Cover
Cover - shares | 9 Months Ended | |
Jun. 30, 2021 | Aug. 16, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2021 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2021 | |
Current Fiscal Year End Date | --09-30 | |
Entity File Number | 000-28745 | |
Entity Registrant Name | Cipherloc Corporation | |
Entity Central Index Key | 0001022505 | |
Entity Tax Identification Number | 86-0837077 | |
Entity Incorporation, State or Country Code | TX | |
Entity Address, Address Line One | 6836 Bee Cave Rd | |
Entity Address, Address Line Two | Bldg. 1 | |
Entity Address, Address Line Three | S#279 | |
Entity Address, City or Town | Austin | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 78746 | |
City Area Code | (512) | |
Local Phone Number | 337-3728 | |
Entity Current Reporting Status | Yes | |
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 | 82,927,311 |
Balance Sheets (Unaudited)
Balance Sheets (Unaudited) - USD ($) | Jun. 30, 2021 | Sep. 30, 2020 |
Current assets | ||
Cash | $ 6,848,508 | $ 1,079,839 |
Prepaid expenses | 8,167 | 258,424 |
Total current assets | 6,856,675 | 1,338,263 |
Other assets | 200,000 | |
Operating lease ROU asset | 0 | 291,140 |
Total assets | 6,856,675 | 1,829,403 |
Current liabilities | ||
Accounts payable and accrued liabilities | 527,939 | 840,234 |
Accrued compensation | 26,912 | 10,000 |
Operating lease liability – current portion | 132,608 | |
Paycheck protection program loan – current portion | 216,902 | |
Deferred revenue | 15,417 | |
Total current liabilities | 554,850 | 1,215,161 |
Paycheck protection program loan – long term | 148,528 | |
Operating lease liability – long-term portion | 603,676 | |
Total liabilities | 554,850 | 1,967,365 |
Series A convertible preferred stock, $0.01 par value, 10,000,000 shares authorized; nil and 1,000,000 shares issued and outstanding as of June 30, 2021, and September 30, 2020, respectively | 10,000 | |
Common stock, $0.01 par value, 681,000,000 shares authorized; 82,927,311 and 27,505,196 shares outstanding; and 96,342,125 and 40,792,510 issued as of June 30, 2021, and September 30, 2020, respectively | 963,421 | 407,925 |
Treasury stock, at cost 13,414,814 and 13,287,314 shares as of June 30, 2021, and September 30, 2020, respectively | (590,000) | (550,000) |
Additional paid-in capital | 76,419,164 | 68,420,721 |
Accumulated deficit | (70,490,761) | (68,426,608) |
Total stockholders’ equity (deficit) | 6,301,824 | (137,962) |
Total liabilities and stockholders’ equity (deficit) | $ 6,856,675 | $ 1,829,403 |
Balance Sheets (Unaudited) (Par
Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Jun. 30, 2021 | Sep. 30, 2020 |
Statement of Financial Position [Abstract] | ||
Series A convertible preferred stock, par value | $ 0.01 | $ 0.01 |
Series A convertible preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Series A convertible preferred stock, shares issued | 0 | 1,000,000 |
Series A convertible preferred stock, shares outstanding | 0 | 1,000,000 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 681,000,000 | 681,000,000 |
Common stock, shares outstanding | 82,927,311 | 27,505,196 |
Common stock, shares issued | 96,342,125 | 40,792,510 |
Treasury stock, shares | 13,414,814 | 13,287,314 |
Statements of Operations (Unaud
Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Income Statement [Abstract] | ||||
Revenues | $ 8,750 | $ 15,417 | $ 39,233 | |
Cost of revenues | ||||
Gross profit | 8,750 | 15,417 | 39,233 | |
Operating expenses | ||||
General and administrative | 197,534 | 833,260 | 1,748,398 | 4,114,084 |
Selling and marketing | 107,842 | 56,250 | 695,245 | |
Research and development | 169,098 | 205,613 | 465,974 | 1,544,205 |
Total operating expenses | 366,632 | 1,146,715 | 2,270,622 | 6,353,534 |
Operating loss | (366,632) | (1,137,965) | (2,255,205) | (6,314,301) |
Other income (expense) | ||||
Loss on disposal of asset | (19,778) | (19,778) | ||
Miscellaneous income | 192,052 | 192,052 | ||
Interest expense | (1,000) | (1,000) | ||
Net loss | $ (175,580) | $ (1,157,743) | $ (2,064,153) | $ (6,334,079) |
Net loss per common share – basic and diluted | $ 0 | $ (0.03) | $ (0.05) | $ (0.16) |
Weighted average common shares outstanding – basic and diluted | 81,076,516 | 40,642,953 | 45,408,375 | 40,740,105 |
Statements of Cash Flows (Unaud
Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Sep. 30, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||
Net loss | $ (175,580) | $ (1,157,743) | $ (2,064,153) | $ (6,334,079) | |
Adjustments to reconcile net loss to net cash flows used in operating activities: | |||||
Depreciation | 18,243 | ||||
PPP loan forgiveness | (192,052) | ||||
Stock-based compensation | (4,400) | 142,872 | |||
