Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Jun. 30, 2014 | Apr. 20, 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 | Jun. 30, 2014 | |
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 | Q3 | |
Document Fiscal Year Focus | 2,014 |
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 liabilities | 547,487 | $ 361,994 |
Stock payable | 177,300 | |
Liabilities attributable to discontinued operations | 44,939 | $ 35,356 |
Line of credit | 62,612 | $ 9,796 |
Deferred Revenue | 1,125,000 | |
Total current liabilities | 1,957,338 | $ 407,146 |
TOTAL LIABILITIES | 1,957,338 | 407,146 |
STOCKHOLDERS' EQUITY (DEFICIT): | ||
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 | (28,983,918) | (26,542,265) |
Total stockholders' equity (deficit) | (481,480) | 427,700 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ 1,475,858 | $ 834,846 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | 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] | ||||
REVENUE | $ 1,725 | $ 137,941 | $ 224,400 | $ 461,512 |
COST OF REVENUES | 61,155 | 61,155 | 183,465 | 182,315 |
GROSS PROFIT | (59,430) | 76,786 | 40,935 | 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 | (1,138,736) | (189,263) | (2,426,589) | (417,677) |
OTHER INCOME (EXPENSE) | ||||
Interest expense | (1,656) | (15) | (2,171) | (211) |
Gain on disposal of assets | 0 | 0 | 0 | 1,353 |
Total other income (expense) | (1,656) | (15) | (2,171) | 1,142 |
LOSS FROM CONTINUING OPERATIONS | (1,140,392) | (189,278) | (2,428,760) | (416,535) |
INCOME (LOSS) FROM DISCONTINUED OPERATIONS | (5,376) | 1,138 | (12,893) | 60,084 |
NET LOSS | $ (1,145,768) | $ (188,140) | $ (2,441,653) | $ (356,451) |
NET LOSS PER COMMON SHARE - Basic and diluted: | ||||
Continuing operations | $ 0 | $ 0 | $ (0.01) | $ 0 |
Discontinued operations | 0 | 0 | 0 | 0 |
Total | $ 0 | $ 0 | $ (0.01) | $ 0 |
WEIGHTED AVERAGE 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 | $ (2,441,653) | $ (356,451) |
Income (loss) discontinued operations | (12,893) | 60,084 |
Net loss from continuing operations | (2,428,760) | (416,535) |
Adjustments to reconcile net loss from continuing operations to net cash from operating activities: | ||
Depreciation and amortization | 183,465 | 182,315 |
Stock-based compensation | 1,623,369 | 31,829 |
Common stock issued for software sales | $ 5,700 | 12,313 |
Impairment of assets | 6,000 | |
Gain on disposal of assets | (1,353) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | $ 1,437 | 132 |
Accounts payable and accrued liabilities | 241,887 | $ 145,256 |
Deferred Revenue | 1,125,000 | |
Net cash provided by (used in) operating activities | 752,098 | $ (40,043) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of intangible assets | 0 | (11,500) |
Proceeds from the sale of assets | $ 0 | 1,353 |
Net cash provided by investing activities | (10,147) | |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Advances from officer | $ 8,299 | 0 |
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 YEAR | 8,587 | 51,356 |
CASH, END OF YEAR | 828,501 | 99,812 |
SUPPLEMENTAL DISCLOSURERS | ||
Interest paid | 0 | 0 |
Income taxes paid | 0 | 0 |
NONCASH OPERATING, INVESTING, AND FINANCING ACTIVITIES: | ||
Write-off of related party debt to additional paid-in capital | 59,704 | 0 |
Common stock issued for purchase of intangilbe assets | $ 6,000 | 21,800 |
Acrual of software acquisition costs | $ 11,500 |
1. DESCRIPTION OF BUSINESS
1. DESCRIPTION OF BUSINESS | 9 Months Ended |
Jun. 30, 2014 | |
Accounting Policies [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 April 3, 2012, the Company changed its name to Cipherloc 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. |
2. RESTATEMENT OF PREVIOUSLY IS
2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS | 9 Months Ended |
Jun. 30, 2014 | |
Restatement Of Previously Issued Financial Statements | |
