Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Mar. 31, 2015 | Mar. 24, 2016 | |
Document And Entity Information | ||
Entity Registrant Name | CIPHERLOC CORPORATION | |
Entity Central Index Key | 1,022,505 | |
Document Type | 10-Q/A | |
Document Period End Date | Mar. 31, 2015 | |
Amendment Flag | true | |
Amendment Description | This amendment is being filed to comply with regulations. | |
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 | 4,494,241 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,014 |
Balance Sheets (Unaudited)
Balance Sheets (Unaudited) - USD ($) | Mar. 31, 2015 | Sep. 30, 2014 |
CURRENT ASSETS: | ||
Cash | $ 86,872 | $ 545,650 |
Accounts receivable | 1,006 | |
Assets attributable to discontinued operations | 6,887 | |
Total current assets | $ 86,872 | 553,543 |
Proprietary technology, net | 238,530 | 604,301 |
TOTAL ASSETS | 325,402 | 1,157,844 |
CURRENT LIABILITIES: | ||
Accounts payable and accrued liabilities | $ 630,720 | 649,452 |
Liabilities attributable to discontinued operations | 18 | |
Lines of credit | $ 46,098 | 53,612 |
Stock payable | 7,000 | |
Deferred revenue | $ 1,125,000 | 1,125,000 |
TOTAL LIABILITIES | $ 1,801,818 | $ 1,835,082 |
COMMITMENTS AND CONTINGENCIES | ||
STOCKHOLDERS' EQUITY: | ||
Preferred stock, $0.01 par value, 10,000,000 shares authorized; 10,000,000 issued and outstanding as of March 31, 2015 and September 30, 2014 | $ 100,000 | $ 40,000 |
Common stock, $0.01 par value, 650,000,000 shares authorized; 2,832,587 and 2,834,737 issued and outstanding as of March 31, 2015 and September 30, 2014, respectively | 28,325 | 28,347 |
Additional paid-in capital | 38,470,411 | 28,635,141 |
Accumulated deficit | (40,075,152) | (29,380,726) |
Total stockholders' equity (deficit) | (1,476,416) | (677,238) |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ 325,402 | $ 1,157,844 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2015 | Sep. 30, 2014 |
Statement of Financial Position [Abstract] | ||
Preferred Stock, Par Value | $ 0.01 | $ 0.01 |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Preferred Stock, Shares Issued | 10,000,000 | 4,000,000 |
Preferred Stock, Shares Outstandng | 10,000,000 | 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 | 2,832,587 | 2,834,737 |
Common Stock, Shares Outstanding | 2,832,587 | 2,834,737 |
Statements of Operations (Unaud
Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | |
Income Statement [Abstract] | ||||
REVENUE | $ 105,118 | $ 431 | $ 222,675 | |
COST OF REVENUES | $ 64,650 | 61,155 | 127,970 | 122,310 |
GROSS PROFIT | (64,650) | 43,963 | (127,539) | 100,365 |
OPERATING EXPENSES: | ||||
General and administrative | 10,107,671 | $ 1,106,142 | 10,283,996 | $ 1,328,218 |
Impairment | 238,531 | 238,531 | ||
Research and development | 19,469 | $ 30,000 | 41,650 | $ 60,000 |
Total operating expenses | 10,365,671 | 1,136,142 | 10,564,177 | 1,388,218 |
OPERATING LOSS | (10,430,321) | (1,092,179) | (10,691,716) | (1,287,853) |
OTHER (INCOME) AND EXPENSES | ||||
Interest expense | (817) | (279) | (1,841) | (515) |
Total other (income) expenses | (817) | (279) | (1,841) | (515) |
LOSS FROM CONTINUING OPERATIONS | (10,431,138) | (1,092,458) | (10,693,557) | (1,288,368) |
(LOSS) INCOME FROM DISCONTINUED OPERATIONS | (155) | 3,198 | (869) | (7,517) |
NET INCOME (LOSS) | $ (10,431,293) | $ (1,089,260) | $ (10,694,426) | $ (1,295,885) |
NET INCOME (LOSS) PER COMMON SHARE - Basic and diluted: | ||||
Continuing operations | $ (3.68) | $ (.49) | $ (3.77) | $ (.59) |
Discontinued operations | 0 | 0 | 0 | 0 |
Total | $ (3.68) | $ (.49) | $ (3.77) | $ (.59) |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING Basic and diluted | 2,832,587 | 2,245,463 | 2,833,320 | 2,196,569 |
Statements of Cash Flows (Unaud
Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Statement of Cash Flows [Abstract] | ||
Net income (loss) | $ (10,694,426) | $ (1,295,885) |
Loss (Income) from discontinued operations | 869 | (7,517) |
Net loss from continuing operations | (10,693,557) | $ (1,295,885) |
Adjustments to reconcile net loss from continuing operations to net cash (used in) provided by operating activities: | ||
Impairment of software | 238,531 | |
Depreciation and amortization | 127,240 | $ 122,310 |
Gain on cancellation of stock issued for services | $ (4,752) | |
Common stock issued for compensation | $ 666,750 | |
Stock issued with software sales | $ 5,700 | |
Stock compensation | $ 9,900,000 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 7,006 | $ 3,162 |
Accounts payable and accrued liabilities | (18,732) | 397,270 |
Net cash (used in) operating activities | $ (444,264) | (100,693) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from line of credit | $ 58,574 | |
Subscribed stock | $ (7,000) | |
Repayment of line of credit | $ (7,514) | |
Common stock issued for cash | $ 5,000 | |
Net cash (used in) provided by financing activities | $ (14,514) | 63,574 |
(DECREASE) INCREASE IN CASH | (458,778) | (37,119) |
CASH, BEGINNING OF YEAR | 545,650 | 8,587 |
CASH, END OF YEAR | 86,872 | $ (28,532) |
CASH PAID FOR: | ||
Interest paid | $ 1,222 | |
Income taxes paid | ||
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES: | ||
Write-off of debt - related parties | $ 59,704 | |
Common stock issued for purchase of software | $ 6,000 | |
Cancellation of stock resinded for purchase of software | $ 6,000 | |
Cancellation of common stock | $ 150 |
1. DESCRIPTION OF BUSINESS
1. DESCRIPTION OF BUSINESS | 6 Months Ended |
Mar. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
1. DESCRIPTION OF BUSINESS | NOTE 1- DESCRIPTION OF BUSINESS Cipherloc Corporation (the Company) was incorporated in Texas on June 22, 1953 as American Mortgage Company. On May 16, 1996, the Company changed its name to National Scientific Corporation. On March 15, 2015, the Company changed its name to Cipherloc Corporation. The name change became effective as of March 23, 2015. The name change effected by the Amended Certificate was effective as of March 23, 2015. The Company has notified the Financial Industry Regulatory Authority (FINRA) of its name change and has received FINRAs approval for a new trading symbol CLOK reflecting its new name. The name change and the 1-100 reverse split were announced March 20, 2015 in the Daily List and became effective on March 23, 2015. All share references have been retroactively adjusted. In the year ended September 30, 2011, the Company introduced the Cloud-MD Office, a Cloud Based, 5010 ready and ICD-10 compliant, fully integrated and interoperable suite of medical software and services, designed by experienced healthcare analysts and programmers for healthcare providers, that produces Actionable Information to help Independent Physician Practices, New Care Delivery Models (ACO), Healthcare Systems and Billing Services optimize a wide range of business processes resulting in Increased Profits, Higher Quality, Greater Efficiency, Noticeable Cost Reductions and Better Patient Care. Current software product offerings include Practice Management, Electronic Medical Records, Revenue Management, Patient Financial Solutions, Medical and Pharmaceutical Supply Management, Claims Management and PHI Exchange. During the year ended September 30, 2012, we launched Cloud-MD Billing Services which provides management of medical claims from posting physician charges and payments into our medical billing software. The software uses a continuous insurance claim follow-up system to track and research all rejected or denied medical claims; a Comprehensive Reporting module that includes monthly financial statements sent to our clients so they can see how their practice is performing and a variety of detailed reports giving our clients the necessary information and tools used to assist in the increased production which leads to more profit; and patient account inquiries and support to assist patients with their billing and insurance questions. On November 21, 2012, the Company purchased from CipherSmith, LLC a complete source code, intellectual property rights, all computer software or algorithm licensed or sold under CipherSmith, and appropriate copy rights, patents, mask works, trademarks, service marks, internet domain names or world wide web URS. Since 2012, the Company has tested the software application and created a commercial product for distribution of its encryption technology. The Company is presently developing more applications for consumer usage in the future. On September 1, 2014, the company purchased Evolve Software for $25,000, which is a front office interface that complements our back office medical billing software. The Company has bridged the software to provide a more user friendly medical billing package for our customers. |