Net loss on disposal of asset | 19,778 | 19,778 | |||
Impairment loss on ROU assets (gain on early termination of operating lease) | (441,597) | 382,961 | |||
Changes in operating assets and liabilities: | |||||
Prepaid expenses and other | 450,257 | 2,359 | |||
Accounts payable and accrued liabilities | (315,842) | 76,291 | |||
Accrued compensation | 16,912 | (102,293) | |||
Deferred revenue | (15,417) | (4,233) | |||
Net cash used in operating activities | (2,566,292) | (5,798,100) | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||
Purchases of fixed assets | (28,972) | ||||
Net cash used in investing activities | (28,972) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||
Purchase of treasury stock | (40,000) | (150,000) | |||
Proceeds from PPA loan | 365,430 | ||||
Repayment PPA loan | (173,378) | ||||
Purchase of preferred stock | (10,000) | ||||
Proceeds from the issuance of common stock, net of costs | 8,558,339 | ||||
Net cash provided by financing activities | 8,334,961 | 215,430 | |||
INCREASE (DECREASE) IN CASH | 5,768,669 | (5,611,642) | |||
CASH, BEGINNING OF PERIOD | 1,079,839 | 7,839,472 | $ 7,839,472 | ||
CASH, END OF PERIOD | $ 6,848,508 | $ 2,227,830 | 6,848,508 | 2,227,830 | $ 1,079,839 |
NON-CASH INVESTING AND FINANCING ACTIVITIES: | |||||
Capitalization of ROU asset | 746,125 | ||||
ST operating lease liability recorded | 61,264 | ||||
LT operating lease liability recorded | $ 684,861 |
Statements of Stockholders' Equ
Statements of Stockholders' Equity (Deficit) (Unaudited) - USD ($) | Preferred Stock [Member] | Common Stock [Member] | Treasury Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Beginning balance, value 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 | 142,781 | 142,782 | ||||
Purchase of treasury stock | (150,000) | (150,000) | ||||
Net loss | (6,334,079) | (6,334,079) | ||||
Ending balance, value at Jun. 30, 2020 | $ 10,000 | $ 407,925 | (150,000) | 68,368,697 | (67,790,612) | 846,010 |
Balance, shares at Jun. 30, 2020 | 1,000,000 | 40,792,510 | ||||
Beginning balance, value 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 | ||||
Ending balance, value at Sep. 30, 2020 | $ 10,000 | $ 407,925 | (550,000) | 68,420,721 | (68,426,608) | (137,962) |
Balance, shares at Sep. 30, 2020 | 1,000,000 | 40,792,510 | ||||
Beginning balance, value 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 | ||||
Options issued to directors & employees | 52,024 | 52,024 | ||||
Purchase of treasury stock | ||||||
Net loss | (1,157,743) | |||||
Ending balance, value at Jun. 30, 2020 | $ 10,000 | $ 407,925 | (150,000) | 68,368,697 | (67,790,612) | 846,010 |
Balance, shares at Jun. 30, 2020 | 1,000,000 | 40,792,510 | ||||
Beginning balance, value at Sep. 30, 2020 | $ 10,000 | $ 407,925 | (550,000) | 68,420,721 | (68,426,608) | (137,962) |
Balance, shares at Sep. 30, 2020 | 1,000,000 | 40,792,510 | ||||
Options issued to directors & employees | (4,400) | (4,400) | ||||
Preferred and treasury shares acquired | $ (10,000) | (40,000) | (50,000) | |||
Preferred and treasury shares acquired, shares | (1,000,000) | |||||
Issuance of common stock, net of issuance costs | $ 555,496 | 8,002,843 | 8,558,339 | |||
Issuance of common stock, net of issuance costs, shares | 55,549,615 | |||||
Net loss | (2,064,153) | (2,064,153) | ||||
Ending balance, value at Jun. 30, 2021 | $ 963,421 | (590,000) | 76,419,164 | (70,490,761) | 6,301,824 | |
Balance, shares at Jun. 30, 2021 | 96,342,125 | |||||
Beginning balance, value at Mar. 31, 2021 | $ 765,504 | (590,000) | 73,640,761 | (70,315,181) | 3,501,084 | |
Balance, shares at Mar. 31, 2021 | 76,550,452 | |||||
Options issued to directors & employees | (84,055) | (84,055) | ||||
Issuance of common stock, net of issuance costs | $ 197,917 | 2,862,458 | 3,060,375 | |||
Issuance of common stock, net of issuance costs, shares | 19,791,773 | |||||
Net loss | (175,580) | (175,580) | ||||
Ending balance, value at Jun. 30, 2021 | $ 963,421 | $ (590,000) | $ 76,419,164 | $ (70,490,761) | $ 6,301,824 | |
Balance, shares at Jun. 30, 2021 | 96,342,125 |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 9 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
DESCRIPTION OF BUSINESS | NOTE 1 - DESCRIPTION OF BUSINESS Cipherloc Corporation (the “ Company Cipherloc American Mortgage Company. Cipherloc Corporation. www.cipherloc.net Management is seeking shareholder approval at its upcoming shareholders meeting to be held on September 13, 2021, to among other things, change the Company’s state of incorporation from Texas to Delaware. The full slate of proposals is summarized under Note 8 - Subsequent Events |
NEW EQUITY ISSUANCE
NEW EQUITY ISSUANCE | 9 Months Ended |
Jun. 30, 2021 | |
