UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] | | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934 For the quarterly period ended June 30, 2015 |
[ ] | | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
For the transition period from N/A to N/A |
Commission File No. 000-28745
Cipherloc Corporation
(Name of small business issuer
as specified in its charter)
(Formerly National Scientific
Corporation)
Texas |
86-0837077 |
( State or other jurisdiction of incorporation or
organization) |
(IRS Employer Identification No.) |
|
|
1291 Galleria Drive, Suite 200
Henderson, NV 89014
(Address of principal
executive offices)
(702) 818-9011
Registrant’s
telephone number, including area code
Indicate by check mark whether the Registrant (1) has filed all reports required
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past
90 days: Yes [X] No [ ]
Indicate by check mark whether the
registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to
be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]
Indicate by check mark whether the registrant is a
large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of
“large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2
of the Exchange Act.
Large accelerated filer |
[ ] |
Accelerated filer |
[ ] |
Non–Accelerated filer |
[ ] |
Smaller reporting company |
[X] |
Indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b–2 of the Exchange Act). Yes [ ] No [X]
Indicate the number of shares
outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class |
|
Outstanding at August
17, 2015 |
Common stock, $0.01 par value |
|
2,951,985 |
CIPHERLOC CORPORATION
INDEX TO FORM 10-Q FILING
FOR THE THREE AND NINE MONTHS ENDED
JUNE 30, 2015 AND 2014
TABLE OF CONTENTS
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PAGE |
PART I - FINANCIAL
INFORMATION |
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Item 1. |
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Consolidated Financial Statements
(Unaudited) |
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4 |
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Consolidated Balance Sheets |
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5 |
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Consolidated Statements of Operations |
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6 |
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Consolidated Statements of Cash Flows |
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7 |
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Notes to Consolidated Financial
Statements |
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7 |
Item 2. |
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Management Discussion & Analysis
of Financial Condition and Results of Operations |
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16 |
Item 3 |
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Quantitative and Qualitative Disclosures About Market Risk |
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19 |
Item 4. |
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Controls and Procedures |
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19 |
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PART II - OTHER INFORMATION |
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Item 1. |
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Legal Proceedings |
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19 |
Item 1A. |
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Risk Factors |
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19 |
Item 2. |
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Unregistered Sales of Equity Securities and Use of Proceeds |
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20 |
Item 3. |
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Defaults Upon Senior Securities |
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20 |
Item 4. |
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Mining Safety Disclosures |
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20 |
Item 5 |
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Other information |
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20 |
Item 6. |
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Exhibits |
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21 |
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CERTIFICATIONS |
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31.1 |
Certification of Chief Executive Officer Pursuant to Section
302 of the Sarbanes-Oxley Act. |
31.2 |
Certification of Chief Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act. |
32.2 |
Certification of Chief Executive Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act. |
32.2 |
Certification of Chief Financial Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act. |
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
The accompanying interim consolidated
financial statements have been prepared in accordance with the instructions to Form 10-Q. Therefore, they do not include
all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows,
and stockholders' equity in conformity with generally accepted accounting principles. Except as disclosed herein, there
has been no material change in the information disclosed in the notes to the consolidated financial statements included in the
Company's Annual Report on Form 10-K for the year ended September 30, 2014. In the opinion of management, all adjustments
considered necessary for a fair presentation of the results of operations and financial position have been included and all such
adjustments are of a normal recurring nature. Operating results for the nine months ended June 30, 2015 are not necessarily
indicative of the results that can be expected for the year ending September 30, 2015.
CIPHERLOC CORPORATION
(Formerly Cloud Medical Doctor Software Corporation)
(Formerly National Scientific Corporation)
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| |
June 30, 2015 | |
September 30, |
| |
2015 | |
2014 |
ASSETS | |
| | | |
| | |
| |
| | | |
| | |
CURRENT ASSETS: | |
| | | |
| | |
Cash | |
$ | 90,567 | | |
$ | 545,650 | |
Accounts receivable | |
| — | | |
| 1,006 | |
Assets attributable to discontinued operations | |
| — | | |
| 6,887 | |
Total current assets | |
| 90,567 | | |
| 553,543 | |
| |
| | | |
| | |
Proprietary technology, net | |
| 53,300 | | |
| 604,301 | |
Intangible assets, net of accumulated amortization | |
| 194,500 | | |
