Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Sep. 30, 2013 | Jan. 13, 2014 | Mar. 29, 2013 | |
Document and Entity Information | ' | ' | ' |
Entity Registrant Name | 'ACTIVECARE, INC. | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 30-Sep-13 | ' | ' |
Amendment Flag | 'true | ' | ' |
Entity Central Index Key | '0001429896 | ' | ' |
Current Fiscal Year End Date | '--09-30 | ' | ' |
Entity Filer Category | 'Smaller Reporting Company | ' | ' |
Entity Current Reporting Status | 'Yes | ' | ' |
Entity Voluntary Filers | 'No | ' | ' |
Entity Well-known Seasoned Issuer | 'No | ' | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
Entity Common Stock, Shares Outstanding | ' | 32,860,314 | ' |
Entity Public Float | ' | ' | $6,000,000 |
Amendment Description | '1 | ' | ' |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Sep. 30, 2013 | Sep. 30, 2012 |
Consolidated Balance Sheets | ' | ' |
Cash | $223,835 | $529,839 |
Accounts receivable, net | 1,852,328 | 644,974 |
Inventory | 4,677,526 | 290,768 |
Prepaid expenses and other | 38,998 | 7,277 |
Total current assets | 6,792,687 | 1,472,858 |
Customer contracts, net of accumulated amortization of $935,361and $102,330, respectively | 1,434,521 | 2,267,552 |
Goodwill | 825,894 | 825,894 |
Patents, net of accumulated amortization of $355,458 and $228,587,respectively | 566,920 | 693,790 |
Property and equipment, net | 296,730 | 266,078 |
Equipment leased to customers, net | 273,630 | 312,993 |
Deposits and other assets | 106,950 | 24,634 |
Domain name, net of accumulated amortization of $2,860 and $2,145,respectively | 11,440 | 12,155 |
Total assets | 10,308,772 | 5,875,954 |
Accounts payable | 6,621,234 | 1,132,611 |
Accounts payable, related-party | 251,386 | 150,395 |
Accrued expenses | 694,934 | 2,104,623 |
Current portion of notes payable, related-party | 1,892,415 | 1,563,923 |
Current portion of notes payable | 1,278,585 | 2,569,221 |
Derivatives liability | 795,151 | 4,015,855 |
Deferred revenue | 13,585 | 61,608 |
Dividends payable | 3,471 | 18,322 |
Total current liabilities | 11,550,761 | 11,616,558 |
Notes payable, net of current portion | 1,055,918 | 1,804,929 |
Notes payable, related-party, net of current portion | 0 | 169,857 |
Total long-term liabilities | 1,055,918 | 1,974,786 |
Total liabilities | 12,606,679 | 13,591,344 |
Preferred stock, $.00001 par value: 10,000,000 shares authorized;480,000 and 480,000 shares of Series C; 938,218 and 386,103shares of Series D; and 61,723 and 0 shares of Series E, outstanding, respectively | 15 | 9 |
Common stock, $.00001 par value: 50,000,000 shares authorized;21,775,303 and 4,636,977 shares outstanding, respectively | 218 | 46 |
Additional paid-in capital, common and preferred | 62,519,544 | 29,643,769 |
Accumulated deficit | -64,817,684 | -37,359,214 |
Total stockholders' deficit | -2,297,907 | -7,715,390 |
Total liabilities and stockholders' deficit | $10,308,772 | $5,875,954 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets Parenthetical (USD $) | Sep. 30, 2013 | Sep. 30, 2012 |
Consolidated Balance Sheets Parenthetical | ' | ' |
Domain name accumulated amortization | $2,860 | $2,145 |
Patent accumulated amortization | 355,458 | 228,587 |
Contracted customer accumulated amortization | $935,361 | $102,330 |
Preferred stock par value | $0.00 | $0.00 |
Preferred stock shares authorized | 10,000,000 | 10,000,000 |
Preferred stock shares outstanding | 1,479,941 | 866,103 |
Common stock par value | $0.00 | $0.00 |
Common stock shares authorized | 50,000,000 | 50,000,000 |
Common stock shares outstanding | 21,775,303 | 4,636,977 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Consolidated Statements of Operations | ' | ' |
Chronic Illness Monitoring Revenue | $4,245,404 | $706,888 |
Care Services Revenue | 1,660,544 | 352,223 |
Total revenues | 5,905,948 | 1,059,111 |
Chronic Illness Monitoring Cost of Revenue | 3,323,011 | 536,790 |
Care Services Cost of Revenue | 2,325,226 | 736,520 |
Total cost of revenues | 5,648,237 | 1,273,310 |
Gross profit (deficit) | 257,711 | -214,199 |
Selling, general and administrative (including $2,159,828 and $3,927,214, respectively, of stock-based compensation) | 11,039,645 | 8,855,724 |
Research and development | 832,271 | 187,230 |
Total operating expenses | 11,871,916 | 9,042,954 |
Loss from operations | -11,614,205 | -9,257,153 |
Loss on derivatives liability | -333,406 | -2,104,389 |
Loss on induced conversion of debt and sale of common stock | -9,355,587 | 0 |
Interest expense, net | -5,583,932 | -858,224 |
Loss on disposal of property and equipment | -200,149 | 0 |
Other expense | -45,011 | 0 |
Total other income (expense) | -15,518,085 | -2,962,613 |
Net loss from continuing operations | -27,132,290 | -12,219,766 |
Loss from discontinued operations | -5,312 | -145,990 |
Net loss | -27,137,602 | -12,365,756 |
Dividends on preferred stock | -320,868 | -57,183 |
Net loss attributable to common stockholders | ($27,458,470) | ($12,422,939) |
Continuing operations | ($3.73) | ($2.89) |
Discontinued operations | $0 | ($0.03) |
Net loss per common share | ($3.73) | ($2.92) |
Weighted average common shares outstanding - basic and diluted | 7,369,000 | 4,251,500 |
Consolidated_Statements_of_Ope1
Consolidated Statements of Operations Parenthetical (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Consolidated Statements of Operations Parenthetical | ' | ' |
Compensation expense paid in stock or amortization of stock options and warrants | $2,159,828 | $3,927,214 |
Consolidated_Statements_of_Sto
Consolidated Statements of Stockholders' Equity (USD $) | Series C Preferred Stock | Series D Preferred Stock | Series E Preferred Stock | Common stock | Additional Paid-in Capital | Accumulated Deficit | Total |
Balance at Sep. 30, 2011 | ' | ' | ' | $39 | $24,394,848 | ($24,936,275) | ($541,388) |
Balance - shares at Sep. 30, 2011 | ' | ' | ' | 3,856,816 | ' | ' | 3,856,816 |
Issuance of common stock for services | ' | ' | ' | 1 | 218,905 | ' | 218,906 |
Issuance of common stock for services - shares | ' | ' | ' | 129,161 | ' | ' | 129,161 |
Issuance of common stock for accrued expenses | ' | ' | ' | 1 | 311,999 | ' | 312,000 |
Issuance of common stock for accrued expenses - shares | ' | ' | ' | 60,000 | ' | ' | 60,000 |
Issuance of common stock for loan origination fee | ' | ' | ' | 1 | 69,999 | ' | 70,000 |
Issuance of common stock for loan origination fee - shares | ' | ' | ' | 100,000 | ' | ' | 100,000 |
Issuance of common stock for debt conversion | ' | ' | ' | 1 | 92,399 | ' | 92,400 |
Issuance of common stock for debt conversion - shares | ' | ' | ' | 231,000 | ' | ' | 231,000 |
Issuance of common stock for settlement agreement | ' | ' | ' | 2 | 499,998 | ' | 500,000 |
Issuance of common stock for settlement agreement - shares | ' | ' | ' | 200,000 | ' | ' | 200,000 |
Issuance of Series D preferred stock for debt conversion | ' | 1 | ' | ' | 109,999 | ' | 110,000 |
Issuance of Series D preferred stock for debt conversion - shares | ' | 55,000 | ' | ' | ' | ' | 55,000 |
Issuance of Series D preferred stock for loan origination fee | ' | 1 | ' | ' | 389,999 | ' | 390,000 |
Issuance of Series D preferred stock for loan origination fee - shares | ' | 140,000 | ' | ' | ' | ' | 140,000 |
Issuance of Series D preferred stock for acquisitions | ' | 2 | ' | ' | 679,998 | ' | 680,000 |
Issuance of Series D preferred stock for acquisitions - shares | ' | 180,000 | ' | ' | ' | ' | 180,000 |
Issuance of Series D preferred stock for dividends | ' | ' | ' | ' | 38,861 | ' | 38,861 |
Issuance of Series D preferred stock for dividends - shares | ' | 11,103 | ' | ' | ' | ' | 11,103 |
Stock based compensation | ' | ' | ' | ' | 3,708,308 | ' | 3,708,308 |
Issuance of options for loan origination fees | ' | ' | ' | ' | ' | ' | 117,551 |
Issuance of options for laon origination fees | ' | ' | ' | ' | 117,551 | ' | 117,551 |
Derivatives liabilites | ' | ' | ' | ' | -1,911,466 | ' | -1,911,466 |
Issuance of common and Series C preferred stock for patents | 5 | ' | ' | 1 | 922,371 | ' | 922,377 |
Issuance of common and Series C preferred stock for patents - shares | 480,000 | ' | ' | 60,000 | ' | ' | 540,000 |
Net loss | ' | ' | ' | ' | ' | -12,365,756 | -12,365,756 |
Dividends on preferred stock | ' | ' | ' | ' | ' | -57,183 | -57,183 |
Balance at Sep. 30, 2012 | 5 | 4 | ' | 46 | 29,643,769 | -37,359,214 | -7,715,390 |
Balance - shares at Sep. 30, 2012 | 480,000 | 386,103 | ' | 4,636,977 | ' | ' | 5,503,080 |
Conversion of Series D preferred stock at Sep. 30, 2012 | ' | ' | ' | ' | ' | ' | 1,830,515 |
Issuance of common stock for services | ' | ' | ' | 16 | 475,484 | ' | 475,500 |
Issuance of common stock for services - shares | ' | ' | ' | 1,579,632 | ' | ' | 1,579,632 |
Issuance of common stock for accrued expenses | ' | ' | ' | 2 | 225,298 | ' | 225,300 |
Issuance of common stock for accrued expenses - shares | ' | ' | ' | 166,200 | ' | ' | 166,200 |
Issuance of common stock for loan origination fee | ' | ' | ' | 2 | 334,265 | ' | 334,267 |
Issuance of common stock for loan origination fee - shares | ' | ' | ' | 189,345 | ' | ' | 189,345 |
Issuance of common stock for debt conversion | ' | ' | ' | 134 | 18,466,989 | ' | 18,467,123 |
Issuance of common stock for debt conversion - shares | ' | ' | ' | 13,439,190 | ' | ' | 13,439,190 |
Issuance of Series D preferred stock for loan origination fee | ' | 1 | ' | ' | 817,482 | ' | 817,483 |
Issuance of Series D preferred stock for loan origination fee - shares | ' | 103,843 | ' | ' | ' | ' | 103,843 |
Issuance of Series D preferred stock for dividends | ' | ' | ' | ' | 66,881 | ' | 66,881 |
Issuance of Series D preferred stock for dividends - shares | ' | 14,087 | ' | ' | ' | ' | 14,087 |
Stock based compensation | ' | ' | ' | ' | 1,750,274 | ' | 1,750,274 |
Issuance of options for loan origination fees | ' | ' | ' | ' | 289,732 | ' | 289,732 |
Derivatives liabilites | ' | ' | ' | ' | 4,417,456 | ' | 4,417,456 |
Issuance of common and Series C preferred stock for patents | ' | ' | ' | ' | ' | ' | 0 |
Net loss | ' | ' | ' | ' | ' | -27,137,602 | -27,137,602 |
Dividends on preferred stock | ' | ' | ' | ' | ' | -320,868 | -320,868 |
Issuance of common stock for cash | ' | ' | ' | 13 | 1,838,820 | ' | 1,838,833 |
Issuance of common stock for cash - shares | ' | ' | ' | 1,313,334 | ' | ' | 1,313,334 |
Issuance of common stock for dividends | ' | ' | ' | 2 | 251,562 | ' | 251,564 |
Issuance of common stock for dividends - shares | ' | ' | ' | 200,625 | ' | ' | 200,625 |
Issuance of Series D preferred stock for services | ' | 5 | ' | ' | 1,800,526 | ' | 1,800,531 |
Issuance of Series D preferred stock for services - shares | ' | 484,185 | ' | ' | ' | ' | 484,185 |
Issuance of Series E preferred stock for debt conversions | ' | ' | 1 | ' | 614,764 | ' | 614,765 |
Issuance of Series E preferred stock for debt conversions - shares | ' | ' | 61,723 | ' | ' | ' | 61,723 |
Issuance of options for services | ' | ' | ' | ' | 202,572 | ' | 202,572 |
Conversion of Series D preferred stock - shares | ' | -50,000 | ' | 250,000 | ' | ' | 200,000 |
Balance at Sep. 30, 2013 | 5 | 9 | 1 | 218 | 62,519,544 | -64,817,684 | -2,297,907 |
Beneficial conversion features on debt at Sep. 30, 2013 | ' | ' | ' | ' | $1,323,672 | ' | $1,323,672 |
Balance - shares at Sep. 30, 2013 | 480,000 | 938,218 | 61,723 | 21,775,303 | ' | ' | 23,255,244 |
Conversion of Series D preferred stock at Sep. 30, 2013 | ' | -1 | ' | 3 | -2 | ' | 4,691,090 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Cash flows from operating activities: | ' | ' |
Net loss | ($27,137,602) | ($12,365,756) |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' |
Depreciation and amortization | 1,232,734 | 385,485 |
Derivatives loss | 333,406 | 2,104,389 |
Stock-based compensation expense | 2,159,828 | 3,927,214 |
Stock and warrants issued for services | 1,286,999 | 0 |
Stock and warrants issued for interest expense | 601,220 | 0 |
Amortization of debt discounts | 3,097,009 | 418,084 |
Loss on induced conversion of debt and sale of common stock | 9,355,587 | 0 |
Loss on disposal of property and equipment | 200,149 | 0 |
Gain on sale of discontinued operations | -55,096 | 0 |
Settlement agreement | 0 | 500,000 |
Changes in operating assets and liabilities: | ' | ' |
Change in accounts receivable | -1,290,312 | -527,954 |
Change in inventories | -4,440,258 | -174,758 |
Change in prepaid expenses and other assets | -16,822 | 18,101 |
Change in accounts payable | 5,787,603 | 676,766 |
Change in accrued expenses | 71,197 | 2,063,859 |
Change in deferred revenue | -48,023 | 26,101 |
Change in deposits and other assets | -82,316 | 0 |
Net cash used in operating activities | -8,944,697 | -2,948,469 |
Cash flows from investing activities: | ' | ' |
Purchases of property and equipment | -249,771 | -47,826 |
Purchases of equipment leased to customers | -235,917 | 0 |
Proceeds from sale of discontinued operations | 184,318 | 0 |
Proceeds from sale of equipment | 4,900 | 0 |
Net cash acquired from Green Wire | 0 | 12,215 |
Acquisition of 4G Biometrics, LLC | 0 | -350,000 |
Net cash used in investing activities | -296,470 | -385,611 |
Cash flows from financing activities: | ' | ' |
Principal payments on related-party notes payable | -198,606 | -165,325 |
Proceeds from related-party notes payable, net | 5,720,799 | 2,190,000 |
Proceeds from notes payable, net | 3,790,496 | 1,746,113 |
Principal payments on notes payable | -1,341,755 | -85,000 |
Proceeds from the sale of common stock, net | 981,500 | 0 |
Payment of dividends | -17,271 | 0 |
Net cash provided by financing activities | 8,935,163 | 3,685,788 |
Net increase (decrease) in cash | -306,004 | 351,708 |
Cash, beginning of the fiscal year | 529,839 | 178,131 |
Cash, end of the fiscal year | 223,835 | 529,839 |
Supplemental Cash Flow Information: | ' | ' |
Cash paid for interest | 745,423 | 530,891 |
Non-Cash Investing and Financing Activities: | ' | ' |
Reclassification of derivatives liability to equity | 4,484,801 | ' |
Issuance of stock for loan origination fees | 2,252,376 | 460,000 |
Conversion of notes payable to debentures | 1,920,797 | ' |
Issuance of derivatives | 1,410,147 | 1,911,466 |
Issuance of common and prefered stock for settlement of liabilities | 991,750 | 312,000 |
Dividends on preferred stock | 320,868 | 57,183 |
Issuance of stock for dividends | 318,445 | 38,861 |
Issuance of stock for prepaid expenses | 14,899 | ' |
Issuance of common and Series C preferred stock for patents | 0 | 922,377 |
Issuance of stock for debt conversion | 0 | 202,400 |
Accrued interest transferred to notes payable | 0 | 174,273 |
Issuance of options for loan origination fees | $289,732 | $117,551 |
1_Organization_and_Nature_of_O
1. Organization and Nature of Operations | 12 Months Ended |
Sep. 30, 2013 | |
Notes | ' |
1. Organization and Nature of Operations | ' |
1. Organization and Nature of Operations | |
ActiveCare, Inc. (“ActiveCare”) was formed March 5, 1998 as a wholly owned subsidiary of SecureAlert, Inc. [OTCBB: SCRA.OB], a Utah corporation, formerly known as RemoteMDx, Inc. (“SecureAlert”). ActiveCare was spun off from SecureAlert in February 2009 and SecureAlert retained no ownership interest in ActiveCare. In July 2009, ActiveCare was reincorporated in Delaware. ActiveCare and its wholly owned subsidiaries (collectively the “Company”) is a technology and service provider that provides real-time visibility to health conditions and risk, and has a unique active approach in caring for members, resulting in improved outcomes. | |
Going Concern | |
Although the Company had gross profit for fiscal year 2013, it has incurred negative cash flows from operating activities, recurring net losses, negative working capital, and negative total equity. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. | |
In order for the Company to remove substantial doubt about its ability to continue as a going concern, it must improve margins, generate positive cash flows from operating activities, and obtain the necessary debt or equity funding to meet its projected capital investment requirements. Management’s plans with respect to this uncertainty include raising additional capital by issuing equity securities and increasing the sales of the Company’s services and products. Subsequent to year end, the Company (1) completed the sale of $3,120,000 of 8% Series F variable rate convertible preferred stock (“Series F preferred stock”); (2) converted $2,301,801 of debt and accrued interest to common stock; and (3) converted $573,886 of debt and accrued interest to Series F variable rate convertible preferred stock (see Note 21). There can be no assurance that the Company will be able to raise sufficient additional capital or that revenues will increase rapidly enough to offset operating losses. If the Company is unable to increase revenues or obtain additional financing, it will be unable to continue the development of its products and may have to cease operations. |
2_Restatement_and_Amendment_of
2. Restatement and Amendment of Previously Reported Financial Information | 12 Months Ended | ||||||
Sep. 30, 2013 | |||||||
Notes | ' | ||||||
2. Restatement and Amendment of Previously Reported Financial Information | ' | ||||||
2. Restatement and Amendment of Previously Reported Financial Information | |||||||
The Company restated the consolidated financial statements as of and for the fiscal year ended September 30, 2013 to correct the accounting related to revenue recognition for chronic illness supplies shipped to distributors. Specifically, it was determined better practice to defer revenue recognition until the products are shipped to the end users as opposed to the distributors, even though the distributors had taken title to the products and there were no significant rights of return. The corrections defer the recognition of revenue until later periods, and do not impact the cash flows related to these transactions. | |||||||
The consolidated financial statements as of and for the fiscal year ended September 30, 2013 have been restated to properly reflect revenue, cost of revenue, inventory and other related balance sheet accounts related to the Chronic Illness Monitoring segment. The following schedules reconcile the amounts as originally reported to the corresponding restated amounts. | |||||||
Restated balance sheet captions | |||||||
30-Sep-13 | |||||||
As previously reported | Restatement adjustments | As restated | |||||
Accounts receivable, net | $ 7,345,912 | $ (5,493,584) | $ 1,852,328 | ||||
Inventory | 1,249,220 | 3,428,306 | 4,677,526 | ||||
Total current assets | 8,857,965 | (2,065,278) | 6,792,687 | ||||
Total assets | 12,374,050 | (2,065,278) | 10,308,772 | ||||
Accrued expenses | 1,253,616 | (558,682) | 694,934 | ||||
Total current liabilities | 12,109,443 | (558,682) | 11,550,761 | ||||
Total liabilities | 13,165,361 | (558,682) | 12,606,679 | ||||
Accumulated deficit | -63,311,088 | (1,506,596) | (64,817,684) | ||||
Total stockholders’ deficit | (791,311) | (1,506,596) | (2,297,907) | ||||
Total liabilities and stockholders’ deficit | $12,374,050 | $ (2,065,278) | $ 10,308,772 | ||||
Restated statement of operations captions | |||||||
30-Sep-13 | |||||||
As previously reported | Restatement adjustments | As restated | |||||
Revenues: | |||||||
Chronic illness monitoring | $ 9,738,988 | $ (5,493,584) | $ 4,245,404 | ||||
Total revenues | 11,399,532 | (5,493,584) | 5,905,948 | ||||
Cost of revenues: | |||||||
Chronic illness monitoring | 7,309,999 | (3,986,988) | 3,323,011 | ||||
Total cost of revenues | 9,635,225 | (3,986,988) | 5,648,237 | ||||
Gross profit (deficit) | 1,764,307 | (1,506,596) | 257,711 | ||||
Loss from operations | -10,107,609 | (1,506,596) | (11,614,205) | ||||
Net loss from continuing operations | -25,625,694 | (1,506,596) | (27,132,290) | ||||
Net loss | (25,631,006) | (1,506,596) | (27,137,602) | ||||
Net loss attributable to common stockholders | -25,951,874 | (1,506,596) | (27,458,470) | ||||
Net loss per common share - basic and diluted | |||||||
Continuing operations | (3.52) | (0.21) | (3.73) | ||||
Net loss per common share | $ (3.52) | $ (0.21) | $ (3.73) | ||||
Restated statement of stockholders’ deficit captions | |||||||
30-Sep-13 | |||||||
As previously reported | Restatement adjustments | As restated | |||||
