UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2014 |
[ ] |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT
For the transition period from N/A to N/A |
Commission File No. 000-28745
Cloud Medical Doctor Software
Corporation
(Name of small business issuer as specified in its charter)
(formerly National Scientific Corporation)
Texas |
86-0837077 |
( State or other jurisdiction of incorporation or
organization) |
(IRS Employer Identification No.) |
|
|
1291 Galleria Drive, Suite 200
Henderson, NV 89014
(Address of principal executive offices)
(Zip Code)
(702) 818-9011
Registrant’s
telephone number, including area code
Indicate by check mark whether the
Registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject
to such filing requirements for the past 90 days:
Yes [x] No
[ ]
Indicate by check mark whether the
registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to
be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files).
Yes [x] No [ ]
Indicate by check mark whether the registrant is a
large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of
“large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2
of the Exchange Act.
Large accelerated filer |
[ ] |
Accelerated filer |
[ ] |
Non–Accelerated filer |
[ ] |
Smaller reporting company |
[x] |
Indicate by check mark whether
the registrant is a shell company (as defined in Rule 12b–2 of the Exchange Act). Yes [
] No [x]
Indicate the number of shares
outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class |
|
Outstanding at February
14, 2015 |
Common stock, $0.01 par value |
|
283,258,722 |
CLOUD MEDICAL DOCTOR SOFTWARE CORPORATION
INDEX TO FORM 10-Q FILING
FOR THE THREE MONTHS ENDED DECEMBER
31, 2014 AND 2013
TABLE OF CONTENTS
|
|
|
|
PAGE |
PART I - FINANCIAL
INFORMATION |
|
|
|
|
|
Item 1. |
|
Consolidated Financial Statements
(Unaudited) |
|
3 |
|
|
Consolidated Balance Sheets |
|
4 |
|
|
Consolidated Statements of Operations |
|
5 |
|
|
Consolidated Statements of Cash Flows |
|
6 |
|
|
Notes to Consolidated Financial
Statements |
|
7 |
Item 2. |
|
Management Discussion & Analysis
of Financial Condition and Results of Operations |
|
19 |
Item 3 |
|
Quantitative and Qualitative Disclosures About Market Risk |
|
27 |
Item 4. |
|
Controls and Procedures |
|
27 |
|
|
PART II - OTHER INFORMATION |
|
|
|
|
|
Item 1. |
|
Legal Proceedings |
|
28 |
Item 1A. |
|
Risk Factors |
|
28 |
Item 2. |
|
Unregistered Sales of Equity Securities and Use of Proceeds |
|
28 |
Item 3. |
|
Defaults Upon Senior Securities |
|
28 |
Item 4. |
|
Mining Safety Disclosures |
|
28 |
Item 5 |
|
Other information |
|
28 |
Item 6. |
|
Exhibits |
|
29 |
|
|
|
|
|
|
|
|
|
|
CERTIFICATIONS |
|
|
31.1 |
Certification of Chief Executive Officer Pursuant to Section
302 of the Sarbanes-Oxley Act. |
31.2 |
Certification of Chief Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act. |
32.2 |
Certification of Chief Executive Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act. |
32.2 |
Certification of Chief Financial Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act. |
PART I
FINANCIAL INFORMATION
Item 1. |
Financial Statements |
The accompanying interim consolidated
financial statements have been prepared in accordance with the instructions to Form 10-Q. Therefore, they do not include
all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows,
and stockholders' equity in conformity with generally accepted accounting principles. Except as disclosed herein, there
has been no material change in the information disclosed in the notes to the consolidated financial statements included in the
Company's Annual Report on Form 10-K for the year ended September 30, 2014. In the opinion of management, all adjustments
considered necessary for a fair presentation of the results of operations and financial position have been included and all such
adjustments are of a normal recurring nature. Operating results for the three months ended December 31, 2014 are not
necessarily indicative of the results that can be expected for the year ending September 30, 2015.
CLOUD MEDICAL DOCTOR SOFTWARE CORPORATION |
(Formerly National Scientific Corporation) |
CONSOLIDATED BALANCE SHEETS |
(Unaudited) |
| |
| |
|
| |
| December 31, | | |
| September 30, | |
| |
| 2014 | | |
| 2014 | |
| |
| | | |
| | |
ASSETS | |
| | | |
| | |
| |
| | | |
| | |
CURRENT ASSETS: | |
| | | |
| | |
Cash | |
$ | 208,501 | | |
$ | 545,650 | |
Accounts receivable | |
| 1,438 | | |
| 1,006 | |
Assets attributable to discontinued operations | |
| 155 | | |
| 6,887 | |
Total current assets | |
| 210,094 | | |
| 553,543 | |
| |
| | | |
| | |
Proprietary technology, net | |
| 534,981 | | |
| 604,301 | |
TOTAL ASSETS | |
$ | 745,075 | | |
$ | 1,157,844 | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |
| | | |
| | |
| |
| | | |
| | |
CURRENT LIABILITIES: | |
| | | |
| | |
Accounts payable and accrued liabilities | |
$ | 510,573 | | |
$ | 649,452 | |
Liabilities attributable to discontinued operations | |
| — | | |
| 18 | |
Lines of credit | |
| 48,873 | | |
| 53,612 | |
Stock payable | |
| 7,000 | | |
| 7,000 | |
Total current liabilities | |
| 566,446 | | |
| 710,082 | |
TOTAL LIABILITIES | |
| 566,446 | | |
| 710,082 | |
| |
| | | |
| | |
COMMITMENTS AND CONTINGENCIES | |
| — | | |
| — | |
| |
| | | |
| | |
STOCKHOLDERS' EQUITY: | |
| | | |
| | |
Preferred stock, $0.01 par value, 10,000,000 shares authorized; | |
| | | |
| | |
4,000,000 issued and outstanding as of December 31, 2014 and September 30, 2014 | |
| 40,000 | | |
| 40,000 | |
Common stock, $0.01 par value, 681,000,000 shares authorized; | |
| | | |
| | |
283,258,722 and 283,473,722 issued and outstanding as of | |
| | | |
| | |
December 31, 2014 and September 30, 2014, respectively | |
| 2,832,587 | | |
| 2,834,737 | |
Additional paid-in capital | |
| 25,824,901 | | |
| 25,828,751 | |
Accumulated deficit | |
| (28,518,858) | | |
| (28,255,726) | |
Total stockholders' equity | |
| 178,630 | | |
| 447,762 | |
| |
| | | |
| | |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | |
$ | 745,075 | | |
$ | 1,157,844 | |
| |
| | | |
| | |
The accompanying notes are an
integral part of these unaudited consolidated financial statements.
CLOUD MEDICAL DOCTOR SOFTWARE CORPORATION |
(Formerly National Scientific Corporation) |
CONSOLIDATED STATEMENTS OF OPERATIONS |
(Unaudited) |
| |
Three Months Ended |
| |
December 31, |
| |
2014 | |
2013 |
| |
| |
|
| |
| |
|
REVENUE | |
$ | 431 | | |
$ | 117,557 | |
COST OF REVENUES | |
| 63,320 | | |
| 61,155 | |
| |
| | | |
| | |
GROSS PROFIT | |
| (62,889) | | |
| 56,402 | |
| |
| | | |
| | |
OPERATING EXPENSES: | |
| | | |
| | |
General and administrative | |
| 176,325 | | |
| 222,076 | |
Research and development | |
| 22,181 | | |
| 30,000 | |
Total operating expenses | |
| 198,506 | | |
| 252,076 | |
OPERATING LOSS | |
| (261,395) | | |
| (195,674) | |
| |
| | | |
| | |
OTHER EXPENSE | |
| | | |
| | |
Interest expense | |
| (1,024) | | |
| (236) | |
Total other expense | |
| (1,024) | | |
| (236) | |
| |
| | | |
| | |
LOSS FROM CONTINUING OPERATIONS | |
| (262,418) | | |
| (195,910) | |
| |
| | | |
| | |
LOSS FROM DISCONTINUED OPERATIONS | |
| (714) | | |
| (10,715) | |
| |
| | | |
| | |
NET LOSS | |
$ | (263,132) | | |
$ | (206,625) | |
| |
| | | |
| | |
NET LOSS PER COMMON SHARE - Basic and diluted: | |
| | | |
| | |
| |
| | | |
| | |
Continuing operations | |
$ | (0.00) | | |
$ | (0.00) | |
| |
| | | |
| | |
Discontinued operations | |
$ | (0.00) | | |
$ | (0.00) | |
| |
| | | |
| | |
Total | |
$ | (0.00) | | |
$ | (0.00) | |
| |
| | | |
| | |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING | |
| | | |
| | |
Basic and diluted | |
| 283,326,494 | | |
| 214,873,781 | |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
CLOUD MEDICAL DOCTOR SOFTWARE CORPORATION |
(Formerly National Scientific Corporation) |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(Unaudited) |
| |
Three Months Ended |
| |
December 31, |
| |
2014 | |
2013 |
| |
| |
|
Net loss | |
$ | (263,132) | | |
$ | (206,625) | |
Loss from discontinued operations | |
| 714 | | |
| 10,715 | |
Loss from continuing operations | |
| (262,418) | | |
| (195,910) | |
Adjustments to reconcile net loss from continuing operations to net cash | |
| | | |
| | |
used in operating activities: | |
| | | |
| | |
Depreciation and amortization | |
| 63,320 | | |
| 61,155 | |
Stock issued with licensing agreements | |
| — | | |
| 3,600 | |
Changes in operating assets and liabilities: | |
| | | |
| | |
Accounts receivable | |
| 5,568 | | |
| (2,155) | |
Accounts payable and accrued liabilities | |
| (138,879) | | |
| 72,706 | |
Deferred revenue | |
| — | | |
| 4,350 | |
Net cash used in operating activities | |
| (332,409) | | |
| (56,254) | |
| |
| | | |
| | |
CASH FLOWS FROM FINANCING ACTIVITIES: | |
| | | |
| | |
Proceeds from line of credit | |
| — | | |
| 58,574 | |
Repayment of line of credit | |
| (4,739) | | |
| — | |
Common stock issued for cash | |
| — | | |
| 5,000 | |
Net cash (used in) provided by financing activities | |
| (4,739) | | |
| 63,574 | |
| |
| | | |
| | |
(DECREASE) INCREASE IN CASH | |
| (337,148) | | |
| 7,320 | |
CASH, BEGINNING OF PERIOD | |
| 545,650 | | |
| 8,587 | |
CASH, END OF PERIOD | |
$ | 208,502 | | |
$ | 15,907 | |
| |
| | | |
| | |
CASH PAID FOR: | |
| | | |
| | |
Interest | |
$ | 1,111 | | |
$ | — | |
Taxes | |
$ | — | | |
$ | — | |
| |
| | | |
| | |
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES: | |
| | | |
| | |
| |
| | | |
| | |
Write-off of debt - related parties | |
$ | — | | |
$ | 59,704 | |
Common stock issued (rescinded) for purchase of software | |
$ | (6,000) | | |
$ | 6,000 | |
Cancellation of common stock issued | |
$ | 150 | | |
$ | — | |
| |
| | | |
| | |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
CLOUD MEDICAL DOCTOR SOFTWARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED DECEMBER
31, 2014 AND 2013
(Unaudited)
NOTE 1- DESCRIPTION OF
BUSINESS
Cloud Medical Doctor Software Corporation
(the “Company”) was incorporated in Texas on June 22, 1953 as American Mortgage Company. On May 16, 1996, the Company
changed its name to National Scientific Corporation. On April 3, 2012, the Company changed its name to Cloud Medical Doctor Software
Corporation.
