ended		12 Months Ended
	Feb. 29, 2020USD ($)ft²	Mar. 31, 2019USD ($)ft²	Feb. 28, 2019USD ($)ft²	Oct. 31, 2018USD ($)ft²	Mar. 31, 2020USD ($)shares	Mar. 31, 2019USD ($)ft²	Sep. 30, 2019shares	Dec. 31, 2018shares	Aug. 31, 2019shares	Dec. 31, 2015shares
Preferred stock, shares issued | shares					1,000,000		1,000,000
Conversion of stock of common stock | shares					1,500,000		1,500,000
Rental cost					$ 63,353	$ 97,685
Impairment charge					447,025
Right-of-use asset					929,940
Operating lease liability					$ 28,534
Lease renewal term					3 years
Arizona [Member]
Area of lease | ft²				3,900
Annual rent increase percentage				5.00%
Future payments of operating lease				$ 132,171
Lease description				The lease for this facility began on October 4, 2018 and continues until October 31, 2021.
Arizona [Member] | November 1, 2018 to October 31, 2019 [Member]
Rental cost				$ 77,180
Virginia [Member]
Area of lease | ft²	3,666
Rental cost	$ 159,471
Annual rent increase percentage	2.50%
Future payments of operating lease	$ 938,863
Lease description	The lease for this facility began on February 1, 2020 and continues until July 31, 2025
Security deposit	$ 100,000
Virginia [Member] | New Lease Obligations [Member]
Operating lease liability	$ 734,000
New Lease Agreement [Member]
Area of lease | ft²			3,900
Rental cost			$ 2,566
Annual rent increase percentage			2.70%
Future payments of operating lease			$ 58,850
Reduction in lease area | ft²			1,302
Lease description			The lease automatically renews for a three-year term, unless either party to the lease agreement notifies the other of the intent to terminate the lease in writing at least 180 days prior to the expiration of the current term.
Ageos, LLC [Member]
Lease term		3 years				3 years
Area of lease | ft²		4,359				4,359
Rental cost		$ 7,991
Annual rent increase percentage		4.00%
Future payments of operating lease		$ 267,389				$ 267,389
De La Garza [Member]
Preferred stock, unauthorized issuance | shares										6,000,000
Preferred stock, shares issued | shares									3,000,000
Conversion of stock of common stock | shares								13,500,000

Commitments and Contingencies -

Commitments and Contingencies - Schedule of Weighted Average Remaining Lease Terms and Discount Rates (Details)	Mar. 31, 2020
Commitments and Contingencies Disclosure [Abstract]
Weighted average remaining lease terms (years) Lease facilities	2 years 11 months 19 days
Weighted average discount rate lease facilities	4.62%

Commitments and Contingencies_3

Commitments and Contingencies - Schedule of Future Annual Minimum Operating Lease Obligations (Details)	Mar. 31, 2020USD ($)
Commitments and Contingencies Disclosure [Abstract]
2020	$ 82,917
2021	278,914
2022	184,083
2023	170,322
2024	174,575
2025	148,870
Future annual minimum lease obligations	$ 1,039,681

Stockholders' Equity (Details N

Stockholders' Equity (Details Narrative) - $ / shares	6 Months Ended
	Mar. 31, 2020	Sep. 30, 2019
Stockholders' Equity Note [Abstract]
Common stock, shares authorized	681,000,000	681,000,000
Preferred stock, shares issued	1,000,000	1,000,000
Common stock, par value	$ 0.01	$ 0.01
Purchase of treasury stock shares	149,557	149,557
Number of shares issued for conversion	1.5
Preferred stock, voting rights	Each share of preferred stock has 1.5 votes on all matters presented to be voted by the holders of common stock. The holders of preferred stock can only convert the shares upon approval of the Company's board of directors. If declared by the board of directors, holders of preferred stock are entitled to receive dividends prior and in preference to any declaration or payment of any dividend on the common stock of the Company.

Subsequent Events (Details Narr

Subsequent Events (Details Narrative)	Apr. 06, 2020USD ($)
Subsequent Event [Member] | Paycheck Protection Program [Member]
Proceeds from loans	$ 365,430