Net loss | ($25,631,006) | $ (1,506,596) | ($27,137,602) | ||||
Accumulated deficit | -63,311,088 | (1,506,596) | (64,817,684) | ||||
Total stockholders’ deficit | $ (791,311) | $ (1,506,596) | $ (2,297,907) | ||||
Restated statement of cash flows captions | |||||||
30-Sep-13 | |||||||
As previously reported | Restatement adjustments | As restated | |||||
Cash flows from operating activities: | |||||||
Net loss | ($25,631,006) | $ (1,506,596) | ($27,137,602) | ||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (6,783,896) | 5,493,584 | (1,290,312) | ||||
Inventory | (1,011,952) | (3,428,306) | (4,440,258) | ||||
Accrued expenses | $ 629,879 | $ (558,682) | $ 71,197 | ||||
3_Summary_of_Significant_Accou
3. Summary of Significant Accounting Policies | 12 Months Ended | |||
Sep. 30, 2013 | ||||
Notes | ' | |||
3. Summary of Significant Accounting Policies | ' | |||
3. Summary of Significant Accounting Policies | ||||
Principles of Accounting and Consolidation | ||||
These consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“US GAAP”). The consolidated financial statements include the accounts of ActiveCare and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated. | ||||
Use of Estimates in the Preparation of Financial Statements | ||||
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates. | ||||
In May 2013, the Company effected a 10-for-1 reverse common stock split. The consolidated financial statements and notes for all periods presented have been retroactively adjusted to reflect the reverse common stock split. | ||||
Discontinued Operations | ||||
In June 2013, the Company sold the net assets and operations of its reagents business segment to a third party for $184,318 in cash. During fiscal years 2013 and 2012, the Company recognized a loss from discontinued operations of $5,312 and $145,990, respectively. | ||||
Fair Value of Financial Instruments | ||||
The carrying values of cash, accounts receivable and accounts payable approximate their respective fair values due to the short-term nature and liquidity of these financial instruments. Derivative financial instruments are recorded at fair value based on current market pricing models. Based on current market conditions, the Company estimates the fair values of its long-term debt obligations approximate their carrying values as of September 30, 2013. | ||||
Concentrations of Credit Risk | ||||
The Company has cash in bank accounts that, at times, may exceed federally insured limits. The Company has not experienced any losses in these accounts. | ||||
In the normal course of business, the Company provides credit terms to its customers and requires no collateral. The Company performs ongoing credit evaluations of its customers’ financial condition. The Company maintains an allowance for doubtful accounts receivable based upon management’s specific review and assessment of each account at the period end. | ||||
During fiscal year 2013, the Company had revenues from one significant Chronic Illness Monitoring customer, which represented 44% of total revenues and 61% of segment revenues. As of September 30, 2013, accounts receivable from two significant customers represented 82% of total accounts receivable. During fiscal year 2012, the Company had revenues from one significant Chronic Illness Monitoring customer, which represented 28% of total revenues and 42% of segment revenues. As of September 30, 2012, accounts receivable from this significant customer represented 51% of total accounts receivable. | ||||
Accounts Receivable | ||||
Accounts receivable are carried at original invoice amount less an estimate made for doubtful accounts. Specific reserves are estimated by management based on certain assumptions and variables, including the customer’s financial condition, age of the customer’s receivables and changes in payment histories. Accounts receivable are written off when management determines the likelihood of collection is remote. A receivable is considered to be past due if any portion of the receivable balance has not been received by the contractual payment date. Interest is not charged on accounts receivable that are past due. The Company recorded an allowance for doubtful accounts of $76,544 and $20,195 as of September 30, 2013 and 2012, respectively. | ||||
Inventory | ||||
Inventory is[A1] recorded at the lower of cost or market, cost being determined using the first-in, first-out (“FIFO”) method. Chronic Illness Monitoring inventory consists of diabetic supplies. Inventory held by distributors is reported as inventories on the Company’s consolidated balance sheets until the supplies are shipped to the end user by the distributor. Provisions, when required, are made to reduce excess and obsolete inventories to their estimated net realizable values. Due to competitive pressures and technological innovation, it is possible that estimates of net realizable values could change in the near term. Inventories consist of the following as of September 30: | ||||
2013 | 2012 | |||
(Restated) | ||||
Chronic Illness Monitoring | ||||
Finished goods | $ 1,249,220 | $ 185,884 | ||
Finished goods held by distributors | 3,428,306 | - | ||
CareServices | ||||
ActiveHome | - | 56,767 | ||
Reagents | ||||
Raw materials | - | 36,211 | ||
Work in process | - | 5,745 | ||
Finished goods | - | 6,161 | ||
Total inventories | $ 4,677,526 | $ 290,768 | ||
Property and Equipment | ||||
Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization are determined using the straight-line method over the estimated useful lives of the assets, which range between 3 and 7 years. Leasehold improvements are amortized over the shorter of the estimated useful lives of the assets or the terms of the lease. Expenditures for maintenance and repairs are expensed as incurred. Upon the sale or disposal of property and equipment, any gains or losses are included in the results of operations. | ||||
Equipment Leased to Customers | ||||
Leased equipment is stated at cost less accumulated depreciation and amortization. The Company amortizes the cost of leased equipment on a straight-line basis over 36 months, which is the estimated useful life of the equipment. Amortization of leased equipment is recorded as cost of revenues. | ||||
Goodwill | ||||
Goodwill is not amortized but is reviewed for potential impairment at least annually. The identification and measurement of goodwill impairment involves the estimation of the fair value of the Company’s reporting units. The estimates of fair value of reporting units are based on the best information available as of the date of the assessment and incorporate management assumptions about expected future cash flows. Future cash flows can be affected by changes in Company performance, industry or market conditions, or overall economic trends. Management determined that goodwill was not impaired as of September 30, 2013 or 2012. | ||||
Impairment of Long-Lived Assets | ||||
Purchased intangible assets with finite lives are amortized using the straight-line method over the estimated economic lives of the assets, which range from 2 to 20 years. Long-lived assets, including intangible assets with finite lives, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. Management determined that long-lived assets were not impaired as of September 30, 2013 or 2012. | ||||
Revenue Recognition | ||||
The Company’s revenue has historically been from three sources: (i) sales from Chronic Illness Monitoring products and supplies; (ii) sales from CareServices; and (iii) sales of medical diagnostic stains from the reagents segment, which was sold during fiscal year 2013 and reported as discontinued operations. | ||||
Chronic Illness Monitoring | ||||
The Company began chronic illness monitoring sales as a result of its acquisition of 4G Biometrics, LLC in the quarter ended March 31, 2012 (see Note 5). The Company recognizes Chronic Illness Monitoring revenue when persuasive evidence of an arrangement exists, delivery has occurred, prices are fixed or determinable, and collection is reasonably assured. | ||||
The Company enter into agreements with insurance companies, disease management companies, third-party administrators, and self-insured companies (collectively, the customers) to lower medical expenses by distributing diabetic testing products and supplies to employees (end users) covered by their health plans or the health plans they manage. Cash is due from the customer or the end user’s health plan as the products and supplies are deployed to the end user. | ||||
The Company also enter into agreements with distributors who take title to products and distribute those products to the end user. Delivery is considered to occur when the supplies are delivered by the distributor to the end user. Cash is due from the distributor, the customer or the end user’s health plan as initial products are deployed to the end user. Subsequent sales (resupplies) are shipped directly from the Company to the end user and cash is due from the customer or the end user’s health plan. | ||||
Shipping and handling fees are typically not charged to end users. The related freight costs and supplies directly associated with shipping products to end users are included as a component of cost of revenues. | ||||
CareServices | ||||
CareServices include contracts in which the Company leases monitoring devices and provides monitoring services to end users. The Company typically enters into contracts on a month-to-month basis with end users that use our CareServices. However, these contracts may be cancelled by either party at any time with 30-days notice. Under the standard contract, the device and service become billable on the date the end user orders the device, and remains billable until the device is returned to the Company. The Company recognizes revenue on devices at the end of each month the CareServices have been provided. In those circumstances in which payment is received in advance, the Company records these payments as deferred revenue. | ||||
The Company recognizes CareServices revenue when persuasive evidence of an arrangement exists, delivery of the device or service has occurred, prices are fixed or determinable and payment has occurred or collection is reasonably assured. Shipping and handling fees are included as part of net revenues. The related freight costs and supplies directly associated with shipping products to end users are included as a component of cost of revenues. All CareServices sales are made with net 30-day payment terms. | ||||
Reagents | ||||
Prior to the sale of the reagent segment, the Company recognized reagents revenues when persuasive evidence of an arrangement with the customer existed, title had passed to the customer, prices were fixed or determinable, and collection was reasonably assured. Prior to the sale of the reagent segment, shipping and handling fees billed to customers were included in revenues and the related freight costs and supplies directly associated with shipping products to customers were included as a component of cost of revenues. | ||||
Research and Development Costs | ||||
All expenditures for research and development are charged to expense as incurred. Research and development expenses for fiscal years 2013 and 2012 were $832,271 and $187,230, respectively. The expenditures for fiscal year 2013 were primarily for the development of the Chronic Illness Monitoring operating system. The expenditures for fiscal year 2012 were for software development efforts for the chronic illness market. | ||||
Advertising Costs | ||||
The Company expenses advertising costs as incurred. Advertising expenses for fiscal years 2013 and 2012 were $59,330 and $176,300, respectively. Advertising expenses primarily relate to the Company’s Chronic Illness Monitoring segment. | ||||
Income Taxes | ||||
The Company recognizes deferred income tax assets or liabilities for the expected future tax consequences of events that have been recognized in the financial statements or income tax returns. Deferred income tax assets or liabilities are determined based upon the difference between the financial reporting bases and tax reporting bases of assets and liabilities using enacted tax rates expected to apply when the differences are expected to be settled or realized. Deferred income tax assets are reviewed periodically for recoverability and valuation allowances are provided as necessary. As of September 30, 2013, management has determined to provide a 100% allowance against deferred income tax assets as it is more likely than not these assets will not be realized. Interest and penalties related to income tax liabilities, when incurred, are classified in interest expense and income tax provision, respectively. | ||||
Warrant Exercises | ||||
The Company issues common shares in connection with warrant exercises when it has received verification that the proceeds have been deposited and when it has received an exercise letter from the warrant holder. The Company issues common shares in connection with note conversions after it verifies the outstanding note balance and the eligibility of conversion, and has received a conversion letter from the lender. | ||||
Stock-Based Compensation | ||||
The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. That cost is recognized in the statement of operations over the period during which the employee is required to provide service in exchange for the award – the requisite service period. The grant-date fair values of the equity instruments are estimated using option-pricing models adjusted for the unique characteristics of those instruments. | ||||
Net Loss Per Common Share | ||||
Basic net loss per common share (“Basic EPS”) is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the year. | ||||
Diluted net loss per common share (“Diluted EPS”) is computed by dividing net loss available to common stockholders by the sum of the weighted average number of common shares outstanding and the weighted-average dilutive common share equivalents then outstanding. The computation of Diluted EPS does not assume exercise or conversion of securities that would have an anti-dilutive effect. | ||||
Common share equivalents consist of shares issuable upon the exercise of common stock warrants, shares issuable from restricted stock grants, shares issuable from convertible notes and convertible Series C, Series D and Series E preferred stock. As of September 30, 2013 and 2012, there were 13,127,396 and 8,202,219 outstanding common share equivalents, respectively, that were not included in the computation of Diluted EPS as their effect would be anti-dilutive. The common stock equivalents outstanding consist of the following as of September 30: | ||||
2013 | 2012 | |||
Common stock options and warrants | 3,598,554 | 2,386,587 | ||
Series C convertible preferred stock | 480,000 | 480,000 | ||
Series D convertible preferred stock | 4,691,090 | 1,830,515 | ||
Series E convertible preferred stock | 601,585 | - | ||
Convertible debt | 3,738,917 | 3,444,217 | ||
Restricted shares of common stock | 17,250 | 60,900 | ||
Total common stock equivalents | 13,127,396 | 8,202,219 | ||
Reclassifications | ||||
Certain prior year amounts have been reclassified to conform to the current year’s presentation. The reclassifications had no effect on the previously reported net loss. | ||||
Recent Accounting Pronouncements | ||||
In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, Revenue from Contracts with Customers, which supersedes nearly all existing revenue recognition guidance under US GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing US GAAP. The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein. Early adoption is not permitted. The Company is currently assessing the impact, if any, of implementing this guidance on its consolidated financial position, results of operations and liquidity. | ||||
4_Discontinued_Operations
4. Discontinued Operations | 12 Months Ended | |||
Sep. 30, 2013 | ||||
Notes | ' | |||
4. Discontinued Operations | ' | |||
4. Discontinued Operations | ||||
In June 2013, the Company sold its assets and liabilities related to the reagents segment. This segment was engaged in the business of manufacturing and marketing medical diagnostic stains, solutions and related equipment to hospitals and medical testing labs. The purchaser was a former employee. The sale consisted solely of the Company's reagents business. | ||||
The Company no longer holds any ownership interest in the reagents segment and has ceased incurring costs related to its operations and development. The sale included all applicable segment assets and liabilities including, accounts receivable, inventory, accounts payable, property, equipment and leased equipment. The purchaser also assumed the lease for general office and warehouse space. | ||||
As a result of the sale of the reagents business, the Company has reflected this segment as discontinued operations in the consolidated financial statements for fiscal years 2013 and 2012. The following table summarizes certain operating data for discontinued operations for fiscal years 2013 and 2012: | ||||
2013 | 2012 | |||
Revenues | $ 351,645 | $ 467,259 | ||
Cost of revenues | (300,396) | (392,049) | ||
Gross profit | 51,249 | 75,210 | ||
Selling, general and administrative expenses | (111,657) | (221,200) | ||
Loss from discontinued operations | (60,408) | (145,990) | ||
Gain on sale of discontinued operations | 55,096 | - | ||
Net loss from discontinued operations | $ (5,312) | $ (145,990) |
5_Acquisitions
5. Acquisitions | 12 Months Ended |
Sep. 30, 2013 | |
Notes | ' |
5. Acquisitions | ' |
5. Acquisitions | |
4G Biometrics, LLC | |
On March 8, 2012, the Company acquired 4G Biometrics, LLC, a Texas limited liability company (“4G”). Pursuant to the acquisition agreement, the Company acquired 100 percent of the member interests of 4G and 4G is operated as a wholly owned subsidiary of the Company. The consideration for the member interests of 4G was comprised as follows: | |
· $350,000 in cash; | |
· The assumption of $50,000 of accounts payable and accrued liabilities; | |
· 160,000 shares of Series D convertible preferred stock; | |
· Options for the purchase of up to 433,333 shares of common stock of the Company at $1.00 per share to each of the three sellers with vesting as follows: | |
o Options for 43,333 shares vest when 4G has 9,300 members | |
o Options for another 43,333 shares vest when an additional 5,000 4G members are added, or a total of 14,300 members; | |
o Options for another 43,333 shares vest when an additional 5,000 4G members are added, or a total of 19,300 members; | |
o Options for another 43,333 shares vest when an additional 5,000 4G members are added, or a total of 24,300 members; and | |
o so forth until fully vested. | |
As of September 30, 2013, options to purchase 260,000 shares of common stock have vested. | |
Three of the 4G key operational managers are under two-year written employment agreements with the Company. | |
Under the purchase method of accounting, the purchase price was allocated to 4G’s assets and assumed liabilities based on their estimated fair values as of the closing date of the acquisition. The excess of the purchase price over the fair values of the net assets acquired was recorded as goodwill. | |
The purchase price for 4G reflects total consideration paid of $1,040,000, of which $825,894 was allocated to goodwill and $214,106 was allocated to customer contracts. | |
GWire | |
During fiscal year 2012, the Company established GWire Corporation (“GWire”) as a subsidiary. Effective September 1, 2012, GWire acquired the assets and assumed certain liabilities of Green Wire, LLC, Green Wire Outsourcing, Inc., Orbit Medical Response, LLC, and Rapid Medical Response, LLC (collectively, “Green Wire”). The Company entered into employment agreements with two of Green Wire’s operating managers on November 1, 2012. These two individuals were granted 27% ownership in GWire and ActiveCare retained the remaining 73%. The purchase consideration for Green Wire consisted of the following: | |
· $2,236,737 in the form of a note payable with a 36-month initial term (including imputed interest at 12%); and | |