In the year ended September 30, 2011,
Cloud-MD introduced the Cloud-MD Office, a “Cloud Based”, 5010 ready and ICD-10 compliant, fully integrated and interoperable
suite of medical software and services, designed by experienced healthcare analysts and programmers for healthcare providers,
that produces “Actionable Information” to help Independent Physician Practices, New Care Delivery Models (ACO), Healthcare
Systems and Billing Services optimize a wide range of business processes resulting in Increased Profits, Higher Quality, Greater
Efficiency, Noticeable Cost Reductions and Better Patient Care. Current software product offerings include Practice Management,
Electronic Medical Records, Revenue Management, Patient Financial Solutions, Medical and Pharmaceutical Supply Management, Claims
Management and PHI Exchange.
During the year ended September 30, 2012,
Cloud-MD launched Cloud-MD Billing Services which provides management of medical claims from posting physician charges and payments
into our medical billing software. The software uses a continuous insurance claim follow-up system to track and research all rejected
or denied medical claims; a Comprehensive Reporting module that includes monthly financial statements sent to our clients so they
can see how their practice is performing and a variety of detailed reports giving our clients the necessary information and tools
used to assist in the increased production which leads to more profit; and patient account inquiries and support to assist patients
with their billing and insurance questions.
On November 21, 2012, the Company purchased
from CipherSmith, LLC a complete source code, intellectual property rights, all computer software or algorithm licensed or sold
under CipherSmith, and appropriate copy rights, patents, mask works, trademarks, service marks, internet domain names or world
wide web URS. Since 2012, the Company has tested the software application and created a commercial product for distribution of
its encryption technology. The Company is presently developing more applications for consumer usage in the future.
On September 1, 2014, the Company purchased
Evolve Software for $25,000, which is a front office interface that complements our back office medical billing software. The
Company has bridged the software to provide a more user friendly medical billing package for our customers.
NOTE 2 – BASIS OF PRESENTATION
OF INTERIM CONSOLIDATED FINANCIAL STATEMENTS
The Company prepares its consolidated
financial statements in accordance with accounting principles generally accepted in the United States of America. The accompanying
interim unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles
for interim financial information in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. In our opinion,
all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.
Operating
results for the three months ended December 31, 2014 are not necessarily indicative of the results that may be expected for the
year ending September 30, 2015. Notes to the unaudited interim consolidated financial statements that would substantially duplicate
the disclosures contained in the audited consolidated financial statements for the year ended September 30, 2014
have been omitted; this report should be read in conjunction with the audited consolidated financial statements and the footnotes
thereto for the fiscal year ended September 30, 2014 included within the Company’s Form 10-K as filed with the Securities
and Exchange Commission.
Segment reporting change
With the placement into service
of the Company’s encryption technology, the Company began a segment reporting structure to match the new operating structure
and how the Company’s management views the business and allocates resources. Reclassifications of prior period financial
information have been made to conform to the current period presentation. This change does not impact previously reported condensed
consolidated financial statements of the Company. See Note 12 for additional information on our segment reporting change.
NOTE 3 - GOING CONCERN
The accompanying consolidated financial
statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which
contemplate continuation of the Company as a going concern. However, the Company has incurred losses from operations, has an accumulated
deficit at December 31, 2014 of $28,518,859 and needs additional cash to maintain its operations.
These factors raise doubt about the
Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty. The Company’s continued existence is dependent upon
management’s ability to develop profitable operations, continued contributions from the Company’s executive officers
to finance its operations and the ability to obtain additional funding sources to explore potential strategic relationships and
to provide capital and other resources for the further development and marketing of the Company’s products and business.
NOTE 4 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
The Company prepares its consolidated
financial statements in accordance with accounting principles generally accepted in the United States of America. Significant
accounting policies are as follows:
Principles of Consolidation
The consolidated financial statements have been prepared
in accordance with generally accepted accounting principles and include the accounts of the Company and Doctors Network of America,
our wholly-owned subsidiary. Intercompany transactions and balances have been eliminated in consolidation.
Use of Estimates and Assumptions
The preparation of consolidated financial
statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management
to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure
of contingent assets and liabilities known to exist as of the date the consolidated financial statements are published, and (iii) the
reported amount of net revenues and expenses recognized during the periods presented. Adjustments made with respect to the use
of estimates often relate to improved information not previously available. Uncertainties with respect to such estimates and assumptions
are inherent in the preparation of consolidated financial statements; accordingly, actual results could differ from these estimates.
The Company’s most significant estimates relate to the valuation of its proprietary technology and its valuation of its
common stock.
Cash and Cash Equivalents
The Company considers all highly liquid
investments with an original maturity of three months or less to be cash equivalents. At September 30, 2014 and 2013,
cash and cash equivalents include cash on hand and cash in the bank. The Company maintains its cash in accounts held by large,
globally recognized banks which, at times, may exceed federally insured limits as guaranteed by the Federal Deposit Insurance
Corporation (FDIC). The FDIC insures these deposits up to $250,000. At September 30, 2014, none of the Company’s cash balance
was uninsured. The Company has not experienced any losses in such accounts.
Long-Lived Assets
Long-lived assets are evaluated for
impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully
recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison
of the undiscounted future cash flows to the recorded value of the asset. If impairment is indicated, the asset is written down
to its estimated fair value.
Fair Value of Financial Instruments
The Company's financial instruments consist
primarily of cash, accounts payable and accrued expenses, and debt. The carrying amounts of such financial instruments approximate
their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments.
Fair value is focused on an exit price that
would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date. Within the measurement of fair value, the use of market-based information is prioritized over
entity specific information and a three-level hierarchy for fair value measurements is used based on the nature of inputs used
in the valuation of an asset or liability as of the measurement date.
The three-level hierarchy for fair value measurements
is defined as follows:
• |
|
Level 1 – inputs to the valuation methodology
are quoted prices (unadjusted) for identical assets or liabilities in active markets; liabilities in active markets; |
• |
|
Level 2 – inputs to the valuation
methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for
the asset or liability other than quoted prices, either directly or indirectly, including inputs in markets that are not considered
to be active; or directly or indirectly including inputs in markets that are not considered to be active; |
• |
|
Level 3 – inputs to the valuation methodology
are unobservable and significant to the fair value measurement. |
|
|
|
|
The following table summarizes fair value measurements by
level at December 31, 2014 and September 30, 2014 for assets measured at fair value on a recurring basis:
| |
Level 1 | |
Level 2 | |
Level 3 | |
Total |
At December 31, 2014 | |
| |
| |
| |
|
Software | |
$ | — | | |
$ | — | | |
$ | 534,981 | | |
$ | 534,981 | |
Total Software | |
$ | — | | |
$ | — | | |
$ | 534,981 | | |
$ | 534,981 | |
| |
| | | |
| | | |
| | | |
| | |
At September 30, 2014 | |
| | | |
| | | |
| | | |
| | |
Software | |
$ | — | | |
$ | — | | |
$ | 604,301 | | |
$ | 604,301 | |
Total Software | |
$ | — | | |
$ | — | | |
$ | 604,301 | | |
$ | 604,301 | |
Accounts Receivable and Allowance for Uncollectible
Accounts
Substantially all of the Company’s accounts
receivable balance is related to trade receivables. Trade accounts receivable are recorded at the invoiced amount and do not bear
interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in
its existing accounts receivable. The Company will maintain allowances for doubtful accounts for estimated losses resulting from
the inability of its customers to make required payments for services. Accounts with known financial issues are first reviewed
and specific estimates are recorded. The remaining accounts receivable balances are then grouped in categories by the number of
days the balance is past due, and the estimated loss is calculated as a percentage of the total category based upon past history.
