Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | |||
Sep. 30, 2013 | Mar. 30, 2013 | Jan. 31, 2014 | Jan. 31, 2014 | |
Common Stock | Preferred Stock | |||
Entity Registrant Name | 'NATIONAL SCIENTIFIC CORP/AZ | ' | ' | ' |
Entity Central Index Key | '0001022505 | ' | ' | ' |
Document Type | '10-K | ' | ' | ' |
Document Period End Date | 30-Sep-13 | ' | ' | ' |
Amendment Flag | 'false | ' | ' | ' |
Current Fiscal Year End Date | '--09-30 | ' | ' | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' | ' | ' |
Is Entity a Voluntary Filer? | 'No | ' | ' | ' |
Is Entity's Reporting Status Current? | 'No | ' | ' | ' |
Entity Filer Category | 'Smaller Reporting Company | ' | ' | ' |
Entity Public Float | ' | $5,219,871 | ' | ' |
Entity Common Stock, Shares Outstanding | ' | ' | 215,159,216 | 4,000,000 |
Document Fiscal Period Focus | 'FY | ' | ' | ' |
Document Fiscal Year Focus | '2013 | ' | ' | ' |
Balance_Sheets
Balance Sheets (USD $) | Sep. 30, 2013 | Sep. 30, 2012 |
CURRENT ASSETS: | ' | ' |
Cash | $8,587 | $51,356 |
Accounts receivable | 8,338 | 4,888 |
Total current assets | 16,925 | 56,244 |
Proprietary technology, net | 817,921 | 1,022,591 |
TOTAL ASSETS | 834,846 | 1,078,835 |
CURRENT LIABILITIES: | ' | ' |
Accounts payable and accrued liabilities | 361,994 | 229,736 |
Liabilities attributable to discontinued operations | 35,356 | ' |
Advances from officers | ' | 25,591 |
Line of credit | 9,796 | 21,763 |
Total current liabilities | 407,146 | 277,090 |
TOTAL LIABILITIES | 407,146 | 277,090 |
STOCKHOLDERS' EQUITY: | ' | ' |
Preferred stock, $0.10 par value, 4,000,000 shares authorized; 4,000,000 issued and outstanding as of September 30, 2013 and 2012 | 40,000 | 40,000 |
Common stock, $0.01 par value, 650,000,000 shares authorized; 214,624,216 and 211,991,212 issued and outstanding as of September 30, 2013 and 2012, respectively | 2,146,242 | 2,119,912 |
Additional paid-in capital | 24,783,723 | 24,552,924 |
Accumulated deficit | -26,542,265 | -25,911,091 |
Total stockholders' equity | 427,700 | 801,745 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $834,846 | $1,078,835 |
Balance_Sheets_Parenthetical
Balance Sheets (Parenthetical) (USD $) | Sep. 30, 2013 | Sep. 30, 2012 |
Statement of Financial Position [Abstract] | ' | ' |
Preferred Stock, Par Value | $0.01 | $0.01 |
Preferred Stock, Shares Authorized | 4,000,000 | 4,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstandng | 0 | 0 |
Common Stock, Par Value | $0.01 | $0.01 |
Common Stock, Shares Authorized | 650,000,000 | 650,000,000 |
Common Stock, Shares Issued | 211,542,212 | 180,526,879 |
Common Stock, Shares Outstanding | 211,542,212 | 180,526,879 |
Statements_of_Operations
Statements of Operations (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Income Statement [Abstract] | ' | ' |
REVENUE | $516,868 | $487,703 |
COST OF REVENUES | 243,470 | 181,739 |
GROSS PROFIT | 273,398 | 305,964 |
OPERATING EXPENSES: | ' | ' |
General and administrative | 714,266 | 223,211 |
Research and development | 208,895 | 151,000 |
Impairment of assets | 6,000 | 4,000 |
Total operating expenses | 929,161 | 378,211 |
OPERATING LOSS | -655,763 | -72,247 |
OTHER (INCOME) AND EXPENSES | ' | ' |
Interest expense | 392 | 1,488 |
Gain on the disposal of assets | -1,353 | ' |
Total other (income) expenses | -961 | 1,488 |
LOSS FROM CONTINUING OPERATIONS | -654,802 | -73,735 |
INCOME FROM DISCONTINUED OPERATIONS | 23,628 | 392,614 |
NET INCOME (LOSS) | ($631,174) | $318,879 |
NET INCOME (LOSS) PER COMMON SHARE - Basic and diluted: | ' | ' |
Continuing operations | $0 | $0 |
Discontinued operations | $0 | $0 |
Total | $0 | $0 |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | ' | ' |
Basic and diluted | 212,798,744 | 210,463,497 |
Shareholders_Equity
Shareholders Equity (USD $) | Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning Balance, Amount at Sep. 30, 2011 | $40,000 | $1,805,269 | $22,409,927 | ($26,229,970) | ($1,974,774) |
Beginning Balance, Shares at Sep. 30, 2011 | 4,000,000 | 180,526,879 | ' | ' | ' |
Common stock issued for settlement of debt, Shares | 0 | 30,000,000 | ' | ' | 30,000,000 |
Common stock issued for settlement of debt, Amount | 0 | 300,000 | 900,106 | ' | 1,200,106 |
Common stock issued for investment, Shares | ' | 200,000 | ' | ' | 200,000 |
Common stock issued for investment, Amount | ' | 2,000 | 2,000 | ' | 4,000 |
Common stock issued for purchase of software, Shares | ' | 100,000 | ' | ' | 100,000 |
Common stock issued for purchase of software, Amount | ' | 1,000 | 1,500 | ' | 2,500 |
Common stock issued for the purchase of billing software, Shares | ' | 941,333 | ' | ' | 941,333 |
Stock Issued for Software Purchase two, Value | ' | 9,413 | 9,888 | ' | 19,301 |
Common stock issued for consulting services, Shares | ' | 33,000 | ' | ' | ' |
Common stock issued for consulting services, Amount | ' | 330 | 294 | ' | 624 |
Common stock issued for cash, Shares | ' | 190,000 | ' | ' | 190,000 |
Common stock issued for cash, Amount | ' | 1,900 | 66,100 | ' | 68,000 |
Write-off of related party debt | ' | ' | 1,163,109 | ' | 1,163,109 |
Net loss | ' | ' | ' | 318,879 | 318,879 |
Ending Balance, Amount at Sep. 30, 2012 | 40,000 | 2,119,912 | 24,552,924 | -25,911,091 | 801,745 |
Ending Balance, Shares at Sep. 30, 2012 | 4,000,000 | 211,991,212 | ' | ' | ' |
Common stock issued for settlement of debt, Amount | ' | ' | ' | ' | ' |
Common stock issued for investment, Shares | ' | 300,000 | ' | ' | 300,000 |
Common stock issued for investment, Amount | ' | 3,000 | 3,000 | ' | 6,000 |
Common stock issued for purchase of software, Shares | ' | 500,004 | ' | ' | 500,004 |
Common stock issued for purchase of software, Amount | ' | 5,000 | 10,800 | ' | 15,800 |
Common stock issued for the purchase of billing software, Shares | ' | 450,000 | ' | ' | 400,000 |
Stock Issued for Software Purchase two, Value | ' | 4,500 | 9,063 | ' | 15,800 |
Common stock issued for consulting services, Shares | ' | 1,165,500 | ' | ' | ' |
Common stock issued for consulting services, Amount | ' | 11,655 | 24,974 | ' | 36,629 |
Common stock issued for cash, Shares | ' | 217,500 | ' | ' | 217,500 |
Common stock issued for cash, Amount | ' | 2,175 | 140,825 | ' | 143,000 |
Write-off of related party debt | ' | ' | 42,137 | ' | 42,137 |
Net loss | ' | ' | ' | -631,174 | -631,174 |
Ending Balance, Amount at Sep. 30, 2013 | $40,000 | $2,146,242 | $24,783,723 | ($26,542,265) | $427,700 |
Ending Balance, Shares at Sep. 30, 2013 | 4,000,000 | 214,624,216 | ' | ' | ' |
Statements_of_Cash_Flows
Statements of Cash Flows (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Statement of Cash Flows [Abstract] | ' | ' |
Net income (loss) | $318,879 | ($631,174) |
Income from discontinued operations | 392,614 | 23,628 |
Net loss from continuing operations | -73,735 | -654,802 |
Adjustments to reconcile net loss from continuing operations to net cash (used in) provided by operating activities: | ' | ' |
Depreciation and amortization | 180,015 | 243,470 |
Impairment of assets | 4,000 | 6,000 |
Stock issued for compensation | 624 | 36,629 |
Stock Issued for Software Purchase, Value | 19,301 | 15,800 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | -4,888 | -3,450 |
Accounts payable and accrued liabilities | 25,000 | 221,879 |
Net cash (used) provided in operating activities | 150,317 | -136,711 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ' | ' |
Purchase of intangible asset | ' | -11,500 |
Net cash (used in) operating activities | ' | -11,500 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ' | ' |
Advances from affiliates | 7,969 | 5,409 |
Repayment of advances from officer | -188,410 | -31,000 |
Proceeds from line of credit | 2,464 | 11,144 |
Repayment of line of credit | ' | -23,111 |
Stock Issued for Cash, Shares | 68,000 | 217,500 |
Net cash provided by (used in) financing activities | -109,977 | 105,442 |
(DECREASE) INCREASE IN CASH | 40,340 | -42,769 |
CASH, BEGINNING OF YEAR | 8,587 | 51,356 |
CASH, END OF YEAR | 51,356 | 8,587 |
CASH PAID FOR: | ' | ' |
Interest paid | ' | ' |
Taxes paid | ' | ' |
SUPPLEMENTAL DISCLOSURE OF NONCASH OPERATING AND FINANCING ACTIVITIES: | ' | ' |
Reclass from discontinued operations to accounts payable | 204,736 | ' |
Accrual of software acquisition costs | ' | 11,500 |
Write-off of debt - related parties | 1,163,109 | 42,137 |
Stock Issued Investment, Value | 4,000 | 6,000 |
Stock Issued for Software Purchase, Value | 2,500 | 15,800 |
Transfer from line of credit to advance from officer | 25,236 | ' |
Common stock issued for settlement of debt | $1,200,106 | ' |
NOTE_1_DESCRIPTION_OF_BUSINESS
NOTE 1. DESCRIPTION OF BUSINESS | 12 Months Ended |
Sep. 30, 2013 | |
Notes to Financial Statements | ' |
NOTE 1. DESCRIPTION OF BUSINESS | ' |
NOTE 1 - DESCRIPTION OF BUSINESS | |
Cloud Medical Doctor Software Corporation (the “Company”, or “Cloud-MD”) 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 April 3, 2012, the Company changed its name to Cloud Medical Doctor Software Corporation. | |
In the year ended September 30, 2011, Cloud-MD 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. The Company’s current software product offerings include Practice Management, Electronic Medical Records, Revenue Management, Patient Financial Solutions, Medical and Pharmaceutical Supply Management, Claims Management and Patient Health Information Exchange. | |
In the year ended September 30, 2012, Cloud-MD launched Cloud-MD Billing Services which provides management of medical claims from posting physician charges and payments into the Company’s 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 and other detailed reports that are sent to the Company’s clients so they can see how their practice is performing, patient account inquiries and support to assist patients with their billing and insurance questions. |
NOTE_2_BASIS_OF_PRESENTATION
NOTE 2. BASIS OF PRESENTATION | 12 Months Ended |
Sep. 30, 2013 | |
Notes to Financial Statements | ' |
NOTE 2. BASIS OF PRESENTATION | ' |
NOTE 2 - BASIS OF PRESENTATION | |
The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and (iii) the reported amount of net revenues and expenses recognized during the periods presented. Adjustments made with respect to the use of estimates often relate to improved information not previously available. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of financial statements; accordingly, actual results could differ from these estimates. | |
In managements’ opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. |
NOTE_3_GOING_CONCERN_ISSUES
