Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Jun. 30, 2014 | Aug. 12, 2014 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'NATIONAL SCIENTIFIC CORP/AZ | ' |
Entity Central Index Key | '0001022505 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Jun-14 | ' |
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? | 'Yes | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 280,321,722 |
Document Fiscal Period Focus | 'Q3 | ' |
Document Fiscal Year Focus | '2013 | ' |
Balance_Sheets_Unaudited
Balance Sheets (Unaudited) (USD $) | Jun. 30, 2014 | Sep. 30, 2013 |
CURRENT ASSETS: | ' | ' |
Cash | $828,501 | $8,587 |
Accounts receivable | 6,901 | 8,338 |
Total current assets | 835,402 | 16,925 |
Software, net | 640,456 | 817,921 |
TOTAL ASSETS | 1,475,858 | 834,846 |
CURRENT LIABILITIES: | ' | ' |
Accounts payable and accrued expenses | 547,487 | 361,994 |
Stock payable | 177,300 | ' |
Liabilities attributed to discontinued operations | 44,939 | 35,356 |
Lines of credit | 62,612 | 9,796 |
Total current liabilities | 832,338 | 407,146 |
TOTAL LIABILITIES | 832,338 | 407,146 |
STOCKHOLDERS' EQUITY: | ' | ' |
Preferred stock, $0.01 par value, 4,000,000 shares authorized; 4,000,000 issued and outstanding | 40,000 | 40,000 |
Common stock, $0.01 par value, 650,000,000 shares authorized; 280,286,722 and 214,624,216 issued and outstanding | 2,802,867 | 2,146,242 |
Additional paid-in capital | 25,659,571 | 24,783,723 |
Accumulated deficit | -27,858,918 | -26,542,265 |
Total stockholders' equity | 643,520 | 427,700 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $1,475,858 | $834,846 |
Balance_Sheets_Parenthetical
Balance Sheets (Parenthetical) (USD $) | Jun. 30, 2014 | Sep. 30, 2013 |
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 | 4,000,000 | 4,000,000 |
Preferred Stock, Shares Outstandng | 4,000,000 | 4,000,000 |
Common Stock, Par Value | $0.01 | $0.01 |
Common Stock, Shares Authorized | 650,000,000 | 650,000,000 |
Common Stock, Shares Issued | 280,286,722 | 214,624,216 |
Common Stock, Shares Outstanding | 280,286,722 | 214,624,216 |
Statements_of_Operations_Unaud
Statements of Operations (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
Income Statement [Abstract] | ' | ' | ' | ' |
COST OF REVENUES | $61,155 | $61,155 | $183,465 | $182,315 |
GROSS PROFIT | 1,065,570 | 76,786 | 1,165,935 | 279,197 |
OPERATING EXPENSES: | ' | ' | ' | ' |
Selling, general and administrative | 1,079,306 | 202,005 | 2,447,524 | 537,830 |
Research and development | ' | 58,044 | 20,000 | 153,044 |
Impairment of assets | ' | 6,000 | ' | 6,000 |
Total operating expenses | 1,079,306 | 266,049 | 2,467,524 | 696,874 |
OPERATING LOSS | -13,736 | -189,263 | -1,301,589 | -417,677 |
OTHER INCOME (EXPENSE) | ' | ' | ' | ' |
Interest expense | -1,656 | -15 | -2,171 | -211 |
Gain on the disposal of assets | ' | ' | ' | 1,353 |
Total other income (expense) | -1,656 | -15 | -2,171 | 1,142 |
LOSS FROM CONTINUING OPERATIONS | -15,392 | -189,278 | -1,303,760 | -416,535 |
INCOME (LOSS) FROM DISCONTINUED OPERATIONS | -5,376 | 1,138 | -12,893 | 60,084 |
NET LOSS | ($20,768) | ($188,140) | ($1,316,653) | ($356,451) |
Basic and diluted | ' | ' | ' | ' |
Continuing operations | $0 | $0 | ($0.01) | $0 |
Discontinued operations | $0 | $0 | $0 | $0 |
Total | $0 | $0 | ($0.01) | $0 |
WEIGHTED AVERAGE NUMBER COMMON SHARES OUTSTANDING | ' | ' | ' | ' |
Basic and diluted | 268,945,677 | 214,211,293 | 236,086,498 | 213,052,263 |
Statements_of_Cash_Flows_Unaud
Statements of Cash Flows (Unaudited) (USD $) | 9 Months Ended | |||
Jun. 30, 2014 | Jun. 30, 2013 | |||
Statement of Cash Flows [Abstract] | ' | ' | ||
Net Loss | ($1,316,653) | ($356,451) | ||
Income from discontinued operations | -12,893 | 60,084 | ||
Loss from continuing operations | -1,303,760 | -416,535 | ||
Adjustments to reconcile net loss from continuing operations to net cash from operating activities: | ' | ' | ||
Depreciation and amortization | 183,465 | 182,315 | ||
Share-based compensation | 1,623,369 | 31,829 | ||
Common stock issued for software sales | 5,700 | 12,313 | ||
Impairment of asset | ' | 6,000 | ||
Gain on the disposal of assets | ' | 1,353 | ||
Changes in operating assets and liabilities: | ' | ' | ||
Accounts receivables | 1,437 | 132 | ||
Accounts payables and accrued liabilities | 241,888 | 145,256 | ||
Net cash provided by (used in) operating activities | 752,098 | -40,043 | ||
CASH FLOWS FROM INVESTING ACTIVITIES: | ' | ' | ||
Purchase of intangible asset | ' | -11,500 | ||
Proceeds from the sale of assets | ' | 1,353 | ||
Net cash provided by investing activities | ' | -10,147 | ||
CASH FLOWS FROM FINANCING ACTIVITIES: | ' | ' | ||
Advances from officer | 8,299 | ' | ||
Repayment of advances from officer | -8,299 | -25,591 | ||
Proceeds from line of credit | 103,529 | 5,664 | ||
Repayment of line of credit | -50,713 | -22,427 | ||
Common stock issued for cash | 15,000 | 141,000 | ||
Net cash provided by financing activities | 67,816 | 98,646 | ||
INCREASE IN CASH | 819,914 | 48,456 | ||
CASH, BEGINNING OF PERIOD | 8,587 | 51,356 | ||
CASH, END OF PERIOD | 828,501 | 99,812 | ||
SUPPLEMENTAL DISCLOSURE | ' | ' | ||
Interest paid | ' | ' | ||
Taxes paid | ' | ' | ||
NONCASH OPERATING, INVESTING, AND FINANCING ACTIVITIES | ' | ' | ||
Write-off of related party debt to additional paid-in capital | 59,704 | [1] | ' | [1] |
Common stock issued for purchase of intangible assets | 6,000 | 21,800 | ||
Accrual of software acquisition costs | ' | $11,500 | ||
[1] | All amounts that were owed to related parties in prior years were recorded to paid-in capital. |
Note_1_DESCRIPTION_OF_BUSINESS
Note 1. DESCRIPTION OF BUSINESS | 9 Months Ended |
Jun. 30, 2014 | |
Accounting Policies [Abstract] | ' |
Note 1. DESCRIPTION OF BUSINESS | ' |
NOTE 1- DESCRIPTION OF BUSINESS | |
Cloud Medical Doctor Software Corporation (the “Company”) was incorporated in Texas on June 22, 1953 as American Mortgage Company. On May 16, 1996, the Company changed its name to National Scientific Corporation. On 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 processes resulting in Increased Profits, Higher Quality, Greater Efficiency, Noticeable Cost Reductions and Better Patient Care. Current software product offerings include Practice Management, Electronic Medical Records, Revenue Management, Patient Financial Solutions, Medical and Pharmaceutical Supply Management, Claims Management and PHI Exchange. | |
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 our medical billing software. The software uses a continuous insurance claim follow-up system to track and research all rejected or denied medical claims; a Comprehensive Reporting module that includes monthly financial statements sent to our clients so they can see how their practice is performing and a variety of detailed reports giving our clients the necessary information and tools used to assist in the increased production which leads to more profit; and patient account inquiries and support to assist patients with their billing and insurance questions. | |