· 20,000 shares of ActiveCare’s Series D convertible preferred stock, valued at $40,000. | |
Under the purchase method of accounting, the purchase price for Green Wire was allocated to the assets purchased and liabilities assumed based on their estimated fair values as of the closing date of the acquisition. | |
The purchase price for Green Wire reflects total consideration paid of $2,276,737, which has been allocated to $12,215 of cash, $13,976 of accounts receivable, $92,022 of property and equipment, $16,964 of deposits and other assets, $229,249 of leased equipment, $2,155,776 of customer contracts, $154,206 of accounts payable, $55,117 of accrued expenses and $34,142 of deferred revenue. | |
During fiscal year 2013, the two operating managers converted their 27% ownership in GWire and 425,000 of related options into 425,000 shares of the Company’s common stock. As a result, the Company owns 100% of GWire as of September 30, 2013. | |
6_Property_Plant_and_Equipment
6. Property, Plant and Equipment Disclosure | 12 Months Ended | |||
Sep. 30, 2013 | ||||
Notes | ' | |||
6. Property, Plant and Equipment Disclosure | ' | |||
6. Property and Equipment | ||||
Property and equipment consist of the following as of September 30: | ||||
2013 | 2012 | |||
Equipment | $ 255,339 | $ 374,229 | ||
Leasehold improvements | 145,147 | 402,016 | ||
Software | 87,361 | 65,111 | ||
Furniture | 32,855 | 50,123 | ||
Total gross property and equipment | 520,702 | 891,479 | ||
Accumulated depreciation and amortization | (223,972) | (625,401) | ||
Property and equipment, net | $ 296,730 | $ 266,078 | ||
Assets to be disposed of are reported at the lower of the carrying amounts or fair values, less the estimated costs to sell or dispose. During fiscal years 2013 and 2012, the Company recorded a loss on the disposal of assets of $200,149 and $0, respectively, and disposed of $25,832 of assets related to the sale of the Reagents segment during fiscal year 2013. Depreciation expense for fiscal years 2013 and 2012 was $97,068 and $64,632, respectively. |
7_Patent_License_Agreement
7. Patent License Agreement | 12 Months Ended | ||
Sep. 30, 2013 | |||
Notes | ' | ||
7. Patent License Agreement | ' | ||
7. Patent License Agreement | |||
During fiscal year 2009, the Company licensed the use of certain patents from a third party. Under the license agreement, the Company was required to pay $300,000 plus a 5% royalty on the net sales of all licensed products. As of September 30, 2009, the Company had capitalized the initial license fee as a long-term asset and had recorded a corresponding current liability as the fee was not yet paid. | |||
During fiscal year 2012, the Company agreed to purchase the related patents and settle amounts owed under the license agreement by issuing 600,000 shares of common stock and 480,000 shares of Series C preferred stock. The patents were valued at $922,378, based on a valuation performed by an independent valuation expert. The value of the common stock issued was $240,000, based on the market price of the common stock on the date of issuance. The implied value of the Series C was $682,378, which was based on the difference between the value of the patents and the common stock issued in settlement of the existing liability. | |||
The Company is amortizing the patents over their remaining useful lives (through 2018). Amortization expense for fiscal years 2013 and 2012 was $126,870 and $147,277, respectively. The Company’s future patent amortization as of September 30, 2013, is as follows: | |||
Years Ending September 30, | |||
2014 | $ | 126,870 | |
2015 | 126,870 | ||
2016 | 126,870 | ||
2017 | 126,870 | ||
2018 | 59,440 | ||
$ | 566,920 |
8_Customer_Contracts
8. Customer Contracts | 12 Months Ended | ||
Sep. 30, 2013 | |||
Notes | ' | ||
8. Customer Contracts | ' | ||
8. Customer Contracts | |||
During the fiscal year ended 2012, the Company recorded customer contracts of $2,369,882 acquired in its purchase of 4G and GWire. The Company is amortizing the customer contracts over their estimated useful lives (through 2015). Amortization expense for fiscal years 2013 and 2012 was $833,032 and $102,329, respectively. The Company’s future customer contract amortization as of September 30, 2013, is as follows: | |||
Years Ending September 30, | |||
2014 | $ | 775,812 | |
2015 | 658,709 | ||
$ | 1,434,521 | ||
9_Equipment_Leased_to_Customer
9. Equipment Leased to Customers | 12 Months Ended | |||
Sep. 30, 2013 | ||||
Notes | ' | |||
9. Equipment Leased to Customers | ' | |||
9. Equipment Leased to Customers | ||||
Equipment leased to customers consisted of the following as of September 30: | ||||
2013 | 2012 | |||
Leased equipment | $ 389,492 | $ 457,898 | ||
Accumulated depreciation | (115,862) | (144,905) | ||
Leased equipment, net | $ 273,630 | $ 312,993 | ||
The Company leases monitoring equipment to customers for CareServices. The leased equipment is depreciated using the straight-line method over the 3-year estimated useful lives of the related equipment, regardless of whether the equipment is leased to a customer or remaining in stock. Leased equipment depreciation expense for fiscal years 2013 and 2012 was $175,049 and $70,531, respectively. The depreciation expense is recorded in cost of revenues for CareServices. Customers have the right to cancel the service agreements at any time. During fiscal years 2013 and 2012, the Company recorded a loss on the disposal of leased equipment of $75,124 and $0, respectively. |
10_Notes_Payable
10. Notes Payable | 12 Months Ended | |||
Sep. 30, 2013 | ||||
Notes | ' | |||
10. Notes Payable | ' | |||
10. Notes Payable | ||||
The Company had the following notes payable outstanding as of September 30: | ||||
2013 | 2012 | |||
Note payable to the former owners of Green Wire, secured by customer contracts, imputed interest rate of 12%, with monthly installments over a 38-month term. In March 2013, the Company issued 15,000 shares of common stock to extend two past due payments without penalty and the grant date fair value was $24,000, which will be amortized over the remaining life of the note. | $ 1,766,971 | $ 2,236,737 | ||
Notes payable with interest at 12%, secured by the Company's assets, due August 2014 and convertible into the shares of common stock at $0.75 per share. The notes required $51,250 in due diligence and legal fees. The Company issued warrants to purchase 36,667 shares of common stock as due diligence fees with a grant date fair value of $51,452. The Company issued 25,000 shares of common stock with a grant date fair value of $31,250 to a related party as consideration for signing a personal guarantee. The notes and accrued interest were converted to Series F preferred stock subsequent to September 30, 2013 (see Note 21). | 550,000 | - | ||
Unsecured note with interest at 12%, due March 2013. The note and accrued interest were converted to common stock subsequent to September 30, 2013 (see Note 21). | 250,000 | 250,000 | ||
Unsecured notes with interest at 15% (18% after due date), due March and April 2013, respectively. The Company issued 20,000 shares of Series D preferred stock as loan origination fees with a grant date fair value of $195,000. Principal of $50,000 was converted to common stock subsequent to September 30, 2013 (see Note 21). | 185,476 | - | ||
Series A debenture loans payable, secured by customer contracts and payable in 36 monthly installments, original due dates between September and April 2016. The loans bear interest at 12% and are convertible into common stock after 180 days. After payment of principal and interest, the holders of the Series A and Series B debentures, as a class, are entitled to receive a pro-rata share of cumulative royalties totaling 4% of the Company’s gross profits payable for the two-year period commencing at the maturity date; provided that no royalties are payable following conversion of any Series A or Series B debenture to the holder thereof. The Company has the right to buy out each lender's royalty by paying the respective lender $20,000 for every $25,000 loaned. The note included a beneficial conversion feature valued at $901,000 at inception, which the Company is amortizing over the life of the loan. The feature had an unamortized value of $47,934 as of September 30, 2013. The majority of loans were converted during fiscal year 2013. The remaining balance was converted to Series E preferred stock subsequent to September 30, 2013 (see Note 21). | 85,719 | 300,000 | ||
Unsecured note with interest at 15%, due March 2013, currently in default. Note included a $25,000 cash and 100,000 shares of common stock as loan origination fees with a grant date fair value of $70,000. The note and accrued interest were converted to common stock subsequent to September 30, 2013 (see Note 21). | 25,000 | 275,000 | ||
Unsecured note with interest at 15% (18% after due date), due November 2012. The Company issued 60,000 shares of Series D stock as loan origination fees with a grant date fair value of $150,000. The note was guaranteed by the Company’s Chief Executive Officer. | - | 1,500,000 | ||
Total before discount and current portion | 2,863,166 | 4,561,737 | ||
Less discount | (528,663) | (187,587) | ||
Total notes payable | 2,334,503 | 4,374,150 | ||
Less current portion | (1,278,585) | (2,569,221) | ||
Total notes payable, net of current portion | $ 1,055,918 | $ 1,804,929 | ||
Scheduled principal payments on notes payable are as follows: | ||||
Years Ending September 30, | ||||
2014 | $ | 1,768,820 | ||
2015 | 854,522 | |||
2016 | 239,824 | |||
$ | 2,863,166 |
11_Relatedparty_Notes_Payable
11. Related-party Notes Payable | 12 Months Ended | |||
Sep. 30, 2013 | ||||
Notes | ' | |||
11. Related-party Notes Payable | ' | |||
11. Related-Party Notes Payable | ||||
The Company had the following related-party notes payable outstanding as of September 30: | ||||
2013 | 2012 | |||
Unsecured notes payable to an entity controlled by an officer of the Company with interest at 15% (18% in the event of default), due September 30, 2013. The Company issued 60,000 shares of common stock as loan origination fees with a grant date fair value of $93,000. The notes and accrued interest were converted to common stock subsequent to September 30, 2013 (see Note 21). | $ 600,000 | $ - | ||
Unsecured note payable to an entity controlled by an officer of the Company, with interest at 3% (18% in the event of default), due July 2013. In July the lender agreed to extend the maturity date to September 30, 2013 with interest at 12% (18% in the event of default). The Company issued 30,000 shares of common stock with grant date fair value of $38,100 as loan origination fees. In the event of default, the note is convertible into shares of common stock at $0.75 per share. The note and accrued interest were converted to common stock subsequent to September 30, 2013 (see Note 21). | 300,000 | - | ||
Unsecured note payable to an entity controlled by an officer of the Company, interest at 12% (18% in the event of default), due September 30, 2013. The Company issued 30,000 shares of common stock with a grant date fair value of $37,500 as loan origination fees. In the event of default, the note is convertible into shares of common stock at $0.75 per share. The note and accrued interest were converted to common stock subsequent to September 30, 2013 (see Note 21). | 300,000 | - | ||
Unsecured notes payable to an entity controlled by an officer of the Company, interest at 12% (18% in the event of default), due April 2013. In the event of default, the note is convertible into shares of common stock at $0.40 per share. The note and accrued interest were converted to common stock subsequent to September 30, 2013 (see Note 21). | 200,000 | - | ||
Unsecured note payable to a lender under the control of the Company’s CEO, interest at 12%, due upon demand. The note is convertible into shares of common stock at $0.75 per share. The Company recognized $148,750 in connection with the beneficial conversion feature. The Company issued 17,500 shares of common stock with a grant date fair value of $26,250 as loan origination fees. Subsequent to September 30, 2013 $160,000 of the note was converted to common stock (see Note 21). | 175,000 | - | ||
Unsecured note payable with zero interest to an entity controlled by an officer of the Company. The note was repaid in full subsequent to September 30, 2013. | 150,000 | - | ||
Unsecured note payable to an entity controlled by an officer of the Company, with interest at 12%, due August 2012. During fiscal year 2013, the lender agreed to extend the maturity date to June 30, 2013 with interest at 18% and 5,600 shares of Series D with a grant date fair value of $56,252 paid as a loan origination fee. The note is currently in default. The note also included $7,500 of loan origination fees added to the principal. In the event of default, the note is convertible into shares of common stock at $0.40 per share. The note and accrued interest were converted to common stock subsequent to September 30, 2013 (see Note 21). | 82,500 | 543,278 | ||
Unsecured note payable to an officer of the Company with interest at 15%, due June 2012, currently in default. The note includes $3,000 of loan origination fees added to the principal and is convertible into common stock at $0.50 per share. | 33,000 | 33,000 | ||
Unsecured note payable to an officer of the Company with interest at 12%, due September 30, 2013, currently in default. The loan is convertible into the Company's common stock at a rate of $0.75 per share. The Company recognized $22,820 in connection with the beneficial conversion feature. | 26,721 | - | ||
Unsecured note payable to an officer of the Company with interest at 12%, due upon demand. | 13,644 | - | ||
Unsecured notes payable with zero interest to an individual related to an officer of the Company. The loan was repaid in full subsequent to September 30, 2013. | 10,000 | - | ||
Series B unsecured debenture loans from entities controlled by an officer of the Company, including $68,914 in loan origination fees added to the principal of the loans, payable in 36 monthly installments, maturing December 2015 and January 2016. Of the debenture, $554,556 was issued to settle a related-party note payable with a total outstanding balance of $460,778 and $43,364 of related accrued interest. Of the loan, $35,000 was issued to settle an accrued service fee. The loans bear interest at 12% and are convertible into common stock after 180 days. After payment of principal and interest, the holders of the Series B and Series A debentures, as a class, are entitled to receive a pro-rata share of cumulative royalties totaling 4% of the Company’s gross profits payable for the two-year period commencing at the maturity date; provided that no royalties are payable following conversion of any Series A or Series B debenture to the holder thereof. The Company has the right to buy out the royalty by paying the lender $22,000 for every $25,000 loaned. During the fiscal year ended September 30, 2013, the Company issued 34,400 shares of Series D with a fair market value of $343,748 at date of grant as additional loan origination fees, and paid $30,102 of the loan principal. The Company is late on certain monthly payments. The notes include beneficial conversion features valued at $167,000 at inception, which the Company is amortizing over the life of the loan. The feature had an unamortized value of $3,348 as of September 30, 2013. During fiscal year 2013, $722,684 of outstanding principal and $49,895 of accrued interest were converted into 1,030,107 common shares at a rate of $0.75 per share. The Company recorded $535,656 of expense associated with the induced conversion of these debenture loans. The majority of loans were converted during fiscal year 2013. The remaining note of $5,270 and accrued interest were converted to common stock subsequent to September 30, 2013 (see Note 21). | 5,270 | - | ||
Unsecured notes payable to a lender under the control of the Company’s CEO with a line of credit borrowing capacity of $2,000,000, interest at 12%, due July 2013. The notes were convertible into shares of common stock at $5.00 per share. In connection with the notes payable, the Company issued 80,000 shares of Series D preferred stock (valued at $240,000). The Company granted warrants to purchase 341,000 shares of common stock as a loan origination fee. These warrants vested immediately and are exercisable at $4.40 per share through November 3, 2016. The fair value of the warrants was $107,130, and was measured using a binomial valuation model with the following assumptions: exercise price $4.40; risk-free interest rate of .39%; expected life of 2.5 years; expected dividends of zero; a volatility factor of 134.57%; and market price on date of grant of $4.40. During fiscal year 2012, the Company re-priced the exercise price of the warrants from $4.40 to $1.00 per share. During the three months ended December 31, 2012, the Company issued a Series A debenture payable to the lender in satisfaction of the outstanding balance of $620,687 plus $21,585 of accrued interest. Upon the conversion of the note, the Company immediately recognized the unamortized debt discount of $209,143. | - | 620,687 | ||
Note payable to an entity controlled by an officer of the Company, interest at 12%, due December 2012. This note was secured by real estate. During the three months ended December 31, 2012, the Company issued a Series A debenture payable to the entity in satisfaction of the outstanding balance of $300,000 plus $14,992 of accrued interest. | - | 300,000 | ||
Series A debenture loans from a former CEO and Chairman of the Company, secured by customer contracts, payable in 36 monthly installments, maturing September and December 2015. The loans bear interest at 12% and are convertible into common stock after 180 days. After payment of principal and interest, the holders of the Series B and Series A debentures, as a class, are entitled to receive a pro-rata share of cumulative royalties totaling 4% of the Company’s gross profits payable for the two-year period commencing at the maturity date; provided that no royalties are payable following conversion of any Series A or Series B debenture to the holder thereof. The Company has the right to buy out each royalty by paying the lender $20,000 for every $25,000 loaned. During fiscal year 2013, the Company paid $41,682 of the loan principal. During fiscal year 2013, $342,912 of principal and interest were converted into 457,216 common shares. The Company recorded $297,191 of expense associated with the induced conversion of these notes. | - | 244,196 | ||
Unsecured note payable to an entity controlled by an officer of the Company, including a $7,500 loan origination fee, interest at 12%, due August 2012. The note was convertible into common stock at 50% of fair market value or $0.40 per share, whichever was less. During the three months ended December 31, 2012, the Company issued a Series A debenture payable to the entity in satisfaction of the outstanding balance of $82,500 plus $3,716 of accrued interest. | - | 82,500 | ||
Unsecured note payable to an entity controlled by an officer of the Company, including a $7,500 loan origination fee, interest at 12%, due September 2012. The note was convertible into common stock at $0.40 per share or 50% of market value, whichever was less. During the three months ended December 31, 2012, the Company issued a Series A debenture payable to the entity in satisfaction of the outstanding balance of $82,500 plus $3,173 of accrued interest. | - | 82,500 | ||
Notes payable to an entity controlled by an officer of the Company, including a $26,000 loan origination fee which was convertible into Series D preferred stock at any time at $2.00 per share, interest at 15%, due December 2012. This note was secured by real estate. During the three months ended December 31, 2012, the Company issued a Series A debenture payable to the entity in satisfaction of the outstanding balance of $51,000 plus $3,186 of accrued interest. Upon the conversion of the note, the Company immediately recognized the unamortized debt discount of $14,238. | - | 51,000 | ||
