Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Sep. 30, 2015 | Jan. 07, 2016 | Mar. 31, 2015 | |
Document and Entity Information: | |||
Entity Registrant Name | ACTIVECARE, INC. | ||
Document Type | 10-K | ||
Document Period End Date | Sep. 30, 2015 | ||
Trading Symbol | acar | ||
Amendment Flag | false | ||
Entity Central Index Key | 1,429,896 | ||
Current Fiscal Year End Date | --09-30 | ||
Entity Common Stock, Shares Outstanding | 79,486,873 | ||
Entity Public Float | $ 23,315,602 | ||
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 | 2,015 | ||
Document Fiscal Period Focus | FY |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2015 | Sep. 30, 2014 |
Current assets: | ||
Cash | $ 172,436 | $ 197,027 |
Accounts receivable, net | 936,866 | 1,635,660 |
Inventory | 742,471 | 1,649,320 |
Prepaid expenses and other | 523,561 | 141,087 |
Assets of discontinued operations | 0 | 712,403 |
Total current assets | 2,375,334 | 4,335,497 |
Goodwill | 0 | 825,894 |
Property and equipment, net | 135,770 | 220,076 |
Deposits and other assets | 17,846 | 29,594 |
Domain name, net | 10,010 | 10,724 |
Total assets | 2,538,960 | 5,421,785 |
Current liabilities: | ||
Accounts payable | 4,493,211 | 4,549,451 |
Accounts payable, related party | 162,797 | 1,109,775 |
Accrued expenses | 743,967 | 1,451,331 |
Current portion of notes payable | 1,259,916 | 1,212,937 |
Current portion of notes payable, related party | 492,495 | 1,669,620 |
Dividends payable | 567,350 | 246,738 |
Derivatives liability | 79,347 | 106,444 |
Total current liabilities | 7,799,083 | 10,346,296 |
Notes payable, related party, net of current portion | 3,348,251 | 0 |
Notes payable, net of current portion | 0 | 219,048 |
Total liabilities | 11,147,334 | 10,565,344 |
Stockholders' deficit: | ||
Preferred stock, $.00001 par value: 10,000,000 shares authorized;45,000 shares of Series D; 70,070shares of Series E; and 5,361shares of Series F outstanding | 1 | 1 |
Common stock, $.00001 par value: 200,000,000 shares authorized;78,113,971 and 45,815,351 shares outstanding, respectively | 781 | 458 |
Additional paid-in capital, common and preferred | 83,231,002 | 73,183,429 |
Accumulated deficit | (91,840,158) | (78,327,447) |
Total stockholders' deficit | (8,608,374) | (5,143,559) |
Total liabilities and stockholders' deficit | $ 2,538,960 | $ 5,421,785 |
Consolidated Balance Sheets Par
Consolidated Balance Sheets Parenthetical - $ / shares | Sep. 30, 2015 | Sep. 30, 2014 |
Consolidated Balance Sheets Parenthetical | ||
Preferred stock par value | $ 0.00001 | $ 0.00001 |
Preferred stock shares authorized | 10,000,000 | 10,000,000 |
Preferred stock shares outstanding | 120,431 | 120,431 |
Common stock par value | $ 0.00001 | $ 0.00001 |
Common stock shares authorized | 200,000,000 | 200,000,000 |
Common stock shares outstanding | 78,113,971 | 45,815,351 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Consolidated Statements of Operations | ||
Chronic Illness Monitoring Revenue | $ 6,597,981 | $ 6,107,941 |
Chronic Illness Monitoring Cost of Revenue | 5,196,827 | 6,437,943 |
Gross profit (loss) | 1,401,154 | (330,002) |
Operating expenses: | ||
Selling, general and administrative (including $5,762,755, and $3,585,379, respectively, of stock-based compensation) | 10,358,410 | 9,800,374 |
Research and development | 106,526 | 215,074 |
Total operating expenses | 10,464,936 | 10,015,448 |
Loss from operations | (9,063,782) | (10,345,450) |
Other income (expense): | ||
Gain on liability settlements | 260,830 | 0 |
Gain on derivatives liability | 128,942 | 373,293 |
Gain on lease termination | 91,692 | 0 |
Other income | 14,129 | 55,368 |
Loss on induced conversion of debt | 0 | (114,098) |
Loss on disposal of property and equipment | (42,336) | (42,094) |
Impairment of goodwill | (825,894) | 0 |
Loss on extinguishment of debt | (927,784) | 0 |
Interest expense, net | (977,234) | (1,936,039) |
Total other expense | (2,277,655) | (1,663,570) |
Loss from continuing operations | (11,341,437) | (12,009,020) |
Loss from discontinued operations | (186,232) | (1,452,567) |
Net loss | (11,527,669) | (13,461,587) |
Dividends on preferred stock | (994,983) | (737,138) |
Deemed dividends on conversion of accrued dividends to common stock | (301,097) | 0 |
Deemed dividends on conversion of preferred stock to common stock | 0 | (2,234,924) |
Net loss attributable to common stockholders | $ (12,823,749) | $ (16,433,649) |
Net loss per common share - basic and diluted | ||
Continuing operations | $ (0.25) | $ (0.43) |
Discontinued operations | 0 | (0.04) |
Net loss per common share | $ (0.25) | $ (0.47) |
Weighted average common shares outstanding - basic and diluted | 51,444,000 | 35,010,000 |
Consolidated Statements of Ope5
Consolidated Statements of Operations Parenthetical - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Consolidated Statements of Operations Parenthetical | ||
Compensation expense paid in stock or amortization of stock options and warrants | $ 5,762,755 | $ 3,585,379 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Deficit - USD ($) | Series C Preferred Stock | Series D Preferred Stock | Series E Preferred Stock | Series F Preferred Stock | Common stock | Additional Paid-in Capital | Accumulated Deficit | Total |
Balance at Sep. 30, 2013 | $ 5 | $ 9 | $ 1 | $ 218 | $ 62,519,544 | $ (64,817,684) | $ (2,297,907) | |
Balance - shares at Sep. 30, 2013 | 480,000 | 938,218 | 61,723 | 21,775,303 | ||||
Issuance of common stock for services | $ 109 | 749,896 | 750,005 | |||||
Issuance of common stock for services - shares | 10,896,970 | |||||||
Issuance of common stock for finance fees | $ 3 | 41,888 | 41,891 | |||||
Issuance of common stock for finance fees - shares | 349,822 | |||||||
Issuance of common stock for loan origination fee | $ 1 | 163,069 | 163,070 | |||||
Issuance of common stock for loan origination fee - shares | 161,738 | |||||||
Issuance of common stock for debt conversion | $ 37 | 2,447,889 | 2,447,926 | |||||
Issuance of common stock for debt conversion - shares | 3,712,549 | |||||||
Issuance of common stock for option exercises | $ 17 | 541,222 | 541,239 | |||||
Issuance of common stock for option exercises - shares | 1,723,100 | |||||||
Issuance of common stock for dividends and related interest | $ 3 | 148,241 | 148,244 | |||||
Issuance of common stock for dividends and related interest - shares | 271,343 | |||||||
Conversion of Series C preferred stock | $ (5) | $ 7 | (2) | |||||
Conversion of Series C preferred stock - shares | (480,000) | 672,000 | ||||||
Conversion of Series D preferred stock | $ (9) | $ 63 | (54) | |||||
Conversion of Series D preferred stock - shares | (893,218) | 6,252,526 | ||||||
Issuance of Series E preferred stock for debt conversions | 83,473 | 83,473 | ||||||
Issuance of Series E preferred stock for debt conversions - shares | 8,347 | |||||||
Issuance of Series F preferred stock for debt conversions | 574,592 | 574,592 | ||||||
Issuance of Series F preferred stock for debt conversions - shares | 858 | |||||||
Issuance of Series F preferred stock for cash, net | 2,175,002 | 1,405,769 | 3,580,771 | |||||
Issuance of Series F preferred stock for cash, net - shares | 4,503 | |||||||
Stock based compensation | 2,051,758 | 2,051,758 | ||||||
Issuance of options for Debt conversions | 590,887 | 590,887 | ||||||
Issuance of options for services | 263,117 | 263,117 | ||||||
Beneficial conversion features on debt | 116,100 | 116,100 | ||||||
Amortization of Series F preferred stock as dividends | 716,807 | (716,807) | ||||||
Net loss | (13,461,587) | (13,461,587) | ||||||
Dividends on preferred stock | (737,138) | (737,138) | ||||||
Balance at Sep. 30, 2014 | $ 1 | $ 458 | 73,183,429 | (78,327,447) | (5,143,559) | |||
Balance - shares at Sep. 30, 2014 | 45,000 | 70,070 | 5,361 | 45,815,351 | ||||
Issuance of common stock for services | $ 220 | 4,088,675 | 4,088,895 | |||||
Issuance of common stock for services - shares | 22,047,659 | |||||||
Issuance of common stock for finance fees | $ 5 | 89,392 | 89,397 | |||||
Issuance of common stock for finance fees - shares | 509,976 | |||||||
Issuance of common stock for loan origination fee | $ 63 | 1,129,937 | 1,130,000 | |||||
Issuance of common stock for loan origination fee - shares | 6,250,000 | |||||||
Issuance of common stock for dividends and related interest | $ 35 | 975,433 | (301,097) | 674,371 | ||||
Issuance of common stock for dividends and related interest - shares | 3,490,985 | |||||||
Stock based compensation | 3,032,304 | 3,032,304 | ||||||
Issuance of options for services | 42,870 | 42,870 | ||||||
Amortization of Series F preferred stock as dividends | 688,962 | (688,962) | ||||||
Net loss | (11,527,669) | (11,527,669) | ||||||
Dividends on preferred stock | (994,983) | (994,983) | ||||||
Balance at Sep. 30, 2015 | $ 1 | $ 781 | $ 83,231,002 | $ (91,840,158) | $ (8,608,374) | |||
Balance - shares at Sep. 30, 2015 | 45,000 | 70,070 | 5,361 | 78,113,971 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash flows from operating activities: | ||
Net loss | $ (11,527,669) | $ (13,461,587) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock-based compensation expense | 4,864,864 | 3,378,938 |
Loss on extinguishment of debt | (927,784) | 0 |
Stock and warrants issued for services | 897,891 | 206,441 |
Impairment of goodwill | (825,894) | 0 |
Stock and warrants issued for interest expense | 647,679 | 883,118 |
Depreciation and amortization | 290,700 | 1,122,862 |
Loss on disposal of property and equipment | (42,336) | (42,094) |
Gain on lease termination | 91,692 | 0 |
Gain on derivatives liability | (128,942) | (373,293) |
Gain on liability settlements | 260,830 | 0 |
Inventory reduction for obsolescence | 0 | 1,660,729 |
Amortization of debt discounts | 0 | 919,032 |
Impairment of long-lived assets | 0 | 497,792 |
Loss on induced conversion of debt and sale of common stock | 0 | 114,098 |
Changes in operating assets and liabilities: | ||
Change in accounts receivable | 698,794 | 216,668 |
Change in inventory | 906,849 | 1,367,477 |
Change in prepaid expenses and other | 20,400 | (48,494) |
Change in accounts payable | 892,170 | (1,193,106) |
Change in accrued expenses | 215,054 | 157,652 |
Change in deposits and other assets | 0 | 77,355 |
Net cash used in operating activities | (778,718) | (4,413,079) |
Cash flows from investing activities: | ||
Proceeds from sale of discontinued operations | 478,738 | 0 |
Proceeds from sale of property and equipment | 938 | 0 |
Purchases of property and equipment | (15,289) | (70,043) |
Cash used to dispose of property and equipment | 0 | (29,078) |
Net cash used in investing activities | 464,387 | (99,121) |
Cash flows from financing activities: | ||
Proceeds from issuance of notes payable, net | 1,262,490 | 680,000 |
Principal payments on notes payable | (957,750) | (1,036,809) |
Principal payments on related-party notes payable | (15,000) | (1,204,166) |
Proceeds from sale of preferred stock, net | 0 | 3,580,771 |
Proceeds from issuance of related-party notes payable, net | 0 | 2,801,166 |
Payment of dividends | 0 | (335,570) |
Net cash provided by financing activities | 289,740 | 4,485,392 |
Net decrease in cash | (24,591) | (26,808) |
Cash, beginning of the year | 197,027 | 223,835 |
Cash, end of the year | 172,436 | 197,027 |
Supplemental Cash Flow Information: | ||
Cash paid for interest | 24,883 | 219,717 |
Non-Cash Investing and Financing Activities: | ||
Conversion of related-party accounts payable and accrued liabilities to related-party notes payable | 1,839,214 | 0 |
Issuance of stock for dividends | 975,468 | 144,642 |
Dividends on preferred stock and related interest | 994,983 | 737,138 |
Issuance of common stock for prepaid consulting services | 645,000 | 0 |
Conversion of accounts payable to notes payable | 100,000 | 0 |
Issuance of stock and stock options for loan origination fees | 89,397 | 370,633 |
Conversion of related-party notes payable to common stock | 0 | 1,782,738 |
Conversion of notes payable to preferred stock | 0 | 633,254 |
Conversion of notes payable to common stock | 0 | 325,000 |
Liability to issue shares of common stock for loan origination fees | $ 0 | $ 234,793 |
1. Organization and Nature of O
1. Organization and Nature of Operations | 12 Months Ended |
Sep. 30, 2015 | |
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. dba Track Group [OTCQB: SCRA], 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 (the “Company”) provides products and services to those diagnosed with chronic illnesses, provides real-time visibility to health conditions and risk, and has a unique active approach in caring for members. Going Concern The Company continues to incur negative cash flows from operating activities and net losses. The Company had negative working capital and negative total equity as of September 30, 2015 and 2014 and is in default with respect to certain debt. 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 eliminate substantial doubt about its ability to continue as a going concern, it must achieve profitability, 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 consist of raising additional capital by issuing debt or equity securities and increasing the sales of the Company’s services and products. 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 services and may have to cease operations. |
2. Summary of Significant Accou
2. Summary of Significant Accounting Policies | 12 Months Ended |
Sep. 30, 2015 | |
Notes | |