2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS | NOTE 2 RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS The Company has restated its consolidated interim financial statements as of June 30, 2014, and for the three and nine months then ended. The restatements reflect adjustments to correct errors identified by management during the Companys regularly scheduled audit. The restatements reflect adjustments to correct errors for the Companys revenue recognition of a transaction in 2014. The effect of the restatement was material on the Companys Balance Sheets, Income Statement and Statement of Cash Flows. The nature and impact of these adjustments are described below. Revenue Recognition During the three months ended June 30, 2014, the Company recorded software revenue related to the sale of a license for software to a customer. Management subsequently determined that a lack of adequate communication and delivery documentation between the Company and the customer did not allow for revenue recognition during 2014. The Company has corrected the classification of this amount as a reduction to software revenue and an increase to deferred revenue. The amount of $1,125,000 has been classified as a reduction to revenue. The results of the restatements are summarized as follows: Consolidated Balance Sheet as of June 30, 2014: As reported Adjustment As restated Deferred revenue $ $ 1,125,000 $ 1,125,000 Accumulated deficit $ (27,858,918 ) $ (1,125,000 ) $ (28,983,918 ) Consolidated Statement of Operations for the three months ended June 30, 2014: As reported Adjustment As restated Revenue $ 1,126,725 $ (1,125,000 ) $ 1,725 Loss from continuing operations $ (15,392 ) $ (1,125,000 ) $ (1,140,392 ) Net loss $ (20,768 ) $ (1,125,000 ) $ (1,145,768 ) Basic and diluted loss per common share $ (0.00 ) $ $ (0.00 ) Consolidated Statement of Operations for the nine months ended June 30, 2014: As reported Adjustment As restated Revenue $ 1,349,400 $ (1,125,000 ) $ 224,400 Loss from continuing operations $ (1,303,760 ) $ (1,125,000 ) $ (2,428,760 ) Net loss $ (1,316,653 ) $ (1,125,000 ) $ (2,441,653 ) Basic and diluted loss per common share $ (0.01 ) $ $ (0.01 ) Consolidated Statement of Cash Flows for the nine months ended June 30, 2014: As reported Adjustment As restated Net loss $ (1,316,653 ) $ (1,125,000 ) $ (2,441,653 ) Adjustments to reconcile net loss from continuing operations to net cash from operating activities: Deferred revenue $ $ 1,125,000 $ 1,125,000 Net cash provided by operating activities $ 752,098 $ $ 752,098 |
3. BASIS OF PRESENTATION OF INT
3. BASIS OF PRESENTATION OF INTERIM CONSOLIDATED FINANCIAL STATEMENTS | 9 Months Ended |
Jun. 30, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [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 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 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, 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. |
4. GOING CONCERN
4. GOING CONCERN | 9 Months Ended |
Jun. 30, 2014 | |
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 recurring losses from operations and an accumulated deficit at June 30, 2014 of $28,983,918 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 | 9 Months Ended |
Jun. 30, 2014 | |
Accounting Policies [Abstract] | |
5. 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: 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 Companys 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 $ $ $ 817,921 $ 817,921 Total Software $ $ $ 817,921 $ 817,921 Accounts Receivable and Allowance for Uncollectible Accounts Substantially all of the Companys 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 Companys 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 Companys 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 Claim s $1 . 00 Pa p er 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 Subscription Revenues Cost of license revenue is primarily comprised of the license-based royalties to third parties and production and distribution costs for initial product licenses. No costs were incurred for license-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 $1,125,000 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 Companys 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 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. 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, 2014 and 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 Companys financial position, operations or cash flows. |