New Equity Issuance | |
NEW EQUITY ISSUANCE | NOTE 2 – NEW EQUITY ISSUANCE From March 31, 2021, to April 16, 2021, we entered into a Securities Purchase Agreement (the “ Purchase Agreement Purchasers 55,549,615 Offering Shares Offering Warrants 0.18 Offering Price 80 The sale of the Offering Shares and Offering Warrants occurred at four closings as follows: SCHEDULE OF OFFERING SHARES AND OFFERING WARRANTS Date of Closing Shares Sold Warrants Sold Gross Proceeds March 31, 2021 35,757,942 35,757,942 $ 6,436,430 April 7, 2021 7,513,893 7,513,893 $ 1,352,501 April 9, 2021 8,683,336 8,683,336 $ 1,563,000 April 16, 2021 3,594,444 3,594,444 $ 647,000 55,549,615 55,549,615 $ 9,998,931 Total gross proceeds from the offering of the Offering Shares and Offering Warrants (the “ Private Offering 10 Paulson Investment Company, LLC (the “ Placement Agent Placement Agreement Placement Warrants We agreed to use the proceeds from the Private Offering for working capital purposes and not to use such proceeds: (a) for the satisfaction of any portion of the Company’s debt (other than (i) payment of trade payables in the ordinary course of the Company’s business and prior practices and (ii) the repayment of funds received by the Company under the “ paycheck protection program In connection with the Private Offering, each of our officers and directors entered into Lock-Up Agreements whereby they agreed not to sell, offer, or transfer, any of our securities which they hold for 180 days after the end of the Private Offering, subject to customary exceptions. The Offering Warrants, which are evidenced by Common Stock Purchase Offering Warrants (the “ Warrant Agreements 0.36 200 4.99 Pursuant to the Registration Rights Agreement (“ RR Agreement th th th On January 11, 2021, we entered into a Placement Agent Agreement with the Placement Agent, pursuant to which we engaged the Placement Agent as the Company’s exclusive placement agent in connection with the Private Offering. Pursuant to the Placement Agent Agreement, we agreed to pay the Placement Agent a cash commission of 13 1,334,861 15 8,332,439 August 31, 2021 35,000 The Placement Warrants are evidenced by Purchase Warrants, have a term of 10 0.18 We are required to pay the Placement Agent liquidated damages of $10 per day for each $1,000 of shares not timely delivered upon the exercise of the Placement Warrants. Management has evaluated the warrants for derivative status and concluded the warrants are freestanding equity instruments. |
BASIS OF PRESENTATION OF INTERI
BASIS OF PRESENTATION OF INTERIM FINANCIAL STATEMENTS | 9 Months Ended |
Jun. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
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 and nine months ended June 30, 2021, are not necessarily indicative of the results that may be expected for the year ending September 30, 2021. 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, 2020, 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, 2020, included within the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 4 - 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 June 30, 2021, and September 30, 2020, cash includes cash on hand and cash in the bank. The balance of such accounts, at times, may exceed federally insured limits, as guaranteed by the Federal Deposit Insurance Corporation (“ FDIC 250,000 6,598,508 Basic and Diluted Net Loss per Common Share Basic loss per share is computed by dividing net 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 June 30, 2021, there were no 1,000,000 1,500,000 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 because of the net loss. During the three and nine months ended June 30, 2021, warrants to purchase 79,461,481 24,216,866 1,000,000 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 nine months ended June 30, 2021, and 2020 were $ 465,974 1,544,205 Revenue Recognition The Company recognizes revenues in accordance with the provisions of Accounting Standards Update (“ ASU Revenue from Contracts with Customers, ASC Topic 606 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. Software License Agreements During the fiscal year ended September 30, 2019, the Company entered into a one-year agreement with SoundFi LLC (“ SoundFi 25,000 from SoundFi during the year ended September 30, 2020. The Company executed an annual software licensing agreement with Castle Shield during the year ended September 30, 2020, which also includes auto-renewing terms. Castle Shield made a $ 10,000 During the nine-months ended June 30, 2021, the Company recognized $ 15,417 Recent Accounting Pronouncements The Financial Accounting Standards Board (“ FASB ASC In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. 