| — | |
TOTAL ASSETS | |
$ | 338,367 | | |
$ | 1,157,844 | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | |
| | | |
| | |
| |
| | | |
| | |
CURRENT LIABILITIES: | |
| | | |
| | |
Accounts payable and accrued liabilities | |
$ | 698,024 | | |
$ | 649,452 | |
Liabilities attributable to discontinued operations | |
| — | | |
| 18 | |
Line of credit | |
| 42,097 | | |
| 53,612 | |
Due to related party | |
| 74,211 | | |
| — | |
Stock payable | |
| — | | |
| 7,000 | |
Total current liabilities | |
| 814,332 | | |
| 710,082 | |
TOTAL LIABILITIES | |
| 814,332 | | |
| 710,082 | |
| |
| | | |
| | |
COMMITMENTS AND CONTINGENCIES | |
| — | | |
| — | |
| |
| | | |
| | |
STOCKHOLDERS' EQUITY (DEFICIT): | |
| | | |
| | |
Preferred stock, $0.01 par value, 10,000,000 shares authorized; 10,000,000 issued and
outstanding as of June 30, 2015 and September 30, 2014 | |
| 100,000 | | |
| 40,000 | |
Common stock, $0.01 par value, 650,000,000 shares authorized; 2,951,587 and 2,834,737
issued and outstanding as of June 30, 2015 and September 30, 2014, respectively | |
| 29,515 | | |
| 28,347 | |
Additional paid-in capital | |
| 38,806,521 | | |
| 28,635,141 | |
Accumulated deficit | |
| (39,412,001 | ) | |
| (28,255,726 | ) |
Total stockholders' equity (deficit) | |
| (475,965 | ) | |
| 447,762 | |
| |
| | | |
| | |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | |
$ | 338,367 | | |
$ | 1,157,844 | |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
CIPHERLOC CORPORATION
(Formerly Cloud Medical Doctor Software Corporation)
(Formerly National Scientific Corporation)
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
| |
Three Months Ended | |
Nine Months Ended |
| |
June 30, | |
June 30, |
| |
2015 | |
2014 | |
2015 | |
2014 |
REVENUE | |
$ | — | | |
$ | 1,126,725 | | |
$ | 431 | | |
$ | 1,349,400 | |
COST OF REVENUES | |
| 63,620 | | |
| 61,155 | | |
| 191,590 | | |
| 183,465 | |
| |
| | | |
| | | |
| | | |
| | |
GROSS PROFIT | |
| (63,620 | ) | |
| 1,065,570 | | |
| (191,159 | ) | |
| 1,165,935 | |
| |
| | | |
| | | |
| | | |
| | |
OPERATING EXPENSES: | |
| | | |
| | | |
| | | |
| | |
General and administrative | |
| 251,770 | | |
| 1,079,306 | | |
| 10,535,766 | | |
| 2,447,524 | |
Impairment | |
| 119,266 | | |
| — | | |
| 357,797 | | |
| — | |
Research and development | |
| 27,195 | | |
| — | | |
| 68,845 | | |
| 20,000 | |
Total operating expenses | |
| 398,231 | | |
| 1,079,306 | | |
| 10,962,408 | | |
| 2,467,524 | |
OPERATING LOSS | |
| (461,851 | ) | |
| (13,736 | ) | |
| (11,153,567 | ) | |
| (1,301,589 | ) |
| |
| | | |
| | | |
| | | |
| | |
OTHER (INCOME) AND EXPENSES | |
| | | |
| | | |
| | | |
| | |
Interest expense | |
| 2 | | |
| (1,656 | ) | |
| (1,839 | ) | |
| (2,171 | ) |
Total other (income) expenses | |
| 2 | | |
| (1,656 | ) | |
| (1,839 | ) | |
| (2,171 | ) |
| |
| | | |
| | | |
| | | |
| | |
LOSS FROM CONTINUING OPERATIONS | |
| (461,849 | ) | |
| (15,392 | ) | |
| (11,155,406 | ) | |
| (1,303,760 | ) |
| |
| | | |
| | | |
| | | |
| | |
(LOSS) INCOME FROM DISCONTINUED OPERATIONS | |
| — | | |
| (5,376 | ) | |
| (869 | ) | |
| (12,893 | ) |
| |
| | | |
| | | |
| | | |
| | |
NET INCOME (LOSS) | |
$ | (461,849 | ) | |
$ | (20,768 | ) | |
$ | (11,156,275 | ) | |
$ | (1,316,653 | ) |
| |
| | | |
| | | |
| | | |
| | |
NET INCOME (LOSS) PER COMMON SHARE - Basic and diluted: | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
Continuing operations | |
$ | (0.16 | ) | |
$ | (0.00 | ) | |
$ | (3.91 | ) | |
$ | (0.01 | ) |
| |
| | | |
| | | |
| | | |
| | |
Discontinued operations | |
$ | 0.00 | | |
$ | (0.00 | ) | |
$ | (0.00 | ) | |
$ | (0.00 | ) |
| |
| | | |
| | | |
| | | |
| | |
Total | |
$ | (0.16 | ) | |
$ | (0.00 | ) | |
$ | (3.91 | ) | |
$ | (0.01 | ) |
| |
| | | |
| | | |
| | | |
| | |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING Basic and diluted | |
| 2,885,104 | | |
| 2,689,457 | | |
| 2,852,486 | | |
| 2,360,865 | |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
CIPHERLOC CORPORATION
(Formerly Cloud Medical Doctor Software
Corporation)
(Formerly National Scientific Corporation)
CONSOLIDATED STATEMENT OF CASHFLOWS
(UNAUDITED)
| |
Nine Months Ended |
| |
June 30, |
| |
2015 | |
2014 |
| |
| | | |
| | |
Net loss | |
$ | (11,156,275 | ) | |
$ | (1,316,653 | ) |
Loss from discontinued operations | |
| (869 | ) | |
| (12,893 | ) |
Net loss from continuing operations | |
| (11,155,406 | ) | |
| (1,303,761 | ) |
Adjustments to reconcile net loss from continuing operations to net cash (used in) provided by operating activities: | |
| | | |
| | |
Impairment of software | |
| 357,797 | | |
| — | |
Depreciation and amortization | |
| 193,204 | | |
| 183,465 | |
Stock-based compensation | |
| 9,930,800 | | |
| 1,623,369 | |
Gain on cancellation of stock issued for services | |
| (4,752 | ) | |
| — | |
Common stock issued for software sales | |
| — | | |
| 5,700 | |
Changes in operating assets and liabilities: | |
| | | |
| | |
Accounts receivable | |
| 7,006 | | |
| 1,437 | |
Accounts payable and accrued liabilities | |
| 48,572 | | |
| 241,888 | |
Net cash (used in) operating activities | |
| (622,779 | ) | |
| 752,098 | |
| |
| | | |
| | |
CASH FLOWS FROM FINANCING ACTIVITIES: | |
| | | |
| | |
Advances from officer | |
| 74,211 | | |
| 8,299 | |
Repayment of advances from officer | |
| — | | |
| (8,299 | ) |
Proceeds from line of credit | |
| — | | |
| 103,529 | |
Subscribed stock | |
| (7,000 | ) | |
| — | |
Repayment of line of credit | |
| (11,515 | ) | |
| (50,713 | ) |
Common stock issued for cash | |
| 112,000 | | |
| 15,000 | |
Net cash provided by financing activities | |
| 167,696 | | |
| 67,816 | |
| |
| | | |
| | |
(DECREASE) INCREASE IN CASH | |
| (455,083 | ) | |
| 819,914 | |
CASH, BEGINNING OF YEAR | |
| 545,650 | | |
| 8,587 | |
CASH, END OF YEAR | |
$ | 90,567 | | |
$ | 828,501 | |
| |
| | | |
| | |
CASH PAID FOR: | |
| | | |
| | |
Interest paid | |
$ | 1,839 | | |
$ | — | |
Income taxes paid | |
$ | — | | |
$ | — | |
| |
| | | |
| | |
SUPPLEMENTAL DISCLOSURE OF NONCASH OPERATING AND FINANCING ACTIVITIES: | |
| | | |
| | |
| |
| | | |
| | |
Write-off of related party debt to additional paid-in capital | |
$ | — | | |
$ | 59,704 | |
Common stock issued for purchase of software | |
$ | 194,500 | | |
$ | 6,000 | |
Cancellation of stock rescinded for purchase of software | |
$ | 6,000 | | |
$ | — | |
Cancellation of common stock | |
$ | 150 | | |
$ | — | |
The accompanying notes are an integral part of these unaudited
consolidated financial statements.