6. SOFTWARE
6. SOFTWARE | 9 Months Ended |
Jun. 30, 2014 | |
Research and Development [Abstract] | |
6. Software | NOTE 6 SOFTWARE The following is a detail of software at June 30, 2014 and September 30, 2013: June 30, 2014 September 30, 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 Doctors 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 Companys software was placed into service starting in the second quarter of fiscal year ended September 30, 2012. The amortization expense was $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. |
7. DISCONTINUED OPERATIONS
7. DISCONTINUED OPERATIONS | 9 Months Ended |
Jun. 30, 2014 | |
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, LLC, 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. 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. June 30, 2014 September 30, 2013 Net liabilities of discontinued operations: Accounts payable $ 44,939 $ 35,356 Net liabilities of discontinued operations $ 44,939 $ 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 |
8. LINE OF CREDIT
8. LINE OF CREDIT | 9 Months Ended |
Jun. 30, 2014 | |
Debt Disclosure [Abstract] | |
8. LINE 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 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 and $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. |
9. DEBT MITIGATION PROGRAM
9. DEBT MITIGATION PROGRAM | 9 Months Ended |
Jun. 30, 2014 | |
Debt Mitigation Program | |
9. DEBT MITIGATION PROGRAM | NOTE 9 DEBT MITIGATION PROGRAM The Company determined that the statute of limitations for certain of the Companys 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. |
10. COMMITMENTS AND CONTINGENCI
10. COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Jun. 30, 2014 | |
Commitments And Contingencies | |
10. COMMITMENTS AND CONTINGENCIES | NOTE 10 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. On July 5, 2013, the Company filed a complaint against Krooss Medical Management Systems, LLC, William F. Krooss and Marie W. Krooss in the United States District Court, District of Nevada Case No. 2013-CV-01187-ABG-VCF for the collection of $200,000 of unpaid medical billing fees that were seriously delinquent. After many attempts by the Company to begin collections, the Defendants refused to pay the outstanding balances, however expected the Company to continue to bill for them. The Complaint includes causes of action Breach of the PTAPA, Breach of Billing and Collections Contracts, Negligence, Breach of the Duty of Good Faith and Fair Dealing, Tortious Interference with Business Relations, Fraud, among other causes of action. On August 13, 2013, Krooss Medical Management Systems et al filed a Complaint in Chancery Court of Rankin County, Mississippi Case No. 13-1372 as a strategy to keep the collection matter in Mississippi Chancery Court. Case No. 13-1372 was remanded to the United States District Court, Southern District of Mississippi Jackson Division Case No. 3:13CV507-HTW-LRA. This litigation is a collection matter of unpaid fees by the Defendants and the Company vehemently denies the allegations (Breach of the Permanent Transfer Asset Purchase Agreement (PTAPA), Rescission of the PTAPA, Breach of Billing and Collections Contracts, Negligence, Quantum Meruit, Restitution, and Estoppel, Breach of the Duty of Good Faith and Fair Dealing, Tortious Interference with Business Relations, among other causes of action) filed in Mississippi Chancery Court related to this collection matter. The Company does not expect the cost to litigate this matter to adversely affect the Companys operations. However, the Company has reduced operations in DNA-Cloud in Mississippi as the sellers have interfered with the billing contracts purchased which is one of the causes of action in Complaint, among others. Many of the contracts have been terminated due to the interference by the sellers, and DNA-Cloud has not been able to expand the business because of the reputation of the sellers in Jackson, Mississippi and the surrounding area. 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 9, 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. |
11. RELATED PARTY TRANSACTIONS
11. RELATED PARTY TRANSACTIONS | 9 Months Ended |
Jun. 30, 2014 | |
Related Party Transactions [Abstract] | |
11. RELATED PARTY TRANSACTIONS | NOTE 11 RELATED PARTY TRANSACTIONS The Company repaid $8,299 and $25,591 of the advances from the Companys 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. |
12. EQUITY
12. EQUITY | 9 Months Ended |
Jun. 30, 2014 | |
Equity [Abstract] | |
12. EQUITY | NOTE 12 - 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 October 21, 2013 25,000 $ 5,000 January 12, 2014 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 December 4, 2013 120,000 $ 3,600 March 4, 2014 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 March 5, 2014 31,750,000 $ 666,750 Compensation to officers April 3, 2014 5,000 116 Compensation for legal services April 21, 2014 1,392,506 34,228 Compensation for CipherLoc consultants April 22, 2014 7,000,000 138,600 Marketing agreement with Hemp, Inc. May 3, 2014 5,000 115 Compensation for legal services May 5, 2014 50,000 1,150 Compensation for marketing services May 6, 2014 25,000,000 605,000 Compensation to a sales consultant June 3, 2014 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 October 14, 2012 20,000 $ 20,000 October 14, 2012 15,000 3,000 October 14, 2012 18,750 2,500 October 14, 2012 18,750 2,500 December 6, 2012 15,000 3,000 March 12, 2013 20,000 20,000 March 12, 2013 20,000 20,000 March 31, 2013 50,000 50,000 March 27, 2013 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 October 14, 2012 50,000 $ 1,300 December 6, 2012 100,000 2,800 March 12, 2013 50,000 1,750 March 21, 2013 50,000 1,750 March 21, 2013 50,000 1,750 April 17, 2013 25,000 838 April 17, 2013 50,000 1,675 June 26, 2013 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 October 14, 2012 10,000 $ 260 Commission December 6, 2012 100,000 2,800 Compensation March 12, 2013 50,000 1,750 Consulting March 21, 2013 167,000 5,845 Compensation March 21, 2013 500,000 17,500 Compensation April 17, 2013 78,500 2,630 Compensation May 1, 2013 20,000 522 Programming May 10, 2013 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. |
13. SEGMENT INFORMATION
13. SEGMENT INFORMATION | 9 Months Ended |
Jun. 30, 2014 | |
Segment Reporting [Abstract] | |
13. SEGMENT INFORMATION | NOTE 13 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 the 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 June 30, 2014 2013 (Restated) Revenues: Cloud-MD $ 1,725 $ 137,941 CipherLoc Total revenues $ 1,725 $ 137,941 Operating expenses: Cloud-MD $ (61,155 ) $ (125,199 ) CipherLoc (30,684 ) Corporate (1,021,150 ) (202,005 ) Operating loss $ (1,138,736 ) $ (189,263 ) Nine months ended June 30, 2014 2013 (Restated) Revenues: Cloud-MD $ 224,400 $ 461,512 CipherLoc Total revenues $ 224 ,400 $ 461,512 Operating loss: Cloud-MD $ (203,465 ) $ (341,359 ) CipherLoc (30,684 ) Corporate (2,431,904 ) (537,830 ) Operating loss $ (2,441,653 ) $ (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 |
14. SUBSEQUENT EVENTS
14. SUBSEQUENT EVENTS | 9 Months Ended |
Jun. 30, 2014 | |
Subsequent Events [Abstract] | |
14. SUBSEQUENT EVENTS | NOTE 14 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 CipherLoc Encryption Technology. The shares were valued at $2,450 based on the market price on the date of grant. |
5. SUMMARY OF SIGNIFICANT ACC20
5. 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 Companys 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 $ $ $ 817,921 $ 817,921 Total Software $ $ $ 817,921 $ 817,921 |
Accounts Receivable and Allowance for Uncollectible Accounts | Accounts Receivable and Allowance for Uncollectible Accounts Substantially all of the Companys 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 Companys 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 Companys 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 Claim s $1 . 00 Pa p er 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 Subscription Revenues Cost of license revenue is primarily comprised of the license-based royalties to third parties and production and distribution costs for initial product licenses. No costs were incurred for license-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 |
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 Companys 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 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. 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, 2014 and 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 Companys financial position, operations or cash flows. |
2. RESTATEMENT OF PREVIOUSLY 21
2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (Tables) | 9 Months Ended |
Jun. 30, 2014 | |
Restatement Of Previously Issued Financial Statements Tables | |
RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS | Consolidated Balance Sheet as of June 30, 2014: As reported Adjustment As restated Deferred revenue $ $ 1,125,000 $ 1,125,000 Accumulated deficit $ (27,858,918 ) $ (1,125,000 ) $ (28,983,918 ) Consolidated Statement of Operations for the three months ended June 30, 2014: As reported Adjustment As restated Revenue $ 1,126,725 $ (1,125,000 ) $ 1,725 Loss from continuing operations $ (15,392 ) $ (1,125,000 ) $ (1,140,392 ) Net loss $ (20,768 ) $ (1,125,000 ) $ (1,145,768 ) Basic and diluted loss per common share $ (0.00 ) $ $ (0.00 ) Consolidated Statement of Operations for the nine months ended June 30, 2014: As reported Adjustment As restated Revenue $ 1,349,400 $ (1,125,000 ) $ 224,400 Loss from continuing operations $ (1,303,760 ) $ (1,125,000 ) $ (2,428,760 ) Net loss $ (1,316,653 ) $ (1,125,000 ) $ (2,441,653 ) Basic and diluted loss per common share $ (0.01 ) $ $ (0.01 ) Consolidated Statement of Cash Flows for the nine months ended June 30, 2014: As reported Adjustment As restated Net loss $ (1,316,653 ) $ (1,125,000 ) $ (2,441,653 ) Adjustments to reconcile net loss from continuing operations to net cash from operating activities: Deferred revenue $ $ 1,125,000 $ 1,125,000 Net cash provided by operating activities $ 752,098 $ $ 752,098 |
5. SUMMARY OF SIGNIFICANT ACC22
5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Jun. 30, 2014 | |
Accounting Policies [Abstract] | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | 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 $ $ $ 817,921 $ 817,921 Total Software $ $ $ 817,921 $ 817,921 |
6. SOFTWARE (Tables)
6. SOFTWARE (Tables) | 9 Months Ended |
Jun. 30, 2014 | |
Research and Development [Abstract] | |
SOFTWARE | June 30, 2014 September 30, 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 Doctors 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 |
7. DISCONTINUED OPERATIONS (Tab
7. DISCONTINUED OPERATIONS (Tables) | 9 Months Ended |
Jun. 30, 2014 | |
Discontinued Operations and Disposal Groups [Abstract] | |
DISCONTINUED OPERATIONS | June 30, 2014 September 30, 2013 Net liabilities of discontinued operations: Accounts payable $ 44,939 $ 35,356 Net liabilities of discontinued operations $ 44,939 $ 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 |
9. DEBT MITIGATION PROGRAM (Tab
9. DEBT MITIGATION PROGRAM (Tables) | 9 Months Ended |
Jun. 30, 2014 | |
Debt Mitigation Program Tables | |
Debt Mitigation | 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 $ |
12. EQUITY (Tables)
12. EQUITY (Tables) | 9 Months Ended |
Jun. 30, 2014 | |
Equity Tables | |