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 The Company adopted ASU 2018-13 on October 1, 2020, and the adoption of this update did not have a material impact on the Company’s financial position, results of operations and cash flows. In July 2017, the FASB issued ASU 2017-11—Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features and II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. ASU 2017-11 eliminates the requirement that a down round feature precludes equity classification when assessing whether an instrument is indexed to an entity’s own stock. A freestanding equity-linked financial instrument no longer would be accounted for as a derivative liability at fair value because of the existence of a down round feature. The Company has adopted ASU 2017-11 and implemented the pronouncement retrospectively. The adoption of this guidance did not have an impact on its financial statements. As a result, a freestanding equity-linked financial instrument no longer would be accounted for as a derivative liability at fair value because of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share (EPS) in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. During March and April 2021, the Company issued warrants to purchase 63,882,054 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Jun. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 5 – COMMITMENTS AND CONTINGENCIES Litigation Other than as set forth below, the Company is not currently involved in any litigation that it believes could have a material adverse effect on its financial condition or results of operations. In December 2017, Robert LeBlanc, a disgruntled former consultant of the Company, filed a petition against the Company and Michael De La Garza, our former Chief Executive Officer and President, in the 20th Judicial District for Hays County, Texas (Cause No. 18-0005). The petition (which has been amended) alleges causes of action against us for alleged violation of the Texas Securities Act (based on the allegation that the defendants sold securities by means of untrue statements of material facts), common law fraud against Mr. De La Garza (for alleged misrepresentations alleged made by Mr. De La Garza); breach of fiduciary duty against Mr. De La Garza; breach of contract; as well as declaratory relief. Damages sought exceed $ 1,000,000 10,000,000 In April 2020, Eric Marquez, the former Secretary/Treasurer and Chief Financial Officer of the Company, and certain other plaintiffs, filed a lawsuit against the Company and Michael De La Garza, our former Chief Executive Officer and President, in the 20 th 1,000,000 Semple, Marchal & Cooper, LLP (“ SMC 75,000 150,000 The parties entered arbitration regarding the amounts owed and subsequently entered into a Settlement Agreement and Release on April 26, 2021, to confidentially settle the matter and mutually release each other from any liabilities. On August 28, 2020, the Company settled all litigation matters which had previously been pending with Michael De La Garza, a former chief executive officer of the Company. As a result of this settlement, De La Garza returned 13.1 400,000 25,000 In October 2020, Ageos, LLC, a Virginia limited liability company (“ Ageos Leases As of June 30, 2021, the Company has no financial obligations for facility lease agreements. In February 2020, the Company leased approximately 3,666 The lease for this facility began on February 1, 2020 and was scheduled to continue until July 31, 2025. 159,471 100,000 2.5 741,680 Tom Wilkinson, the Company’s Chairman of the Board of Directors, provides the Company the use of office space which he rents, at 6836 Bee Caves Road, Building 1, Suite 279, Austin, TX 78746 for its corporate headquarters. There is no formal lease or sublease agreement with Mr. Wilkinson and Mr. Wilkinson does not charge the Company any rental fees in connection therewith. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenant. Operating Leases Operating leases were 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. As a result of restructuring actions intended to conserve cash during the COVID-19 crisis, the Company stopped occupying the space in March 2020 and notified the landlord that the Company no longer needed the property and began seeking an amicable and reasonable termination of the lease agreement. On June 9, 2021, a settlement of $ 150,000 The early termination of the 2111 Wilson Boulevard operating lease resulted in recognizing a $ 441,597 0 Cash Flows An initial right-of-use asset of $ 233,751 746,000 80,402 150,000 Significant Judgments There are no significant judgments. Rent expense totaled $ 306,452 177,785 |
DEBT
DEBT | 9 Months Ended |
Jun. 30, 2021 | |