Total before discount and current portion | 1,896,135 | 1,957,161 | ||
Less discount | (3,720) | (223,381) | ||
Total notes payable, related-party | 1,892,415 | 1,733,780 | ||
Less current portion | (1,892,415) | (1,563,923) | ||
Total notes payable, related-party, net of current portion | $ - | $ 169,857 |
12_Loss_On_Induced_Conversion_
12. Loss On Induced Conversion of Debt and Sale of Common Stock | 12 Months Ended |
Sep. 30, 2013 | |
Notes | ' |
12. Loss On Induced Conversion of Debt and Sale of Common Stock | ' |
12. Loss on Induced Conversion of Debt and Sale of Common Stock | |
The Company offered an induced conversion rate to all debt holders of $0.75 of debt per share of common stock, which was below the market price of the stock. Debt and accrued interest of approximately $10,004,000 were converted to shares of common stock. The Company also offered the private placement of common stock to existing investors at $0.75 per share, which was below the market price. The difference between the offered price and the market price of all common stock issued was approximately $9,356,000 and is recorded as a loss on induced conversion of debt and sale of common stock. |
13_Fair_Value_Measurements
13. Fair Value Measurements | 12 Months Ended | |
Sep. 30, 2013 | ||
Notes | ' | |
13. Fair Value Measurements | ' | |
13. Fair Value Measurements | ||
The Company measured the fair values of its assets and liabilities using the US GAAP hierarchy levels as follows: | ||
Level 1 | The Company does not have any Level 1 inputs available to measure its assets. | |
Level 2 | The Company’s embedded derivative liabilities are measured on a recurring basis using Level 2 inputs. | |
Level 3 | The Company’s goodwill is measured using Level 3 inputs. | |
The Company’s embedded derivative liabilities are re-measured to fair value as of each reporting date until the contingency is resolved. See Note 14 below for more information about these liabilities and the inputs used for calculating fair value. |
14_Derivative_Liabilities
14. Derivative Liabilities | 12 Months Ended |
Sep. 30, 2013 | |
Notes | ' |
14. Derivative Liabilities | ' |
14. Derivative Liabilities | |
As described in Notes 10 and 11, the Company has issued convertible notes payable with variable conversion options. The Company has determined the conversion options of certain notes payable are subject to derivative liability treatment and are required to be accounted for at fair value. The derivative liabilities for the fiscal years ended September 30, 2013 and 2012 totaled $795,151 and $4,015,855, respectively. The derivative liability as of September 30, 2012 was eliminated during fiscal year 2013 as a result of the 10-for-1 reverse common stock split, this decreased the number of outstanding shares and convertible shares of “freestanding instruments”, such that the Company could reserve sufficient shares to settle “freestanding instruments.” | |
During fiscal year 2013, the Company estimated the fair value of the embedded derivatives using a binomial option-pricing model with the following assumptions: conversion price of $0.75 per share according to the agreements; risk free interest rate of 0.10% to 0.11%; expected life of 0.83 to 1.00 years; expected dividends of zero; a volatility factor of 200% to 229%; and a stock price of $1.45. The expected lives of the instruments are equal to the average term of the conversion option. The expected volatility is based on the historical price volatility of the Company’s common stock. The risk-free interest rate represents the U.S. Treasury constant maturities rate for the expected life of the related conversion option. The dividend yield represents anticipated cash dividends to be paid over the expected life of the conversion option. The loss on derivative liabilities for the fiscal years 2013 and 2012 was $333,406 and $2,104,389, respectively. |
15_Preferred_Stock
15. Preferred Stock | 12 Months Ended |
Sep. 30, 2013 | |
Notes | ' |
15. Preferred Stock | ' |
15. Preferred Stock | |
The Company is authorized to issue 10,000,000 shares of preferred stock, with a par value of $0.00001 per share. Pursuant to the Company’s Certificate of Incorporation, the Board of Directors has the authority to amend the Company’s Certificate of Incorporation, without further stockholder approval, to designate and determine the preferences, limitations and relative rights of the preferred stock before any issuance of the preferred stock and to create one or more series of preferred stock, fix the number of shares of each such series, and determine the preferences, limitations and relative rights of each series of preferred stock, including dividend rights, dividend rates, conversion rights, voting rights, terms of redemption, redemption prices, and liquidation preferences. | |
Series C Convertible Preferred Stock | |
On October 4, 2011, the Company issued 480,000 shares of Series C convertible preferred stock (“Series C preferred stock”) in connection with the patent license agreement settlement (see Note 7). The par value of the Series C is $0.00001 per share. The Series C preferred stock is non-voting stock. Each share of Series C preferred stock may be converted into one share of common stock, provided, however, that a holder may not convert shares of Series C preferred stock which, upon conversion, would result in the holder becoming the beneficial owner of more than 4.99% of the issued and outstanding common stock of the Company. | |
During fiscal year 2012, the Company amended the rights and preferences of the Series C preferred stock as follows: | |
· Required payment of dividends at a rate of 8% per annum in either cash or common stock at the Company’s discretion. If paid in common stock, the price of the common stock is the average closing price of the last 10 trading days of each quarter; and | |
· Permitted conversion of the Series C preferred stock into common stock at any time after June 30, 2012. | |
During fiscal year 2013, the Company issued 9,062 shares of Series D preferred stock for accrued dividends of $53,992 associated with Series C preferred stock. During fiscal year 2012, the Company issued 10,218 shares of Series D preferred stock for accrued dividends of $35,763 associated with Series C preferred stock. | |
Series D Convertible Preferred Stock | |
On October 4, 2011, the Board of Directors designated 1,000,000 shares of preferred stock as Series D convertible preferred stock (“Series D preferred stock”). As originally designated, the Series D preferred stock vested immediately upon issuance, and each share of Series D preferred stock was convertible into one share of common stock. The original designation also provided that the Series D preferred stock was non-voting and would not receive dividends. In addition, conversion of the Series D preferred stock was limited to not more than 4.99% of the issued and outstanding common stock. | |
During fiscal year 2012, the Board of Directors approved the following amendments to the designation of the rights and preferences of the Series D preferred stock prior to the issuance of any of the shares: | |
· Changed the conversion ratio from one share of common stock for one share of Series D preferred stock to five shares of common stock for one share of Series D preferred stock; | |
· Added an annual dividend rate of 8%, payable in stock or cash quarterly beginning April 1, 2012; | |
· Changed the shares from non-voting to voting, on an as-converted basis; | |
· Eliminated the 4.99% conversion limitation; | |
· Permitted conversion of the Series D preferred stock, commencing April 1, 2012; | |
· Permitted the Company, at its option, to redeem the Series D preferred shares at a redemption price equal to 120% of the original purchase with 15 days notice. | |
During fiscal year 2013, the Company issued the following shares of Series D preferred stock: | |
· 103,843 shares for $817,482 in loan origination fees; | |
· 71,800 shares for advisory services through December 2014, the value on the date of grant was $230,800; | |
· 20,000 shares for consulting services through December 2013, the value on the date of grant was $60,000; | |
· 52,913 shares for $150,000 in previously accrued Board of Directors’ fees and $61,652 of compensation for services; | |
· 46,300 shares for a bonus to an officer for services, the value on the date of grant was $234,700; | |
· 9,062 shares for dividends on Series C preferred stock, the value on the date of grant was $53,992; | |
· 5,025 shares for dividends on Series D preferred stock, the value on the date of grant was $31,689; | |
· 126,117 shares for consulting services by an entity controlled by an officer of the Company, which were previously accrued in the amount of $564,280; | |
· 85,000 shares to an entity controlled by an officer of the Company for consulting services, the value on the date of grant was $455,000; | |
· 80,000 shares for a bonus to the CEO of the Company for signing an employment agreement with the Company, the value at the date of grant was $320,000, which cannot convert to common stock until the Company has 20,000 members; | |
· 2,055 shares for services with value of $14,899 on the date of grant. | |
During fiscal year 2013, an employee of the Company converted 50,000 shares of Series D preferred stock into 250,000 shares of common stock. The Company also accrued $232,834 of dividends on Series D preferred stock and settled the accrued dividends by issuing 5,025 shares of Series D preferred stock and 143,465 shares of common stock during fiscal year 2013. | |
Series E Convertible Preferred Stock | |
During fiscal year 2013, the Board of Directors designated shares of preferred stock as Series E convertible preferred stock (“Series E preferred stock”). The Series E preferred stock vests immediately upon issuance. Series E preferred stock is convertible into common stock at $1.00 per share, the conversion price is adjustable if there are distributions of common stock or stock splits by the Company. The designation also provides that the Series E preferred stock would be non-voting and would receive a monthly dividend of 3.322% for 25 to 32 months. In addition, the convertibility and the redemption price of the Series E preferred stock is gradually reduced by dividend payments over 25 to 32 months. After the dividend payment term, the redemption price of Series E preferred stock is $0 and the Series E preferred stock has no convertibility to common stock. | |
During fiscal year 2013, $614,765 of debenture loans and accrued interest converted into 61,723 shares of Series E preferred stock. During fiscal year 2013, the Company paid dividends of $17,271 to Series E shareholders. As of September 30, 2013, the redemption price for the Series E preferred stock was $601,585. | |
Liquidation Preference | |
Upon any liquidation, dissolution or winding up of the Company, before any distribution or payment may be made to the holders of the common stock, the holders of the Series C, Series D, and Series E preferred stock are entitled to be paid out of the assets an amount equal to $1.00 per share plus all accrued but unpaid dividends. If the assets of the Company are insufficient to make payment in full to all holders of preferred stock, then the assets shall be distributed among the holders of preferred stock ratably in proportion to the full amounts to which they would otherwise be respectively entitled. |
16_Common_Stock
16. Common Stock | 12 Months Ended |
Sep. 30, 2013 | |
Notes | ' |
16. Common Stock | ' |
16. Common Stock | |
During fiscal year 2013, the Company issued the following shares of common stock: | |
· 327,382 shares valued at $458,929 as compensation for services to six independent consultants; | |
· 220,000 shares valued at $318,000 as compensation for two key employees as an incentive to work for the Company. The stock vests according to the terms of the employment agreements; | |
· 27,650 shares for employee bonuses valued at the date of grant at $39,825; | |
· 350,000 shares valued at $350,000 for option exercises from employee bonuses granted by the Company; | |
· 150,000 shares valued at $187,500 for an employment contract extension with a key employee; | |
· 25,000 shares valued at $31,750 to medical advisory board members for services through September 2014; | |
· 25,000 shares valued at $31,750 for services provided by a board member; | |
· 141,987 shares as loan origination fees at a value of $387,849; | |
· 4,758 shares valued at $7,137 for the extension of related-party payables; | |
· 40,000 shares valued at $61,500 for the extension of third-party notes payable; | |
· 13,439,190 shares for the conversion of outstanding debt in the amount of $18,467,123; | |
· 2,600 shares valued at $3,900 as part of the issuance of $26,000 of new debt to a related party; | |
· 166,200 shares valued at $225,300 to settle an accrued liability of $126,200; | |
· 250,000 shares for the conversion of 50,000 shares of Series D preferred stock; | |
· 425,000 shares for the exercise of options held by two key managers of GWire; | |
· 200,625 shares valued at $232,765 as dividends accrued for Series C and Series D preferred stock holders; | |
· 1,313,334 shares valued at $1,842,334 for cash of $985,000; | |
· 29,600 shares to employees in accordance with a restricted stock agreement: | |
During fiscal year 2012, the Company issued the following shares of common stock: | |
· 60,000 shares for settlement of a patent license agreement, with value on the date of grant of $240,000; | |
· 129,161 shares for consulting services, with value on the date of grant of $218,906; | |
· 60,000 shares for settlement of $312,000 of accrued liabilities; | |
· 200,000 shares in connection with a settlement agreement. During fiscal year 2010, the Company granted Class D warrants for the purchase of 158,416 shares of common stock and Class E warrants for the purchase of 41,584 shares of common stock. During fiscal year 2012, the Company entered into a settlement agreement with the holders of these warrants to resolve claims of the holders regarding their conversion of shares of preferred stock. Under the settlement agreement, the holders exchanged the Class D and Class E warrants for 200,000 shares of common stock and the warrants were cancelled. The Company recognized $500,000 of expense due to the conversion; | |
· 231,000 shares from conversion of related–party, short-term notes payable in the amount of $92,400; and | |
· 100,000 shares for loan origination fees of $70,000. | |
In June 2011, the Company entered into a service contract with a former CEO for services to be rendered from October 2010 through September 2014. As part of this service contract, the Company issued 400,000 shares of restricted common stock with a fair value on the date of grant of $1,840,000, as payment for past and future services. During fiscal year 2012, the Company accelerated the vesting of the shares and recognized the residual compensation expense of $1,380,000 related to the issuance of these shares. | |
In fiscal year 2010, the Company awarded certain employees restricted stock totaling 67,900 shares, valued at $916,650, in connection with Company milestones. In fiscal year 2013, the Company issued 29,600 restricted shares of common stock valued at $399,600, and reduced the shares of non-vested common stock by 25,700 shares due to the change of employment status of individuals. In fiscal year 2012, no restricted shares of common stock were issued to employees. During fiscal years 2013 and 2012, the Company recognized compensation expense of $0 and $168,419, respectively. As of September 30, 2013 and 2012, the unrecognized stock-based compensation was $0 and $245,952, respectively. |
17_Stock_Options_and_Warrants
17. Stock Options and Warrants | 12 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Notes | ' | ||||||||
17. Stock Options and Warrants | ' | ||||||||
17. Stock Options and Warrants | |||||||||
The fair value of each stock option or warrant is estimated on the date of grant using a binomial option-pricing model. The expected life of stock options or warrants represents the period of time that the stock options or warrants are expected to be outstanding, based on the simplified method. Expected volatilities are based on historical volatility of the Company’s common stock, among other factors. The Company uses the simplified method within the valuation model due to the Company’s short trading history. The risk-free rate related to the expected term of the stock option or warrants is based on the U.S. Treasury yield curve in effect at the time of grant. The dividend yield is zero. | |||||||||
During fiscal years 2013 and 2012, the Company measured the fair value of the warrants using a binomial valuation model with the following assumptions: | |||||||||
2013 | 2012 | ||||||||
Exercise price | $0.75 - $10.00 | $0.40 - .44 | |||||||
Expected term (years) | 1.5 - 2.5 | 2.5 | |||||||
Volatility | 219% - 298% | 131% - 135% | |||||||
Risk-free rate | 0.23% - 0.88% | 0.39% - 0.44% | |||||||
Dividend rate | 0% | 0% | |||||||
During fiscal year 2013, the Company recorded stock-based compensation expense relating to the following stock options and warrants: | |||||||||
· Options to purchase 433,333 shares were granted to each of three employees of 4G, 1,300,000 total shares, as part of their employment agreements dated June 21, 2012, with an exercise price of $1.00 per share. These options vest as described in Note 5. The options expire in June 2017. The value of the options at the date of grant was $1,147,163. The Company amortizes the expense based on expected completion dates of the milestones. During fiscal year 2013, the Company recognized $846,898 of the total compensation expense. As of September 30, 2013, options for 260,000 shares have vested. | |||||||||
· Options to purchase 1,000,000 shares were granted to the Company’s CEO for services as part of his employment agreement dated July 2012, with an exercise price of $1.00 per share. One tenth (100,000 shares) of the options vest for each milestone of 5,000 additional members added to the Company since the beginning of his employment in July 2012 until fully vested. The options expire in July 2017. The Company amortizes the expense based on expected completion dates of the milestones. During fiscal year 2013, the Company recognized $660,140 of the total compensation expense. As of September 30, 2013, options for 500,000 shares have vested due to the Company reaching certain milestones according to the contract. In August 2013, the CEO exercised options to purchase 350,000 shares of common stock at $1.00 per share. | |||||||||
· Options to purchase 212,500 shares were granted to both key managers of GWire, 425,000 in aggregate, with an exercise price of $1.00 per share. Under the option agreements, the only method of exercise requires the employee to submit up to 212,500 shares of GWire stock, awarded as part of the employment agreements dated November 1, 2012 to the Company in exchange for equivalent shares of the Company’s common stock, up to $425,000 in total. The options were fully vested upon issuance. In April 2013, both managers converted all of these options together with 4,250,000 shares of GWire stock into 425,000 shares of the Company’s common stock. As a result, the Company owns 100% of GWire as of June 30, 2013. | |||||||||
· Options to purchase 25,300 shares were granted to GWire employees, with an exercise price of $1.00 per share. The options vested immediately and the Company recognized $32,572 as compensation expense during fiscal year 2013. | |||||||||
· Options to purchase 100,000 shares were granted as part of an employment agreement signed with a new employee dated May 2013, with an exercise price of $1.65 per share. One quarter (25,000 shares) of the options vest after one year and the remaining balance vests equally over the following nine quarters (8,333 per quarter). The options expire in May 2018. During fiscal year 2013, the Company recognized $12,689 of compensation expense associated with the options. | |||||||||
