10-K 1 nsct10k11.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the Fiscal Year Ended September 30, 2011

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from N/A to N/A

Commission File Number: 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 of Incorporation		IRS Employer Identification No.

1291 Galleria Drive, Suite 200

Henderson, NV 89014

(Address of principal executive offices)

(Former Address 8361 East Evans Road, Suite 106, Scottsdale, AZ 85260-3617)

(702) 818-9011

(Issuer’s telephone number)

(Former telephone number (480) 948-8324)

Securities registered under Section 12(b) of the Exchange Act:

None

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, $0.001 par value per share

(Title of Class)

Common Stock, $.001 Par Value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

[ ] Yes [x] No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

[x] Yes [ ] No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed 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 [ ] No [x]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, 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 [ ] No [x]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]

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 definitions of “large accelerated filer,”“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	[ ]	Accelerated filer	[ ]
Non–Accelerated filer	[ ]	Small 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]

Aggregate market value of the voting stock held by non-affiliates: $5,087,389 as based on the closing price of the stock on September 26, 2013. The voting stock held by non-affiliates on that date consisted of 169,579,649 shares of common stock.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. As of September 25, 2013, there were 214,634,216 shares of common stock, par value $0.01, issued and outstanding 4,000,000 shares of preferred stock, par value $0.10.

Documents Incorporated by Reference: None

THE COMPANY PREVIOUSLY HAD INSUFFICIENT WORKING CAPITAL TO PAY FOR THE PROFESSIONAL SERVICES REQUIRED TO PREPARE, AUDIT, AND FILE THE QUARTERLY AND ANNUAL REPORTS REQUIRED BY THE SECURITIES ACT OF 1934. AS A RESULT, THE AUDITORS WHO AUDITED THE SEPTEMBER 30, 2007 FINANCIAL STATEMENTS AND REVIEWED THE QUARTERLY REPORTS THROUGH JUNE 30, 2008 RESIGNED EFFECTIVE DECEMBER 13, 2011.

IN FEBRUARY 2010 THE BOARD OF DIRECTORS VOTED TO DISCONTINUE THE MOBILE DVR AND LOCATION PRODUCTS LINE OF BUSINESS REPORTED IN THESE FINANCIAL STATEMENTS DUE TO THE CUMULATIVE EFFECTS OF SEVERELY DECLINING REVENUES RESULTING FROM THE 2008 RECESSION. SINCE THIS DECISION WAS MADE SUBSEQUENT TO THE YEARS ENDED SEPTEMBER 30, 2008 AND 2009, THE QUARTERLY AND YEAR END STATEMENTS FOR THOSE YEARS ARE BEING REPORTED ON A GOING CONCERN BASIS RATHER THAN AS DISCONTINUED OPERATIONS. THEY WILL, HOWEVER, BE REPORTED AS DISCONTINUED OPERATIONS COMMENCING WITH THE FISCAL 2010 FILINGS.

NEW MANAGEMENT HAS SUBSEQUENTLY INFUSED SUFFICIENT WORKING CAPITAL TO BRING THE 1934 ACT FILINGS CURRENT. ADDITIONALLY, A NEW LINE OF BUSINESS HAS ALSO COMMENCED WHICH WILL BE REPORTED ON IN THE FISCAL 2011 AND 2012 FILINGS.

ACCORDINGLY, THIS FILING IS BEING SUBMITTED ONLY TO COMPLY WITH SEC RULES AND REGULATIONS AND SHOULD NOT BE RELIED UPON FOR YOUR INVESTMENT DECISIONS. THE OPERATIONS REPORTED ON IN THIS DOCUMENT HAVE BEEN DISCONTINUED AS OF FEBRUARY 4, 2010. NEW MANAGEMENT ENCOURAGES THE READERS OF THIS DOCUMENT TO SUSPEND ANY INVESTMENT DECISIONS PERTAINING TO THIS STOCK UNTIL THE FILINGS ARE BROUGHT CURRENT.

Cloud Medical Doctor Software Corporation

FORM 10-K ANNUAL REPORT

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011 and 2010

TABLE OF CONTENTS

PART I
ITEM 1.	BUSINESS	2
ITEM 1A.	RISK FACTORS	7
ITEM 1B.	UNRESOLVED STAFF COMMENTS	12
ITEM 2.	PROPERTIES	12
ITEM 3.	LEGAL PROCEEDINGS	12
ITEM 4.	REMOVED AND RESERVED	13
PART II
ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	14
ITEM 6.	SELECTED FINANCIAL DATA	17
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	17
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	19
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	F-1
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	20
ITEM 9A.	CONTROLS AND PROCEDURES	21
ITEM 9B.	OTHER INFORMATION	22
PART III
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE	23
ITEM 11.	EXECUTIVE COMPENSATION	25
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	29
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	31
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	32
PART IV
ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	33
	SIGNATURES	34

CERTIFICATIONS

Exhibit 31.1 – Management certification

Exhibit 31.2 – Management certification

Exhibit 32.1 – Sarbanes-Oxley Act

Exhibit 32.2 – Sarbanes-Oxley Act

Special Note Regarding Forward-Looking Statements

Some of our statements under "Business," "Properties," "Legal Proceedings," "Management's Discussion and Analysis of Financial Condition and Results of Operations,"" the Notes to Financial Statements and elsewhere in this report constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are subject to certain events, risks and uncertainties that may be outside our control. Some of these forward-looking statements include statements of:

·		management's plans, objectives and budgets for its future operations and future economic performance;
·		capital budget and future capital requirements;
·		meeting future capital needs;
·		realization of any deferred tax assets;
·		the level of future expenditures;
·		impact of recent accounting pronouncements;
·		the outcome of regulatory and litigation matters;
·		the assumptions described in this report underlying such forward-looking statements; and
·		Actual results and developments may materially differ from those expressed in or implied by such statements due to a number of factors, including:

o		those described in the context of such forward-looking statements;
o		future service costs;
o		changes in our incentive plans;
o		the markets of our domestic operations;
o		the impact of competitive products and pricing;
o		the political, social and economic climate in which we conduct operations; and
o		the risk factors described in other documents and reports filed with the Securities and Exchange Commission.

In some cases, forward-looking statements are identified by terminology such as "may," "will," "should," "could," "would," "expects," "plans," "intends," "anticipates," "believes," "estimates," "approximates," "predicts," "potential" or "continue" or the negative of such terms and other comparable terminology.

Although we believe that the expectations reflected in these forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither we nor anyone else assumes responsibility for the accuracy and completeness of such statements and is under no duty to update any of the forward-looking statements after the date of this report.

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PART I

ITEM 1. BUSINESS.

General

The financial statements presented in this report of Cloud Medical Doctor Software Corporation, a Texas corporation. When the terms “Cloud, the Company,” “we,” “us” or “our” are used in this document, those terms refer to Cloud Medical Doctor Software Corporation.

Our Company

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. During 1996, the Company acquired the operations of Eden Systems, Inc. (Eden) as a wholly owned subsidiary. Eden was engaged in water treatment and the retailing of cleaning products. Eden’s operations were sold on October 1, 1997. From September 30, 1997 through the year ended September 30, 2001, we aimed our efforts in the research and development of semiconductor proprietary technology and processes and in raising capital to fund its operations and research.

Beginning in calendar 2002, we focused our efforts on the development, acquisition, enhancement and marketing of location device technologies. Our revenue is derived from sales of electronic devices, recognized as the product is delivered.

In February 4, 2010 the prior Board members Mr. Michael Grollman and Mr. Greg Szabo, decided to discontinue and wind down the operation of the Company's Mobile DVR and Location Products business and operate these remaining Company assets in a Limited Liability Company named NSC Labs, LLC controlled and owned by Mr. Grollman. Mr. Grollman and NSC Labs, LLC was to pay the Company 2% of revenues and $100,000. However, Mr. Grollman nor NSC Labs, LLC never paid consideration for this transaction.

In November 19, 2010, the prior management was terminated and new management began working on operations related to the Company’s medical billing software. In fiscal 2011, the year of termination of prior management, new management has deemed that the above transaction transferring prior operations to NSC Labs, LLC was transacted in full and final settlement of the liabilities to former management including those captioned as “disputed accrued expenses – related party” on the Balance Sheet. Since the transaction was related to former management who had the ability to affect the terms and outcomes of the liabilities, the transaction has been subsequently recorded as an increase to additional paid in capital.

Our Current Business of the Company – Cloud Doctor Medical Software

In 2011 Cloud-MD Software Solutions introduced the Cloud-MD Office, a “Cloud Based”, 5010 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.

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Cloud-MD Billing Services provides: Management of Medical Claims from posting physician charges into our medical billing software to posting of payments; Continuous Insurance Claim Follow Up to track and research all rejected or denied medical claims; Comprehensive Reporting including monthly financial Statements sent to our clients so they can see how their practice is doing and a variety of detailed reports give our clients the important information and tools used to assist in the increased production which leads to more profit; Patient Account Inquiries & Support to assist patients with their billing and insurance questions.

Cloud-MD Medical and Pharmaceutical Supply Management Software Services provides: a ground breaking cloud-based Medical Supply Inventory Management System, specifically designed for small and medium Medical Practices, DME’s, Home Health, Long-term Care, and Surgery Centers that offers:

Centralized management control over your medical supply and drug inventory

Real time utilization and financial inventory summary

Low price notifications

Par level/reorder tracking

RX expiration tracking

Auto supply re-ordering

Based on a barcode scanning system, designed to reduce workloads by automating inventory control processes, the Cloud-MD® Inventory Management System requires no installation, on-site software or special hardware. The Cloud-MD® application suite is fully delivered via the Internet and requires no special computing environment at the end-user facility.

Cloud-MD Healthcare Systems Consulting Services specializes in the implementation of sustainable, comprehensive solutions that increase financial and operational performance in healthcare businesses. By partnering with clients, we deliver solutions across the healthcare enterprise that improve quality, increase revenue, reduce operational expenses and attract physicians, patients and employees. We bring resources, in-depth knowledge, and significantly deeper experience than most in the field.