Debt Disclosure [Abstract] | |
DEBT | NOTE 6 – DEBT On April 6, 2020, to supplement its cash balance, the Company submitted their application for a Paycheck Protection Program (“ PPP SBA loan 365,430 April 22, 2020 1 Section 1106 of the Coronavirus Aid, Relief, and Economic Security Act (“ CARES Act The PPP loan balance on March 31, 2021, was $ 365,430 192,052 The full principal balance of the loan, plus $ 1,000 0 |
STOCKHOLDERS_ EQUITY (DEFICIT)
STOCKHOLDERS’ EQUITY (DEFICIT) | 9 Months Ended |
Jun. 30, 2021 | |
Equity [Abstract] | |
STOCKHOLDERS’ EQUITY (DEFICIT) | NOTE 7 - STOCKHOLDERS’ EQUITY (DEFICIT) The Company is authorized to issue 681,000,000 10,000,000 0.01 Common Stock During the nine months ended June 30, 2021, the Company issued 55,549,615 0.18 9,998,931 8,558,339 During the nine months ended June 30, 2021, the Company came to a settlement with James LeGanke, as Trustee of Carmel Trust II and purchased back 127,500 50,000 40,000 10,000 During the twelve months ended September 30, 2020, the Company came to a settlement with Michael De La Garza and purchased 13,137,757 400,000 300,000 100,000 25,000 During the nine months ended June 30, 2020, the Company came to a settlement with First Fire Global Opportunity Fund, LLC and purchased back 149,55 150,000 As of June 30, 2021, we had issued 40,792,501 13,414,814 82,927,311 Series A Preferred Stock During the nine months ended June 30, 2021, the Company came to a settlement with James LeGanke, as Trustee of Carmel Trust II and purchased back 1,000,000 50,000 10,000 40,000 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Jun. 30, 2021 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 8 – SUBSEQUENT EVENTS On July 14, 2021, we entered into an employment agreement with Nick Hnatiw to fulfill the role of Chief Technology Officer (“CTO”). The effective date of the employment agreement was June 1, 2021. Mr. Hnatiw began providing CTO services to Cipherloc as an independent contractor during November 2020. On July 19, 2021, the Company filed a Definitive Proxy Statement on Schedule 14A announcing a shareholders meeting to be held on September 13, 2021 for shareholders of record as of July 15, 2021, to elect a Board of Directors and to seek approval of five other proposals. On July 28, 2021, the Definitive Proxy Statement was amended to add two additional proposals relating to executive compensation. The meeting will be held at the Company’s headquarters at 6836 Bee Cave Road in Austin, Texas at 9:00 AM Central Time on September 13, 2021. Shareholders will be voting on the following proposals: To elect four (4) members to our Board of Directors; 2. To ratify the appointment of Briggs & Veselka Co. as our independent registered public accounting firm for our fiscal year ending September 30, 2021; 3. To approve the Company’s 2021 Omnibus Equity Incentive Plan and the reservation of 8,000,000 4. To approve the reincorporation of the Company from the State of Texas to the State of Delaware; 5. To grant discretionary authority to our board of directors to (i) amend our proposed Delaware certificate of incorporation, after the Company effectuates its reincorporation to the State of Delaware, to combine outstanding shares of our common stock into a lesser number of outstanding shares, or a “reverse stock split,” at a specific ratio within a range of 1-for-2 to a maximum of a 1-for-20 split, with the exact ratio to be determined by our board of directors in its sole discretion; and (ii) effect the reverse stock split, if at all, within one year of the date the proposal is approved by stockholders 6. To approve an amendment of the Company’s Amended and Restated Articles of Incorporation, as amended, to eliminate the shareholders’ statutory preemptive rights pursuant to Section 21.208 of the Texas Business Organizations Code in the event that the reincorporation of the Company from the State of Texas to the State of Delaware is not consummated; 7. To approve, by non-binding advisory vote, of the resolution approving named executive officer compensation; and 8. To approve, by non-binding advisory vote, of the frequency of future non-binding advisory votes on resolutions approving future named executive officer compensation. On July 23, 2021, the “ Company Paulson 4,000,000 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Jun. 30, 2021 | |
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 June 30, 2021, and September 30, 2020, cash includes cash on hand and cash in the bank. The balance of such accounts, at times, may exceed federally insured limits, as guaranteed by the Federal Deposit Insurance Corporation (“ FDIC 250,000 6,598,508 |