· Options to purchase 100,000 shares were granted as part of a loan extension agreement with an unrelated party, with an exercise price of $1.00 per share. The options vested immediately and the Company recognized $103,495 of interest expense during fiscal year 2013. | |||||||||
· Options to purchase 100,000 shares were granted for consulting services rendered by a third party, with an exercise price of $1.00 per share. The options vested immediately and the Company recognized $134,785 of consulting expense during fiscal year 2013. | |||||||||
· Options to purchase 36,667 shares were granted as loan due diligence fees to an unrelated party, with an exercise price of $0.75 per share. The options vested immediately and the Company recorded $51,492 as loan discount, which is being amortized over the life of the loan. During fiscal year 2013, the Company recognized $8,317 as interest expense for the loan discount amortization. | |||||||||
Warrants 1 | Warrants 2 | Warrants 3 | Warrants 4 | Warrants 5 | Warrants 6 | Warrants 7 | Warrants 8 | ||
Warrants | 1300000 | 1000000 | 425000 | 25300 | 100000 | 100000 | 100000 | 36667 | |
Exercise price | 1 | 1 | 1 | 1 | 1.65 | 1 | 1 | 0.75 | |
Interest expense | 103495 | 8317 | |||||||
Consulting expense | 134785 | ||||||||
Additional compensation expense | 846898 | 660140 | 32572 | 12689 | |||||
The following table summarizes information about stock options and warrants outstanding as of September 30, 2013: | |||||||||
Options and Warrants | Number of Options and Warrants | Weighted-Average Exercise Price | |||||||
Outstanding as of October 1, 2012 | 2,386,587 | $ 1.47 | |||||||
Granted | 2,086,967 | 1.04 | |||||||
Exercised | (875,000) | 1.00 | |||||||
Forfeited | - | - | |||||||
Outstanding as of September 30, 2013 | 3,598,554 | 1.33 | |||||||
Exercisable as of September 30, 2013 | 2,271,887 | 1.50 | |||||||
As of September 30, 2013, the outstanding warrants have an aggregate intrinsic value of $434,890, and the weighted average remaining term of the warrants is 3.13 years. |
18_Segment_Information
18. Segment Information | 12 Months Ended | |||||
Sep. 30, 2013 | ||||||
Notes | ' | |||||
18. Segment Information | ' | |||||
18. Segment Information | ||||||
The Company operates two business segments based primarily on the nature of the Company’s products. The Chronic Illness Monitoring segment is engaged in the business of developing, distributing and marketing mobile monitoring of patient vital signs and physical activity to self-insured companies. The CareServices segment is engaged in the business of developing, distributing and marketing mobile health monitoring and concierge services to distributors and consumers. The Company previously operated a reagents business which was sold in June 2013. The Company no longer holds any ownership interest in the reagents business. | ||||||
Additionally, at the corporate level, the Company raises capital and provides for the administrative operations of the Company as a whole. | ||||||
The following table reflects certain financial information relating to each reportable segment for fiscal years 2013 and 2012: | ||||||
Corporate | Chronic Illness Monitoring | CareServices | Reagents | Total | ||
Fiscal year ended September 30, 2013, as restated | ||||||
Sales to external customers | $ - | $ 4,245,404 | $ 1,660,544 | $ 351,645 | $ 6,257,593 | |
Segment loss | (21,986,526) | (1,966,613) | (3,179,151) | (5,312) | (27,137,602) | |
Interest expense, net | 5,583,932 | - | - | - | 5,583,932 | |
Segment assets | 600,892 | 7,416,759 | 2,291,121 | - | 10,308,772 | |
Fixed assets and leased equipment purchases | 243,273 | - | 241,527 | 888 | 485,688 | |
Depreciation and amortization | 124,269 | 114,440 | 984,663 | 9,362 | 1,232,734 | |
Fiscal year ended September 30, 2012 | ||||||
Sales to external customers | $ - | $ 706,888 | $ 352,223 | $ 467,259 | $ 1,526,370 | |
Segment loss | (11,298,372) | (532,207) | (389,187) | (145,990) | (12,365,756) | |
Interest expense, net | 858,224 | - | - | - | 858,224 | |
Segment assets | 397,557 | 1,957,779 | 3,224,579 | 296,039 | 5,875,954 | |
Fixed assets and leased equipment purchases | 93,315 | - | 257,857 | - | 351,172 | |
Depreciation and amortization | 304,841 | - | 64,348 | 16,296 | 385,485 | |
[A2] |
19_Income_Tax_Disclosure
19. Income Tax Disclosure | 12 Months Ended | |||
Sep. 30, 2013 | ||||
Notes | ' | |||
19. Income Tax Disclosure | ' | |||
19. Income Taxes | ||||
As of September 30, 2013, the Company had net operating loss carryforwards available to offset future taxable income, if any, of approximately $53,300,000, which will begin to expire in 2027. The utilization of the net operating loss carryforwards is dependent upon the tax laws in effect at the time the net operating loss carryforwards can be utilized. The Internal Revenue Code contains provisions that likely could reduce or limit the availability and utilization of these net operating loss carryforwards. For example, limitations are imposed on the utilization of net operating loss carryforwards if certain ownership changes have taken place or will take place. The Company will perform an analysis to determine whether any such limitations have occurred as the net operating losses are utilized. | ||||
The amount and ultimate realization of the benefits from the net operating loss carryforwards are dependent, in part, upon the tax laws in effect, the Company’s future earnings, and other future events, the effects of which cannot be determined. The Company has established a valuation allowance against all deferred income tax assets not offset by deferred income tax liabilities due to the uncertainty of their realization. Accordingly, there is no benefit for income taxes in the accompanying statements of operations. | ||||
Deferred income taxes are determined based on the estimated future effects of differences between the consolidated financial reporting and income tax reporting bases of assets and liabilities given the provisions of currently enacted tax laws and the tax rates expected to be in place. For fiscal years 2013 and 2012, the Company’s expected federal tax rate was 34%. | ||||
The deferred income tax assets (liabilities) were comprised of the following as of September 30: | ||||
2013 | 2012 | |||
(Restated) | ||||
Net operating loss carryforwards | $ 19,892,000 | $ 11,807,000 | ||
Depreciation, amortization and reserves | 453,000 | 101,000 | ||
Stock-based compensation | 1,863,000 | 1,113,000 | ||
Accrued vacation | 2,000 | 20,000 | ||
Valuation allowance | (22,210,000) | (13,041,000) | ||
Total | $ - | $ - | ||
Reconciliations between the benefit for income taxes at the federal statutory income tax rate and the Company’s benefit for income taxes for fiscal years 2013 and 2012 were as follows: | ||||
2013 | 2012 | |||
(Restated) | ||||
Federal income tax benefit at statutory rate | $ 9,227,000 | $ 4,204,000 | ||
State income tax benefit, net of federal | ||||
income tax effect | 896,000 | 408,000 | ||
Non-deductible expenses | (954,000) | (804,000) | ||
Change in valuation allowance | (9,169,000) | (3,808,000) | ||
Benefit for income taxes | $ - | $ - | ||
During fiscal years 2013 and 2012, the Company recognized no interest or penalties, and there were no changes in unrecognized tax benefits from tax positions taken or from lapsed statutes of limitations. There were no settlements with taxing authorities. As of September 30, 2013, the Company had no unrecognized tax benefits that, if recognized, would affect the effective tax rate, and there are no positions that are anticipated to significantly increase or decrease. The Company had no tax examinations beginning, ending, or remaining in process as of and for the years ended September 30, 2013 and 2012. Tax returns for fiscal years subsequent to 2009 remain subject to examination. |
20_Commitments_and_Contingenci
20. Commitments and Contingencies | 12 Months Ended | |||
Sep. 30, 2013 | ||||
Notes | ' | |||
20. Commitments and Contingencies | ' | |||
20. Commitments and Contingencies | ||||
The Company leases office space under non-cancelable operating leases. Future minimum rental payments under non-cancelable operating leases as of September 30, 2013 were as follows: | ||||
Years Ending September 30, | ||||
2014 | $ 277,603 | |||
2015 | 308,330 | |||
2016 | 317,580 | |||
2017 | 327,107 | |||
2018 | 280,077 | |||
$ 1,510,697 | ||||
The Company’s rent expense for facilities held under non-cancelable operating leases for fiscal years 2013 and 2012 was approximately $268,000 and $204,000, respectively. | ||||
In May 2013, the Company entered into a settlement agreement and patent license agreement and an agreed motion was filed to dismiss all claims of a lawsuit. The final payment required by the settlement agreement and patent license patent agreement was made in December 2013. |
21_Subsequent_Events
21. Subsequent Events | 12 Months Ended | ||||||||||
Sep. 30, 2013 | |||||||||||
Notes | ' | ||||||||||
21. Subsequent Events | ' | ||||||||||
21. Subsequent Events | |||||||||||
Subsequent to September 30, 2013 the Company entered into the following agreements and transactions: | |||||||||||
(1) The Board of Directors accepted the resignation of David Derrick as Chief Executive Officer and appointed Michael Jones, Company President, as Interim Chief Executive Officer. David Derrick was retained as Chairman of the Board of Directors. The Board of Directors accepted the resignation of Michael Acton as Chief Financial Officer and appointed Marc Bratsman as Chief Financial Officer. | |||||||||||
(2) James Carter, Jack Johnson, and William Martin resigned as members of the Board of Directors of the Company. There were no disagreements between these board members and the Company or any officer or director of the Company which led to their resignation. Jeffery Peterson was appointed to the Board of Directors. | |||||||||||
(3) The Company amended its Certificate of Incorporation increasing the total number of authorized shares of common stock from 50,000,000 shares to 200,000,000 shares; and amended the Series F preferred stock designation to increase the authorized shares of Series F preferred stock from 7,803 to 10,000. The Board of Directors and the required Series F preferred stockholders approved an amendment to the Series F preferred stock designation to allow Series F preferred stock dividends to be paid in cash or stock. | |||||||||||
(4) The Company designated 7,803 shares of preferred stock as Series F variable rate convertible preferred stock and completed the sale of $4,020,000 in 8% original issue shares of Series F preferred stock. The Company entered into a loan conversion agreement with one of its debt holders to convert $573,868 of principal and interest into 857 shares of Series F preferred stock. In addition, the Company issued 6,958,122 warrants exercisable at $1.10 per share for five years as part of these Series F preferred stock transactions. | |||||||||||
(5) Related party and non-related party investors converted 480,000 shares of Series C preferred stock and 893,218 shares of Series D preferred stock to 6,924,526 shares of common stock. | |||||||||||
(6) The Company entered into loan conversion agreements with related party and non-related party debt holders to convert $2,417,301 of principal and interest into 3,712,549 shares of common stock and 8,347 shares of Series E preferred stock. | |||||||||||
(7) The Company issued 289,865 shares of common stock to settle accrued dividends for Series C preferred stock, Series D preferred stock, and Series F preferred stock. | |||||||||||
(8) The Company issued 12,063,172 shares of common stock to related parties for services with vesting ranging from immediate to two years. The Company issued 409,000 shares of common stock to non-related parties for services and fees. | |||||||||||
(9) The Company issued 1,723,100 shares of common stock to related parties for the exercise of modified stock option agreements (the exercise price was reduced to $0). | |||||||||||
(10) The Company issued 504,668 shares of common stock to related parties and non-related parties for loan origination fees and investment fees. | |||||||||||
(11) The Company issued 1,540,000 warrants exercisable between $0.50 and $1.10 per share for five years to related parties and non-related parties. | |||||||||||
(12) The Company entered into agreements with related parties and non-related parties who purchased customer receivables for $2,160,500 where the Company may buy back the receivables for $2,475,000 less cash received by the entities. | |||||||||||
(13) The Company entered into a $500,000 note payable with no interest with a non-related party that requires a payment of 667,000 shares of common stock at the end of the term. | |||||||||||
(14) The Company received advances totaling $1,100,000 from related parties or entities controlled by related parties. | |||||||||||
Event 1 | Event 2 | Event 3 | Event 4 | Event 5 | Event 6 | Event 7 | Event 8 | Event 9 | Event 10 | ||
Conversion of Series A Debenture-Shares | 8347 | ||||||||||
Conversion of Note Payable -Shares | 441735 | 857 | 1883675 | 1100110 | 213334 | 66667 | |||||
Principal and Interest Balance | 83473 | 331301 | 573868 | 1126026 | 659474 | 160000 | 50000 | ||||
Preferred Stock Designated As Series F Variable Rate Convertible Preferred Stock | 7803 | ||||||||||
Proceeds From Sale of Series F Preferred Stock | 2835771 | ||||||||||
Warrants Issued | 3495000 | 410348 | 239652 | ||||||||
Series C Preferred Stock converted to Common Stock | 480000 | ||||||||||
Series D Preferred Stock converted to Common Stock | 893218 | ||||||||||
Preferred Stock converted to Common Stock | 672000 | 6252526 |
1_Organization_and_Nature_of_O1
1. Organization and Nature of Operations: Going Concern (Policies) | 12 Months Ended |
Sep. 30, 2013 | |
Policies | ' |
Going Concern | ' |
Going Concern | |
Although the Company had gross profit for fiscal year 2013, it has incurred negative cash flows from operating activities, recurring net losses, negative working capital, and negative total equity. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. | |
In order for the Company to remove substantial doubt about its ability to continue as a going concern, it must improve margins, generate positive cash flows from operating activities, and obtain the necessary debt or equity funding to meet its projected capital investment requirements. Management’s plans with respect to this uncertainty include raising additional capital by issuing equity securities and increasing the sales of the Company’s services and products. Subsequent to year end, the Company (1) completed the sale of $3,120,000 of 8% Series F variable rate convertible preferred stock (“Series F preferred stock”); (2) converted $2,301,801 of debt and accrued interest to common stock; and (3) converted $573,886 of debt and accrued interest to Series F variable rate convertible preferred stock (see Note 21). There can be no assurance that the Company will be able to raise sufficient additional capital or that revenues will increase rapidly enough to offset operating losses. If the Company is unable to increase revenues or obtain additional financing, it will be unable to continue the development of its products and may have to cease operations. |
3_Summary_of_Significant_Accou1
3. Summary of Significant Accounting Policies: Use of Estimates in The Preparation of Financial Statements (Policies) | 12 Months Ended |
Sep. 30, 2013 | |
Policies | ' |
Use of Estimates in The Preparation of Financial Statements | ' |
Use of Estimates in the Preparation of Financial Statements | |
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates. | |
In May 2013, the Company effected a 10-for-1 reverse common stock split. The consolidated financial statements and notes for all periods presented have been retroactively adjusted to reflect the reverse common stock split. |
3_Summary_of_Significant_Accou2
3. Summary of Significant Accounting Policies: Discontinued Operations, Policy (Policies) | 12 Months Ended |
Sep. 30, 2013 | |
Policies | ' |
Discontinued Operations, Policy | ' |
Discontinued Operations | |
In June 2013, the Company sold the net assets and operations of its reagents business segment to a third party for $184,318 in cash. During fiscal years 2013 and 2012, the Company recognized a loss from discontinued operations of $5,312 and $145,990, respectively. |
3_Summary_of_Significant_Accou3
3. Summary of Significant Accounting Policies: Fair Value of Financial Instruments (Policies) | 12 Months Ended |
Sep. 30, 2013 | |
Policies | ' |
Fair Value of Financial Instruments | ' |
Fair Value of Financial Instruments | |
The carrying values of cash, accounts receivable and accounts payable approximate their respective fair values due to the short-term nature and liquidity of these financial instruments. Derivative financial instruments are recorded at fair value based on current market pricing models. Based on current market conditions, the Company estimates the fair values of its long-term debt obligations approximate their carrying values as of September 30, 2013. |
3_Summary_of_Significant_Accou4
3. Summary of Significant Accounting Policies: Concentrations of Credit Risk (Policies) | 12 Months Ended |
Sep. 30, 2013 | |
Policies | ' |
Concentrations of Credit Risk | ' |
Concentrations of Credit Risk | |
The Company has cash in bank accounts that, at times, may exceed federally insured limits. The Company has not experienced any losses in these accounts. | |
In the normal course of business, the Company provides credit terms to its customers and requires no collateral. The Company performs ongoing credit evaluations of its customers’ financial condition. The Company maintains an allowance for doubtful accounts receivable based upon management’s specific review and assessment of each account at the period end. | |
During fiscal year 2013, the Company had revenues from one significant Chronic Illness Monitoring customer, which represented 44% of total revenues and 61% of segment revenues. As of September 30, 2013, accounts receivable from two significant customers represented 82% of total accounts receivable. During fiscal year 2012, the Company had revenues from one significant Chronic Illness Monitoring customer, which represented 28% of total revenues and 42% of segment revenues. As of September 30, 2012, accounts receivable from this significant customer represented 51% of total accounts receivable. |
3_Summary_of_Significant_Accou5
3. Summary of Significant Accounting Policies: Accounts Receivable (Policies) | 12 Months Ended |
Sep. 30, 2013 | |
Policies | ' |
Accounts Receivable | ' |
Accounts Receivable | |
Accounts receivable are carried at original invoice amount less an estimate made for doubtful accounts. Specific reserves are estimated by management based on certain assumptions and variables, including the customer’s financial condition, age of the customer’s receivables and changes in payment histories. Accounts receivable are written off when management determines the likelihood of collection is remote. A receivable is considered to be past due if any portion of the receivable balance has not been received by the contractual payment date. Interest is not charged on accounts receivable that are past due. The Company recorded an allowance for doubtful accounts of $76,544 and $20,195 as of September 30, 2013 and 2012, respectively. |
3_Summary_of_Significant_Accou6
3. Summary of Significant Accounting Policies: Inventory (Policies) | 12 Months Ended | |||
Sep. 30, 2013 | ||||
Policies | ' | |||
Inventory | ' | |||
Inventory | ||||
Inventory is[A1] recorded at the lower of cost or market, cost being determined using the first-in, first-out (“FIFO”) method. Chronic Illness Monitoring inventory consists of diabetic supplies. Inventory held by distributors is reported as inventories on the Company’s consolidated balance sheets until the supplies are shipped to the end user by the distributor. Provisions, when required, are made to reduce excess and obsolete inventories to their estimated net realizable values. Due to competitive pressures and technological innovation, it is possible that estimates of net realizable values could change in the near term. Inventories consist of the following as of September 30: | ||||
2013 | 2012 | |||
(Restated) | ||||
