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5. SOFTWARE

3 Months Ended

Dec. 31, 2012

Research and Development [Abstract]

NOTE 5 – SOFTWARE

The following is a detail of software at December 31, 2012 and September 30, 2012:

			December 31, 2012				September 30, 2012
Source Code License		$	2,500			$	2,500
Software License			1,200,106				1,200,106
Encryption Software Code			2,800				—
Acquisition of Doctor’s Network of America			4,000				4,000
Total intangible assets			1,209,406				1,206,606
Accumulated amortization of intangible assets			(240,020	)			(180,015	)
Accumulated impairment of assets			(4,000	)			(4,000	)
Total intangible assets		$	965,386			$	1,022,591

The Company’s software was placed into service starting in the second quarter of fiscal year ended September 30, 2012. The amortization expense was $60,005 and $0 for the three months ended December 31, 2012 and 2011, respectively. The Company recognized a $4,000 impairment of Doctors Network of America (“DNA”) operating in Flowood, Mississippi during the year ended September 30, 2012. The Company is currently in litigation with the sellers of DNA relating to the collection of certain medical billings owed to the Company. As a result of the litigation, the Company deemed the investment to be impaired.

Source Code License

On August 14, 2012, the Company, through a comprehensive agreement with MediSouth, LLC, (“MediSouth”) has purchased a complete source code license and will integrate and enhance this feature set as part of its Cloud-MD Office product suite.

The License Agreement requires the following:

a)		That MediSouth will provide the Company with all software updates for the license within 5 working days of MediSouth implementing those same software updates in its own production version of the license.
b)		The Company has the right to modify the software contained in the license to meet its operational needs.
c)		The Company shall provide to MediSouth, with the permission of each affected Company client, the de-identified purchasing data which is any data that would identify a patient such as social security numbers, date of birth, health condition, among others that it collects as a result of the Company’s clients utilizing the embedded Medical Supplies and Pharmaceutical Inventory Management functionality provided by the license.
e)		MediSouth shall receive 100,000 shares of the Company’s non-dilutable, common stock with a one (1) year trading restriction.
f)		The Company may not sell the license, transfer the license, allow any other entity to use the license as part of that entity's software application or transfer any rights to another party to use the license separately from the Company’s products in which the license is embedded.

The fair value of the consideration and the assets acquired is based on the aggregate value of the 100,000 shares of common stock issued in exchange for the software. The total fair value on August 14, 2012 was $2,500.

Software License

On January 2, 2011, the Company entered into an asset purchase agreement with certain private companies owned by Michael de la Garza (“MDLG”), the Company’s CEO, whereby the Company acquired the rights to proprietary medical billing and practice management software developed by the private companies.

The Company issued a $1,200,106 convertible promissory note with an 8% interest rate and convertible into common stock of the Company at a price to be determined later in exchange for the purchase of the software. The note matures on April 30, 2021.

In October 2011, the Company issued Absolute Medical Software Systems, LLC, an entity owned by MDLG, 30,000,000 shares of common stock in full payment of this promissory note and interest accrued as of the date of conversion. The market price per share on the date of grant was $0.008 per share. No gain or loss was recorded on the conversion of the convertible promissory note.

The Company has determined that due to the voting rights of the Preferred A shares owned by MDLG, that the transaction occurred between parties under common control. Accordingly, the Company has determined that the cost basis of the software acquired should become the cost basis of the Company.

Cost basis for assets acquired under Common Control		Cost Basis
Cost basis of Consideration:
Absolute Medical Software Systems LLC development costs from inception		$	1,011,222
Impairment of software on September 10, 2008 to value			(11,222	)

Total Value at September 10, 2008		$	1,000,000
Software Update to Operate on Cloud Based Platform
Absolute Medical Software Systems LLC development costs		$	200,106

Total Cost Basis at January 1, 2011		$	1,200,106

Encryption Software Code

On November 21, 2012, the Company purchased from CipherSmith, LLC, a complete source code, intellectual property rights, all computer software or algorithm licensed or sold under CipherSmith, and appropriate copy rights, patents, mask works, trademarks, service marks, internet domain names or world wide web URS. The Company issued 100,000 shares of its common stock as payment for the acquisition. The fair value of the consideration and the assets acquired is based on the aggregate fair value of the common stock issued in exchange for the software. The total fair value of the shares of common stock issued on the date of grant was $2,800.

Doctors Network of America

On June 22, 2012, the Company entered into an acquisition agreement that closed on March 16, 2013. The Company agreed to acquire DNA in Flowood, Mississippi from Krooss Medical Management Systems, LLC (“Krooss”) for 500,000 shares of common stock. As of September 30, 2012, only 200,000 shares of common stock were issued as a deposit, which was valued at $4,000 based on the market value on the date of grant.

Subsequent to the transaction closing on March 16, 2013, the sellers refused to pay for medical billing process transaction fees in accordance with their contracts in the amount of approximately $200,000. The Company and the sellers are currently in litigation over the disputed transaction fees of $200,000. The Company has recorded an impairment of the acquired asset in the amount of $4,000 for the year ended September 30, 2012.

The entire disclosure for research, development, and computer software activities, including contracts and arrangements to be performed for others and with federal government. Includes costs incurred (1) in a planned search or critical investigation aimed at discovery of new knowledge with the hope that such knowledge will be useful in developing a new product or service, a new process or technique, or in bringing about a significant improvement to an existing product or process; or (2) to translate research findings or other knowledge into a plan or design for a new product or process or for a significant improvement to an existing product or process whether intended for sale or the entity's use, during the reporting period charged to research and development projects, including the costs of developing computer software up to the point in time of achieving technological feasibility and in-process research and development acquired in a business combination consummated during the period.

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