Cloud-MD Acquisition Services provides medical supply acquisition services that are fully integrated with Cloud-MD Office’s Medical and Pharmaceutical Inventory Management software and offers a full range of medical, surgical, and laboratory supply products and equipment for medical offices and surgery centers. Cloud-MD Acquisition Services easy-to-use and seamless process makes supply purchasing quicker and more cost efficient.

Item 1. Description of Business

Discontinued Operations of the Business up through February 4, 2010

Mobile DVR and Location Products

Most of our customers require monitoring and or tracking of a person or object, and reporting this information back to a central location.

Our current MDVR technology has not been awarded any patents as of the date of this report and has been awarded trademark protection on one other. We use a combination of confidentiality agreements, copyright and other trade secret management techniques to protect our trade secrets.

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Location Products

GPS GRAPHIC

Overview of This Technology

We have developed a group of mobile products with the capability to record high quality digital video, determine location and identify individuals and concatenate this information into a homogeneous information stream that can be easily displayed on a remote computer. We use a technology called Global Positioning System or GPS to determine location. These products report the location information as well as other desired information back to the user through a radio network. The products typically contain a small computer to provide the overall control and data processing capacity for the device. The products can be thought of as having three distinct pieces or systems. These are the data collection system, the data control & processing system, and the data transport system. This design concept is the basis for our Mobile DVR products. The diagram below shows in a general way how the system works with our products:

Data Collection System

This system can be thought of as the “eyes and ears” of the product. It is comprised of two systems. One determines location of the product, while the other system records specific events that the customer may be interested in, such as a door opening on a school bus or the speed of the bus at a certain location. The location system determines the position of the product using a technology developed by the U.S. Government called the Global Positioning System, or GPS, as it is commonly known. The U.S. Government developed the system which consists of approximately 24 satellites that orbit the earth rapidly. It is a worldwide navigation support system that allows users of GPS receivers to determine their precise geographic locations to within a few meters in most cases. The network of satellites and their ground control and monitoring stations are maintained and operated by the United States Department of Defense, which maintains an ongoing satellite replenishment program to ensure continuous global system coverage. Access to the system for all users is currently provided free of charge by the U.S. Government.

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GPS works by ranging and triangulating the product’s position from a group of satellites. Of the 24 GPS satellites in orbit, a minimum of four is needed to reliably determine the product’s three-dimensional position. A GPS receiver measures distance by calculating the amount of time it takes a navigation and time reference radio signal from the satellite to make a one-way trip to the GPS receiver.

GPS receivers typically are very compact; and it is not necessary to have a large dish antenna to receive GPS signals. Typical information that can be obtained from these GPS signals are latitude, longitude, elevation, speed, direction, date, and time.

The second part of this Data Collection System is customer specific. Many customers have additional types of data that they want to know or want collected relevant to a location. An example of this is, every time a child enters or leaves a school bus or the time and location that the bus stops. This data input system can therefore be customized to meet the exact needs of a customer.

Another kind of data collection technology we use in some of our products is called RFID, which stands for Radio Frequency Identification. RFID devices are small radios that could be used to track information about people or objects. RFID provides a low-cost solution for certain kinds of tracking activities, especially short-range activities, typically less than a hundred feet. RFID devices are primarily used to determine if the object is close to a given location.

Another kind of data collection technology we use in some of our products is called MDVR, which stands for mobile digital video recorder. MDVR devices use a small digital camera that takes up to 30 pictures per second and then stores these images electronically. When these individual pictures are ‘played back’, you see a movie of the recorded event. Schools are particularly interested in this type of technology in conjunction with GPS to monitor what is happening on their buses.

Data Control & Processing System

This system can be thought of as the “brains” of the product. A technical term for this system is an embedded system, meaning one that lives deep inside the overall product. An embedded system is a small special-purpose computer system built into a larger device. The reason we use an embedded system in our products is to keep cost to us low, so our products stay more competitive in price. Simple embedded systems can cost us as little as a few dollars each and use very little power compared to the desktop computers that many people are familiar with, which usually cost much more. On our embedded systems there is typically no disk drive, operating system, keyboard, or screen. Our embedded systems instead communicate with other computers by radio. These other computers typically have a keyboard and screens, and they are used to display our information.

The programs that we run on these systems are custom designed and built by our software engineers. These programs are called firmware. The firmware controls how the data is collected, what data should be collected and what events should be monitored and reported, what should be ignored, and how, when and what data should be sent back to the user. As mentioned above, the system is relatively easy to customize, and the firmware is also easy to customize as it has been written in a modular fashion that allows changes to one section to be implemented without the need to completely re-write the program. This also helps us keep costs down.

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Data Transport System

This system can be thought of as the “mouth” of the product. It communicates to the outside world where it is and what has happened. There are many different types of technology that can be used to transport this data back to the user, generally using some kind of wireless technology based on radios. We currently use cellular radios, satellite radios, Wi-Fi radios, and other special purpose radios.

We use a cellular radio based on GSM cellular technology. GSM, or Global System for Mobile Communications, is a second-generation digital mobile telephone standard. GSM was initially developed as pan-European collaboration, intended to enable mobile roaming between member countries.

The cellular radios typically operate in “real time.” When an event occurs, the data is immediately transported back to a user at a remote location.

While cellular coverage and reception is good in urban areas, it is less effective in rural areas and is non-existent in most wilderness areas. Sometimes our products are used in areas where there is poor or no cellular coverage. To overcome this we sometimes use a special radio that communicates with satellites orbiting the earth. This form of communication has the advantage that our products can be used in very remote areas almost anywhere in the world. The major downside is that these radios are large and expensive and the airtime usage costs can be high. Another problem associated with this technology is that, like GPS, these satellite radios work best when there is a clear line of site to the satellites; as such they may not work well indoors, or under dense foliage or in deep valleys. The satellite radios typically operate in “real time.” When an event occurs, the data is immediately transported back to the user. Some of our customers do not want to have the expense of a real time cellular or satellite connection, nor are they interested in having the data in real time. For this we use either a special purpose radio or a Wi-Fi radio.

The Wi-Fi radio operates in a very similar manner to cordless phones found in many households. These phones typically consist of a base station and handset. Our system is very similar; it consists of a base station unit that receives data from the mobile unit that would be on the asset or vehicle being tracked. The base station is typically attached to a personal computer that takes the raw data from the radio and re-formats it into information that can be displayed by other computers on the Internet. Wi-Fi stands for “Wireless Fidelity” and is a technology in very common use to wirelessly connect personal computers to other computer networks, including the Internet.

Our special purpose radios work in a very similar manner to the Wi-Fi radio, except that they can sometimes transmit data over longer distances.

Wi-Fi radios operate in an unlicensed part of the radio spectrum and as such do not have any special government licensing fees associated with them. Because they operate in a license-free spectrum, the Federal Communications Commission (FCC) imposes some restrictions on the use of these radios. One major restriction is that the radio signal range is limited to about 300 feet.

Since most of the time our product operates well beyond 300 feet from the base station, all the collected data is stored within the device for later transmission when the product comes back into that range again. When the vehicle or asset comes back into base-station range, the mobile units automatically download their information. We call this mode of operation “near time.” These “near time” products do not incur any special airtime usage charges. As such, they can be significantly cheaper to operate than the cellular or satellite equivalents.

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Once the data is transmitted back to the user they can either display the information on our software or on some other computer application.

Personnel

As of the date of this report, we have twenty full time employees.

WHERE YOU CAN FIND MORE INFORMATION

You are advised to read this Form 10-K 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 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.

In an effort to keep our stockholders and the public informed about our business, we may make “forward-looking statements.” Forward-looking statements usually relate to future events and anticipated revenues, earnings, cash flows or other aspects of our operations or operating results. As indicated previously, forward-looking statements are often identified by words, “will”, “may”, “should”, “continue”, “anticipate”, “believe”, “expect”, “plan”, “forecast”, “project”, “estimate”, “intend” and words of similar nature. Forward-looking statements generally include statements containing:

•		projections about accounting and finances;
•		plans and objectives for the future;
•		projections or estimates about assumptions relating to our performance; or
•		our opinions, views or beliefs about the effects of current or future events, circumstances or performance.

You should view those statements with caution. Those statements are not guarantees of future performance, circumstances or events. They are based on facts and circumstances known to us as of the date the statements are made. All phases of our business are subject to uncertainties, risks and other influences, many of which we do not control. Any of these factors either alone or taken together, could have a material adverse effect on us and could change whether any forward-looking statement ultimately turns out to be true. Additionally, we assume no obligation to update any forward-looking statement as a result of future events, circumstances or developments.

Outlined below are some of the risks that we believe could affect our business and financial statements for 2011 and beyond. An investment in our common stock involves a high degree of risk. You should carefully consider the following information about these risks, together with the other information contained in this Annual Report on Form 10-K, before investing in our common stock. If any of the events anticipated by the risks described below occur, our results of operations and financial condition could be adversely affected which could result in a decline in the market price of our common stock, causing you to lose all or part of your investment.

The Report Of Our Independent Registered Public Accounting Firm Contains Explanatory Language That Substantial Doubt Exists About Our Ability To Continue As A Going Concern

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The independent auditor’s report on our financial statements contains explanatory language that substantial doubt exists about our ability to continue as a going concern. We have a net loss for the year ended September 30, 2011of $356,629, an accumulated deficit at September 30, 2011 of $26,229,970, cash flows used in of $220,628 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. If we are unable to obtain sufficient financing in the near term or achieve profitability, then we would, in all likelihood, experience severe liquidity problems and may have to curtail or cease our operations altogether. If we curtail our operations or cease our operations, we may be placed into bankruptcy or undergo liquidation, the result of which will adversely affect the value of our common shares.

Because We Are Quoted On The OTCBB “OTC Markets “formerly known as “Pinks Sheets” Instead Of An Exchange Or National Quotation System, Our Investors May Have A Tougher Time Selling Their Stock Or Experience Negative Volatility On The Market Price Of Our Stock.

