2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

12 Months Ended

Sep. 30, 2015

Equity [Abstract]

2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

NOTE 2 – RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

The restatement reflects adjustments to correct errors identified by management related to the Company’s revenue recognition of a transaction that occurred during the year ended September 30, 2014. The effect of the restatement was material on the Company’s Balance Sheets, Income Statement and Statement of Cash Flows. The nature and impact of these adjustments are described below.

Revenue Recognition

During the year ended September 30, 2014, the Company recorded software revenue related to the sale of a license for its Cipherloc software to a customer. The Company’s management reviewed the recognition of revenue for the sale of the license in accordance with its accounting policy. Management believed that the Company had met all the criteria for revenue recognition, as the Company had a signed contract with the customer, the license fee was fixed and collected, and the Company had delivered to the customer as of September 30, 2014. During the year ended September 30, 2015, the Company received various communications from the customer regarding the delivery of the software. As a result, the Company has determined that full delivery had not occurred as of September 30, 2014. Accordingly, the Company has restated its financial statements for the year ended September 30, 2014 to reflect the payment of the license fee as deferred revenue until the Company has achieved independent verification of delivery. The amount remains as deferred revenue as of September 30, 2015.

For the year ended September 30, 2014

The results of the restatements are summarized as follows:

Consolidated Balance Sheets as of September 30, 2014:

	As Reported			Restatement Adjustment			As Restated
Deferred revenue	$	—		$	1,125,000		$	1,125,000
Accumulated deficit		(28,255,726	)		(1,125,000	)		(29,380,726	)

Consolidated Statements of Operations for the year ended September 30, 2014:

	As Reported			Restatement Adjustment			Discontinued Operations Adjustment			As Restated
Revenue	$	1,339,155		$	(1,125,000	)	$	(214,155	)	$	—
Cost of revenues		240,270			(40,000	)		(200,270	)		—
Operating expenses		(2,848,486	)		—			37,880			(2,810,606	)
Loss from continuing operations		(1,752,031	)		(1,085,000	)		23,699			(2,813,332	)
Loss from discontinuing operations		38,570			—			(13,441	)		25,129
Basic and diluted loss per common share	$	(0.01	)	$	(1.14	)	$	(0.01	)	$	(1.15	)

Consolidated Statements of Cash Flows for the year ended September 30, 2014:

	As Reported			Adjustment			Discontinued Operations Adjustment			As Restated
Net loss	$	(1,713,461	)	$	(1,125,000	)	$	25,129		$	(2,813,332	)
Net cash provided by operating activities	$	481,247	)	$	—		$	(202,647	)	$	278,600
Net cash used in investing activities	$	(25,000	)	$	—		$	25,000		$	—