Basic and Diluted Net Loss per Common Share | Basic and Diluted Net Loss per Common Share Basic loss per share is computed by dividing net 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 June 30, 2021, there were no 1,000,000 1,500,000 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 because of the net loss. During the three and nine months ended June 30, 2021, warrants to purchase 79,461,481 24,216,866 1,000,000 |
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 nine months ended June 30, 2021, and 2020 were $ 465,974 1,544,205 Revenue Recognition The Company recognizes revenues in accordance with the provisions of Accounting Standards Update (“ ASU Revenue from Contracts with Customers, ASC Topic 606 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. Software License Agreements During the fiscal year ended September 30, 2019, the Company entered into a one-year agreement with SoundFi LLC (“ SoundFi 25,000 from SoundFi during the year ended September 30, 2020. The Company executed an annual software licensing agreement with Castle Shield during the year ended September 30, 2020, which also includes auto-renewing terms. Castle Shield made a $ 10,000 During the nine-months ended June 30, 2021, the Company recognized $ 15,417 |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The Financial Accounting Standards Board (“ FASB ASC In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. 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 The Company adopted ASU 2018-13 on October 1, 2020, and the adoption of this update did not have a material impact on the Company’s financial position, results of operations and cash flows. In July 2017, the FASB issued ASU 2017-11—Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features and II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. ASU 2017-11 eliminates the requirement that a down round feature precludes equity classification when assessing whether an instrument is indexed to an entity’s own stock. A freestanding equity-linked financial instrument no longer would be accounted for as a derivative liability at fair value because of the existence of a down round feature. The Company has adopted ASU 2017-11 and implemented the pronouncement retrospectively. The adoption of this guidance did not have an impact on its financial statements. As a result, a freestanding equity-linked financial instrument no longer would be accounted for as a derivative liability at fair value because of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share (EPS) in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. During March and April 2021, the Company issued warrants to purchase 63,882,054 |
NEW EQUITY ISSUANCE (Tables)
NEW EQUITY ISSUANCE (Tables) | 9 Months Ended |
Jun. 30, 2021 | |
New Equity Issuance | |
SCHEDULE OF OFFERING SHARES AND OFFERING WARRANTS | The sale of the Offering Shares and Offering Warrants occurred at four closings as follows: SCHEDULE OF OFFERING SHARES AND OFFERING WARRANTS Date of Closing Shares Sold Warrants Sold Gross Proceeds March 31, 2021 35,757,942 35,757,942 $ 6,436,430 April 7, 2021 7,513,893 7,513,893 $ 1,352,501 April 9, 2021 8,683,336 8,683,336 $ 1,563,000 April 16, 2021 3,594,444 3,594,444 $ 647,000 55,549,615 55,549,615 $ 9,998,931 |
SCHEDULE OF OFFERING SHARES AND
SCHEDULE OF OFFERING SHARES AND OFFERING WARRANTS (Details) - shares | Apr. 16, 2021 | Apr. 09, 2021 | Apr. 07, 2021 | Mar. 31, 2021 | Jun. 30, 2021 |
New Equity Issuance | |||||
Shares Sold | 3,594,444 | 8,683,336 | 7,513,893 | 35,757,942 | 55,549,615 |
Warrants Sold | 3,594,444 | 8,683,336 | 7,513,893 | 35,757,942 | 55,549,615 |
Gross Proceeds | 647,000 | 1,563,000 | 1,352,501 | 6,436,430 | 9,998,931 |
NEW EQUITY ISSUANCE (Details Na
NEW EQUITY ISSUANCE (Details Narrative) - USD ($) | Apr. 16, 2021 | Apr. 09, 2021 | Apr. 07, 2021 | Mar. 31, 2021 | Jan. 11, 2021 | Apr. 16, 2021 | Jun. 30, 2021 | Apr. 30, 2021 |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||
Sale of stock | 3,594,444 | 8,683,336 | 7,513,893 | 35,757,942 | 55,549,615 | |||
Warrants to purchase common stock | 63,882,054 | |||||||
Securities Purchase Agreement [Member] | Accredited Investors [Member] | ||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||
Sale of stock | 55,549,615 | |||||||
Percentage equivalent to closing sale price | 80.00% | |||||||
Proceeds from offering | $ 10,000,000 | |||||||
Securities Purchase Agreement [Member] | Accredited Investors [Member] | Warrant [Member] | ||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||
Sale of stock price per share | $ 0.18 | $ 0.18 | ||||||
Warrant Agreements [Member] | ||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||
Percentage equivalent to closing sale price | 200.00% | |||||||