NOTE 3. GOING CONCERN ISSUES | 12 Months Ended |
Sep. 30, 2013 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
NOTE 3. GOING CONCERN ISSUES | ' |
NOTE 3 - GOING CONCERN ISSUES | |
The accompanying 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 an accumulated deficit at September 30, 2013 of $26,542,265 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 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_
NOTE 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||
NOTE 4. 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: | |||||||||||||||||
Use of Estimates and Assumptions | |||||||||||||||||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and (iii) the reported amount of net revenues and expenses recognized during the periods presented. Adjustments made with respect to the use of estimates often relate to improved information not previously available. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of financial statements; accordingly, actual results could differ from these estimates. The Company’s most significant estimates relate to the valuation of its proprietary technology and the valuation of its common stock. | |||||||||||||||||
Cash and Cash Equivalents | |||||||||||||||||
The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. At September 30, 2013 and 2012, cash and cash equivalents include cash on hand and cash in the bank. The FDIC insures these deposits up to $250,000. | |||||||||||||||||
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. | |||||||||||||||||
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 defined as an exit price that would be received upon the 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 September 30, 2013 and 2012 for assets measured at fair value on a recurring basis: | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
At September 30, 2013 | |||||||||||||||||
Software development net of amortization | $ | — | $ | — | $ | 817,921 | $ | 817,921 | |||||||||
Total Proprietary Technology | $ | — | $ | — | $ | 817,921 | $ | 817,921 | |||||||||
At September 30, 2012 | |||||||||||||||||
Software development net of amortization | $ | — | $ | — | $ | 1,022,591 | $ | 1,022,591 | |||||||||
Total Proprietary Technology | $ | — | $ | — | $ | 1,022,591 | $ | 1,022,591 | |||||||||
Accounts Receivable and Allowance for Uncollectible Accounts | |||||||||||||||||
Substantially all of the Company’s accounts receivable balance is related to trade receivables. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable. The Company will maintain allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments for services. Accounts with known financial issues are first reviewed and specific estimates are recorded. The remaining accounts receivable balances are then grouped in categories by the number of days the balance is past due, and the estimated loss is calculated as a percentage of the total category based upon past history. Account balances are charged against the allowance when it is probable the receivable will not be recovered. As of September 30, 2013 and 2012, the Company had no valuation allowance for the Company’s accounts receivable. | |||||||||||||||||
During the year ended September 30, 2013, the Company wrote-off accounts receivable of approximately $200,000. These accounts receivable were from billing services performed in DNA, subsequent to our acquisition of the company from Krooss Medical Management Systems, LLC (“Krooss”) which was completed during the year ended September 30, 2013. These amounts were deemed uncollectible due to our pending litigation with Krooss, and were recorded in loss from discontinued operations. | |||||||||||||||||
Income Taxes | |||||||||||||||||
The Company utilizes the asset and liability method in accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for operating loss and tax credit carry-forwards and for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets unless it is more likely than not that the value of such assets will be realized. | |||||||||||||||||
The Company uses the two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not, that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount, which is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimating the Company's tax positions and tax benefits, which may require periodic adjustments. At September 30, 2013, the Company did not record any liabilities for uncertain tax positions. | |||||||||||||||||
Revenue Recognition | |||||||||||||||||
License revenue consists principally of revenue earned under software license agreements. The Company sells its software to a medical practitioner for direct payment or through a third party leasing company for direct payment to the Company. The third party lease agreement is a non-recourse debt and the Company is not responsible for the default of the medical practitioner. License revenue is generally recognized when a signed contract or other persuasive evidence of an arrangement exists, the software has been electronically delivered, the license fee is fixed or is measured on a paid user basis; and collection of the resulting receivable is probable. When contracts contain multiple elements wherein Vendor-Specific Objective Evidence (“VSOE”) exists for all undelivered elements, we account for the delivered elements in accordance with the “Residual Method.” VSOE of fair value for maintenance and support is established by a stated renewal rate, if substantive, included in the license arrangement or rates charged in stand-alone sales of maintenance and support. Revenue from subscription license agreements, which include software, rights to unspecified future products and maintenance, is recognized ratably over the term of the subscription period. | |||||||||||||||||
Provided all other revenue criteria are met, the upfront, minimum, non-refundable license fees from customers are generally recognized upon delivery and on-going royalty fees are generally recognized upon reports of new licenses issued. If there is significant uncertainty about the project completion or receipt of payment for professional services, revenue is deferred until the uncertainty is sufficiently resolved. VSOE of fair value of services is based upon stand-alone sales of those services. | |||||||||||||||||
Subscription revenue is generated from bandwidth and information storage. After the first year and each year thereafter that the software has been purchased and installed, the purchaser is required to pay an annual fee of $1,200, $1,500, $1,800, and $2,400, respectively. Subscription revenue is recognized ratably over the term of the agreement. | |||||||||||||||||
Transaction revenue is generated from the following services and recognized when transaction occurs: | |||||||||||||||||
· | Electronic Remittance Advise $0.35 Electronic remittance transaction fee; | ||||||||||||||||
· | Paper Claims $1.00 Paper claim fee; | ||||||||||||||||
· | Carrier Direct $0.16 Carrier direct fee; | ||||||||||||||||
· | Fast Forward $0.35 Fast forward transaction fee; and, | ||||||||||||||||
· | Patient Credit $2.50 Automatic Debit processing per transaction paid by the patient | ||||||||||||||||
The Company has not incurred any transaction revenues in the year ended September 30, 2013. | |||||||||||||||||
Cost of License, and Subscription Revenues | |||||||||||||||||
Cost of license revenue is primarily comprised of the license-based royalties to third parties and production and distribution costs for initial product licenses. No costs were incurred for license revenue during the years ended September 30, 2013 and 2012. | |||||||||||||||||
Cost of subscription revenue is primarily comprised of the costs associated with the customer support personnel that provide maintenance, enhancement and support services to customers. No costs were incurred for subscription revenue or customer support during the years ended September 30, 2013 and 2012. | |||||||||||||||||
The amortization of acquired technology for products acquired through business combinations are considered as the cost of revenues. The acquired technology is amortized using the straight-line method over 5 years. | |||||||||||||||||
Sales Commissions | |||||||||||||||||
The Company pays commissions, including sales bonuses, to the direct sales force related to revenue transactions under sales compensation plans established annually. The commission payments are typically accrued on the date of sale and paid in the month following execution of the customer contracts. The Company paid commissions of $62,060 and $73,298 for the years ended September 30, 2013 and 2012, respectively. | |||||||||||||||||
Research and Development and Software Development Costs | |||||||||||||||||
Capitalization of certain software development costs are recorded after the determination of technological feasibility. Based on our product development process, technological feasibility is determined upon the completion of a working model. To date, costs incurred by us from the completion of the working model to the point at which the product is ready for general release have been insignificant. Accordingly, we have charged all such costs to research and development expense in the period incurred. Our research and development costs for the years ended September 30, 2013 and 2012 were $208,895 and $151,000, respectively. | |||||||||||||||||
Share-Based Compensation | |||||||||||||||||
The Company measures the cost of services received in exchange for an award of an equity instrument based on the grant-date fair value of the award. Compensation cost is recognized over the vesting or requisite service period. The Black-Scholes option-pricing model is used to estimate the fair value of options or warrants granted. There were no options or warrants issued by the Company during the years ended September 30, 2013 and 2012. | |||||||||||||||||
Basic and Diluted Net Loss per Common Share | |||||||||||||||||
Basic income (loss) per share is computed by dividing net income (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 September 30, 2013 and 2012, the Company had no potentially dilutive instruments outstanding. | |||||||||||||||||
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 as a result of the net loss. | |||||||||||||||||
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. | |||||||||||||||||
Subsequent Events | |||||||||||||||||
The Company has evaluated all transactions occurring between the end of its fiscal year, September 30, 2013, through the date of issuance of the financial statements for subsequent event disclosure consideration. | |||||||||||||||||