2. Summary of Significant Accounting Policies | 2. 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 the disclosure of contingent assets and liabilities as of the balance sheet dates and the reported amounts of revenues and expenses for the reporting periods. Actual results could differ from these estimates. Discontinued Operations In December 2014, the Company sold substantially all of its customer contracts and equipment leased to customers associated with its CareServices segment to a third party. Additional equipment in stock was sold to another third party pursuant to a written invoice. The purchase price included a cash payment of $412,280 for the customer contracts and $66,458 for the equipment in stock. During fiscal years 2015 and 2014, the Company recognized a loss from discontinued operations related to CareServices of $186,232 and $1,452,567, respectively. Fair Value of Financial Instruments The Company measured the fair values of its assets and liabilities using the US GAAP hierarchy. The carrying amounts reported in the consolidated balance sheets for cash, accounts receivable, accounts payable, and accrued liabilities approximate 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. The carrying amounts reported for notes payable approximate fair value because the underlying instruments are at interest rates which approximate current market rates. 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 2015, the Company had revenues from three significant customers which represented 69% of total revenues. During fiscal year 2014, the Company had revenues from two significant customers which represented 67% of total revenues. As of September 30, 2015 and 2014 accounts receivable from significant customers represented 66% and 80% of total accounts receivable, respectively. During the fiscal years 2015 and 2014, the Company purchased substantially all of its products and supplies from one vendor. 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 $30,495 and $115,994 as of September 30, 2015 and 2014, respectively. Inventory Inventory is recorded at the lower of cost or market, cost being determined using the first-in, first-out (“FIFO”) method. Inventory is for the Chronic Illness Monitoring segment and consists of diabetic supplies. Inventory held by distributors is reported as inventory until the supplies are shipped to the end user by the distributor. The Company estimates an inventory reserve for obsolescence and excessive quantities. Due to competitive pressures and technological innovation, it is possible that estimates of net realizable values could change in the near term. Inventory consists of the following as of September 30: 2015 2014 Finished goods $ 206,038 $ 589,423 Finished goods held by distributors 1,350,368 2,720,626 Total inventory 1,556,406 3,310,049 Inventory reserve (813,935) (1,660,729) Net inventory $ 742,471 $ 1,649,320 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 operations . Goodwill Goodwill is reviewed for impairment annually or more frequently when an event occurs or circumstances change that indicate that the carrying value may not be recoverable. The annual testing date is September 30. The identification and measurement of goodwill impairment involves the estimation of the fair value of our reporting units. The estimates of fair value of reporting units are based on the best information available as of the date of the assessment, which primarily incorporate management assumptions about expected future cash flows and the Company’s market cap. Future cash flows can be affected by changes in industry or market conditions. Goodwill was impaired by $825,894 as of September 30, 2015. The impairment of goodwill was due to a potentially long-term reduction in the market capitalization of the Company subsequent to September 30, 2015. Goodwill was not impaired as of September 30, 2014. 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 two to twenty 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. No long-lived assets were impaired as of September 30, 2015. The Company impaired its CareServices customer contracts by $89,460 and patents by $408,332 as of September 30, 2014, which were recorded as part of discontinued operations related to the CareServices segment for the fiscal year ended September 30, 2014. The impairment of the customer contracts is due to their sales price being lower than the net book value as of the date of sale. The patents impaired were solely related to the CareServices segment and provide no future cash flows after the CareServices customer contracts and equipment leased to customers were sold in December 2014. Revenue Recognition For the years presented, revenues came from two sources: (1) sales of Chronic Illness Monitoring products and services; (2) sales from CareServices. The CareServices segment was sold in December 2014. Information regarding revenue recognition policies relating to these business segments is contained in the following paragraphs. Chronic Illness Monitoring Chronic Illness Monitoring revenues are recognized when persuasive evidence of an arrangement exists, delivery of the product or service to the end user has occurred, prices are fixed or determinable and collection is reasonably assured. The Company enters 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 monitors the end user’s test results in real-time with our 24x7 CareCenter. Customers who are billed separately for monitoring are obligated to pay as the service is performed and revenue is recognized ratably over the period of the contract. The term of these contracts is generally one year and, unless terminated by either party, will automatically renew for another year. Collection terms are net 30 days after claims are submitted. There is no contingent revenue in these contracts. The Company also enters 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. Sales of Chronic Illness Monitoring products and services contain multiple elements. Multiple-Element Arrangements The Company evaluates each element in a multiple-element arrangement to determine whether it represents a separate unit of accounting. In order to account for elements in a multiple-element arrangement as separate units of accounting, the deliverables must have stand-alone value upon delivery. In determining whether monitoring services have stand-alone value, the nature of our monitoring services, whether we sell supplies to new customers without monitoring services, and availability of monitoring services from the other vendors are factors that are considered. When multiple elements included in an arrangement are separable into different units of accounting, the arrangement consideration is allocated to the identified separate units of accounting based on the relative selling prices. Multiple-element arrangements accounting guidance provides a hierarchy to use when determining the relative selling price for each unit of accounting. Vendor-specific objective evidence (VSOE) of selling price, based on the price at which the item is regularly sold by the vendor on a stand-alone basis, should be used if it exists. If VSOE of selling price is not available, third-party evidence (TPE) of selling price is used to establish the selling price if it exists. If VSOE of selling price and TPE of selling price are not available, then the best estimate of selling price is to be used. Total consideration under our multiple-element contracts is allocated to supplies and monitoring through application of the relative fair value method. During the three months ended June 30, 2014, we began to provide enhanced monitoring services to a key customer, which pays a separate monthly monitoring fee. Beginning in the three months ended June 30, 2015, our sales initiatives under the direction of new executive management became focused on the monitoring of end users. This monitoring is accounted for as an element with stand-alone value. CareServices CareServices included contracts in which we leased monitoring devices and provided monitoring services to end users. The Company typically entered into contracts on a month-to-month basis with end users that used CareServices. These contracts could be cancelled by either party at any time with 30-days’ notice. Under a standard contract, the device and service became billable on the date the end user ordered the device, and remained billable until the device was returned to the Company. Revenues were recognized at the end of each month the service had been provided. In those circumstances in which payment was received in advance, we recorded deferred revenue. CareServices revenue was recognized when persuasive evidence of an arrangement existed, delivery of the device or service had occurred, prices were fixed or determinable and collection was reasonably assured. Shipping and handling fees were included as part of net revenues. The related freight costs and supplies directly associated with shipping products to end users were included as a component of cost of revenues. All CareServices sales were made with net 30-day payment terms. Research and Development Costs All expenditures for research and development are charged to expense as incurred. Research and development expenses for fiscal years 2015 and 2014 were $106,526 and $215,074 respectively. The expenditures for fiscal year 2015 and 2014 were for ongoing software improvements for the Chronic Illness Monitoring operating system and customer portal. Advertising Costs The Company expenses advertising costs as incurred. Advertising expenses for fiscal years 2015 and 2014 were $30,551 and $48,778, respectively. Advertising expenses primarily related to the Company’s Chronic Illness Monitoring segment for the fiscal years ended 2015 and 2014. 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, 2015, management has provided 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 and Note Conversions 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 statements 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 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, and shares issuable from convertible notes and convertible Series D, Series E and Series F preferred stock. As of September 30, 2015 and 2014, there were 39,111,621 and 17,199,080 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: 2015 2014 Common stock options and warrants 9,497,551 10,991,576 Series D convertible preferred stock 225,000 225,000 Series E convertible preferred stock 477,830 477,830 Series F convertible preferred stock 16,065,328 5,361,000 Convertible debt 12,838,412 133,924 Restricted shares of common stock 7,500 9,750 Total common stock equivalents 39,111,621 17,199,080 Recent Accounting Pronouncements In April 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern In November 2014, the FASB issued ASU 2014-16, Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity In June 2015, the FASB issued ASU 2015-10, Technical Corrections and Improvements In July 2015, the FASB issued ASU 2015-11, Inventory: Simplifying the Measurement of Inventory |
3. Discontinued Operations
3. Discontinued Operations | 12 Months Ended |
Sep. 30, 2015 | |
Notes | |
3. Discontinued Operations | 3. Discontinued Operations In December 2014, the Company sold substantially all of its customer contracts and equipment leased to customers associated with its CareServices segment. Additional equipment in stock was sold to the buyer pursuant to a written invoice. The purchase price included a cash payment of $412,280 for the customer contracts and $66,458 for the equipment in stock. The sale included all segment assets that generated revenue related to the CareServices segment. The Company no longer holds any ownership interest in these assets and has ceased incurring costs related to the operations and development of the CareServices segment. This segment was engaged in the business of developing, distributing and marketing mobile health monitoring and concierge services to distributors and consumers. The debt secured by the CareServices customer contracts was amended in January 2015 and remains an obligation of the Company (see Note 8). There were no material liabilities of discontinued operations. Assets of discontinued operations consist of the following as of September 30: 2015 2014 Customer contracts, net $ - $ 569,250 Equipment leased to customers, net - 111,435 Patents, net - 31,718 Total assets of discontinued operations $ - $ 712,403 As a result of the sale of the CareServices assets, the Company has reflected this segment as discontinued operations in the consolidated financial statements for fiscal years 2015 and 2014. The following table summarizes certain operating data for discontinued operations for fiscal years 2015 and 2014: 2015 2014 Revenues $ 152,686 $ 1,003,238 Cost of revenues 127,709 881,753 Gross profit 24,977 121,485 Selling, general and administrative expenses (211,209) (1,047,629) Impairment of long-lived assets - (497,792) Loss on disposal of property and equipment - (18,746) Other expense - (9,885) Loss from discontinued operations $ (186,232) $ (1,452,567) |
4. Customer Contracts
4. Customer Contracts | 12 Months Ended |
Sep. 30, 2015 | |
Notes | |
