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STOCKHOLDERS’ EQUITY
 3 Months Ended
Dec. 31, 2022
Equity [Abstract]  
STOCKHOLDERS’ EQUITY

NOTE 9 - STOCKHOLDERS’ EQUITY

 

Effective December 29, 2021, SCS was authorized to issue 1,000 shares of common stock with a $0.01 per share par value. The 1,000 shares of common stock were exchanged for 59,900,000 shares of Cipherloc Common Stock common stock and 100 shares of Series A Preferred Stock of Cipherloc. As a result, the financial statements have been adjusted retroactively to reflect these shares as being outstanding as of September 30, 2020.

 

As explained in Note 5, in December 2021, we promised to pay Mr. Desai $100,000, without interest, in exchange for Mr. Desai’s right, title, and interest in SCS.

 

SideChannel LLC made profit sharing distributions of $489,000 during the three months ended December 31, 2021. in accordance with its partnership agreements.

 

Common Stock

 

As of December 31, 2022, and 2021, we had 148,904,613 and 59,900,000 shares of common stock outstanding, respectively, and were authorized to issue 681,000,000 shares of common stock at a par value of $0.001.

 

Common Stock Issued for Cash

 

We did not issue shares of common stock for cash during the three months ended December 31, 2022.

 

Common Stock Issued for Business Combinations

 

We did not issue shares for mergers or acquisitions related activity during the three months ended December 31, 2022.

 

Common Stock Issued for Services

 

Our Board of Directors (“Board”) has elected to have each of its members receive one-half of such member’s quarterly compensation in the form of shares of the Company’s common stock, instead of cash. On December 27, 2022, the Company issued 180,557 shares of common stock as compensation for a value of $18,000 to the Board for the first quarter of fiscal year 2023.

 

Common Stock Issued Under Equity Incentive Plan

 

We did not issue shares of common stock as incentive compensation during the three months ended December 31, 2022.

 

Preferred Stock

 

As of December 31, 2022, we had 100 shares of Series A Preferred Stock outstanding. These shares were issued as part of the Business Combination. The 100 shares of Series A Preferred Stock that were exchanged for SCS, Inc. common stock have been retroactively reflected as issued and outstanding as of September 30, 2020. The Series A Preferred Stock contains a Board Designation Right which provides that the holders of the majority of the Series A Preferred Stock have the right to elect a majority of our Board of Directors.

 

Warrants

 

Prior to the July 1, 2022 Business Combination, Cipherloc had outstanding warrants which continue to be binding on the Company after the Business Combination.

 

The following table summarizes warrant activity for the period from September 30, 2022 to December 31, 2022:

 

   Number of Warrants   Weighted Average Exercise Price   Weighted Average Remaining Life 
Outstanding at September 30, 2022   87,793,920   $0.56    5.02 
Granted   —    —    — 
Exercised   —    —    — 
Canceled/Forfeited   (75,000)   2.00    — 
Outstanding at December 31, 2022   87,718,920   $0.56    4.68