Our common stock is traded on the OTCBB “OTC Markets”. The OTCBB “OTC Markets” is often highly illiquid, in part because it does not have a national quotation system by which potential investors can follow the market price of shares except through information received and generated by a limited number of broker-dealers that make markets in particular stocks. There is a greater chance of volatility for securities that trade on the OTCBB “OTC Markets” as compared to a national exchange or quotation system. This volatility may be caused by a variety of factors, including the lack of readily available price quotations, the absence of consistent administrative supervision of bid and ask quotations, lower trading volume, and market conditions. Investors in our common stock may experience high fluctuations in the market price and volume of the trading market for our securities. These fluctuations, when they occur, have a negative effect on the market price for our securities. Accordingly, our stockholders may not be able to realize a fair price from their shares when they determine to sell them or may have to hold them for a substantial period of time until the market for our common stock improves.

We depend significantly upon the continued involvement of our present management.

The Company’s success depends significantly upon the involvement of our present management, who is in charge of our strategic planning and operations. We may need to attract and retain additional talented individuals in order to carry out our business objectives. The competition for individuals with expertise in this industry could be intense and there are no assurances that these individuals will be available to us.

Our Common Stock Is Subject To Penny Stock Regulation

Our shares are subject to the provisions of Section 15(g) and Rule 15g-9 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), commonly referred to as the "penny stock" rule. Section 15(g) sets forth certain requirements for transactions in penny stocks and Rule 15g-9(d)(1) incorporates the definition of penny stock as that used in Rule 3a51-1 of the Exchange Act. The Commission generally defines penny stock to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. Rule 3a51-1 provides that any equity security is considered to be penny stock unless that security is: registered and traded on a national securities exchange meeting specified criteria set by the Commission; authorized for quotation on the NASDAQ Stock Market; issued by a registered investment company; excluded from the definition on the basis of price (at least $5.00 per share) or the registrant's net tangible assets; or exempted from the definition by the Commission. Since our shares are deemed to be "penny stock", trading in the shares will be subject to additional sales practice requirements on broker/dealers who sell penny stock to persons other than established customers and accredited investors.

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Compliance with changing regulation of corporate governance and public disclosure will result in additional expenses and pose challenges for our management.

Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations promulgated there under, the Sarbanes-Oxley Act and SEC regulations, have created uncertainty for public companies and significantly increased the costs and risks associated with accessing the U.S. public markets. Our management team will need to devote significant time and financial resources to comply with both existing and evolving standards for public companies, which will lead to increased general and administrative expenses and a diversion of management time and attention from revenue generating activities to compliance activities.

We rely heavily on international third parties to manufacture subsystems of our available on acceptable terms, if at all. If such financing is not available on satisfactory terms, we may be unable to continue, products.

We currently rely on international third-party contractors to manufacture key sub assemblies to satisfy the needs of such customers. Reliance on one or more international third-party manufacturers exposes us to the risk that delivery schedules cannot be met, and that we cannot fulfill orders for some of our products in a timely way at the right price in U.S. dollars. This risk includes the concern that:

•		Third-party manufacturers might be unable to manufacture our products in the volume and of the quality required to meet customers’ needs;
•		Our existing and future contract manufacturers may not perform as agreed or may not remain in the contract manufacturing business for the time required to supply our customers;
•		If any third-party manufacturer makes improvements in the manufacturing process for our products, we may not own, or may have to share, the intellectual property rights to the innovation.

Each of these conditions could delay the shipments to our customers, approvals required by regulatory authorities, and the commercialization of some of our customers’ products. These risks could also result in higher costs to the customer or could deprive us of potential product revenues.

Risks Relating To Our Industry

There are substantial inherent risks in attempting to commercialize new technological applications, and, as a result, we may not be able to successfully develop products or technology for commercial use.

Our company conducts ongoing development on our medical billing software. Our product development team is working on developing technology and products in various stages. Software development requires significant amounts of capital and takes an extremely long time to reach commercial viability, if at all. During the development of our software, we may experience technological barriers that we may be unable to overcome. Because of these uncertainties, it is possible that none of our product candidates will be successfully developed.

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Risks Related to our Securities

The market price for our common stock may be volatile, and you may not be able to sell our stock at a favorable price or at all.

Many factors could cause the market price of our common stock to rise and fall, including:

•		actual or anticipated variations in our quarterly results of operations;
•		changes in market valuations of companies in our industry;
•		changes in expectations of future financial performance;
•		fluctuations in stock market prices and volumes;
•		issuances of dilutive common stock or other securities in the future;
•		the addition or departure of key personnel;
•		announcements by us or our competitors of acquisitions, investments or strategic alliances; and
•		it is possible that the proceeds from sales of our common stock may not equal or exceed the prices you paid for the shares after including the costs and fees of making the sales

Substantial sales of our common stock, or the perception that such sales might occur, could depress the market price of our common stock.

We cannot predict whether future issuances of our common stock or resale in the open market will decrease the market price of our common stock. The consequence of any such issuances or resale of our common stock on our market price may be increased as a result of the fact that our common stock is thinly, or infrequently, traded. The exercise of any options, or the vesting of any restricted stock that we may grant to directors, executive officers and other employees in the future, the issuance of common stock in connection with acquisitions and other issuances of our common stock may decrease the market price of our common stock.

Holders of our common stock have a risk of potential dilution if we issue additional shares of common stock in the future.

Although our Board of Directors intends to utilize its reasonable business judgment to fulfill its fiduciary obligations to our then existing stockholders in connection with any future issuance of our common stock, the future issuance of additional shares of our common stock would cause immediate, and potentially substantial, dilution to the net tangible book value of those shares of common stock that are issued and outstanding immediately prior to such transaction. Any future decrease in the net tangible book value of our issued and outstanding shares could have a material adverse effect on the market value of our shares.

We do not intend to pay cash dividends to our stockholders, so you will not receive any return on your investment in our Company prior to selling your interest in the Company.

The Company has never paid any cash dividends to our stockholders. We currently intend to retain any future earnings for funding growth and, therefore, do not expect to pay any cash dividends in the foreseeable future. As a result, you will not receive any return on your investment prior to selling your shares in our Company and, for the other reasons discussed in this “Risk Factors” section, you may not receive any return on your investment even when you sell your shares in our Company.

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Certain shares of our common stock are restricted from immediate resale. The lapse of those restrictions, coupled with the sale of the related shares in the market, or the market’s expectation of such sales, could result in an immediate and substantial decline in the market price of our common stock.

Most of our shares of common stock are restricted from immediate resale in the public market. The restricted shares are restricted in accordance with Rule 144, which states that if unregistered, restricted securities are to be sold, a minimum of one year must elapse between the later of the date of acquisition of the securities from the issuer or from an affiliate of the issuer, and any resale of those securities in reliance on Rule 144. The Rule 144 restrictive legend remains on the stock until the holder of the stock holds the stock for longer than six months (unless an affiliate) and meets the other requirements of Rule 144 to have the restriction removed. The sale or resale of those shares in the public market, or the market’s expectation of such sales, may result in an immediate and substantial decline in the market price of our shares. Such a decline will adversely affect our investors, and make it more difficult for us to raise additional funds through equity offerings in the future.

Our common stock is subject to restrictions on sales by broker-dealers and penny stock rules, which may be detrimental to investors.

Our common stock is subject to Rules 15g-1 through 15g-9 under the Exchange Act, which imposes certain sales practice requirements on broker-dealers who sell our common stock to persons other than established customers and “accredited investors” (as defined in Rule 501(a) of the Securities Act). For transactions covered by this rule, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written consent to the transaction prior to the sale. This rule adversely affects the ability of broker-dealers to sell our common stock and purchasers of our common stock to sell their shares of our common stock.

Additionally, our common stock is subject to SEC regulations applicable to “penny stocks.” Penny stocks include any non-Nasdaq equity security that has a market price of less than $5.00 per share, subject to certain exceptions. The regulations require that prior to any non-exempt buy/sell transaction in a penny stock; a disclosure schedule proscribed by the SEC relating to the penny stock market must be delivered by a broker-dealer to the purchaser of such penny stock. This disclosure must include the amount of commissions payable to both the broker-dealer and the registered representative and current price quotations for our common stock. The regulations also require that monthly statements be sent to holders of a penny stock that disclose recent price information for the penny stock and information of the limited market for penny stocks. These requirements adversely affect the market liquidity of our common stock.

Our Articles of Incorporation allow us to sell preferred stock without shareholder approval.

Our Board of Directors has the authority to issue up to 4,000,000 shares of preferred stock and to determine the price, rights, preferences, privileges and restrictions, including voting rights, of those shares without any additional vote or action by our shareholders. The rights of the holders of the common stock will be subject to, and could be materially adversely affected by, the rights of the holders of any preferred stock that may be issued in the future. For example we could issue preferred stock that has superior rights to dividends or is convertible into shares of common stock. This might adversely affect the market price of the common stock.

If we experience delays and/or defaults in customer payments, we could be unable to recover all expenditures.

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Because of the nature of our contracts, at times we commit resources to projects prior to receiving payments from the customer in amounts sufficient to cover expenditures on projects as they are incurred. Delays in customer payments may require us to make a working capital investment. If a customer defaults in making their payments on a project in which we have devoted resources, it could have a material negative effect on our results of operations.

If we do not effectively manage our growth, our existing infrastructure may become strained, and we may be unable to increase revenue growth.

Our past growth that we have experienced, and in the future may experience, may provide challenges to our organization, requiring us to expand our personnel and our operations. Future growth may strain our infrastructure, operations and other managerial and operating resources. If our business resources become strained, our earnings may be adversely affected and we may be unable to increase revenue growth. Further, we may undertake contractual commitments that exceed our labor resources, which could also adversely affect our earnings and our ability to increase revenue growth.

SHOULD ONE OR MORE OF THE FOREGOING RISKS OR UNCERTAINTIES MATERIALIZE, OR SHOULD THE UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THOSE ANTICIPATED, BELIEVED, ESTIMATED, EXPECTED, INTENDED OR PLANNED

ITEM 1B. UNRESOLVED STAFF COMMENTS

This Item is not applicable to us as we are not an accelerated filer, a large accelerated filer, or a well-seasoned issuer.