Stock Issuances | 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 October 21, 2013 25,000 $ 5,000 January 12, 2014 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 December 4, 2013 120,000 $ 3,600 March 4, 2014 100,000 2,100 Total 220,000 $ 5,700 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 March 5, 2014 31,750,000 $ 666,750 Compensation to officers April 3, 2014 5,000 116 Compensation for legal services April 21, 2014 1,392,506 34,228 Compensation for CipherLoc consultants April 22, 2014 7,000,000 138,600 Marketing agreement with Hemp, Inc. May 3, 2014 5,000 115 Compensation for legal services May 5, 2014 50,000 1,150 Compensation for marketing services May 6, 2014 25,000,000 605,000 Compensation to a sales consultant June 3, 2014 5,000 110 Compensation for legal services Total 65,207,506 $ 1,446,069 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 October 14, 2012 20,000 $ 20,000 October 14, 2012 15,000 3,000 October 14, 2012 18,750 2,500 October 14, 2012 18,750 2,500 December 6, 2012 15,000 3,000 March 12, 2013 20,000 20,000 March 12, 2013 20,000 20,000 March 31, 2013 50,000 50,000 March 27, 2013 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 October 14, 2012 50,000 $ 1,300 December 6, 2012 100,000 2,800 March 12, 2013 50,000 1,750 March 21, 2013 50,000 1,750 March 21, 2013 50,000 1,750 April 17, 2013 25,000 838 April 17, 2013 50,000 1,675 June 26, 2013 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 October 14, 2012 10,000 $ 260 Commission December 6, 2012 100,000 2,800 Compensation March 12, 2013 50,000 1,750 Consulting March 21, 2013 167,000 5,845 Compensation March 21, 2013 500,000 17,500 Compensation April 17, 2013 78,500 2,630 Compensation May 1, 2013 20,000 522 Programming May 10, 2013 20,000 522 Programming Total 945,500 $ 31,829 |
13. SEGMENT INFORMATION (Tables
13. SEGMENT INFORMATION (Tables) | 9 Months Ended |
Jun. 30, 2014 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | Three months ended June 30, 2014 2013 (Restated) Revenues: Cloud-MD $ 1,725 $ 137,941 CipherLoc Total revenues $ 1,725 $ 137,941 Operating expenses: Cloud-MD $ (61,155 ) $ (125,199 ) CipherLoc (30,684 ) Corporate (1,021,150 ) (202,005 ) Operating loss $ (1,138,736 ) $ (189,263 ) Nine months ended June 30, 2014 2013 (Restated) Revenues: Cloud-MD $ 224,400 $ 461,512 CipherLoc Total revenues $ 224 ,400 $ 461,512 Operating loss: Cloud-MD $ (203,465 ) $ (341,359 ) CipherLoc (30,684 ) Corporate (2,431,904 ) (537,830 ) Operating loss $ (2,441,653 ) $ (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 |
2. RESTATEMENT OF PREVIOUSLY 28
2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Sep. 30, 2013 | |
Deferred Revenue | $ 1,125,000 | $ 1,125,000 | |||
Accumulated Deficit | (28,983,918) | (28,983,918) | $ (26,542,265) | ||
Consolidated Income statement | |||||
Revenue | 1,725 | $ 137,941 | 224,400 | $ 461,512 | |
Loss from continuing operations | (1,140,392) | (189,278) | (2,428,760) | (416,535) | |
Net loss | $ (1,145,768) | $ (188,140) | $ (2,441,653) | $ (356,451) | |
Basic and diluted loss per common share | $ 0 | $ 0 | $ (0.01) | $ 0 | |
Consolidated Statement of Cash Flow | |||||
Net cash provided by operating activities | $ 752,098 | $ (40,043) | |||
As reported | |||||
Deferred Revenue | |||||
Accumulated Deficit | $ (27,858,918) | $ (27,858,918) | |||
Consolidated Income statement | |||||
Revenue | 1,126,725 | 1,349,400 | |||
Loss from continuing operations | (15,392) | (1,303,760) | |||
Net loss | $ (20,768) | $ (1,316,653) | |||
Basic and diluted loss per common share | $ 0 | $ (0.01) | |||
Consolidated Statement of Cash Flow | |||||
Net loss | $ (1,316,653) | ||||
Deferred Revenue | |||||
Net cash provided by operating activities | $ 752,098 | ||||
Restatement Adjustment | |||||
Deferred Revenue | $ 1,125,000 | 1,125,000 | |||
Accumulated Deficit | (1,125,000) | (1,125,000) | |||
Consolidated Income statement | |||||
Revenue | (1,125,000) | (1,125,000) | |||
Loss from continuing operations | (1,125,000) | (1,125,000) | |||
Net loss | $ (1,125,000) | $ (1,125,000) | |||
Basic and diluted loss per common share | |||||
Consolidated Statement of Cash Flow | |||||
Net loss | $ (1,125,000) | ||||
Deferred Revenue | 1,125,000 | ||||
Net cash provided by operating activities | 0 | ||||
As Restated | |||||
Deferred Revenue | $ 1,125,000 | 1,125,000 | |||
Accumulated Deficit | (28,983,918) | (28,983,918) | |||
Consolidated Income statement | |||||
Revenue | 1,725 | 224,400 | |||
Loss from continuing operations | (1,140,392) | (2,428,760) | |||
Net loss | $ (1,145,768) | $ (2,441,653) | |||
Basic and diluted loss per common share | $ 0 | $ (0.01) | |||
Consolidated Statement of Cash Flow | |||||
Net loss | $ (2,441,653) | ||||
Deferred Revenue | 1,125,000 | ||||
Net cash provided by operating activities | $ 752,098 |
4. GOING CONCERN (Details Narra
4. GOING CONCERN (Details Narrative) - USD ($) | Jun. 30, 2014 | Sep. 30, 2013 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
ACCUMULATED DEFICIT | $ (28,983,918) | $ (26,542,265) |
5. SUMMARY OF SIGNIFICANT ACC30
5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | Jun. 30, 2015 | Sep. 30, 2014 |
Software, net | $ 640,456 | $ 817,921 |
Total Software | $ 640,456 | $ 817,921 |
Level 1 | ||
Software, net | ||
Total Software | ||
Level 2 | ||
Software, net | ||
Total Software | ||
Level 3 | ||
Software, net | $ 640,456 | $ 817,921 |
Total Software | $ 640,456 | $ 817,921 |
6. SOFTWARE (Details)
6. SOFTWARE (Details) - USD ($) | Jun. 30, 2015 | Sep. 30, 2014 | Jun. 30, 2014 |
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 | |
Source Code License - Antree Systems Limited | |||
Intangible assets | $ 6,000 | ||
Encryption Software Code | |||
Intangible assets | $ 15,800 | 15,800 | |
Source Code License - MediSouth LLC | |||
Intangible assets | 2,500 | 2,500 | |
Acquisition of Doctor's Network America | |||
Intangible assets | 10,000 | 10,000 | |
Software License | |||
Intangible assets | 1,200,106 | 1,200,106 | |
EMR Certification | |||
Intangible assets | $ 23,000 | $ 23,000 |
6. PROPRIETARY TECHNOLOGY (Deta
6. PROPRIETARY TECHNOLOGY (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
Research and Development [Abstract] | ||||
Amortization Expense | $ 61,155 | $ 61,155 | $ 0 | $ 10,000 |
7. DISCONTINUED OPERATIONS (Det
7. 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 | |
Accounts payable | $ 44,939 | $ 44,939 | $ 35,356 | ||
Net liabilities of discontinued operations | 44,939 | 44,939 | $ 35,356 | ||
Revenue | 1,725 | $ 137,941 | 224,400 | $ 461,512 | |
Cost of Sales | 61,155 | 61,155 | 183,465 | 182,315 | |
Operating expenses | 1,079,306 | 266,049 | 2,467,524 | 696,874 | |
Discontinued Operations, Disposed of by Means Other than Sale [Member] | |||||
Revenue | $ 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 | 0 | 58,984 | |||
(Loss) income from discontinued operations | $ (5,376) | $ 1,138 | $ (12,893) | $ 60,084 |
8. LINE OF CREDIT (Details Narr
8. LINE OF CREDIT (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
Debt Disclosure [Abstract] | ||||
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 | ||
Line of Credit, Repayment | 50,713 | $ 22,427 | ||
Interest Expense | $ 1,657 | $ 15 | $ 2,171 | $ 211 |
9. DEBT MITIGATION PROGRAM (Det
9. DEBT MITIGATION PROGRAM (Details) - USD ($) | Jun. 30, 2014 | Jun. 30, 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 | 0 | $ (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. |
11. RELATED PARTY TRANSACTIONS
11. RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 9 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Related Party Transactions [Abstract] | ||
Advances from officer | $ 8,299 | $ 0 |
Repayment of advances from officer | $ 8,299 | $ 25,591 |
12. EQUITY - Stock Issuances (D
12. EQUITY - Stock Issuances (Details) - USD ($) | 9 Months Ended | 12 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | Sep. 30, 2014 | |
Stock Issued for Services 1 | |||
Date | Mar. 5, 2014 | Oct. 14, 2012 | |
Number of Shares | 31,750,000 | 10,000 | |
Fair Value | $ 666,750 | $ 260 | |
Description of Services | Compensation to officers | Programming | |
Stock Issued for Services 2 | |||
Date | Apr. 3, 2014 | Dec. 6, 2012 | |
Number of Shares | 5,000 | 100,000 | |
Fair Value | $ 116 | $ 2,800 | |
Description of Services | Compensation for legal services | ||
Stock Issued for Services 3 | |||
Date | Apr. 21, 2014 | Mar. 12, 2013 | |
Number of Shares | 1,392,506 | 50,000 | |
Fair Value | $ 34,228 | $ 1,750 | |
Description of Services | Compensation for CipherLoc consultants | ||
Stock Issued for Services 4 | |||
Date | Apr. 22, 2014 | Mar. 21, 2013 | |
Number of Shares | 7,000,000 | 167,000 | |
Fair Value | $ 138,600 | $ 5,845 | |
Description of Services | Marketing agreement with Hemp, Inc. | ||