CIPHERLOC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED
JUNE 30, 2015 AND 2014
(Unaudited)
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. On March 15, 2015, the Company
changed its name to Cipherloc Corporation. The name change became effective through the Amended Certificate
as of March 23, 2015.
The Company has notified the Financial
Industry Regulatory Authority (FINRA) of its name change and has received FINRA’s approval for a new trading symbol CLOK
reflecting its new name. The name change and the 1-100 reverse split were announced March 20, 2015 in the Daily List and became
effective on March 23, 2015. The financial statements as to shares and earning per share are restated as if the reverse split
occurred on the first day of the first period being reported.
In the year ended September 30, 2011,
the Company introduced the Cloud-MD Office, a “Cloud Based”, 5010 ready and ICD-10 compliant, fully integrated and
interoperable suite of medical software and services, designed by experienced healthcare analysts and programmers for healthcare
providers, that produces “Actionable Information” to help Independent Physician Practices, New Care Delivery Models
(ACO), Healthcare Systems and Billing Services optimize a wide range of business processes resulting in Increased Profits, Higher
Quality, Greater Efficiency, Noticeable Cost Reductions and Better Patient Care. Current software product offerings include Practice
Management, Electronic Medical Records, Revenue Management, Patient Financial Solutions, Medical and Pharmaceutical Supply Management,
Claims Management and PHI Exchange.
During the year ended September 30, 2012,
we launched Cloud-MD Billing Services which provides management of medical claims from posting physician charges and payments
into our medical billing software. The software uses a continuous insurance claim follow-up system to track and research all rejected
or denied medical claims; a Comprehensive Reporting module that includes monthly financial statements sent to our clients so they
can see how their practice is performing and a variety of detailed reports giving our clients the necessary information and tools
used to assist in the increased production which leads to more profit; and patient account inquiries and support to assist patients
with their billing and insurance questions.
On November 21, 2012, the Company purchased
from CipherSmith, LLC a complete source code, intellectual property rights, all computer software or algorithm licensed or sold
under CipherSmith, and appropriate copy rights, patents, mask works, trademarks, service marks, internet domain names or world
wide web URS. Since 2012, the Company has tested the software application and created a commercial product for distribution of
its encryption technology. The Company is presently developing more applications for consumer usage in the future.
On September 1, 2014, the company purchased Evolve Software for $25,000, which is a
front office interface that complements our back office medical billing software. The Company has bridged the software to provide
a more user friendly medical billing package for our customers.
NOTE 2 – BASIS OF PRESENTATION
OF INTERIM CONSOLIDATED FINANCIAL STATEMENTS
The Company prepares its consolidated
financial statements in accordance with accounting principles generally accepted in the United States of America. The accompanying
interim unaudited consolidated 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 nine months ended June 30, 2015
are not necessarily indicative of the results that may be expected for the year ending September 30, 2015. Notes to the unaudited
interim consolidated financial statements that would substantially duplicate the disclosures contained in the audited consolidated
financial statements for the year ended September 30, 2014 have been omitted; this report should
be read in conjunction with the audited consolidated financial statements and the footnotes thereto for the fiscal year ended
September 30, 2014 included within the Company’s Form 10-K as filed with the Securities and Exchange Commission.
Segment reporting change
With the placement into service of the Company’s
encryption technology, the Company began a segment reporting structure to match the new operating structure and how the Company’s
management views the business and allocates resources.
Reclassifications of prior period financial information
have been made to conform to the current period presentation. This change does not impact previously reported condensed consolidated
financial statements of the Company. See Note 10 for additional information on our segment reporting change.
NOTE 3 - GOING CONCERN
The accompanying consolidated financial
statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which
contemplate continuation of the Company as a going concern. However, the Company has incurred losses from operations, has an accumulated
deficit at June 30, 2015 of $39,412,001 and needs additional cash to maintain its operations.
These factors raise doubt about the
Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty. The Company’s continued existence is dependent upon
management’s ability to develop profitable operations, continued contributions from the Company’s executive officers
to finance its operations and the ability to obtain additional funding sources to explore potential strategic relationships and
to provide capital and other resources for the further development and marketing of the Company’s products and business.
NOTE 4 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
The Company prepares its consolidated
financial statements in accordance with accounting principles generally accepted in the United States of America. Significant
accounting policies are as follows:
Long-Lived Assets
Long-lived assets are evaluated for impairment whenever events or changes in
business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives
of these assets are no longer appropriate. Each impairment test is based on a comparison of the undiscounted future cash
flows to the recorded value of the asset. If impairment is indicated, the asset is written down to its estimated fair value.
The Company impaired $119,266 and $357,797 for the three and nine month periods ending June 30, 2015
Fair Value of Financial Instruments
The Company's financial instruments consist
primarily of cash, accounts payable and accrued expenses, and debt. The carrying amounts of such financial instruments approximate
their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments.
Fair value is focused on an exit price that
would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date. Within the measurement of fair value, the use of market-based information is prioritized over
entity specific information and a three-level hierarchy for fair value measurements is used based on the nature of inputs used
in the valuation of an asset or liability as of the measurement date.