Chronic Illness Monitoring | ||||
Finished goods | $ 1,249,220 | $ 185,884 | ||
Finished goods held by distributors | 3,428,306 | - | ||
CareServices | ||||
ActiveHome | - | 56,767 | ||
Reagents | ||||
Raw materials | - | 36,211 | ||
Work in process | - | 5,745 | ||
Finished goods | - | 6,161 | ||
Total inventories | $ 4,677,526 | $ 290,768 |
3_Summary_of_Significant_Accou7
3. Summary of Significant Accounting Policies: Property, Plant and Equipment, Policy (Policies) | 12 Months Ended |
Sep. 30, 2013 | |
Policies | ' |
Property, Plant and Equipment, Policy | ' |
Property and Equipment | |
Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization are determined using the straight-line method over the estimated useful lives of the assets, which range between 3 and 7 years. Leasehold improvements are amortized over the shorter of the estimated useful lives of the assets or the terms of the lease. Expenditures for maintenance and repairs are expensed as incurred. Upon the sale or disposal of property and equipment, any gains or losses are included in the results of operations. |
3_Summary_of_Significant_Accou8
3. Summary of Significant Accounting Policies: Goodwill (Policies) | 12 Months Ended |
Sep. 30, 2013 | |
Policies | ' |
Goodwill | ' |
Goodwill | |
Goodwill is not amortized but is reviewed for potential impairment at least annually. The identification and measurement of goodwill impairment involves the estimation of the fair value of the Company’s reporting units. The estimates of fair value of reporting units are based on the best information available as of the date of the assessment and incorporate management assumptions about expected future cash flows. Future cash flows can be affected by changes in Company performance, industry or market conditions, or overall economic trends. Management determined that goodwill was not impaired as of September 30, 2013 or 2012. |
3_Summary_of_Significant_Accou9
3. Summary of Significant Accounting Policies: Impairment of Long-lived Assets (Policies) | 12 Months Ended |
Sep. 30, 2013 | |
Policies | ' |
Impairment of Long-lived Assets | ' |
Impairment of Long-Lived Assets | |
Purchased intangible assets with finite lives are amortized using the straight-line method over the estimated economic lives of the assets, which range from 2 to 20 years. Long-lived assets, including intangible assets with finite lives, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. Management determined that long-lived assets were not impaired as of September 30, 2013 or 2012. |
Recovered_Sheet1
3. Summary of Significant Accounting Policies: Revenue Recognition (Policies) | 12 Months Ended |
Sep. 30, 2013 | |
Policies | ' |
Revenue Recognition | ' |
Revenue Recognition | |
The Company’s revenue has historically been from three sources: (i) sales from Chronic Illness Monitoring products and supplies; (ii) sales from CareServices; and (iii) sales of medical diagnostic stains from the reagents segment, which was sold during fiscal year 2013 and reported as discontinued operations. | |
Chronic Illness Monitoring | |
The Company began chronic illness monitoring sales as a result of its acquisition of 4G Biometrics, LLC in the quarter ended March 31, 2012 (see Note 5). The Company recognizes Chronic Illness Monitoring revenue when persuasive evidence of an arrangement exists, delivery has occurred, prices are fixed or determinable, and collection is reasonably assured. | |
The Company enter into agreements with insurance companies, disease management companies, third-party administrators, and self-insured companies (collectively, the customers) to lower medical expenses by distributing diabetic testing products and supplies to employees (end users) covered by their health plans or the health plans they manage. Cash is due from the customer or the end user’s health plan as the products and supplies are deployed to the end user. | |
The Company also enter into agreements with distributors who take title to products and distribute those products to the end user. Delivery is considered to occur when the supplies are delivered by the distributor to the end user. Cash is due from the distributor, the customer or the end user’s health plan as initial products are deployed to the end user. Subsequent sales (resupplies) are shipped directly from the Company to the end user and cash is due from the customer or the end user’s health plan. | |
Shipping and handling fees are typically not charged to end users. The related freight costs and supplies directly associated with shipping products to end users are included as a component of cost of revenues. | |
CareServices | |
CareServices include contracts in which the Company leases monitoring devices and provides monitoring services to end users. The Company typically enters into contracts on a month-to-month basis with end users that use our CareServices. However, these contracts may be cancelled by either party at any time with 30-days notice. Under the standard contract, the device and service become billable on the date the end user orders the device, and remains billable until the device is returned to the Company. The Company recognizes revenue on devices at the end of each month the CareServices have been provided. In those circumstances in which payment is received in advance, the Company records these payments as deferred revenue. | |
The Company recognizes CareServices revenue when persuasive evidence of an arrangement exists, delivery of the device or service has occurred, prices are fixed or determinable and payment has occurred or collection is reasonably assured. Shipping and handling fees are included as part of net revenues. The related freight costs and supplies directly associated with shipping products to end users are included as a component of cost of revenues. All CareServices sales are made with net 30-day payment terms. | |
Reagents | |
Prior to the sale of the reagent segment, the Company recognized reagents revenues when persuasive evidence of an arrangement with the customer existed, title had passed to the customer, prices were fixed or determinable, and collection was reasonably assured. Prior to the sale of the reagent segment, shipping and handling fees billed to customers were included in revenues and the related freight costs and supplies directly associated with shipping products to customers were included as a component of cost of revenues. | |
Recovered_Sheet2
3. Summary of Significant Accounting Policies: Research and Development Costs (Policies) | 12 Months Ended |
Sep. 30, 2013 | |
Policies | ' |
Research and Development Costs | ' |
Research and Development Costs | |
All expenditures for research and development are charged to expense as incurred. Research and development expenses for fiscal years 2013 and 2012 were $832,271 and $187,230, respectively. The expenditures for fiscal year 2013 were primarily for the development of the Chronic Illness Monitoring operating system. The expenditures for fiscal year 2012 were for software development efforts for the chronic illness market. | |
Recovered_Sheet3
3. Summary of Significant Accounting Policies: Advertising Costs (Policies) | 12 Months Ended |
Sep. 30, 2013 | |
Policies | ' |
Advertising Costs | ' |
Advertising Costs | |
The Company expenses advertising costs as incurred. Advertising expenses for fiscal years 2013 and 2012 were $59,330 and $176,300, respectively. Advertising expenses primarily relate to the Company’s Chronic Illness Monitoring segment. | |
Recovered_Sheet4
3. Summary of Significant Accounting Policies: Income Taxes (Policies) | 12 Months Ended |
Sep. 30, 2013 | |
Policies | ' |
Income Taxes | ' |
Income Taxes | |
The Company recognizes deferred income tax assets or liabilities for the expected future tax consequences of events that have been recognized in the financial statements or income tax returns. Deferred income tax assets or liabilities are determined based upon the difference between the financial reporting bases and tax reporting bases of assets and liabilities using enacted tax rates expected to apply when the differences are expected to be settled or realized. Deferred income tax assets are reviewed periodically for recoverability and valuation allowances are provided as necessary. As of September 30, 2013, management has determined to provide a 100% allowance against deferred income tax assets as it is more likely than not these assets will not be realized. Interest and penalties related to income tax liabilities, when incurred, are classified in interest expense and income tax provision, respectively. |
Recovered_Sheet5
3. Summary of Significant Accounting Policies: Stock-based Compensation (Policies) | 12 Months Ended |
Sep. 30, 2013 | |
Policies | ' |
Stock-based Compensation | ' |
Stock-Based Compensation | |
The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. That cost is recognized in the statement of operations over the period during which the employee is required to provide service in exchange for the award – the requisite service period. The grant-date fair values of the equity instruments are estimated using option-pricing models adjusted for the unique characteristics of those instruments. | |
Recovered_Sheet6
3. Summary of Significant Accounting Policies: Net Loss Per Common Share (Policies) | 12 Months Ended | |||
Sep. 30, 2013 | ||||
Policies | ' | |||
Net Loss Per Common Share | ' | |||
Net Loss Per Common Share | ||||
Basic net loss per common share (“Basic EPS”) is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the year. | ||||
Diluted net loss per common share (“Diluted EPS”) is computed by dividing net loss available to common stockholders by the sum of the weighted average number of common shares outstanding and the weighted-average dilutive common share equivalents then outstanding. The computation of Diluted EPS does not assume exercise or conversion of securities that would have an anti-dilutive effect. | ||||
Common share equivalents consist of shares issuable upon the exercise of common stock warrants, shares issuable from restricted stock grants, shares issuable from convertible notes and convertible Series C, Series D and Series E preferred stock. As of September 30, 2013 and 2012, there were 13,127,396 and 8,202,219 outstanding common share equivalents, respectively, that were not included in the computation of Diluted EPS as their effect would be anti-dilutive. The common stock equivalents outstanding consist of the following as of September 30: | ||||
2013 | 2012 | |||
Common stock options and warrants | 3,598,554 | 2,386,587 | ||
Series C convertible preferred stock | 480,000 | 480,000 | ||
Series D convertible preferred stock | 4,691,090 | 1,830,515 | ||
Series E convertible preferred stock | 601,585 | - | ||
Convertible debt | 3,738,917 | 3,444,217 | ||
Restricted shares of common stock | 17,250 | 60,900 | ||
Total common stock equivalents | 13,127,396 | 8,202,219 |
Recovered_Sheet7
3. Summary of Significant Accounting Policies: Reclassifications (Policies) | 12 Months Ended |
Sep. 30, 2013 | |
Policies | ' |
Reclassifications | ' |
Reclassifications | |
Certain prior year amounts have been reclassified to conform to the current year’s presentation. The reclassifications had no effect on the previously reported net loss. |
Recovered_Sheet8
3. Summary of Significant Accounting Policies: Recent Accounting Pronouncements (Policies) | 12 Months Ended |
Sep. 30, 2013 | |
Policies | ' |
Recent Accounting Pronouncements | ' |
Recent Accounting Pronouncements | |
In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, Revenue from Contracts with Customers, which supersedes nearly all existing revenue recognition guidance under US GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing US GAAP. The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein. Early adoption is not permitted. The Company is currently assessing the impact, if any, of implementing this guidance on its consolidated financial position, results of operations and liquidity. | |
Recovered_Sheet9
3. Summary of Significant Accounting Policies: Inventory: Schedule of Utility Inventory (Tables) | 12 Months Ended | |||
Sep. 30, 2013 | ||||
Tables/Schedules | ' | |||
Schedule of Utility Inventory | ' | |||
2013 | 2012 | |||
(Restated) | ||||
Chronic Illness Monitoring | ||||
Finished goods | $ 1,249,220 | $ 185,884 | ||
Finished goods held by distributors | 3,428,306 | - | ||
CareServices | ||||
ActiveHome | - | 56,767 | ||
Reagents | ||||
Raw materials | - | 36,211 | ||
Work in process | - | 5,745 | ||
Finished goods | - | 6,161 | ||
Total inventories | $ 4,677,526 | $ 290,768 |
Recovered_Sheet10
3. Summary of Significant Accounting Policies: Net Loss Per Common Share: Schedule of common stock equivalents (Tables) | 12 Months Ended | |||
Sep. 30, 2013 | ||||
Tables/Schedules | ' | |||
Schedule of common stock equivalents | ' | |||
2013 | 2012 | |||
Common stock options and warrants | 3,598,554 | 2,386,587 | ||
Series C convertible preferred stock | 480,000 | 480,000 | ||
Series D convertible preferred stock | 4,691,090 | 1,830,515 | ||
Series E convertible preferred stock | 601,585 | - | ||
Convertible debt | 3,738,917 | 3,444,217 | ||
Restricted shares of common stock | 17,250 | 60,900 | ||
Total common stock equivalents | 13,127,396 | 8,202,219 |
4_Discontinued_Operations_Sche
4. Discontinued Operations: Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures (Tables) | 12 Months Ended | |||
Sep. 30, 2013 | ||||
Tables/Schedules | ' | |||
Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures | ' | |||
2013 | 2012 | |||
Revenues | $ 351,645 | $ 467,259 | ||
Cost of revenues | (300,396) | (392,049) | ||
Gross profit | 51,249 | 75,210 | ||
Selling, general and administrative expenses | (111,657) | (221,200) | ||
Loss from discontinued operations | (60,408) | (145,990) | ||
Gain on sale of discontinued operations | 55,096 | - | ||
Net loss from discontinued operations | $ (5,312) | $ (145,990) |
6_Property_Plant_and_Equipment1
6. Property, Plant and Equipment Disclosure: Schedule of Property and Equipment (Tables) | 12 Months Ended | |||
Sep. 30, 2013 | ||||
Tables/Schedules | ' | |||
Schedule of Property and Equipment | ' | |||
2013 | 2012 | |||
Equipment | $ 255,339 | $ 374,229 | ||
Leasehold improvements | 145,147 | 402,016 | ||
Software | 87,361 | 65,111 | ||
Furniture | 32,855 | 50,123 | ||
Total gross property and equipment | 520,702 | 891,479 | ||
Accumulated depreciation and amortization | (223,972) | (625,401) | ||
Property and equipment, net | $ 296,730 | $ 266,078 |
7_Patent_License_Agreement_Sch
7. Patent License Agreement: Schedule of Expected Amortization Expense (Tables) | 12 Months Ended | ||
Sep. 30, 2013 | |||
Tables/Schedules | ' | ||
Schedule of Expected Amortization Expense | ' | ||
Years Ending September 30, | |||
2014 | $ | 126,870 | |
2015 | 126,870 | ||
2016 | 126,870 | ||
2017 | 126,870 | ||
2018 | 59,440 | ||
$ | 566,920 |
8_Customer_Contracts_Schedule_
8. Customer Contracts: Schedule of Future Customer Contract Amortization (Tables) | 12 Months Ended | ||
Sep. 30, 2013 | |||
Tables/Schedules | ' | ||
Schedule of Future Customer Contract Amortization | ' | ||
Years Ending September 30, | |||
2014 | $ | 775,812 | |
2015 | 658,709 | ||
$ | 1,434,521 |
9_Equipment_Leased_to_Customer1
9. Equipment Leased to Customers: Schedule of leased equipment (Tables) | 12 Months Ended | |||
Sep. 30, 2013 | ||||
Tables/Schedules | ' | |||
Schedule of leased equipment | ' | |||
2013 | 2012 | |||
Leased equipment | $ 389,492 | $ 457,898 | ||
Accumulated depreciation | (115,862) | (144,905) | ||
Leased equipment, net | $ 273,630 | $ 312,993 |
10_Notes_Payable_Schedule_of_D
10. Notes Payable: Schedule of Debt (Tables) | 12 Months Ended | |||
Sep. 30, 2013 | ||||
Tables/Schedules | ' | |||
Schedule of Debt | ' | |||
2013 | 2012 | |||
Note payable to the former owners of Green Wire, secured by customer contracts, imputed interest rate of 12%, with monthly installments over a 38-month term. In March 2013, the Company issued 15,000 shares of common stock to extend two past due payments without penalty and the grant date fair value was $24,000, which will be amortized over the remaining life of the note. | $ 1,766,971 | $ 2,236,737 | ||
Notes payable with interest at 12%, secured by the Company's assets, due August 2014 and convertible into the shares of common stock at $0.75 per share. The notes required $51,250 in due diligence and legal fees. The Company issued warrants to purchase 36,667 shares of common stock as due diligence fees with a grant date fair value of $51,452. The Company issued 25,000 shares of common stock with a grant date fair value of $31,250 to a related party as consideration for signing a personal guarantee. The notes and accrued interest were converted to Series F preferred stock subsequent to September 30, 2013 (see Note 21). | 550,000 | - | ||
Unsecured note with interest at 12%, due March 2013. The note and accrued interest were converted to common stock subsequent to September 30, 2013 (see Note 21). | 250,000 | 250,000 | ||
Unsecured notes with interest at 15% (18% after due date), due March and April 2013, respectively. The Company issued 20,000 shares of Series D preferred stock as loan origination fees with a grant date fair value of $195,000. Principal of $50,000 was converted to common stock subsequent to September 30, 2013 (see Note 21). | 185,476 | - | ||
Series A debenture loans payable, secured by customer contracts and payable in 36 monthly installments, original due dates between September and April 2016. The loans bear interest at 12% and are convertible into common stock after 180 days. After payment of principal and interest, the holders of the Series A and Series B debentures, as a class, are entitled to receive a pro-rata share of cumulative royalties totaling 4% of the Company’s gross profits payable for the two-year period commencing at the maturity date; provided that no royalties are payable following conversion of any Series A or Series B debenture to the holder thereof. The Company has the right to buy out each lender's royalty by paying the respective lender $20,000 for every $25,000 loaned. The note included a beneficial conversion feature valued at $901,000 at inception, which the Company is amortizing over the life of the loan. The feature had an unamortized value of $47,934 as of September 30, 2013. The majority of loans were converted during fiscal year 2013. The remaining balance was converted to Series E preferred stock subsequent to September 30, 2013 (see Note 21). | 85,719 | 300,000 | ||
Unsecured note with interest at 15%, due March 2013, currently in default. Note included a $25,000 cash and 100,000 shares of common stock as loan origination fees with a grant date fair value of $70,000. The note and accrued interest were converted to common stock subsequent to September 30, 2013 (see Note 21). | 25,000 | 275,000 | ||
Unsecured note with interest at 15% (18% after due date), due November 2012. The Company issued 60,000 shares of Series D stock as loan origination fees with a grant date fair value of $150,000. The note was guaranteed by the Company’s Chief Executive Officer. | - | 1,500,000 | ||
Total before discount and current portion | 2,863,166 | 4,561,737 | ||
Less discount | (528,663) | (187,587) | ||
Total notes payable | 2,334,503 | 4,374,150 | ||
Less current portion | (1,278,585) | (2,569,221) | ||
Total notes payable, net of current portion | $ 1,055,918 | $ 1,804,929 |
10_Notes_Payable_Schedule_of_p
10. Notes Payable: Schedule of principal payments on notes payable (Tables) | 12 Months Ended | ||
Sep. 30, 2013 | |||
Tables/Schedules | ' | ||
Schedule of principal payments on notes payable | ' | ||
Years Ending September 30, | |||
2014 | $ | 1,768,820 | |
2015 | 854,522 | ||
2016 | 239,824 | ||
$ | 2,863,166 |
11_Relatedparty_Notes_Payable_
11. Related-party Notes Payable: Schedule of related party notes payable (Tables) | 12 Months Ended | |||
Sep. 30, 2013 | ||||
Tables/Schedules | ' | |||
Schedule of related party notes payable | ' | |||
2013 | 2012 | |||
Unsecured notes payable to an entity controlled by an officer of the Company with interest at 15% (18% in the event of default), due September 30, 2013. The Company issued 60,000 shares of common stock as loan origination fees with a grant date fair value of $93,000. The notes and accrued interest were converted to common stock subsequent to September 30, 2013 (see Note 21). | $ 600,000 | $ - | ||
Unsecured note payable to an entity controlled by an officer of the Company, with interest at 3% (18% in the event of default), due July 2013. In July the lender agreed to extend the maturity date to September 30, 2013 with interest at 12% (18% in the event of default). The Company issued 30,000 shares of common stock with grant date fair value of $38,100 as loan origination fees. In the event of default, the note is convertible into shares of common stock at $0.75 per share. The note and accrued interest were converted to common stock subsequent to September 30, 2013 (see Note 21). | 300,000 | - | ||
Unsecured note payable to an entity controlled by an officer of the Company, interest at 12% (18% in the event of default), due September 30, 2013. The Company issued 30,000 shares of common stock with a grant date fair value of $37,500 as loan origination fees. In the event of default, the note is convertible into shares of common stock at $0.75 per share. The note and accrued interest were converted to common stock subsequent to September 30, 2013 (see Note 21). | 300,000 | - | ||
Unsecured notes payable to an entity controlled by an officer of the Company, interest at 12% (18% in the event of default), due April 2013. In the event of default, the note is convertible into shares of common stock at $0.40 per share. The note and accrued interest were converted to common stock subsequent to September 30, 2013 (see Note 21). | 200,000 | - | ||
Unsecured note payable to a lender under the control of the Company’s CEO, interest at 12%, due upon demand. The note is convertible into shares of common stock at $0.75 per share. The Company recognized $148,750 in connection with the beneficial conversion feature. The Company issued 17,500 shares of common stock with a grant date fair value of $26,250 as loan origination fees. Subsequent to September 30, 2013 $160,000 of the note was converted to common stock (see Note 21). | 175,000 | - | ||
Unsecured note payable with zero interest to an entity controlled by an officer of the Company. The note was repaid in full subsequent to September 30, 2013. | 150,000 | - | ||
Unsecured note payable to an entity controlled by an officer of the Company, with interest at 12%, due August 2012. During fiscal year 2013, the lender agreed to extend the maturity date to June 30, 2013 with interest at 18% and 5,600 shares of Series D with a grant date fair value of $56,252 paid as a loan origination fee. The note is currently in default. The note also included $7,500 of loan origination fees added to the principal. In the event of default, the note is convertible into shares of common stock at $0.40 per share. The note and accrued interest were converted to common stock subsequent to September 30, 2013 (see Note 21). | 82,500 | 543,278 | ||
Unsecured note payable to an officer of the Company with interest at 15%, due June 2012, currently in default. The note includes $3,000 of loan origination fees added to the principal and is convertible into common stock at $0.50 per share. | 33,000 | 33,000 | ||
Unsecured note payable to an officer of the Company with interest at 12%, due September 30, 2013, currently in default. The loan is convertible into the Company's common stock at a rate of $0.75 per share. The Company recognized $22,820 in connection with the beneficial conversion feature. | 26,721 | - | ||
Unsecured note payable to an officer of the Company with interest at 12%, due upon demand. | 13,644 | - | ||
Unsecured notes payable with zero interest to an individual related to an officer of the Company. The loan was repaid in full subsequent to September 30, 2013. | 10,000 | - | ||
Series B unsecured debenture loans from entities controlled by an officer of the Company, including $68,914 in loan origination fees added to the principal of the loans, payable in 36 monthly installments, maturing December 2015 and January 2016. Of the debenture, $554,556 was issued to settle a related-party note payable with a total outstanding balance of $460,778 and $43,364 of related accrued interest. Of the loan, $35,000 was issued to settle an accrued service fee. The loans bear interest at 12% and are convertible into common stock after 180 days. After payment of principal and interest, the holders of the Series B and Series A debentures, as a class, are entitled to receive a pro-rata share of cumulative royalties totaling 4% of the Company’s gross profits payable for the two-year period commencing at the maturity date; provided that no royalties are payable following conversion of any Series A or Series B debenture to the holder thereof. The Company has the right to buy out the royalty by paying the lender $22,000 for every $25,000 loaned. During the fiscal year ended September 30, 2013, the Company issued 34,400 shares of Series D with a fair market value of $343,748 at date of grant as additional loan origination fees, and paid $30,102 of the loan principal. The Company is late on certain monthly payments. The notes include beneficial conversion features valued at $167,000 at inception, which the Company is amortizing over the life of the loan. The feature had an unamortized value of $3,348 as of September 30, 2013. During fiscal year 2013, $722,684 of outstanding principal and $49,895 of accrued interest were converted into 1,030,107 common shares at a rate of $0.75 per share. The Company recorded $535,656 of expense associated with the induced conversion of these debenture loans. The majority of loans were converted during fiscal year 2013. The remaining note of $5,270 and accrued interest were converted to common stock subsequent to September 30, 2013 (see Note 21). | 5,270 | - | ||
Unsecured notes payable to a lender under the control of the Company’s CEO with a line of credit borrowing capacity of $2,000,000, interest at 12%, due July 2013. The notes were convertible into shares of common stock at $5.00 per share. In connection with the notes payable, the Company issued 80,000 shares of Series D preferred stock (valued at $240,000). The Company granted warrants to purchase 341,000 shares of common stock as a loan origination fee. These warrants vested immediately and are exercisable at $4.40 per share through November 3, 2016. The fair value of the warrants was $107,130, and was measured using a binomial valuation model with the following assumptions: exercise price $4.40; risk-free interest rate of .39%; expected life of 2.5 years; expected dividends of zero; a volatility factor of 134.57%; and market price on date of grant of $4.40. During fiscal year 2012, the Company re-priced the exercise price of the warrants from $4.40 to $1.00 per share. During the three months ended December 31, 2012, the Company issued a Series A debenture payable to the lender in satisfaction of the outstanding balance of $620,687 plus $21,585 of accrued interest. Upon the conversion of the note, the Company immediately recognized the unamortized debt discount of $209,143. | - | 620,687 | ||
Note payable to an entity controlled by an officer of the Company, interest at 12%, due December 2012. This note was secured by real estate. During the three months ended December 31, 2012, the Company issued a Series A debenture payable to the entity in satisfaction of the outstanding balance of $300,000 plus $14,992 of accrued interest. | - | 300,000 | ||
Series A debenture loans from a former CEO and Chairman of the Company, secured by customer contracts, payable in 36 monthly installments, maturing September and December 2015. The loans bear interest at 12% and are convertible into common stock after 180 days. After payment of principal and interest, the holders of the Series B and Series A debentures, as a class, are entitled to receive a pro-rata share of cumulative royalties totaling 4% of the Company’s gross profits payable for the two-year period commencing at the maturity date; provided that no royalties are payable following conversion of any Series A or Series B debenture to the holder thereof. The Company has the right to buy out each royalty by paying the lender $20,000 for every $25,000 loaned. During fiscal year 2013, the Company paid $41,682 of the loan principal. During fiscal year 2013, $342,912 of principal and interest were converted into 457,216 common shares. The Company recorded $297,191 of expense associated with the induced conversion of these notes. | - | 244,196 | ||
Unsecured note payable to an entity controlled by an officer of the Company, including a $7,500 loan origination fee, interest at 12%, due August 2012. The note was convertible into common stock at 50% of fair market value or $0.40 per share, whichever was less. During the three months ended December 31, 2012, the Company issued a Series A debenture payable to the entity in satisfaction of the outstanding balance of $82,500 plus $3,716 of accrued interest. | - | 82,500 | ||
Unsecured note payable to an entity controlled by an officer of the Company, including a $7,500 loan origination fee, interest at 12%, due September 2012. The note was convertible into common stock at $0.40 per share or 50% of market value, whichever was less. During the three months ended December 31, 2012, the Company issued a Series A debenture payable to the entity in satisfaction of the outstanding balance of $82,500 plus $3,173 of accrued interest. | - | 82,500 | ||
Notes payable to an entity controlled by an officer of the Company, including a $26,000 loan origination fee which was convertible into Series D preferred stock at any time at $2.00 per share, interest at 15%, due December 2012. This note was secured by real estate. During the three months ended December 31, 2012, the Company issued a Series A debenture payable to the entity in satisfaction of the outstanding balance of $51,000 plus $3,186 of accrued interest. Upon the conversion of the note, the Company immediately recognized the unamortized debt discount of $14,238. | - | 51,000 | ||
Total before discount and current portion | 1,896,135 | 1,957,161 | ||
Less discount | (3,720) | (223,381) | ||
Total notes payable, related-party | 1,892,415 | 1,733,780 | ||
Less current portion | (1,892,415) | (1,563,923) | ||
Total notes payable, related-party, net of current portion | $ - | $ 169,857 |
17_Stock_Options_and_Warrants_
17. Stock Options and Warrants: Schedule of fair value assumptions (Tables) | 12 Months Ended | |||
Sep. 30, 2013 | ||||
Tables/Schedules | ' | |||
Schedule of fair value assumptions | ' | |||
2013 | 2012 | |||
Exercise price | $0.75 - $10.00 | $0.40 - .44 | ||
Expected term (years) | 1.5 - 2.5 | 2.5 | ||
Volatility | 219% - 298% | 131% - 135% | ||
Risk-free rate | 0.23% - 0.88% | 0.39% - 0.44% | ||
Dividend rate | 0% | 0% |
17_Stock_Options_and_Warrants_1
17. Stock Options and Warrants: Schedule of Share-based Compensation, Activity (Tables) | 12 Months Ended | |||
Sep. 30, 2013 | ||||
Tables/Schedules | ' | |||
Schedule of Share-based Compensation, Activity | ' | |||
Options and Warrants | Number of Options and Warrants | Weighted-Average Exercise Price | ||
Outstanding as of October 1, 2012 | 2,386,587 | $ 1.47 | ||
Granted | 2,086,967 | 1.04 | ||
Exercised | (875,000) | 1.00 | ||
Forfeited | - | - | ||
Outstanding as of September 30, 2013 | 3,598,554 | 1.33 | ||
Exercisable as of September 30, 2013 | 2,271,887 | 1.50 |
18_Segment_Information_Schedul
18. Segment Information: Schedule of Segment Reporting Information, by Segment (Tables) | 12 Months Ended | |||||
Sep. 30, 2013 | ||||||
Tables/Schedules | ' | |||||
Schedule of Segment Reporting Information, by Segment | ' | |||||
Corporate | Chronic Illness Monitoring | CareServices | Reagents | Total | ||
Fiscal year ended September 30, 2013, as restated | ||||||
Sales to external customers | $ - | $ 4,245,404 | $ 1,660,544 | $ 351,645 | $ 6,257,593 | |
Segment loss | (21,986,526) | (1,966,613) | (3,179,151) | (5,312) | (27,137,602) | |
Interest expense, net | 5,583,932 | - | - | - | 5,583,932 | |
Segment assets | 600,892 | 7,416,759 | 2,291,121 | - | 10,308,772 | |
Fixed assets and leased equipment purchases | 243,273 | - | 241,527 | 888 | 485,688 | |
Depreciation and amortization | 124,269 | 114,440 | 984,663 | 9,362 | 1,232,734 | |
Fiscal year ended September 30, 2012 | ||||||
Sales to external customers | $ - | $ 706,888 | $ 352,223 | $ 467,259 | $ 1,526,370 | |
Segment loss | (11,298,372) | (532,207) | (389,187) | (145,990) | (12,365,756) | |
Interest expense, net | 858,224 | - | - | - | 858,224 | |
Segment assets | 397,557 | 1,957,779 | 3,224,579 | 296,039 | 5,875,954 | |
Fixed assets and leased equipment purchases | 93,315 | - | 257,857 | - | 351,172 | |
Depreciation and amortization | 304,841 | - | 64,348 | 16,296 | 385,485 | |
[A2] |
19_Income_Tax_Disclosure_Sched
19. Income Tax Disclosure: Schedule of Deferred Tax Assets and Liabilities (Tables) | 12 Months Ended | |||
Sep. 30, 2013 | ||||
Tables/Schedules | ' | |||
Schedule of Deferred Tax Assets and Liabilities | ' | |||
2013 | 2012 | |||
(Restated) | ||||
Net operating loss carryforwards | $ 19,892,000 | $ 11,807,000 | ||
Depreciation, amortization and reserves | 453,000 | 101,000 | ||
Stock-based compensation | 1,863,000 | 1,113,000 | ||
Accrued vacation | 2,000 | 20,000 | ||
Valuation allowance | (22,210,000) | (13,041,000) | ||
Total | $ - | $ - |
19_Income_Tax_Disclosure_Sched1
19. Income Tax Disclosure: Schedule of Components of Income Tax Expense (Benefit) (Tables) | 12 Months Ended | |||
Sep. 30, 2013 | ||||
Tables/Schedules | ' | |||
Schedule of Components of Income Tax Expense (Benefit) | ' | |||
2013 | 2012 | |||
(Restated) | ||||
Federal income tax benefit at statutory rate | $ 9,227,000 | $ 4,204,000 | ||
State income tax benefit, net of federal | ||||
income tax effect | 896,000 | 408,000 | ||
Non-deductible expenses | (954,000) | (804,000) | ||
Change in valuation allowance | (9,169,000) | (3,808,000) | ||
Benefit for income taxes | $ - | $ - |
20_Commitments_and_Contingenci1
20. Commitments and Contingencies: Schedule of Future Minimum Rental Payments for Operating Leases (Tables) | 12 Months Ended | |||
Sep. 30, 2013 | ||||
Tables/Schedules | ' | |||
Schedule of Future Minimum Rental Payments for Operating Leases | ' | |||
Years Ending September 30, | ||||
2014 | $ 277,603 | |||
2015 | 308,330 | |||
2016 | 317,580 | |||
2017 | 327,107 | |||
2018 | 280,077 | |||
$ 1,510,697 |
Recovered_Sheet11
3. Summary of Significant Accounting Policies: Discontinued Operations, Policy (Details) (USD $) | 1 Months Ended | 12 Months Ended | |
Jun. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2012 | |
Details | ' | ' | ' |
Proceeds from Sales of Business, Affiliate and Productive Assets | $184,318 | ' | ' |
Loss from discontinued operations | ' | $5,312 | $145,990 |
Recovered_Sheet12
3. Summary of Significant Accounting Policies: Accounts Receivable (Details) (USD $) | Sep. 30, 2013 | Sep. 30, 2012 |
Details | ' | ' |
Allowance for Doubtful Accounts Receivable | $76,544 | $20,195 |
Recovered_Sheet13
3. Summary of Significant Accounting Policies: Inventory: Schedule of Utility Inventory (Details) (USD $) | Sep. 30, 2013 | Sep. 30, 2012 |
Inventory | $4,677,526 | $290,768 |
Chronic Illness Monitoring | ' | ' |
Inventory, Finished Goods, Gross | 1,249,220 | 185,884 |
Inventory finished goods held by distributors | 3,428,306 | ' |
CareServices | ' | ' |
ActiveHome | ' | 56,767 |
Reagents | ' | ' |
Inventory, Finished Goods, Gross | ' | 6,161 |
Inventory, Raw Materials, Gross | ' | 36,211 |
Inventory, Finished Goods and Work in Process, Gross | ' | $5,745 |
Recovered_Sheet14
3. Summary of Significant Accounting Policies: Research and Development Costs (Details) (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Details | ' | ' |
Research and development | $832,271 | $187,230 |
Recovered_Sheet15
3. Summary of Significant Accounting Policies: Advertising Costs (Details) (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Details | ' | ' |
Advertising Expense | $59,330 | $176,300 |
Recovered_Sheet16
3. Summary of Significant Accounting Policies: Net Loss Per Common Share (Details) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Details | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 13,127,396 | 8,202,219 |
Recovered_Sheet17
3. Summary of Significant Accounting Policies: Net Loss Per Common Share: Schedule of common stock equivalents (Details) | Sep. 30, 2013 | Sep. 30, 2012 |
Details | ' | ' |
Common stock options and warrants | 3,598,554 | 2,386,587 |
Series C convertible preferred stock | 480,000 | 480,000 |
Series D convertible preferred stock | 4,691,090 | 1,830,515 |
Series E convertible preferred stock | 601,585 | ' |
Convertible debt - Shares | 3,738,917 | 3,444,217 |
Restricted shares of common stock | 17,250 | 60,900 |
Total common stock equivalents | 13,127,396 | 8,202,219 |
4_Discontinued_Operations_Sche1
4. Discontinued Operations: Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures (Details) (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Gross profit (deficit) | $257,711 | ($214,199) |
Selling, general and administrative (including $2,159,828 and $3,927,214, respectively, of stock-based compensation) | 11,039,645 | 8,855,724 |
Loss from discontinued operations | -5,312 | -145,990 |
Segment, Discontinued Operations | ' | ' |
Revenues | 351,645 | 467,259 |
Cost of Revenue | -300,396 | -392,049 |
Gross profit (deficit) | 51,249 | 75,210 |
Selling, general and administrative (including $2,159,828 and $3,927,214, respectively, of stock-based compensation) | -111,657 | -221,200 |
Discontinued Operation, Amount of Other Income (Loss) from Disposition of Discontinued Operation, Net of Tax | -60,408 | -145,990 |
Gain (Loss) on Disposition of Other Assets | 55,096 | ' |
Loss from discontinued operations | ($5,312) | ($145,990) |
5_Acquisitions_Details
5. Acquisitions (Details) (USD $) | Sep. 30, 2013 | Mar. 31, 2012 | Sep. 30, 2013 | Mar. 08, 2012 | Sep. 01, 2012 |
4G Biometrics, LLC | 4G Biometrics, LLC | 4G Biometrics, LLC | GWire | ||
Business Acquisition, Cost of Acquired Entity, Cash Paid | ' | ' | ' | $350,000 | ' |
Business Acquisition, Cost of Acquired Entity, Liabilities Incurred | ' | ' | ' | 50,000 | ' |
Business Acquisition Equity Interests Issued Or Issuable Number Of Series D Convertible Shares Issued | ' | ' | ' | 160,000 | 20,000 |
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares | ' | 433,333 | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price | $1.50 | ' | ' | $1 | ' |
Vested Common Stock Options | ' | ' | 260,000 | ' | ' |
Business Acquisition, Cost of Acquired Entity, Purchase Price | ' | ' | ' | 1,040,000 | 2,276,737 |
Business Acquisition, Purchase Price Allocation, Goodwill Amount | ' | ' | ' | 825,894 | ' |
Business Acquisition, Purchase Price Allocation, Other Assets | ' | ' | ' | 214,106 | 2,155,776 |
Business Acquisition, Cost of Acquired Entity, Other Noncash Consideration | ' | ' | ' | ' | 2,236,737 |
Business Acquisition Equity Interests Issued Or Issuable Number Of Series D Convertible Shares Issued Value | ' | ' | ' | ' | 40,000 |
Business Acquisition, Purchase Price Allocation, Current Assets, Cash and Cash Equivalents | ' | ' | ' | ' | 12,215 |
Business Acquisition, Purchase Price Allocation, Current Assets, Receivables | ' | ' | ' | ' | 13,976 |
Business Acquisition, Purchase Price Allocation, Property, Plant and Equipment | ' | ' | ' | ' | 92,022 |
Business Acquisition, Purchase Price Allocation, Current Assets | ' | ' | ' | ' | 16,964 |
Business Acquisition, Purchase Price Allocation, Equipment | ' | ' | ' | ' | 229,249 |
Business Acquisition, Purchase Price Allocation, Current Liabilities, Accounts Payable | ' | ' | ' | ' | 154,206 |
Business Acquisition, Purchase Price Allocation, Current Liabilities, Accrued Liabilities | ' | ' | ' | ' | 55,117 |
Business Acquisition, Purchase Price Allocation, Current Liabilities, Deferred Revenue | ' | ' | ' | ' | $34,142 |
6_Property_Plant_and_Equipment2
6. Property, Plant and Equipment Disclosure: Schedule of Property and Equipment (Details) (USD $) | Sep. 30, 2013 | Sep. 30, 2012 |
Property and equipment, net | $296,730 | $266,078 |
Property, Plant and Equipment, Gross | 520,702 | 891,479 |
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | -223,972 | -625,401 |
Equipment | ' | ' |
Property and equipment, net | 255,339 | 374,229 |
Leaseholds and Leasehold Improvements | ' | ' |
Property and equipment, net | 145,147 | 402,016 |
Computer Software, Intangible Asset | ' | ' |
Property and equipment, net | 87,361 | 65,111 |
Furniture and Fixtures | ' | ' |
Property and equipment, net | $32,855 | $50,123 |
6_Property_Plant_and_Equipment3
6. Property, Plant and Equipment Disclosure (Details) (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Details | ' | ' |
Loss on disposal of property and equipment | $200,149 | $0 |
Disposal Group, Including Discontinued Operation, Assets | 25,832 | ' |
Depreciation, Amortization and Accretion, Net | $97,068 | $64,632 |
7_Patent_License_Agreement_Det
7. Patent License Agreement (Details) (USD $) | 12 Months Ended | 60 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2018 | |
Details | ' | ' | ' |
Common stock shares issued in purchase of patents | ' | 600,000 | ' |
Series C stock shares issued in purchase of patents | ' | 480,000 | ' |
Independent valuation of patents | ' | $922,378 | ' |
Value of the Common Stock issued | ' | 240,000 | ' |
Value of the Series C Preferred Stock issued | ' | 682,378 | ' |
Amortization of Intangible Assets | $126,870 | $147,277 | $566,920 |
7_Patent_License_Agreement_Sch1
7. Patent License Agreement: Schedule of Expected Amortization Expense (Details) (USD $) | 12 Months Ended | 60 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2018 | |
Details | ' | ' | ' |
Finite-Lived Intangible Assets, Amortization Expense, Next Twelve Months | $126,870 | ' | ' |
Finite-Lived Intangible Assets, Amortization Expense, Year Two | 126,870 | ' | ' |
Finite-Lived Intangible Assets, Amortization Expense, Year Three | 126,870 | ' | ' |
Finite-Lived Intangible Assets, Amortization Expense, Year Five | 59,440 | ' | ' |
Amortization of Intangible Assets | $126,870 | $147,277 | $566,920 |
8_Customer_Contracts_Details
8. Customer Contracts (Details) (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Details | ' | ' |
Customer contracts acquired | ' | $2,369,882 |
Amortization | $833,032 | $102,329 |
8_Customer_Contracts_Schedule_1
8. Customer Contracts: Schedule of Future Customer Contract Amortization (Details) (USD $) | 12 Months Ended |
Sep. 30, 2013 | |
Details | ' |
Future customer contract amortization year 1 | $775,812 |
Future customer contract amortization year 2 | 658,709 |
Future customer contract amortization | $1,434,521 |
9_Equipment_Leased_to_Customer2
9. Equipment Leased to Customers: Schedule of leased equipment (Details) (USD $) | Sep. 30, 2013 | Sep. 30, 2012 |
Details | ' | ' |
Property Subject to or Available for Operating Lease, Gross | $389,492 | $457,898 |
Property Subject to or Available for Operating Lease, Accumulated Depreciation | -115,862 | -144,905 |
Equipment leased to customers, net | $273,630 | $312,993 |
9_Equipment_Leased_to_Customer3
9. Equipment Leased to Customers (Details) (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Details | ' | ' |
Property Subject To Or Available For Operating Lease Depreciation Expense | $175,049 | $70,531 |
Disposal Group, Not Discontinued Operation, Gain (Loss) on Disposal | $75,124 | ' |
10_Notes_Payable_Schedule_of_D1
10. Notes Payable: Schedule of Debt (Details) (USD $) | Sep. 30, 2013 | Sep. 30, 2012 |
Gross notes payable before discount | $2,863,166 | $4,561,737 |
Discount on notes payable | -528,663 | -187,587 |
Notes payable current and noncurrent | 2,334,503 | 4,374,150 |
Notes payable current portion | -1,278,585 | -2,569,221 |
Notes payable, net of current portion | 1,055,918 | 1,804,929 |
Note 1 | ' | ' |
Gross notes payable before discount | 1,766,971 | 2,236,737 |
Note 2 | ' | ' |
Gross notes payable before discount | 550,000 | ' |
Note 3 | ' | ' |
Gross notes payable before discount | 250,000 | 250,000 |
Note 4 | ' | ' |
Gross notes payable before discount | 185,476 | ' |
Note 5 | ' | ' |
Gross notes payable before discount | 85,719 | 300,000 |
Note 6 | ' | ' |
Gross notes payable before discount | 25,000 | 275,000 |
Note 7 | ' | ' |
Gross notes payable before discount | ' | $1,500,000 |
10_Notes_Payable_Schedule_of_p1
10. Notes Payable: Schedule of principal payments on notes payable (Details) (USD $) | 12 Months Ended |
Sep. 30, 2013 | |
Details | ' |
Notes payable principal payments in 2014 | $1,768,820 |
Notes payable principal payments in 2015 | 854,522 |
Notes payable principal payments in 2016 | 239,824 |
Notes payable principal payments | $2,863,166 |
11_Relatedparty_Notes_Payable_1
11. Related-party Notes Payable: Schedule of related party notes payable (Details) (USD $) | Sep. 30, 2013 | Sep. 30, 2012 |
Gross notes payable related party before discount | $1,896,135 | $1,957,161 |
Discount on notes payable related party | -3,720 | -223,381 |
Notes payable related party current and noncurrent | 1,892,415 | 1,733,780 |
Notes payable related party current portion | -1,892,415 | -1,563,923 |
Notes payable, related-party, net of current portion | 0 | 169,857 |
Note 1 | ' | ' |
Gross notes payable related party before discount | 600,000 | ' |
Note 2 | ' | ' |
Gross notes payable related party before discount | 300,000 | ' |
Note 3 | ' | ' |
Gross notes payable related party before discount | 300,000 | ' |
Note 4 | ' | ' |
Gross notes payable related party before discount | 200,000 | ' |
Note 5 | ' | ' |
Gross notes payable related party before discount | 175,000 | ' |
Note 6 | ' | ' |
Gross notes payable related party before discount | 150,000 | ' |
Note 7 | ' | ' |
Gross notes payable related party before discount | 82,500 | 543,278 |
Note 8 | ' | ' |
Gross notes payable related party before discount | 33,000 | 33,000 |
Note 9 | ' | ' |
Gross notes payable related party before discount | 26,721 | ' |
Note 10 | ' | ' |
Gross notes payable related party before discount | 13,644 | ' |
Note 11 | ' | ' |
Gross notes payable related party before discount | 10,000 | ' |
Note 12 | ' | ' |
Gross notes payable related party before discount | 5,270 | ' |
Note 13 | ' | ' |
Gross notes payable related party before discount | ' | 620,687 |
Note 14 | ' | ' |
Gross notes payable related party before discount | ' | 300,000 |
Note 15 | ' | ' |
Gross notes payable related party before discount | ' | 244,196 |
Note 16 | ' | ' |
Gross notes payable related party before discount | ' | 82,500 |
Note 17 | ' | ' |
Gross notes payable related party before discount | ' | 82,500 |
Note 18 | ' | ' |
Gross notes payable related party before discount | ' | $51,000 |
12_Loss_On_Induced_Conversion_1
12. Loss On Induced Conversion of Debt and Sale of Common Stock (Details) (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Details | ' | ' |
Debt and accrued interest converted to shares of common stock | $10,004,000 | ' |
Loss on induced conversion of debt and sale of common stock | ($9,355,587) | $0 |
14_Derivative_Liabilities_Deta
14. Derivative Liabilities (Details) (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Details | ' | ' |
Derivatives liability | $795,151 | $4,015,855 |
Loss on derivatives liability | $333,406 | $2,104,389 |
15_Preferred_Stock_Details
15. Preferred Stock (Details) (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Series C stock shares issued in purchase of patents | ' | 480,000 |
Dividends payable | $3,471 | $18,322 |
Series D preferred shares converted | 50,000 | ' |
Shares issued from conversion of Series D preferred stock | 250,000 | ' |
Accrued Dividends on Series D preferred stock | 232,834 | ' |
Series D Preferred Stock issued to settle accrued dividends | 5,025 | ' |
Shares issued to settle accrued dividends | 143,465 | ' |
Debenture loans and accrued interest converted into shares of Series E preferred stock | 614,765 | ' |
Debenture loans and accrued interest converted into shares of Series E preferred stock - shares | 61,723 | ' |
Dividends paid to Series E Shareholders | 17,271 | ' |
Redemption Price of Series E preferred stock | 601,585 | ' |
LoanOriginationFeesMember | ' | ' |
Shares Series D Preferred Stock Issued | 103,843 | ' |
Loan origination fees | 817,482 | ' |
FutureAdvisoryServicesMember | ' | ' |
Shares Series D Preferred Stock Issued | 71,800 | ' |
Shares Series D Preferred Stock Issued Value | 230,800 | ' |
FutureConsultingServicesMember | ' | ' |
Shares Series D Preferred Stock Issued | 20,000 | ' |
Shares Series D Preferred Stock Issued Value | 60,000 | ' |
AccruedBoardOfDirectorFeesAndCompensationMember | ' | ' |
Shares Series D Preferred Stock Issued | 52,913 | ' |
Shares Series D Preferred Stock Issued Value | 61,652 | ' |
BonusToAnOfficerMember | ' | ' |
Shares Series D Preferred Stock Issued | 46,300 | ' |
Shares Series D Preferred Stock Issued Value | 234,700 | ' |
DividendsOnSeriesCPreferredStockMember | ' | ' |
Shares Series D Preferred Stock Issued | 9,062 | ' |
Shares Series D Preferred Stock Issued Value | 53,992 | ' |
DividendsOnSeriesDPreferredStockMember | ' | ' |
Shares Series D Preferred Stock Issued | 5,025 | ' |
Shares Series D Preferred Stock Issued Value | 31,689 | ' |
PastConsultingServicesMember | ' | ' |
Shares Series D Preferred Stock Issued | 126,117 | ' |
Shares Series D Preferred Stock Issued Value | 564,280 | ' |
BonusForConsultingServicesMember | ' | ' |
Shares Series D Preferred Stock Issued | 85,000 | ' |
Shares Series D Preferred Stock Issued Value | 455,000 | ' |
BonusToCeoMember | ' | ' |
Shares Series D Preferred Stock Issued | 80,000 | ' |
Shares Series D Preferred Stock Issued Value | 320,000 | ' |
Services Member | ' | ' |
Shares Series D Preferred Stock Issued | 2,055 | ' |
Shares Series D Preferred Stock Issued Value | 14,899 | ' |
Series C Preferred Stock | ' | ' |
Dividends payable | $53,992 | $35,763 |
16_Common_Stock_Details
16. Common Stock (Details) (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
ServiceCompensationMember | ' | ' |
Common Shares Issued | 327,382 | ' |
Common Shares Issued Value | $458,929 | ' |
CompensationForNewEmployeesMember | ' | ' |
Common Shares Issued | 220,000 | ' |
Common Shares Issued Value | 318,000 | ' |
EmployeeBonusesMember | ' | ' |
Common Shares Issued | 27,650 | ' |
Common Shares Issued Value | 39,825 | ' |
OptionExercisesFromEmployeeBonusesMember | ' | ' |
Common Shares Issued | 350,000 | ' |
Common Shares Issued Value | 350,000 | ' |
EmploymentContractExtensionMember | ' | ' |
Common Shares Issued | 150,000 | ' |
Common Shares Issued Value | 187,500 | ' |
MedicalAdvisoryBoardMembersMember | ' | ' |
Common Shares Issued | 25,000 | ' |
Common Shares Issued Value | 31,750 | ' |
BoardMemberMember | ' | ' |
Common Shares Issued | 25,000 | ' |
Common Shares Issued Value | 31,750 | ' |
LoanOriginationFeesMember | ' | ' |
Common Shares Issued | 141,987 | 100,000 |
Common Shares Issued Value | 387,849 | 70,000 |
ExtentionOfRelatedPartyPayablesMember | ' | ' |
Common Shares Issued | 4,758 | ' |
Common Shares Issued Value | 7,137 | ' |
ExtentionOfUnrelatedPartyPayablesMember | ' | ' |
Common Shares Issued | 40,000 | ' |
Common Shares Issued Value | 61,500 | ' |
ConversionOfDebtMember | ' | ' |
Common Shares Issued | 13,439,190 | ' |
Common Shares Issued Value | 18,467,123 | ' |
IssuanceOfNewDebtMember | ' | ' |
Common Shares Issued | 2,600 | ' |
Common Shares Issued Value | 3,900 | ' |
New debt to related party | 26,000 | ' |
SettleAccruedLiabilityMember | ' | ' |
Common Shares Issued | 166,200 | 60,000 |
Common Shares Issued Value | 225,300 | ' |
Accrued Liability Settled | 126,200 | 312,000 |
ConversionOfSeriesDPreferredStockMember | ' | ' |
Common Shares Issued | 250,000 | ' |
ExerciseOfOptionsMember | ' | ' |
Common Shares Issued | 425,000 | ' |
DividendsAccruedSeriesCAndDPreferredStockMember | ' | ' |
Common Shares Issued | 200,625 | ' |
Common Shares Issued Value | 232,765 | ' |
Cash | ' | ' |
Common Shares Issued | 1,313,334 | ' |
Common Shares Issued Value | 1,842,334 | ' |
Shares Issued For Cash | 985,000 | ' |
SharesToEmployeesMember | ' | ' |
Common Shares Issued | 29,600 | ' |
PatentLicenseAgreementMember | ' | ' |
Common Shares Issued | ' | 60,000 |
Common Shares Issued Value | ' | 240,000 |
ConsultingServicesMember | ' | ' |
Common Shares Issued | ' | 129,161 |
Common Shares Issued Value | ' | 218,906 |
SettlementAgreementMember | ' | ' |
Common Shares Issued | ' | 200,000 |
ShortTermNotesPayableMember | ' | ' |
Common Shares Issued | ' | 231,000 |
Common Shares Issued Value | ' | $92,400 |
17_Stock_Options_and_Warrants_2
17. Stock Options and Warrants: Schedule of fair value assumptions (Details) (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Minimum | ' | ' |
Fair Value Assumptions, Exercise Price | $0.75 | $0.40 |
Fair Value Assumptions, Expected Term | '1 year 6 months | ' |
Fair Value Assumptions, Expected Volatility Rate | 219.00% | 131.00% |
Fair Value Assumptions, Risk Free Interest Rate | 0.23% | 0.39% |
Maximum | ' | ' |
Fair Value Assumptions, Exercise Price | $10 | $0.44 |
Fair Value Assumptions, Expected Term | '2 years 6 months | '2 years 6 months |
Fair Value Assumptions, Expected Volatility Rate | 298.00% | 135.00% |
Fair Value Assumptions, Risk Free Interest Rate | 0.88% | 0.44% |
17_Stock_Options_and_Warrants_3
17. Stock Options and Warrants (Details) (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Interest expense, net | $5,583,932 | $858,224 |
Aggregate Intrinsic Value | 434,890 | ' |
Weighted average remaining term of the warrants | 3.13 | ' |
Warrant 1 | ' | ' |
Warrants | 1,300,000 | ' |
Exercise price | $1 | ' |
Additional compensation expense | 846,898 | ' |
Warrant 2 | ' | ' |
Warrants | 1,000,000 | ' |
Exercise price | $1 | ' |
Additional compensation expense | 660,140 | ' |
Warrant 3 | ' | ' |
Warrants | 425,000 | ' |
Exercise price | $1 | ' |
Warrant 4 | ' | ' |
Warrants | 25,300 | ' |
Exercise price | $1 | ' |
Additional compensation expense | 32,572 | ' |
Warrant 5 | ' | ' |
Warrants | 100,000 | ' |
Exercise price | $1.65 | ' |
Additional compensation expense | 12,689 | ' |
Warrant 6 | ' | ' |
Warrants | 100,000 | ' |
Exercise price | $1 | ' |
Interest expense, net | 103,495 | ' |
Warrant 7 | ' | ' |
Warrants | 100,000 | ' |
Exercise price | $1 | ' |
Consulting Expense | 134,785 | ' |
Warrant 8 | ' | ' |
Warrants | 36,667 | ' |
Exercise price | $0.75 | ' |
Interest expense, net | $8,317 | ' |
17_Stock_Options_and_Warrants_4
17. Stock Options and Warrants: Schedule of Share-based Compensation, Activity (Details) (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2013 | |
Details | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Beginning Balance | 2,386,587 | 3,598,554 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Beginning Balance | $1.47 | $1.33 |
Share-based compensation arrangement by share-based payment award, Options, Grants in period | 2,086,967 | ' |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $1.04 | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | -875,000 | ' |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price | $1 | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number | ' | 2,271,887 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price | ' | $1.50 |
18_Segment_Information_Schedul1
18. Segment Information: Schedule of Segment Reporting Information, by Segment (Details) (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Total revenues | $5,905,948 | $1,059,111 |
Net loss | -27,137,602 | -12,365,756 |
Interest expense, net | 5,583,932 | 858,224 |
Total assets | 10,308,772 | 5,875,954 |
Corporate | ' | ' |
Net loss | -11,298,372 | -21,986,526 |
Interest expense, net | 858,224 | 5,583,932 |
Total assets | 397,557 | 600,892 |
Fixed assets and leased equipment purchases | 93,315 | 243,273 |
Depreciation, Depletion and Amortization, Nonproduction | 304,841 | 124,269 |
Chronic Illness Monitoring | ' | ' |
Total revenues | 706,888 | 4,245,404 |
Net loss | -532,207 | -1,966,613 |
Total assets | 1,957,779 | 7,416,759 |
Depreciation, Depletion and Amortization, Nonproduction | ' | 114,440 |
CareServices | ' | ' |
Total revenues | 352,223 | 1,660,544 |
Net loss | -389,187 | -3,179,151 |
Total assets | 3,224,579 | 2,291,121 |
Fixed assets and leased equipment purchases | 257,857 | 241,527 |
Depreciation, Depletion and Amortization, Nonproduction | 64,348 | 984,663 |
Reagents | ' | ' |
Total revenues | 467,259 | 351,645 |
Net loss | -145,990 | -5,312 |
Total assets | 296,039 | ' |
Fixed assets and leased equipment purchases | ' | 888 |
Depreciation, Depletion and Amortization, Nonproduction | 16,296 | 9,362 |
Total | ' | ' |
Total revenues | 1,526,370 | 6,257,593 |
Net loss | -12,365,756 | -27,137,602 |
Interest expense, net | 858,224 | 5,583,932 |
Total assets | 5,875,954 | 10,308,772 |
Fixed assets and leased equipment purchases | 351,172 | 485,688 |
Depreciation, Depletion and Amortization, Nonproduction | $385,485 | $1,232,734 |
19_Income_Tax_Disclosure_Sched2
19. Income Tax Disclosure: Schedule of Deferred Tax Assets and Liabilities (Details) (USD $) | Sep. 30, 2013 | Sep. 30, 2012 |
Details | ' | ' |
Deferred Tax Assets, Operating Loss Carryforwards | $19,892,000 | $11,807,000 |
Deferred Tax Assets, Tax Deferred Expense, Reserves and Accruals | 453,000 | 101,000 |
Deferred Tax Assets, Tax Deferred Expense, Compensation and Benefits | 1,863,000 | 1,113,000 |
Deferred Tax Assets, Tax Deferred Expense, Other | 2,000 | 20,000 |
Deferred Tax Assets, Valuation Allowance | ($22,210,000) | ($13,041,000) |
19_Income_Tax_Disclosure_Sched3
19. Income Tax Disclosure: Schedule of Components of Income Tax Expense (Benefit) (Details) (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Details | ' | ' |
Current Federal Tax Expense (Benefit) | $9,227,000 | $4,204,000 |
Current State and Local Tax Expense (Benefit) | 896,000 | 408,000 |
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Amount | -954,000 | -804,000 |
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Amount | ($9,169,000) | ($3,808,000) |
20_Commitments_and_Contingenci2
20. Commitments and Contingencies: Schedule of Future Minimum Rental Payments for Operating Leases (Details) (USD $) | Sep. 30, 2013 |
Details | ' |
Operating Leases, Future Minimum Payments Due, Next Twelve Months | $277,603 |
Operating Leases, Future Minimum Payments, Due in Two Years | 308,330 |
Operating Leases, Future Minimum Payments, Due in Three Years | 317,580 |
Operating Leases, Future Minimum Payments, Due in Four Years | 327,107 |
Operating Leases, Future Minimum Payments, Due in Five Years | 280,077 |
Operating Leases, Future Minimum Payments Due | $1,510,697 |
20_Commitments_and_Contingenci3
20. Commitments and Contingencies (Details) (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Details | ' | ' |
Operating Leases, Rent Expense, Net | $268,000 | $204,000 |
21_Subsequent_Events_Details
21. Subsequent Events (Details) (USD $) | 3 Months Ended |
Dec. 31, 2013 | |
Event 1 | ' |
Shares issued for conversion of Series A debenture | 8,347 |
Principal and interest balance | $83,473 |
Event 2 | ' |
Shares issued for conversion of Note Payable | 441,735 |
Principal and interest balance | 331,301 |
Event 3 | ' |
Preferred Stock Designated As Series F Variable Rate Convertible Preferred Stock | 7,803 |
Proceeds From Sale of Series F Preferred Stock | 2,835,771 |
Warrants Issued | 3,495,000 |
Event 4 | ' |
Shares issued for conversion of Note Payable | 857 |
Principal and interest balance | 573,868 |
Event 5 | ' |
Shares issued for conversion of Note Payable | 1,883,675 |
Principal and interest balance | 1,126,026 |
Warrants Issued | 410,348 |
Event 6 | ' |
Shares issued for conversion of Note Payable | 1,100,110 |
Principal and interest balance | 659,474 |
Warrants Issued | 239,652 |
Event 7 | ' |
Shares issued for conversion of Note Payable | 213,334 |
Principal and interest balance | 160,000 |
Event 8 | ' |
Series C Preferred Stock Convertible | 480,000 |
Preferred Stock Converted To Common Stock | 672,000 |
Event 9 | ' |
Series D Preferred Stock Convertible | 893,218 |
Preferred Stock Converted To Common Stock | 6,252,526 |
Event 10 | ' |
Shares issued for conversion of Note Payable | 66,667 |
Principal and interest balance | $50,000 |