2. RESTATEMENT OF PREVIOUSLY IS
2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS | 6 Months Ended |
Mar. 31, 2015 | |
Restatement Of Previously Issued Financial Statements | |
2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS | NOTE 2 RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS The restatement reflects adjustments to correct errors identified by management related to the Companys revenue recognition of a transaction that occurred during the year ended September 30, 2014. The effect of the restatement was material on the Companys Balance Sheet. The nature and impact of these adjustments are described below. Revenue Recognition During the quarter ended March 31, 2015, the Company has retrospectively restated software revenue related to the sale of a license for its Cipherloc software to a third-party. Management subsequently determined that a lack of delivery of the software to the customer did not allow for revenue recognition during the year ended September 30, 2014. The Company has corrected the classification of this amount ($1,125,000) as a reduction to software revenue and an increase to deferred revenue. For the quarter ended March 31, 2015 The results of the restatements are summarized as follows: Consolidated Balance Sheet as of March 31, 2015: As reported Restatement Adjustment As restated Deferred revenue $ $ 1,125,000 $ 1,125,000 Current liabilities 676,818 1,125,000 1,801,818 Accumulated deficit (38,950,152 ) (1,125,000 ) (40,075,152 ) Stockholders deficit (351,416 ) (1,125,000 ) (1,476,416 ) Consolidated Balance Sheet as of September 2014: As reported Restatement Adjustment As restated Deferred revenue $ $ 1,125,000 $ 1,125,000 Current liabilities 710,082 1,125,000 1,835,082 Accumulated deficit (28,255,726 ) (1,125,000 ) (29,380,726 ) Stockholders deficit 447,762 (1,125,000 ) (677,238 ) |
3. BASIS OF PRESENTATION OF INT
3. BASIS OF PRESENTATION OF INTERIM CONSOLIDATED FINANCIAL STATEMENTS | 6 Months Ended |
Mar. 31, 2015 | |
Accounting Policies [Abstract] | |
3. BASIS OF PRESENTATION OF INTERIM CONSOLIDATED FINANCIAL STATEMENTS | NOTE 3 - 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 six months ended March 31, 2015 are not necessarily indicative of the results that may be expected for the year ending September 30, 2015. Notes to the unaudited interim consolidated financial statements that would substantially duplicate the disclosures contained in the audited consolidated financial statements for the year ended September 30, 2014 have been omitted; this report should be read in conjunction with the audited consolidated financial statements and the footnotes thereto for the fiscal year ended September 30, 2014 included within the Companys Form 10-K as filed with the Securities and Exchange Commission. Segment reporting change With the placement into service of the Companys encryption technology, the Company began a segment reporting structure to match the new operating structure and how the Companys management views the business and allocates resources. Reclassifications of prior period financial information have been made to conform to the current period presentation. This change does not impact previously reported consolidated financial statements of the Company. See Note 12 for additional information on our segment reporting change. |
4. GOING CONCERN
4. GOING CONCERN | 6 Months Ended |
Mar. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
4. GOING CONCERN | NOTE 4 - GOING CONCERN The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. However, the Company has incurred losses from operations, has an accumulated deficit at March 31, 2015 of $40,075,152 and needs additional cash to maintain its operations. These factors raise doubt about the Companys 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 Companys continued existence is dependent upon managements ability to develop profitable operations, continued contributions from the Companys 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 Companys products and business. |
5. SUMMARY OF SIGNIFICANT ACCOU
5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Mar. 31, 2015 | |
Accounting Policies [Abstract] | |
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 5 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. Significant accounting policies are as follows: Long-Lived Assets Long-lived assets are evaluated for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the undiscounted future cash flows to the recorded value of the asset. If impairment is indicated, the asset is written down to its estimated fair value. During the six months ended March 31, 2015, the Company impaired $238,531 of its software assets. 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 March 31, 2015 and September 30, 2014 for assets measured at fair value on a recurring basis: Level 1 Level 2 Level 3 Total At March 31, 2015 Software $ $ $ 238,530 $ 238,530 Total Software $ $ $ 238,530 $ 238,530 At September 30, 2014 Software $ $ $ 604,301 $ 604,301 Total Software $ $ $ 604,301 $ 604,301 Concentration of Credit Risk All of the Companys 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 managements opinion, the capitalization and operating history of the financial institutions are such that the likelihood of material loss is remote. |
6. SOFTWARE
6. SOFTWARE | 6 Months Ended |
Mar. 31, 2015 | |
Research and Development [Abstract] | |
6. SOFTWARE | NOTE 6 - SOFTWARE The following is a detail of software at March 31, 2015 and September 30, 2014: 2015 2014 Source Code License $ 2,500 $ 2,500 Software License 1,200,106 1,200,106 EMR Certification 23,000 23,000 Encryption Software Code 15,800 15,800 Evolve Software Code 25,000 25,000 Compose Rose Code 6,000 Acquisition of Doctors Network of America 10,000 10,000 Total intangible assets 1,276,406 1,282,406 Accumulated amortization of intangible assets (charged to cost of sales) (795,345 ) (668,105 ) Accumulated impairment of assets (248,531 ) (10,000 ) Total proprietary technology, net $ 238,530 $ 604,301 The amortization expense was $127,240 for the six months ended March 31, 2015. During the six months ended March 31, 2015, the Company impaired $238,531 of its software assets, as a result of the decline in revenues. 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 2,000 shares of its common stock as consideration for the purchase. The fair value of the consideration and the assets acquired is based on the fair value of the common stock issued in exchange for the software. The total fair value, based on the market price on the date of grant, was $6,000. The Company evaluated this acquisition and determined that it did not meet the definition of a significant business acquisition. During the six months ended March 31, 2014, the Company and Antree agreed to unwind the acquisition of the software by the Company. Accordingly, the Company gave up all its rights for the use of the Compass Rose Code and all associated intellectual property rights, all computer software, patents, or formulas, algorithms licensed or sold under the project known as Compass Rose and the appropriate copyrights, patents, mask works, trademarks, service marks, internet domain names and world wide web uniform resource locators. In exchange for the Company giving up its rights to the Compass Rose Code, Antree agreed to the rescission and cancellation of the shares issued for the purchase. The Company cancelled the 2,000 shares issued to Antree and recorded a reduction to its capitalized intangible assets of $6,000 and a corresponding reduction of equity. The Company recorded a gain on the cancellation for the shares of $4,752. |
7. DISCONTINUED OPERATIONS
7. DISCONTINUED OPERATIONS | 6 Months Ended |
Mar. 31, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | |
7. DISCONTINUED OPERATIONS | NOTE 7- DISCONTINUED OPERATIONS The Companys former Board of Directors believed that it was in the best interest of the Company to discontinue the former business operation of the GPS operational device business. In 2011, this business was transferred to National Scientific Corporation; a company owned by the Companys prior CEO, by prior management in which the Companys former CEO was to pay $100,000 plus 2% of revenues for that technology. The former officer never paid the specific consideration for this transaction. Accordingly, the Company reclassified the assets, liabilities and operations related to its GPS operational device business as discontinued operations. Consequently, the accompanying consolidated financial statements reflect the assets, liabilities and operations of the GPS operational device business as net assets of discontinued operations, net liabilities of discontinued operations and results from discontinued operations. DNA On March 16, 2013, the Company closed the acquisition with the final payment for DNA. Subsequent to the transaction closing, the sellers refused to pay the transaction fees for medical billing contracts that were processed. The Company filed a lawsuit against the sellers for Breach of Contract among other things in June of 2013. During that time, the Company believes the sellers began contacting all billing contract holders and interfered with the acquisition of all the assets from the transaction. Consequently, the accompanying consolidated financial statements reflect the assets, liabilities and operations of DNA as net assets of discontinued operations, net liabilities of discontinued operations and results from discontinued operations. Details of the classifications for net liabilities and operations are shown below. March 31, 2015 September 30, 2014 Net liabilities of discontinued operations: Accounts payable $ $ 18 Net liabilities of discontinued operations $ $ 18 Three Months Ended March 31, 2015 2014 Discontinued operations: Revenues $ 12,779 $ 53,766 Operating expenses (12,934 ) (50,568 ) (Loss) income from discontinued operations (155 ) $ 3,198 Six Months Ended March 31, 2015 2014 Discontinued operations: Revenues $ 12,779 $ 12,779 Operating expenses (13,648 ) (13,494 ) (Loss) income from discontinued operations (869 ) (7,517 ) |
8. LINES OF CREDIT
8. LINES OF CREDIT | 6 Months Ended |
Mar. 31, 2015 | |
Debt Disclosure [Abstract] | |
8. LINES OF CREDIT | NOTE 8 - 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 5.00% interest rate per annum which renews annually. As of March 31, 2015, the Company had borrowed $46,097 against the line of credit. During the six months ended March 31, 2015, the Company repaid $7,514 of the outstanding balance and incurred and paid $1,222 in interest expense related to the Mutual of Omaha line of credit. |
9. COMMITMENTS AND CONTINGENCIE
9. COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Mar. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
9. COMMITMENTS AND CONTINGENCIES | NOTE 9 - COMMITMENTS AND CONTINGENCIES 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. |
10. EQUITY
10. EQUITY | 6 Months Ended |
Mar. 31, 2015 | |
Equity [Abstract] | |
10. EQUITY | NOTE 10 - EQUITY As of March 31, 2015, the Company was authorized to issue 650,000,000 common shares and 10,000,000 preferred shares at a par value of $0.01. Six months ended March 31, 2015 Stock Cancelled During the six months ended March 31, 2015, the Company cancelled 2,150 shares of common stock. 2,000 of these shares were cancelled in relation to the Company giving back its rights to the Compass Rose Code. See Note 5. As part of the Antree rescission and cancellation, 150 shares were additionally cancelled that were issued in the year ended September 30, 2014, to one of the owners of Antree who provided additional programming services for improvements to the Compass Rose Code. The cancellation of the 150 shares was recorded as an adjustment to the Companys par value, as no consideration was paid for the cancellation. The Company received $7,000 for the issuance of 50,000 shares of common stock recorded as stock payable and as of September 30, 2014 the common stock has not been issued by the Company. In the six months ended March 31, 2015, the Company paid back the proceeds and did not issue the stock. Preferred Stock On February 5, 2015, the Company issued 6,000,000 shares of its Series A Preferred Stock to its CEO. As the Series A Preferred Stock is convertible into the Companys common stock at a rate of 1 to 1.5 common shares. The Company recorded $9,900,000 as stock compensation based on the market value of the Companys common stock on the date of grant. As of February 17, 2015, there are a total of 10,000,000 shares of the Series A Preferred Stock authorized and outstanding which are convertible into a total of 15,000,000 shares of common stock. The holders of the Preferred A shares can only convert the shares upon proper notice and approval of the Board of Directors. Presently, the holders of the Preferred A shares have not sent notice to the Board of Directors and the Board of Directors does not currently intend to approve such conversion. |
11. SEGMENT INFORMATION
11. SEGMENT INFORMATION | 6 Months Ended |
Mar. 31, 2015 | |
Segment Reporting [Abstract] | |
11. SEGMENT INFORMATION | NOTE 11 - 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 Companys business activities were derived from this segment. Cipherloc - the Company has a second software program which is an encryption technology that can be used by larger corporation to protect their data through our polymorphic technology. Corporate Overhead - the Companys 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 Companys operations are principally in the United States. Consolidated revenues from external customers, operating loss, and identifiable assets were as follows: Three months ended March 31, 2015 2014 Revenues: Cloud-MD $ $ 105,118 CipherLoc Total revenues $ $ 105,118 Operating expenses: Cloud-MD $ (10,254,265 ) $ (91,155 ) Cipherloc (18,520 ) Corporate (157,806 ) (1,106,142 ) Net Loss from Continuing Operations $ (10,430,321 ) $ (1,092,179 ) Six months ended March 31, 2015 2014 Revenues: Cloud-MD $ 431 $ 222,675 Cipherloc Total revenues $ 431 $ 222,675 Operating expenses: Cloud-MD $ (10,516,073 ) $ (182,310 ) Cipherloc (18,520 ) (18,520 ) Corporate (604,075 ) (1,309,698 ) Net Loss from Continuing Operations $ (10,691,716 ) $ (1,287,853 ) March 31, 2015 September 30, 2014 Identifiable assets: Cloud-MD $ 216,730 $ 583,507 CipherLoc 21,800 21,800 Corporate 86,872 552,537 Total identifiable assets $ 325,402 $ 1,157844 |
12. SUBSEQUENT EVENTS
12. SUBSEQUENT EVENTS | 6 Months Ended |
Mar. 31, 2015 | |
Subsequent Events [Abstract] | |
11. SUBSEQUENT EVENTS | NOTE 11 - 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 Companys business activities were derived from this segment. Cipherloc - the Company has a second software program which is an encryption technology that can be used by larger corporation to protect their data through our polymorphic technology. Corporate Overhead - the Companys 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 Companys operations are principally in the United States. Consolidated revenues from external customers, operating loss, and identifiable assets were as follows: Three months ended March 31, 2015 2014 Revenues: Cloud-MD $ $ 105,118 CipherLoc Total revenues $ $ 105,118 Operating expenses: Cloud-MD $ (10,254,265 ) $ (91,155 ) Cipherloc (18,520 ) Corporate (157,806 ) (1,106,142 ) Net Loss from Continuing Operations $ (10,430,321 ) $ (1,092,179 ) Six months ended March 31, 2015 2014 Revenues: Cloud-MD $ 431 $ 222,675 Cipherloc Total revenues $ 431 $ 222,675 Operating expenses: Cloud-MD $ (10,516,073 ) $ (182,310 ) Cipherloc (18,520 ) (18,520 ) Corporate (604,075 ) (1,309,698 ) Net Loss from Continuing Operations $ (10,691,716 ) $ (1,287,853 ) March 31, 2015 September 30, 2014 Identifiable assets: Cloud-MD $ 216,730 $ 583,507 CipherLoc 21,800 21,800 Corporate 86,872 552,537 Total identifiable assets $ 325,402 $ 1,157844 |
5. SUMMARY OF SIGNIFICANT ACC18
5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Mar. 31, 2015 | |
Accounting Policies [Abstract] | |
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. During the six months ended March 31, 2015, the Company impaired $238,531 of its software assets. |
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 March 31, 2015 and September 30, 2014 for assets measured at fair value on a recurring basis: Level 1 Level 2 Level 3 Total At March 31, 2015 Software $ $ $ 238,530 $ 238,530 Total Software $ $ $ 238,530 $ 238,530 At September 30, 2014 Software $ $ $ 604,301 $ 604,301 Total Software $ $ $ 604,301 $ 604,301 |
Concentration of Credit Risk | Concentration of Credit Risk All of the Companys 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 managements opinion, the capitalization and operating history of the financial institutions are such that the likelihood of material loss is remote. |
2. RESTATEMENT OF PREVIOUSLY 19
2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (Tables) | 6 Months Ended |
Mar. 31, 2015 | |
Restatement Of Previously Issued Financial Statements Tables | |
RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS | Consolidated Balance Sheet as of March 31, 2015: As reported Restatement Adjustment As restated Deferred revenue $ $ 1,125,000 $ 1,125,000 Current liabilities 676,818 1,125,000 1,801,818 Accumulated deficit (38,950,152 ) (1,125,000 ) (40,075,152 ) Stockholders deficit (351,416 ) (1,125,000 ) (1,476,416 ) Consolidated Balance Sheet as of September 2014: As reported Restatement Adjustment As restated Deferred revenue $ $ 1,125,000 $ 1,125,000 Current liabilities 710,082 1,125,000 1,835,082 Accumulated deficit (28,255,726 ) (1,125,000 ) (29,380,726 ) Stockholders deficit 447,762 (1,125,000 ) (677,238 ) |
5. SUMMARY OF SIGNIFICANT ACC20
5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Mar. 31, 2015 | |
Accounting Policies [Abstract] | |
Fair Value of Financial Instruments | Level 1 Level 2 Level 3 Total At March 31, 2015 Software $ $ $ 238,530 $ 238,530 Total Software $ $ $ 238,530 $ 238,530 At September 30, 2014 Software $ $ $ 604,301 $ 604,301 Total Software $ $ $ 604,301 $ 604,301 |
6. SOFTWARE (Tables)
6. SOFTWARE (Tables) | 6 Months Ended |
Mar. 31, 2015 | |
Research and Development [Abstract] | |
Software | 2015 2014 Source Code License $ 2,500 $ 2,500 Software License 1,200,106 1,200,106 EMR Certification 23,000 23,000 Encryption Software Code 15,800 15,800 Evolve Software Code 25,000 25,000 Compose Rose Code 6,000 Acquisition of Doctors Network of America 10,000 10,000 Total intangible assets 1,276,406 1,282,406 Accumulated amortization of intangible assets (charged to cost of sales) (795,345 ) (668,105 ) Accumulated impairment of assets (248,531 ) (10,000 ) Total proprietary technology, net $ 238,530 $ 604,301 |
7. DISCONTINUED OPERATIONS (Tab
7. DISCONTINUED OPERATIONS (Tables) | 6 Months Ended |
Mar. 31, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | March 31, 2015 September 30, 2014 Net liabilities of discontinued operations: Accounts payable $ $ 18 Net liabilities of discontinued operations $ $ 18 Three Months Ended March 31, 2015 2014 Discontinued operations: Revenues $ 12,779 $ 53,766 Operating expenses (12,934 ) (50,568 ) (Loss) income from discontinued operations (155 ) $ 3,198 Six Months Ended March 31, 2015 2014 Discontinued operations: Revenues $ 12,779 $ 12,779 Operating expenses (13,648 ) (13,494 ) (Loss) income from discontinued operations (869 ) (7,517 ) |
11. SEGMENT INFORMATION (Tables
11. SEGMENT INFORMATION (Tables) | 6 Months Ended |
Mar. 31, 2015 | |
Segment Reporting [Abstract] | |
Segment Information | Three months ended March 31, 2015 2014 Revenues: Cloud-MD $ $ 105,118 CipherLoc Total revenues $ $ 105,118 Operating expenses: Cloud-MD $ (10,254,265 ) $ (91,155 ) Cipherloc (18,520 ) Corporate (157,806 ) (1,106,142 ) Net Loss from Continuing Operations $ (10,430,321 ) $ (1,092,179 ) Six months ended March 31, 2015 2014 Revenues: Cloud-MD $ 431 $ 222,675 Cipherloc Total revenues $ 431 $ 222,675 Operating expenses: Cloud-MD $ (10,516,073 ) $ (182,310 ) Cipherloc (18,520 ) (18,520 ) Corporate (604,075 ) (1,309,698 ) Net Loss from Continuing Operations $ (10,691,716 ) $ (1,287,853 ) March 31, 2015 September 30, 2014 Identifiable assets: Cloud-MD $ 216,730 $ 583,507 CipherLoc 21,800 21,800 Corporate 86,872 552,537 Total identifiable assets $ 325,402 $ 1,157844 |
1. DESCRIPTION OF BUSINESS (Det
1. DESCRIPTION OF BUSINESS (Details Narrative) | 6 Months Ended |
Mar. 31, 2015USD ($) | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Software Purchase | $ 25,000 |
2. RESTATEMENT OF PREVIOUSLY 25
2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (Details) - USD ($) | Mar. 31, 2015 | Sep. 30, 2014 |
Deferred revenue | $ 1,125,000 | $ 1,125,000 |
Accumulated deficit | $ (40,075,152) | $ (29,380,726) |
As reported | ||
Deferred revenue | ||
Current liabilities | $ 676,818 | $ 710,082 |
Accumulated deficit | (38,950,152) | (28,255,726) |
Stockholders' deficit | (351,416) | 447,762 |
Restatement Adjustment | ||
Deferred revenue | 1,125,000 | 1,125,000 |
Current liabilities | 1,125,000 | 1,125,000 |
Accumulated deficit | (1,125,000) | (1,125,000) |
Stockholders' deficit | (1,125,000) | (1,125,000) |
As Restated | ||
Deferred revenue | 1,125,000 | 1,125,000 |
Current liabilities | 1,801,818 | 1,835,082 |
Accumulated deficit | (40,075,152) | (29,380,726) |
Stockholders' deficit | $ (1,476,416) | $ (677,238) |
4. GOING CONCERN (Details Narra
4. GOING CONCERN (Details Narrative) - USD ($) | Mar. 31, 2015 | Sep. 30, 2014 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accumulated Deficit | $ (40,075,152) | $ (29,380,726) |
5. SUMMARY OF SIGNIFICANT ACC27
5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | Mar. 31, 2015 | Sep. 30, 2014 |
Software | $ 238,530 | $ 604,301 |
Total Software | $ 238,530 | $ 604,301 |
Level 1 | ||
Software | ||
Total Software | ||
Level 2 | ||
Software | ||
Total Software | ||
Level 3 | ||
Software | $ 238,530 | $ 604,301 |
Total Software | $ 238,530 | $ 604,301 |
6. SOFTWARE (Details)
6. SOFTWARE (Details) - USD ($) | Mar. 31, 2015 | Sep. 30, 2014 |
Intangible assets | $ 1,276,406 | $ 1,282,406 |
Accumulated amortization of intangible assets | (795,345) | (668,105) |
Accumulated impairment of assets | (248,531) | (10,000) |
Intangible assets, Net | 238,530 | 604,301 |
Source Code License | ||
Intangible assets | 2,500 | 2,500 |
Software License | ||
Intangible assets | 1,200,106 | 1,200,106 |
EMR Certification | ||
Intangible assets | 23,000 | 23,000 |
Encryption Software Code | ||
Intangible assets | 15,800 | 15,800 |
Evolve Software Code | ||
Intangible assets | $ 25,000 | 25,000 |
Compose Rose Code | ||
Intangible assets | 6,000 | |
Doctors Network America | ||
Intangible assets | $ 10,000 | $ 10,000 |
6. SOFTWARE (Details Narrative)
6. SOFTWARE (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | |
Research and Development [Abstract] | ||||
Amortization Expense | $ 127,240 | |||
Impairment | $ 238,531 | $ 238,531 |
7. DISCONTINUED OPERATIONS (Det
7. DISCONTINUED OPERATIONS (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | Sep. 30, 2014 | |
Accounts payable | $ 18 | ||||
Net liabilities of discontinued operations | $ 18 | ||||
Revenues | $ 105,118 | $ 431 | $ 222,675 | ||
Operating expenses | $ 10,365,671 | 1,136,142 | $ 10,564,177 | 1,388,218 | |
Discontinued Operations, Disposed of by Sale [Member] | |||||
Accounts payable | |||||
Net liabilities of discontinued operations | |||||
Revenues | $ 12,779 | 53,766 | $ 12,779 | 12,779 | |
Operating expenses | (12,934) | (50,568) | (13,648) | (13,494) | |
(Loss) income from discontinued operations | $ (155) | $ 3,198 | $ (869) | $ (7,517) |
8. LINES OF CREDIT (Details Nar
8. LINES OF CREDIT (Details Narrative) - USD ($) | 6 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Line of Credit, Repayment | $ 7,514 | |
Mutual of Omaha | ||
Revolving Line of Credit, Borrowing Capacity | $ 65,000 | |
Line of Credit Interest Rate | 5.00% | |
Line of Credit, Amount Outstanding | $ 46,097 | |
Line of Credit, Repayment | 7,514 | |
Interest Expense | $ 1,222 |
9. COMMITMENTS AND CONTINGENC32
9. COMMITMENTS AND CONTINGENCIES (Details Narrative) | 6 Months Ended |
Mar. 31, 2015USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Contingencies | $ 200,000 |
10. EQUITY (Details Narrative)
10. EQUITY (Details Narrative) - $ / shares | 6 Months Ended | 12 Months Ended |
Mar. 31, 2015 | Sep. 30, 2014 | |
Equity [Abstract] | ||
Common Stock, Shares Authorized | 650,000,000 | 650,000,000 |
Preferred Stock Shares Authorized | 10,000,000 | 10,000,000 |
Common Stock, Par Value | $ 0.01 | $ 0.01 |
Preferred Stock, Par Value | $ 0.01 | $ 0.01 |
Preferred Stock, Shares Issued | 10,000,000 | 4,000,000 |
Preferred Stock, Shares Outstandng | 10,000,000 | 4,000,000 |
Stock Cancelled, Shares | 2,150 | 150 |
11. SEGMENT INFORMATION (Detail
11. SEGMENT INFORMATION (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | Sep. 30, 2014 | |
Revenues: | $ 105,118 | $ 431 | $ 222,675 | ||
Operating expenses: | $ (10,430,321) | (1,092,179) | (10,691,716) | (1,287,853) | |
Identifiable assets: | $ 325,402 | 325,402 | $ 1,157,844 | ||
Cloud MD | |||||
Revenues: | 105,118 | 431 | 222,675 | ||
Operating expenses: | $ (10,254,265) | $ (91,155) | (10,516,073) | $ (182,310) | |
Identifiable assets: | $ 216,730 | $ 216,730 | 583,507 | ||
CipherLoc | |||||
Revenues: | |||||
Operating expenses: | $ (18,520) | $ (18,520) | $ (18,520) | ||
Identifiable assets: | 21,800 | 21,800 | 21,800 | ||
Corporate | |||||
Operating expenses: | (157,806) | $ (1,106,142) | (604,075) | $ (1,309,698) | |
Identifiable assets: | $ 86,872 | $ 86,872 | $ 552,537 |
12. SUBSEQUENT EVENTS (Details
12. SUBSEQUENT EVENTS (Details Narrative) | 6 Months Ended |
Mar. 31, 2015shares | |
Subsequent Events [Abstract] | |
Software Licensing Fee, Shares | 50,000 |