Warrant exercise price per share | $ 0.36 | $ 0.36 | ||||||
Beneficial ownership percentage | 4.99% | 4.99% | ||||||
Placement Agent Agreement [Member] | ||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||
Proceeds from offering | $ 1,334,861 | |||||||
Cash comission percentage | 13.00% | |||||||
Warrants to purchase shares percentage | 0.15 | |||||||
Agreement expiration date | Aug. 31, 2021 | |||||||
Placement Agent Agreement [Member] | Private Placement [Member] | ||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||
Warrants to purchase common stock | 8,332,439 | |||||||
Payments to placement agents | $ 35,000 | |||||||
Placement Agent Agreement [Member] | Placement Warrants [Member] | ||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||
Warrant exercise price per share | $ 0.18 | |||||||
Warrants term | 10 years | |||||||
Liquidated damages description | We are required to pay the Placement Agent liquidated damages of $10 per day for each $1,000 of shares not timely delivered upon the exercise of the Placement Warrants. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Apr. 30, 2021 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||
FDIC insured cash | $ 250,000 | $ 250,000 | |||||
Cash balance uninsured | $ 6,598,508 | $ 6,598,508 | |||||
Preferred stock, shares outstanding | 0 | 1,000,000 | 0 | 1,000,000 | 1,000,000 | ||
Number of shares issued for conversion | 1,500,000 | ||||||
Research and development costs | $ 169,098 | $ 205,613 | $ 465,974 | $ 1,544,205 | |||
License revenue | $ 8,750 | $ 15,417 | $ 39,233 | ||||
Warrants to issue common stock | 63,882,054 | ||||||
SoundFi LLC [Member] | |||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||
Payment to acquire software license | $ 25,000 | ||||||
SoundFi LLC [Member] | One-Year Agreement [Member] | |||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||
Payment to acquire software license | $ 10,000 | ||||||
Stock Options [Member]. | |||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||
Anti-dilutive common stock equivalents | 79,461,481 | ||||||
Warrant [Member] | |||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||
Anti-dilutive common stock equivalents | 24,216,866 | ||||||
Convertible Preferred Stock [Member] | |||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||||||
Anti-dilutive common stock equivalents | 1,000,000 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) shares in Millions | Sep. 01, 2021USD ($) | Aug. 28, 2020shares | Oct. 31, 2019 | Apr. 30, 2020USD ($) | Feb. 29, 2020USD ($)ft² | Dec. 31, 2017USD ($) | Jun. 30, 2021USD ($) | Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) | Sep. 30, 2021USD ($) | Jun. 30, 2021USD ($) | Sep. 30, 2020USD ($) |
Loss Contingencies [Line Items] | ||||||||||||
Number of common stock value | $ 3,060,375 | $ 8,558,339 | ||||||||||
Operating lease right of use asset | 0 | 0 | $ 0 | $ 291,140 | ||||||||
Operating lease liability | 0 | 0 | 0 | |||||||||
Cash paid to lease | 80,402 | |||||||||||
lease in exchange for one-time payment | $ 150,000 | 150,000 | 150,000 | |||||||||
Rent expense | 306,452 | $ 177,785 | ||||||||||
Wilson Boulevard Inc [Member] | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Settlement of lease payments | $ 150,000 | |||||||||||
Gain on operating lease | $ 441,597 | |||||||||||
VIRGINIA | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Area of lease | ft² | 3,666 | |||||||||||
Lease description | The lease for this facility began on February 1, 2020 and was scheduled to continue until July 31, 2025. | |||||||||||
Rental cost | $ 159,471 | |||||||||||
Security deposit | $ 100,000 | |||||||||||
Annual rent increase percentage | 2.50% | |||||||||||
Future payments of operating lease | $ 741,680 | |||||||||||
Right-of-use asset | 233,751 | |||||||||||
VIRGINIA | New Lease Obligations [Member] | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Operating lease liability | $ 746,000 | |||||||||||
Forecast [Member] | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Settlement payments | $ 25,000 | |||||||||||
Minimum [Member] | Semple, Marchal & Cooper, LLP [Member] | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Contingency alleged amount | 75,000 | |||||||||||
Maximum [Member] | Semple, Marchal & Cooper, LLP [Member] | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Contingency alleged amount | 150,000 | |||||||||||
Robert LeBlanc [Member] | Minimum [Member] | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Damages sought value | $ 1,000,000 | |||||||||||
Robert LeBlanc [Member] | Maximum [Member] | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Damages sought value | $ 10,000,000 | |||||||||||