Account balances are charged against the allowance when it is probable the receivable will not be recovered. As of December 31,
2014 and 2013, the Company had no valuation allowance for the Company’s accounts receivable.
Income Taxes
The Company utilizes the asset and liability
method in accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for operating loss
and tax credit carry-forwards and for the future tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results
of operations in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying amounts
of deferred tax assets unless it is more likely than not that the value of such assets will be realized.
The Company uses the two-step approach to
recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining
if the weight of available evidence indicates it is more likely than not, that the position will be sustained on audit, including
resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount,
which is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and
estimating the Company's tax positions and tax benefits, which may require periodic adjustments. At December 31, 2014, the Company
did not record any liabilities for uncertain tax positions for the three months ended December 31, 2014.
Revenue Recognition
Medical Licensing Agreement
License revenue
consists principally of revenue earned under software license agreements. The Company sells its software to a medical
practitioner for direct payment or through a third party leasing company for direct payment to the Company. The third party
lease agreement is a non-recourse debt and the Company is not responsible for the default of the medical practitioner. License
revenue is generally recognized when a signed contract or other persuasive evidence of an arrangement exists, the software
has been electronically delivered, the license fee is fixed or is measured on a paid user basis; and collection of the resulting
receivable is probable. When contracts contain multiple elements wherein Vendor-Specific Objective Evidence
(“VSOE”) exists for all undelivered elements, we account for the delivered elements in accordance with the
“Residual Method.”
VSOE of fair value for maintenance
and support is established by a stated renewal rate, if substantive, included in the license arrangement or rates charged in stand-alone
sales of maintenance and support. Revenue from subscription license agreements, which include software, rights to unspecified
future products and maintenance, is recognized ratably over the term of the subscription period.
Provided all other revenue criteria are met, the upfront,
minimum, non-refundable license fees from customers are generally recognized upon delivery and on-going royalty fees are generally
recognized upon reports of new licenses issued. If there is significant uncertainty about the project completion or receipt of
payment for professional services, revenue is deferred until the uncertainty is sufficiently resolved. VSOE of fair value of services
is based upon stand-alone sales of those services.
Subscription revenue is generated
from bandwidth and information storage. In the first year and each year thereafter, the software is purchased and installed the
purchaser will pay an annual fee of $1,200, $1,500, $1,800, and $2,400, respectively. Subscription revenue is recognized ratably
over the term of the agreement.
Transaction revenue is generated from the
following services and recognized when a transaction occurs:
| · | Electronic
Remittance Advice $0.35 Electronic remittance transaction fee; |
| · | Paper
Claims $1.00
Paper claim fee; |
| · | Carrier
Direct $0.16 Carrier direct fee; |
| · | Fast
Forward $0.35 Fast forward transaction fee; and, |
| · | Patient
Credit $2.50 Automatic Debit processing per transaction paid by the patient |
The Company had not received
any transaction revenues in the three months ended December 31, 2014.
CipherLoc Licensing Agreement
License revenue also consists
of revenue earned under a CipherLoc License Agreement. License revenue is generally recognized when
a signed contract or other persuasive evidence of an arrangement exists, the software has been electronically delivered, the license
fee is fixed or is measured on a paid user basis; and collection of the resulting receivable is probable. When contracts contain
multiple elements wherein Vendor-Specific Objective Evidence (“VSOE”) exists for all undelivered elements, we account
for the delivered elements in accordance with the “Residual Method.”
VSOE of fair value for maintenance
and support is established by a stated renewal rate, if substantive, included in the license arrangement or rates charged in stand-alone
sales of maintenance and support. Revenue from subscription license agreements, which include software, rights to unspecified
future products and maintenance, is recognized ratably over the term of the subscription period.
Provided all other revenue criteria
are met, the upfront, minimum, non-refundable license fees from customers are generally recognized upon delivery and on-going
royalty fees are generally recognized upon reports of new licenses issued. If there is significant uncertainty about the project
completion or receipt of payment for professional services, revenue is deferred until the uncertainty is sufficiently resolved.
VSOE of fair value of services is based upon stand-alone sales of those services.
Cost of License and Subscriptions Revenue
Cost of license revenue is primarily
comprised of the license-based royalties to third parties and production and distribution costs for initial product licenses.
No costs were incurred for license-based royalties during the three months ended December 31, 2014 and 2013.
Cost of subscription revenue is primarily
comprised of the costs associated with the customer support personnel that provide maintenance, enhancement and support services
to customers. No costs were incurred for customer support during the three months ended December 31, 2014 and 2013.
The amortization
of acquired technology for products acquired through business combinations are considered as the cost of revenues. The
acquired software technologies are amortized over their useful lives of five (5) years
Deferred Revenue
Deferred revenue result from fees billed to
customers for which revenue has not yet been recognized or for which the conditions of the arrangement have been
modified. The Company recognizes revenue to provide up-front capitalization to Cloud-MD for each provider added to the
solution set. The Company also recognizes annual subscription fees for virtual servers and subscription and small usage fees
and those revenues are based on a 48-month lease, Cloud-MD would amortize the revenue over the life of the agreement of 48
months. In addition, it features incremental monthly revenue, for the duration of the lease (48 months) based on fees
assessed for transactions such as eligibility claims processing, etc.
The Company has deferred revenue of
$0 as of December 31, 2014.
Sales Commissions
The Company pays commissions, including
sales bonuses, to the direct sales force related to revenue transactions under sales compensation plans which are established
annually. The commission payments are typically paid in full in the month or quarter following execution of the customer contracts.
The Company paid commissions of $0 and $37,000 for the three months ended December 31, 2014 and 2013
Research
and Development and Software Development Costs
Capitalization of certain software
development costs subsequent to the establishment of technological feasibility. Based on our product development process, technological
feasibility is established upon the completion of a working model. To date, costs incurred by us from the completion of the working
model to the point at which the product is ready for general release have been insignificant. Accordingly, we have charged all
such costs to research and development expense in the period incurred. The Company recorded research and development costs of
$17,430 and $30,000 for the three months ended December 31, 2014 and 2013
Share-Based Compensation
The Company measures the cost of services
received in exchange for an award of an equity instrument based on the grant-date fair value of the award. Compensation
cost is recognized over the vesting or requisite service period. The Black-Scholes option-pricing model is used to estimate the
fair value of options or warrants granted. There were no options or warrants issued by the Company during the three months ended
December 31, 2014 and 2013.
Basic and Diluted Net Income (Loss) per
Common Share
Basic income (loss) per share is computed
by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during
the reporting period. The weighted average number of shares is calculated by taking the number of shares outstanding and
weighting them by the amount of time that they were outstanding. Diluted earnings per share reflects the potential dilution
that could occur if stock options, warrants, and other commitments to issue common stock were exercised or equity awards vest
resulting in the issuance of common stock that could share in the earnings of the Company. As of September 30, 2014 and 2013,
the Company had no potentially dilutive instruments outstanding.
As of December 31, 2014, the Company has 4,000,000
preferred shares that can be converted subject to the limitation of the Company’s authorized shares at 1 preferred share
for 150 common shares. The conversion can only take place with the approval of the Board of Directors. At December 31, 2014, the
preferred shares could be converted into 600,000,000 of common shares which exceeds the Company’s authorized common shares
to be issued and would result in dilution of current common shareholders. The preferred shares are anti-dilutive since the losses
the Company has incurred for the periods ended December 31, 2014 and 2013.
Diluted loss per share is the same as basic
loss per share during periods where net losses are incurred since the inclusion of the potential common stock equivalents would
be anti-dilutive as a result of the net loss.
Concentration of Credit Risk
All of the Company’s cash and cash equivalents
are maintained in regional and national financial institutions. The Company has exposure to credit risk to the extent that its
cash and cash equivalents exceed amounts covered by the U.S. federal deposit insurance; however, the Company has not experienced
any losses in such accounts. In management’s opinion, the capitalization and operating history of the financial institutions
are such that the likelihood of material loss is remote.
Subsequent Events
The Company
has evaluated all transactions occurring from the end of three months, December 31, 2014, through the date of issuance of the
financial statements for subsequent event disclosure consideration.
Recent Accounting Pronouncements
No accounting standards or interpretations
issued recently are expected to a have a material impact on the Company’s financial position, operations or cash flows.
NOTE 5 – SOFTWARE
The following is a detail of software
at December 31, 2014 and September 30, 2013:
| |
2014 | |
2013 |
Source Code License | |
$ | 2,500 | | |
$ | 2,500 | |
Software License | |
| 1,200,106 | | |
| 1,200,106 | |
EMR Certification | |
| 23,000 | | |
| 23,000 | |
Encryption Software Code | |
| 15,800 | | |
| 15,800 | |
Evolve Software Code | |
| 25,000 | | |
| 25,000 | |
Compass Rose Code | |
| — | | |
| 6,000 | |
Acquisition of Doctor’s Network of America | |
| 10,000 | | |
| 10,000 | |
Total intangible assets | |
| 1,276,406 | | |
| 1,282,406 | |
Accumulated amortization of intangible assets (charged to cost of sales) | |
| (731,425 | ) | |
| (668,105 | ) |
Accumulated impairment of assets | |
| (10,000 | ) | |
| (10,000 | ) |
Total proprietary technology, net | |
$ | 534,981 | | |
$ | 604,301 | |
The Company’s software was placed
into service starting in the second quarter of fiscal year ended September 30, 2012. The amortization expense was $63,320 and
$61,155 for the three months ended December 31, 2014 and 2013, respectively.