On November 21, 2012, the Company purchased from CipherSmith, LLC a complete source code, intellectual property rights, all computer software or algorithm licensed or sold under CipherSmith, and appropriate copy rights, patents, mask works, trademarks, service marks, internet domain names or world wide web URS. Since 2012 the Company has tested the software application and created a commercial product for distribution of its encryption technology. The Company is presently, developing more applications for consumer usage in the future. |
Note_2_BASIS_OF_PRESENTATION_O
Note 2. BASIS OF PRESENTATION OF INTERIM CONSOLIDATED FINANCIAL STATEMENTS | 9 Months Ended |
Jun. 30, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
Note 2. BASIS OF PRESENTATION OF INTERIM CONSOLIDATED FINANCIAL STATEMENTS | ' |
NOTE 2 – BASIS OF PRESENTATION OF INTERIM CONSOLIDATED FINANCIAL STATEMENTS | |
The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. The accompanying interim unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. In our opinion, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. | |
Operating results for the nine months ended June 30, 2014 are not necessarily indicative of the results that may be expected for the year ending September 30, 2014. Notes to the unaudited interim consolidated financial statements that would substantially duplicate the disclosures contained in the audited consolidated financial statements for the year ended September 30, 2013 have been omitted; this report should be read in conjunction with the audited consolidated financial statements and the footnotes thereto for the fiscal year ended September 30, 2013 included within the Company’s Form 10-K as filed with the Securities and Exchange Commission. | |
Segment reporting change | |
With the placement into service of the Company’s encryption technology, the Company began a segment reporting structure to match the new operating structure and how the Company’s management views the business and allocates resources, beginning in the quarter ended June 30, 2014. Reclassifications of prior period financial information have been made to conform to the current period presentation. This change does not impact previously reported condensed consolidated financial statements of the Company. See Note 12 for additional information on our segment reporting change. |
Note_3_GOING_CONCERN
Note 3. GOING CONCERN | 9 Months Ended |
Jun. 30, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
Note 3. GOING CONCERN | ' |
NOTE 3 - GOING CONCERN | |
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. However, the Company has recurring losses from operations and an accumulated deficit at June 30, 2014 of $27,858,918 and needs additional cash to maintain its operations. | |
These factors raise doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company’s continued existence is dependent upon management’s ability to develop profitable operations, continued contributions from the Company’s executive officers to finance its operations and the ability to obtain additional funding sources to explore potential strategic relationships and to provide capital and other resources for the further development and marketing of the Company’s products and business. |
Note_4_SUMMARY_OF_SIGNIFICANT_
Note 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended | ||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||
Note 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | ||||||||||||||||
NOTE 4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||||||||||
The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. Significant accounting policies are as follows: | |||||||||||||||||
Use of Estimates and Assumptions | |||||||||||||||||
The preparation of consolidated 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 consolidated 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 consolidated 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 its 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 June 30, 2014, cash and cash equivalents include cash on hand and cash in the bank and the FDIC insures these deposits up to $250,000. | |||||||||||||||||
Impairment of Long-Lived Assets | |||||||||||||||||
Long-lived assets are evaluated for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the undiscounted future cash flows to the recorded value of the asset. If impairment is indicated, the asset is written down to its estimated fair value. The acquired software technologies are reviewed annually for impairment. | |||||||||||||||||
Fair Value of Financial Instruments | |||||||||||||||||
The Company's financial instruments consist primarily of cash, accounts payable and accrued expenses, and debt. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments. | |||||||||||||||||
Fair value is focused on an exit price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Within the measurement of fair value, the use of market-based information is prioritized over entity specific information and a three-level hierarchy for fair value measurements is used based on the nature of inputs used in the valuation of an asset or liability as of the measurement date. | |||||||||||||||||
The three-level hierarchy for fair value measurements is defined as follows: | |||||||||||||||||
• | Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets; liabilities in active markets; | ||||||||||||||||
• | Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability other than quoted prices, either directly or indirectly, including inputs in markets that are not considered to be active; or directly or indirectly including inputs in markets that are not considered to be active; | ||||||||||||||||
• | Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement. | ||||||||||||||||
The following table summarizes fair value measurements by level at June 30, 2014 and September 30, 2013 for assets measured at fair value on a recurring basis: | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
At June 30, 2014 | |||||||||||||||||
Software | $ | — | $ | — | $ | 640,456 | $ | 640,456 | |||||||||
Total Software | $ | — | $ | — | $ | 640,456 | $ | 640,456 | |||||||||
At September 30, 2013 | |||||||||||||||||
Software | $ | — | $ | — | $ | 937,431 | $ | 937,431 | |||||||||
Total Software | $ | — | $ | — | $ | 937,431 | $ | 937,431 | |||||||||
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 June 30, 2014 and 2013, the Company had no valuation allowance for the Company’s accounts receivable. | |||||||||||||||||
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 June 30, 2014, the Company did not record any liabilities for uncertain tax positions. | |||||||||||||||||
Revenue Recognition | |||||||||||||||||
Medical Licensing Agreement | |||||||||||||||||
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. In the first year and each year thereafter, the software is purchased and installed the purchaser will 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 a transaction occurs: | |||||||||||||||||
· | Electronic Remittance Advice $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 had not received any transaction revenues in the three and nine months ended June 30, 2014. | |||||||||||||||||
CipherLoc Licensing Agreement | |||||||||||||||||
License revenue also consists of revenue earned under a CipherLoc License Agreement. 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. | |||||||||||||||||