4. Customer Contracts | 4. Customer Contracts The Company was amortizing Chronic Illness Monitoring customer contracts acquired during 2012 over their estimated useful lives (through 2014). As of September 30, 2015 and 2014, the cost associated with these customer contracts was $214,106 and the accumulated amortization was $214,106. Amortization expense related to these contracts for fiscal years 2015 and 2014 was $0 and $57,220, respectively. The Company sold substantially all of the CareServices customer contracts during December 2014. The Company impaired the CareServices customer contracts as of September 30, 2014 by $89,460, which has been included as part of discontinued operations for the fiscal year ended September 30, 2014. As of September 30, 2015 and 2014, customer contracts totaled $0 and $2,066,316, respectively, and the related accumulated amortization was $0 and $1,497,067, respectively. Amortization expense related to the CareServices segment for fiscal years 2015 and 2014 was $179,648 and $718,592, respectively. |
5. Property, Plant and Equipmen
5. Property, Plant and Equipment Disclosure | 12 Months Ended |
Sep. 30, 2015 | |
Notes | |
5. Property, Plant and Equipment Disclosure | 5. Property and Equipment Property and equipment consist of the following as of September 30: 2015 2014 Software $ 100,574 $ 100,574 Leasehold improvements 98,023 151,287 Furniture 68,758 69,776 Equipment 59,754 54,732 Total property and equipment 327,109 376,369 Accumulated depreciation and amortization (191,339) (156,293) Property and equipment, net $ 135,770 $ 220,076 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 2015 and 2014, the Company recorded a loss on the disposal of assets of $42,336 and $42,094, respectively. During December 2014, the Company sold all of its equipment leased to customers (see Note 3). Depreciation expense for fiscal years 2015 and 2014 was $56,321 and $219,465, respectively. |
6. Patent License Agreement
6. Patent License Agreement | 12 Months Ended |
Sep. 30, 2015 | |
Notes | |
6. Patent License Agreement | 6. 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 third party. 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. Amortization expense for fiscal years 2015 and 2014 was $31,718 and $126,870, respectively. The Company impaired the patents as of September 30, 2014 by $408,332, which has been included as part of discontinued operations for the fiscal year ended September 30, 2014 (see Note 3). As of September 30, 2015 and 2014, the cost associated with the patents was $514,046 and the accumulated amortization was $514,046 and $482,328, respectively. |
7. Accrued Expenses
7. Accrued Expenses | 12 Months Ended |
Sep. 30, 2015 | |
Notes | |
7. Accrued Expenses | 7. Accrued Expenses Accrued expenses consist of the following as of September 30: 2015 2014 Payroll expense $ 270,974 $ 308,529 Interest 190,045 59,091 Deferred revenue 147,344 18,534 Commissions and fees 64,432 453,744 Liability to issue common stock 40,000 522,087 Other 31,172 - Deferred rent - 89,346 Total accrued expenses $ 743,967 $ 1,451,331 |
8. Notes Payable
8. Notes Payable | 12 Months Ended |
Sep. 30, 2015 | |
Notes | |
8. Notes Payable | 8. Notes Payable The Company had the following notes payable outstanding as of September 30: 2015 2014 Secured borrowings from a third party that purchased $693,000 of customer receipts for $550,000, with due dates ranging from November 2015 to September 2016 and payable in daily payments ranging from $955 to $1,909. The $143,000 difference between the customer receipts and cash received is being amortized to interest expense over the term of the respective notes. The secured borrowings are guaranteed by two officers of the Company. $ 421,413 $ - Note payable previously secured by CareServices customer contracts. In January 2015, the note was amended to reduce the outstanding principal to $375,000, interest at 9%, and payable in 15 monthly installments beginning in February 2015. The amendment released the collateralized customer contracts and the note payable is guaranteed by both a former Executive Chairman of the Board of Directors and a member of the Board of Directors. A gain on the extinguishment of the old note of $769,449 was recorded in other income. 303,212 1,103,841 Unsecured note payable with interest at 12%, due November 2015 (extended to February 2016 subsequent to year end). In connection with the issuance of the note, the Company repriced previously issued warrants to purchase shares of common stock. The $22,397 increase in relative fair value of the warrants was included as a loss on the extinguishment of the old note in other expense. The note also required a payment of 3,000,000 shares of common stock. The fair value of $780,000 was included as a loss on the extinguishment of the old note in other expense. 300,000 - Secured borrowings from third parties that purchased a $337,600 customer receivable for $200,000, in default. The Company was able to buy back the receivable for $233,333 less cash received by the third parties before June 2015. The $33,333 difference between the buyback and cash received plus $20,000 of commission paid to a related party, was amortized to interest expense through June 2015. 233,333 233,333 Unsecured notes payable with interest at 12%, due March 2016 and convertible into common stock at a 15% discount from the 10-day volume adjusted weighted average closing price per share upon maturity. In connection with the issuance of the notes, the Company issued 509,976 shares of common stock. The $89,397 fair value of the stock is being amortized to interest expense over the term of the notes. The notes included loan origination fees of $21,249, which are being amortized to interest expense over the term of the notes. The Company recorded a derivative in connection with the convertible feature of the notes (see Note 12) and is amortizing the initial $101,884 fair value of the derivatives liability over the life of the notes. 212,490 - Unsecured notes with interest at 18%, due April 2013, in default. The Company issued 20,000 shares of Series D preferred stock as loan origination fees. The $195,000 fair value of the preferred stock was amortized over the original term of the note. Principal of $50,000 and accrued interest of $13,333 were converted to common stock in December 2013. 64,261 64,261 Unsecured note payable with no interest, due March 2015. In connection with the issuance of the note, the Company issued warrants to purchase 450,000 shares of common stock. The $143,634 relative fair value of the warrants was amortized to interest expense through March 2015. The note also required a payment of the greater of 667,000 shares of common stock or shares of common stock equal to $500,000 at the end of the term (relative fair value of $230,293). In May 2015, the note and other payables were converted into an unsecured note payable to the same party. The conversion resulted in a gain on extinguishment of debt of $230,293. - 200,000 Total notes payable before discount 1,534,709 1,601,435 Less discount (274,793) (169,450) Total notes payable 1,259,916 1,431,985 Less current portion (1,259,916) (1,212,937) Notes payable, net of current portion $ - $ 219,048 As of September 30, 2015, scheduled principal payments on notes payable are as follows: Year Ending September 30, 2016 $ 1,534,709 |
9. Related-party Notes Payable
9. Related-party Notes Payable | 12 Months Ended |
Sep. 30, 2015 | |
Notes | |
9. Related-party Notes Payable | 9. Related-Party Notes Payable The Company had the following related-party notes payable outstanding as of September 30: 2015 2014 Secured borrowings from entities controlled by an officer that purchased a $2,813,175 customer receivable for $1,710,500. The Company was able to buy back the receivable for $1,950,000 less cash received by the entities through March 2015. The $239,500 difference between the buyback and cash received plus $253,500 of loan origination fees was amortized to interest expense through March 2015. In September 2015, the note was modified to extend the maturity date to January 2017 with interest at 18%. The Company added $81,600 of extension fees and issued 3,000,000 shares of common stock as part of the modification and the note is convertible into common stock at $0.30 per share. The $540,000 fair value of the common stock was recognized as a loss on extinguishment of debt $ 1,721,100 $ 1,639,500 Unsecured note payable to an entity controlled by an officer with interest at 18%, due January 2017, convertible into common stock at $0.30 per share. The Company issued 3,000,000 shares of common stock as loan origination fees. The $540,000 fair value of the common stock was recognized as a loss on extinguishment of debt 1,303,135 - Unsecured note payable to an entity controlled by a former Executive Chairman of the Board of Directors with no interest (18% in the event of default), due on demand and in default. The former Executive Chairman demanded payment by May 15, 2015. 396,667 - Unsecured note payable to an entity controlled by a former Executive Chairman of the Board of Directors with interest at 18%, due January 2017. 324,016 - Unsecured note payable to a former officer with interest at 15%, due June 2012, in default. The note included a $3,000 loan origination fee added to the principal and is convertible into common stock at $0.50 per share. 30,000 30,000 Unsecured note payable to a former officer with interest at 12%, due September 2013, in default, and convertible into common stock at $0.75 per share. 26,721 26,721 Unsecured note payable to an entity controlled by an officer with interest at 18%, due upon demand. 25,463 - Unsecured note payable to a former officer with interest at 12%, due on demand. 13,644 13,644 Secured borrowings from a former Executive Chairman of the Board of Directors who purchased a $422,000 customer receivable for $250,000. The Company was able to buy back the receivable for $291,667 less cash received by the former Executive Chairman before June 2015. The $41,667 difference between the buyback and cash received plus $25,000 of loan origination fees was to be amortized to interest expense over the buyback term. In November 2014, the secured borrowings and other advances were converted into an unsecured note payable to the same related party and the remaining discount balance of $45,129 was recognized as a loss on extinguishment of debt. - 291,667 Unsecured note payable to an entity controlled by a former Executive Chairman of the Board of Directors, interest at 12%, due on demand, and convertible into common stock at $0.75 per share. The Company issued 17,500 shares of common stock as loan origination fees. The $26,250 fair value of the common stock was amortized to interest expense over the original term of the note, (through September 2013). In December 2013, $160,000 of the note was converted to common stock. In September 2015, $15,000 of principal and $10,469 of interest with other payables were converted into an unsecured note payable to the same party. - 15,000 Total notes payable, related-party, before discount 3,840,746 2,016,532 Less discount - (346,912) Total notes payable, related-party 3,840,746 1,669,620 Less current portion (492,495) (1,669,620) Notes payable, related party, net of current portion $ 3,348,251 $ - As of September 30, 2015, scheduled principal payments on related-party notes payable are as follows: Years Ending September 30, 2016 $ 492,495 2017 3,348,251 |
10. Loss On Induced Conversion
10. Loss On Induced Conversion of Debt and Sale of Common Stock | 12 Months Ended |
Sep. 30, 2015 | |
Notes | |
10. Loss On Induced Conversion of Debt and Sale of Common Stock | 10. Loss on Induced Conversion of Debt and Sale of Common Stock During the fiscal year ended September 30, 2014, 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 $381,000 was converted to shares of common stock. In addition, debt and accrued interest due to related parties of approximately $1,946,000 was converted to shares of common stock at $0.60 of debt per share of common stock, which was below the market price of the 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 $114,000114,098 and is recorded as a loss on induced conversion of debt. |
11. Fair Value Measurements
11. Fair Value Measurements | 12 Months Ended |
Sep. 30, 2015 | |
Notes | |
11. Fair Value Measurements | 11. 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 CompanyÂ’s embedded derivative liabilities are measured on a recurring basis using Level 2 inputs. Level 3 The CompanyÂ’s goodwill is measured using Level 3 inputs. The CompanyÂ’s embedded derivatives liability is re-measured to fair value as of each reporting date until the contingency is resolved. See Note 12 for more information about derivatives and the inputs used for calculating fair value. |
12. Derivatives Liability
12. Derivatives Liability | 12 Months Ended |
Sep. 30, 2015 | |
Notes | |
12. Derivatives Liability | 12. Derivatives Liability The derivatives liability as of September 30, 2015 and 2014 was $79,347 and $106,444, respectively. The derivatives liability as of September 30, 2014 is related to a variable conversion price adjustment on the Series F preferred stock. The derivatives liability as of December 31, 2014 was eliminated due to the conversion price on Series F preferred stock being adjusted from $1.00 to $0.3337 based on the number of subscribers as of December 31, 2014. The derivatives liability as of September 30, 2015 is related to a variable conversion price adjustment on outstanding notes payable. During the fiscal year ended September 30, 2014, the Company estimated the fair value of the embedded derivatives prior to their conversion and elimination using a binomial option-pricing model with the following assumptions, according to the instrument: exercise price of $0.35 per share; risk free interest rate of 0.060%; expected life of 0.50 years; expected dividends of 0%; a volatility factor of 104%; and a stock price of $0.24. During the fiscal year ended September 30, 2015, the Company estimated the fair value of the embedded derivatives prior to their conversion and elimination using a binomial option-pricing model with the following assumptions, according to the instrument: exercise prices ranging from $0.12 to $0.33 per share; risk free interest rates ranging from 0.010% to 0.260%; expected lives ranging from 0.001 to 0.50 years; expected dividends of 0%; volatility factors ranging from 0.01% to 138.68%; and stock prices ranging from $0.12 to $0.33. The expected lives of the instruments were equal to the average term of the conversion option. The expected volatility is based on the historical price volatility of the CompanyÂ’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 Company recognized a gain on derivatives liability for the fiscal years ended September 30, 2015 and 2014 of $128,942 and $373,293, respectively. |