Source Code License
In October 2013, the Company through
a purchase agreement with Antree Systems Limited (“Antree”) purchased a complete source code, intellectual property
rights, all computer software, patents, or formulas, algorithm licensed or sold under a project known as Compass Rose and appropriate
copyrights, patents, mask works, trademarks, service marks, internet domain names and world wide web uniform resource locators
(“URLs”) from Antree Systems Limited. The Company issued 200,000 shares of its common stock as consideration for the
purchase. The fair value of the consideration and the assets acquired is based on the fair value of the common stock issued in
exchange for the software. The total fair value, based on the market price on the date of grant, was $6,000. The Company evaluated
this acquisition and determined that it did not meet the definition of a significant business acquisition.
During the three months ended December 31, 2014,
the Company and Antree agreed to unwind the acquisition of the software by the Company. Accordingly, the Company gave up all its
rights for the use of the Compass Rose Code and all associated intellectual property rights, all computer software, patents, or
formulas, algorithms licensed or sold under the project known as Compass Rose and the appropriate copyrights, patents, mask works,
trademarks, service marks, internet domain names and world wide web uniform resource locators. In exchange for the Company giving
up its rights to the Compass Rose Code, Antree agreed to the rescission and cancellation of the shares issued for the purchase.
The Company cancelled the 200,000 shares issued to Antree and recorded a reduction to its capitalized intangible assets of $6,000
and a corresponding reduction of equity.
NOTE 6- DISCONTINUED OPERATIONS
GPS Operational Device Business
The Company’s former Board
of Directors believed that it was in the best interest of the Company to discontinue the former business operation of the GPS
operational device business. In 2011, this business was transferred to National Scientific, LLC, a company owned by the Company’s
prior CEO, by prior management in which the Company’s former CEO was to pay $100,000 plus 2% of revenues for that technology.
The former officer never paid the specific consideration for this transaction.
Accordingly, the Company reclassified
the assets, liabilities and operations related to its GPS operational device business as discontinued operations. Consequently,
the accompanying consolidated financial statements reflect the assets, liabilities and operations of the GPS operational device
business as net assets of discontinued operations, net liabilities of discontinued operations and results from discontinued operations.
DNA
On March 16, 2013, the Company closed the acquisition with
the final payment for DNA. Subsequent to the transaction closing, the sellers refused to pay the transaction fees for medical
billing contracts that were processed. The Company filed a lawsuit against the sellers for Breach of Contract among other things
in June of 2013. During that time, the Company believes the sellers began contacting all billing contract holders and interfered
with the acquisition of all the assets from the transaction. Consequently, the accompanying consolidated financial statements
reflect the assets, liabilities and operations of DNA as net assets of discontinued operations, net liabilities of discontinued
operations and results from discontinued operations.
Details of the classifications for net assets, liabilities
and operations are shown below.
| |
| |
|
| |
December 31, 2014 | |
September 30, 2013 |
Net liabilities of discontinued operations: | |
| |
|
Accounts payable | |
$ | — | | |
$ | 18 | |
Net liabilities of discontinued operations | |
$ | — | | |
$ | 18 | |
| |
| | | |
| | |
| |
Three Months Ended December 31, |
| |
2014 | |
|
2013 |
Discontinued operations: | |
| | | |
|
| | |
Revenues | |
$ | 12,779 | | |
|
$ | 77,284 | |
Cost of sales | |
| — | | |
|
| — | |
Operating expenses | |
| (13,493) | | |
|
| (87,999) | |
(Loss) income from discontinued operations | |
| (714) | | |
|
| (10,715) | |
| |
| | | |
|
| | |
NOTE 7 – LINES OF CREDIT
In November
2013, the Company entered into a revolving line of credit with Mutual of Omaha in the amount of $65,000 at a 5.00% interest rate
per annum which renews annually. As of December 31, 2014, the Company had an outstanding balance of $48,873 on the line of credit.
During the three months ended December 31, 2014, the Company repaid $4,739 of the outstanding balance and incurred and paid $1,111
in interest expense related to the Mutual of Omaha line of credit.
The Company has a revolving line of
credit with Chase Bank with a balance as of December 31, 2014 in the amount of $0 and a borrowing limit of $50,000. The line of
credit with Chase Bank has an interest rate of 4.25% per annum and renews annually.
NOTE 8 – DEBT MITIGATION PROGRAM
The Company determined that the statute
of limitations for certain of the Company’s creditors to enforce collection of any amounts they might be owed has now elapsed.
Based on the determinations and findings, during three months ended December 31, 2014 and 2013, the Company recognized a
gain on the write-off of liabilities in the amount of $0 and $58,984 from third party liabilities, respectively, which was recorded
in income from discontinued operations, and additional paid-in capital of $0 and $42,137 for related party liabilities, respectively.
The Company will continue to conduct this analysis going forward and write-off obligations when such obligations are no longer
enforceable based on applicable law.
The following liabilities, through
the opinion of legal counsel, were determined by the Company as unenforceable.
| |
December 31, | |
September 30, |
| |
2014 | |
2014 |
Debt Mitigation Program - Accounts payable and accrued expenses | |
$ | — | | |
$ | 101,121 | |
Gain on write-off of debt | |
| — | | |
| 58,984 | |
Additional paid-in capital (1) | |
$ | — | | |
$ | 42,137 | |
(1) |
|
All amounts that were owed to related parties in prior years were recorded
to paid-in capital. |
NOTE
9 – COMMITMENTS AND CONTINGENCIES
The Company entered into an agreement
to purchase the assets of DNA in June 2012 and, after due diligence by both parties, the transaction closed on March 16, 2013.
Subsequent to the transaction closing on March 16, 2013, the sellers refused to pay for medical billing process transaction fees
in accordance with their contracts of approximately $200,000. In June 2013, the Company sued the sellers in federal court for
breach of contract among other causes of action of unpaid medical billing transaction fees of approximately $200,000. The Company
believes it will be successful in its litigation. However, if the Company is successful, the collectability of the judgment is
highly questionable.
The Company
has issued shares to new investors since January 2, 2011, that have an anti-reverse common stock split clause if the Company reverse
splits the common stock. The reverse split of common stock is determined by management but must be approved by Financial Industry
Regulation Authority (“FINRA”). The current investors holding anti-reverse split stock will have the right to hold
the same number of shares of common stock as status quo after the reverse split. The anti-reverse split common stock protection
is only for stock subject to reverse split and once the Company declares a reverse split and it is completed, the anti-reverse
split protection will be terminated and shareholders that received anti-reverse split stock will be held with regular stockholders
as the Company proceeds forward. In accordance with the anti-reverse split provision, no further shares will be issued to the
anti-reverse split shareholders once the reverse split is approved and completed. The Company has issued 90,029,843 anti-reverse
split shares and these holders will hold the same number of shares after the reverse split has been completed. The company submitted
a new application to FINRA for a 100:1 reverse stock split on January 15, 2015. Had the Company completed the reverse stock split
by December 31, 2014, the price of the Company stock would have been $1.38, and 89,129,544 additional shares would have been issued
at a total of $122,998,771.
As discussed in Note 8, the Company has written
off $0 and $59,704 in accounts payable, accrued liabilities and notes payable based on the opinion of legal counsel during the
three months ended December 31, 2014 and for the year ended September 30, 2014, respectively. However, the related creditors could
make a claim in the future in regards to these liabilities.
NOTE 10 - EQUITY
As of December 31, 2014,
the Company was authorized to issue 681,000,000 common shares and 10,000,000 preferred shares at a par value of $0.01.
Three months ended December 31, 2014
Stock Cancelled
During the three months ended December 31,
2014, the Company cancelled 215,000 shares of common stock. 200,000 of these shares were cancelled in relation to the Company
giving back its rights to the Compass Rose Code. See Note 5. As part of the Antree rescission and cancellation, 15,000 shares
were additionally cancelled that were issued in the year ended September 30, 2014, to one of the owners of Antree who provided
additional programming services for improvements to the Compass Rose Code. The cancellation of the 15,000 shares was recorded
as an adjustment to the Company’s par value, as no consideration was paid for the cancellation.
Three months ended December 31, 2013
Stock Issued for Cash
During the three months ended December
31, 2013, the Company issued 25,000 shares of common stock for $5,000 in net cash proceeds as follows:
Date | |
Number of Shares | |
Proceeds |
| October 21, 2013 | | |
| 25,000 | | |
$ | 5,000 | |
| Total | | |
| 25,000 | | |
$ | 5,000 | |
Stock Issued in Connection
with Software Licensing and Subscription Agreements
During the three months ended December
31, 2013, the Company issued 120,000 shares of common stock valued at $3,600 based on the market price on the date of
grant, to customers, in regards to the purchase of software from the Company in accordance with the Software Licensing and Subscription
Agreements. The fair values of the shares issued were recorded as a reduction of software revenue recognized during the three
months ended December 31, 2013.