The three-level hierarchy for fair value measurements is defined as follows:
• | | Level 1 – inputs to the valuation methodology are quoted prices (unadjusted)
for identical assets or liabilities in active markets; liabilities in active markets; |
• | | Level 2 – inputs to the valuation methodology include quoted prices for similar
assets and liabilities in active markets, and inputs that are observable for the asset or liability other than quoted prices,
either directly or indirectly, including inputs in markets that are not considered to be active; or directly or indirectly including
inputs in markets that are not considered to be active; |
• | | Level 3 – inputs to the valuation methodology are unobservable and significant
to the fair value measurement. |
The following table summarizes fair value measurements by
level at June 30, 2015 and September 30, 2014 for assets measured at fair value on a recurring basis:
| |
Level 1 | |
Level 2 | |
Level 3 | |
Total |
At June 30, 2015 | |
| |
| |
| |
|
Proprietary technology, net
| |
$ | — | | |
$ | — | | |
$ | 53,300 | | |
$ | 53,300 | |
Intangible assets, net of accumulated amortization | |
$ | — | | |
$ | | | |
$ | 194, 500 | | |
$ | 194,500 | |
Total | |
$ | — | | |
$ | — | | |
$ | 247,800 | | |
$ | 247,800 | |
| |
| | | |
| | | |
| | | |
| | |
At September 30, 2014 | |
| | | |
| | | |
| | | |
| | |
Proprietary technology | |
$ | — | | |
$ | — | | |
$ | 604,301 | | |
$ | 604,301 | |
Total | |
$ | — | | |
$ | — | | |
$ | 604,301 | | |
$ | 604,301 | |
Concentration of Credit Risk
All of the Company’s cash and cash equivalents
are maintained in regional and national financial institutions. The Company has exposure to credit risk to the extent that its
cash and cash equivalents exceed amounts covered by the U.S. federal deposit insurance; however, the Company has not experienced
any losses in such accounts. In management’s opinion, the capitalization and operating history of the financial institutions
are such that the likelihood of material loss is remote.
NOTE 5 – Proprietary Technology
The following is a detail of software
at June 30, 2015 and September 30, 2014:
| |
2015 | |
2014 |
Source Code License | |
$ | 2,500 | | |
$ | 2,500 | |
Software License | |
| 1,200,106 | | |
| 1,200,106 | |
EMR Certification | |
| 23,000 | | |
| 23,000 | |
Encryption Software Code | |
| 15,800 | | |
| 15,800 | |
Evolve Software Code | |
| 25,000 | | |
| 25,000 | |
Compose Rose Code | |
| 6,000 | | |
| 6,000 | |
Acquisition of Doctor’s Network of America | |
| 10,000 | | |
| 10,000 | |
Total intangible assets | |
| 1,282,406 | | |
| 1,282,406 | |
Accumulated amortization of intangible assets (charged to cost of sales) | |
| (861,310 | ) | |
| (668,105 | ) |
Accumulated impairment of assets | |
| (367,766 | ) | |
| (10,000 | ) |
Total proprietary technology, net | |
$ | 53,300 | | |
$ | 604,301 | |
The Company’s software was placed
into service starting in the second quarter of fiscal year ended September 30, 2012. The amortization expense was $63,320 and
$61,155 for the three months ended June 30, 2015 and June 30, 2014 as compared to $193,204 and $183,465 for the nine months ended
June 30, 2015 and 2014, respectively.
Source Code License
In October 2013, the Company through
a purchase agreement with Antree Systems Limited has purchased a complete source code, intellectual property rights, all computer
software, patents, or formulas, algorithm licensed or sold under a project known as Compass Rose and appropriate copyrights, patents,
mask works, trademarks, service marks, internet domain names and world wide web uniform resource locators (“URLs”)
from Antree Systems Limited. The Company issued 200,000 shares of its common stock as consideration for the purchase. The fair
value of the consideration and the assets acquired is based on the fair value of the common stock issued in exchange for the software.
The total fair value, based on the market price on the date of grant, was $6,000. The Company evaluated this acquisition and determined
that it did not meet the definition of a significant business acquisition.
During the three months ended March 31, 2014,
the Company and Antree agreed to unwind the acquisition of the software by the Company. Accordingly, the Company gave up all its
rights for the use of the Compass Rose Code and all associated intellectual property rights, all computer software, patents, or
formulas, algorithms licensed or sold under the project known as Compass Rose and the appropriate copyrights, patents, mask works,
trademarks, service marks, internet domain names and world wide web uniform resource locators. In exchange for the Company giving
up its rights to the Compass Rose Code, Antree agreed to the rescission and cancellation of the shares issued for the purchase.
The Company cancelled the 2,000 shares issued to Antree and recorded a reduction to its capitalized intangible assets of $6,000
and a corresponding reduction of equity. The Company recorded a gain on the cancellation for the shares of $4,752.
NOTE 6- DISCONTINUED OPERATIONS
The Company’s former Board
of Directors believed that it was in the best interest of the Company to discontinue the former business operation of the GPS
operational device business. In 2011, this business was transferred to National Scientific Corporation; a company owned by the
Company’s prior CEO, by prior management in which the Company’s former CEO was to pay $100,000 plus 2% of revenues
for that technology. The former officer never paid the specific consideration for this transaction.
Accordingly, the Company reclassified
the assets, liabilities and operations related to its GPS operational device business as discontinued operations. Consequently,
the accompanying consolidated financial statements reflect the assets, liabilities and operations of the GPS operational device
business as net assets of discontinued operations, net liabilities of discontinued operations and results from discontinued operations.
DNA
On March 16, 2013, the Company closed
the acquisition with the final payment for DNA. Subsequent to the transaction closing, the sellers refused to pay the transaction
fees for medical billing contracts that were processed. The Company filed a lawsuit against the sellers for Breach of Contract
among other things in June of 2013. During that time, the Company believes the sellers began contacting all billing contract holders
and interfered with the acquisition of all the assets from the transaction. Consequently, the accompanying consolidated financial
statements reflect the assets, liabilities and operations of DNA as net assets of discontinued operations, net liabilities of
discontinued operations and results from discontinued operations.
Details of the classifications for net assets, liabilities
and operations are shown below.
| |
June 30, 2015 | |
September 30, 2014 |
Net liabilities of discontinued operations: | |
| |
|
Accounts payable | |
$ | — | | |
$ | 18 | |
Net liabilities of discontinued operations | |
$ | — | | |
$ | 18 | |
| |
Three
Months Ended June 30, |
| |
2015 | |
2014 |
Discontinued operations: | |
| | | |
| | |
Revenues | |
$ | — | | |
$ | 45,555 | |
Operating expenses | |
| — | | |
| 50,931 | |
(Loss) income from discontinued operations | |
$ | — | | |
| (5,376 | ) |
| |
Nine
Months Ended June 30, |
| |
2015 | |
2014 |
Discontinued operations: | |
| | | |
| | |
Revenues | |
$ | 12,779 | | |
$ | 176,607 | |
Operating expenses | |
| 13,648 | | |
| 189,500 | |
(Loss) income from discontinued operations | |
| (869 | ) | |
| (12,893 | ) |
NOTE 7 – LINE OF CREDIT
In
November 2013, the Company entered into a revolving line of credit with Mutual of Omaha in the amount of $65,000 at a 5.00% interest
rate per annum which renews annually. As of June 30, 2015, the Company had borrowed $42,097 against the line of credit.
During the nine months ended June 30, 2015, the Company repaid $11,515 of the outstanding balance and and paid $1,839 in interest
expense related to the Mutual of Omaha line of credit. The line of credit was unsecured and is paid in full.
NOTE 8– RELATED PARTY TRANSACTIONS
The Company repaid $16,000 and $8,299 of the advances
from the Company’s CEO in the nine months ended June 30, 2015 and 2014, respectively. The advances from the CEO are due
on demand and do not accrue interest. As of June 30, 2015 and September 30, 2014, the amount owed to the CEO for advances was
$74,211 and $0, respectively.
NOTE 9- EQUITY
As of June 30, 2015, the Company was authorized to
issue 650,000,000 common shares and 10,000,000 preferred shares at a par value of $0.01.
Nine months ended June 30, 2015
Stock Cancelled
The Company received $7,000 for the issuance of 50,000 shares of common stock recorded
as stock payable and as of September 30, 2014 the common stock has not been issued by the Company. In the nine months ended March
31, 2015, the Company paid back the proceeds and did not issue the stock.
During the nine months ended June 30, 2015,
the Company cancelled 2,150 shares of common stock. 2,000 of these shares were cancelled in relation to the Company giving back
its rights to the Compass Rose Code. See Note 5. As part of the Antree rescission and cancellation, 150 shares were additionally
cancelled that were issued in the year ended September 30, 2014, to one of the owners of Antree who provided additional programming
services for improvements to the Compass Rose Code. The cancellation of the 150 shares was recorded as an adjustment to the Company’s
par value, as no consideration was paid for the cancellation.
Preferred Stock
On February 5, 2015, the Company issued
6,000,000 shares of its Series A Preferred Stock to its CEO. As the Series A Preferred Stock is convertible into the Company’s
common stock at a rate of 1 to 1.5 common shares. The Company recorded $9,900,000 as stock compensation based on the market value
of the Company’s common stock on the date of grant. As of February 17, 2015, there are a total of 10,000,000 shares of the
Series A Preferred Stock authorized and outstanding which are convertible into a total of 15,000,000 shares of common stock. The
holders of the Preferred A shares can only convert the shares upon proper notice and approval of the Board of Directors. Presently,
the holders of the Preferred A shares have not sent notice to the Board of Directors and the Board of Directors does not currently
intend to approve such conversion.
Common Stock Issued for Cash
On March 18, 2015, the Company issued 5,000 restricted common shares to Entrust Group/Michael
Hopkins for $5,000. On May 20, 2015 the Company issued 7,000 restricted common shares to Garry Zagami for $7,000. On June 18,
2015, the Company issued 50,000 restricted common shares to Common Wealth Management for $100,000.
Common Stock Issued for Services
On May 5, 2015 the Company issued 2,000 restricted common shares to Robert Wurzburg
for his assistance in the production of an animated video for the Company. The shares had a value of $8,800 on the date of
issue. Common Wealth Management received 5,000 restricted common shares from the Company on May 5, 2015 for commissions. The
shares had a value of $22,000 on the date of issuance.
Common Stock Issued for Software
Licensing
On April 21, 2015 the Company issued 50,000 shares of restricted common stock for the purchase of a software
license as follows; 25,000 shares to Code Robert, LLC and 25,000 shares to Sunset Angel Productions, LLC.
NOTE 10 – SEGMENT INFORMATION
Cloud Medical Doctors Software Corporation
has two reporting segments and corporate overhead:
• | | Cloud-MD – the Company sells medical billing software to doctors. Prior to 2014,
all of the Company’s business activities were derived from this segment. |
• | | Cipherloc – the Company has a second software program which is an encryption
technology that can be used by larger corporation to protect their data through our polymorphic technology. |
• | | Corporate Overhead – the Company’s investment holding including financing
current operations and expansion of its current holdings as well as evaluating the feasibility of entering into additional business. |
The accounting policies of the segments are the same as those described in the summary
of significant accounting policies. The Company evaluates performances based on profit or loss from operations before income taxes,
not including nonrecurring gains and losses and foreign exchange gains and losses. The reportable segments are strategic business
units that offer different technology and marketing strategies. Most of the businesses were developed internally and management
remains the same. To date, the Company’s operations are principally in the United States.
Consolidated revenues from external customers, operating loss, and identifiable assets
were as follows:
| |
Three months ended June 30, |
| |
2015 | |
2014 |
Revenues: | |
| | | |
| | |
Cloud-MD | |
$ | — | | |
$ | 1,725 | |
CipherLoc | |
| — | | |
| 1,125,000 | |
Total revenues | |
$ | — | | |
$ | 1,126,725 | |
| |
| | | |
| | |
Operating expenses: | |
| | | |
| | |
Cloud-MD | |
$ | (19,693 | ) | |
$ | (61,155 | ) |
Cipherloc | |
| (27,195 | ) | |
| (30,684 | ) |
Corporate | |
| (414,963 | ) | |
| (1,021,150 | ) |
Net Loss from Continuing Operations | |
$ | (461,851 | ) | |
$ | (13,736 | ) |
| |
Nine months ended June 30, |
| |
2015 | |
2014 |
Revenues: | |
| | | |
| | |
Cloud-MD | |
$ | 431 | | |
$ | 224,400 | |
Cipherloc | |
| — | | |
| 1,125,000 | |
Total revenues | |
$ | 431 | | |
$ | 1,349,400 | |
| |
| | | |
| | |
Operating expenses: | |
| | | |
| | |
Cloud-MD | |
$ | (10,535,766 | ) | |
$ | (203,465 | ) |
Cipherloc | |
| (45,715 | ) | |
| (30,684 | ) |
Corporate | |
| (572,517 | ) | |
| (2,431,904 | ) |
Net Loss from Continuing Operations | |
$ | (11,153,567 | ) | |
$ | (1,316,653 | ) |
| |
June 30, 2015 | |
September 30, 2014 |
Identifiable assets: | |
| | | |
| | |
Cloud-MD | |
$ | 31,500 | | |
$ | 583,507 | |
CipherLoc | |
| 216,300 | | |
| 21,800 | |
Corporate | |
| 90,567 | | |
| 552,537 | |
Total identifiable assets | |
$ | 338,367 | | |
$ | 1,157,844 | |
* * * * * * * * * * * *
ITEM 2 MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In this Quarterly Report “Company,”
“our company,” “us,” and “our” refer to Cipherloc Corporation and its subsidiaries, unless
the context requires otherwise
Forward-Looking Statements
The following information contains certain
forward-looking statements. Forward-looking statements are statements that estimate the happening of future events and are not
based on historical fact. Forward-looking statements may be identified by the use of forward-looking terminology, such as "may,"
"could," "expect," "estimate," "anticipate," "plan," "predict," "probable,"
"possible," "should," "continue," or similar terms, variations of those terms or the negative of
those terms. The forward-looking statements specified in the following information have been compiled by our management on the
basis of assumptions made by management and considered by management to be reasonable. Our future operating results, however,
are impossible to predict and no representation, guaranty, or warranty is to be inferred from those forward-looking statements.
Our Business
Cipherloc Corporation is a Technology
and Services based Solutions Company for the rapidly expanding Cloud based Cyber Security industry. Cipherloc is based in Henderson,
Nevada.
The company has introduced an innovative and revolutionary new
type of encryption technology with five international patents and two US patents pending and is the industry’s first “Polymorphic
Cipher Engine”, called CipherLoc®. It is the first secure commercially viable advanced “Polymorphic
Key Progression Algorithmic Cipher Engine” (PKPA). This morphing cipher can be used in any commercial data security industry
and/or in sensitive applications: Banks, Financial transactions, Credit Cards, Securities, Stock and Bonds transactions, Emails,
Phones, tablets, Servers and or computers, etc...
Financial results and
trends
Results of Operations for the Nine Months Ended June 30, 2015
and 2014
Revenue decreased to $431 from $1,349,400
for the nine months ended June 30, 2015 and 2014, respectively. Our revenues decreased as a result of our focus on the marketing
of our CipherLoc Encryption Technology.
Cost of revenue was $191,590 and $183,465
for the nine months ended June 30, 2015 and 2014, respectively. Our cost of revenue was related to the amortization of the software
costs placed into service.
Selling, general and administrative expenses
increased to $10,535,766 from $2,447,524 for the nine months ended June 30, 2015 and 2014, respectively. The
increase in our selling, general and administrative expenses is related to stock-based compensation.
Research and development costs increased to $68,845 from $20,000 for the nine months ended June 30, 2015 and 2014, respectively.
Our research and development costs increase is related to our focus on our CipherLoc Encryption Technology.
Interest expense decreased to $1,839 from
$2,171 for the nine months ended June 30, 2015 and 2014, respectively. Our interest expense decreased as a result of the decrease
in outstanding borrowings on our lines of credits.
We recorded a loss to income for
discontinued operations of $869 and $12,893 for the nine months ended June 30, 2015 and 2014, respectively. The Company is currently
engaged in the medical billing operations. Until October 1, 2009, the Company’s sole sources of revenues were
from GPS operational device business. The Company discontinued its GPS operational device business in February 2010 (See
“Note 6 - Discontinued Operations” to the accompanying Consolidated Financial Statements).
Liquidity and Capital Resources
We expect to incur substantial expenses
and generate significant operating losses as we continue to grow our operations, as well as incur expenses related to operating
as a public company and compliance with regulatory requirements. At June 30, 2015, the Company had cash of $90,567.
We have an accumulated deficit at June
30, 2015 of $39,412,001 and need additional cash flows to maintain our operations. We depend on the continued contributions of
our executive officers to finance our operations and need to obtain additional funding sources to explore potential strategic
relationships and to provide capital and other resources for the further development and marketing of our products and business.
We expect our cash needs for the next 12 months to be $850,000 to fund our operations. The ability of the Company to continue
its operations is dependent on the successful execution of management’s plans, which include expectations of raising debt
or equity based capital until such time that funds from operations are sufficient to fund working capital requirements. The Company
may need to incur additional liabilities with related parties to sustain the Company’s existence. There is no assurance
that such funding, if required will be available to us or, if available, will be available upon terms favorable to us.
Sources of Cash
The Company has a revolving line of
credit with Chase Bank with a balance as of June 30, 2015 in the amount of $0 and a borrowing limit of $50,000. We have previously
received advances from our Chief Executive Officer which we have used to help fund our operations.
In November 2013, the Company entered
into a revolving line of credit with Mutual of Omaha for a line of credit at 4.00% interest rate which renews annually. The outstanding
balance as of June 30, 2015 is $42,097.
We believe that our existing cash and
investment balances, our available revolving credit facility, our ability to issue new debt instruments, and cash generated from
operations will be sufficient to meet our working capital and capital expenditure requirements. Our strategy emphasizes organic
growth through internal innovation and will be complemented by acquisitions that fit strategically and meet specific internal
profitability hurdles.
Uses of Cash
Our revolving lines of credit renew annually
and we make significant principle payments to those lines to assure that they remain a line of credit.
Cash Flow
The following table summarizes, for the periods
indicated, selected items in our Condensed Consolidated Statements of Cash Flows:
| |
Nine Months Ended |
| |
June
30, 2015 | |
June
30, 2014 |
Net cash provided by (used in): | |
| | | |
| | |
Operating activities | |
$ | (622,779 | ) | |
$ | 752,098 | |
Investing activities | |
| — | | |
| — | |
Financing activities | |
| 167,696 | | |
| 67,816 | |
Operating Activities
Cash flows from operating activities. Our
cash (used in) operating activities were ($622,779) and $752,098 for the Nine Months ended June 30, 2015 and 2014, respectively.
The increase of cash used in operations was primarily attributable to the stock compensation.
Financing Activities
Cash flows from financing activities.
Cash provided by financing activities was $167,696 and $67,816 for the nine months ended June 30, 2015 and 2014, respectively.
In the nine months ended June 30, 2015, we repaid our line of credits of $11,515, received cash for the sale of common stock of
$112,000 and subscribed stock of $7,000. For the same period in the prior year, we received cash from the sale of our common stock
of $15,000.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements
including arrangements that would affect the liquidity, capital resources, market risk support and credit risk support or other
benefits.
WHERE YOU CAN FIND MORE INFORMATION
You are advised to read this Quarterly
Report on Form 10-Q in conjunction with other reports and documents that we file from time to time with the SEC. In particular,
please read our Quarterly Reports on Form 10-Q, Annual Report on Form 10-K, and Current Reports on Form 8-K that we file from
time to time. You may obtain copies of these reports directly from us or from the SEC at the SEC’s Public Reference Room
at 100 F. Street, N.E. Washington, D.C. 20549, and you may obtain information about obtaining access to the Reference Room by
calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains information for electronic filers at its website http://www.sec.gov.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We do not hold any derivative instruments and do not
engage in any hedging activities.
ITEM 4.
CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and
procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed,
summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and
that such information is accumulated and communicated to our Chief Executive Officer and Principal Financial Officer, as appropriate,
to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures,
management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable
assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures. Our disclosure controls and procedures were designed to provide reasonable assurance
that the controls and procedures would meet their objectives. As required by SEC Rule 13a-15(b), our Chief Executive Officer and
Principal Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls
and procedures as of the end of the period covered by this report. Based on the foregoing, our Chief Executive Officer and Principal
Financial Officer concluded that our disclosure controls and procedures were not effective.
Our Chief Executive Officer and Principal Financial Officer are
responsible for establishing and maintaining adequate internal control over our financial reporting. In order to evaluate the
effectiveness of internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act, management has
conducted an assessment, including testing, using the criteria in Internal Control — Integrated Framework, issued by the
Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Our system of internal control over financial
reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
consolidated financial statements for external purposes in accordance with generally accepted accounting principles. Because of
its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Management has used
the framework set forth in the report entitled Internal Control-Integrated Framework published by the Committee of Sponsoring
Organizations of the Treadway Commission, known as COSO, to evaluate the effectiveness of our internal control over financial
reporting. Based on this assessment, our Chief Executive Officer and Principal Financial Officer have concluded that our internal
control over financial reporting were effective as of June 30, 2015. There has been no change in our internal controls over financial
reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our
internal controls over financial reporting.
a. | | There were no changes in our internal control over financial reporting that occurred
during the three months ended June 30, 2015 that have materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting. |
b. | | It should be noted that any system of controls, however well designed and operated,
can provide only reasonable and not absolute assurance that the objectives of the system are met. In addition, the design of any
control system is based in part upon certain assumptions about the likelihood of certain events. Because of these and other inherent
limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all
potential future conditions, regardless of how remote. |
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are currently not involved in any
litigation that we believe could have a material adverse effect on our financial condition or results of operations. We have filed
separate lawsuits to collect receivables from two physicians in the State of Mississippi totaling $230,000 plus interest and costs.
In the case against Orhan Ilercil,
MD, Mississippi Brain and Spine PLLC wherein we claim Dr. Ilercil owes the Company over $30,000 in unpaid billing fees, Dr. Ilercil
has filed a counterclaim for $70,000 alleging that our software did not perform. The Company considers this claim to be frivolous
in that it was not our software that he was using and the Company will vigorously defend said claim.
ITEM 1A - RISK FACTORS
There were no material changes from the risk factors previously
disclosed in Part II, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended September
30, 2014 during our nine months ended June 30, 2015.
ITEM 2. UNREGISTERED SALES
OF EQUITY SECURITIES AND USE OF PROCEEDS SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR
SECURITIES
There were no defaults upon senior
securities during the three months ended June 30, 2015.
ITEM
4. MINING SAFETY DISCLOSURES
N/A
ITEM 5. OTHER INFORMATION
There is no information with respect
to which information is not otherwise called for by this form.
ITEM 6. EXHIBITS
| Exhibits | | |
|
| 3.1 | | |
Articles of Incorporation(1) |
| 3.2 | | |
Bylaws(2) |
| 10.1 | | |
Employment Agreement between National Scientific Corporation and Michael A. Grollman dated January 2001(4) |
| 10.2 | | |
Employment Agreement between National Scientific Corporation and Graham L. Clark dated January 2003(6) |
| 10.3 | | |
NSC Consulting Agreement dated August 2001, and Amendments dated August 2002 and July 2003, with Dr. El-Badawy El-Sharawy(6) |
| 10.4 | | |
Amended and Restated 2000 Stock Option Plan(3) |
| 10.5 | | |
Form of 2004 Stock Retainage Plan Agreement(6) |
| 10.6 | | |
Agreement Regarding Management Consulting Services with Stanton Walker of New York dated May 2003(6) |
| 10.7 | | |
Agreement Regarding Distribution and Marketing of Gotcha!® Child Safety Product and other products dated December 2002 with FutureCom Global, Inc. (6) |
| 10.8 | | |
Purchase Order from Verify Systems, Inc, dated March 2003 for IBUS™ School Child Tracking Systems(5) |
| 10.9 | | |
Letter of Understanding and Agreement dated April 2004 Regarding Sales and Distribution of Verify School safety products, and an Unlimited Software License with Anthony Grosso and CIS Services, LLC(6) |
| 10.10 | | |
Letter of Intent from Positus, Inc. dba Bike & Cycle Trak, dated February 2003 for Design of Power Sports Tracking System(6) |
| 10.11 | | |
Purchase Order from Positus, Inc. dba Bike & Cycle Trak, for Design of Power Sports Tracking System dated March 2003(6) |
| 10.12 | | |
Employment agreement of Michael De La Garza(8) |
| 10.13 | | |
Employment agreement of Pamela Thompson(8) |
| 10.14 | | |
Licensing Agreement Code Robert, LLC and Sunset Angel Productions, LLC (11) |
| 14 | | |
Code of Ethics(7) |
| 16.1 | | |
Letter of GBH CPAs, PC, regarding change in independent registered public accounting firm (12) |
| 17 | | |
Departure of Director and Officer (9) |
| 19 | | |
Report to Security Holders re reverse stock split, name change and new trading symbol (10) |
The following exhibits are filed herein:
(1) | | Incorporated by reference to the Registrant’s Form 10-SB filed on or about January
3, 2000 |
(2) | | Incorporated by reference to the Registrant’s Form 10-QSB for the quarter ended
March 31, 2001 and filed on or about May 15, 2001. |
(3) | | Incorporated by reference to the Registrant’s Form 10-QSB for the quarter ended
December 31, 2000 and filed on or about February 14, 2001. |
(4) | | Incorporated by reference to the Registrant’s Form 10-KSB for the year ended
September 30, 2000 and filed on or about December 19, 2000. |
(5) | | Incorporated by reference to the Registrant’s Form S-8 filed on or around June
3, 2003. |
(6) | | Incorporated by reference to the Registrant’s Form SB2 filed on or around June
24, 2004. |
(7) | | Incorporated by reference to the Registrant’s Form 10-QSB for the quarter ended
June 30, 2004 and filed on or about August 16, 2004. |
(8) | | Incorporated by reference to the Registrant’s Form 10-K for the year ended September
30, 2011 and filed on or about October 10, 2013. |
(9) | | Incorporated by reference to the Registrant’s Form 8-K filed on January 8, 2015 |
(10) | | Incorporated by reference to the Registrant’s Form 14-CDEF filed on September
12, 2014 |
(11) | | Incorporated by reference to the Registrant’s Form 8-K filed on April 25, 2015 |
(12) | | Incorporated by reference to the Registrant’s Form 8-K filed on April 13, 2015 |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
August 17, 2015 |
|
Cipherloc Corporation
By: /s/ Michael
De La Garza |
|
|
Michael De La Garza |
|
|
Chief Executive Officer (Principal Executive Officer) |
Registrant
Date: August 17, 2015 |
|
Cipherloc Corporation
By: /s/ Eric
Marquez |
|
|
Eric Marquez |
|
|
Principal Financial Officer |
Exhibit 31.1
Certification pursuant to 18 U.S.C. Section 1350 as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and pursuant to Rule 13a-14(a) and Rule 15d-14 under the Securities
Exchange Act of 1934
I, Michael De La Garza, certify that:
1. | | I have reviewed this Quarterly Report on Form 10-Q of Cipherloc Corporation; |
2. | | Based on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report; |
3. | | Based on my knowledge, the consolidated financial statements, and other financial
information included in this report, fairly present in all material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in this report; |
4. | | The registrant's other certifying officer(s) and I are responsible for establishing
and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | | Designed such disclosure controls and procedures, or caused such disclosure controls
and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this
report is being prepared; |
b. | | Designed such internal control over financial reporting, or caused such internal control
over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted
accounting principles; |
c. | | Evaluated the effectiveness of the registrant’s disclosure and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluations: and |
d. | | Disclosed in this report any change in the registrant's internal control over financial
reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely
to materially affect, the registrant's internal control over financial reporting; and |
5. | | The registrant's other certifying officer(s) and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's
board of directors (or persons performing the equivalent functions): |
a. | | All significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and |
b. | | Any fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant's internal control over financial reporting. |
Registrant
|
|
Cipherloc Corporation
By: /s/ Michael De La Garza |
Date: August 17, 2015 |
|
Michael De La Garza |
|
|
Chief Executive Officer (Principal Executive Officer,) |
Exhibit 31.2
Certification pursuant to 18 U.S.C.
Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and pursuant to Rule 13a-14(a) and Rule 15d-14
under the Securities Exchange Act of 1934
I, Eric Marquez, certify that:
1 | | I have reviewed this Quarterly Report on Form 10-Q of Cipherloc Corporation; |
2 | | Based on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report; |
3. | | Based on my knowledge, the consolidated financial statements, and other financial
information included in this report, fairly present in all material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in this report; |
4. | | The registrant's other certifying officer(s) and I are responsible for establishing
and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | | Designed such disclosure controls and procedures, or caused such disclosure controls
and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this
report is being prepared; |
b. | | Designed such internal control over financial reporting, or caused such internal control
over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted
accounting principles; |
c. | | Evaluated the effectiveness of the registrant’s disclosure and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluations: and |
d. | | Disclosed in this report any change in the registrant's internal control over financial
reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely
to materially affect, the registrant's internal control over financial reporting; and |
5. | | The registrant's other certifying officer(s) and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's
board of directors (or persons performing the equivalent functions): |
a. | | All significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and |
b. | | Any fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant's internal control over financial reporting. |
Registrant
|
|
Cipherloc Corporation
By: /s/ Eric
Marquez |
Date: August 17, 2015 |
|
Eric Marquez |
|
|
Chief Financial Officer (Principal Financial Officer) |
Exhibit 32.1
CERTIFICATIONS PURSUANT TO SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
In connection with the Quarterly Report
of Cipherloc Corporation (the "Company") on Form 10-Q for the period ending June 30, 2015 as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), I, Michael De La Garza, Chief Executive Officer of the Company,
certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1) | | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended; and |
(2) | | The information contained in the Report fairly presents, in all material respects,
the financial condition and result of operations of the Company. |
Registrant
|
|
Cipherloc Corporation
By: /s/ Michael De La Garza |
Date: August 17, 2015 |
|
Michael De La Garza |
|
|
Chief Executive Officer (Principal Executive Officer) |
Exhibit 32.2
CERTIFICATIONS PURSUANT TO SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
In connection with
the Quarterly Report of Cloud Medical Doctor Software Corporation (the "Company") on Form 10-Q for the period ending
June 30, 2015 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Eric Marquez,
Principle Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906
of the Sarbanes-Oxley Act of 2002, that:
(1) | | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended; and |
(2) | | The information contained in the Report fairly presents, in all material respects,
the financial condition and result of operations of the Company. |
Registrant
Date: August 17, 2015 |
|
Cipherloc Corporation
By: /s/ Eric Marquez |
|
|
Eric Marquez |
|
|
Chief Financial Officer (Principal Financial Officer) |
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