Recent Accounting Pronouncements | |||||||||||||||||
No accounting standards or interpretations issued recently are expected to a have a material impact on the Company’s financial position, operations or cash flows. |
NOTE_5_SOFTWARE
NOTE 5. SOFTWARE | 12 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Research and Development [Abstract] | ' | ||||||||
NOTE 5. SOFTWARE | ' | ||||||||
NOTE 5 – SOFTWARE | |||||||||
The following is a detail of software at September 30, 2013 and 2012: | |||||||||
2013 | 2012 | ||||||||
Source Code License | $ | 2,500 | $ | 2,500 | |||||
Software License | 1,200,106 | 1,200,106 | |||||||
EMR Certification | 23,000 | — | |||||||
Encryption Software Code | 15,800 | — | |||||||
Acquisition of Doctor’s Network of America | 10,000 | 4,000 | |||||||
Total intangible assets | 1,251,406 | 1,202,606 | |||||||
Accumulated amortization of intangible assets (charged to cost of sales) | (423,485 | ) | (180,015 | ) | |||||
Accumulated impairment of assets | (10,000 | ) | (4,000 | ) | |||||
Total proprietary technology, net | $ | 817,921 | $ | 1,022,591 | |||||
The Company impaired an investment of $10,000 and $4,000 for the years ended September 30, 2013 and 2012, respectively, directly related to the acquisition of Doctors Network of America (“DNA”) operating in Jackson Mississippi. The Company is currently in litigation with the sellers of DNA relating to the collection of certain medical billings owed to the Company. As a result of the litigation, the Company deemed the investment to be impaired. The amortization expense was $243,470 and $180,015 for the years ended September 30, 2013 and 2012, respectively. The Company’s proprietary technology was placed into service starting in the second quarter of fiscal 2012. | |||||||||
Source Code License | |||||||||
On August 14, 2012, the Company, through a comprehensive agreement (the “License Agreement”) with MediSouth, LLC, (“MediSouth”) has purchased a complete source code license (the “License”) and will integrate and enhance this feature set as part of its ever expanding Cloud-MD Office product suite. | |||||||||
The License Agreement requires the following: | |||||||||
a) | That MediSouth will provide the Company with all software updates for the License within 5 working days of MediSouth implementing those same software updates in its own production version of the License. | ||||||||
b) | The Company has the right to modify the software contained in the License to meet its operational needs. | ||||||||
c) | The Company shall provide to MediSouth, with the permission of each affected Company client, the de-identified purchasing data which is any data that would identify a patient such as social security numbers, date of birth, health condition, among others that it collects as a result of the Company’s clients utilizing the embedded Medical Supplies and Pharmaceutical Inventory Management functionality provided by the License. | ||||||||
e) | MediSouth shall receive 100,000 shares of the Company’s non-dilutable, common stock with a one (1) year trading restriction. | ||||||||
f) | The Company may not sell the License, transfer the License, allow any other entity to use the License as part of that entity's software application or transfer any rights to another party to use the License separately from the Company’s products in which the License is embedded. | ||||||||
The fair value of the consideration and the assets acquired is based on the aggregate value of the 100,000 shares of common stock issued in exchange for the software. The total fair value on August 14, 2012 was $2,500. | |||||||||
Encryption Software Code | |||||||||
On November 21, 2012, the Company, through a purchase agreement with CipherSmith, LLC, purchased 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. The Company issued 500,004 shares of its common stock as payment for the acquisition. The fair value of the consideration and the assets acquired is based on the aggregate fair value of the common stock issued in exchange for the software. The total fair value of the shares of common stock issued on the date of grant was $15,800. | |||||||||
Doctors Network of America | |||||||||
On June 22, 2012, the Company entered into an acquisition agreement that closed on March 16, 2013. The Company agreed to acquire DNA in Flowood, Mississippi from Krooss Medical Management Systems, LLC (“Krooss”) for 500,000 shares of common stock. As of September 30, 2012, only 200,000 shares of common stock were issued as a deposit, which was valued at $4,000 based on the market value on the date of grant. At the closing of the transaction on March 16, 2013, the Company issued an additional 300,000 shares of common stock which were valued at $6,000 based on the market value on the date of grant. | |||||||||
Subsequent to the transaction closing on March 16, 2013, the sellers refused to pay for medical billing process transaction fees in accordance with their contracts in the amount of approximately $200,000. The Company and the sellers are currently in litigation over the disputed transaction fees of $200,000. The Company has recorded an accumulated impairment of the acquired asset in the amount of $10,000 and $4,000 for the years ended September 30, 2013 and 2012, respectively. |
NOTE_6_DISCONTINUED_OPERATIONS
NOTE 6. DISCONTINUED OPERATIONS | 12 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Discontinued Operations and Disposal Groups [Abstract] | ' | ||||||||
NOTE 6. DISCONTINUED OPERATIONS | ' | ||||||||
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 business operations of the GPS operational device business. In 2011, the assets were transferred to National Scientific, LLC, 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 required compensation. | |||||||||
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. As of September 30, 2013 and 2012, the Company did not have any net assets or net liabilities related to the GPS operational device business. | |||||||||
The Company closed the acquisition with the final payment for DNA on March 16, 2013. Subsequent to the transaction closing, the sellers refused to pay the transaction fees for medical billing contracts that were processed. The Company filed a law suit against the sellers for Breach of Contract among other things in June of 2013. During that time, the Company believe 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. All of the assets that were acquired have been impaired and included in discontinued operations. | |||||||||
Details of the classifications for net liabilities and operations are shown below. | |||||||||
September 30, | 30-Sep-12 | ||||||||
2013 | |||||||||
Net liabilities of discontinued operations: | |||||||||
Accounts payable and accrued expenses | 35,356 | — | |||||||
Net liabilities of discontinued operations | $ | 35,356 | $ | — | |||||
Year ended September 30, | |||||||||
2013 | 2012 | ||||||||
Discontinued operations: | |||||||||
Revenues | $ | 431,400 | $ | — | |||||
Cost of sales | — | — | |||||||
Operating expenses | (245,287 | ) | — | ||||||
Bad debt | (221,469 | ) | — | ||||||
Interest expense | — | (17,868 | ) | ||||||
Gain from write-off of debt | 58,984 | 410,482 | |||||||
Income from Discontinued Operations | $ | 23,628 | $ | 392,614 | |||||
Commitments and contingencies that were discontinued as a result of the transfer of the assets to National Scientific LLC as follows: | |||||||||
On November 1, 2005, the Company entered into a financing program with Strategic Working Capital Fund, LP. The terms of this program included a five-year note payable at maturity in November 2010 for $175,000, at an annual interest rate of 8%. Interest was due and payable semi-annually on May 1st and November 1st for each year in which the note is outstanding The transaction also included 1,200,000 restricted common shares and a conversion/exchange option to convert the principal amount and any unpaid interest of the Note into common shares at a per share conversion price of $0.0525. These shares included weighted average anti-dilution provisions, as well as piggyback registration rights. Additionally, the note had various put and call rights, and has a right to early payment under certain conditions after 2 years. The 1,200,000 restricted common shares were recorded at $0.043, which was the five-day average market closing price of our stock. The note and common stock were issued with a debt discount of $51,600 and a beneficial conversion feature of $9,933. The discount and beneficial conversion feature are being amortized to interest expense over the term of the note, which is approximately 60 months. The issuance of the shares resulted in deferred financing costs of $24,000. The deferred financing costs were amortized over term of the note, which is approximately 60 months, and are included in the statement of operations as offering costs. Management received a legal opinion and determined that this note is unenforceable and has been written off during fiscal year ended September 30, 2012 (See Note 7 – Debt Mitigation Program). | |||||||||
On February 24, 2005, March 28, 2005, May 2, 2005, and May 27, 2005 the Company’s former Chairman Michael Grollman made personal loans to the Company totaling $159,000 to assist it with working capital needs. The loans are evidenced by a demand note that provides for repayment within five business days of a demand notice from Mr. Grollman, with interest of 6% compounded annually from June 1, 2005. These loans were secured by an interest in the copyrights in the Company’s iBus software and designs. During the three months ended September 30, 2007, these loans were paid down by $11,000. As of September 30, 2007, these loans had a balance outstanding of $148,000 and the interest rate going forward was adjusted to 8% compounded annually from October 1, 2007. On September 30, 2007, the Company converted unpaid interest of $13,300 on demand notes payable to Michael Grollman into a new demand note of $13,300 that provided for repayment within five business days of a demand notice from Mr. Grollman, with interest of 8% compounded annually on October 1st. Management received a legal opinion and determined this note is unenforceable and has been written off during fiscal year ended September 30, 2012 (See Note 7 – Debt Mitigation Program). | |||||||||
On April 27, 2006, the Company secured a short-term loan of $16,625 from a shareholder. The loan carries an origination/placement fee of $500 and has a perfectible security interest a) prior to delivery in any assets purchased for the fulfillment of a customer’s order dated March 16, 2006, and b) in any receivable resulting from the fulfillment of the customer’s purchase order. The interest rate on the loan was 12%. The transaction also included 100,000 warrants to purchase our common stock at $0.036 at any time before April 27, 2009 which have expired unexercised. The note had an approximate maturity date of June 15, 2006. Management received a legal opinion and determined this note is unenforceable and has been written off during fiscal year ended September 30, 2012 (See Note 7 – Debt Mitigation Program). | |||||||||
On May 31, 2006, we secured a short-term loan of $20,000 from a shareholder. The loan carried an origination/placement fee of $500 and has a perfectible security interest a) prior to delivery in any assets purchased for the fulfillment of Clover Park, WA’s order and b) in any receivable resulting from the fulfillment of the Clover Park purchase order. The interest rate on the loan was 12%. The transaction also included 100,000 warrants to purchase our common stock at $0.036 at any time before May 31, 2009 which expired unexercised. The note had a maturity date of July 10, 2006. Management received a legal opinion and determined this note is unenforceable and has been written off during fiscal year ended September 30, 2012 (See Note 7 – Debt Mitigation Program). |
NOTE_7_DEBT_MITIGATION_PROGRAM
NOTE 7. DEBT MITIGATION PROGRAM | 12 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
OTHER (INCOME) AND EXPENSES | ' | ||||||||
NOTE 7. DEBT MITIGATION PROGRAM | ' | ||||||||
NOTE 7 – DEBT MITIGATION PROGRAM | |||||||||
The Company determined that the statute of limitations for certain of the Company’s creditors to enforce collection of any amounts they might be owed has now elapsed. Based on the determinations and findings, during the years ended September 30, 2013 and 2012, the Company wrote off $101,121 and $1,573,591, respectively, in creditor liabilities which were all previously included in current liabilities in the accompanying balance sheet. As a result of these write-offs, the Company recognized a gain on the write off of liabilities in the amount of $58,984 and $410,482 from third party liabilities, respectively, which was recorded in income from discontinued operations, and additional paid-in capital of $42,137 and $1,163,109 for related party liabilities, respectively. The Company will continue to conduct this analysis going forward and write-off obligations when such obligations are no longer enforceable based on applicable law. | |||||||||
The following liabilities, through the opinion of legal counsel, were determined by the Company as unenforceable. | |||||||||
September 30, | September 30, | ||||||||
2013 | 2012 | ||||||||
Debt Mitigation Program: | |||||||||
Accounts payable and accrued expenses | $ | 58,984 | $ | 66,281 | |||||
Disputed salaries & vacation of former officers | — | 968,645 | |||||||
Disputed salary – former employee | — | 20,256 | |||||||
Disputed payroll taxes for back pay of former officers | — | 84,701 | |||||||
Disputed interest | — | 227,083 | |||||||
Accrued interest | 42,137 | — | |||||||
Shareholders demand note payable at 12% | — | 11,625 | |||||||
Shareholders demand note payable at 12% | — | 20,000 | |||||||
Unsecured note payable at 8% interest due in November 2010, interest payments in default | — | 175,000 | |||||||
Total debt mitigation program | $ | 101,121 | $ | 1,573,591 | |||||
Gain on write off of debt | $ | (58,984 | ) | $ | (410,483 | ) | |||
Additional paid-in capital (1) | $ | (42,137 | ) | $ | (1,163,108 | ) | |||
-1 | All amounts that were owed to related parties in prior years were recorded to paid-in-capital. | ||||||||
NOTE_8_COMMITMENTS_AND_CONTING
NOTE 8. COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Sep. 30, 2013 | |
COMMITMENTS AND CONTINGENCIES | ' |
NOTE 8. COMMITMENTS AND CONTINGENCIES | ' |
NOTE 8– COMMITMENTS AND CONTINGENCIES | |
Rent expense for the years ended September 30, 2013 and 2012 was $0 for both years. | |
The Company entered into an agreement to purchase the assets of DNA in June 2012 and after due diligence by both parties the transaction closed on March 16, 2013. Subsequent to the transaction closing on March 16, 2013, the sellers refused to pay for medical billing process transaction fees in accordance with their contracts of approximately $200,000. In June 2013, the Company sued the sellers in federal court for breach of contract among other causes of action of unpaid medical billing transaction fees of approximately $200,000. The Company believes it will be successful in its litigation. However, if the Company is successful, the collectability of the judgment is highly questionable. | |
The Company has issued shares to new investors since January 2, 2011, that have an anti-reverse common stock split clause if the Company reverse splits the common stock. The reverse split of common stock is determined by management but must be approved by Financial Industry Regulation Authority (“FINRA”). Presently FINRA has denied the Company the right to reverse split the common stock until all Securities and Exchange Commission filings are current and at that point and time the Company will submit a request to FINRA to execute a reverse split of the common stock of the Company. The current investors holding anti-reverse split stock will have the right to hold the same number of shares of common stock as status quo after the reverse split. The anti-reverse split common stock protection is only for stock subject to reverse split and once the Company declares a reverse split and it is completed, the anti-reverse split protection will be terminate and shareholders that received anti-reverse split stock will be held with regular stockholders as the Company proceeds forward. In accordance with the anti-reverse split provision, no further shares will be issued to the anti-reverse split shareholders once the reverse split is approved and completed. | |
As discussed in Note 7, the Company has written off $101,121 and $1,573,591 in accounts payable, accrued liabilities and notes payable based on the opinion of legal counsel for years ended September 30, 2013 and 2012. However, the related creditors could make a claim in the future in regards to these liabilities. |
NOTE_9_RELATED_PARTY_TRANSACTI
NOTE 9. RELATED PARTY TRANSACTIONS | 12 Months Ended | ||
Sep. 30, 2013 | |||
Related Party Transactions [Abstract] | ' | ||
NOTE 9. RELATED PARTY TRANSACTIONS | ' | ||
NOTE 9– RELATED PARTY TRANSACTIONS | |||
On October 15, 2011, the Company issued 30,000,000 common shares to the CEO for the conversion of the debt issued in the principal amount of $1,200,106. | |||
During the years ended September 30, 2013 and 2012, the CEO advanced the Company cash of $5,409 and $7,969, respectively. In addition, during the year ended September 30, 2012, the CEO made payments on the Company’s behalf of $25,236 on the Company’s line of credit. The Company repaid $31,000 and $188,410 of the advances in the years ended September 30, 2013 and 2012, respectively. The advances from the CEO are due on demand and do not accrue interest. As of September 30, 2013 and 2012, the amount owed to the CEO for advances was $0 and $25,591, respectively. | |||
Employment Agreements | |||
The Company entered into an employment agreement with its Chief Executive Officer on January 1, 2013. The employment agreement will expire on January 1, 2018 and shall automatically renew for another 5 years unless terminated in accordance with the provisions of the employment agreement. The employment agreement provides for: | |||
i. | A monthly salary of $20,833 subject to an annual increase of 10% and consistent with the Company policy applicable to other senior executives and officers and approval by the Board of Directors. | ||
ii. | A cash bonus of 25% of his annual base salary each year if the Company reaches the following milestones (none of which were attained in 2013): | ||
a. | The Company posts annual gross revenues on a consolidated basis of at least $5,000,000; | ||
b. | The Company's earnings before the deduction of income taxes and amortization expenses (“EBITA”), including cash extraordinary items but before officer's bonuses, on a consolidated basis for any year is at least $1,000,000; or the completion of the delinquent SEC filings for five (5) years through September 30, 2013 or the Company obtains FINRA approval for any reverse stock splits. | ||
iii. | The issuance of shares equal to 1% of the then issued and outstanding shares of the Company annually which is approximately 2,146,242, to be issued in 2013. | ||
iv. | The issuance of common stock on each anniversary date of the employment agreement of 5,000,000 shares and issuance of common stock for every acquisition granting 5,000,000 shares for DNA, 5,000,000 shares for CipherSmith, LLC, and 1,000,000 shares for MediSouth, LLC. | ||
v. | An automobile allowance of $1,500 per month. | ||
vi. | A medical insurance allowance of $1,500 per month. | ||
vii. | In the event the Executive's employment is terminated without cause, he will receive the entire contract remaining on the agreement. | ||
The Company entered into an employment agreement with its Chief Financial Officer on January 1, 2013. The employment agreement will expire January 1, 2018 and shall automatically renew for another 5 years unless terminated in accordance with the provisions of the employment agreement. The employment agreement provides for: | |||
i. | A monthly salary of $12,500 per month subject to an annual increase of 10% per year and consistent with the Company policy applicable to other senior executives and officers and approval by the Board of Directors. | ||
ii. | A cash bonus of 25% of her annual base salary each year if the Company reaches the following milestones (none of which were attained in 2013): | ||
a. | The Company posts annual gross revenues on a consolidated basis of at least $5,000,000; | ||
b. | The Company's EBITA, including cash extraordinary items but before officer's bonuses, on a consolidated basis for any year is at least $1,000,000; or the completion of the delinquent SEC filings for five (5) years through September 30, 2013 or the Company obtains FINRA approval for any reverse stock splits. | ||
iii. | The issuance of shares equal to 1% of the then issued and outstanding shares of the Company annually, which is approximately 2,146,242 to be issued in 2013 | ||
iv. | The issuance of common stock on each anniversary date of the employment agreement of 5,000,000 shares and issuance of common stock for every acquisition granting 3,000,000 shares for DNA, 3,000,000 shares for CipherSmith, LLC, and 750,000 shares for MediSouth, LLC. | ||
v. | An automobile allowance of $1,000 per month. | ||
vi. | A medical insurance allowance of $1,500 per month. | ||
vii. | In the event the Executive's employment is terminated without cause he will receive the entire contract remaining on the agreement. | ||
NOTE_10_EQUITY
NOTE 10. EQUITY | 12 Months Ended | ||||||||||||
Sep. 30, 2013 | |||||||||||||
Equity [Abstract] | ' | ||||||||||||
NOTE 10. EQUITY | ' | ||||||||||||
NOTE 10 - EQUITY | |||||||||||||
As of September 31, 2013, the Company was authorized to issue 650,000,000 common shares and 4,000,000 preferred shares at a par value of $0.01 per share. | |||||||||||||
Fiscal Year Ended September 30, 2013 | |||||||||||||
Stock Issued for Cash | |||||||||||||
During the year ended September 30, 2013, the Company issued 217,500 shares of common stock for $143,000 in net proceeds as follows: | |||||||||||||
Date | Number of Shares | Proceeds | |||||||||||
14-Oct-12 | 20,000 | $ | 20,000 | ||||||||||
14-Oct-12 | 15,000 | 3,000 | |||||||||||
14-Oct-12 | 18,750 | 2,500 | |||||||||||
14-Oct-12 | 18,750 | 2,500 | |||||||||||
6-Dec-12 | 15,000 | 3,000 | |||||||||||
12-Mar-13 | 20,000 | 20,000 | |||||||||||
12-Mar-13 | 20,000 | 20,000 | |||||||||||
31-Mar-13 | 50,000 | 50,000 | |||||||||||
17-Apr-13 | 20,000 | 20,000 | |||||||||||
26-Aug-13 | 20,000 | 2,000 | |||||||||||
Total | 217,500 | $ | 143,000 | ||||||||||
Stock Issued in Connection with Software Licensing and Subscription Agreements | |||||||||||||
During the year ended September 30, 2013, the Company issued 400,000 shares of common stock valued at $13,563 based on the market price on the date of grant, to customers, in regards to the purchase of software from the Company in accordance with the Software Licensing and Subscription Agreements. The fair values of the shares issued were recorded against software revenue recognized during the year ended September 30, 2013. | |||||||||||||
Date | Number of Shares | Fair Value | |||||||||||
14-Oct-12 | 50,000 | $ | 1,300 | ||||||||||
6-Dec-12 | 100,000 | 2,800 | |||||||||||
12-Mar-13 | 50,000 | 1,750 | |||||||||||
21-Mar-13 | 50,000 | 1,750 | |||||||||||
21-Mar-13 | 50,000 | 1,750 | |||||||||||
17-Apr-13 | 25,000 | 838 | |||||||||||
17-Apr-13 | 50,000 | 1,675 | |||||||||||
26-Jun-13 | 25,000 | 450 | |||||||||||
30-Sep-13 | 50,000 | 1,250 | |||||||||||
Total | 400,000 | $ | 13,563 | ||||||||||
Stock Issued for Services | |||||||||||||
During the year ended September 30, 2013, the Company issued 1,165,500 shares of common stock as compensation. The fair values of the shares were a total of $36,629 and were recorded at the market price on the date of grant. The issuances of stock were as follows: | |||||||||||||
Date | Number of Shares | Fair Value | Description of Services | ||||||||||
14-Oct-12 | 10,000 | $ | 260 | Commission | |||||||||
6-Dec-12 | 100,000 | 2,800 | Software Agreement | ||||||||||
12-Mar-13 | 50,000 | 1,750 | Consulting | ||||||||||
21-Mar-13 | 167,000 | 5,845 | Compensation | ||||||||||
21-Mar-13 | 500,000 | 17,500 | Compensation | ||||||||||
17-Apr-13 | 78,500 | 2,630 | Compensation | ||||||||||
1-May-13 | 20,000 | 522 | Programming | ||||||||||
10-May-13 | 20,000 | 522 | Programming | ||||||||||
26-Aug-13 | 100,000 | 1,800 | Software Sales | ||||||||||
30-Sep-13 | 60,000 | 1,500 | Programming | ||||||||||
30-Sep-13 | 60,000 | 1,500 | Programming | ||||||||||
Total | 1,165,500 | 36,629 | |||||||||||
Stock Issued for Assets Acquisition | |||||||||||||
On April 17, 2013, the Company issued 300,000 shares of common stock valued at $6,000, based on the market price on the date of grant, to Krooss Family Trust LLP for the acquisition of Doctors Network of America in Flowood, Mississippi and all of the assets of that company. | |||||||||||||
During year ended September 30, 2013, the Company issued 500,004 shares of common stock for the acquisition of CipherSmith software. Those shares were valued at $15,800 based on the market price on the dates of grant. | |||||||||||||
Fiscal Year Ended September 30, 2012 | |||||||||||||
Stock Issued for Cash | |||||||||||||
During year ended September 30, 2012, the Company issued 190,000 shares of common stock for $68,000 as follows: | |||||||||||||
Date | Number of Shares | Proceeds | |||||||||||
October 15, 2011 | 25,000 | $ | 5,000 | ||||||||||
29-Dec-11 | 100,000 | 50,000 | |||||||||||
21-Jun-12 | 65,000 | 13,000 | |||||||||||
Total | 190,000 | $ | 68,000 | ||||||||||
Stock Issued in Connection with Software Licensing and Subscription Agreements | |||||||||||||
During the year ended September 30, 2012, the Company issued 941,333 shares of common stock valued at $19,301based on the market price on the date of grant, to customers, in regards to the purchase of software from the Company in accordance with the Software Licensing and Subscription Agreements. The fair values of the shares issued were recorded against software revenue recognized during the year ended September 30, 2012. | |||||||||||||
Date | Number of Shares | Fair Value | |||||||||||
29-Dec-11 | 100,000 | $ | 1,150 | ||||||||||
29-May-12 | 25,000 | 400 | |||||||||||
29-May-12 | 50,000 | 800 | |||||||||||
29-May-12 | 100,000 | 1,600 | |||||||||||
29-May-12 | 150,000 | 2,400 | |||||||||||
29-May-12 | 181,333 | 2,901 | |||||||||||
9-Aug-12 | 300,000 | 9,000 | |||||||||||
9-Aug-12 | 35,000 | 1,050 | |||||||||||
Total | 941,333 | $ | 19,301 | ||||||||||
Stock Issued for Services | |||||||||||||
During the year ended September 30, 2012, the Company issued 33,000 shares of common stock for compensation. The fair values of the shares were a total of $624 and were recorded at the market price on the date of grant. The issuances of stock were as follows: | |||||||||||||
Date | Number of Shares | Fair Value | Description of Services | ||||||||||
5-Dec-11 | 8,000 | $ | 82 | Legal services | |||||||||
5-Dec-11 | 10,000 | 102 | Advisory service | ||||||||||
21-Jun-12 | 1,000 | 20 | Commission | ||||||||||
9-Aug-12 | 14,000 | 420 | Commission | ||||||||||
Total | 33,000 | $ | 624 | ||||||||||
Stock Issued for Debt Settlement | |||||||||||||
On October 15, 2011, the Company issued 30,000,000 shares of common stock for the conversion of debt from our CEO in the principal amount of $1,200,106. | |||||||||||||
Stock Issued for Assets Acquisition | |||||||||||||
The Company issued 200,000 shares of common stock on June 21, 2012 to Krooss Medical Management in accordance with the acquisition agreement for Doctors Network of America and recorded it at the market price of the common shares of $0.020 and as an investment in Krooss Medical Management of $4,000. | |||||||||||||
The Company issued 100,000 shares of common stock to MediSouth LLC in accordance with the acquisition agreement and recorded it at the market price of the common shares of $0.025 and as an investment in MediSouth LLC of $2,500. | |||||||||||||
Preferred Stock | |||||||||||||
The Company has authorized 4,000,000 shares of preferred stock, at $0.01 par value. The Corporation established and designates the rights and preferences of a Series A Preferred Stock, and reserve 4,000,000 shares of preferred stock against its issuance, such rights, preferences and designations. Each share of the Preferred Stock has 150 votes on all matters presented to be voted by the holders of our common stock. All 4,000,000 shares of preferred stock have been issued to our CEO & CFO on April 11, 2011. |
NOTE_11_INCOME_TAXES
NOTE 11. INCOME TAXES | 12 Months Ended |
Sep. 30, 2013 | |
Income Tax Disclosure [Abstract] | ' |
NOTE 11. INCOME TAXES | ' |
NOTE 11 - INCOME TAXES | |
Deferred income taxes result from temporary differences in the recognition of income and expenses for the financial reporting purposes and for tax purposes. The Company has a net operating loss carryforward of approximately $25.9 million available to offset future taxable income through 2013. For income tax reporting purposes, the Company’s aggregate unused net operating losses are subject to limitations of Section 382 of the Internal Revenue Code, as amended. Under the Tax Reform Act of 1986, the benefits from net operating losses carried forward may be impaired or limited on certain circumstances. Events which may cause limitations in the amount of net operating losses that the Company may utilize in any one year include, but are not limited to, a cumulative ownership change of more than 50% over a three-year period. The consolidation of any limitations that may be imposed for future issuances of equity securities, including issuances with respect to acquisitions have not been determined. The Company has provided a valuation reserve against the full amount of the net operating loss benefit, because in the opinion of management based upon the earning history of the Company; it is more likely than not that the benefits will not be realized. | |
For the years ended September 30, 2013 and 2012, the difference between the amounts of income tax expense or benefit that would result from applying the statutory rates to pretax income to the reported income tax expense of $0 is the result of the net operation loss carryforward and the related valuation allowance. | |
The Company anticipates it will continue to record a valuation allowance against the losses of certain jurisdictions, primarily federal and state, until such time as it is able to determine it is “more-likely-than-not” the deferred tax asset will be realized. Such position is dependent on whether there will be sufficient future taxable income to realize such deferred tax assets. The Company’s effective tax rate may vary from period to period based on changes in estimated taxable income or loss by jurisdiction, changes to the valuation allowance, changes to federal, state or foreign tax laws, future expansion into areas with varying country, state, and local income tax rates, deductibility of certain costs and expenses by jurisdiction. |
NOTE_12_SUBSEQUENT_EVENTS
NOTE 12. SUBSEQUENT EVENTS | 12 Months Ended |
Sep. 30, 2013 | |
Subsequent Events [Abstract] | ' |
NOTE 12. SUBSEQUENT EVENTS | ' |
NOTE 12– SUBSEQUENT EVENTS | |
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. | |
In November 2013, the Company entered into a revolving line of credit with Mutual of Omaha for a line of credit in the amount of $65,000 at 4.00% interest rate which renews annually. As of January 10, 2014 we have borrowed $36,500. | |
On December 17, 2013, the Company amended its Articles of Incorporation that gave the right to the holders of Preferred A shares to convert 1 share of Convertible Preferred A shares to 150 Common Shares of the Company. The holders of the Preferred A shares can 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. | |
Stock issuances | |
Fiscal Year Ending September 30, 2014 | |
In October 2013, the Company issued 25,000 shares of common stock for net cash proceeds of $5,000. | |
In October 2013, the Company issued 200,000 shares of common stock for purchase of assets from Antree Systems Limited. These shares were valued at $6,000 based on the market price on the date of grant. | |
In November 2013, the Company issued 180,000 shares of common stock as replacement shares for the 160,000 shares of common stock issued to Antree Systems Limited and 20,000 shares of common stock to Kimberly Ilicerl. The Company intends to cancel the original shares because the shares were lost during delivery to Antree Systems. The Company replaced those lost shares and canceled the shares that were lost when delivered to Ireland the office of Antree Systems. | |
On December 4, 2013, the Company issued 120,000 shares of common stock valued at $3,600 based on the market price on the date of grant, for the purchase of our software licensing and subscription agreements. | |
On January 12, 2014, the Company issued 10,000 shares of common stock for net cash proceeds of $10,000. |
NOTE_4_SUMMARY_OF_SIGNIFICANT_1
NOTE 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||
Use of Estimates and Assumptions | ' | ||||||||||||||||
Use of Estimates and Assumptions | |||||||||||||||||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and (iii) the reported amount of net revenues and expenses recognized during the periods presented. Adjustments made with respect to the use of estimates often relate to improved information not previously available. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of financial statements; accordingly, actual results could differ from these estimates. The Company’s most significant estimates relate to the valuation of its proprietary technology and the valuation of its common stock. | |||||||||||||||||
Cash and Cash Equivalents | ' | ||||||||||||||||
Cash and Cash Equivalents | |||||||||||||||||
The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. At September 30, 2013 and 2012, cash and cash equivalents include cash on hand and cash in the bank. The FDIC insures these deposits up to $250,000. | |||||||||||||||||
Long-Lived Assets | ' | ||||||||||||||||
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. | |||||||||||||||||
Fair Value of Financial Instruments | ' | ||||||||||||||||
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 defined as an exit price that would be received upon the 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 September 30, 2013 and 2012 for assets measured at fair value on a recurring basis: | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
At September 30, 2013 | |||||||||||||||||
Software development net of amortization | $ | — | $ | — | $ | 817,921 | $ | 817,921 | |||||||||
Total Proprietary Technology | $ | — | $ | — | $ | 817,921 | $ | 817,921 | |||||||||
At September 30, 2012 | |||||||||||||||||
Software development net of amortization | $ | — | $ | — | $ | 1,022,591 | $ | 1,022,591 | |||||||||
Total Proprietary Technology | $ | — | $ | — | $ | 1,022,591 | $ | 1,022,591 | |||||||||
Accounts Receivable and Allowance for Uncollectible Accounts | ' | ||||||||||||||||
Accounts Receivable and Allowance for Uncollectible Accounts | |||||||||||||||||
Substantially all of the Company’s accounts receivable balance is related to trade receivables. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable. The Company will maintain allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments for services. Accounts with known financial issues are first reviewed and specific estimates are recorded. The remaining accounts receivable balances are then grouped in categories by the number of days the balance is past due, and the estimated loss is calculated as a percentage of the total category based upon past history. Account balances are charged against the allowance when it is probable the receivable will not be recovered. As of September 30, 2013 and 2012, the Company had no valuation allowance for the Company’s accounts receivable. | |||||||||||||||||
During the year ended September 30, 2013, the Company wrote-off accounts receivable of approximately $200,000. These accounts receivable were from billing services performed in DNA, subsequent to our acquisition of the company from Krooss Medical Management Systems, LLC (“Krooss”) which was completed during the year ended September 30, 2013. These amounts were deemed uncollectible due to our pending litigation with Krooss, and were recorded in loss from discontinued operations. | |||||||||||||||||
Income Taxes | ' | ||||||||||||||||
Income Taxes | |||||||||||||||||
The Company utilizes the asset and liability method in accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for operating loss and tax credit carry-forwards and for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets unless it is more likely than not that the value of such assets will be realized. | |||||||||||||||||
The Company uses the two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not, that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount, which is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimating the Company's tax positions and tax benefits, which may require periodic adjustments. At September 30, 2013, the Company did not record any liabilities for uncertain tax positions. | |||||||||||||||||
Revenue Recognition | ' | ||||||||||||||||
Revenue Recognition | |||||||||||||||||
License revenue consists principally of revenue earned under software license agreements. The Company sells its software to a medical practitioner for direct payment or through a third party leasing company for direct payment to the Company. The third party lease agreement is a non-recourse debt and the Company is not responsible for the default of the medical practitioner. License revenue is generally recognized when a signed contract or other persuasive evidence of an arrangement exists, the software has been electronically delivered, the license fee is fixed or is measured on a paid user basis; and collection of the resulting receivable is probable. When contracts contain multiple elements wherein Vendor-Specific Objective Evidence (“VSOE”) exists for all undelivered elements, we account for the delivered elements in accordance with the “Residual Method.” VSOE of fair value for maintenance and support is established by a stated renewal rate, if substantive, included in the license arrangement or rates charged in stand-alone sales of maintenance and support. Revenue from subscription license agreements, which include software, rights to unspecified future products and maintenance, is recognized ratably over the term of the subscription period. | |||||||||||||||||
Provided all other revenue criteria are met, the upfront, minimum, non-refundable license fees from customers are generally recognized upon delivery and on-going royalty fees are generally recognized upon reports of new licenses issued. If there is significant uncertainty about the project completion or receipt of payment for professional services, revenue is deferred until the uncertainty is sufficiently resolved. VSOE of fair value of services is based upon stand-alone sales of those services. | |||||||||||||||||
Subscription revenue is generated from bandwidth and information storage. After the first year and each year thereafter that the software has been purchased and installed, the purchaser is required to pay an annual fee of $1,200, $1,500, $1,800, and $2,400, respectively. Subscription revenue is recognized ratably over the term of the agreement. | |||||||||||||||||
Transaction revenue is generated from the following services and recognized when transaction occurs: | |||||||||||||||||
· | Electronic Remittance Advise $0.35 Electronic remittance transaction fee; | ||||||||||||||||
· | Paper Claims $1.00 Paper claim fee; | ||||||||||||||||
· | Carrier Direct $0.16 Carrier direct fee; | ||||||||||||||||
· | Fast Forward $0.35 Fast forward transaction fee; and, | ||||||||||||||||
· | Patient Credit $2.50 Automatic Debit processing per transaction paid by the patient | ||||||||||||||||
The Company has not incurred any transaction revenues in the year ended September 30, 2013. | |||||||||||||||||
Cost of License, and Subscription Revenues | ' | ||||||||||||||||
Cost of License, and Subscription Revenues | |||||||||||||||||
Cost of license revenue is primarily comprised of the license-based royalties to third parties and production and distribution costs for initial product licenses. No costs were incurred for license revenue during the years ended September 30, 2013 and 2012. | |||||||||||||||||
Cost of subscription revenue is primarily comprised of the costs associated with the customer support personnel that provide maintenance, enhancement and support services to customers. No costs were incurred for subscription revenue or customer support during the years ended September 30, 2013 and 2012. | |||||||||||||||||
The amortization of acquired technology for products acquired through business combinations are considered as the cost of revenues. The acquired technology is amortized using the straight-line method over 5 years. | |||||||||||||||||
Sales Commissions | ' | ||||||||||||||||
Sales Commissions | |||||||||||||||||
The Company pays commissions, including sales bonuses, to the direct sales force related to revenue transactions under sales compensation plans established annually. The commission payments are typically accrued on the date of sale and paid in the month following execution of the customer contracts. The Company paid commissions of $62,060 and $73,298 for the years ended September 30, 2013 and 2012, respectively. | |||||||||||||||||
Research and Development and Software Development Costs | ' | ||||||||||||||||
Research and Development and Software Development Costs | |||||||||||||||||
Capitalization of certain software development costs are recorded after the determination of technological feasibility. Based on our product development process, technological feasibility is determined upon the completion of a working model. To date, costs incurred by us from the completion of the working model to the point at which the product is ready for general release have been insignificant. Accordingly, we have charged all such costs to research and development expense in the period incurred. Our research and development costs for the years ended September 30, 2013 and 2012 were $208,895 and $151,000, respectively. | |||||||||||||||||
Share-Based Compensation | ' | ||||||||||||||||
Share-Based Compensation | |||||||||||||||||
The Company measures the cost of services received in exchange for an award of an equity instrument based on the grant-date fair value of the award. Compensation cost is recognized over the vesting or requisite service period. The Black-Scholes option-pricing model is used to estimate the fair value of options or warrants granted. There were no options or warrants issued by the Company during the years ended September 30, 2013 and 2012. | |||||||||||||||||
Basic and Diluted Net Loss per Common Share | ' | ||||||||||||||||
Basic and Diluted Net Loss per Common Share | |||||||||||||||||
Basic income (loss) per share is computed by dividing net income (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 September 30, 2013 and 2012, the Company had no potentially dilutive instruments outstanding. | |||||||||||||||||
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 as a result of the net loss. | |||||||||||||||||
Concentration of Credit Risk | ' | ||||||||||||||||
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. | |||||||||||||||||
Subsequent Events | ' | ||||||||||||||||
Subsequent Events | |||||||||||||||||
The Company has evaluated all transactions occurring between the end of its fiscal year, September 30, 2013, through the date of issuance of the financial statements for subsequent event disclosure consideration. | |||||||||||||||||
Recent Accounting Pronouncements | ' | ||||||||||||||||
Recent Accounting Pronouncements | |||||||||||||||||
No accounting standards or interpretations issued recently are expected to a have a material impact on the Company’s financial position, operations or cash flows. |
NOTE_4_SUMMARY_OF_SIGNIFICANT_2
NOTE 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||
Fair Value Measurements by Level | ' | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
At September 30, 2013 | |||||||||||||||||
Software development net of amortization | $ | — | $ | — | $ | 817,921 | $ | 817,921 | |||||||||
Total Proprietary Technology | $ | — | $ | — | $ | 817,921 | $ | 817,921 | |||||||||
At September 30, 2012 | |||||||||||||||||
Software development net of amortization | $ | — | $ | — | $ | 1,022,591 | $ | 1,022,591 | |||||||||
Total Proprietary Technology | $ | — | $ | — | $ | 1,022,591 | $ | 1,022,591 |
NOTE_5_SOFTWARE_Tables
NOTE 5. SOFTWARE (Tables) | 12 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Research and Development [Abstract] | ' | ||||||||
Software Detail | ' | ||||||||
2013 | 2012 | ||||||||
Source Code License | $ | 2,500 | $ | 2,500 | |||||
Software License | 1,200,106 | 1,200,106 | |||||||
EMR Certification | 23,000 | — | |||||||
Encryption Software Code | 15,800 | — | |||||||
Acquisition of Doctor’s Network of America | 10,000 | 4,000 | |||||||
Total intangible assets | 1,251,406 | 1,202,606 | |||||||
Accumulated amortization of intangible assets (charged to cost of sales) | (423,485 | ) | (180,015 | ) | |||||
Accumulated impairment of assets | (10,000 | ) | (4,000 | ) | |||||
Total proprietary technology, net | $ | 817,921 | $ | 1,022,591 |
NOTE_6_DISCONTINUED_OPERATIONS1
NOTE 6. DISCONTINUED OPERATIONS (Tables) | 12 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Discontinued Operations and Disposal Groups [Abstract] | ' | ||||||||
Discontinued Operations | ' | ||||||||
September 30, | 30-Sep-12 | ||||||||
2013 | |||||||||
Net liabilities of discontinued operations: | |||||||||
Accounts payable and accrued expenses | 35,356 | — | |||||||
Net liabilities of discontinued operations | $ | 35,356 | $ | — | |||||
Year ended September 30, | |||||||||
2013 | 2012 | ||||||||
Discontinued operations: | |||||||||
Revenues | $ | 431,400 | $ | — | |||||
Cost of sales | — | — | |||||||
Operating expenses | (245,287 | ) | — | ||||||
Bad debt | (221,469 | ) | — | ||||||
Interest expense | — | (17,868 | ) | ||||||
Gain from write-off of debt | 58,984 | 410,482 | |||||||
Income from Discontinued Operations | $ | 23,628 | $ | 392,614 |
NOTE_7_DEBT_MITIGATION_PROGRAM1
NOTE 7. DEBT MITIGATION PROGRAM (Tables) | 12 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
OTHER (INCOME) AND EXPENSES | ' | ||||||||
Debt Mitigation Program | ' | ||||||||
September 30, | September 30, | ||||||||
2013 | 2012 | ||||||||
Debt Mitigation Program: | |||||||||
Accounts payable and accrued expenses | $ | 58,984 | $ | 66,281 | |||||
Disputed salaries & vacation of former officers | — | 968,645 | |||||||
Disputed salary – former employee | — | 20,256 | |||||||
Disputed payroll taxes for back pay of former officers | — | 84,701 | |||||||
Disputed interest | — | 227,083 | |||||||
Accrued interest | 42,137 | — | |||||||
Shareholders demand note payable at 12% | — | 11,625 | |||||||
Shareholders demand note payable at 12% | — | 20,000 | |||||||
Unsecured note payable at 8% interest due in November 2010, interest payments in default | — | 175,000 | |||||||
Total debt mitigation program | $ | 101,121 | $ | 1,573,591 | |||||
Gain on write off of debt | $ | (58,984 | ) | $ | (410,483 | ) | |||
Additional paid-in capital (1) | $ | (42,137 | ) | $ | (1,163,108 | ) |
NOTE_3_GOING_CONCERN_ISSUES_De
NOTE 3. GOING CONCERN ISSUES (Details Narrative) (USD $) | Sep. 30, 2013 | Sep. 30, 2012 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ' |
Accumulated Deficit | ($26,542,265) | ($25,911,091) |
NOTE_4_SUMMARY_OF_SIGNIFICANT_3
NOTE 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Fair Value Measurements by Level (Details) (USD $) | Sep. 30, 2013 | Sep. 30, 2012 |
Software Development, Net of Amortization | $817,921 | $1,022,591 |
Total Proprietary Technology | 817,921 | 1,022,591 |
Level 1 | ' | ' |
Software Development, Net of Amortization | ' | ' |
Total Proprietary Technology | ' | ' |
Level 2 | ' | ' |
Software Development, Net of Amortization | ' | ' |
Total Proprietary Technology | ' | ' |
Level 3 | ' | ' |
Software Development, Net of Amortization | 817,921 | 1,022,591 |
Total Proprietary Technology | $817,921 | $1,022,591 |
NOTE_4_SUMMARY_OF_SIGNIFICANT_4
NOTE 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Accounting Policies [Abstract] | ' | ' |
FDIC Insured Deposits | $250,000 | ' |
Accounts Receivable, Write-Offs | 200,000 | ' |
Commissions | 62,060 | 73,298 |
Research and Development Costs | 208,895 | 151,000 |
Subscription Revenue in Year One | 1,200 | ' |
Subscription Revenue in Year Two | 1,500 | ' |
Subscription Revenue in Year Three | 1,800 | ' |
Subscription Revenue in Year Four | $2,400 | ' |
NOTE_5_SOFTWARE_Software_Detai
NOTE 5. SOFTWARE - Software Detail (Details) (USD $) | Oct. 31, 2013 | Sep. 30, 2013 | Sep. 30, 2012 |
Acquisition of Doctors Network of America | $6,000 | $10,000 | $4,000 |
Total intangible assets | ' | 1,251,406 | 1,202,606 |
Accumulated amortization of intangible assets | ' | -423,485 | -180,015 |
Impairment of assets | ' | -10,000 | -4,000 |
Total intangible assets | ' | 817,921 | 1,022,591 |
Source Code License | ' | ' | ' |
Source Code License | ' | 2,500 | 2,500 |
Software License | ' | ' | ' |
Source Code License | ' | 1,200,106 | 1,200,106 |
EMR Certification | ' | ' | ' |
Source Code License | ' | 23,000 | ' |
Encryption Software Code | ' | ' | ' |
Source Code License | ' | $15,800 | ' |
NOTE_5_SOFTWARE_Details_Narrat
NOTE 5. SOFTWARE (Details Narrative) (USD $) | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2012 | |
Research and Development [Abstract] | ' | ' | ' | ' |
Investment Impairment | ' | ' | $10,000 | $4,000 |
Amortization Expense | ' | ' | 243,470 | 180,015 |
Stock Issued for Software Purchase, Shares | ' | ' | 500,004 | 100,000 |
Stock Issued During Period for Software Acquisition, Value | ' | ' | ' | 2,500 |
Stock Issued During Period for Software Acquisition 2, Shares | ' | ' | 400,000 | 941,333 |
Stock Issued for Software Purchase 2, Value | ' | 19,301 | 15,800 | 19,301 |
Stock issued for Acquisition, Shares | 200,000 | ' | ' | 500,000 |
Stock Issued During Period for Investment, Shares | ' | ' | 300,000 | 200,000 |
Stock Issued Investment, Value | ' | 4,000 | 6,000 | 4,000 |
Accumulated Impairmnt of the Acquired Asset | ' | $4,000 | $6,000 | $4,000 |
NOTE_6_DISCONTINUED_OPERATIONS2
NOTE 6. DISCONTINUED OPERATIONS - Discontinued Operations (Details) (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Revenues | $516,868 | $487,703 |
Cost of sales | 243,470 | 181,739 |
Operating expenses | 929,161 | 378,211 |
Interest expense | 392 | 1,488 |
Gain from write-off of debt | -58,984 | -410,483 |
Discontinued Operations | ' | ' |
Accounts payable and accrued expenses | 35,356 | ' |
Net liabilities of discontinued operations | 35,356 | ' |
Revenues | 431,400 | ' |
Cost of sales | ' | ' |
Operating expenses | -245,287 | ' |
Bad debt | -221,469 | ' |
Interest expense | ' | -17,868 |
Gain from write-off of debt | 58,984 | 410,482 |
Income from Discontinued Operations | $23,628 | $392,614 |
NOTE_6_DISCONTINUED_OPERATIONS3
NOTE 6. DISCONTINUED OPERATIONS (Details Narrative) (USD $) | 3 Months Ended | 12 Months Ended | ||||||||
Sep. 30, 2007 | Sep. 30, 2011 | Sep. 30, 2006 | Sep. 30, 2005 | Sep. 30, 2013 | Sep. 30, 2012 | 31-May-06 | Apr. 27, 2006 | Nov. 01, 2005 | 27-May-05 | |
Discontinued Operations and Disposal Groups [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Sale of Assets, Purchase Price | ' | $100,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Note Payable | ' | ' | ' | ' | ' | ' | 20,000 | 16,625 | 175,000 | ' |
Note Payable, Interest Rate | 8.00% | ' | ' | ' | ' | ' | 1200.00% | 1200.00% | 800.00% | 6.00% |
Shares Issued, Financing Program | ' | ' | ' | 1,200,000 | ' | ' | ' | ' | ' | ' |
Per Share Conversion Price | ' | ' | ' | ' | ' | ' | ' | ' | $0.05 | ' |
Shares Issued, Price Per Share | ' | ' | ' | ' | ' | ' | ' | ' | $0.04 | ' |
Debt Discount | ' | ' | ' | ' | ' | ' | ' | ' | 51,600 | ' |
Beneficial Conversion Feature | ' | ' | ' | 9,933 | ' | ' | ' | ' | ' | ' |
Deferred Financing Costs, Issuance of Shares | ' | ' | ' | ' | ' | ' | ' | ' | 24,000 | ' |
Related Party Payable | 13,300 | ' | ' | ' | ' | 25,591 | ' | ' | ' | 159,000 |
Proceeds from Repayment of Related Party Debt | 11,000 | 0 | ' | ' | ' | ' | ' | ' | ' | ' |