Date | |
Number of Shares | |
Fair Value |
| December 4, 2013 | | |
| 120,000 | | |
$ | 3,600 | |
| Total | | |
| 120,000 | | |
$ | 3,600 | |
Stock Issued for Assets Acquisition
In October 2013, the Company through
a purchase agreement with Antree has purchased a complete source code, intellectual property rights, all computer software, patents,
or formulas, algorithm licensed or sold under a project known as Compass Rose and appropriate copyrights, patents, mask works,
trademarks, service marks, internet domain names and world wide web uniform resource locators (“URLs”) from Antree.
The Company issued 200,000 shares of its common stock as consideration for the purchase. The fair value of the consideration and
the assets acquired is based on the fair value of the common stock issued in exchange for the software. The total fair value,
based on the market price on the date of grant, was $6,000. The Company evaluated this acquisition and determined that it did
not meet the definition of a significant business acquisition.
In November 2013, the Company issued
180,000 shares of common stock as replacement shares for the 160,000 shares of common stock issued to Antree and 20,000 shares
of common stock to Kimberly Ilicerl. The Company cancelled the original shares issued to Antree because the shares were lost during
delivery to Antree .
Preferred Stock
The Company has authorized
10,000,000 shares of preferred stock, at $0.01 par value. The Company established and designated the rights and preferences of
a Series A Preferred Stock, and reserve 10,000,000 shares of preferred stock against its issuance, such rights, preferences and
designations. Each share of the Series A Preferred Stock has 150 votes on all matters presented to be voted by the holders of
our common stock. 2,000,000 shares of preferred stock were issued to each of the Company’s CEO and former CFO on April 11,
2011.
On December 17, 2013, the
Company amended its Articles of Incorporation that gave the right to the holders of Preferred A shares to convert 1 share of Convertible
Preferred A shares to 150 Common Shares of the Company. The holders of the Preferred A shares can convert the shares upon proper
notice and approval of the Board of Directors. Presently, the holders of the Preferred A shares have not sent notice to the Board
of Directors.
NOTE 11 – SEGMENT INFORMATION
Cloud Medical Doctors Software Corporation
has two reporting segments and corporate overhead:
- Cloud-MD – the Company sells
medical billing software to doctors. Prior to 2014, all of the Company’s business activities were derived from this segment.
- CipherLoc – the Company licenses
encryption technology that can be used by larger corporation to protect their data through our polymorphic technology.
- Corporate Overhead – the Company’s
activities that are used to finance the current operations and expansion of its segments.
The accounting policies of the segments
are the same as those described in the summary of significant accounting policies. The Company evaluates performance based on
profit or loss from operations before income taxes, not including nonrecurring gains and losses and foreign exchange gains and
losses. The reportable segments are strategic business units that offer different technology and marketing strategies. Most of
the businesses were developed internally and management remains the same. To date, the Company’s operations are principally
in the United States.
Consolidated revenues from external customers, operating
loss, and identifiable assets were as follows:
| |
Three months ended December 31, |
| |
2014 | |
2013 |
Revenues: | |
| | | |
| | |
Cloud-MD | |
$ | 431 | | |
$ | 117,557 | |
CipherLoc | |
| — | | |
| — | |
Total revenues | |
$ | 431 | | |
$ | 117,557 | |
| |
| | | |
| | |
Operating Income (loss): | |
| | | |
| | |
Cloud-MD | |
$ | (66,550) | | |
$ | 26,402 | |
CipherLoc | |
| (18,520) | | |
| — | |
Corporate | |
| (176,325) | | |
| (222,076) | |
Operating loss | |
$ | (261,395) | | |
$ | (195,674) | |
| |
| | | |
| | |
| |
Three months ended December 31, 2014 | |
September 30, 2014 |
Identifiable assets: | |
| | | |
| | |
Cloud-MD | |
$ | 519,971 | | |
$ | 583,507 | |
CipherLoc | |
| 15,010 | | |
| 21,800 | |
Corporate | |
| 210,094 | | |
| 552,537 | |
Total identifiable assets | |
$ | 745,075 | | |
$ | 1,157,844 | |
NOTE 14 – SUBSEQUENT EVENTS
In
February 2015, the Company issued 6,000,000 shares of its Series A Preferred Stock to its CEO. As the Series A Preferred Stock
is convertible into the Company’s common stock, the Company recorded $60,000 as stock compensation based on the market value
of the Company’s common stock on the date of grant. As of February 17, 2015, there are a total of 10,000,000 shares of the
Series A Preferred Stock outstanding which are convertible into a total of 1,500,000,000 shares of common stock. This number of
shares currently exceeds our authorized number of common shares. However, the holders of the Preferred A shares can only
convert the shares upon proper notice and approval of the Board of Directors. Presently, the holders of the Preferred A shares
have not sent notice to the Board of Directors and the Board of Directors does not currently intend to approve such conversion.
* * * * * * * * * * * *
In this Quarterly Report on Form
10-Q, “Company,” “our company,” “us,” and “our” refer to Cloud Medical Doctor
Software Corporation and its subsidiaries, unless the context requires otherwise.
ITEM 2 - MANAGEMENT’S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
Management’s Discussion
and Analysis contains various “forward looking statements” within the meaning of Section 21E of the Securities Exchange
Act of 1934, as amended, regarding future events or the future financial performance of the Company that involve risks and uncertainties.
Certain statements included in this Form 10-Q, including, without limitation, statements related to anticipated cash flow sources
and uses, and words including but not limited to “anticipates”, “believes”, “plans”, “expects”,
“future” and similar statements or expressions, identify forward looking statements. Any forward-looking statements
herein are subject to certain risks and uncertainties in the Company’s business, including but not limited to, reliance
on key customers and competition in its markets, market demand, delayed payments of accounts receivables, technological developments,
maintenance of relationships with key suppliers, difficulties of hiring or retaining key personnel and any changes in current
accounting rules, all of which may be beyond the control of the Company. Management will elect additional changes to revenue recognition
to comply with the most conservative SEC recognition on a forward going accrual basis as the model is replicated with other similar
markets (i.e. SBDC). The Company’s actual results could differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including those set forth therein.
Forward-looking statements involve
risks, uncertainties and other factors, which may cause our actual results, performance or achievements to be materially different
from those expressed or implied by such forward-looking statements. Factors and risks that could affect our results and achievements
and cause them to materially differ from those contained in the forward-looking statements include those identified in the section
titled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended September 30, 2013, as
well as other factors that we are currently unable to identify or quantify, but that may exist in the future.
In addition, the foregoing factors
may affect generally our business, results of operations and financial position. Forward-looking statements speak only as of the
date the statement was made. We do not undertake and specifically decline any obligation to update any forward-looking statements.
Our Business
Cloud Medical Doctor Software Corporation
(the “Company”) was incorporated in Texas on June 22, 1953 as American Mortgage Company. On May 16, 1996, the Company
changed its name to National Scientific Corporation. On April 3, 2012, the Company changed its name to Cloud Medical Doctor Software
Corporation.
In the year ended September 30, 2011,
Cloud-MD introduced the Cloud-MD Office, a “Cloud Based”, 5010 ready and ICD-10 compliant, fully integrated and interoperable
suite of medical software and services, designed by experienced healthcare analysts and programmers for healthcare providers,
that produces “Actionable Information” to help Independent Physician Practices, New Care Delivery Models (ACO), Healthcare
Systems and Billing Services optimize a wide range of business processes resulting in Increased Profits, Higher Quality, Greater
Efficiency, Noticeable Cost Reductions and Better Patient Care. Current software product offerings include Practice Management,
Electronic Medical Records, Revenue Management, Patient Financial Solutions, Medical and Pharmaceutical Supply Management, Claims
Management and PHI Exchange.
During the year ended September 30, 2012, Cloud-MD
launched Cloud-MD Billing Services which provides management of medical claims from posting physician charges and payments into
our medical billing software. The software uses a continuous insurance claim follow-up system to track and research all rejected
or denied medical claims; a Comprehensive Reporting module that includes monthly financial statements sent to our clients so they
can see how their practice is performing and a variety of detailed reports giving our clients the necessary information and tools
used to assist in the increased production which leads to more profit; and patient account inquiries and support to assist patients
with their billing and insurance questions.
On November 21, 2012, the Company purchased
from CipherSmith, LLC a complete source code, intellectual property rights, all computer software or algorithm licensed or sold
under CipherSmith, and appropriate copy rights, patents, mask works, trademarks, service marks, internet domain names or world
wide web URS. Since 2012, the Company has tested the software application and created a commercial product for distribution of
its encryption technology. The Company is presently developing more applications for consumer usage in the future.
On September 1, 2014, the Company purchased
Evolve Software for $25,000, which is a front office interface that complements our back office medical billing software. The
Company has bridged the software to provide a more user friendly medical billing package for our customers.
Strategy
Our strategy is to establish leadership in the evolving software
services and products. We have already established a cloud based application in our two revenues segments and we intend to commit
more sales staff to develop a sustainable financial performance. To be successful we must implement and focus our priority on
our sales team by developing a large sales base to sell our cloud based medical billing software and allow our technical experts
to meet with commercial buyers of our encryption technology. The new focus will provide a strong foundation for our long-term
growth.
Our Operating Segments
Cloud Medical Doctors Software Corporation
has two reporting segments and corporate overhead:
| · | Cloud-MD
– the Company sells medical billing software to doctors. Prior to 2014, all of
the Company’s business activities were derived from this segment. |
| · | CipherLoc
– the Company has an encryption technology that can be used by larger corporation
to protect their data through our polymorphic technology. |
The Future for Cloud-MD™
Our business strategy includes the
acquisition of successful billing companies in strategic markets, the acquisition or licensing of useful emerging technologies
and the direct sale to physicians of Cloud-MD™ Office software licenses.