Cost of License, and Subscriptions 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-based royalties during the nine months ended June 30, 2014 and 2013. | |||||||||||||||||
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 customer support during the nine months ended June 30, 2014 and 2013. | |||||||||||||||||
The amortization of acquired technology for products acquired through business combinations are considered as the cost of revenues. The acquired software technologies are amortized over their useful lives of 5 years | |||||||||||||||||
Deferred Revenue | |||||||||||||||||
Deferred revenue result from fees billed to customers for which revenue has not yet been recognized or for which the conditions of the arrangement have been modified. The Company recognizes revenue to provide up-front capitalization to Cloud-MD for each provider added to the solution set. The Company also recognizes annual subscription fees for virtual servers and subscription and small usage fees and those revenues are based on a 48-month lease, Cloud-MD would amortize the revenue over the life of the agreement of 48 months. In addition, it features incremental monthly revenue, for the duration of the lease (48 months) based on fees assessed for transactions such as eligibility claims processing, etc. | |||||||||||||||||
The Company has deferred revenue of $0 as of June 30, 2014. | |||||||||||||||||
Sales Commissions | |||||||||||||||||
The Company pays commissions, including sales bonuses, to the direct sales force related to revenue transactions under sales compensation plans which are established annually. The commission payments are typically paid in full in the month or quarter following execution of the customer contracts. The Company paid commissions of $0 and $10,000 for the three months ended June 30, 2014 and 2013, respectively, and $35,650 and $50,260 for the nine months ended June 30, 2014 and 2013, respectively. | |||||||||||||||||
Research and Development and Software Development Costs | |||||||||||||||||
Capitalization of certain software development costs subsequent to the establishment of technological feasibility. Based on our product development process, technological feasibility is established 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. The Company recorded research and development costs of $0 and $58,044 for the three months ended June 30, 2014 and 2013, respectively, and $20,000 and $153,044 for the nine months ended June 30, 2014 and 2013, 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. | |||||||||||||||||
Basic and Diluted Net Income (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. | |||||||||||||||||
The Company has 4,000,000 preferred shares that can be converted subject to the limitation of the Company’s authorized shares at 1 preferred share for 150 common shares. The conversion can only take place with the approval of the Board of Directors. At June 30, 2014, the preferred shares could be converted into 600,000,000 of common shares resulting in dilution of common shareholders. The preferred shares are anti-dilutive since the losses the Company has incurred for the periods ended June 30, 2014 and 2013. | |||||||||||||||||
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. Presently the bank accounts held by Chase bank exceeds the $250,000 FDIC insurance by $608,201. | |||||||||||||||||
Subsequent Events | |||||||||||||||||
The Company has evaluated all transactions occurring between June 30, 2014and the date of issuance of the consolidated 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 | 9 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Research and Development [Abstract] | ' | ||||||||
Note 5. SOFTWARE | ' | ||||||||
NOTE 5 – SOFTWARE | |||||||||
The following is a detail of software at June 30, 2014 and September 30, 2013: | |||||||||
June 30, | September 30, | ||||||||
2014 | 2013 | ||||||||
Source Code License – Antree Systems Limited | $ | 6,000 | $ | — | |||||
Encryption Software Code | 15,800 | 15,800 | |||||||
Source Code License – MediSouth, LLC | 2,500 | 2,500 | |||||||
Acquisition of Doctor’s Network of America | 10,000 | 10,000 | |||||||
Software License | 1,200,106 | 1,200,106 | |||||||
EMR Certification | 23,000 | 23,000 | |||||||
Total intangible assets | 1,257,406 | 1,251,406 | |||||||
Accumulated amortization of intangible assets | (606,950 | ) | (423,485 | ) | |||||
Accumulated impairment of assets | (10,000 | ) | (10,000 | ) | |||||
Total intangible assets | $ | 640,456 | $ | 817,921 | |||||
The Company’s software was placed into service starting in the second quarter of fiscal year ended September 30, 2012. The amortization expense was $61,155 and $61,155 for the three months ended June 30, 2014 and 2013, respectively. The Company recognized a $0 and $10,000 for impairment of software acquired from Doctors Network of America (“DNA”) operating in Flowood, Mississippi during the nine months ended June 30, 2014 and the year ended September 30, 2013, respectively. 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 assets to be impaired. | |||||||||
Source Code License | |||||||||
In October 2013, the Company through a purchase agreement with Antree Systems Limited has purchased a complete source code, intellectual property rights, all computer software, patents, or formulas, algorithm licensed or sold under a project known as Compass Rose and appropriate copyrights, patents, mask works, trademarks, service marks, internet domain names and world wide web uniform resource locators (“URLs”) from Antree Systems Limited. The Company issued 200,000 shares of its common stock as consideration for the purchase. The fair value of the consideration and the assets acquired is based on the fair value of the common stock issued in exchange for the software. The total fair value, based on the market price on the date of grant, was $6,000. The Company evaluated this acquisition and determined that it did not meet the definition of a significant business acquisition. | |||||||||
Encryption Software Code | |||||||||
On November 21, 2012, the Company purchased from CipherSmith, LLC a complete source code, intellectual property rights, all computer software or algorithm licensed or sold under CipherSmith, and appropriate copy rights, patents, mask works, trademarks, service marks, internet domain names or world wide web URS. 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, 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. |
Note_6_DISCONTINUED_OPERATIONS
Note 6. DISCONTINUED OPERATIONS | 9 Months Ended | ||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||
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 former business operation of the GPS operational device business. In 2011, this business was 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 specific consideration for this transaction. | |||||||||||||||||
Accordingly, the Company reclassified the assets, liabilities and operations related to its GPS operational device business as discontinued operations. Consequently, the accompanying consolidated financial statements reflect the assets, liabilities and operations of the GPS operational device business as net assets of discontinued operations, net liabilities of discontinued operations and results from discontinued operations. | |||||||||||||||||