ITEM 2. PROPERTIES

During December 31, 2010 the Company uses the Chief Financial Officers office as the Corporation’s office at no cost to the Company.

Since January 2012, the Company uses the office at 1291 Galleria Drive, Suite 200, Henderson, NV 89014. The office is at no cost to the Company.

ITEM 3. 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. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our company’s or our company’s subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

On July 5, 2013 the Company filed a complaint for the collection of $150,000 of unpaid medical billing fees that were seriously delinquent. After many attempts by the Company to begin collections, the Defendants refused to pay the outstanding balances, however expected the Company to continue to bill for them. The Company’s complaint was filed against Krooss Medical Management Systems, LLC, William F. Krooss and Marie W. Krooss in the United States District Court, District of Nevada Case No. 2013-CV-01187-ABG-VCF.

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On August 13, 2013 Krooss Medical Management Systems et al filed a Complaint in Chancery Court of Rankin County, Mississippi Case No. 13-1372 as a strategy to keep the collection matter in Mississippi Chancery Court.

Case No. 13-1372 was remanded to the United States District Court, Southern District of Mississippi Jackson Division Case No. 3:13CV507-HTW-LRA.

This litigation is a collection matter of unpaid fees by the Defendants and the Company vehemently denies the allegations 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.

ITEM 4. N/A

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PART II

ITEM 5. MARKET FOR REGISTANT’S COMMON STOCK, RELATED STOCKHOLDER MATTERS AND ISSUERS PURCHASES OF EQUITY SECURITIES.

Cloud common stock is traded in the over-the-counter market, and quoted in the National Association of Securities Dealers Inter-dealer Quotation System (“Electronic Bulletin Board) and can be accessed on the Internet at OTCmarkets.com under the symbol “NSCT.”

At September 30, 2011, there were 180,526,879 shares of common stock of Cloud outstanding and there were in excess of 8,000 shareholders of record of the Company’s common stock.

The following table sets forth for the periods indicated the high and low bid quotations for Cloud’s common stock. These quotations represent inter-dealer quotations, without adjustment for retail markup, markdown or commission and may not represent actual transactions.

Periods	High		Low
Fiscal Year 2011
First Quarter (October – December 2010)	$	0.01	$	0.01
Second Quarter (January – March 2011)	$	0.01	$	0.01
Third Quarter (April - June 2011)	$	0.01	$	0.01
Fourth Quarter (July – September 2011)	$	0.00	$	0.00
Fiscal Year 2010
First Quarter (October – December 2009)	$	0.0008	$	0.0008
Second Quarter (January – March 2010)	$	0.0012	$	.0012
Third Quarter (April - June 2010)	$	0.0008	$	0.0008
Fourth Quarter (July – September 2010)	$	0.0004	$	0.0004

On September 25, 2013, the closing bid price of our common stock was $0.03

Dividends

We may never pay any dividends to our shareholders. We did not declare any dividends for the year ended September 30, 2011. Our Board of Directors does not intend to distribute dividends in the near future. The declaration, payment and amount of any future dividends will be made at the discretion of the Board of Directors, and will depend upon, among other things, the results of our operations, cash flows and financial condition, operating and capital requirements, and other factors as the Board of Directors considers relevant. There is no assurance that future dividends will be paid, and if dividends are paid, there is no assurance with respect to the amount of any such dividend.

Transfer Agent

Cloud’s Transfer Agent and Registrar for the common stock is Pacific Stock Transfer located in Las Vegas, Nevada.

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Recent sales of Unregistered Securities

2013

In October, 2012 the Company issued 137,500 common shares for $46,000 and issued 10,000 common stock in conjunction with the sale of medical software.

In December 6, 2012 the Company issued 500,000 common shares for the acquisition of CipherSmith software, issued 200,000 common shares for the sale of medical software.

In January 22, 2013 the Company issued 200,000 common shares for the acquisition of CipherSmith software.

In March 21, 2013 the Company issued 270,000 common shares for software investment in the company in accordance with the Software Investment Agreements.

In March 21, 2013 the Company issued 500,000 to Krooss Family Trust LLP for the acquisition of Doctors Network of America in Flowood, Mississippi and all of the assets of that company. Also on April 17, 2013 the Company issued 167,000 for compensation for the salaries for the entire year of 2013 those shares were issued to Krooss Family Trust LLP in accordance with the Agreement. On April 17, 2013 the Company issued 378,500 to Krooss Family Trust LLP in accordance with the Agreement with total shares issued to William and Marie Krooss of 1,045,500 common shares.

April 17, 2013 the Company cancelled the 200,000 common shares issued to for the acquisition and reissued 220,004 common shares for the acquisition of CipherSmith software.

April 17, 2013 the Company issued 95,000 for the software investment in the Company in accordance with the Software Investment Agreements.

May 10, 2013 the Company issued 20,000 common shares for software investment in the company in accordance with the Software Investment Agreements.

June 26, 2013 the Company issued 25,000 common shares for software investment in the company in accordance with the Software Investment Agreements.

August 26, 2013 the Company issued 120,000 common shares to two Software Sales Personal located in California.

Fiscal Year Ended 2012

During the ten months ended July 31, 2012 the Company issued 30,000,000 common shares for there the reduction of debt from our CEO and reduced debt of the company by $3,325,949. The Company also issued 19,000 common shares for services rendered by professionals and recorded the expenses based upon the trading price of the common shares of $0.0102 and expensed $204 as consulting fees. The Company issued 706,333 common shares to third parties that have purchased our medical billing software at the trading price of the common stock of $0.0160 and recorded a revenue contra account of $10,401.

The Company issued 90,000 common shares for $18,000 in cash.

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The Company issued 200,000 common shares to Kroos Medical Management in accordance with the acquisition agreement and recorded it at the trading price of the common shares of $0.020 and recorded an investment in Kroos Medical Management of $4,000.

Fiscal Year Ended 2011

In September 30, 2011 the Company issued 15,000,000 common shares at the trading price of the common stock of $0.007. The Stock was issued for compensation to new management and recorded and expense of $105,000.

The Company issued 250,000 in common stock for $25,000 in cash.

Fiscal Year Ended 2010

No common stock was issued.

Common Stock

On April 11, 2011 the Company amended its articles of incorporation to increase the authorized shares to 650,000,000, at $0.01 par value and 180,526,879 are issued and outstanding as of September 30, 2011. The holders of our common stock are entitled to receive such dividends, if any, as may be declared by our board of directors from time to time out of legally available funds. The dividend rights of our common stock are junior to any preferential dividend rights of any outstanding shares of preferred stock. The holders of our common stock also are entitled to receive distributions upon our liquidation, dissolution or winding up of our assets that are legally available for distribution, after payment of all debt and other liabilities and distribution in full of preferential amounts, if any, to be distributed to holders of our preferred stock.

The holders of our common stock are not entitled to preemptive, subscription, redemption or conversion rights. The rights, preferences and privileges of holders of our common stock are subject to, and may be adversely affected by, the rights of any series of preferred stock that we may designate and issue in the future.

Preferred Stock

The Company has authorized 4,000,000 shares of preferred stock, at $.001 par value and 4,000,000 are issued and outstanding as of September 30, 2011. The Corporation established and designates the rights and preferences of a Series A Convertible Preferred Stock, and reserves 4,000,000 shares of preferred stock against its issuance, such rights, preferences and designations. Each share of the Preferred Stock shall have 150 votes on all matters presented to be voted by the holders of our common stock. All 4,000,000 shares of preferred stock that have been granted to our CEO & CFO on November 30, 2010 and issued on April 11, 2012 which was valued at the trading price of the common stock of $0.0095 and recorded as an expense of $38,000.

The issuance of preferred stock by our board of directors could adversely affect the rights of holders of the common stock by, among other things, establishing preferential dividends, liquidation rights or voting powers. See “Risk Factors” above.

Warrants and Options

All warrants issued have expired.

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Stock Option Plan

Our board of directors adopted the 2000 Stock Option Plan effective January 1, 2001. Our stockholders formally approved the 2000 Stock Option Plan on February 14, 2001. The 2000 Stock Option plan terminates in accordance with the term on December 1, 2010. The Current Board of Directors has not approved nor extended the Stock Option Plan therefore it is terminated.

ITEM 6. SELECTED FINANCIAL DATA.

The following information has been summarized from financial information included elsewhere and should be read in conjunction with such financial statements and notes thereto.

Summary of Statements of Operations and Financial Position of NSCT

Years Ended September 30, 2011 and 2010

	September 30,
Operating Data:	2011			2010

Revenue		—		$	—
Operating and Other Expenses		340,417			21,964
Discontinued operations		16,212			35,121
Net Loss		(356,629	)	$	(57,085	)

	September 30,
Balance Sheet Data:		2011			2010

Current Assets		—		$	—
Total Assets		11,016			2,597
Current Liabilities		1,200,106			1,788,741
Non-Current Liabilities		—			—
Total Liabilities		1,985,790			1,788,741
Working Capital (Deficit)		(1,974,774	)		(1,788,741	)
Shareholders’ Equity		(1,974,774	)	$	(1,786,145	)

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is management’s discussion and analysis of certain significant factors that have affected our financial position and operating results during the periods included in the accompanying financial statements, as well as information relating to the plans of our current management. This report includes forward-looking statements. Undue reliance should not be placed on these forward-looking statements which speak only as of the date hereof. We undertake no obligation to update these forward-looking statements.

The following discussion and analysis should be read in conjunction with our financial statements and the related notes thereto and other financial information contained elsewhere in this Form 10-K.

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Business

In February 4, 2010 the prior Board members Mr. Michael Grollman and Mr. Greg Szabo, voted to discontinue and wind down the operations of the Company's Mobile DVR and Location Products business and operate these remaining Company assets in a Limited Liability Company named NSC Labs, LLC, a company controlled and owned by Mr. Grollman. Mr. Grollman and NSC Labs, LLC entered into an agreement to pay the Company $100,000 plus 2% of revenues. Since as of this filing neither Mr. Grollman nor NSC Labs, LLC have paid the specified consideration for this transaction the transaction has not been recorded in the accounting records of the Company.