Stock Issued for Services 5 | |||
Date | May 3, 2014 | Mar. 21, 2013 | |
Number of Shares | 5,000 | 500,000 | |
Fair Value | $ 115 | $ 17,500 | |
Description of Services | Compensation for legal services | ||
Stock Issued for Services 6 | |||
Date | May 5, 2014 | Apr. 17, 2013 | |
Number of Shares | 50,000 | 78,500 | |
Fair Value | $ 1,150 | $ 2,630 | |
Description of Services | Compensation for marketing services | ||
Stock Issued for Services 7 | |||
Date | May 6, 2014 | May 1, 2013 | |
Number of Shares | 25,000,000 | 20,000 | |
Fair Value | $ 605,000 | $ 522 | |
Description of Services | Compensation to a sales consultant | ||
Stock Issued for Services 8 | |||
Date | Jun. 3, 2014 | May 10, 2013 | |
Number of Shares | 5,000 | 20,000 | |
Fair Value | $ 110 | $ 522 | |
Description of Services | Compensation for legal services | ||
Stock Issued for Services Total | |||
Number of Shares | 65,207,506 | 945,500 | |
Fair Value | $ 1,446,069 | $ 31,829 | |
Description of Services | Commission | ||
Stock Issued for Cash 1 | |||
Date | Oct. 21, 2013 | ||
Number of Shares | 25,000 | ||
Fair Value | $ 5,000 | ||
Description of Services | Compensation | ||
Stock Issued for Cash 2 | |||
Date | Jan. 12, 2014 | ||
Number of Shares | 10,000 | ||
Fair Value | $ 10,000 | ||
Description of Services | Consulting | ||
Stock Issued for Cash Total | |||
Number of Shares | 35,000 | ||
Fair Value | $ 15,000 | ||
Description of Services | Compensation | ||
Stock Issued for Software Licensing 1 | |||
Date | Dec. 4, 2013 | Oct. 14, 2012 | |
Number of Shares | 120,000 | 20,000 | |
Fair Value | $ 3,600 | $ 20,000 | |
Description of Services | Compensation | ||
Stock Issued for Software Licensing 2 | |||
Date | Mar. 4, 2014 | Oct. 14, 2012 | |
Number of Shares | 100,000 | 15,000 | |
Fair Value | $ 2,100 | $ 3,000 | |
Description of Services | Compensation | ||
Stock Issued for Software Licensing Total | |||
Number of Shares | 220,000 | ||
Fair Value | $ 5,700 | ||
Description of Services | Programming | ||
Stock Issued for Software Licensing 3 | |||
Date | Mar. 12, 2013 | Oct. 14, 2012 | |
Number of Shares | 50,000 | 18,750 | |
Fair Value | $ 1,750 | $ 2,500 | |
Stock Issued for Software Licensing 4 | |||
Date | Mar. 21, 2013 | Oct. 14, 2012 | |
Number of Shares | 50,000 | 18,750 | |
Fair Value | $ 1,750 | $ 2,500 | |
Stock Issued for Software Licensing 5 | |||
Date | Mar. 21, 2013 | Dec. 6, 2012 | |
Number of Shares | 50,000 | 15,000 | |
Fair Value | $ 1,750 | $ 3,000 | |
Stock Issued for Software Licensing 6 | |||
Date | Apr. 17, 2013 | Mar. 12, 2013 | |
Number of Shares | 25,000 | 20,000 | |
Fair Value | $ 838 | $ 20,000 | |
Stock Issued for Software Licensing 7 | |||
Date | Apr. 17, 2013 | Mar. 12, 2013 | |
Number of Shares | 50,000 | 20,000 | |
Fair Value | $ 1,675 | $ 20,000 | |
Stock Issued for Software Licensing 8 | |||
Date | Jun. 26, 2013 | Mar. 31, 2013 | |
Number of Shares | 25,000 | 50,000 | |
Fair Value | $ 450 | $ 50,000 | |
Stock Issued for Software Licensing 9 | |||
Date | Mar. 27, 2013 | ||
Number of Shares | 20,000 | ||
Fair Value | $ 20,000 | ||
Stock Issued for Software Licensing Total | |||
Number of Shares | 400,000 | 197,500 | |
Fair Value | $ 12,313 | $ 141,000 | |
Stock Issued for Software Licensing 1 | |||
Date | Oct. 14, 2012 | ||
Number of Shares | 50,000 | ||
Fair Value | $ 1,300 | ||
Stock Issued for Software Licensing 2 | |||
Date | Dec. 6, 2012 | ||
Number of Shares | 100,000 | ||
Fair Value | $ 2,800 |
13. SEGMENT INFORMATION (Detail
13. 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 | |
Revenue: | $ 1,725 | $ 137,941 | $ 224,400 | $ 461,512 | |
Operating expenses: | (1,138,736) | (189,263) | (2,426,589) | (417,677) | |
Identifiable assets: | 1,475,858 | 1,475,858 | $ 834,846 | ||
Cloud MD | |||||
Revenue: | 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 | |||||
Revenue: | |||||
Operating expenses: | $ (30,684) | $ (30,684) | $ (537,830) | ||
Identifiable assets: | 15,800 | 15,800 | |||
Corporate | |||||
Operating expenses: | (1,021,150) | $ (202,005) | (2,431,904) | ||
Identifiable assets: | $ 828,501 | $ 828,501 | $ 8,587 |