On March 16, 2013, the Company closed the acquisition with the final payment for DNA. Subsequent to the transaction closing, the sellers refused to pay the transaction fees for medical billing contracts that were processed. The Company filed a lawsuit against the sellers for Breach of Contract among other things in June of 2013. During that time, the Company believes the sellers began contacting all billing contract holders and interfered with the acquisition of all the assets from the transaction. Consequently, the accompanying consolidated financial statements reflect the assets, liabilities and operations of DNA as net assets of discontinued operations, net liabilities of discontinued operations and results from discontinued operations. | |||||||||||||||||
Details of the classifications for net assets, liabilities and operations are shown below. | |||||||||||||||||
30-Jun-14 | 30-Sep-13 | ||||||||||||||||
Net liabilities of discontinued operations: | |||||||||||||||||
Accounts payable | $ | 44,594 | $ | 35,356 | |||||||||||||
Net liabilities of discontinued operations | $ | 44,594 | $ | 35,356 | |||||||||||||
Three Months Ended | |||||||||||||||||
June 30, | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Discontinued operations: | |||||||||||||||||
Revenues | $ | 45,555 | $ | 266,246 | |||||||||||||
Cost of sales | — | — | |||||||||||||||
Operating expenses | 50,931 | (265,108 | ) | ||||||||||||||
Gain from write-off of debt | — | — | |||||||||||||||
(Loss) income from discontinued operations | (5,376 | )) | $ | 1,138 | |||||||||||||
Nine months ended | |||||||||||||||||
June 30, | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Discontinued operations: | |||||||||||||||||
Revenues | $ | 176,607 | $ | 267,146 | |||||||||||||
Cost of sales | — | — | |||||||||||||||
Operating expenses | 189,500 | (266,046 | ) | ||||||||||||||
Gain from write-off of debt | — | 58,984 | |||||||||||||||
(Loss) income from discontinued operations | (12,893 | )) | $ | 60,084 |
Note_7_LINES_OF_CREDIT
Note 7. LINES OF CREDIT | 9 Months Ended |
Jun. 30, 2014 | |
Debt Disclosure [Abstract] | ' |
Note 7. LINES OF CREDIT | ' |
NOTE 7 – LINES OF CREDIT | |
In November 2013, the Company entered into a revolving line of credit with Mutual of Omaha in the amount of $65,000 at a 4.00% interest rate per annum which renews annually. As of June 30, 2014, the Company had borrowed $62,612 against the line of credit. | |
The Company has a revolving line of credit with Chase Bank with a balance as of June 30, 2014 in the amount of $0 and a borrowing limit of $50,000. The line of credit with Chase Bank has an interest rate of 4.25% per annum and renews annually. | |
Interest expense for these lines of credit was $1,657 from $15 for the three months ended June 30, 2014 and 2013, respectively, and $2,171 and $211 for the nine months ended June 30, 2014 and 2013, respectively. |
Note_8_DEBT_MITIGATION_PROGRAM
Note 8. DEBT MITIGATION PROGRAM | 9 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
OTHER INCOME (EXPENSE) | ' | ||||||||
Note 8. DEBT MITIGATION PROGRAM | ' | ||||||||
NOTE 8 – 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 nine months ended June 30, 2014 and 2013, the Company recognized a gain on the write-off of liabilities in the amount of $0 and $58,984 from third party liabilities, respectively, which was recorded in income from discontinued operations, and additional paid-in capital of $59,704 and $0 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. | |||||||||
June 30, | June 30, | ||||||||
2014 | 2013 | ||||||||
Debt Mitigation Program: | |||||||||
Accounts payable and accrued expenses | $ | 59,704 | $ | 58,984 | |||||
Total debt mitigation program | $ | 59,704 | $ | 58,984 | |||||
Gain on write-off of debt | — | (58,984 | ) | ||||||
Additional paid-in capital (1) | $ | 59,704 | $ | — | |||||
(1) All amounts that were owed to related parties in prior years were recorded to paid-in capital. |
Note_9_COMMITMENTS_AND_CONTING
Note 9. COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Jun. 30, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
Note 9. COMMITMENTS AND CONTINGENCIES | ' |
NOTE 9 – COMMITMENTS AND CONTINGENCIES | |
Rent expense for the three and nine months ended June 30, 2014 and 2013 was $0 for both periods. | |
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”). 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. The Company has issued 90,029,843 anti-reverse split shares and these holders will hold the same number of shares after the reverse split has been completed. | |
As discussed in Note 8, the Company has written off $59,704 and $58,984 in accounts payable, accrued liabilities and notes payable based on the opinion of legal counsel for the nine months ended June 30, 2014 and 2013. However, the related creditors could make a claim in the future in regards to these liabilities. | |
In June 2014, the Company entered into an investor relations agreement and market awareness consulting agreement with BCMG Entertainment, Inc. (“BCMG”) for $450,000. The Company has paid BCMG $75,000 as of June 30, 2014. The Company will continue to pays $25,000 per month based on performance until the contract is satisfied. |
Note_10_RELATED_PARTY_TRANSACT
Note 10. RELATED PARTY TRANSACTIONS | 9 Months Ended |
Jun. 30, 2014 | |
Related Party Transactions [Abstract] | ' |
Note 10. RELATED PARTY TRANSACTIONS | ' |
NOTE 10– RELATED PARTY TRANSACTIONS | |
The Company repaid $8,299 and $25,591 of the advances from the Company’s CEO in the nine months ended June 30, 2014 and 2013, respectively. The advances from the CEO are due on demand and do not accrue interest. As of June 30, 2014 and September 30, 2013, there were no amounts owed to the CEO for advances, respectively. |
Note_11_EQUITY
Note 11. EQUITY | 9 Months Ended | ||||||||||||||
Jun. 30, 2014 | |||||||||||||||
Equity [Abstract] | ' | ||||||||||||||
Note 11. EQUITY | ' | ||||||||||||||
NOTE 11 - EQUITY | |||||||||||||||
As of June 30, 2014, the Company was authorized to issue 650,000,000 common shares and 4,000,000 preferred shares at a par value of $0.01. | |||||||||||||||
Nine months ended June 30, 2014 | |||||||||||||||
Stock Issued for Cash | |||||||||||||||
During the nine months ended June 30, 2014, the Company issued 35,000 shares of common stock for $15,000 in net cash proceeds as follows: | |||||||||||||||
Date | Number of Shares | Proceeds | |||||||||||||
21-Oct-13 | 25,000 | $ | 5,000 | ||||||||||||
12-Jan-14 | 10,000 | 10,000 | |||||||||||||
Total | 35,000 | $ | 15,000 | ||||||||||||
Stock Issued in Connection with Software Licensing and Subscription Agreements | |||||||||||||||
During the nine months ended June 30, 2014, the Company issued 220,000 shares of common stock valued at $5,700 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 as a reduction of software revenue recognized during the three months ended June 30, 2014. | |||||||||||||||
Date | Number of Shares | Fair Value | |||||||||||||
4-Dec-13 | 120,000 | $ | 3,600 | ||||||||||||
4-Mar-14 | 100,000 | 2,100 | |||||||||||||
Total | 220,000 | $ | 5,700 | ||||||||||||
Stock Issued for Assets Acquisition | |||||||||||||||
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 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 issued because the shares were lost during delivery to the shareholders. | |||||||||||||||
Stock Issued for Services | |||||||||||||||
During the nine months ended June 30, 2014, the Company issued 65,207,506 shares of common stock as compensation. The fair values of the shares were a total of $1,446,069 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-Mar-14 | 31,750,000 | $ | 666,750 | Compensation to officers | |||||||||||
3-Apr-14 | 5,000 | 116 | Compensation for legal services | ||||||||||||
21-Apr-14 | 1,392,506 | 34,228 | Compensation for CipherLoc consultants | ||||||||||||
22-Apr-14 | 7,000,000 | 138,600 | Marketing agreement with Hemp, Inc. | ||||||||||||
3-May-14 | 5,000 | 115 | Compensation for legal services | ||||||||||||
5-May-14 | 50,000 | 1,150 | Compensation for marketing services | ||||||||||||
6-May-14 | 25,000,000 | 605,000 | Compensation to a sales consultant | ||||||||||||
3-Jun-14 | 5,000 | 110 | Compensation for legal services | ||||||||||||
Total | 65,207,506 | $ | 1,446,069 | ||||||||||||
In June 2014, the Company entered into a consulting agreement with Gawk, Inc. This agreement requires the issuance of 3,000,000 common shares and Gawk has agreed to assist the Company in seeking addition purchasers of CipherLoc Encryption Technology within the entertainment industry. The Company has valued the shares on the date of grant and recorded a stock payable in the amount of $177,300. | |||||||||||||||
Nine months ended June 30, 2013 | |||||||||||||||
Stock Issued for Cash | |||||||||||||||
During the nine months ended June 30, 2013, the Company issued 197,500 shares of common stock for $141,000 in net cash 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 | |||||||||||||
27-Mar-13 | 20,000 | 20,000 | |||||||||||||
Total | 197,500 | $ | 141,000 | ||||||||||||
Stock Issued in Connection with Software Licensing and Subscription Agreements | |||||||||||||||
During the nine months ended June 30, 2013, the Company issued 400,000 shares of common stock valued at $12,313 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 as a reduction of software revenue recognized during the nine months ended June 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 | |||||||||||||
Total | 400,000 | $ | 12,313 | ||||||||||||
Stock Issued for Services | |||||||||||||||
During the nine months ended June 30, 2013, the Company issued 945,500 shares of common stock as compensation. The fair values of the shares were a total of $31,829 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 | Compensation | ||||||||||||
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 | ||||||||||||
Total | 945,500 | $ | 31,829 | ||||||||||||
Stock Issued for Assets Acquisition | |||||||||||||||
During the nine months ended June 30, 2013, the Company issued 400,000 shares of common stock for the acquisition of CipherSmith software. Those shares were valued at $13,000 based on the market price on the dates of grant. | |||||||||||||||
Preferred Stock | |||||||||||||||
The Company has authorized 4,000,000 shares of preferred stock, at $0.01 par value and 4,000,000 are issued and outstanding as of September 30, 2013. 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 granted to our CEO & CFO on November 30, 2010 and issued on April 11, 2012 which was valued at the trading price of the common stock of $0.0095 and recorded as an expense of $38,000. | |||||||||||||||
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. |
Note_12_SEGMENT_INFORMATION
Note 12. SEGMENT INFORMATION | 9 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Segment Reporting [Abstract] | ' | ||||||||
Note 12. SEGMENT INFORMATION | ' | ||||||||
NOTE 12 – SEGMENT INFORMATION | |||||||||
Cloud Medical Doctors Software Corporation has two reporting segments and corporate overhead: | |||||||||
· | Cloud-MD – the Company sells medical billing software to doctors. Prior to 2014, all of the Company’s business activities were derived from this segment. | ||||||||
· | CipherLoc – the Company has a second software the encryption technology that can be used by larger corporation to protect their data through our polymorphic technology. | ||||||||
· | Corporate Overhead – the Company’s investment holding including financing current operations and expansion of its current holdings as well as evaluating the feasibility of entering into additional business. | ||||||||
The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company evaluates performances based on profit or loss from operations before income taxes, not including nonrecurring gains and losses and foreign exchange gains and losses. The reportable segments are strategic business units that offer different technology and marketing strategies. Most of the businesses were developed internally and management remains the same. To date, the Company’s operations are principally in the United States. | |||||||||
Consolidated revenues from external customers, operating loss, and identifiable assets were as follows: | |||||||||
Three months ended June 30, | |||||||||
2014 | 2013 | ||||||||
Revenues: | |||||||||
Cloud-MD | $ | 1,725 | $ | 137,941 | |||||
CipherLoc | 1,125,000 | — | |||||||
Total revenues | $ | 1,126,725 | $ | 137,941 | |||||
Operating expenses: | |||||||||
Cloud-MD | $ | (61,155 | ) | $ | (125,199 | ) | |||
CipherLoc | (30,684 | ) | — | ||||||
Corporate | (1,021,150 | ) | (202,005 | ) | |||||
Operating loss | $ | (13,736 | ) | $ | (189,263 | ) | |||
Nine months ended June 30, | |||||||||
2014 | 2013 | ||||||||
Revenues: | |||||||||
Cloud-MD | $ | 224,400 | $ | 461,512 | |||||
CipherLoc | 1,125,000 | — | |||||||
Total revenues | $ | 1,349,400 | $ | 461,512 | |||||
Operating loss: | |||||||||
Cloud-MD | $ | (203,465 | ) | $ | (341,359 | ) | |||
CipherLoc | (30,684 | ) | — | ||||||
Corporate | (2,431,904 | ) | (537,830 | ) | |||||
Operating loss | $ | (1,316,653 | ) | $ | (417,677 | ) | |||
Nine months ended June 30, 2014 | |||||||||
September 30, | |||||||||
2013 | |||||||||
Identifiable assets: | |||||||||
Cloud-MD | $ | 631,557 | $ | 826,259 | |||||
CipherLoc | 15,800 | — | |||||||
Corporate | 828,501 | 8,587 | |||||||
Total identifiable assets | $ | 1,475,858 | $ | 834,846 | |||||
Note_13_SUBSEQUENT_EVENTS
Note 13. SUBSEQUENT EVENTS | 9 Months Ended |
Jun. 30, 2014 | |
Subsequent Events [Abstract] | ' |
Note 13. SUBSEQUENT EVENTS | ' |
NOTE 13 – SUBSEQUENT EVENTS | |
On July 11, 2014 the Company issued 35,000 common shares for compensation. The stock was issued as compensation for work performed on our Cypher Loc Encryption Technology. The shares were valued at $2,450 based on the market price on the date of grant. |
Note_4_SUMMARY_OF_SIGNIFICANT_1
Note 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended | ||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||
Use of Estimates and Assumptions | ' | ||||||||||||||||
Use of Estimates and Assumptions | |||||||||||||||||
The preparation of consolidated 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 consolidated 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 consolidated 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 its 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 June 30, 2014, cash and cash equivalents include cash on hand and cash in the bank and the FDIC insures these deposits up to $250,000. | |||||||||||||||||
Impairment of Long-Lived Assets | ' | ||||||||||||||||
Impairment of Long-Lived Assets | |||||||||||||||||
Long-lived assets are evaluated for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the undiscounted future cash flows to the recorded value of the asset. If impairment is indicated, the asset is written down to its estimated fair value. The acquired software technologies are reviewed annually for impairment. | |||||||||||||||||
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 focused on an exit price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Within the measurement of fair value, the use of market-based information is prioritized over entity specific information and a three-level hierarchy for fair value measurements is used based on the nature of inputs used in the valuation of an asset or liability as of the measurement date. | |||||||||||||||||
The three-level hierarchy for fair value measurements is defined as follows: | |||||||||||||||||
• | Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets; liabilities in active markets; | ||||||||||||||||
• | Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability other than quoted prices, either directly or indirectly, including inputs in markets that are not considered to be active; or directly or indirectly including inputs in markets that are not considered to be active; | ||||||||||||||||
• | Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement. | ||||||||||||||||
The following table summarizes fair value measurements by level at June 30, 2014 and September 30, 2013 for assets measured at fair value on a recurring basis: | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
At June 30, 2014 | |||||||||||||||||
Software | $ | — | $ | — | $ | 640,456 | $ | 640,456 | |||||||||
Total Software | $ | — | $ | — | $ | 640,456 | $ | 640,456 | |||||||||
At September 30, 2013 | |||||||||||||||||
Software | $ | — | $ | — | $ | 937,431 | $ | 937,431 | |||||||||
Total Software | $ | — | $ | — | $ | 937,431 | $ | 937,431 | |||||||||
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 June 30, 2014 and 2013, the Company had no valuation allowance for the Company’s accounts receivable. | |||||||||||||||||
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 June 30, 2014, the Company did not record any liabilities for uncertain tax positions. | |||||||||||||||||
Revenue Recognition | ' | ||||||||||||||||
Revenue Recognition | |||||||||||||||||
Medical Licensing Agreement | |||||||||||||||||
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. In the first year and each year thereafter, the software is purchased and installed the purchaser will 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 a transaction occurs: | |||||||||||||||||
· | Electronic Remittance Advice $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 had not received any transaction revenues in the three and nine months ended June 30, 2014. | |||||||||||||||||
CipherLoc Licensing Agreement | |||||||||||||||||
License revenue also consists of revenue earned under a CipherLoc License Agreement. 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. | |||||||||||||||||
Cost of License, and Subscriptions Revenues | ' | ||||||||||||||||
Cost of License, and Subscriptions 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-based royalties during the nine months ended June 30, 2014 and 2013. | |||||||||||||||||
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 customer support during the nine months ended June 30, 2014 and 2013. | |||||||||||||||||
The amortization of acquired technology for products acquired through business combinations are considered as the cost of revenues. The acquired software technologies are amortized over their useful lives of 5 years | |||||||||||||||||
Deferred Revenue | ' | ||||||||||||||||
Deferred Revenue | |||||||||||||||||
Deferred revenue result from fees billed to customers for which revenue has not yet been recognized or for which the conditions of the arrangement have been modified. The Company recognizes revenue to provide up-front capitalization to Cloud-MD for each provider added to the solution set. The Company also recognizes annual subscription fees for virtual servers and subscription and small usage fees and those revenues are based on a 48-month lease, Cloud-MD would amortize the revenue over the life of the agreement of 48 months. In addition, it features incremental monthly revenue, for the duration of the lease (48 months) based on fees assessed for transactions such as eligibility claims processing, etc. | |||||||||||||||||
The Company has deferred revenue of $0 as of June 30, 2014. | |||||||||||||||||
Sales Commissions | ' | ||||||||||||||||
Sales Commissions | |||||||||||||||||
The Company pays commissions, including sales bonuses, to the direct sales force related to revenue transactions under sales compensation plans which are established annually. The commission payments are typically paid in full in the month or quarter following execution of the customer contracts. The Company paid commissions of $0 and $10,000 for the three months ended June 30, 2014 and 2013, respectively, and $35,650 and $50,260 for the nine months ended June 30, 2014 and 2013, respectively. | |||||||||||||||||
Research and Development and Software Development Costs | ' | ||||||||||||||||
Research and Development and Software Development Costs | |||||||||||||||||
Capitalization of certain software development costs subsequent to the establishment of technological feasibility. Based on our product development process, technological feasibility is established 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. The Company recorded research and development costs of $0 and $58,044 for the three months ended June 30, 2014 and 2013, respectively, and $20,000 and $153,044 for the nine months ended June 30, 2014 and 2013, 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. | |||||||||||||||||
Basic and Diluted Net Income (Loss) per Common Share | ' | ||||||||||||||||
Basic and Diluted Net Income (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. | |||||||||||||||||
The Company has 4,000,000 preferred shares that can be converted subject to the limitation of the Company’s authorized shares at 1 preferred share for 150 common shares. The conversion can only take place with the approval of the Board of Directors. At June 30, 2014, the preferred shares could be converted into 600,000,000 of common shares resulting in dilution of common shareholders. The preferred shares are anti-dilutive since the losses the Company has incurred for the periods ended June 30, 2014 and 2013. | |||||||||||||||||
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. Presently the bank accounts held by Chase bank exceeds the $250,000 FDIC insurance by $608,201. | |||||||||||||||||
Subsequent Events | ' | ||||||||||||||||
Subsequent Events | |||||||||||||||||
The Company has evaluated all transactions occurring between June 30, 2014and the date of issuance of the consolidated 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) | 9 Months Ended | ||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||
Fair Value Measurements by Level | ' | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
At June 30, 2014 | |||||||||||||||||
Software | $ | — | $ | — | $ | 640,456 | $ | 640,456 | |||||||||
Total Software | $ | — | $ | — | $ | 640,456 | $ | 640,456 | |||||||||
At September 30, 2013 | |||||||||||||||||
Software | $ | — | $ | — | $ | 937,431 | $ | 937,431 | |||||||||
Total Software | $ | — | $ | — | $ | 937,431 | $ | 937,431 |
Note_5_SOFTWARE_Tables
Note 5. SOFTWARE (Tables) | 9 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Research and Development [Abstract] | ' | ||||||||
Software | ' | ||||||||
June 30, | September 30, | ||||||||
2014 | 2013 | ||||||||
Source Code License – Antree Systems Limited | $ | 6,000 | $ | — | |||||
Encryption Software Code | 15,800 | 15,800 | |||||||
Source Code License – MediSouth, LLC | 2,500 | 2,500 | |||||||
Acquisition of Doctor’s Network of America | 10,000 | 10,000 | |||||||
Software License | 1,200,106 | 1,200,106 | |||||||
EMR Certification | 23,000 | 23,000 | |||||||
Total intangible assets | 1,257,406 | 1,251,406 | |||||||
Accumulated amortization of intangible assets | (606,950 | ) | (423,485 | ) | |||||
Accumulated impairment of assets | (10,000 | ) | (10,000 | ) | |||||
Total intangible assets | $ | 640,456 | $ | 817,921 |
Note_6_DISCONTINUED_OPERATIONS1
Note 6. DISCONTINUED OPERATIONS (Tables) | 9 Months Ended | ||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | ' | ||||||||||||||||
Discontinued Operations | ' | ||||||||||||||||
30-Jun-14 | 30-Sep-13 | ||||||||||||||||
Net liabilities of discontinued operations: | |||||||||||||||||
Accounts payable | $ | 44,594 | $ | 35,356 | |||||||||||||
Net liabilities of discontinued operations | $ | 44,594 | $ | 35,356 | |||||||||||||
Three Months Ended | |||||||||||||||||
June 30, | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Discontinued operations: | |||||||||||||||||
Revenues | $ | 45,555 | $ | 266,246 | |||||||||||||
Cost of sales | — | — | |||||||||||||||
Operating expenses | 50,931 | (265,108 | ) | ||||||||||||||
Gain from write-off of debt | — | — | |||||||||||||||
(Loss) income from discontinued operations | (5,376 | )) | $ | 1,138 | |||||||||||||
Nine months ended | |||||||||||||||||
June 30, | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Discontinued operations: | |||||||||||||||||
Revenues | $ | 176,607 | $ | 267,146 | |||||||||||||
Cost of sales | — | — | |||||||||||||||
Operating expenses | 189,500 | (266,046 | ) | ||||||||||||||
Gain from write-off of debt | — | 58,984 | |||||||||||||||
(Loss) income from discontinued operations | (12,893 | )) | $ | 60,084 |
Note_8_DEBT_MITIGATION_PROGRAM1
Note 8. DEBT MITIGATION PROGRAM (Tables) | 9 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
OTHER INCOME (EXPENSE) | ' | ||||||||
Debt Mitigation Program | ' | ||||||||
June 30, | June 30, | ||||||||
2014 | 2013 | ||||||||
Debt Mitigation Program: | |||||||||
Accounts payable and accrued expenses | $ | 59,704 | $ | 58,984 | |||||
Total debt mitigation program | $ | 59,704 | $ | 58,984 | |||||
Gain on write-off of debt | — | (58,984 | ) | ||||||
Additional paid-in capital (1) | $ | 59,704 | $ | — |
Note_12_SEGMENT_INFORMATION_Ta
Note 12. SEGMENT INFORMATION (Tables) | 9 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Segment Reporting [Abstract] | ' | ||||||||
Segment Information | ' | ||||||||
Three months ended June 30, | |||||||||
2014 | 2013 | ||||||||
Revenues: | |||||||||
Cloud-MD | $ | 1,725 | $ | 137,941 | |||||
CipherLoc | 1,125,000 | — | |||||||
Total revenues | $ | 1,126,725 | $ | 137,941 | |||||
Operating expenses: | |||||||||
Cloud-MD | $ | (61,155 | ) | $ | (125,199 | ) | |||
CipherLoc | (30,684 | ) | — | ||||||
Corporate | (1,021,150 | ) | (202,005 | ) | |||||
Operating loss | $ | (13,736 | ) | $ | (189,263 | ) | |||
Nine months ended June 30, | |||||||||
2014 | 2013 | ||||||||
Revenues: | |||||||||
Cloud-MD | $ | 224,400 | $ | 461,512 | |||||
CipherLoc | 1,125,000 | — | |||||||
Total revenues | $ | 1,349,400 | $ | 461,512 | |||||
Operating loss: | |||||||||
Cloud-MD | $ | (203,465 | ) | $ | (341,359 | ) | |||
CipherLoc | (30,684 | ) | — | ||||||
Corporate | (2,431,904 | ) | (537,830 | ) | |||||
Operating loss | $ | (1,316,653 | ) | $ | (417,677 | ) | |||
Nine months ended June 30, 2014 | |||||||||
September 30, | |||||||||
2013 | |||||||||
Identifiable assets: | |||||||||
Cloud-MD | $ | 631,557 | $ | 826,259 | |||||
CipherLoc | 15,800 | — | |||||||
Corporate | 828,501 | 8,587 | |||||||
Total identifiable assets | $ | 1,475,858 | $ | 834,846 |
Note_3_GOING_CONCERN_Details_N
Note 3. GOING CONCERN (Details Narrative) (USD $) | Jun. 30, 2014 | Sep. 30, 2013 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ' |
Accumulated Deficit | ($27,858,918) | ($26,542,265) |
Note_4_SUMMARY_OF_SIGNIFICANT_3
Note 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Fair Value Measurements by Level (Details) (USD $) | Jun. 30, 2014 | Sep. 30, 2013 |
Software | $640,456 | $937,431 |
Total Software | 640,456 | 937,431 |
Level 1 | ' | ' |
Software | ' | ' |
Total Software | ' | ' |
Level 2 | ' | ' |
Software | ' | ' |
Total Software | ' | ' |
Level 3 | ' | ' |
Software | 640,456 | 937,431 |
Total Software | $640,456 | $937,431 |
Note_4_SUMMARY_OF_SIGNIFICANT_4
Note 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Sep. 30, 2013 | |
Accounting Policies [Abstract] | ' | ' | ' | ' | ' |
FDIC Insured Cash | $250,000 | ' | $250,000 | ' | ' |
Subscription Revenue, Year One | ' | ' | 1,200 | ' | ' |
Subscription Revenue, Year Two | ' | ' | 1,500 | ' | ' |
Subscription Revenue, Year Three | ' | ' | 1,800 | ' | ' |
Subscription Revenue, Year Four | ' | ' | 2,400 | ' | ' |
Deferred Revenue | 0 | ' | 0 | ' | ' |
Sales Commissions | 0 | 10,000 | 33,650 | 50,260 | ' |
Research and Development Costs | ' | 58,044 | 20,000 | 153,044 | ' |
Preferred Stock, Shares Outstanding | 4,000,000 | ' | 4,000,000 | ' | 4,000,000 |
Preferred Stock converted into Common Stock, Shares Common Stock | 600,000,000 | ' | ' | ' | ' |
Cash held in excess of FDIC Insured Amount | $608,201 | ' | $608,201 | ' | ' |
Note_5_SOFTWARE_Software_Detai
Note 5. SOFTWARE - Software (Details) (USD $) | Jun. 30, 2014 | Sep. 30, 2013 |
Intangible assets | $1,257,406 | $1,251,406 |
Accumulated amortization of intangible assets | -606,950 | -423,485 |
Accumulated impairment of assets | -10,000 | -10,000 |
Intangible assets, Net | 640,456 | 817,921 |
Antree Systems Limited | ' | ' |
Intangible assets | 6,000 | ' |
Encryption Software Code | ' | ' |
Intangible assets | 15,800 | 15,800 |
MediSouth LLC | ' | ' |
Intangible assets | 2,500 | 2,500 |
Doctors Networkof America [Member] | ' | ' |
Intangible assets | 10,000 | 10,000 |
Software License | ' | ' |
Intangible assets | 1,200,106 | 1,200,106 |
EMR Certification | ' | ' |
Intangible assets | $23,000 | $23,000 |
Note_5_SOFTWARE_Details_Narrat
Note 5. SOFTWARE (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Jun. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2012 | Mar. 16, 2013 | Mar. 16, 2013 | |
Antree Systems Limited | Cipher Smith [Member] | Doctors Networkof America [Member] | Doctors Networkof America [Member] | Doctors Networkof America [Member] | Doctors Networkof America [Member] | Doctors Networkof America [Member] | |||||
Pending Litigation [Member] | |||||||||||
Amortization Expense | $61,155 | $61,155 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Software Impairment | ' | ' | ' | ' | ' | ' | 0 | 10,000 | ' | ' | ' |
Stock issued Purchase of Asset, Shares | ' | ' | 200,000 | 400,000 | 200,000 | 500,004 | ' | ' | ' | ' | ' |
Stock Issued Purchase of Asset, Value | ' | ' | 6,000 | 13,000 | 6,000 | 15,800 | ' | ' | ' | ' | ' |
Stock Issued, Acquisition, Shares | ' | ' | ' | ' | ' | ' | ' | ' | 500,000 | ' | ' |
Shares Issued | ' | ' | ' | ' | ' | ' | ' | ' | 200,000 | 300,000 | ' |
Shares Issued, Value | ' | ' | ' | ' | ' | ' | ' | ' | 4,000 | 6,000 | ' |
Amount Due from Acquisition | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $200,000 |
Note_6_DISCONTINUED_OPERATIONS2
Note 6. DISCONTINUED OPERATIONS - Discontinued Operations (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Sep. 30, 2013 | |
Net liabilities of discontinued operations | $44,939 | ' | $44,939 | ' | $35,356 |
Cost of sales | 61,155 | 61,155 | 183,465 | 182,315 | ' |
Operating expenses | 1,079,306 | 266,049 | 2,467,524 | 696,874 | ' |
Gain from write-off of debt | ' | ' | ' | -58,984 | ' |
Discontinued Operations [Member] | ' | ' | ' | ' | ' |
Accounts payable | 44,594 | ' | 44,594 | ' | 35,356 |
Net liabilities of discontinued operations | 44,594 | ' | 44,594 | ' | 35,356 |
Revenues | 45,555 | 266,246 | 176,607 | 267,146 | ' |
Cost of sales | ' | ' | ' | ' | ' |
Operating expenses | 50,931 | -265,108 | 189,500 | -266,046 | ' |
Gain from write-off of debt | ' | ' | ' | 58,984 | ' |
(Loss) income from discontinued operations | ($5,376) | $1,138 | ($12,893) | $60,084 | ' |
Note_7_LINES_OF_CREDIT_Details
Note 7. LINES OF CREDIT (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
Interest Expense | $1,657 | $15 | $2,171 | $211 |
Mutual of Omaha | ' | ' | ' | ' |
Revolving Line of Credit, Borrowing Capacity | 65,000 | ' | 65,000 | ' |
Line of Credit Interest Rate | 4.00% | ' | ' | ' |
Line of Credit, Amount Outstanding | 62,612 | ' | 62,612 | ' |
Chase Bank | ' | ' | ' | ' |
Revolving Line of Credit, Borrowing Capacity | 50,000 | ' | 50,000 | ' |
Line of Credit Interest Rate | 4.25% | ' | ' | ' |
Line of Credit, Amount Outstanding | $0 | ' | $0 | ' |
Note_8_DEBT_MITIGATION_PROGRAM2
Note 8. DEBT MITIGATION PROGRAM - Debt Mitigation Program (Details) (USD $) | 9 Months Ended | |||
Jun. 30, 2014 | Jun. 30, 2013 | |||
Total debt mitigation program | $59,704 | $58,984 | ||
Gain on write-off of debt | ' | -58,984 | ||
Additional paid-in capital | 59,704 | [1] | ' | [1] |
Accounts Payable and Accrued Expenses | ' | ' | ||
Total debt mitigation program | $59,704 | $58,984 | ||
[1] | All amounts that were owed to related parties in prior years were recorded to paid-in capital. |
Note_8_DEBT_MITIGATION_PROGRAM3
Note 8. DEBT MITIGATION PROGRAM (Details Narrative) (USD $) | 9 Months Ended | |||
Jun. 30, 2014 | Jun. 30, 2013 | |||
OTHER INCOME (EXPENSE) | ' | ' | ||
Gain on the Write-Off of Liabilities | $0 | $58,984 | ||
Additional Paid-In Capital for Related Party Liabilities | $59,704 | [1] | ' | [1] |
[1] | All amounts that were owed to related parties in prior years were recorded to paid-in capital. |
Note_9_COMMITMENTS_AND_CONTING1
Note 9. COMMITMENTS AND CONTINGENCIES (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
Commitments and Contingencies Disclosure [Abstract] | ' | ' | ' | ' |
Rent Expense | $0 | $0 | $0 | $0 |
Payable Write Offs | ' | ' | 59,704 | 58,984 |
Legal Contingencies | ' | ' | 200,000 | ' |
Anti-Reverse Split Shares Issued | ' | ' | 90,029,843 | ' |
Professional Services Fees, Aggregate | 450,000 | ' | 450,000 | ' |
Professional Services Fees, Paid | ' | ' | 75,000 | ' |
Professional Services Fees, Periodic Payments | ' | ' | $25,000 | ' |
Note_10_RELATED_PARTY_TRANSACT1
Note 10. RELATED PARTY TRANSACTIONS (Details Narrative) (USD $) | 9 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Related Party Transactions [Abstract] | ' | ' |
Repayment of Advances from Related Parties | ($8,299) | ($25,591) |
Note_11_EQUITY_Details_Narrati
Note 11. EQUITY (Details Narrative) (USD $) | 9 Months Ended | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | Sep. 30, 2013 | |
Common Stock, Shares Authorized | 650,000,000 | ' | 650,000,000 |
Preferred Stock Shares Authorized | 4,000,000 | ' | 4,000,000 |
Common Stock, Par Value | $0.01 | ' | $0.01 |
Preferred Stock, Par Value | $0.01 | ' | $0.01 |
Preferred Stock, Shares Issued | 4,000,000 | ' | 4,000,000 |
Preferred Stock Shares Outstanding | 4,000,000 | ' | 4,000,000 |
Preferred Stock, Voting Rights | ' | ' | '150 |
Preferred Stock, Trading Price of the Common Stock | ' | ' | $0.01 |
Compensation Expense | ' | ' | $38,000 |
Stock Issued for Cash, Shares | 35,000 | 197,500 | ' |
Stock Issued for Cash, Value | 15,000 | 141,000 | ' |
Stock Issued for Software Licensing and Subscription Agreements, Shares | 220,000 | 400,000 | ' |
Stock Issued for Software Licensing and Subscription Agreements, Value | 5,700 | 12,313 | ' |
Stock Issued for Assets Acquisition, Shares | 200,000 | 400,000 | ' |
Stock Issued for Assets Acquisition, Value | 6,000 | 13,000 | ' |
Stock Issued for Replacement, Shares | ' | ' | 180,000 |
Stock Issued for Services, Shares | 65,207,506 | 945,500 | ' |
Stock Issued for Services, Value | 1,446,069 | 31,829 | ' |
Gawk Inc. | ' | ' | ' |
Stock Issued for Services, Shares | 3,000,000 | ' | ' |
Stock Issued for Services, Value | $177,300 | ' | ' |
Antree Systems Limited | ' | ' | ' |
Stock Issued for Replacement, Shares | ' | ' | 160,000 |
Kimberly Ilicerl | ' | ' | ' |
Stock Issued for Replacement, Shares | ' | ' | 20,000 |
Note_12_SEGMENT_INFORMATION_Se
Note 12. SEGMENT INFORMATION - Segment Information (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Sep. 30, 2013 | |
Operating expenses: | $1,079,306 | $266,049 | $2,467,524 | $696,874 | ' |
Cloud-MD | ' | ' | ' | ' | ' |
Revenues: | 1,725 | 137,941 | 224,400 | 461,512 | ' |
Operating expenses: | -61,155 | -125,199 | -203,465 | -341,359 | ' |
Identifiable assets: | 631,557 | ' | 631,557 | ' | 826,259 |
CipherLoc | ' | ' | ' | ' | ' |
Revenues: | 1,125,000 | ' | 1,125,000 | ' | ' |
Operating expenses: | -30,684 | ' | -30,684 | ' | ' |
Identifiable assets: | 15,800 | ' | 15,800 | ' | ' |
Corporate Segment [Member] | ' | ' | ' | ' | ' |
Operating expenses: | -1,021,150 | -202,005 | -2,431,904 | -537,830 | ' |
Identifiable assets: | 828,501 | ' | 828,501 | ' | 8,587 |
Operating Segments [Member] | ' | ' | ' | ' | ' |
Revenues: | 1,126,725 | 137,941 | 1,349,400 | 461,512 | ' |
Operating expenses: | -13,736 | -189,263 | -1,316,653 | -417,677 | ' |
Identifiable assets: | $1,475,858 | ' | $1,475,858 | ' | $834,846 |
Note_13_SUBSEQUENT_EVENTS_Deta
Note 13. SUBSEQUENT EVENTS (Details Narrative) (Subsequent Event [Member], USD $) | 9 Months Ended |
Jun. 30, 2014 | |
Subsequent Event [Member] | ' |
Stock Issued for Compensation, Shares | 35,000 |
Stock Issued for Compensation, Value | $2,450 |