In November 19, 2010, the prior management was terminated and new management began working on operations related to the Company’s medical billing software. In fiscal 2011, the year of termination of prior management, new management has deemed that the above transaction transferring prior operations to NSC Labs, LLC was transacted in full and final settlement of the liabilities to former management including those captioned as “disputed accrued expenses – related party” on the Balance Sheet Since the transaction was related to former management who had the ability to affect the terms and outcomes of the liabilities, the transaction has been subsequently recorded as an increase to additional paid in capital.

Critical Accounting Policies

Use of Estimates and Assumptions

The preparation of 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 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 financial statements; accordingly, actual results could differ from these estimates.

These estimates and assumptions also affect the reported amounts of revenues, costs and expenses during the reporting period. Management evaluates these estimates and assumptions on a regular basis. Actual results could differ from those estimates.

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Revenue Recognition

Revenue includes product sales and provision of services. The Company recognizes revenue from product sales and provision of services at the time evidence of an arrangement exists, fees are contractually fixed or determinable, collection is reasonably assured through historical collection results and regular credit evaluations, and there are no uncertainties regarding customer acceptance.

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, 2011, cash and cash equivalents include cash on hand and cash in the bank and the FDIC insures these deposits up to $250,000.

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.

RESULTS OF OPERATIONS FROM DISCONTINUED MOBILE DVR AND LOCATION PRODUCTS BUSINESS

Fiscal Year Ended September 30, 2011, Compared to Fiscal Year Ended September 30, 2010

General and administrative expenses increased to $21,964 from $0 for the years ended September 30, 2011 and 2010, respectively. Our General and administrative expenses is related to the new medical billing company operations.

We recorded a loss from discontinued operations for the year ended September 30, 2011 of $16,212 of $35,121 for year ended September 30, 2009. The Company is currently engaged in the medical billing operations. Until October 1, 2009, the Company’s sole sources of revenues were from GPS operational device business. The Company discontinued its GPS operational device business in February 2010 (See “Note 3 - Discontinued Operations” to the accompanying Financial Statements). The Company’s GPS operational device business was its primary operations and only sources of revenues for the year ended September 30, 2009.

Liquidity and Capital Resources

The Company has material notes, one from our prior Chief Executive Officer for approximately $59,704, one convertible note with an investor relationship with Strategic Working Capital Fund, LP $175,000 net of discount and beneficial conversion feature of $0.00 with a total balance due of $175,000, and three notes with shareholders of $31,625. As of September 30, 2011 the Company was in default on all notes since the Company has not paid the required quarterly interest payments. In July 2010 our new CEO advanced $159,515.

Our cash (used in) provided by operating activities were ($220,628) and ($31,518) for the years ended September 30, 2011 and 2010, respectively. The decrease in cash flows used in operations was primarily attributable to the changes in operating assets and liabilities, primarily related to increases in amounts payable, in 2011 as compared to the 2010 period.

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Cash provided by (used in) financing activities was $229,050 and $21,281 for the years ended September 30, 2011 and 2010, respectively. We received advances from our CEO of $159,515.

There is a strong possibility that we may not be able to satisfy our cash requirements over the next twelve months and may be required to raise additional cash from outside sources.

In the event that we are required to raise additional cash from outside source, we may issue equity securities or incur additional debt. 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.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We do not hold any derivative instruments and do not engage in any hedging activities.

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ITEM 8. FINANCIAL STATEMENTS

CLOUD MEDICAL DOCTOR SOFTWARE CORPORATION

TABLE OF CONTENTS		Page

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS:		F-2
FINANCIAL STATEMENTS:
Balance Sheet at September 30, 2011 and 2010		F-3
Statements of Operations for the year ended September 30, 2011 and 2010		F-4
Statement of Stockholders’ (Deficit) for the year ended September 30, 2011 and 2010		F-5
Statements of Cash Flows for the year ended September 30, 2011 and 2010		F-6
NOTES TO FINANCIAL STATEMENTS		F-7

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F-1

S.E.Clark & Company, P.C.

Registered Firm: Public Company Accounting Oversight Board

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

Cloud Medical Doctor Software Corporation,

fka National Scientific Corporation

Phoenix, Arizona

We have audited the accompanying balance sheets of Cloud Medical Doctor Software Corporation, fka National Scientific Corporation (the “Company”), as of September 30, 2011 and 2010, and the related statements of operations, stockholders’ deficit and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Cloud Medical Doctor Software Corporation, fka National Scientific Corporation, as of September 30, 2011 and 2010 and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has a net loss for the year ended September 30, 2011 of $356,629, an accumulated deficit at September 30, 2011 of $26,229,970, cash flows used by operating activities of $220,628, and needs additional cash flows to maintain its operations. Those conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to those matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ S.E.Clark & Company, P.C.

Tucson, Arizona

September 30, 2013

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F-2

CLOUD MEDICAL DOCTOR SOFTWARE CORPORATION
(Formerly National Scientific Corporation)
BALANCE SHEETS
	September 30,
	2011			2010

ASSETS

CURRENT ASSETS:
Cash	$	11,016		$	—
Net assets of discontinued operations		—			2,597
Total current assets		11,016			2,597

Proprietary technology		1,200,106			—

TOTAL ASSETS	$	1,211,122		$	2,597

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
Advances from officers	$	180,795		$	21,281
Line of Credit		44,535			—
Net liabilities of discontinued operations		1,760,459			1,767,460
Total current liabilities		1,985,790			1,788,741

Note payable affiliate		1,200,106			—

TOTAL LIABILITIES		3,185,896			1,788,741

STOCKHOLDERS' DEFICIT:
Preferred stock, $.10 par value, 4,000,000 shares authorized; none issued and outstanding as of September 30, 2011 and 2010		40,000			—
Common stock, $.01 par value, 650,000,000 shares authorized; 180,526,879 and 165,276,913 issued and outstanding as of September 30, 2011 and 2010, respectively		1,805,269			1,652,769
Additional paid-in capital		22,409,927			22,434,427
Accumulated deficit		(26,229,970	)		(25,873,341	)
Total stockholders' deficit		(1,974,774	)		(1,786,145	)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	1,211,122		$	2,597

The accompanying notes are an integral part of these financial statements.

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F-3

CLOUD MEDICAL DOCTOR SOFTWARE CORPORATION
(Formerly National Scientific Corporation)
STATEMENTS OF OPERATIONS
	Years Ended September 30,
	2011			2010

OPERATING EXPENSES:
Total operating expenses	$	340,417		$	21,964
OPERATING LOSS		(340,417	)		(21,964	)

(LOSS) INCOME BEFORE TAXES AND DISCOUNTED OPERATIONS	$	(340,417	)		(21,964	)

(LOSS) INCOME FROM CONTINUED OPERATIONS		(340,417	)		(21,964	)

(LOSS) INCOME FROM DISCONTINUED OPERATIONS		(16,212	)		(35,121	)

NET LOSS	$	(356,629	)	$	(57,085	)

NET LOSS PER COMMON SHARE:
Basic

Continuing operations	$	(0.00	)	$	(0.00	)

Discontinuing operations	$	(0.00	)	$	(0.00	)

NET (LOSS) INCOME PER COMMON SHARE
Basic	$	(0.00	)	$	(0.00	)

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic		180,526,879			165,276,879

The accompanying notes are an integral part of these financial statements.

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F-4

CLOUD MEDICAL DOCTOR SOFTWARE CORPORATION
(Formerly National Scientific Corporation)
STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED SEPTEMBER 30, 2011 AND 2010
	Preferred Stock					Common Stock
		Shares		Amount		Shares		Amount		Additional Paid-in Capital			Accumulated Deficit			Total

SEPTEMBER 30, 2008			—	$	—		137,276,879	$	1,372,770	$	22,658,682		$	(25,491,084	)	$	(1,459,633	)
Options expired							—				19,945						19,945
Common stock issued for back pay of officers							28,000,000		280,000		(244,200	)		—			35,800
Net loss														(325,172	)		(325,172	)
SEPTEMBER 30, 2009			—	$	—		165,276,879	$	1,652,769	$	22,434,427		$	(25,816,256	)	$	(1,729,061	)

Net loss														(57,085	)		(57,085	)
SEPTEMBER 30, 2010			—	$	—		165,276,879	$	1,652,769	$	22,434,427		$	(25,873,341	)	$	(1,786,146	)


Common stock issued for compensation							15,000,000		150,000		(45,000	)					105,000
Preferred stock issued for compensation			4,000,000		40,000						(2,000	)					38,000
Common stock issued for cash							250,000		2,500		22,500						25,000
Net loss														(356,629	)		(356,629	)
SEPTEMBER 30, 2011			4,000,000	$	40,000		180,526,879	$	1,805,269	$	22,409,927		$	(26,229,970	)	$	(1,974,775	)

THE LINE OF BUSINESS REPORTED ON THESE FINANCIAL STATEMENTS
WAS DISCONTINUED IN FEBRUARY 2010. SEE NOTE 1
The accompanying notes are an integral part of these financial statements

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F-5

CLOUD MEDICAL DOCTOR SOFTWARE CORPORATION
(Formerly National Scientific Corporation)
STATEMENTS OF CASH FLOWS

	September 30,
	2011			2010

Net Loss	$	(356,629	)	$	(57,085	)
Adjustments to reconcile net loss to net cash
(used in) operating activities:
Discontinued operations		16,212			35,121
Changes in assets and liabilities:
Stock issued for compensation		143,000			—
Net assets and liabilities from discontinued operations		(23,214	)		(9,554	)
Net cash used in operating activities		(220,631	)		(31,518	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Common stock issued for cash		25,000			—
Advances from affiliates		159,515			36,000
Line of credit		44,535			(14,719	)
Net cash provided by financing activities		229,050			21,281

INCREASE IN CASH		8,419			(10,237	)
CASH, BEGINNING OF PERIOD		2,597			12,434
CASH, END OF PERIOD	$	11,016		$	2,197

SUPPLEMENTAL CASH FLOW INFORMATION:

Interest paid	$	—		$	—
Taxes paid	$	—		$	—
Purchase of proprietary technology	$	1,200,106		$	—

The accompanying notes are an integral part of these financial statements.