Eric Marquez [Member] | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Damages sought value | $ 1,000,000 | |||||||||||
De La Garza [Member] | Settlement Agreement [Member] | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Number of common stock shares | shares | 13.1 | |||||||||||
De La Garza [Member] | Settlement Agreement [Member] | Subsequent Event [Member] | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Number of common stock value | $ 400,000 |
DEBT (Details Narrative)
DEBT (Details Narrative) - USD ($) | Apr. 15, 2021 | Jan. 29, 2021 | Apr. 06, 2020 | Jun. 30, 2021 | Mar. 31, 2021 |
Line of Credit Facility [Line Items] | |||||
Paycheck protection program loan | $ 365,430 | $ 0 | $ 365,430 | ||
Debt instrument, maturity date | Apr. 22, 2020 | ||||
Debt instrument, interest rate | 1.00% | ||||
Loan forgiveness | $ 192,052 | ||||
Texas Capital Bank [Member] | |||||
Line of Credit Facility [Line Items] | |||||
Principal balance with interest amount | $ 1,000 |
STOCKHOLDERS_ EQUITY (DEFICIT)
STOCKHOLDERS’ EQUITY (DEFICIT) (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Sep. 30, 2020 | |
Subsidiary, Sale of Stock [Line Items] | ||||
Common stock, shares authorized | 681,000,000 | 681,000,000 | 681,000,000 | |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | 10,000,000 | |
Common stock, par value | $ 0.01 | $ 0.01 | $ 0.01 | |
Preferred stock, par value | $ 0.01 | $ 0.01 | $ 0.01 | |
Proceeds from issuance of common stock, net | $ 8,558,339 | |||
Payments for repurchase of common stock | 40,000 | 150,000 | ||
Payments for repurchase of preferred stock | 10,000 | |||
Number of common stock value | $ 3,060,375 | $ 8,558,339 | ||
Conversion of Common stock, shares issued | 40,792,501 | |||
Treasury stock, shares | 13,414,814 | 13,414,814 | 13,287,314 | |
Common stock, shares outstanding | 82,927,311 | 82,927,311 | 27,505,196 | |
Common Stock [Member] | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Number of common stock, shares | 19,791,773 | 55,549,615 | ||
Number of common stock value | $ 197,917 | $ 555,496 | ||
Common Stock [Member] | FirstFire Global Opportunities Fund, LLC [Member] | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Number of common stock, shares | 149.55 | |||
Number of common stock value | $ 150,000 | |||
James LeGanke [Member] | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Payments for repurchase of equity | 50,000 | |||
Payments for repurchase of common stock | $ 40,000 | |||
James LeGanke [Member] | Series A Preferred Stock [Member] | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Number of common stock, shares | 1,000,000 | |||
Payments for repurchase of preferred stock | $ 10,000 | |||
James LeGanke [Member] | Common Stock [Member] | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Number of common stock, shares | 127,500 | |||
Michael De La Garza [Member] | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Payments for repurchase of common stock | $ 300,000 | |||
Remaining payments for repurchase of common stock | 100,000 | |||
Quarterly payments for repurchase of common stock | $ 25,000 | |||
Michael De La Garza [Member] | Common Stock [Member] | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Number of common stock, shares | 13,137,757 | |||
Number of common stock value | $ 400,000 | |||
Private Placement [Member] | ||||
Subsidiary, Sale of Stock [Line Items] | ||||
Common stock, par value | $ 0.18 | $ 0.18 | ||
Number of common stock, shares | 55,549,615 | |||
Gross proceeds from issuance of common stock | $ 9,998,931 | |||
Proceeds from issuance of common stock, net | $ 8,558,339 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - shares | Sep. 13, 2021 | Jul. 23, 2021 |
Subsequent Event [Member] | Pulson Investment Company LLC [Member] | ||
Subsequent Event [Line Items] | ||
Stock issued for services | 4,000,000 | |
Forecast [Member] | ||
Subsequent Event [Line Items] | ||
Stockholders equity reverse stock split, description | To grant discretionary authority to our board of directors to (i) amend our proposed Delaware certificate of incorporation, after the Company effectuates its reincorporation to the State of Delaware, to combine outstanding shares of our common stock into a lesser number of outstanding shares, or a “reverse stock split,” at a specific ratio within a range of 1-for-2 to a maximum of a 1-for-20 split, with the exact ratio to be determined by our board of directors in its sole discretion; and (ii) effect the reverse stock split, if at all, within one year of the date the proposal is approved by stockholders | |
Omnibus Equity Incentive Plan [Member] | Forecast [Member] | ||
Subsequent Event [Line Items] | ||
Capital shares reserved for future issuance | 8,000,000 |