13. Preferred Stock
13. Preferred Stock | 12 Months Ended |
Sep. 30, 2015 | |
Notes | |
13. Preferred Stock | 13. 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 As of September 30, 2013, the Company had 480,000 shares of Series C convertible preferred stock issued and outstanding (“Series C preferred stock”). In December 2013, all 480,000 shares of Series C preferred stock were converted to 672,000 shares of common stock. The conversion rate of 1.4 shares of common stock was greater than the designated conversion rate of one share of common stock and, therefore, the fair value of the additional 192,000 shares was recorded as a deemed dividend. During fiscal year 2014, the Company accrued $11,367 of dividends on Series C preferred stock and settled the accrued dividends by issuing 11,599 shares of common stock. The Series C preferred stock was non-voting. Series D Convertible Preferred Stock The Board of Directors has designated 1,000,000 shares of preferred stock as Series D convertible preferred stock (“Series D preferred stock”). The Series D preferred stock is voting on an as-converted basis. The Series D preferred stock has a dividend rate of 8%, payable quarterly. The Company may redeem the Series D preferred shares at a redemption price equal to 120% of the original purchase price with 15 days notice. In December 2013, 893,218 shares of Series D preferred stock were converted to 6,252,526 shares of common stock. The conversion rate of 7 shares of common stock was greater than the designated conversion rate of 5 shares of common stock and, therefore, the fair value of the additional 1,786,436 shares was recorded as a deemed dividend. During fiscal year 2015, the Company accrued $24,800 of dividends on Series D preferred stock and settled $31,051 of accrued dividends by issuing 118,068 shares of common stock. During fiscal year 2014, the Company accrued $84,212 of dividends on Series D preferred stock and settled $77,961 of the accrued dividends by issuing 85,477 shares of common stock. 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”). 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 is non-voting and receives 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, the Series E preferred stock has no convertibility to common stock and the holders are entitled to receive a pro-rata share of cumulative royalties totaling 4% of the Company’s gross profits payable quarterly for a two-year period. During fiscal year 2014, $83,473 of debenture loans and accrued interest converted into 8,347 shares of Series E preferred stock. During fiscal years 2015 and 2014, the Company accrued dividends of $326,863 and $320,071, respectively, to Series E shareholders. During fiscal years 2015 and 2014, the Company paid dividends of $0 and $258,284, respectively, to Series E shareholders. As of September 30, 2015 and 2014, the redemption price for the Series E preferred stock was $477,829. Series F Convertible Preferred Stock During fiscal year 2014, the Board of Directors designated 7,803 shares of preferred stock as Series F convertible preferred stock (“Series F preferred stock”). In April 2014, the Company increased the authorized shares of Series F preferred stock to 10,000. Series F preferred stock is non-voting, has a stated value of $1,000 and is convertible into common stock at $0.3337 per share (see Note 12). The Series F preferred stock has a dividend rate, payable quarterly, of 8% until April 30, 2015, 16% from May 1, 2015 to July 31, 2015, 20% from August 1, 2015 to October 31, 2015 and 25% thereafter. During the fiscal year ended September 30, 2014, the Company issued 5,361 858 4,503 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 preferred stock, Series D preferred stock, Series E preferred stock, and Series F 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 entitled. |
14. Common Stock
14. Common Stock | 12 Months Ended |
Sep. 30, 2015 | |
Notes | |
14. Common Stock | 14. Common Stock In April 2014, 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. During fiscal year 2015, the Company issued the following shares of common stock: · · · · · · · · · · · · · · · The fair value of unvested common stock as of September 30, 2015 was $2,607,016. |
15. Common Stock Options and Wa
15. Common Stock Options and Warrants | 12 Months Ended |
Sep. 30, 2015 | |
Notes | |
15. Common Stock Options and Warrants | 15. Common 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 CompanyÂ’s common stock, among other factors. The Company uses the simplified method within the valuation model due to the CompanyÂ’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 2015 and 2014, the Company measured the fair value of the warrants using a binomial valuation model with the following assumptions: 2015 2014 Exercise price $0.30 - $1.00 $0.50 - $1.40 Expected term (years) 1 - 2 1 - 3 Volatility 228% - 302% 101% - 216% Risk-free rate 0.22% - 0.63% 0.11% - 0.92% Dividend rate 0% 0% During the fiscal year ended September 30, 2015, the Company did not grant any common stock options or warrants. During February 2015, the Company modified the exercise price of options and warrants previously issued to the Executive Chairman of the Board of Directors from $1.00 to $0.30 per share, according to an agreement entered into prior to appointment as the Executive Chairman, and recognized additional expense of $20,472. During April 2015, the Company modified the exercise price of options and warrants previously issued to a note holder from $1.00 to $0.40 per share as part of a settlement agreement and conversion of an existing note payable and other payables into a new note payable. The additional expense of $22,397 was recorded as a loss on extinguishment of debt. During the fiscal year ended September 30, 2014, the Company modified the exercise price of options and warrants previously issued to current employees and officers to $0.50 per share. The Company recognized additional expense of $71,942 and deferred $7,960 over the remaining vesting period of the options and warrants. The following table summarizes information about stock options and warrants outstanding as of September 30, 2015: Options and Warrants Number of Options and Warrants Weighted-Average Exercise Price Outstanding as of October 1, 2014 10,991,576 $ 1.05 Granted - Exercised - Forfeited (1,494,025) 1.52 Outstanding as of September 30, 2015 9,497,551 0.91 Exercisable as of September 30, 2015 7,667,551 1.01 As of September 30, 2015, the outstanding warrants have an aggregate intrinsic value of $0, the weighted average remaining term of the warrants was 2.91 years, and the fair value of unvested stock options and warrants was $154,522. |
16. Segment Information
16. Segment Information | 12 Months Ended |
Sep. 30, 2015 | |
Notes | |
16. Segment Information | 16. Segment Information The Company operated two business segments during fiscal year 2015 based primarily on the nature of the CompanyÂ’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 insurance companies, disease management companies, third-party administrators, and self-insured companies. The customer contracts and equipment leased to customers of the CareServices segment were sold in December 2014. The CareServices segment was engaged in the business of developing, distributing and marketing mobile health monitoring and concierge services to distributors and consumers. 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 2015 and 2014: Corporate Chronic Illness Monitoring CareServices (Discontinued Operations) Total As of September 30, 2015 and for the Fiscal Year Then Ended Sales to external customers $ - $ 6,597,981 $ 152,686 $ 6,750,667 Segment income (loss) (10,757,547) (583,890) (186,232) (11,527,669) Interest expense, net 977,234 - - 977,234 Segment assets 767,302 1,771,658 - 2,538,960 Property and equipment purchases 15,289 - - 15,289 Depreciation and amortization 57,036 - 233,664 290,700 As of September 30, 2014 and for the Fiscal Year Then Ended Sales to external customers $ - $ 6,107,941 $ 1,003,238 $ 7,111,179 Segment loss (9,957,268) (2,051,752) (1,452,567) (13,461,587) Interest expense, net 1,936,039 - - 1,936,039 Segment assets 550,370 4,134,403 737,012 5,421,785 Property and equipment purchases 70,603 - - 70,603 Depreciation and amortization 92,823 57,220 972,819 1,122,862 |
17. Income Taxes
17. Income Taxes | 12 Months Ended |
Sep. 30, 2015 | |
Notes | |
17. Income Taxes | 17. Income Taxes As of September 30, 2015, the Company had net operating loss carryforwards available to offset future taxable income, if any, of approximately $77,700,000, 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 CompanyÂ’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 2015 and 2014, the CompanyÂ’s expected federal tax rate was 34%. The deferred income tax assets (liabilities) were comprised of the following as of September 30: 2015 2014 Net operating loss carryforwards $ 29,000,000 $ 23,858,000 Depreciation, amortization and reserves 721,000 1,515,000 Stock-based compensation 1,728,000 2,007,000 Accrued vacation 28,000 53,000 Valuation allowance (31,477,000) (27,433,000) Total $ - $ - Reconciliations between the benefit for income taxes at the federal statutory income tax rate and the CompanyÂ’s benefit for income taxes for fiscal years 2015 and 2014 were as follows: 2015 2014 Federal income tax benefit at statutory rate $ 3,919,000 $ 4,577,000 State income tax benefit, net of federal income tax effect 380,000 444,000 Non-deductible expenses (367,000) 67,000 Other 112,000 135,000 Change in valuation allowance (4,044,000) (5,223,000) Benefit for income taxes $ - $ - During fiscal years 2015 and 2014, 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, 2015, 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, 2015 and 2014. Tax returns for fiscal years subsequent to 2011 remain subject to examination. |
18. Commitments and Contingenci
18. Commitments and Contingencies | 12 Months Ended |
Sep. 30, 2015 | |
Notes | |
18. Commitments and Contingencies | 18. Commitments and Contingencies During the fiscal year ended September 30, 2015, the Company leased office space under a non-cancelable operating lease, which was terminated during June 2015. In February 2015, the Company entered into a sublease agreement for part of the office space under the non-cancelable operating lease through the end of the original lease period. Payments under the sublease were made by the sublessee directly to the CompanyÂ’s landlord. During the fiscal year ended September 30, 2015, the Company recognized $42,438 of sublease income as part of other expense, net. The CompanyÂ’s rent expense for facilities under the terminated operating lease for the nine months ended June 30, 2015 and fiscal year ended September 30, 2014 was approximately $226,000 and $279,000, respectively. During June 2015, the Company entered into a new non-cancelable operating lease for its existing office space, excluding the previously subleased space, and with payments beginning in July 2015. Future minimum rental payments under the non-cancelable operating lease as of September 30, 2015 were as follows: Years Ending September 30, 2016 $ 126,249 2017 130,036 2018 111,340 $ 367,625 The CompanyÂ’s rent expense for under the new non-cancelable operating lease for fiscal year 2015 was approximately $31,000. On May 28, 2015, an investor of the Company filed a lawsuit for $1,000,000 exclusive of interest and costs against the Company, its Executive Chairman, an entity controlled by its former Executive Chairman, and 4G Biometrics, a wholly owned subsidiary of the Company claiming a breach of contract in the District Court of Utah-Central Division. The Company has engaged legal counsel regarding the matter. As the lawsuit is in its early stages, it is not possible to predict the outcome of the matter. The Company intends to vigorously dispute the litigation and believes it has meritorious defenses to the claims. On November 4, 2015 the Company received a demand for payment of $275,000 from a former employee of the Company and former principle of 4G Biometrics who was terminated for cause in regards to his employment agreement. On December 4, 2015, the Company filed a complaint against the former owners of 4G Biometrics, including this former employee, seeking damages in excess of $300,000 related to alleged misrepresentations made to induce ActiveCare to acquire 4G Biometrics. As the lawsuit is in its early stages, it is not possible to predict the outcome of the matter. The Company intends to vigorously support the complaint and believes it has meritorious support for the complaint. |
19. Related Party Transactions
19. Related Party Transactions Not Otherwise Disclosed | 12 Months Ended |
Sep. 30, 2015 | |
Notes | |
19. Related Party Transactions Not Otherwise Disclosed | 19. Related Party Transactions Not Otherwise Disclosed During fiscal year 2015, Purizer Corporation, an entity controlled by David Derrick, the CompanyÂ’s former Executive Chairman of the Board of Directors, introduced and helped us entered into agreement with a customer. Along with the sales contract, the Company granted Purizer Corporation 250,000 shares of common stock with fair value of $53,500. We also agreed to pay Purizer Corporation 8.5% of revenue from this customer as long as the sales contract remains in full force. During September 2015, the Company entered into consulting agreements with ADP Management, an entity controlled by Mr. David Derrick. The Company agreed to pay for Mr. DerrickÂ’s healthcare insurance cost plus $6,000 per month for his consulting services. The Company also agreed to pay as a bonus to ADP Management a fee equal to 15% of the funds raised less payments to third parties owed in regards to the fund raised. During September 2015, the Company entered into a one-year consulting agreement with Bluestone Advisors, LLC, an entity controlled by Mr. Jeffrey Peterson, who assumed a new role as Chief Financial Officer of the Company. The Company agreed to pay Bluestone Advisors, LLC $20,000 per month and 2,000,000 shares of Common Stock with fair value of $360,000 as Mr. JeffreyÂ’s services compensation. |
20. Subsequent Events
20. Subsequent Events | 12 Months Ended |
Sep. 30, 2015 | |
Notes | |
20. Subsequent Events | 20. Subsequent Events Subsequent to September 30, 2015 and through the release date of this report, the Company entered into the following agreements and transactions: (1) In October 2015, the Company entered into a consulting agreement with a third party in which it issued 250,000 shares of common stock. (2) In October 2015, the Company received funding under convertible debentures of $138,000 in which it issued 331,200 shares of common stock. (3) In November 2015, the Company entered into a factoring agreement in which it is able to factor $2 million of receivables at any given time. In connection with the execution of this agreement, the Company issued 791,666 shares of common stock and 1,333,333 warrants to purchase shares of common stock. (4) In November 2015, the Company altered certain terms and conditions of a previously executed factor agreement in which it subordinated to the factor agreement as put forth in paragraph 3 above. (5) In December 2015, the Company entered into a factoring agreement in which the Company was advanced $200,000. (6) In December 2015, the Company entered into a convertible loan agreement with an existing debt holder at 10% and is due December 2014, which incorporated $303,212 of principal and $31,380 of accrued interest of a previous note payable. All or part of the prinipal, interest and any late fees of the note payable is convertile into a share of the CompanyÂ’s common stock at a 5-day volume weighted average of the closing sales price. The convertible note is guaranteed by the CompanyÂ’s chief financial officer and former Executive Chairman. |
1. Organization and Nature of28
1. Organization and Nature of Operations: Going Concern (Policies) | 12 Months Ended |
Sep. 30, 2015 | |
Policies | |
Going Concern | Going Concern The Company continues to incur negative cash flows from operating activities and net losses. The Company had negative working capital and negative total equity as of September 30, 2015 and 2014 and is in default with respect to certain debt. These factors, among others, raise substantial doubt about the CompanyÂ’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 eliminate substantial doubt about its ability to continue as a going concern, it must achieve profitability, generate positive cash flows from operating activities and obtain the necessary debt or equity funding to meet its projected capital investment requirements. ManagementÂ’s plans with respect to this uncertainty consist of raising additional capital by issuing debt or equity securities and increasing the sales of the CompanyÂ’s services and products. 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 services and may have to cease operations. |
2. Summary of Significant Acc29
2. Summary of Significant Accounting Policies: Use of Estimates in The Preparation of Financial Statements (Policies) | 12 Months Ended |
Sep. 30, 2015 | |
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 the disclosure of contingent assets and liabilities as of the balance sheet dates and the reported amounts of revenues and expenses for the reporting periods. Actual results could differ from these estimates. |
2. Summary of Significant Acc30
2. Summary of Significant Accounting Policies: Discontinued Operations, Policy (Policies) | 12 Months Ended |
Sep. 30, 2015 | |
Policies | |
Discontinued Operations, Policy | Discontinued Operations In December 2014, the Company sold substantially all of its customer contracts and equipment leased to customers associated with its CareServices segment to a third party. Additional equipment in stock was sold to another third party pursuant to a written invoice. The purchase price included a cash payment of $412,280 for the customer contracts and $66,458 for the equipment in stock. During fiscal years 2015 and 2014, the Company recognized a loss from discontinued operations related to CareServices of $186,232 and $1,452,567, respectively. |
2. Summary of Significant Acc31
2. Summary of Significant Accounting Policies: Fair Value of Financial Instruments (Policies) | 12 Months Ended |
Sep. 30, 2015 | |
Policies | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company measured the fair values of its assets and liabilities using the US GAAP hierarchy. The carrying amounts reported in the consolidated balance sheets for cash, accounts receivable, accounts payable, and accrued liabilities approximate 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. The carrying amounts reported for notes payable approximate fair value because the underlying instruments are at interest rates which approximate current market rates. |
2. Summary of Significant Acc32
2. Summary of Significant Accounting Policies: Concentrations of Credit Risk (Policies) | 12 Months Ended |
Sep. 30, 2015 | |
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 customersÂ’ financial condition. The Company maintains an allowance for doubtful accounts receivable based upon managementÂ’s specific review and assessment of each account at the period end. During fiscal year 2015, the Company had revenues from three significant customers which represented 69% of total revenues. During fiscal year 2014, the Company had revenues from two significant customers which represented 67% of total revenues. As of September 30, 2015 and 2014 accounts receivable from significant customers represented 66% and 80% of total accounts receivable, respectively. During the fiscal years 2015 and 2014, the Company purchased substantially all of its products and supplies from one vendor. |
2. Summary of Significant Acc33
2. Summary of Significant Accounting Policies: Accounts Receivable (Policies) | 12 Months Ended |
Sep. 30, 2015 | |
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 customerÂ’s financial condition, age of the customerÂ’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 $30,495 and $115,994 as of September 30, 2015 and 2014, respectively. |
2. Summary of Significant Acc34
2. Summary of Significant Accounting Policies: Inventory (Policies) | 12 Months Ended |
Sep. 30, 2015 | |
Policies | |
Inventory | Inventory Inventory is recorded at the lower of cost or market, cost being determined using the first-in, first-out (“FIFO”) method. Inventory is for the Chronic Illness Monitoring segment and consists of diabetic supplies. Inventory held by distributors is reported as inventory until the supplies are shipped to the end user by the distributor. The Company estimates an inventory reserve for obsolescence and excessive quantities. Due to competitive pressures and technological innovation, it is possible that estimates of net realizable values could change in the near term. Inventory consists of the following as of September 30: 2015 2014 Finished goods $ 206,038 $ 589,423 Finished goods held by distributors 1,350,368 2,720,626 Total inventory 1,556,406 3,310,049 Inventory reserve (813,935) (1,660,729) Net inventory $ 742,471 $ 1,649,320 |
2. Summary of Significant Acc35
2. Summary of Significant Accounting Policies: Property, Plant and Equipment, Policy (Policies) | 12 Months Ended |
Sep. 30, 2015 | |
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 operations . |
2. Summary of Significant Acc36
2. Summary of Significant Accounting Policies: Goodwill (Policies) | 12 Months Ended |
Sep. 30, 2015 | |
Policies | |
Goodwill | Goodwill Goodwill is reviewed for impairment annually or more frequently when an event occurs or circumstances change that indicate that the carrying value may not be recoverable. The annual testing date is September 30. The identification and measurement of goodwill impairment involves the estimation of the fair value of our reporting units. The estimates of fair value of reporting units are based on the best information available as of the date of the assessment, which primarily incorporate management assumptions about expected future cash flows and the CompanyÂ’s market cap. Future cash flows can be affected by changes in industry or market conditions. Goodwill was impaired by $825,894 as of September 30, 2015. The impairment of goodwill was due to a potentially long-term reduction in the market capitalization of the Company subsequent to September 30, 2015. Goodwill was not impaired as of September 30, 2014. |
2. Summary of Significant Acc37
2. Summary of Significant Accounting Policies: Impairment of Long-lived Assets (Policies) | 12 Months Ended |
Sep. 30, 2015 | |
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 two to twenty 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. No long-lived assets were impaired as of September 30, 2015. The Company impaired its CareServices customer contracts by $89,460 and patents by $408,332 as of September 30, 2014, which were recorded as part of discontinued operations related to the CareServices segment for the fiscal year ended September 30, 2014. The impairment of the customer contracts is due to their sales price being lower than the net book value as of the date of sale. The patents impaired were solely related to the CareServices segment and provide no future cash flows after the CareServices customer contracts and equipment leased to customers were sold in December 2014. |
2. Summary of Significant Acc38
2. Summary of Significant Accounting Policies: Revenue Recognition (Policies) | 12 Months Ended |
Sep. 30, 2015 | |
Policies | |
Revenue Recognition | Revenue Recognition For the years presented, revenues came from two sources: (1) sales of Chronic Illness Monitoring products and services; (2) sales from CareServices. The CareServices segment was sold in December 2014. Information regarding revenue recognition policies relating to these business segments is contained in the following paragraphs. Chronic Illness Monitoring Chronic Illness Monitoring revenues are recognized when persuasive evidence of an arrangement exists, delivery of the product or service to the end user has occurred, prices are fixed or determinable and collection is reasonably assured. The Company enters 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 userÂ’s health plan as the products and supplies are deployed to the end user. The Company also monitors the end userÂ’s test results in real-time with our 24x7 CareCenter. Customers who are billed separately for monitoring are obligated to pay as the service is performed and revenue is recognized ratably over the period of the contract. The term of these contracts is generally one year and, unless terminated by either party, will automatically renew for another year. Collection terms are net 30 days after claims are submitted. There is no contingent revenue in these contracts. The Company also enters 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 userÂ’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 userÂ’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. Sales of Chronic Illness Monitoring products and services contain multiple elements. Multiple-Element Arrangements The Company evaluates each element in a multiple-element arrangement to determine whether it represents a separate unit of accounting. In order to account for elements in a multiple-element arrangement as separate units of accounting, the deliverables must have stand-alone value upon delivery. In determining whether monitoring services have stand-alone value, the nature of our monitoring services, whether we sell supplies to new customers without monitoring services, and availability of monitoring services from the other vendors are factors that are considered. When multiple elements included in an arrangement are separable into different units of accounting, the arrangement consideration is allocated to the identified separate units of accounting based on the relative selling prices. Multiple-element arrangements accounting guidance provides a hierarchy to use when determining the relative selling price for each unit of accounting. Vendor-specific objective evidence (VSOE) of selling price, based on the price at which the item is regularly sold by the vendor on a stand-alone basis, should be used if it exists. If VSOE of selling price is not available, third-party evidence (TPE) of selling price is used to establish the selling price if it exists. If VSOE of selling price and TPE of selling price are not available, then the best estimate of selling price is to be used. Total consideration under our multiple-element contracts is allocated to supplies and monitoring through application of the relative fair value method. During the three months ended June 30, 2014, we began to provide enhanced monitoring services to a key customer, which pays a separate monthly monitoring fee. Beginning in the three months ended June 30, 2015, our sales initiatives under the direction of new executive management became focused on the monitoring of end users. This monitoring is accounted for as an element with stand-alone value. CareServices CareServices included contracts in which we leased monitoring devices and provided monitoring services to end users. The Company typically entered into contracts on a month-to-month basis with end users that used CareServices. These contracts could be cancelled by either party at any time with 30-daysÂ’ notice. Under a standard contract, the device and service became billable on the date the end user ordered the device, and remained billable until the device was returned to the Company. Revenues were recognized at the end of each month the service had been provided. In those circumstances in which payment was received in advance, we recorded deferred revenue. CareServices revenue was recognized when persuasive evidence of an arrangement existed, delivery of the device or service had occurred, prices were fixed or determinable and collection was reasonably assured. Shipping and handling fees were included as part of net revenues. The related freight costs and supplies directly associated with shipping products to end users were included as a component of cost of revenues. All CareServices sales were made with net 30-day payment terms. |
2. Summary of Significant Acc39
2. Summary of Significant Accounting Policies: Research and Development Costs (Policies) | 12 Months Ended |
Sep. 30, 2015 | |
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 2015 and 2014 were $106,526 and $215,074 respectively. The expenditures for fiscal year 2015 and 2014 were for ongoing software improvements for the Chronic Illness Monitoring operating system and customer portal. |
2. Summary of Significant Acc40
2. Summary of Significant Accounting Policies: Advertising Costs (Policies) | 12 Months Ended |
Sep. 30, 2015 | |
Policies | |
Advertising Costs | Advertising Costs The Company expenses advertising costs as incurred. Advertising expenses for fiscal years 2015 and 2014 were $30,551 and $48,778, respectively. Advertising expenses primarily related to the CompanyÂ’s Chronic Illness Monitoring segment for the fiscal years ended 2015 and 2014. |
2. Summary of Significant Acc41
2. Summary of Significant Accounting Policies: Income Taxes (Policies) | 12 Months Ended |
Sep. 30, 2015 | |
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, 2015, management has provided 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. |
2. Summary of Significant Acc42
2. Summary of Significant Accounting Policies: Stock-based Compensation (Policies) | 12 Months Ended |
Sep. 30, 2015 | |
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 statements 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. |
2. Summary of Significant Acc43
2. Summary of Significant Accounting Policies: Net Loss Per Common Share (Policies) | 12 Months Ended |
Sep. 30, 2015 | |
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 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, and shares issuable from convertible notes and convertible Series D, Series E and Series F preferred stock. As of September 30, 2015 and 2014, there were 39,111,621 and 17,199,080 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: 2015 2014 Common stock options and warrants 9,497,551 10,991,576 Series D convertible preferred stock 225,000 225,000 Series E convertible preferred stock 477,830 477,830 Series F convertible preferred stock 16,065,328 5,361,000 Convertible debt 12,838,412 133,924 Restricted shares of common stock 7,500 9,750 Total common stock equivalents 39,111,621 17,199,080 |
2. Summary of Significant Acc44
2. Summary of Significant Accounting Policies: Recent Accounting Pronouncements (Policies) | 12 Months Ended |
Sep. 30, 2015 | |
Policies | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In April 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern In November 2014, the FASB issued ASU 2014-16, Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity In June 2015, the FASB issued ASU 2015-10, Technical Corrections and Improvements In July 2015, the FASB issued ASU 2015-11, Inventory: Simplifying the Measurement of Inventory |
2. Summary of Significant Acc45
2. Summary of Significant Accounting Policies: Inventory: Schedule of Utility Inventory (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
Schedule of Utility Inventory | 2015 2014 Finished goods $ 206,038 $ 589,423 Finished goods held by distributors 1,350,368 2,720,626 Total inventory 1,556,406 3,310,049 Inventory reserve (813,935) (1,660,729) Net inventory $ 742,471 $ 1,649,320 |
2. Summary of Significant Acc46
2. Summary of Significant Accounting Policies: Net Loss Per Common Share: Schedule of common stock equivalents (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
Schedule of common stock equivalents | 2015 2014 Common stock options and warrants 9,497,551 10,991,576 Series D convertible preferred stock 225,000 225,000 Series E convertible preferred stock 477,830 477,830 Series F convertible preferred stock 16,065,328 5,361,000 Convertible debt 12,838,412 133,924 Restricted shares of common stock 7,500 9,750 Total common stock equivalents 39,111,621 17,199,080 |
3. Discontinued Operations_ Sch
3. Discontinued Operations: Schedule of Assets Classified as Discontinued Operations (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
Schedule of Assets Classified as Discontinued Operations | 2015 2014 Customer contracts, net $ - $ 569,250 Equipment leased to customers, net - 111,435 Patents, net - 31,718 Total assets of discontinued operations $ - $ 712,403 |
3. Discontinued Operations_ S48
3. Discontinued Operations: Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures | 2015 2014 Revenues $ 152,686 $ 1,003,238 Cost of revenues 127,709 881,753 Gross profit 24,977 121,485 Selling, general and administrative expenses (211,209) (1,047,629) Impairment of long-lived assets - (497,792) Loss on disposal of property and equipment - (18,746) Other expense - (9,885) Loss from discontinued operations $ (186,232) $ (1,452,567) |
5. Property, Plant and Equipm49
5. Property, Plant and Equipment Disclosure: Schedule of Property and Equipment (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
Schedule of Property and Equipment | 2015 2014 Software $ 100,574 $ 100,574 Leasehold improvements 98,023 151,287 Furniture 68,758 69,776 Equipment 59,754 54,732 Total property and equipment 327,109 376,369 Accumulated depreciation and amortization (191,339) (156,293) Property and equipment, net $ 135,770 $ 220,076 |
7. Accrued Expenses_ Schedule o
7. Accrued Expenses: Schedule of Accrued Expenses (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
Schedule of Accrued Expenses | 2015 2014 Payroll expense $ 270,974 $ 308,529 Interest 190,045 59,091 Deferred revenue 147,344 18,534 Commissions and fees 64,432 453,744 Liability to issue common stock 40,000 522,087 Other 31,172 - Deferred rent - 89,346 Total accrued expenses $ 743,967 $ 1,451,331 |
8. Notes Payable_ Schedule of D
8. Notes Payable: Schedule of Debt (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
Schedule of Debt | 2015 2014 Secured borrowings from a third party that purchased $693,000 of customer receipts for $550,000, with due dates ranging from November 2015 to September 2016 and payable in daily payments ranging from $955 to $1,909. The $143,000 difference between the customer receipts and cash received is being amortized to interest expense over the term of the respective notes. The secured borrowings are guaranteed by two officers of the Company. $ 421,413 $ - Note payable previously secured by CareServices customer contracts. In January 2015, the note was amended to reduce the outstanding principal to $375,000, interest at 9%, and payable in 15 monthly installments beginning in February 2015. The amendment released the collateralized customer contracts and the note payable is guaranteed by both a former Executive Chairman of the Board of Directors and a member of the Board of Directors. A gain on the extinguishment of the old note of $769,449 was recorded in other income. 303,212 1,103,841 Unsecured note payable with interest at 12%, due November 2015 (extended to February 2016 subsequent to year end). In connection with the issuance of the note, the Company repriced previously issued warrants to purchase shares of common stock. The $22,397 increase in relative fair value of the warrants was included as a loss on the extinguishment of the old note in other expense. The note also required a payment of 3,000,000 shares of common stock. The fair value of $780,000 was included as a loss on the extinguishment of the old note in other expense. 300,000 - Secured borrowings from third parties that purchased a $337,600 customer receivable for $200,000, in default. The Company was able to buy back the receivable for $233,333 less cash received by the third parties before June 2015. The $33,333 difference between the buyback and cash received plus $20,000 of commission paid to a related party, was amortized to interest expense through June 2015. 233,333 233,333 Unsecured notes payable with interest at 12%, due March 2016 and convertible into common stock at a 15% discount from the 10-day volume adjusted weighted average closing price per share upon maturity. In connection with the issuance of the notes, the Company issued 509,976 shares of common stock. The $89,397 fair value of the stock is being amortized to interest expense over the term of the notes. The notes included loan origination fees of $21,249, which are being amortized to interest expense over the term of the notes. The Company recorded a derivative in connection with the convertible feature of the notes (see Note 12) and is amortizing the initial $101,884 fair value of the derivatives liability over the life of the notes. 212,490 - Unsecured notes with interest at 18%, due April 2013, in default. The Company issued 20,000 shares of Series D preferred stock as loan origination fees. The $195,000 fair value of the preferred stock was amortized over the original term of the note. Principal of $50,000 and accrued interest of $13,333 were converted to common stock in December 2013. 64,261 64,261 Unsecured note payable with no interest, due March 2015. In connection with the issuance of the note, the Company issued warrants to purchase 450,000 shares of common stock. The $143,634 relative fair value of the warrants was amortized to interest expense through March 2015. The note also required a payment of the greater of 667,000 shares of common stock or shares of common stock equal to $500,000 at the end of the term (relative fair value of $230,293). In May 2015, the note and other payables were converted into an unsecured note payable to the same party. The conversion resulted in a gain on extinguishment of debt of $230,293. - 200,000 Total notes payable before discount 1,534,709 1,601,435 Less discount (274,793) (169,450) Total notes payable 1,259,916 1,431,985 Less current portion (1,259,916) (1,212,937) Notes payable, net of current portion $ - $ 219,048 |
8. Notes Payable_ Schedule of p
8. Notes Payable: Schedule of principal payments on notes payable (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
Schedule of principal payments on notes payable | Year Ending September 30, 2016 $ 1,534,709 |
9. Related-party Notes Payable_
9. Related-party Notes Payable: Schedule of related party notes payable (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
Schedule of related party notes payable | 2015 2014 Secured borrowings from entities controlled by an officer that purchased a $2,813,175 customer receivable for $1,710,500. The Company was able to buy back the receivable for $1,950,000 less cash received by the entities through March 2015. The $239,500 difference between the buyback and cash received plus $253,500 of loan origination fees was amortized to interest expense through March 2015. In September 2015, the note was modified to extend the maturity date to January 2017 with interest at 18%. The Company added $81,600 of extension fees and issued 3,000,000 shares of common stock as part of the modification and the note is convertible into common stock at $0.30 per share. The $540,000 fair value of the common stock was recognized as a loss on extinguishment of debt $ 1,721,100 $ 1,639,500 Unsecured note payable to an entity controlled by an officer with interest at 18%, due January 2017, convertible into common stock at $0.30 per share. The Company issued 3,000,000 shares of common stock as loan origination fees. The $540,000 fair value of the common stock was recognized as a loss on extinguishment of debt 1,303,135 - Unsecured note payable to an entity controlled by a former Executive Chairman of the Board of Directors with no interest (18% in the event of default), due on demand and in default. The former Executive Chairman demanded payment by May 15, 2015. 396,667 - Unsecured note payable to an entity controlled by a former Executive Chairman of the Board of Directors with interest at 18%, due January 2017. 324,016 - Unsecured note payable to a former officer with interest at 15%, due June 2012, in default. The note included a $3,000 loan origination fee added to the principal and is convertible into common stock at $0.50 per share. 30,000 30,000 Unsecured note payable to a former officer with interest at 12%, due September 2013, in default, and convertible into common stock at $0.75 per share. 26,721 26,721 Unsecured note payable to an entity controlled by an officer with interest at 18%, due upon demand. 25,463 - Unsecured note payable to a former officer with interest at 12%, due on demand. 13,644 13,644 Secured borrowings from a former Executive Chairman of the Board of Directors who purchased a $422,000 customer receivable for $250,000. The Company was able to buy back the receivable for $291,667 less cash received by the former Executive Chairman before June 2015. The $41,667 difference between the buyback and cash received plus $25,000 of loan origination fees was to be amortized to interest expense over the buyback term. In November 2014, the secured borrowings and other advances were converted into an unsecured note payable to the same related party and the remaining discount balance of $45,129 was recognized as a loss on extinguishment of debt. - 291,667 Unsecured note payable to an entity controlled by a former Executive Chairman of the Board of Directors, interest at 12%, due on demand, and convertible into common stock at $0.75 per share. The Company issued 17,500 shares of common stock as loan origination fees. The $26,250 fair value of the common stock was amortized to interest expense over the original term of the note, (through September 2013). In December 2013, $160,000 of the note was converted to common stock. In September 2015, $15,000 of principal and $10,469 of interest with other payables were converted into an unsecured note payable to the same party. - 15,000 Total notes payable, related-party, before discount 3,840,746 2,016,532 Less discount - (346,912) Total notes payable, related-party 3,840,746 1,669,620 Less current portion (492,495) (1,669,620) Notes payable, related party, net of current portion $ 3,348,251 $ - |
15. Common Stock Options and 54
15. Common Stock Options and Warrants: Schedule of fair value assumptions (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
Schedule of fair value assumptions | 2015 2014 Exercise price $0.30 - $1.00 $0.50 - $1.40 Expected term (years) 1 - 2 1 - 3 Volatility 228% - 302% 101% - 216% Risk-free rate 0.22% - 0.63% 0.11% - 0.92% Dividend rate 0% 0% |
15. Common Stock Options and 55
15. Common Stock Options and Warrants: Schedule of Share-based Compensation, Activity (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
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, 2014 10,991,576 $ 1.05 Granted - Exercised - Forfeited (1,494,025) 1.52 Outstanding as of September 30, 2015 9,497,551 0.91 Exercisable as of September 30, 2015 7,667,551 1.01 |
16. Segment Information_ Schedu
16. Segment Information: Schedule of Segment Reporting Information, by Segment (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
Schedule of Segment Reporting Information, by Segment | Corporate Chronic Illness Monitoring CareServices (Discontinued Operations) Total As of September 30, 2015 and for the Fiscal Year Then Ended Sales to external customers $ - $ 6,597,981 $ 152,686 $ 6,750,667 Segment income (loss) (10,757,547) (583,890) (186,232) (11,527,669) Interest expense, net 977,234 - - 977,234 Segment assets 767,302 1,771,658 - 2,538,960 Property and equipment purchases 15,289 - - 15,289 Depreciation and amortization 57,036 - 233,664 290,700 As of September 30, 2014 and for the Fiscal Year Then Ended Sales to external customers $ - $ 6,107,941 $ 1,003,238 $ 7,111,179 Segment loss (9,957,268) (2,051,752) (1,452,567) (13,461,587) Interest expense, net 1,936,039 - - 1,936,039 Segment assets 550,370 4,134,403 737,012 5,421,785 Property and equipment purchases 70,603 - - 70,603 Depreciation and amortization 92,823 57,220 972,819 1,122,862 |
17. Income Taxes_ Schedule of D
17. Income Taxes: Schedule of Deferred Tax Assets and Liabilities (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
Schedule of Deferred Tax Assets and Liabilities | 2015 2014 Net operating loss carryforwards $ 29,000,000 $ 23,858,000 Depreciation, amortization and reserves 721,000 1,515,000 Stock-based compensation 1,728,000 2,007,000 Accrued vacation 28,000 53,000 Valuation allowance (31,477,000) (27,433,000) Total $ - $ - |
17. Income Taxes_ Schedule of C
17. Income Taxes: Schedule of Components of Income Tax Expense (Benefit) (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
Schedule of Components of Income Tax Expense (Benefit) | 2015 2014 Federal income tax benefit at statutory rate $ 3,919,000 $ 4,577,000 State income tax benefit, net of federal income tax effect 380,000 444,000 Non-deductible expenses (367,000) 67,000 Other 112,000 135,000 Change in valuation allowance (4,044,000) (5,223,000) Benefit for income taxes $ - $ - |
18. Commitments and Contingen59
18. Commitments and Contingencies: Schedule of Future Minimum Rental Payments for Operating Leases (Tables) | 12 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
Schedule of Future Minimum Rental Payments for Operating Leases | Years Ending September 30, 2016 $ 126,249 2017 130,036 2018 111,340 $ 367,625 |
2. Summary of Significant Acc60
2. Summary of Significant Accounting Policies: Discontinued Operations, Policy (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Gain (loss) from discontinued operations | $ 186,232 | $ 1,452,567 |
CareServices | ||
Gain (loss) from discontinued operations | $ 186,232 | $ 1,452,567 |
2. Summary of Significant Acc61
2. Summary of Significant Accounting Policies: Concentrations of Credit Risk (Details) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Details | ||
Concentration Risk, Customer | the Company had revenues from three significant customers which represented 69% of total revenues | |
Concentration Risk, Accounts Receivable | 66.00% | 80.00% |
2. Summary of Significant Acc62
2. Summary of Significant Accounting Policies: Accounts Receivable (Details) - USD ($) | Sep. 30, 2015 | Sep. 30, 2014 |
Details | ||
Allowance for Doubtful Accounts Receivable | $ 30,495 | $ 115,994 |
2. Summary of Significant Acc63
2. Summary of Significant Accounting Policies: Inventory: Schedule of Utility Inventory (Details) - USD ($) | Sep. 30, 2015 | Sep. 30, 2014 |
Details | ||
Inventory, Finished Goods, Gross | $ 206,038 | $ 589,423 |
Finished goods held by distributors | 1,350,368 | 2,720,626 |
Inventory, Gross | 1,556,406 | 3,310,049 |
Inventory Valuation Reserves | (813,935) | (1,660,729) |
Inventory | $ 742,471 | $ 1,649,320 |
2. Summary of Significant Acc64
2. Summary of Significant Accounting Policies: Goodwill (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Details | ||
Impairment of goodwill | $ 825,894 | $ 0 |
2. Summary of Significant Acc65
2. Summary of Significant Accounting Policies: Impairment of Long-lived Assets (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Impairment of long-lived assets | $ 0 | $ (497,792) |
Customer Contracts | CareServices | ||
Impairment of long-lived assets | 89,460 | |
Patents | ||
Impairment of long-lived assets | $ 408,332 |
2. Summary of Significant Acc66
2. Summary of Significant Accounting Policies: Research and Development Costs (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Details | ||
Research and development | $ 106,526 | $ 215,074 |
2. Summary of Significant Acc67
2. Summary of Significant Accounting Policies: Advertising Costs (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Details | ||
Advertising Expense | $ 30,551 | $ 48,778 |
2. Summary of Significant Acc68
2. Summary of Significant Accounting Policies: Net Loss Per Common Share (Details) - shares | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Details | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 39,111,621 | 17,199,080 |
2. Summary of Significant Acc69
2. Summary of Significant Accounting Policies: Net Loss Per Common Share: Schedule of common stock equivalents (Details) - shares | Sep. 30, 2015 | Sep. 30, 2014 |
Details | ||
Common stock options and warrants | 9,497,551 | 10,991,576 |
Series D convertible preferred stock | 225,000 | 225,000 |
Series E convertible preferred stock | 477,830 | 477,830 |
Series F convertible preferred stock | 16,065,328 | 5,361,000 |
Convertible debt - Shares | 12,838,412 | 133,924 |
Restricted shares of common stock | 7,500 | 9,750 |
Total common stock equivalents | 39,111,621 | 17,199,080 |
3. Discontinued Operations_ S70
3. Discontinued Operations: Schedule of Assets Classified as Discontinued Operations (Details) - USD ($) | Sep. 30, 2015 | Sep. 30, 2014 |
Assets of discontinued operations | $ 0 | $ 712,403 |
Equipment Leased to Other Party | ||
Assets of discontinued operations | 111,435 | |
Customer Contracts | ||
Assets of discontinued operations | 569,250 | |
Patents | ||
Assets of discontinued operations | $ 31,718 |
3. Discontinued Operations_ S71
3. Discontinued Operations: Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Chronic Illness Monitoring Revenue | $ 6,597,981 | $ 6,107,941 |
Chronic Illness Monitoring Cost of Revenue | 5,196,827 | 6,437,943 |
Gross profit (loss) | 1,401,154 | (330,002) |
Total operating expenses | 10,464,936 | 10,015,448 |
Total other expense | (2,277,655) | (1,663,570) |
Loss from discontinued operations | (186,232) | (1,452,567) |
Segment, Discontinued Operations | ||
Chronic Illness Monitoring Revenue | 152,686 | 1,003,238 |
Chronic Illness Monitoring Cost of Revenue | 127,709 | 881,753 |
Gross profit (loss) | 24,977 | 121,485 |
Total operating expenses | (211,209) | (1,047,629) |
Impairment of Long-Lived Assets to be Disposed of | (497,792) | |
Gain (Loss) on Disposition of Property Plant Equipment, Excluding Oil and Gas Property and Timber Property | (18,746) | |
Total other expense | (9,885) | |
Loss from discontinued operations | $ (186,232) | $ (1,452,567) |
4. Customer Contracts (Details)
4. Customer Contracts (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | $ 191,339 | $ 156,293 |
Impairment of long-lived assets | 0 | (497,792) |
Customer Contracts | Chronic Illness Monitoring | ||
Cost Associated with Intangible Assets | 214,106 | 214,106 |
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | 214,106 | 214,106 |
Amortization of Intangible Assets | 0 | 57,220 |
Customer Contracts | CareServices | ||
Cost Associated with Intangible Assets | 0 | 2,066,316 |
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | 0 | 1,497,067 |
Amortization of Intangible Assets | $ 179,648 | 718,592 |
Impairment of long-lived assets | $ 89,460 |
5. Property, Plant and Equipm73
5. Property, Plant and Equipment Disclosure: Schedule of Property and Equipment (Details) - USD ($) | Sep. 30, 2015 | Sep. 30, 2014 |
Property, Plant and Equipment, Gross | $ 327,109 | $ 376,369 |
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | (191,339) | (156,293) |
Property and equipment, net | 135,770 | 220,076 |
Software and Software Development Costs | ||
Property, Plant and Equipment, Gross | 100,574 | 100,574 |
Leasehold Improvements | ||
Property, Plant and Equipment, Gross | 98,023 | 151,287 |
Furniture and Fixtures | ||
Property, Plant and Equipment, Gross | 68,758 | 69,776 |
Equipment | ||
Property, Plant and Equipment, Gross | $ 59,754 | $ 54,732 |
5. Property, Plant and Equipm74
5. Property, Plant and Equipment Disclosure (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Details | ||
Loss on disposal of property and equipment | $ 42,336 | $ 42,094 |
Depreciation, Amortization and Accretion, Net | $ 56,321 | $ 219,465 |
6. Patent License Agreement (De
6. Patent License Agreement (Details) - USD ($) | 12 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2012 | |
Common stock shares issued in purchase of patents | 600,000 | |||
Series C stock shares issued in purchase of patents | (480,000) | 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 | |||
Impairment of long-lived assets | $ 0 | $ (497,792) | ||
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | 191,339 | 156,293 | ||
Patents | ||||
Amortization of Intangible Assets | 31,718 | 126,870 | ||
Impairment of long-lived assets | 408,332 | |||
Cost Associated with Intangible Assets | 514,046 | 514,046 | ||
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | $ 514,046 | $ 482,328 |
7. Accrued Expenses_ Schedule76
7. Accrued Expenses: Schedule of Accrued Expenses (Details) - USD ($) | Sep. 30, 2015 | Sep. 30, 2014 |
Accrued expenses | $ 743,967 | $ 1,451,331 |
Payroll Expense | ||
Accrued expenses | 270,974 | 308,529 |
Interest Expense | ||
Accrued expenses | 190,045 | 59,091 |
DeferredRevenueMember | ||
Accrued expenses | 147,344 | 18,534 |
Commissions and fees | ||
Accrued expenses | 64,432 | 453,744 |
Liability to issue common stock | ||
Accrued expenses | 40,000 | 522,087 |
Other Expense | ||
Accrued expenses | $ 31,172 | |
Deferred Rent | ||
Accrued expenses | $ 89,346 |
8. Notes Payable_ Schedule of77
8. Notes Payable: Schedule of Debt (Details) - USD ($) | Sep. 30, 2015 | Sep. 30, 2014 |
Gross notes payable before discount | $ 1,534,709 | $ 1,601,435 |
Discount on notes payable | (274,793) | (169,450) |
Notes payable current and noncurrent | 1,259,916 | 1,431,985 |
Notes payable current portion | (1,259,916) | (1,212,937) |
Notes payable, net of current portion | 0 | 219,048 |
Note1Member | ||
Gross notes payable before discount | 421,413 | |
Note2Member | ||
Gross notes payable before discount | 303,212 | 1,103,841 |
Note3Member | ||
Gross notes payable before discount | 300,000 | |
Note4Member | ||
Gross notes payable before discount | 233,333 | 233,333 |
Note5Member | ||
Gross notes payable before discount | 212,490 | |
Note6Member | ||
Gross notes payable before discount | $ 64,261 | 64,261 |
Note7Member | ||
Gross notes payable before discount | $ 200,000 |
8. Notes Payable_ Schedule of78
8. Notes Payable: Schedule of principal payments on notes payable (Details) | 12 Months Ended |
Sep. 30, 2015USD ($) | |
Details | |
Notes payable principal payments in 2016 | $ 1,534,709 |
9. Related-party Notes Payabl79
9. Related-party Notes Payable: Schedule of related party notes payable (Details) - USD ($) | Sep. 30, 2015 | Sep. 30, 2014 |
Gross notes payable related party before discount | $ 3,840,746 | $ 2,016,532 |
Discount on notes payable related party | (346,912) | |
Notes Payable, Related Parties | 3,840,746 | 1,669,620 |
Notes payable, related party | (492,495) | (1,669,620) |
Notes payable, related party, net of current portion | 3,348,251 | 0 |
Note1Member | ||
Gross notes payable related party before discount | 1,721,100 | 1,639,500 |
Note2Member | ||
Gross notes payable related party before discount | 1,303,135 | |
Note3Member | ||
Gross notes payable related party before discount | 396,667 | |
Note4Member | ||
Gross notes payable related party before discount | 324,016 | |
Note5Member | ||
Gross notes payable related party before discount | 30,000 | 30,000 |
Note6Member | ||
Gross notes payable related party before discount | 26,721 | 26,721 |
Note7Member | ||
Gross notes payable related party before discount | 25,463 | |
Note8Member | ||
Gross notes payable related party before discount | $ 13,644 | 13,644 |
Note9Member | ||
Gross notes payable related party before discount | 291,667 | |
Note10Member | ||
Gross notes payable related party before discount | $ 15,000 |
10. Loss On Induced Conversio80
10. Loss On Induced Conversion of Debt and Sale of Common Stock (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Details | ||
Debt and accrued interest converted to shares of common stock | $ 381,000 | |
Debt and accrued interest due to related parties converted to shares of common stock | 1,946,000 | |
Loss on induced conversion of debt and sale of common stock | $ 0 | $ 114,098 |
12. Derivatives Liability (Deta
12. Derivatives Liability (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Details | ||
Derivatives liability | $ 79,347 | $ 106,444 |
Gain (loss) on derivatives liability | $ 128,942 | $ 373,293 |
13. Preferred Stock (Details)
13. Preferred Stock (Details) - USD ($) | 12 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2012 | |
Preferred stock shares authorized | 10,000,000 | 10,000,000 | ||
Preferred stock par value | $ 0.00001 | $ 0.00001 | ||
Series C stock shares issued in purchase of patents | 480,000 | (480,000) | ||
Dividends payable | $ 567,350 | $ 246,738 | ||
Issuance of Series E preferred stock for debt conversions | 83,473 | |||
Dividends paid to Series E Shareholders | 0 | 258,284 | ||
Redemption Price of Series E preferred stock | 477,829 | 477,829 | ||
Issuance of Series F preferred stock for cash, net | 3,580,771 | |||
Related Costs Considered in Conversion of Series F Preferred Stock | 675,229 | |||
Issuance of Series F preferred stock for debt conversions | 574,592 | |||
Cash paid to settle dividends and accrued interest on Series F preferred stock | 73,815 | |||
Series C Preferred Stock | ||||
Dividends payable | $ 11,367 | |||
Common Stock issued to settle accrued dividends | 11,599 | |||
Series D Preferred Stock | ||||
Dividends payable | $ 24,800 | $ 84,212 | ||
Common Stock issued to settle accrued dividends | 118,068 | |||
Conversion of Series D preferred stock - shares | 893,218 | |||
Series E Preferred Stock | ||||
Dividends payable | $ 326,863 | $ 320,071 | ||
Issuance of Series E preferred stock for debt conversions - shares | 8,347 | |||
Series F Preferred Stock | ||||
Dividends payable | $ 643,320 | $ 322,730 | ||
Common Stock issued to settle accrued dividends | 184,541 | |||
Issuance of Series F preferred stock for debt conversions - shares | 858 | |||
Issuance of Series F preferred stock for cash, net - shares | 4,503 |
14. Common Stock (Details)
14. Common Stock (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Common stock shares authorized | 200,000,000 | 200,000,000 |
Fair Value of Unvested Common Stock | $ 2,607,016 | |
Option1Member | ||
Stock Granted, Value, Share-based Compensation, Net of Forfeitures | 69,600 | |
Option2Member | ||
Stock Granted, Value, Share-based Compensation, Net of Forfeitures | 1,761,606 | |
Option3Member | ||
Stock Granted, Value, Share-based Compensation, Net of Forfeitures | 31,051 | |
Option4Member | ||
Stock Granted, Value, Share-based Compensation, Net of Forfeitures | 68,750 | |
Option5Member | ||
Stock Granted, Value, Share-based Compensation, Net of Forfeitures | 780,000 | |
Option6Member | ||
Stock Granted, Value, Share-based Compensation, Net of Forfeitures | 600,000 | |
Option7Member | ||
Stock Granted, Value, Share-based Compensation, Net of Forfeitures | 720,000 | |
Option8Member | ||
Stock Granted, Value, Share-based Compensation, Net of Forfeitures | 55,000 | |
Option 9 | ||
Stock Granted, Value, Share-based Compensation, Net of Forfeitures | 360,000 | |
Option 10 | ||
Stock Granted, Value, Share-based Compensation, Net of Forfeitures | 944,417 | |
Option11Member | ||
Stock Granted, Value, Share-based Compensation, Net of Forfeitures | 770,000 | |
Option12Member | ||
Stock Granted, Value, Share-based Compensation, Net of Forfeitures | 53,500 | |
Option13Member | ||
Stock Granted, Value, Share-based Compensation, Net of Forfeitures | 45,000 | |
Option14Member | ||
Stock Granted, Value, Share-based Compensation, Net of Forfeitures | 89,397 | |
Option15Member | ||
Stock Granted, Value, Share-based Compensation, Net of Forfeitures | $ 1,080,000 | |
Common stock | ||
Issuance of common stock for services - shares | 22,047,659 | 10,896,970 |
Common stock | Option1Member | ||
Issuance of common stock for services - shares | 290,000 | |
Common stock | Option2Member | ||
Issuance of common stock for services - shares | 7,177,103 | |
Common stock | Option3Member | ||
Issuance of common stock for services - shares | 118,068 | |
Common stock | Option4Member | ||
Issuance of common stock for services - shares | 275,000 | |
Common stock | Option5Member | ||
Issuance of common stock for services - shares | 3,000,000 | |
Common stock | Option6Member | ||
Issuance of common stock for services - shares | 2,000,000 | |
Common stock | Option7Member | ||
Issuance of common stock for services - shares | 4,000,000 | |
Common stock | Option8Member | ||
Issuance of common stock for services - shares | 305,556 | |
Common stock | Option 9 | ||
Issuance of common stock for services - shares | 2,000,000 | |
Common stock | Option 10 | ||
Issuance of common stock for services - shares | 3,372,917 | |
Common stock | Option11Member | ||
Issuance of common stock for services - shares | 2,750,000 | |
Common stock | Option12Member | ||
Issuance of common stock for services - shares | 250,000 | |
Common stock | Option13Member | ||
Issuance of common stock for services - shares | 250,000 | |
Common stock | Option14Member | ||
Issuance of common stock for services - shares | 509,976 | |
Common stock | Option15Member | ||
Issuance of common stock for services - shares | 6,000,000 |
15. Common Stock Options and 84
15. Common Stock Options and Warrants: Schedule of fair value assumptions (Details) - $ / shares | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Minimum | ||
Fair Value Assumptions, Exercise Price | $ 0.30 | $ 0.50 |
Fair Value Assumptions, Expected Term | 1 year | 1 year |
Fair Value Assumptions, Expected Volatility Rate | 228.00% | 101.00% |
Fair Value Assumptions, Risk Free Interest Rate | 0.22% | 0.11% |
Maximum | ||
Fair Value Assumptions, Exercise Price | $ 1 | $ 1.40 |
Fair Value Assumptions, Expected Term | 2 years | 3 years |
Fair Value Assumptions, Expected Volatility Rate | 302.00% | 216.00% |
Fair Value Assumptions, Risk Free Interest Rate | 0.63% | 0.92% |
15. Common Stock Options and 85
15. Common Stock Options and Warrants (Details) | 12 Months Ended |
Sep. 30, 2015USD ($) | |
Details | |
Additional expense recognized related to Options and Warrants | $ 71,942 |
Additional expense deferred over remaining vesting period of Options and Warrants | 7,960 |
Aggregate Intrinsic Value | $ 0 |
Weighted average remaining term of the warrants | 2.91 |
Fair Value of Unvested Stock Options and Warrants | $ 154,522 |
15. Common Stock Options and 86
15. Common Stock Options and Warrants: Schedule of Share-based Compensation, Activity (Details) - $ / shares | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Details | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Beginning Balance | 9,497,551 | 10,991,576 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Beginning Balance | $ 0.91 | $ 1.05 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Expirations in Period | (1,494,025) | |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Expirations in Period, Weighted Average Exercise Price | $ 1.52 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number | 7,667,551 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price | $ 1.01 |
16. Segment Information_ Sche87
16. Segment Information: Schedule of Segment Reporting Information, by Segment (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Net loss | $ (11,527,669) | $ (13,461,587) |
Interest expense, net | (977,234) | (1,936,039) |
Total assets | 2,538,960 | 5,421,785 |
Corporate | ||
Net loss | (10,757,547) | (9,957,268) |
Interest expense, net | 977,234 | 1,936,039 |
Total assets | 767,302 | 550,370 |
Payments to Acquire Property, Plant, and Equipment | 15,289 | 70,603 |
Depreciation, Depletion and Amortization, Nonproduction | 57,036 | 92,823 |
Chronic Illness Monitoring | ||
Revenue, Net | 6,597,981 | 6,107,941 |
Net loss | (583,890) | (2,051,752) |
Total assets | 1,771,658 | 4,134,403 |
Depreciation, Depletion and Amortization, Nonproduction | 57,220 | |
CareServices | ||
Revenue, Net | 152,686 | 1,003,238 |
Net loss | (186,232) | (1,452,567) |
Total assets | 737,012 | |
Depreciation, Depletion and Amortization, Nonproduction | 233,664 | 972,819 |
Total | ||
Revenue, Net | 6,750,667 | 7,111,179 |
Net loss | (11,527,669) | (13,461,587) |
Interest expense, net | 977,234 | 1,936,039 |
Total assets | 2,538,960 | 5,421,785 |
Payments to Acquire Property, Plant, and Equipment | 15,289 | 70,603 |
Depreciation, Depletion and Amortization, Nonproduction | $ 290,700 | $ 1,122,862 |
17. Income Taxes (Details)
17. Income Taxes (Details) | Sep. 30, 2015USD ($) |
Details | |
Operating Loss Carryforwards | $ 77,700,000 |
17. Income Taxes_ Schedule of89
17. Income Taxes: Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) | Sep. 30, 2015 | Sep. 30, 2014 |
Details | ||
Deferred Tax Assets, Operating Loss Carryforwards | $ 29,000,000 | $ 23,858,000 |
Deferred Tax Assets, Tax Deferred Expense, Reserves and Accruals | 721,000 | 1,515,000 |
Deferred Tax Assets, Tax Deferred Expense, Compensation and Benefits | 1,728,000 | 2,007,000 |
Deferred Tax Assets, Tax Deferred Expense, Other | 28,000 | 53,000 |
Deferred Tax Assets, Valuation Allowance | $ (31,477,000) | $ (27,433,000) |
17. Income Taxes_ Schedule of90
17. Income Taxes: Schedule of Components of Income Tax Expense (Benefit) (Details) - USD ($) | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Details | ||
Current Federal Tax Expense (Benefit) | $ 3,919,000 | $ 4,577,000 |
Current State and Local Tax Expense (Benefit) | 380,000 | 444,000 |
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Amount | (367,000) | 67,000 |
Other Tax Expense (Benefit) | 112,000 | 135,000 |
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Amount | $ (4,044,000) | $ (5,223,000) |
18. Commitments and Contingen91
18. Commitments and Contingencies (Details) - USD ($) | 9 Months Ended | 12 Months Ended | |
Jun. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | |
Details | |||
Operating Leases, Income Statement, Sublease Revenue | $ 42,438 | ||
Operating Leases, Rent Expense, Net | $ 226,000 | $ 31,000 | $ 279,000 |
18. Commitments and Contingen92
18. Commitments and Contingencies: Schedule of Future Minimum Rental Payments for Operating Leases (Details) | Sep. 30, 2015USD ($) |
Details | |
Operating Leases, Future Minimum Payments Due, Next Twelve Months | $ 126,249 |
Operating Leases, Future Minimum Payments, Due in Two Years | 130,036 |
Operating Leases, Future Minimum Payments, Due in Three Years | 111,340 |
Operating Leases, Future Minimum Payments Due | $ 367,625 |
19. Related Party Transaction93
19. Related Party Transactions Not Otherwise Disclosed (Details) | 12 Months Ended |
Sep. 30, 2015USD ($)shares | |
Purizer Corporation | |
Stock Issued During Period, Shares, Issued for Services | shares | 250,000 |
Stock Issued During Period, Value, Issued for Services | $ 53,500 |
ADP Management | |
Other Cost of Services | $ 6,000 |
Mr. Jeffrey Peterson | |
Stock Issued During Period, Shares, Issued for Services | shares | 2,000,000 |
Stock Issued During Period, Value, Issued for Services | $ 360,000 |
Other Cost of Services | $ 20,000 |