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F-6

CLOUD MEDICAL DOCTOR SOFTWARE CORPORATION

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED SEPTEMBER 30, 2011 AND 2010

NOTE 1 - DESCRIPTION OF BUSINESS

ACCORDINGLY, THESE FINANCIAL STATEMENTS ARE BEING SUBMITTED ONLY TO COMPLY WITH SEC RULES AND REGULATIONS AND SHOULD NOT BE RELIED UPON FOR YOUR INVESTMENT DECISIONS. THE OPERATIONS REPORTED ON IN THESE FINANCIAL STATEMENTS HAVE BEEN DISCONTINUED AS OF FEBRUARY 4, 2010. NEW MANAGEMENT ENCOURAGES THE READERS OF THESE FINANCIAL STATEMENTS TO SUSPEND ANY INVESTMENT DECISIONS PERTAINING TO THE STOCK OF THIS COMPANY UNTIL ALL REQUIRED 1934 ACT FILINGS ARE BROUGHT CURRENT.

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F-7

In February 4, 2010 the prior Board members Mr. Michael Grollman and Mr. Greg Szabo, voted to discontinue and wind down the operations of the Company's Mobile DVR and Location Products business and operate the remaining Company assets in a Limited Liability Company named NSC Labs, LLC, a company controlled and owned by Mr. Grollman. Mr. Grollman and NSC Labs, LLC entered into an agreement to pay the Company $100,000 plus 2% of revenues. Since as of this filing neither Mr. Grollman nor NSC Labs, LLC have paid the specified consideration for this transaction the transaction has not been recorded in the accounting records of the Company

NOTE 2 - BASIS OF PRESENTATION AND GOING CONCERN ISSUES

In managements’ opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

NOTE 3 - GOING CONCERN ISSUES

The accompanying 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 a net loss for the twelve months ended September 30, 2011 of $356,629, an accumulated deficit at September 30, 2011 of $26,229,970, 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 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 financial statements in accordance with accounting principles generally accepted in the United States of America. Significant accounting policies are as follows:

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F-8

Use of Estimates and Assumptions

Revenue Recognition

Revenue includes provision of services. The Company recognizes revenue from provision of services at the time evidence of an arrangement exists, fees are contractually fixed or determinable, collection is reasonably assured through historical collection results and regular credit evaluations, and there are no uncertainties regarding customer acceptance.

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 off against the allowance when it is probable the receivable will not be recovered.

Cash and Cash Equivalents

Income Taxes

Deferred income taxes are provided to reflect the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

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F-9

The Company adopted the provisions of ASC Topic 740, Accounting For Uncertainty In Income Taxes-An Interpretation of ASC Topic 740 ("ASC Topic 740"). ASC Topic 740 contains a 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 September 30, 2011, the Company did not record any liabilities for uncertain tax positions.

Share-Based Compensation

Basic and Diluted Net Loss Per 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.

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.

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.

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F-10

The Company adopted ASC Topic 820, Fair Value Measurements (“ASC Topic 820”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The standard provides a consistent definition of fair value which focuses 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. The standard also prioritizes, within the measurement of fair value, the use of market-based information over entity specific information and establishes a three-level hierarchy for fair value measurements 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 September 31, 2011 and 2010 for assets measured at fair value on a recurring basis:

at September 30, 2011

Level 1

Level 2

Level 3

Total

Proprietary Technology

1,200,106

Total Proprietary Technology

1,200,106

at September 30, 2010

Level 1

Level 2

Level 3

Total

Proprietary Technology

Total Proprietary Technology

—

Reclassifications

Certain prior period amounts have been reclassified to conform to current year presentations.

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.

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F-11

NOTE 5- DISCONTINUED OPERATIONS

The Company’s former Board of Directors believed that it was in the best interest of the Company to discontinue the business operation of the GPS operational device business. In 2011, this business was transferred to National Scientific, LLC by prior management in which he was to pay $100,000 for that technology the former officer never paid the required compensation. The Company discontinued these operations and began selling Medical Business Software and is the current operation of the Company.

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 operations from discontinued operations in accordance with ASC Topic 360, Accounting for the Impairment or Disposal of Long Lived Assets.

Details of those classifications are shown below.

	September 30, 2011		September 30, 2010
Net assets of discontinued operations:
Cash	$	—	$	2,197
Accounts receivable		—		—
Deferred offering costs		—		400
Net assets of discontinued operations	$	—	$	2,597

Net liabilities of discontinued operations:
Accounts payable and accrued expenses	$	169,176	$	195,072

Disputed salaries & vacation of former officers		968,645		968,645
Disputed salary – former employee		20,256		20,256

Disputed payroll taxes for back pay of former officers		84,701		84,701
Disputed interest		209,215		191,346
Interest expenses		42,137		42,137
Former officer note payable at 8% interest rate		59,704		59,704
Shareholders demand note payable at 12%		11,625		11,625
Shareholders demand note payable at 12%		20,000		20,000
Unsecured note payable at 8% interest due November 2010, interest payments in default at 9/30/2010		175,000		175,000
Note discount		—		(860	)
Note beneficial conversion feature		—		(166	)
Net liabilities of discontinued operations	$	1,760,459	$	1,767,460

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F-12

	Years ended September 30,
	2011		2010
Discontinued operations:
Revenues	$	3,400	$	58,788
Cost of sales		—		25,462
Operating expenses		—		36,485
Interest expense		19,612		31,962
Interest income		—		—
Loss from Discontinued Operations	$	16,212	$	35,121

Commitments and contingencies that were discontinued as a result of the transfer of the assets to National Scientific LLC as follows:

On September 7, 2005, we entered into a factoring agreement with United Capital Funding (UCF) of Florida. UCF is a specialized financial services firm offering Accounts Receivable Management and working capital funding via factoring. We expect to improve our cash flow with this arrangement.

Under the arrangement, we sell to UCF as absolute owner, invoices that we submit to UCF to be factored. Upon purchase, UCF assumes the risk of non-payment on purchased invoices, so long as the cause of non-payment is solely due to the occurrence of an insolvency event. As collateral securing the obligations, we grant UCF a continuing first priority security interest in all accounts and related inventory. Notwithstanding the creation of the above security interest, our relationship with UCF is one of Seller and Purchaser of accounts, and not that of lender and borrower. However, as there is certain recourse for non-payment, the accounts receivable are recorded at the estimated realizable value, net of allowances and the net advanced amount from UCF is recorded as an obligation at the end of fiscal 2010 and 2010. The initial and periodic factoring fee is .45% of the face amount of factored invoices. The factoring period is five days and the purchase price is 80% of the face amount, excluding sales tax.

UCF typically advances to us 80% of the total amount of invoices factored, excluding sales tax. UCF retains 20% of the outstanding factored invoices as a reserve, which it holds until the customer pays the factored invoice to UCF.

On November 1, 2005, as an important phase in the current year’s financing plan, we entered into a financing program with Strategic Working Capital Fund, LP. The terms of this program include a five-year Note payable at maturity in November 2010 for $175,000, at an effective annual interest rate of 8%. Interest is due and payable semi-annually on May 1st and November 1st for each year in which the note is outstanding The transaction also included 1,200,000 restricted common shares and a conversion/exchange option to convert the principal amount and any unpaid interest of the Note into common shares at a per share conversion price of $0.0525. These shares include weighted average anti-dilution provisions, as well as piggyback registration rights. Additionally, the Note has various put and call rights, and has a right to early payment under certain conditions after 2 years. The 1,200,000 restricted common shares were recorded at $0.043, which was the five-day average market closing price of our stock. The note and common stock were issued with a debt discount of $51,600 and a beneficial conversion feature of $9,933. The discount and beneficial conversion feature are being amortized to interest expense over the term of the note, which is approximately 60 months. The issuance of the shares resulted in deferred financing costs of $24,000. The deferred financing costs are being amortized over term of the note, which is approximately 60 months, and are included in the statement of operations as offering costs.

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F-13

On February 24, 2005, March 28, 2005, May 2, 2005, and May 27, 2005 our Chairman Michael Grollman made new personal loans to the Company totaling $159,000 to assist us with working capital needs. The loans are evidenced by a demand note that provides for repayment within five business days of a demand notice from Mr. Grollman, with interest of 6% compounded annually from June 1, 2005. These loans were secured by an interest in the copyrights in the Company’s iBus software and designs. During the quarter to September 30, 2007, these loans were paid down by $11,000. As of September 30, 2007, these loans had a balance outstanding of $148,000 and the interest rate going forward was adjusted to 8% compounded annually from October 1, 2007. On September 30, 2007, the Company converted unpaid interest of $13,300 on demand notes payable to Michael Grollman into a new demand note of $13,300 that provides for repayment within five business days of a demand notice from Mr. Grollman, with interest of 8% compounded annually on October 1^st. The balance of the note at September 30, 2011 is $59,704.

On April 27, 2006, we secured a short-term loan of $16,625 from a shareholder. The loan carries an origination/placement fee of $500 and has a perfectible security interest a) prior to delivery in any assets purchased for the fulfillment of a customer’s order dated March 16, 2006, and b) in any receivable resulting from the fulfillment of the customer’s purchase order. The interest rate on the loan is 12%. The transaction also included 100,000 warrants to purchase our common stock at $0.036 at any time before April 27, 2009. The note had an approximate maturity date of June 15, 2006. At September 30, 2006 and September 30, 2007 this note was in default. As of September 30, 2011 $11,625 of this loan was in default.