On the Medical Software and Billing
Services side of the equation, Cloud-MD™ has already begun the sale of software licenses and the acquisition of billing
companies with the purchase of Doctors Network of America, LLC and is currently in final negotiations with two others billing
companies in Texas and we are currently in talks with another medical software company to acquire their software assets and customer
base.
Our model is effective because we offer:
| · | Software For
Life – Buy One Time |
| · | Evergreen Product
- Support, Maintenance and Upgrades Included With User License |
| · | Physician Ownership
Opportunity – Stock Award With Purchase Of License |
| · | Cloud-MD™
is Publicly Traded NSCT.PK |
| · | Patented Auto
Post Feature - To Eliminate Need For Manual Posting of Electronic Remittance Advice (835)
By Staff |
| · | Multiple Opportunities
to Recover Investment (Meaningful Use Dollars, Stock Award Option, IRS Section 179, Lower
Employee and Maintenance Cost) |
| · | State-Of-The-Art
Claims Editing and Real-Time Eligibility - Increase Collections and Reduce Days in A/R
|
| · | Cloud Based
Technology- IPAD, IPHONE, ANDROID, GOOGLE, WINDOWS for Anytime and Anywhere Availability
and Eliminates Catastrophic Loss of Data |
As we move forward building on our
current platforms and strengths and gaining significant momentum in acquisitions, capabilities and revenue streams, it is important
for Cloud-MD™ to augment its portfolio of capabilities with solutions that complement those offerings currently available.
With the addition of a pending acquisition, we will add another dimension to our Cloud-MD™ Office and Billing Services offering
that will offer a secure mechanism for providers to exchange patient PHI without the need to have all of the providers on a common
EMR platform, but will integrate with our EMR in a manner that offers prospective large clients such as hospitals, ACO’s,
etc. the functionality of an Electronic Health Interchange without the huge costs and overhead. In addition, we have recently
developed enhanced capabilities within our Cloud-MD™ Office product offering that will offer superior solutions to hospitalists,
nursing home practitioners and providers of home health services.
The Company is currently negotiating
a front end software interface that will enhance our software capabilities.
The Future for CipherLoc™
Our CipherLoc™ Polymorphic Cipher
Engine is a ground-breaking; state-of-the-art Polymorphic Key Progression Algorithm (PKPA) based digital encryption solution that
has wide-spread applicability throughout the commercial computer, communications and broadcasting industries as well as significant
applicability in the government arena. The CipherLoc Polymorphic Hardware Engine has a current patent and is fully developed and
ready for use.
CipherLoc is different from the historical
Digital Cyber Security Solutions as it incorporates polymorphism which is the ability to change an encryption to another method
of encryption or key on the fly. Polymorphic ciphers are more commonly known as “mutating” ciphers.
Polymorphic ciphers are an idea
based on the information content in a message rather than the difficulty of the key. Using advanced set theory and information
theory, this encryption method does not rely exclusively on large keys and complicated permutation/obscuring techniques. This
makes the algorithm faster and requires less memory than other encryptions. A polymorphic cipher solves both asset intrusion and
electronic attack problems.
Our business strategy includes the
sales of our encryption technology for commercial use to credit card companies, investment companies, retailers, among others.
We have internally tested our demonstration model with success and we have used this demonstration software to show potential
buyers of its powerful security encryption technology. The digital cipher and encryption market offers seemingly endless opportunity.
The Company is presently discussing licensing agreements with several large corporations that are in need of this software to
protect their customers, passwords, websites and other devices that require data security.
Strategic Alliances
The Company entered into a consulting
agreement with Hemp, Inc. The agreement requires Hemp to provide introductions, products, financing contacts, and other significant
business opportunities to the Company. The principles of Hemp, Inc. have had a long term relationship with the CEO of Gawk, Inc.
(“Gawk”) which facilitated in our first sale of our CipherLoc Encryption Technology.
Presently the entertainment industry
has one of the highest pirated assets and is in need for advance encryption technology to protect those assets. Accordingly, the
Company has entered into consulting agreements to facilitate introductions with entertainment industry participants.
The Company entered into a consulting
agreement with Gawk. This agreement was to help facilitate introductions by Gawk to the Company from their list of contacts in
the entertainment industry. Through our relationship with Gawk, Inc. and its CEO we believe they will be instrumental in future
introductions for the sale of our CipherLoc Encryption Technology.
The Company
entered into an investor relations and consulting agreement with BCMG Entertainment, Inc. (“BCMG”). The agreement
provides for BCMG to introduce the Company to participants in the entertainment industry. BCMG also has experience in market awareness
which the Company can benefit from through this alliance.
On July 22,
2014 the Company entered into a consulting service agreement with Vindonnus Group/Alerce Global LLC. This agreement will provide
marketing and sales strategies for the sale of CipherLoc our encryption technology. As compensation for the consulting services
and sales, the consultant will receive 1,000,000 warrants exercised price of $1.00 with a three year live for each $10,000,000
in annualized sales directly attributed to Consultants efforts and subject to the terms and condition of the Agreement. This Agreement
will help increase our sales and marketing of our CipherLoc Encryption Technology.
SIGNIFICANT
ACCOUNTING POLICIES
The Company prepares its consolidated
financial statements in accordance with accounting principles generally accepted in the United States of America. Significant
accounting policies are as follows:
Use of Estimates and Assumptions
The preparation of consolidated financial
statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management
to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure
of contingent assets and liabilities known to exist as of the date the consolidated financial statements are published, and (iii) the
reported amount of net revenues and expenses recognized during the periods presented. Adjustments made with respect to the use
of estimates often relate to improved information not previously available. Uncertainties with respect to such estimates and assumptions
are inherent in the preparation of consolidated financial statements; accordingly, actual results could differ from these estimates.
The Company’s most significant estimates relate to the valuation of its proprietary technology and its valuation of its
common stock.
Share-Based Compensation
The Company measures the cost of services
received in exchange for an award of an equity instrument based on the grant-date fair value of the award. Compensation
cost is recognized over the vesting or requisite service period.
Basic and Diluted Net Income (Loss) per
Common Share
Basic income (loss) per share is
computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares
outstanding during the reporting period. The weighted average number of shares is calculated by taking the number of
shares outstanding and weighting them by the amount of time that they were outstanding. Diluted earnings per share
reflects the potential dilution that could occur if stock options, warrants, and other commitments to issue common stock were
exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company. As
of December 31, 2014, the Company has 4,000,000 preferred shares that can be converted subject to the limitation of the
Company’s authorized shares at 1 preferred share for 150 common shares. The conversion can only take place with the
approval of the Board of Directors. At December 31, 2014, the preferred shares could be converted into 600,000,000 of common
shares which exceeds the Company’s authorized common shares to be issued and would result in dilution of current common
shareholders. The preferred shares are anti-dilutive since the losses the Company has incurred for the periods ended December
31, 2014 and 2013.
Diluted loss per share is the same as basic
loss per share during periods where net losses are incurred since the inclusion of the potential common stock equivalents would
be anti-dilutive as a result of the net loss.
Revenue Recognition
Medical Licensing Agreement
License revenue
consists principally of revenue earned under software license agreements. The Company sells its software to a medical
practitioner for direct payment or through a third party leasing company for direct payment to the Company. The third party
lease agreement is a non-recourse debt and the Company is not responsible for the default of the medical practitioner. License
revenue is generally recognized when a signed contract or other persuasive evidence of an arrangement exists, the software
has been electronically delivered, the license fee is fixed or is measured on a paid user basis; and collection of the
resulting receivable is probable. When contracts contain multiple elements wherein Vendor-Specific Objective Evidence
(“VSOE”) exists for all undelivered elements, we account for the delivered elements in accordance with the
“Residual Method.”
VSOE of fair value for maintenance
and support is established by a stated renewal rate, if substantive, included in the license arrangement or rates charged in stand-alone
sales of maintenance and support. Revenue from subscription license agreements, which include software, rights to unspecified
future products and maintenance, is recognized ratably over the term of the subscription period.
Provided all other revenue criteria
are met, the upfront, minimum, non-refundable license fees from customers are generally recognized upon delivery and on-going
royalty fees are generally recognized upon reports of new licenses issued. If there is significant uncertainty about the project
completion or receipt of payment for professional services, revenue is deferred until the uncertainty is sufficiently resolved.
VSOE of fair value of services is based upon stand-alone sales of those services.
Subscription revenue is generated
from bandwidth and information storage. In the first year and each year thereafter, the software is purchased and installed the
purchaser will pay an annual fee of $1,200, $1,500, $1,800, and $2,400, respectively. Subscription revenue is recognized ratably
over the term of the agreement.
Transaction revenue is generated from the
following services and recognized when a transaction occurs:
| · | Electronic
Remittance Advice $0.35 Electronic remittance transaction fee; |
| · | Paper
Claims $1.00
Paper claim fee; |
| · | Carrier
Direct $0.16 Carrier direct fee; |
| · | Fast
Forward $0.35 Fast forward transaction fee; and, |
| · | Patient
Credit $2.50 Automatic Debit processing per transaction paid by the patient |
The Company had not received
any transaction revenues in the three and three months ended December 31, 2014.
CipherLoc Licensing Agreement
License revenue consists also
of revenue earned under CipherLoc License Agreement. License revenue is generally recognized when a
signed contract or other persuasive evidence of an arrangement exists, the software has been electronically delivered, the license
fee is fixed or is measured on a paid user basis; and collection of the resulting receivable is probable. When contracts contain
multiple elements wherein Vendor-Specific Objective Evidence (“VSOE”) exists for all undelivered elements, we account
for the delivered elements in accordance with the “Residual Method.”
VSOE of fair value for maintenance
and support is established by a stated renewal rate, if substantive, included in the license arrangement or rates charged in stand-alone
sales of maintenance and support. Revenue from subscription license agreements, which include software, rights to unspecified
future products and maintenance, is recognized ratably over the term of the subscription period.
Provided all other revenue criteria are met,
the upfront, minimum, non-refundable license fees from customers are generally recognized upon delivery and on-going royalty
fees are generally recognized upon reports of new licenses issued. If there is significant uncertainty about the project
completion or receipt of payment for professional services, revenue is deferred until the uncertainty is sufficiently
resolved. VSOE of fair value of services is based upon stand-alone sales of those services.
Financial results and
trends
Results of Operations for the
Three Months Ended December 31, 2014 and 2013
Revenue decreased to $431 from $117,55 7
for the three months ended December 31, 2014 and 2013, respectively. Our revenues decreased as a result of our focus on the marketing
of our CipherLoc Encryption Technology. The Company’s medical billing software that produced the Company’s source
of revenues in the prior year is currently being updated to combine the Evolution Exchange software that was acquired in the year
ended September 30, 2014. Once these modification have been completed the Company anticipates that its medical billing software
will be more attractive to customers and the Company will begin realizing revenues from this segment.
Cost of revenue was $63,320 and $61,155
for the three months ended December 31, 2014 and 2013, respectively. Our cost of revenue was related to the amortization of the
software costs placed into service.
Selling, general and administrative expenses
decreased to $176,325 from $222,076 for the three months ended December 31, 2014 and 2013, respectively. The decrease in our selling,
general and administrative expenses are related to the reduction of stock issued for services.
Research and development costs decreased to
$22,181 from $30,000 for the three months ended December 31, 2014 and 2013, respectively. Our research and development costs decrease
is related to our focus on our CipherLoc Encryption Technology. .
Interest expense increased to $1,024 from
$236 for the three months ended December 31, 2014 and 2013, respectively. Our interest expense increased as a result of the increase
in outstanding borrowings on our lines of credits.
We recorded income from discontinued operations
of $714 and $10,715 for the three months ended December 31, 2014 and 2013, respectively. The Company’s discontinued operations
are related to the revenues and expenses of Doctors Network of America (“DNA”). Due to the litigation with the
sellers of DNA, the Company wound down all of the operations of DNA beginning in the year ended September 30, 2013. As a result,
the Company saw a decrease in income from discontinued operations during the first three months ended December 31, 2014 compared
to the first three months ended December 31, 2013.
Liquidity and Capital Resources
We expect to incur substantial expenses
and generate significant operating losses as we continue to grow our operations, as well as incur expenses related to operating
as a public company and compliance with regulatory requirements. At December 31, 2014, the Company had cash of $208,500
We have an accumulated deficit at December
31, 2014 of $28,518,858 and need additional cash flows to maintain our operations. We depend on the continued contributions of
our executive officers to finance our operations and need to obtain additional funding sources to explore potential strategic
relationships and to provide capital and other resources for the further development and marketing of our products and business.
We expect our cash needs for the next 12 months to be $850,000 to fund our operations. The ability of the Company to continue
its operations is dependent on the successful execution of management’s plans, which include expectations of raising debt
or equity based capital until such time that funds from operations are sufficient to fund working capital requirements. The Company
may need to incur additional liabilities with related parties to sustain the Company’s existence. There is no assurance
that such funding, if required will be available to us or, if available, will be available upon terms favorable to us.
Sources of Cash
The Company has a revolving line of
credit with Chase Bank with a balance as of December 31, 2014 in the amount of $0 and a borrowing limit of $50,000. We have previously
received advances from our Chief Executive Officer which we have used to help fund our operations.
In November 2013, the Company entered
into a revolving line of credit with Mutual of Omaha for a line of credit at a 5.00% interest rate which renews annually. The
outstanding balance as of December 31, 2014 is $48,873 and a borrowing limit of $65,000.
We believe that our existing cash and
investment balances, our available revolving credit facility, our ability to issue new debt instruments, and cash generated
from operations will be sufficient to meet our working capital and capital expenditure requirements. Our strategy emphasizes
organic growth through internal innovation and will be complemented by acquisitions that fit strategically and meet specific
internal profitability hurdles.
Uses of Cash
Our revolving lines of credit renew annually
and we make significant principal payments to those lines to assure that they remain a line of credit.
Cash Flow
The following table summarizes, for the periods
indicated, selected items in our Condensed Consolidated Statements of Cash Flows:
| |
Three Months Ended |
| |
December 31, 2014 | |
December 31, 2013 |
| |
|
Net cash provided by (used in): | |
| | | |
| | |
Operating activities | |
$ | (332,409 | ) | |
$ | (56,254 | ) |
Investing activities | |
| (- | ) | |
| (- | ) |
Financing activities | |
| (4,739 | ) | |
| 63,574 | |
Operating Activities
Cash flows from operating activities. Our
cash used in operating activities were $$332,409 and $56,254 for the three months ended December 31, 2014 and 2013, respectively.
The increase in cash used in operations was primarily attributable to the decrease of revenue and increase in cash used to pay
off accounts payable and accrued liabilities during the three months ended December 31, 2014.
Financing Activities
Cash flows from financing activities.
Cash (used in) and provided by financing activities was ($4,739) and $63,574 for the three months ended December 31, 2014
and 2013, respectively. We repaid $4,739 and borrowed $58,574 on our line of credits during the three months ended December 31,
2014 and 2013, respectively.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements
including arrangements that would affect the liquidity, capital resources, market risk support and credit risk support or other
benefits.
WHERE YOU CAN FIND MORE INFORMATION
You are advised to read this Quarterly
Report on Form 10-Q in conjunction with other reports and documents that we file from time to time with the SEC. In particular,
please read our Quarterly Reports on Form 10-Q, Annual Report on Form 10-K, and Current Reports on Form 8-K that we file from
time to time. You may obtain copies of these reports directly from us or from the SEC at the SEC’s Public Reference Room
at 100 F. Street, N.E. Washington, D.C. 20549, and you may obtain information about obtaining access to the Reference Room by
calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains information for electronic filers at its website http://www.sec.gov.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We do not hold any derivative instruments and do not
engage in any hedging activities.
ITEM 4.
CONTROLS AND PROCEDURES
| (a) | Evaluation of Disclosure Controls
and Procedures |
We maintain disclosure controls and
procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed,
summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and
that such information is accumulated and communicated to our Chief Executive Officer and Principal Financial Officer, as appropriate,
to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures,
management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable
assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures. Our disclosure controls and procedures were designed to provide reasonable assurance
that the controls and procedures would meet their objectives. As required by SEC Rule 13a-15(b), our Chief Executive Officer and
Principal Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls
and procedures as of the end of the period covered by this report. Based on the foregoing, our Chief Executive Officer and Principal
Financial Officer concluded that our disclosure controls and procedures were not effective.
Our Chief Executive Officer and Principal
Financial Officer are responsible for establishing and maintaining adequate internal control over our financial reporting. In
order to evaluate the effectiveness of internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley
Act, management has conducted an assessment, including testing, using the criteria in Internal Control — Integrated Framework,
issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Our system of internal control
over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Management
has used the framework set forth in the report entitled Internal Control-Integrated Framework published by the Committee of Sponsoring
Organizations of the Treadway Commission, known as COSO, to evaluate the effectiveness of our internal control over financial
reporting. Based on this assessment, our Chief Executive Officer and Principal Financial Officer have concluded that our internal
control over financial reporting were effective as of December 31, 2014. There has been no change in our internal controls over
financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially
affect, our internal controls over financial reporting.
| a. | The
Company’s CFO resigned on January 2, 2015. However, the Company does not believe
that the resignation will materially affect, or is reasonably likely to materially affect,
our internal control over financial reporting. |
| b. | It should be noted that any system
of controls, however well designed and operated, can provide only reasonable and not
absolute assurance that the objectives of the system are met. In addition, the design
of any control system is based in part upon certain assumptions about the likelihood
of certain events. Because of these and other inherent limitations of control systems,
there can be no assurance that any design will succeed in achieving its stated goals
under all potential future conditions, regardless of how remote. |
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are currently not involved in any
litigation that we believe could have a material adverse effect on our financial condition or results of operations.
On July 5, 2013, the Company filed
a complaint against Krooss Medical Management Systems, LLC, William F. Krooss and Marie W. Krooss ( the “Defendants”)
in the United States District Court, District of Nevada Case No. 2013-CV-01187-ABG-VCF for the collection of approximately $200,000
of unpaid medical billing fees that were seriously delinquent.
After many attempts by the Company
to begin collections, the Defendants refused to pay the outstanding balances, however they expected the Company to continue to
bill for them. The Complaint includes causes of action for Breach of the Permanent Asset Transfer and Purchase Agreement (“PTAPA”),
Breach of Billing and Collections Contracts, Negligence, Breach of the Duty of Good Faith and Fair Dealing, Tortious Interference
with Business Relations, Fraud, and other causes of action.
On August 13, 2013, Krooss Medical
Management Systems et al filed a Complaint in Chancery Court of Rankin County, Mississippi Case No. 13-1372 as a strategy to
keep the collection matter in Mississippi Chancery Court. On September 22, 2013, Case No. 13-1372 was remanded to Chancery
Court of Ranking County, Mississippi Case No. 3:13CV507-HTW-LRA.
On June 23, 2014, Orhan Ilercil, MD,
Mississippi Brain and Spine PLLC filed a complaint in County Court of Rankin County Mississippi. This matter is a collection matter
where as Dr. Ilercil owes the Company over $30,000 in unpaid billing fees.
This litigation is a collection matter
of unpaid fees by the Defendants and the Company denies the allegations (Breach of the PTAPA, Rescission of the PTAPA, Breach
of Billing and Collections Contracts, Negligence, Quantum Meruit, Restitution, and Estoppel, Breach of the Duty of Good Faith
and Fair Dealing, Tortious Interference with Business Relations, and other causes of action) filed in Mississippi Chancery Court
related to this collection matter. The Company does not expect the cost to litigate this matter to adversely affect the Company’s
operations. However, the Company has discontinued operations in DNA-Cloud in Mississippi as the Company believes the Defendants
have interfered with the billing contracts purchased which is one of the causes of action in the Complaint, among others. The
Company believes many of the contracts have been terminated due to the interference by the Defendants, and DNA-Cloud has not been
able to expand the business because of the reputation of the Defendants in Jackson, Mississippi and the surrounding area.
ITEM 1A - RISK FACTORS
There were no material changes from the risk factors previously
disclosed in Part II, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended September
30, 2014 during our three months ended December 31, 2014.
ITEM 2. UNREGISTERED SALES
OF EQUITY SECURITIES AND USE OF PROCEEDS SECURITIES
Period from January 1, 2014 through
February 17, 2015.
None
ITEM 3. DEFAULTS UPON SENIOR
SECURITIES
There were no defaults upon senior
securities during the three months ended December 31, 2014.
ITEM
4. MINING SAFETY DISCLOSURES
N/A
ITEM 5. OTHER INFORMATION
There is no information with respect
to which information is not otherwise called for by this form.
ITEM 6. EXHIBITS
Exhibits
| 3.1 | | |
Articles of Incorporation(1) |
| 3.2 | | |
Bylaws(2) |
| 10.1 | | |
Employment Agreement between National Scientific Corporation and Michael A. Grollman dated January 2001(4) |
| 10.2 | | |
Employment Agreement between National Scientific Corporation and Graham L. Clark dated January 2003(6) |
| 10.3 | | |
NSC Consulting Agreement dated August 2001, and Amendments dated August 2002 and July 2003, with Dr. El-Badawy El-Sharawy(6) |
| 10.4 | | |
Amended and Restated 2000 Stock Option Plan(3) |
| 10.5 | | |
Form of 2004 Stock Retainage Plan Agreement(6) |
| 10.6 | | |
Agreement Regarding Management Consulting Services with Stanton Walker of New York dated May 2003(6) |
| 10.7 | | |
Agreement Regarding Distribution and Marketing of Gotcha!® Child Safety Product and other products dated December 2002 with FutureCom Global, Inc. (6) |
| 10.8 | | |
Purchase Order from Verify Systems, Inc, dated March 2003 for IBUS™ School Child Tracking Systems(5) |
| 10.9 | | |
Letter of Understanding and Agreement dated April 2004 Regarding Sales and Distribution of Verify School safety products, and an Unlimited Software License with Anthony Grosso and CIS Services, LLC(6) |
| 10.10 | | |
Letter of Intent from Positus, Inc. dba Bike & Cycle Trak, dated February 2003 for Design of Power Sports Tracking System(6) |
| 10.11 | | |
Purchase Order from Positus, Inc. dba Bike & Cycle Trak, for Design of Power Sports Tracking System dated March 2003(6) |
| 10.12 | | |
Employment agreement of Michael De La Garza(8) |
| 10.13 | | |
Employment agreement of Pamela Thompson(8) |
| 14 | | |
Code of Ethics(7) |
| 31 | | |
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act |
| 32 | | |
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act |
____________
|
(1) |
Incorporated by reference to the Registrant’s Form 10-SB filed on
or about January 3, 2000. |
|
(2) |
Incorporated by reference to the Registrant’s Form 10-QSB for the
quarter ended March 31, 2001 and filed on or about May 15, 2001. |
|
(3) |
Incorporated by reference to the Registrant’s Form 10-QSB for the
quarter ended December 31, 2000 and filed on or about February 14, 2001. |
|
(4) |
Incorporated by reference to the Registrant’s Form 10-KSB for the
year ended September 30, 2000 and filed on or about December 19, 2000. |
|
(5) |
Incorporated by reference to the Registrant’s Form S-8 filed on or
around June 3, 2003. |
|
(6) |
Incorporated by reference to the Registrant’s Form SB2 filed on or
around June 24, 2004. |
|
(7) |
Incorporated by reference to the Registrant’s Form 10-QSB for the
quarter ended June 30, 2004 and filed on or about August 16, 2004. |
|
(8) |
Incorporated by reference to the Registrant’s Form 10-K for the year
ended September 30, 2011 and filed on or about October 10, 2013. |
|
|
|
|
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
February 17, 2015 |
|
Cloud Medical Doctor Software Corporation
By: /s/ Michael De La Garza |
|
|
Michael De La Garza |
|
|
Chief Executive Officer (Principal Executive Officer) |
Registrant
Date: February 17, 2015 |
|
Cloud Medical Doctor Software Corporation
By: /s/ Michael De La Garza |
|
|
Michael De La Garza |
|
|
Principal Financial Officer |
Exhibit 31.1
Certification pursuant to 18 U.S.C. Section 1350 as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and pursuant to Rule 13a-14(a) and Rule 15d-14 under the Securities
Exchange Act of 1934
I, Michael De La Garza, certify that:
1. |
I have reviewed this Quarterly Report on Form 10-Q of Cloud Medical Doctor Software Corporation; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the consolidated financial statements, and other financial information
included in this report, fairly present in all material respects the financial condition, results of operations and cash flows
of the registrant as of, and for, the periods presented in this report; |
4. |
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
a. |
Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared; |
|
b. |
Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance
with generally accepted accounting principles; |
|
c. |
Evaluated the effectiveness of the registrant’s disclosure and procedures
and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluations: and |
|
d. |
Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or
is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. |
The registrant's other certifying officer(s) and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's
board of directors (or persons performing the equivalent functions): |
|
a. |
All significant deficiencies and material weaknesses in the design or operation
of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and |
|
b. |
Any fraud, whether or not material, that involves management or other employees
who have a significant role in the registrant's internal control over financial reporting. |
Registrant
|
|
Cloud Medical Doctor Software Corporation
By: /s/ Michael De La Garza |
Date: February 17, 2015 |
|
Michael De La Garza |
|
|
Chief Executive Officer (Principal Executive Officer,) |
Exhibit 31.2
Certification pursuant to 18 U.S.C.
Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and pursuant to Rule 13a-14(a) and Rule 15d-14
under the Securities Exchange Act of 1934
I, Michael De La Garza, certify that:
1 |
I have reviewed this Quarterly Report on Form 10-Q of Cloud Medical Doctor
Software Corporation; |
2 |
Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the consolidated financial statements, and other
financial information included in this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant
and have: |
|
a. |
Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared; |
|
b. |
Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance
with generally accepted accounting principles; |
|
c. |
Evaluated the effectiveness of the registrant’s disclosure and procedures
and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluations: and |
|
d. |
Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or
is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. |
The registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee
of the registrant's board of directors (or persons performing the equivalent functions): |
|
a. |
All significant deficiencies and material weaknesses in the design or operation
of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and |
|
b. |
Any fraud, whether or not material, that involves management or other employees
who have a significant role in the registrant's internal control over financial reporting. |
Registrant
|
|
Cloud Medical Doctor Software Corporation
By: /s/ Michael De La Garza |
Date: February 17, 2015 |
|
Michael De La Garza |
|
|
Chief Financial Officer (Principal Financial Officer) |
Exhibit 32.1
CERTIFICATIONS PURSUANT TO SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
In connection with the Quarterly Report
of Cloud Medical Doctor Software Corporation (the "Company") on Form 10-Q for the period ending December 31, 2014 as
filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Michael De La Garza, Chief Executive
Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley
Act of 2002, that:
(1) The
Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The
information contained in the Report fairly presents, in all material respects, the financial condition and result of operations
of the Company.
Registrant
|
|
Cloud Medical Doctor Software Corporation
By: /s/ Michael De La Garza |
Date: February 17, 2015 |
|
Michael De La Garza |
|
|
Chief Executive Officer (Principal Executive Officer) |
Exhibit 32.2
CERTIFICATIONS PURSUANT TO SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
In connection with the Quarterly Report
of Cloud Medical Doctor Software Corporation (the "Company") on Form 10-Q for the period ending December 31, 2014 as
filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Michael De La Garza, Principle
Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) The
Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The
information contained in the Report fairly presents, in all material respects, the financial condition and result of operations
of the Company.
Registrant
Date: February 17, 2015 |
|
Cloud Medical Doctor Software Corporation
By: /s/ Michael De La Garza |
|
|
Michael De La Garza |
|
|
Chief Financial Officer (Principal Financial Officer) |
Cipherloc (QB) (USOTC:CLOK)
Historical Stock Chart
From Jun 2024 to Jul 2024
Cipherloc (QB) (USOTC:CLOK)
Historical Stock Chart
From Jul 2023 to Jul 2024