Due to Related Party | 148,000 | ' | ' | ' | 0 | 25,591 | ' | ' | ' | ' |
Interest Payable | 13,300 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Origination/Placement Fee | ' | ' | 500 | ' | ' | ' | ' | ' | ' | ' |
Warrants Issued | ' | ' | $100,000 | ' | ' | ' | ' | ' | ' | ' |
Purchase Price Per Share | ' | ' | ' | ' | ' | ' | $0.04 | $0.04 | ' | ' |
NOTE_7_DEBT_MITIGATION_PROGRAM2
NOTE 7. DEBT MITIGATION PROGRAM - Debt Mitigation Program (Details) (USD $) | 12 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | ||
Debt mitigation program | $101,121 | $1,573,591 | |
Gain on write off of debt | -58,984 | -410,483 | |
Additional paid-in capital | 42,137 | 1,163,109 | [1] |
Accounts Payable and Accrued Expenses | ' | ' | |
Debt mitigation program | 58,984 | 66,281 | |
Disputed Salaries & Vacations of Former Officers | ' | ' | |
Debt mitigation program | ' | 968,645 | |
Disputed Salaries of Former Employees | ' | ' | |
Debt mitigation program | ' | 20,256 | |
Disputed Payroll Taxes for Back Pay of Former Officers | ' | ' | |
Debt mitigation program | ' | 84,701 | |
Disputed Interest | ' | ' | |
Debt mitigation program | ' | 227,083 | |
Accrued Interest | ' | ' | |
Debt mitigation program | 42,137 | ' | |
Shareholders Demand Note 1 | ' | ' | |
Debt mitigation program | ' | 11,625 | |
Shareholders Demand Note 2 | ' | ' | |
Debt mitigation program | ' | 20,000 | |
Unsecured Note | ' | ' | |
Debt mitigation program | ' | $175,000 | |
[1] | All amounts that were owed to related parties in prior years were recorded to paid-in-capital. |
NOTE_7_DEBT_MITIGATION_PROGRAM3
NOTE 7. DEBT MITIGATION PROGRAM (Details Narrative) (USD $) | 12 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | ||
OTHER (INCOME) AND EXPENSES | ' | ' | |
Creditor Liabilities, Write Off | $101,121 | $1,573,591 | |
Gain on the Write Off of Liabilities | 58,984 | 410,482 | |
Additional Paid-In Capital for Related Party Liabilities | $42,137 | $1,163,109 | [1] |
[1] | All amounts that were owed to related parties in prior years were recorded to paid-in-capital. |
NOTE_8_COMMITMENTS_AND_CONTING1
NOTE 8. COMMITMENTS AND CONTINGENCIES (Details Narrative) (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
COMMITMENTS AND CONTINGENCIES | ' | ' |
Rent Expense | $0 | $0 |
Litigation Reserve | 200,000 | ' |
Write Offs | $101,121 | $1,573,591 |
NOTE_9_RELATED_PARTY_TRANSACTI1
NOTE 9. RELATED PARTY TRANSACTIONS (Details Narrative) (USD $) | 12 Months Ended | |||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2007 | |||
Related Party Transactions [Abstract] | ' | ' | ' | ' | ||
Stock Issued during Period for Conversion of Debt, Shares | ' | ' | 30,000,000 | ' | ||
Stock Issued During Period Conversion of Debt, Value | ' | ' | $1,200,106 | ' | ||
Related Party, Cash Advances | ' | 5,409 | 7,969 | ' | ||
Related Party, Payments Made on Behalf of Compay | ' | 25,236 | ' | ' | ||
Repayment of Related Party Debt | -188,410 | -31,000 | -188,410 | ' | ||
Due to Related Party | ' | $0 | $25,591 | $148,000 | ||
Employment Agreements | ' | ' | ' | ' | ||
Employment Agreements | ||||||
The Company entered into an employment agreement with its Chief Executive Officer on January 1, 2013. The employment agreement will expire on January 1, 2018 and shall automatically renew for another 5 years unless terminated in accordance with the provisions of the employment agreement. The employment agreement provides for: | ||||||
i. | A monthly salary of $20,833 subject to an annual increase of 10% and consistent with the Company policy applicable to other senior executives and officers and approval by the Board of Directors. | |||||
ii. | A cash bonus of 25% of his annual base salary each year if the Company reaches the following milestones (none of which were attained in 2013): | |||||
a. | The Company posts annual gross revenues on a consolidated basis of at least $5,000,000; | |||||
b. | The Company's earnings before the deduction of income taxes and amortization expenses (“EBITA”), including cash extraordinary items but before officer's bonuses, on a consolidated basis for any year is at least $1,000,000; or the completion of the delinquent SEC filings for five (5) years through September 30, 2013 or the Company obtains FINRA approval for any reverse stock splits. | |||||
iii. | The issuance of shares equal to 1% of the then issued and outstanding shares of the Company annually which is approximately 2,146,242, to be issued in 2013. | |||||
iv. | The issuance of common stock on each anniversary date of the employment agreement of 5,000,000 shares and issuance of common stock for every acquisition granting 5,000,000 shares for DNA, 5,000,000 shares for CipherSmith, LLC, and 1,000,000 shares for MediSouth, LLC. | |||||
v. | An automobile allowance of $1,500 per month. | |||||
vi. | A medical insurance allowance of $1,500 per month. | |||||
vii. | In the event the Executive's employment is terminated without cause, he will receive the entire contract remaining on the agreement. | |||||
The Company entered into an employment agreement with its Chief Financial Officer on January 1, 2013. The employment agreement will expire January 1, 2018 and shall automatically renew for another 5 years unless terminated in accordance with the provisions of the employment agreement. The employment agreement provides for: | ||||||
i. | A monthly salary of $12,500 per month subject to an annual increase of 10% per year and consistent with the Company policy applicable to other senior executives and officers and approval by the Board of Directors. | |||||
ii. | A cash bonus of 25% of her annual base salary each year if the Company reaches the following milestones (none of which were attained in 2013): | |||||
a. | The Company posts annual gross revenues on a consolidated basis of at least $5,000,000; | |||||
b. | The Company's EBITA, including cash extraordinary items but before officer's bonuses, on a consolidated basis for any year is at least $1,000,000; or the completion of the delinquent SEC filings for five (5) years through September 30, 2013 or the Company obtains FINRA approval for any reverse stock splits. | |||||
iii. | The issuance of shares equal to 1% of the then issued and outstanding shares of the Company annually, which is approximately 2,146,242 to be issued in 2013 | |||||
iv. | The issuance of common stock on each anniversary date of the employment agreement of 5,000,000 shares and issuance of common stock for every acquisition granting 3,000,000 shares for DNA, 3,000,000 shares for CipherSmith, LLC, and 750,000 shares for MediSouth, LLC. | |||||
v. | An automobile allowance of $1,000 per month. | |||||
vi. | A medical insurance allowance of $1,500 per month. | |||||
vii. | In the event the Executive's employment is terminated without cause he will receive the entire contract remaining on the agreement. | |||||
NOTE_10_EQUITY_Details_Narrati
NOTE 10. EQUITY (Details Narrative) (USD $) | 12 Months Ended | |||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2012 | Jun. 21, 2012 | |
Equity [Abstract] | ' | ' | ' | ' |
Common Stock, Shares Authorized | ' | 650,000,000 | 650,000,000 | ' |
Preferred Stock, Shares Authorized | ' | 4,000,000 | 4,000,000 | ' |
Preferred Stock, Par Value | ' | $0.01 | $0.01 | ' |
Stock Issued for Cash, Shares | 68,000 | 217,500 | 190,000 | ' |
Stock Issued During Period for Cash, Value | ' | $143,000 | $68,000 | ' |
Stock Issued for Software Purchase 2, Shares | ' | 400,000 | 941,333 | ' |
Stock Issued for Software Purchase 2, Value | 19,301 | 15,800 | 19,301 | ' |
Stock Issued Compensation, Shares | ' | 1,165,500 | 33,000 | ' |
Stock Issued Compensation, Value | 624 | 36,629 | 624 | ' |
Stock Issued Investment, Shares | ' | 300,000 | 200,000 | ' |
Stock Issued Investment, Value | 4,000 | 6,000 | 4,000 | ' |
Stock Issued for Software Purchase, Shares | ' | 500,004 | 100,000 | ' |
Stock Issued for Software Purchase, Value | 2,500 | 15,800 | 2,500 | ' |
Stock Issued Conversion of Debt, Shares | ' | ' | 30,000,000 | ' |
Stock Issued Conversion of Shares, Value | $1,200,106 | ' | $1,200,106 | ' |
Stock Issued, Price Per Share | ' | ' | $0.03 | $0.02 |
Preferred Stock, Shares Reserved | ' | 4,000,000 | ' | ' |
Preferred Stock, Voting Rights | ' | '150 | ' | ' |
NOTE_11_INCOME_TAXES_Details_N
NOTE 11. INCOME TAXES (Details Narrative) (USD $) | 12 Months Ended |
Sep. 30, 2013 | |
Income Tax Disclosure [Abstract] | ' |
Net Operating Loss Carryforward | $25,900,000 |
Income Tax Expense | $0 |
NOTE_12_SUBSEQUENT_EVENTS_Deta
NOTE 12. SUBSEQUENT EVENTS (Details Narrative) (USD $) | 3 Months Ended | 12 Months Ended | |||||
Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2012 | Jan. 10, 2014 | Nov. 30, 2013 | Oct. 31, 2013 | |
Acquisition of Software, Fair Value | ' | ' | $10,000 | $4,000 | ' | ' | $6,000 |
Shares Issued in Acquisition | 200,000 | ' | ' | 500,000 | ' | ' | ' |
Line of Credit, Amount | ' | ' | ' | ' | ' | 65,000 | ' |
Line of Credit, Interest Rate | ' | ' | ' | ' | ' | 4.00% | ' |
Line of Credit, Amount Outstanding | ' | ' | ' | ' | 36,500 | ' | ' |
Preferred Stock Conversion Rights | '1 shares of Convertible Preferred A Shares to 150 Common Shares of the Company | ' | ' | ' | ' | ' | ' |
Stock Issued for Cash, Shares | ' | 68,000 | 217,500 | 190,000 | ' | ' | ' |
Stock Issued for Cash, Value | ' | ' | 143,000 | 68,000 | ' | ' | ' |
Stock Issued for Software Purchase, Shares | ' | ' | 500,004 | 100,000 | ' | ' | ' |
Stock Issued for Software Purchase, Value | ' | 2,500 | 15,800 | 2,500 | ' | ' | ' |
Stock Issued for Software Purchase 2, Shares | ' | ' | 400,000 | 941,333 | ' | ' | ' |
Stock Issued for Software Purchase 2, Value | ' | 19,301 | 15,800 | 19,301 | ' | ' | ' |
Subsequent Event [Member] | ' | ' | ' | ' | ' | ' | ' |
Stock Issued for Cash, Shares | ' | 35,000 | ' | ' | ' | ' | ' |
Stock Issued for Cash, Value | ' | 15,000 | ' | ' | ' | ' | ' |
Stock Issued for Software Purchase, Shares | ' | 200,000 | ' | ' | ' | ' | ' |
Stock Issued for Software Purchase, Value | ' | 6,000 | ' | ' | ' | ' | ' |
Stock Issued as Replacement Shares, Shares | ' | 180,000 | ' | ' | ' | ' | ' |
Stock Issued for Software Purchase 2, Shares | ' | 120,000 | ' | ' | ' | ' | ' |
Stock Issued for Software Purchase 2, Value | ' | $3,600 | ' | ' | ' | ' | ' |
Antree Systems Limited | ' | ' | ' | ' | ' | ' | ' |
Stock Issued as Replacement Shares, Shares | ' | 160,000 | ' | ' | ' | ' | ' |
Kimberly Ilicerl | ' | ' | ' | ' | ' | ' | ' |
Stock Issued as Replacement Shares, Shares | ' | 20,000 | ' | ' | ' | ' | ' |