On May 31, 2006, we secured a short-term loan of $20,000 from a shareholder. The loan carries an origination/placement fee of $500 and has a perfectible security interest a) prior to delivery in any assets purchased for the fulfillment of Clover Park, WA’s order and b) in any receivable resulting from the fulfillment of the Clover Park purchase order. The interest rate on the loan is 12%. The transaction also included 100,000 warrants to purchase our common stock at $0.036 at any time before May 31, 2009. The note had a maturity date of July 10, 2006. At September 30, 2011 this note was in default.

NOTE 6– COMMITMENT AND CONTINGENCIES

Rent expense for the years ended September 30, 2011 and 2010 was approximately $0.00 and $7,245 respectively

NOTE 7– RELATED PARTY TRANSACTIONS

In September 30, 2009 the Company issued 28,000,000 common shares at the trading price of the common stock of $0.0012785. The Stock was issued for unpaid compensation to officers and reduced accrued compensation by $35,800.

On July 19, 2010 the Company assumed the line of credit of new management from Chase Bank of $36,000 to fund transitional expenses of which the net advance totaled $44,535.

In April 2011 the Company issued 4,000,000 common shares at the trading price of the common stock of $0.0095. The stock was issued for compensation to new management and recorded and expense of $38,000.

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F-14

The Company entered into an employment agreement with its Chief Executive Officer (the “Executive’) on January 1, 2013 (the “Employment Agreement”). The Employment Agreement, will expire January 1, 2018 and shall automatically renew for another 5 years unless terminated in accordance with the provisions of the Employment Agreement. The Employment Agreement provides for:

i.		A monthly salary of $20,833 per month subject to an annual increase of 10% per year and consistent with the Company policy applicable to other senior executives and officers and approval by the Board of Directors.
ii.		A cash bonus of 25% of his annual base salary each year if the Company reaches the following milestones (none of which were attained in 2013):

a.		The Company posts annual gross revenues on a consolidated basis of at least $5,000,000;
b.		The Company's earnings before the deduction of income taxes and amortization expenses (“EBITA”), including cash extraordinary items but before officer's bonuses, on a consolidated basis for any year is at least $1,000,000; or

iii.		The issuance of shares equal to 1% of the then issued and outstanding shares of the Company annually, which will be issued in 2013.
iv.		The issuance of common stock on each anniversary date of the Employment Agreement of 5,000,000 and issuance of common stock for every acquisition granting 5,000,000 for DNA, 5,000,000, and 1,000,000 for MediSouth, LLC
v.		An automobile allowance of $1,500 per month.
vi.		A medical insurance allowance of $1,500 per month.
vii.		In the event the Executive's employment is terminated without cause he will receive the entire contract remaining on the agreement.

For the years ended September 30, 2011 and 2010, the Company paid $0.00 compensation.

The Company entered into an employment agreement with its Chief Financial Officer (the “Executive’) on January 1, 2013 (the “Employment Agreement”). The Employment Agreement will expire January 1, 2018 and shall automatically renew for another 5 years unless terminated in accordance with the provisions of the Employment Agreement. The Employment Agreement provides for:

i.		A monthly salary of $12,500 per month subject to an annual increase of 10% per year and consistent with the Company policy applicable to other senior executives and officers and approval by the Board of Directors.
ii.		A cash bonus of 25% of his annual base salary each year if the Company reaches the following milestones (none of which were attained in 2013):

a.		The Company posts annual gross revenues on a consolidated basis of at least $5,000,000;
b.		The Company's earnings before the deduction of income taxes and amortization expenses (“EBITA”), including cash extraordinary items but before officer's bonuses, on a consolidated basis for any year is at least $1,000,000; or

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F-15

iii.		The issuance of shares equal to 1% of the then issued and outstanding shares of the Company annually, which will be issued in 2013.
iv.		The issuance of common stock on each anniversary date of the Employment Agreement of 5,000,000 and issuance of common stock for every acquisition granting 3,000,000 for DNA, 3,000,000, and 750,000 for MediSouth, LLC
v.		An automobile allowance of $1,000 per month.
vi.		A medical insurance allowance of $1,500 per month.
vii.		In the event the Executive's employment is terminated without cause he will receive the entire contract remaining on the agreement.

For the years ended September 30, 2011 and 2010, the Company paid $0.00 compensation

NOTE 8 - EQUITY

On April 11, 2011 the Company amended its articles of incorporation to increase the authorized common shares to 650,000,000, at $0.01 par value and 180,526,879 are issued and outstanding as of September 30, 2011. and 4,000,000 preferred shares outstanding at a par value of $.01.

The Common stock holders have right to vote one share for every share that is issued.

The Preferred stockholders have designated rights and preferences of a Series A Convertible Preferred Stock, and reserved 4,000,000 shares of preferred stock against its issuance, such rights, preferences and designations. Each share of the Preferred Stock shall have 150 votes on all matters presented to be voted by the holders of our common stock.

2013

In October, 2012 the Company issued 137,500 common shares for $46,000 and issued 10,000 common stock in conjunction with the sale of medical software.

In December 6, 2012 the Company issued 500,000 common shares for the acquisition of CipherSmith software, issued 200,000 common shares for the sale of medical software.

In January 22, 2013 the Company issued 200,000 common shares for the acquisition of CipherSmith software.

In March 21, 2013 the Company issued 270,000 common shares for software investment in the company in accordance with the Software Investment Agreements.

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F-16

April 17, 2013 the Company cancelled the 200,000 common shares issued to for the acquisition and reissued 220,004 common shares for the acquisition of CipherSmith software.

April 17, 2013 the Company issued 95,000 for the software investment in the Company in accordance with the Software Investment Agreements.

May 10, 2013 the Company issued 20,000 common shares for software investment in the company in accordance with the Software Investment Agreements.

June 26, 2013 the Company issued 25,000 common shares for software investment in the company in accordance with the Software Investment Agreements.

August 26, 2013 the Company issued 120,000 common shares to two Software Sales Personal located in California.

2012

During the ten months ended July 31, 2012 the Company issued 30,000,000 common shares for there the reduction of debt from our CEO and reduced debt of the company by $1,200,106. The Company also issued 19,000 common shares for services rendered by professionals and recorded the expenses based upon the trading price of the common shares of $0.0102 and expensed $204 as consulting fees. The Company issued 706,333 common shares to third parties that have purchased our medical billing software at the trading price of the common stock of $0.0160 and recorded a revenue contra account of $10,401.

The Company issued 90,000 common shares for $18,000 in cash.

The Company issued 200,000 common shares to Kroosss Medical Management in accordance with the acquisition agreement and recorded it at the trading price of the common shares of $0.020 and recorded an investment in Krooss Medical Management of $4,000.

In August of 2012 the Company issued 100,000 shares to MediSouth LLC for the acquisition of its software. The stock was valued at $2,500 (See MediSouth LLC software acquisition below).

2011

The Company issued 250,000 in common stock for $25,000 in cash.

2010

No common stock was issued.

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F-17

Common Stock

The holders of our common stock are entitled to receive such dividends, if any, as may be declared by our board of directors from time to time out of legally available funds. The dividend rights of our common stock are junior to any preferential dividend rights of any outstanding shares of preferred stock. The holders of our common stock also are entitled to receive distributions upon our liquidation, dissolution or winding up of our assets that are legally available for distribution, after payment of all debt and other liabilities and distribution in full of preferential amounts, if any, to be distributed to holders of our preferred stock.

Preferred Stock

The Company has authorized 4,000,000 shares of preferred stock, at $.001 par value and zero are issued and outstanding as of September 30, 2011. The Corporation established and designates the rights and preferences of a Series A Convertible Preferred Stock, and reserves 4,000,000 shares of preferred stock against its issuance, such rights, preferences and designations. Each share of the Preferred Stock shall have 150 votes on all matters presented to be voted by the holders of our common stock. All 4,000,000 shares of preferred stock that have been issued to our CEO & CFO on April 11, 2011 valued at the trading price of the common stock of $0.0095 and recorded as an expense of $38,000.

NOTE 9 – STOCK-BASED COMPENSATION

Options

The Prior board of directors adopted the 2000 Stock Option Plan effective January 1, 2001. Our stockholders formally approved the 2000 Stock Option Plan on February 14, 2001. The 2000 Stock Option plan terminated in accordance with the plan provisions on December 1, 2010. The Current Board of Directors did not extend the Stock Option Plan, allowing it to terminate.

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F-18

Under the 2000 Stock Option Plan, the purchase price must be at least 100% of the fair market value of our common stock (if the option is an incentive stock option), or at least 25% of the fair market value of our common stock at the time the option was granted (if the option is a nonqualified grant), or such higher price as may be determined by the Board of Directors at the time of grant. If however, an incentive stock option was granted to an individual who would, immediately before the grant, directly or indirectly own more than 10% of the total combined voting power of all our classes of stock, the purchase price of the shares of common stock covered by such incentive stock option may not be less than 110% of the fair market value of such shares on the day the incentive stock option was granted. As the price of the Company’s common stock was quoted on the OTC Bulletin Board, the fair market value of the common stock underlying options granted under the 2000 Stock Option Plan was the last closing sale price of the common stock on the day the options were granted. If there was no market price for the common stock, then our Board of Directors may, after taking all relevant facts into consideration, determined the fair market value of our common stock.

According to Section 10. Of the agreement captioned “Exercise of Options Upon Termination”

“(a) Subject to Section 10(c), upon the termination of a Grantee’s relationship with the Company and its Subsidiaries, the period during which such Grantee may exercise any outstanding exercisable installments of his Options that were exercisable at the date of termination of his relationship with the Company shall not exceed (i) if such termination is due to death or permanent and total disability, one year from the date of such termination, and (ii) in all other cases, three months (six months for Nonemployee Directors) from the date of such termination, provided, however, that in no event shall the period extend beyond the expiration of the Option term. Notwithstanding the foregoing, all Options shall immediately terminate upon a termination of a Grantee’s employment if the Committee determines, in its sole discretion, that such termination is for Cause.

(b) In no event shall any Option be exercisable for more than the maximum number of shares that the Grantee was entitled to purchase at the date of termination of the relationship with the Company and its Subsidiaries.

(c) The Committee may, in its discretion, extend the period of exercisability set forth in clauses (i) and (ii) in paragraph (a) above; provided, however, that such period may not be extended for Options granted to Nonemployee Directors or for ISOs.”

Accordingly, upon termination of employment with the Company, whether through dismissal or resignation, the options granted to former management expired. All remaining options expired three months after the resignation of Mr. Grollman in 2010. Additionally, current management did not extend the options of any prior management.

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F-19

A summary of Options activity for the year ended September 30, 2011 and 2010 is presented below:

	Outstanding Options
	Shares Available for Grant		Number of Shares Granted			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)		Aggregate Intrinsic Value
October 1, 2008		7,000,000		5,271,756			0.43		4.75	$	—
Grants				40,000		$	0.15				—
Forfeitures				—							—
September 30, 2009		—		5,311,756		$	0.43		3.75		—
Grants				—			—
Forfeitures				(5,311,756	)-		.64-
September 30, 2011		7,000,000		—		$	—		—		—

The Company values all warrants using the Black-Scholes option-pricing model. Critical assumptions for the Black-Scholes option-pricing model include the market value of the stock price at the time of issuance, the risk-free interest rate corresponding to the term of the warrant, the volatility of the Company’s stock price, dividend yield on the common stock, as well as the exercise price and term of the warrant. The warrants are not subject to any form of vesting schedule and, therefore, are exercisable by the holders anytime at their discretion during the life of the warrant. No discounts were applied to the valuation determined by the Black-Scholes option-pricing model.

Warrants

During the year ended September 30, 2011, no awards were granted, no share purchase warrants were exercised, and no warrants were forfeited.

Summary of warrant activity for the year ended September 30, 2011 and 2010 is presented below:

	Number of Shares Granted			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)		Aggregate Intrinsic Value
October 1, 2009		2,308,497		$	.10	$	58	$	—
Grants		—			—
Expired		—			—
September 30, 2010		2,308,497		$	0.10		.38		—
Grants		—			—
Expired		(2,308,497	)		—
September 30, 2011		—		$	—	$	—	$	—

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F-20

Stock Option Plan

NOTE 10 INCOME TAXES

	September 30,
	2011			2010
Current:
Federal	$	0		$	0
State		0			0
	$	0		$	0

Deferred:
Federal	$	8,378,837		$	8,264,131
State		44,703			25,445
		8,423,540			8,289,576
Valuation allowance		(8,423,540	)		(8,289,576	)
Provision benefit for income taxes, net	$	—		$	—

The difference between income tax expense computed by applying the federal statutory corporate tax rate and actual income tax expense is as follows:

	September 30,
	2011			2010
Statutory federal income tax rate		34.0	%		34.0	%
State income taxes and other		9.0			9.0
Valuation allowance		(43.0	)		(43.0	)
Effective tax rate		0.0	%		0.0	%

Deferred income taxes result from temporary differences in the recognition of income and expenses for the financial reporting purposes and for tax purposes. The tax effect of these temporary differences representing deferred tax asset and liabilities result principally from the following:

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F-21

	September 30,
	2011			2010
Net operating loss carryforward	$	25,866,296			25,331,677
Valuation allowance		(25,688,296	)		(25,331,677	)
Deferred income tax asset	$	—		$	—

The Company has a net operating loss carryforward of approximately $25.0 million available to offset future taxable income through 2030. For income tax reporting purposes, the Company’s aggregate unused net operating losses are subject to limitations of Section 382 of the Internal Revenue Code, as amended. Under the Tax Reform Act of 1986, the benefits from net operating losses carried forward may be impaired or limited on certain circumstances. Events which may cause limitations in the amount of net operating losses that the Company may utilize in any one year include, but are not limited to, a cumulative ownership change of more than 50% over a three-year period. The consolidation of any limitations that may be imposed for future issuances of equity securities, including issuances with respect to acquisitions have not been determined. The Company has provided a valuation reserve against the full amount of the net operating loss benefit, because in the opinion of management based upon the earning history of the Company; it is more likely than not that the benefits will not be realized.

ASC 740 requires the consideration of a valuation allowance to reflect the likelihood of realization of deferred tax assets. Significant management judgment is required in determining any valuation allowance recorded against deferred tax assets. In evaluating the ability to recover deferred tax assets, the Company considered available positive and negative evidence, giving greater weight to its recent cumulative losses and its ability to carry-back losses against prior taxable income and lesser weight to its projected financial results due to the challenges of forecasting future periods. The Company also considered, commensurate with its objective verifiability, the forecast of future taxable income including the reversal of temporary differences. At that time the Company continued to have sufficient positive evidence, including recent cumulative profits, a reduction in operating expenses, the ability to carry-back losses against prior taxable income and an expectation of improving operating results, showing a valuation allowance was not required. At the end of the year ended September 30, 2007, changes in previously anticipated expectations and continued operating losses necessitated a valuation allowance against the tax benefits recognized in this quarter and prior quarters since they are no longer “more-likely-than-not” realizable. Under current tax laws, this valuation allowance will not limit the Company’s ability to utilize U.S. federal and state deferred tax assets provided it can generate sufficient future taxable income in the U.S.

The Company anticipates it will continue to record a valuation allowance against the losses of certain jurisdictions, primarily federal and state, until such time as it is able to determine it is “more-likely-than-not” the deferred tax asset will be realized. Such position is dependent on whether there will be sufficient future taxable income to realize such deferred tax assets. The Company’s effective tax rate may vary from period to period based on changes in estimated taxable income or loss by jurisdiction, changes to the valuation allowance, changes to federal, state or foreign tax laws, future expansion into areas with varying country, state, and local income tax rates, deductibility of certain costs and expenses by jurisdiction.

NOTE 11 – SOFTWARE ACQUISITION: TRANSACTION BETWEEN ENTITIES UNDER COMMON CONTROL

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

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The Office of the Chief Accountant (OCA) of the Securities and Exchange Commission was consulted by Company management to insure that the transaction was recorded correctly on the books of NSC. The OCA considered the facts and circumstances as described below in their deliberations.

January 1, 2011 Acquisition Of Software A Business Combination Under Common Control

On August 24, 2010 –National Scientific Corporation (“NSC”) signed a letter of intent for NSC to acquire the Private Companies’ assets.

On November 19, 2010 – NSC and MDLG signed a revised letter of intent with the Private Companies.

In accordance with the revised LOI the following occurred and on December 1, 2010 the NSC reported that change on Form 8-K:

1.		On November 19, 2010 - MDLG was appointed CEO, President, and Chairman of the Board. At that time there were now then 3 Board members.
2.		On November 29, 2010, 4,000,000 shares of Preferred A were authorized by the Board. These preferred shares are not convertible but entitle to 150 votes per share.
3.		On November 30, 2010 – 3,000,000 Preferred A shares were beneficially issued to The Private Companies and 1,000,000 were issued to another Board member.
4.		On January 2, 2011 the sale of the software by the Private Companies to NSC was finalized which included the exchange for a $5,000,000 note convertible to 500,000,000 of common stock at $.01 per share. At the time of this transaction the Company did not have the available authorized shares to issue these shares for the convertible note. Therefore, the Company agreed to issue a $5,000,000 promissory note for 8% interest rate the note matures on April 30, 2021.
5.		On January 2, 2011 10,000,000 common shares were beneficially issued to MDLG via an affiliate for compensation.

On January 18, 2011 the prior CEO of NSC resigned from the Board of Directors and a Form 8-K was filed on February 8, 2011.

On October 5, 2011 the Company issued Absolute Medical Software Systems, LLC 30,000,000 common shares in full payment of this promissory note.

On January 3, 2013 the Company engaged a valuation expert to assess the value of the software for impairment purposes at September 30, 2011 and 2012. The Company valued the software and source code on the development cost of the software provided by Absolute Medical Software Systems, LLC of $4,296,000 for September 30, 2011 and September 30, 2012. This valuation was done by an independent Certified Valuation Analysis.

Prior Public Company Transaction

Michael de la Garza (“MDLG”) is the owner of three related private companies, Absolute, PayMed, and MedPay (“the private companies”) who own and operate medical billing software. On September 10, 2008 the private company entered into an asset purchase agreement with a prior public company. On September 10, 2008 prior publicly traded companies, purchased all the private companies’ assets, for 10,000,000 shares of common stock per the purchase agreements. On the date of that sale, September 10, 2008, the stock was trading at $.10 which valued the transaction at $1,000.000. This value was based on the software before the update to operate on a Cloud based platform. Management considers the price to represent the fair value of the software at that point in time.

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This transaction was an arms-length value since MDLG was not a shareholder, officer or director of this prior public company. On June 9, 2009 the transaction was rescinded and the assets returned to The Private Companies. The private companies impaired the GAAP basis software development cost to the value of the prior public company transaction value of $1,000,000.

During the period of 2009 through 2010 the software was updated to operate on a Cloud based platform and had additional software development costs of $200,106.

The Office of Chief Accountant (“OCA”) has determined that due to the voting rights of the Preferred A shares that the transaction occurred between parties under common control. Accordingly, they have determined that the GAAP basis software development cost of the private entity sellers should become the cost basis of NSC.

Since these costs ($1,011,223) exceeded the transaction price ($1,000,000) with the prior public company, the prior costs incurred have been impaired to the September 10, 2008 value of the share received in the prior transaction.

The related convertible note which was subsequently converted to common shares has been discounted to the cost basis used to value the transaction which is less than the fair value of the software as determined by independent appraisal.

The cost basis was determined as follows:

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

Purchase Price Allocation	January 1, 2011
Value of Consideration:
Equity instrument of $5,000,000 promissory note converted to 30,000,000 common stock on October 4, 2011 value under common control	$	1,200,106
Total Purchase Price	$	1,200,106
Cost Basis of Assets acquired under common control:
Assets:
Software source code and development costs of software	$	1,200,106
Cost Basis of total assets	$	1,200,106

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NOTE 12– SUBSEQUENT EVENTS

In accordance with the Subsequent Events Topic of the FASB ASC 855, Management has evaluated subsequent events, and have determined that the following events are reasonably likely to impact the financial statements: