UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q/A
(Amendment
No. 1)
☒ QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2014
☐ TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the Transition Period from ______ to ______
Commission
File Number: 333-153290
MEDICAL
ALARM CONCEPTS HOLDINGS, INC.
(Exact
name of registrant as specified in its charter)
Nevada |
|
26-3534190 |
(State or other jurisdiction of incorporation or organization) |
|
(I.R.S. Employer Identification No.) |
|
|
|
200
W. Church Road Suite B, King of Prussia, PA |
|
19406 |
(Address of principal executive offices) |
|
(Zip Code) |
(877)
639-2929
(Registrants
telephone number, including area code)
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
☒
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☐ No
☒
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of large accelerated filer, accelerated filer and smaller
reporting company in Rule 12b-2 of the Exchange Act.
Large
accelerated filer |
☐ |
Accelerated
filer |
☐ |
Non-accelerated
filer |
☐ |
Smaller
reporting company |
☒ |
(Do
not check if a smaller reporting company) |
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
☐ No ☒
Indicate
the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date.
Class |
|
Outstanding
at February 16, 2015 |
Common
Stock, $0.0001 par value per share |
|
5,628,679
shares |
EXPLANATORY
NOTE
The purpose of
this Amendment No. 1 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2014, filed with
the Securities and Exchange Commission on February 17, 2015 (the “Form 10-Q”), is solely to furnish Exhibit 101 to
the Form 10-Q. Exhibit 101 provides the financial statements and related notes from the Form 10-Q formatted in XBRL (Extensible
Business Reporting Language). No other changes have been made to the Form 10-Q. This Amendment No. 1 to the Form 10-Q speaks as
of the original filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing
date and does not modify or update in any way disclosures made in the original Form 10-Q.
TABLE OF CONTENTS
| PART | I. FINANCIAL INFORMATION |
ITEM 1. FINANCIAL STATEMENTS
MEDICAL
ALARM CONCEPTS HOLDING, INC. |
CONSOLIDATED
BALANCE SHEETS |
(Unaudited) |
| |
| |
|
| |
| December
31, 2014 | | |
| June
30, 2014 | |
ASSETS | |
| | | |
| | |
CURRENT ASSETS | |
| | | |
| | |
Cash | |
$ | 4,671 | | |
$ | 7,673 | |
Accounts receivable net of allowance
of $7,906 | |
| 14,473 | | |
| 36,952 | |
Inventory | |
| 120,494 | | |
| 22,839 | |
Loan to employee | |
| 30,000 | | |
| — | |
Purchase deposits | |
| 42,482 | | |
| — | |
Total current assets | |
| 212,120 | | |
| 67,464 | |
| |
| | | |
| | |
NON-CURRENT ASSETS | |
| | | |
| | |
Property and equipment, net | |
| — | | |
| 461 | |
Intangible assets,
net | |
| 1,059,785 | | |
| 1,099,036 | |
Total non-current
assets | |
| 1,059,785 | | |
| 1,099,497 | |
| |
| | | |
| | |
Total assets | |
$ | 1,271,905 | | |
$ | 1,166,961 | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDRS'
DEFICIT | |
| | | |
| | |
CURRENT LIABILITIES | |
| | | |
| | |
Derivative liability | |
$ | — | | |
$ | 30,766 | |
Accounts payable | |
| 93,841 | | |
| 67,305 | |
Deferred revenue | |
| 363,838 | | |
| 380,397 | |
Note payable - other | |
| — | | |
| 5,000 | |
Credit line payable - related party | |
| 275,000 | | |
| — | |
Accured expenses and other current liabilities | |
| 182,298 | | |
| 194,025 | |
Convertible notes
payable | |
| — | | |
| 25,908 | |
Total current liabilities | |
| 914,977 | | |
| 703,401 | |
NON-CURRENT LIABILITIES | |
| | | |
| | |
Patent payable | |
| 2,500,000 | | |
| 2,500,000 | |
Total non-current
liabilities | |
| 2,500,000 | | |
| 2,500,000 | |
| |
| | | |
| | |
Total liabilities | |
| 3,414,977 | | |
| 3,203,401 | |
| |
| | | |
| | |
STOCKHOLDERS' DEFICIT | |
| | | |
| | |
Series A Convertible Preferred Stock:
$0.0001 par value; 100,000 shares authorized; 688 shares issued and outstanding as of December 31, 2014 and June 30, 2014,
respectively | |
| — | | |
| — | |
Series B Convertible Preferred Stock:
$0.0001 par value; 62,500 shares authorized; 9,938 shares issued and outstanding as of December 31, 2014 and June 30, 2014,
respectively | |
| 1 | | |
| 1 | |
Common stock: $0.0001 par value; 20,000,000
shares authorized; 5,628,679 and 5,623,679 shares issued and outstanding on December 31, 2014 and June 30, 2014, respectively | |
| 563 | | |
| 562 | |
Additional paid-in capital | |
| 12,273,738 | | |
| 12,203,981 | |
Accumulated deficit | |
| (14,417,374 | ) | |
| (14,240,984 | ) |
Total stockholders'
deficit | |
| (2,143,072 | ) | |
| (2,036,440 | ) |
| |
| | | |
| | |
TOTAL
LIABILITIES AND STOCKHOLDERS' DEFICIT | |
$ | 1,271,905 | | |
$ | 1,166,961 | |
See accompanying notes to these unaudited
consolidated financial statements.
MEDICAL
ALARM CONCEPTS HOLDING, INC. |
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME (LOSS) |
(Unaudited) |
| |
| |
| |
| |
|
| |
For
the three months ended December 31, | |
For
the six months ended December 31, |
| |
2014 | |
2013 | |
2014 | |
2013 |
Revenue | |
| 241,077 | | |
| 256,731 | | |
$ | 512,081 | | |
$ | 521,591 | |
Cost of revenue | |
| 41,144 | | |
| 102,178 | | |
| 103,059 | | |
| 163,611 | |
Gross profit | |
| 199,933 | | |
| 154,553 | | |
| 409,022 | | |
| 357,980 | |
| |
| | | |
| | | |
| | | |
| | |
Operating expenses | |
| | | |
| | | |
| | | |
| | |
Selling expense | |
| 69,504 | | |
| 83,878 | | |
| 129,884 | | |
| 125,229 | |
General and administrative | |
| 211,958 | | |
| 1,100,300 | | |
| 365,714 | | |
| 1,255,266 | |
Total operating
expenses | |
| 281,462 | | |
| 1,184,178 | | |
| 495,598 | | |
| 1,380,495 | |
Loss from operations | |
| (81,529 | ) | |
| (1,029,625 | ) | |
| (86,576 | ) | |
| (1,022,515 | ) |
| |
| | | |
| | | |
| | | |
| | |
Other (income) expenses | |
| | | |
| | | |
| | | |
| | |
Change in fair value of derivative instrument | |
| (8,096 | ) | |
| (1,035,900 | ) | |
| 11,335 | | |
| (1,455,035 | ) |
Interest expense - related party | |
| 2,934 | | |
| — | | |
| 2,934 | | |
| — | |
Interest expense | |
| 38,030 | | |
| 81,258 | | |
| 75,545 | | |
| 161,481 | |
Total other (income) expense | |
| 32,868 | | |
| (954,642 | ) | |
| 89,814 | | |
| (1,293,554 | ) |
| |
| | | |
| | | |
| | | |
| | |
Income (loss) before income tax | |
| (114,397 | ) | |
| (74,983 | ) | |
| (176,390 | ) | |
| 271,039 | |
Income tax provision | |
| — | | |
| — | | |
| — | | |
| — | |
Net
income (loss) | |
| (114,397 | ) | |
| (74,983 | ) | |
$ | (176,390 | ) | |
$ | 271,039 | |
| |
| | | |
| | | |
| | | |
| | |
Net income per
common share - basic and diluted | |
| (0.02 | ) | |
| (0.03 | ) | |
$ | (0.03 | ) | |
$ | 0.13 | |
Weighted average number of common
shares - basic and diluted | |
| 5,623,679 | | |
| 2,531,655 | | |
| 5,623,679 | | |
| 2,116,555 | |
See accompanying notes to these unaudited
consolidated financial statements.
MEDICAL ALARM CONCEPTS HOLDING, INC. |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(Unaudited) |
| |
| |
|
| |
For the six months ended December 31, |
| |
2014 | |
2013 |
Net income (loss) | |
$ | (176,390 | ) | |
$ | 271,039 | |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | |
| | | |
| | |
Common stock issued for services | |
| 1,750 | | |
| 955,948 | |
Change in fair value of derivative instrument | |
| 11,335 | | |
| (1,455,035 | ) |
Amortization of patent | |
| 39,251 | | |
| 39,251 | |
Non-cash interest expense | |
| — | | |
| 28,991 | |
Depreciation | |
| 461 | | |
| 2,625 | |
Change in operating assets and liabilities | |
| | | |
| | |
Accounts receivable | |
| 22,479 | | |
| 3,600 | |
Inventory | |
| (97,655 | ) | |
| (5,791 | ) |
Purchase deposits | |
| (42,482 | ) | |
| 32,661 | |
Accounts payable | |
| 26,536 | | |
| 25,676 | |
Accrued expenses and other current liabilities | |
| (11,728 | ) | |
| 52,457 | |
Deferred revenue | |
| (16,559 | ) | |
| 41,703 | |
Net Cash Used in Operating Activities | |
| (243,002 | ) | |
| (6,875 | ) |
| |
| | | |
| | |
CASH FLOWS FROM INVESTING ACTIVITIES | |
| | | |
| | |
Loan to employee | |
| (30,000 | ) | |
| — | |
Net Cash Used in Investing Activities | |
| (30,000 | ) | |
| — | |
| |
| | | |
| | |
CASH FLOWS FROM FINANCING ACTIVITIES | |
| | | |
| | |
Proceed from (repayment for) note payable - other | |
| (5,000 | ) | |
| 30,000 | |
Proceeds from credit line | |
| 275,000 | | |
| — | |
Net Cash Provided By Financing Activities | |
| 270,000 | | |
| 30,000 | |
| |
| | | |
| | |
NET INCREASE (DECREASE) IN CASH | |
| (3,002 | ) | |
| 23,125 | |
| |
| | | |
| | |
CASH AT BEGINNING OF PERIOD | |
| 7,673 | | |
| 5,857 | |
| |
| | | |
| | |
CASH AT END OF PERIOD | |
$ | 4,671 | | |
$ | 28,982 | |
| |
| | | |
| | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | |
| | | |
| | |
| |
| | | |
| | |
Cash paid for interest expense | |
$ | 75,000 | | |
$ | 75,000 | |
| |
| | | |
| | |
Cash paid for income taxes | |
$ | — | | |
$ | — | |
| |
| | | |
| | |
Conversion of convertible notes to common stock | |
$ | — | | |
$ | 314,819 | |
| |
| | | |
| | |
Derivative liability classified to additional paid-in capital upon conversion of related convertible notes | |
$ | 42,101 | | |
$ | 909,915 | |
| |
| | | |
| | |
Issuance of common stock previously classified as stock to be issued | |
$ | — | | |
$ | 24,400 | |
| |
| | | |
| | |
Forgivenss of convertible notes | |
$ | 25,908 | | |
$ | — | |
| |
| | | |
| | |
Forgiveness of credit line payable classified to additional paid-in capital | |
$ | — | | |
$ | 618,843 | |
| |
| | | |
| | |
Accrued interest and debt discount classified to additional paid-in capital upon conversion and forgiveness of debt | |
$ | — | | |
$ | 107,656 | |
See
accompanying notes to these unaudited consolidated financial statements.
MEDICAL
ALARM CONCEPTS HOLDING, INC.
NOTES
TO FINANCIAL STATEMENTS
On June 4, 2008, Medical
Alarm Concepts Holding, Inc. (the “Company”) was incorporated under the laws of the State of Nevada. The Company was
formed for the sole purpose of acquiring all of the membership units of Medical Alarm Concepts LLC, a Pennsylvania limited liability
company (“Medical LLC”).
The Company utilizes
new technology in the medical alarm industry to provide 24-hour personal response monitoring services and related products to subscribers
with medical or age-related conditions.
| 2. | SUMMARY OF ACCOUNTING POLICIES |
Basis of Presentation
and Consolidation
The Company’s consolidated
financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”).
The consolidated financial
statements include the accounts of the Company and its wholly owned subsidiary. All significant inter-company transactions and
balances among the Company and its subsidiary are eliminated upon consolidation.
These interim consolidated
financial statements are unaudited. In the opinion of management, all adjustments (consisting solely of normal recurring adjustments)
and disclosures necessary for a fair presentation of these interim consolidated financial statements have been included. The results
reported in the consolidated financial statements for any interim periods are not necessarily indicative of the results that may
be reported for the entire year or any other periods. (a) The consolidated balance sheet as of June 30, 2014, which was derived
from audited financial statements, and (b) the unaudited interim consolidated financial statements have been prepared pursuant
to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included
in annual financial statements prepared in accordance with accounting principles generally accepted in the United States have been
condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate
to make the information not misleading. These unaudited consolidated financial statements should be read in conjunction with the
consolidated financial statements and accompanying footnotes included in the Company’s Annual Report on Form 10-K for the
year ended June 30, 2014.
Use of Estimates
The preparation of the
financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual
results could differ from those estimates. These estimates and assumptions include the collectability of accounts receivable and
deferred taxes and related valuation allowances. Certain of our estimates, including evaluating the collectability of accounts
receivable, could be affected by external conditions, including those unique to our industry, and general economic conditions.
It is possible that these external factors could have an effect on our estimates that could cause actual results to differ from
our estimates. We re-evaluate all of our accounting estimates at least quarterly based on these conditions and record adjustments
when necessary.
Inventory
The Company values inventory,
consisting of purchased products, at the lower of cost or market. Cost is determined on the first-in and first-out (“FIFO”)
method. The Company regularly reviews its inventories on hand and, when necessary, records a provision for excess or obsolete inventories
based primarily on current selling price and spot market prices. The Company determined that there was no inventory obsolescence
as of December 31, 2014.
Impairment of long-lived
assets
The Company follows section
360-10-05-4 of the FASB Accounting Standards Codification for its long-lived assets. The Company’s reviews it long-lived
assets, which include property and equipment, and patent, for impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable.
The Company
assesses the recoverability of its long-lived assets by comparing the projected undiscounted net cash flows associated with
the related long-lived asset or group of long-lived assets over their remaining estimated useful lives against their
respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those
assets. Fair value is generally determined using the asset’s expected future undiscounted cash flows or market value,
if readily determinable. If long-lived assets are determined to be recoverable, but the newly determined remaining estimated
useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated or amortized
over the newly determined remaining estimated useful lives. The Company determined that there were no impairment of
long-lived assets as of December 31, 2014.
Derivative warrant
liability
The Company evaluates
its convertible debt, options, warrants or other contracts to determine if those contracts or embedded components of those contracts
qualify as derivatives to be separately accounted for in accordance with paragraph 810-10-05-4 of the FASB Accounting Standards
Codification and paragraph 815-40-25 of the FASB Accounting Standards Codification. The result of this accounting treatment is
that the fair value of the embedded derivative is marked-to-market each balance sheet date and recorded as a liability. In the
event that the fair value is recorded as a liability, the change in fair value is recorded in the Statement of Operations as other
income or expense. Upon conversion, exercise or cancellation of a derivative instrument, the instrument is marked to fair value
at the conversion date and then the related fair value is reclassified to equity.
In circumstances where
the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative
instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted
for as a single, compound derivative instrument.
The classification of
derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the
end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification
are reclassified to liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities
will be classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative
instrument is expected within 12 months of the balance sheet date.
On January 1, 2009, the
Company adopted Section 815-40-15 of the FASB Accounting Standards Codification (“Section 815-40-15”) to determine
whether an instrument (or an embedded feature) is indexed to the Company’s own stock. Section 815-40-15 provides that an
entity should use a two-step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed
to its own stock, including evaluating the instrument’s contingent exercise and settlement provisions. The adoption of Section
815-40-15 has affected the accounting for certain freestanding warrants that contain exercise price adjustment features.
Fair Value of Financial
Instruments
The Company follows paragraph
825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph
820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of
its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value pursuant to GAAP and expands
disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures,
Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure
fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active
markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value
hierarchy defined by Paragraph 820-10-35-37 are described below:
Level 1
Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level
2 Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly
observable as of the reporting date.
Level 3
Pricing inputs that are generally observable inputs and not corroborated by market data.
The carrying amounts
of the Company’s financial assets and liabilities, such as cash, accounts receivable, inventory, accounts payable, deferred
revenues and accrued liabilities, approximate their fair values because of the short maturity of these instruments. The Company’s
convertible notes payable and patent payable approximate the fair value of such instruments based upon management’s best
estimate of interest rates that would be available to the Company for similar financial arrangements at December 31, 2014.
The derivative liability
which consists of embedded conversion feature and warrants issued in connection with our convertible debt, classified as a level
3 liability, are the only financial liabilities measured at fair value on a recurring basis.
Income Taxes
The Company accounts
for income taxes under the provisions of FASB ASC Topic 740, “Income Tax,” which requires recognition of deferred tax
assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial
statements or tax returns. Deferred tax assets and liabilities are recognized for the future tax consequence attributable to the
difference between the tax bases of assets and liabilities and their reported amounts in the financial statements. Deferred tax
assets and liabilities are measured using the enacted tax rate expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period that includes the enactment date. The Company establishes a valuation when it is
more likely than not that the assets will not be recovered.
ASC Topic 740.10.30 clarifies
the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition
threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected
to be taken in a tax return. ASC Topic 740.10.40 provides guidance on derecognition, classification, interest and penalties, accounting
in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.
Revenue Recognition
The Company’s revenues
are derived principally from utilizing new technology in the medical alarm industry to provide 24-hour personal response monitoring
services and related products to subscribers with medical or age-related conditions. The Company applies paragraph 605-10-S99-1
of the FASB Accounting Standards Codification for revenue recognition. The Company will recognize revenue when it is realized or
realizable and earned. The Company considers revenue realized or realizable and earned when it has persuasive evidence of an arrangement
that the services have been rendered to the customer, the sales price is fixed or determinable, and collectability is reasonably
assured.
All revenues from subscription
arrangements are recognized ratably over the term of such arrangements. The excess of amounts received over the income recognized
is recorded as deferred revenue on the consolidated balance sheet.
Shipping and Handling
Costs
The Company accounts
for shipping and handling fees in accordance with paragraph 605-45-45-19 of the FASB Accounting Standards Codification. While amounts
charged to customers for shipping products are included in revenues, the related costs are classified in cost of goods sold as
incurred.
Stock-Based Compensation
We recognize compensation
expense for stock-based compensation in accordance with ASC Topic 718. For employee stock-based awards, we calculate the fair value
of the award on the date of grant using the Black-Scholes method for stock options and the quoted price of our common stock for
unrestricted shares; the expense is recognized over the service period for awards expected to vest. For non-employee stock-based
awards, we calculate the fair value of the award on the date of grant in the same manner as employee awards. However, the awards
are revalued at the end of each reporting period and the pro rata compensation expense is adjusted accordingly until such time
the nonemployee award is fully vested, at which time the total compensation recognized to date equals the fair value of the stock-based
award as calculated on the measurement date, which is the date at which the award recipient’s performance is complete. The
estimation of stock-based awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates
differ from original estimates, such amounts are recorded as a cumulative adjustment in the period estimates are revised. We consider
many factors when estimating expected forfeitures, including types of awards, employee class, and historical experience.
Net Income per Common
Share
Net income per
common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income per
common share is computed by taking net income divided by the weighted average number of common shares outstanding for the
period. Diluted net income per common share is computed by dividing net income by the weighted average number of shares of
common stock and potentially outstanding shares of common stock during the period to reflect the potential dilution that
could occur from common shares issuable through stock options, warrants, and convertible debt. These potential shares of
common stock were not included as they were anti-dilutive.
These consolidated financial
statements are presented on the basis that the Company will continue as a going concern. The going concern concept contemplates
the realization of assets and satisfaction of liabilities in the normal course of business.
As reflected in the
accompanying consolidated financial statements, as of December 31, 2014, the Company has working capital deficit of $702,857;
did not generate significant cash from its operations; had stockholders’ deficit of $2,143,072 and had operating
loss for prior three years. These circumstances, among others, raise substantial doubt about the Company’s ability to continue
as a going concern.
While
the Company is attempting to generate sufficient revenues, the Company’s cash position may not be enough to support the Company’s
daily operations. Management intends to raise additional funds by way of a public or private offering, or
by alternative methods. Management believes that the actions presently being taken to further implement its business plan and generate
sufficient revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability
of its strategy to increase revenues and in its ability to raise additional funds, there can be no assurances to that effect. The
ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business
plan and generate sufficient revenues.
The consolidated financial
statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
On July 10, 2008, the
Company entered into a Purchase Agreement and Patent Assignment Agreement (the “Agreement”) to be effective July 31,
2008. The Company is obligated to pay the seller $2,500,000 on June 30, 2012. The Agreement specifies interest of 6% to be payable
monthly, commencing on July 31, 2008. The seller will reacquire all patents and applications if payment is not made on June 30,
2012. On December 31, 2014, this due date was extended to March 31, 2015.
The patent is being
amortized over its estimated useful life. Amortization of patent aggregated $39,251 for the six months ended December
31, 2014 and 2013.
Patent, stated at cost,
less accumulated amortization consisted of the following:
| |
December 31, 2014 | |
June 30, 2014 |
Patent | |
$ | 2,500,000 | | |
$ | 2,500,000 | |
Less: accumulated amortization | |
| (1,440,215 | ) | |
| (1,400,964 | ) |
| |
$ | 1,059,785 | | |
$ | 1,099,036 | |
| 5. | CONVERTIBLE NOTES PAYABLE |
The convertible notes
are convertible into shares of the Company’s common stock at a fixed conversion price equal to the lesser of the fixed conversion
price of $0.002, or seventy five percent (75%) of the average of the closing bid price of the common stock as reported by Bloomberg
LP for the principal market for the 5 trading days preceding the conversion date, and was due on September 30, 2013. On November
2, 2014, the holder of convertible note informed the Company that it will no longer be seeking repayment of $25,908.
The following table summarizes
the convertible promissory notes movement:
Balance at June 30, 2014 | |
$ | 25,908 | |
Convertible notes issued | |
| — | |
Convertible notes forgiven | |
| (25,908 | ) |
Total | |
| — | |
Less: debt discount | |
| — | |
Balance at December 31, 2014 | |
$ | — | |
| 6. | DERIVATIVE WARRANT LIABILITY AND FAIR VALUE |
The Company has evaluated
the application of ASC 815 Derivatives and Hedging (formerly SFAS No. 133) and ASC 815-40-25 to the Warrants to purchase common
stock issued with the Convertible Notes and service agreements. Based on the guidance in ASC 815 and ASC 815-40-25, the Company
concluded these instruments were required to be accounted for as derivatives due to the down round protection feature on the conversion
price and the exercise price. The Company records the fair value of these derivatives on its balance sheet with changes in the
values of these derivatives reflected in the statements of operations as “Gain (loss) on derivative liabilities.” These
derivative instruments are not designated as hedging instruments under ASC 815 and are disclosed on the balance sheet under Derivative
Liabilities.
The Company accounted
for the issuance of the convertible debentures in accordance with ASC 815” Derivatives and Hedging.” The debentures
are convertible into an indeterminate number of shares for which the Company cannot determine if it has sufficient authorized shares
to settle the transaction with. Accordingly, the embedded conversion option is a derivative liability and is marked to market through
earnings at the end of each reporting period.
The gross proceeds from
the sale of the debentures are recorded net of discount of related conversion feature of the embedded conversion option. When the
fair value of conversion options is in excess of the debt discount the amount is included as a component of interest expense in
the statement of comprehensive income.
The fair value of the
Warrants underlying the promissory notes issued at the time of their issuance was calculated pursuant to the Black-Scholes option
pricing model. The fair value was recorded as a reduction to the promissory notes payable and was charged to operations as interest
expense in accordance with effective interest method within the period of the promissory notes. Significant assumptions used in
calculating fair value of outstanding warrants are as follows.
Expected dividend |
Expected volatility |
Risk-free rate of interest |
Expected term
(year) |
Exercise price |
Underlying Number of shares |
- |
196.14% - 348.56% |
0.07%/1 year
0.35%/2 years
0.5%/3 years |
As set forth by each promissory note agreement |
$0.0002 per share |
As set forth by each promissory note agreement |
On November 1, 2013,
the Company issued a $30,000 promissory note to a vendor who provide monitoring services to the Company. The note is non-interest
bearing and due on June 1, 2014. The note will be paid in six installment payments with $5,000 due on the first day of each month
from January to June 2014. Based on the note, all subscribers monitoring agreements owned or newly originated by the Company must
be monitored by the note holder until the terms of the agreement are satisfied. This note is guaranteed by the CEO of the Company.
As of December 31, 2014, the note was paid in full.
| 8. | CREDIT LINE – RELATED PARTY |
On September 30, 2014,
the Company entered into a line of credit with a company, which is partially owned by the Company’s CEO. Under the line of
credit agreement, the Company will be able to borrow up to $300,000 with the rate of interest of 6.5% per annum. The maturity date
of the credit line is September 30, 2017.
As of December 31, 2014,
outstanding balance under the line of credit was $275,000.
During three months ended
December 31, 2014, the Company loaned $30,000 to an employee of the Company. This loan is non-interest bearing and due in December
31, 2015. The employee pledged 60,000 shares of the Company’s common stock as collateral.
As of December 31, 2104,
the amount outstanding was $30,000.
The reconciliation of
income tax benefit at the U.S. statutory rate of 34% for the six months ended December 31, 2014 and 2013 to the Company’s
effective tax rate is as follows:
| |
Six months ended December 31, |
| |
2014 | |
2013 |
U.S. federal statutory rate | |
| (34.0 | )% | |
| (34.0 | )% |
State income tax, net of federal benefit | |
| (9.99 | )% | |
| (9.99 | )% |
Change in valuation allowance | |
| 43.99 | % | |
| 43.99 | % |
Income tax provision (benefit) | |
| 0.0 | % | |
| 0.0 | % |
The benefit for income
tax is summarized as follows:
| |
Six months ended December 31, |
| |
2014 | |
2013 |
Federal: | |
| | | |
| | |
Current | |
$ | — | | |
$ | — | |
Deferred | |
| (49,616 | ) | |
| 301,850 | |
State and local: | |
| | | |
| | |
Current | |
| — | | |
| — | |
Deferred | |
| (14,578 | ) | |
| 88,690 | |
Change in valuation allowance | |
| 64,194 | | |
| (390,540 | ) |
Income tax provision (benefit) | |
$ | — | | |
$ | — | |
As of December 31, 2014,
the Company had approximately $11 million of federal and state net operating loss carryovers (“NOLs”) which begin to
expire in 2028. Utilization of the NOLs may be subject to limitation under the Internal Revenue Code Section 382 should
there be a greater than 50% ownership change as determined under regulations.
In assessing the realization
of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets
will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable
income during the periods in which those temporary differences become deductible. Management considers the scheduled
reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based
on the assessment, management has established a full valuation allowance against the entire deferred tax asset relating to NOLs
for every period because it is more likely than not that all of the deferred tax asset will not be realized.
The Company files U.S.
federal and states of Pennsylvania tax returns that are subject to audit by tax authorities beginning with the year ended June
30, 2008. The Company’s policy is to classify assessments, if any, for tax and related interest and penalties as tax expense.
The Company had only
one supplier during the three and six months ended December 31, 2014 and 2013, respectively.
On
January 28, 2015, the Company entered into an agreement to acquire 51% ownership of Medical Sales Group, LLC (“Medical Sales
Group”) in exchange for one million shares of restricted common stock of the Company. This acquisition is expected to close
once all accounting work has been completed on the acquisition. The Company’s CEO owns 33% interest in Medical Sales
Group. Medical Sales Group was formed in 2014 as a vehicle for acquiring companies in the rapidly expanding medical and telehealth
fields.
| Item | 2.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
This Quarterly Report
on Form 10-Q for the three and six months ended December 31, 2013 contains “forward-looking statements” within the
meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, including statements that include the words “believes,”
“expects,” “anticipates,” or similar expressions. These forward-looking statements include, among others,
statements concerning our expectations regarding our working capital requirements, financing requirements, business, growth prospects,
competition and results of operations, and other statements of expectations, beliefs, future plans and strategies, anticipated
events or trends, and similar expressions concerning matters that are not historical facts. The forward-looking statements in this
Quarterly Report on Form 10-Q for the three and three months ended December 31, 2014 involve known and unknown risks, uncertainties
and other factors that could cause our actual results, performance or achievements to differ materially from those expressed in
or implied by the forward-looking statements contained herein.
Overview and Recent
Events
Medical Alarm Concepts
Holding, Inc. was organized in mid 2008. The operation was financed with a considerable amount of toxic convertible debt. This
type of financing, along with several other issues, prevented the Company from realizing a robust growth rate for its first few
years of operation. Since that time considerable management time has been spent and investor money utilized to turn the Company's
operation around. As of the date of this filing, Medical Alarm Concepts is currently experiencing a robust growth rate, quality
relationships with quality customers, and significantly improved balance sheet.
The Company's product
is called the MediPendant®, which is a personal emergency alarm that is mainly purchased by adults for their aging parents.
While it is primarily a device for older people, there is also a market for those who are physically disabled, as well as for persons
living alone. The MediPendant® device has significant feature and function advantages over other personal medical alarms in
the marketplace today. Approximately 70% of all medical alarms currently being sold in the United States are first-generation technologies
that require the user to speak and listen through a central base station unit. If the user of one of these older generation products
is not within speaking or listening distance to the base station, the user may not be heard by the operator in the centralized
emergency monitoring center.
The MediPendant®
enables the wearer to simply speak and listen directly through the pendant in the event of an emergency. The MediPendant® is
designed to be worn in the bath or shower and offers a 600-foot range so that the wearer can operate the unit from virtually anywhere
within their home or on their property.
The MediPendant®
has strong intellectual property patent protection. The patent protects a unique feature of the product, which is voice prompts
that alert the user of the operational status of the device and that help is being summoned upon alarm activation.
During December of 2011,
the Company announced the MediPendant® would be distributed by Costco Wholesale Corporation. Costco is one of the largest retailers
in not only the United States, but throughout the world with approximately 75,000,000 customers. The Company's relationship with
this retailer has been strong, sales are occurring on a daily basis, and customer satisfaction is high. The Company successfully
runs sales programs at Costco including email blasts, Costco.com coupons, and assorted other promotions. The MediPendant® product
will continue to be included in Costco promotions with more scheduled for later in 2014 and early 2015. The MediPendant® has
now received 28 product reviews on the retailer's website, 21 of which are "5 out of 5 Star" ratings. The average rating
is "4.5 Stars" out of 5 Stars.
The Company has also
had successes internationally with distribution agreements in Denmark and Ireland. Additionally, the Company is currently working
on a distribution/joint venture with JTT-EMS, which is a company located just outside of Beijing, China. Medical Alarm Concepts
is expecting steady growth from its international markets during 2015. The Company also distributes the MediPendant® through
Internet marketing and through various outside call centers. Significant investment is planned to expand sales opportunities relative
to these areas.
The Company received
an investment led by strategic partner, JTT-EMS LTD of Shijiazhuang, China. Under the terms of the investment, JTT-EMS LTD purchased
Common Stock in a private placement transaction and has indicated to the Company that it plans to hold these shares as a long-term
investment. The financing, including additional investments by current shareholders, total up to approximately $330,000. There
are no warrants or options associated with this investment. As more fully noted below, funds received will primarily be used to
rebuild inventory levels to meet the growing demand and to pay professional fees associated with returning the Company to fully
reporting status.
On December 10, 2013,
the Company entered into a Global Settlement Agreement (the “Agreement”) with the holder of its credit line and major
shareholders. Under the terms of the agreement, all of the Company’s credit line and accrued interests on credit line were
forgiven and all of the convertible debt would be converted to common shares, except for the balance of $25,908.08. On November
2, 2014, the holder of the convertible notes informed the Company that the holder of the convertible notes would no longer seeking
repayment of the outstanding balance of $25,908.
In exchange for the credit
line cancellation and the conversion of convertible debt, both parties agreed on the following terms: 1) the management team agreed
to modify its September 19, 2011 agreement with the Company giving up all anti-dilution rights, 2) the Company agreed to take steps
to increase the number of authorized shares to accommodate the debt conversions and would complete a reverse split of its shares,
3) The Company would file a registration statement with the SEC, and 4) the Company would continue to file past due periodic reports
with the SEC on Forms 10-Q and 10-K in order to return the Company to full reporting status, a process that is already well underway.
We believe upcoming balance
sheets, on which we expect to be free of nearly all long-term debt and free of warrants, options and minimal outstanding preferred
stock, will more accurately reflect the true value of our growing company.
The Company expects the
balance of calendar year 2015 and 2016 to be one of continued growth in both monthly recurring revenues and distribution sales,
which will allow the Company to realize sustainable positive operating cash flow. We believe the growth rate and the operating
cash flow we are currently realizing is sustainable into the balance of 2014 and 2015.
Going Concern
These consolidated financial
statements are presented on the basis that we will continue as a going concern. The going concern concept contemplates the realization
of assets and satisfaction of liabilities in the normal course of business
As reflected in the
accompanying consolidated financial statements, the Company has working capital deficit of $702,857, did not generate significant
cash from its operations, had stockholders’ deficit of $2,143,072 and had operating loss for prior three years. These
circumstances raise substantial doubt about the Company’s ability to continue as a going concern.
While the Company is
attempting to generate sufficient revenues, the Company’s cash position may not be enough to support the Company’s
daily operations. Management intends to raise additional funds by way of a public or private offering, or by alternative methods.
Management believes that the actions presently being taken to further implement its business plan and generate sufficient revenues
provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy
to increase revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the
Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and
generate sufficient revenues.
The consolidated financial
statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Results of Operations
Results of Operations for
Three Months Ended December 31, 2014 and 2013
Net Sales
Net sales generated
during the quarters ended December 31, 2014 and 2013 were $241,077 and $256,731, respectively; representing a 6% or $15,654 decrease,
resulting from decrease in sales to distributors. During the quarters ended December 31, 2014 and 2013, net sales were generated
from sales to distributors, resellers and from direct sales to consumers who pay the Company for monthly monitoring services.
Cost of Sales
Cost of sales incurred
during quarters ended December 31, 2014 and 2013 were $41,144 and $102,178, respectively, representing a 60% or $61,034 decrease.
The decrease of cost of sales was mainly due to decrease of net sales to distributors and more revenue generated from monitoring
services, which has lower costs.
Gross Profit
Gross profit generated
during quarters ended December 31, 2014 and 2013 was $199,933 and $154,553, respectively. The gross profit margin for quarters
ended December 31, 2014 and 2013 was 83% and 60%, respectively. The increase in gross profit margin was mainly due to more revenue
generated from monitoring services which has higher gross profit margin.
General and
Administrative
General and administrative
expenses for quarters ended December 31, 2014 and 2013 were $211,958 and $1,100,300, respectively; representing 81% or $888,342
decrease in general and administrative expense. During three months ended December 31, 2013, the Company issued 1,493,669 shares
of common stocks to management pursuant to Global Settlement Agreement and recorded stock compensation expense of $909,915.
Selling Expenses
Selling expenses incurred
during quarters ended December 31, 2014 and 2013 were $69,504 and $83,878, respectively. The $14,374 decrease compared to the previous
period.
Change in Fair
Value of Derivative Instrument
Changes in fair value
of derivative instrument generated income of $8,096 and $1,035,900 during quarters ended December 31, 2014 and 2013, respectively.
This was due to a lower value of the derivative liability at December 31, 2014.
Interest Expense
Interest expense
for the quarter ended December 31, 2014 and 2013 was $38,030 and $81,258, respectively. The $43,228 or 53% decrease in interest
expense was mainly due to decreased amount of interest expense recorded on the convertible debt and credit line. The Company
also accrued interest of $2,934 on the credit line obtained from a company partially owned by the Company’s CEO during the
quarter ended December 31, 2014.
Net Loss
Net loss incurred
during quarter ended December 31, 2014 and 2013 was $114,397 and $74,983, respectively. Change in net income is due to
the derivative liabilities and the reasons stated above.
Results of Operations for
Six Months Ended December 31, 2014 and 2013
Net Sales
Net sales generated
during the six months ended December 31, 2014 and 2013 were $512,081 and $521,591, respectively; representing a 2% or $9,510 decrease,
resulting from less revenue generated from sales to distributors.
Cost of Sales
Cost of sales incurred
during six months ended December 31, 2014 and 2013 were $103,059 and $163,611, respectively, representing a 37% or $60,552 decrease.
The decrease of cost of sales was mainly due to decrease of net sales to distributors and more revenue generated from monitoring
services, which has lower costs.
Gross Profit
Gross profit generated
during six months ended December 31, 2014 and 2013 was $409,022 and $357,980, respectively. The gross profit margin for six months
ended December 31, 2014 and 2013 was 80% and 69%, respectively. The increase in gross profit margin was mainly due to more revenue
generated from monitoring services which has higher gross profit margin.
General and
Administrative
General and administrative
expenses for six months ended December 31, 2014 and 2013 were $365,714 and $1,255,266, respectively; representing 71% or $889,552
decrease in general and administrative expense mainly due to the Company recorded $909,915 stock compensation expense for stock
issued to management pursuant to Global Settlement Agreement entered in December 10, 2013.
Selling Expenses
Selling expenses incurred
during six months ended December 31, 2014 and 2013 were $129,884 and $125,229, respectively, representing $4,655 or 4% increase
due to increased sales compared to the previous period.
Change in Fair
Value of Derivative Instrument
Changes in fair value
of derivative instrument generated income of $1,455,035 during six months ended December 31, 2013; comparably, during the same
period of 2014, change in fair value of derivative instrument generated expenses of $11,335. This was due to a lower value of the
derivative liability at December 31, 2014.
Interest Expense
Interest expense
for the six months ended December 31, 2014 and 2013 was $75,545 and $161,481, respectively. The $85,936 or 53% decrease in interest
expense was mainly due to decreased amount of interest expense recorded on to convertible notes and credit line. The Company
also accrued interest of $2,934 on the credit line obtained from a company partially owned by the Company’s CEO during the
six months ended December 31, 2014.
Net Income (Loss)
Net income during six
months ended December 31, 2013 was $271,039; comparably net loss incurred during the same period of 2014 was $176,390. Change in
net income is due to the reasons stated above.
Liquidity and Capital
Resources
As of December 31, 2014
and June 30, 2014, we had $4,671 and $7,673 in cash, respectively.
During six months ended
December 31, 2014 and 2013, our operating activities incurred net cash outflow of $243,002 and $6,875, respectively. Main reasons
for the change in net cash used in operating activities were outlined below:
| 1. | Changes in fair value of derivative instrument during six months ended
December 31, 2013 generated non-cash income of $1,455,035, comparably during the same period of 2014, such changes generated non-cash
expense of $11,335; |
| 2. | During six months ended December 31, 2013, amortization of discount
on convertible notes and interest expense incurred non-cash expense of $28,991 and zero for the six months ended December 31, 2014.
|
| 3. | During six months ended December 31, 2013, the increase of deferred
revenue generated cash inflow of $41,703; comparably, during the same period of 2014, decrease of deferred revenue incurred cash
outflow of $16,559. |
| 4. | During
six months ended December 31, 2014 and 2013, expenses incurred from issuance of common
stock for services were $1,750 and $955,948, respectively. |
| 5. | During six months ended December 31, 2014 and 2013, the Company paid
$97,655 and $5,791 on purchasing inventories. |
| 6. | During six months ended December 31, 2014, the Company paid $42,482
as purchase deposits; comparably, during the same period of 2013, the decrease of purchase deposit generated net cash inflow of
$32,661. |
During six months ended
December 31, 2014, the Company lent $30,000 to one of employees. There was no transaction in similar nature during the same period
of previous year.
During six months ended
December 31, 2014 and 2013, financing activities generated net cash inflow of $270,000 and $30,000, respectively. Main reasons
for the change in net cash provided by financing activities were outlined below:
| 1. | During six months ended December 31, 2014, the Company raised $275,000
by obtaining a credit line from a company, which is partially owned by the Company’s CEO. |
| 2. | During
the six month ended December 31, 2014, the Company made $5,000 loan payment to
a vendor. During the six months ended December31, 2013, the Company received $30,000
proceed from a vendor. |
We believe we can satisfy
our cash requirements for the next twelve months with our current cash flow from business operations, although there can be no
assurance to that effect. If we are unable to satisfy our cash requirements, we may be unable to proceed with our plan of operation.
We do not anticipate the purchase or sale of any significant equipment. We also do not expect any significant additions to the
number of employees. The foregoing represents our best estimate of our cash needs based on current planning and business conditions.
In the event we are not successful in reaching our initial revenue targets, additional funds may be required, and we may not be
able to proceed with our business plan for the development and marketing of our core services. Should this occur, we may be forced
to suspend or cease operations.
We anticipate incurring
operating losses in the foreseeable future. Therefore, our auditors have raised substantial doubt about our ability to continue
as a going concern.
Off-Balance Sheet Arrangements
At December 31, 2014,
we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as
structured finance or special purpose entities, established for the purpose of facilitating off-balance sheet arrangements or other
contractually narrow or limited purposes. As such, we are not exposed to any financing, liquidity, market or credit risk that could
arise if we had engaged in such relationships.
| Item | 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Not required for smaller
reporting companies.
| Item | 4.
Controls and Procedures |
Evaluation of Disclosure
Controls.
Our management, under
the supervision and with the participation of our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"),
has evaluated the effectiveness of our disclosure controls and procedures as defined in SEC Rules 13a-15(e) and 15d-15(e) as of
the end of the period covered by this Quarterly Report. Our disclosure controls and procedures are designed to ensure that information
required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934 ("Exchange Act")
is recorded, processed, summarized, and reported within the time periods specified in the SEC’s forms, and that such information
is accumulated and communicated to our management including our CEO and CFO, to allow timely decisions regarding required disclosures.
Based on their evaluation, our CEO and CFO have concluded that, as of December 31, 2014, our disclosure controls and procedures
were ineffective.
Our management has conducted,
with the participation of our CEO and CFO, an assessment, including testing of the effectiveness, of our disclosure controls and
procedures as of December 31, 2014. Based on such evaluation, management identified deficiencies that were determined to be a material
weakness.
A material weakness is
a deficiency, or a combination of deficiencies, in disclosure controls and procedures, such that there is a reasonable possibility
that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on
a timely basis. Because of the material weaknesses described below, management concluded that our disclosure controls and procedures
were ineffective as of December 31, 2014.
The specific material
weakness identified by the Company’s management as of December 31, 2014 are described as follows:
• | | The Company is lacking qualified
resources to perform the internal audit functions properly. In addition, the scope and effectiveness of the Company’s internal
audit function are yet to be developed. |
• | | We currently do not have an
audit committee. |
• | | The Company is relatively inexperienced
with certain complexities within USGAAP and SEC reporting. |
Remediation Initiative
We are committed to establishing the disclosure controls and procedures
but due to limited qualified resources in the region, we were not able to hire sufficient internal audit resources by December
31, 2014. However, internally we established a central management center to recruit more senior qualified people in order to improve
our internal control procedures. Externally, we are looking forward to engaging an accounting firm to assist the Company in improving
the Company’s internal control system based on the COSO Framework. We also will increase our efforts to hire the qualified
resources.
We intend to establish an audit committee of the board of directors
as soon as practicable. We envision that the audit committee will be primarily responsible for reviewing the services performed
by our independent auditors, evaluating our accounting policies and our system of internal controls.
Conclusion
The Company did not have
sufficient and skilled accounting personnel with an appropriate level of technical accounting knowledge and experience in the application
of generally accepted accounting principles accepted in the United States of America commensurate with the Company’s disclosure
controls and procedures requirements, which resulted in a number of deficiencies in disclosure controls and procedures that were
identified as being significant. The Company’s management believes that the number and nature of these significant deficiencies,
when aggregated, was determined to be a material weakness.
Despite of the material
weaknesses and deficiencies reported above, the Company’s management believes that its condensed consolidated financial statements
included in this report fairly present in all material respects the Company’s financial condition, results of operations
and cash flows for the periods presented and that this report does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements, in light of the circumstances under which such statements were made,
not misleading with respect to the period covered by this report.
Changes in internal
control over financial reporting.
There were no changes
in the Company’s internal control over financial reporting during the quarter ended December 31, 2014 that have materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
None.
Note: in addition to
the other information set forth in this report, you should carefully consider the factors discussed in “Item 1A. Risk Factors”
contained in our Annual Report on Form 10-K for the fiscal year ended June 30, 2014, which could materially affect our business,
financial condition, or future results. During the six ended December 31, 2014, there have been no material changes to the risk
factors previously disclosed in our Annual Report on Form 10-K for the year ended June 30, 2014.
| Item | 2.
Unregistered Sales of Equity Securities and Use of Proceeds |
None.
| Item | 3.
Defaults Upon Senior Securities |
None.
| Item | 4.
Mine safety disclosures |
Not applicable.
None.
| | |
** | | XRBL (Extensible Business Reporting Language information is furnished and not
filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as
amended, is deemed not filed for purposes of Section 18 of th |
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
MEDICAL ALARM CONCEPTS
HOLDING, INC.
(Registrant)
/s/ Ronnie Adams |
|
February 18, 2015 |
Chief Executive Officer and Chief Financial Officer |
|
Ronnie Adams |
|
|
(Principal Executive Officer, Principal Financial and Accounting Officer) |
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
/s/ Allen Polsky |
|
February 18, 2015 |
Director |
|
|
|
|
|
Allen Polsky |
|
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|
Exhibit 31.1
Certification by
the Chief Executive Officer and Chief Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
I, Ronnie Adams, certify
that:
1. I have
reviewed this Quarterly Report on Form 10-Q of Medical Alarm Concepts Holding, Inc.;
2. Based
on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to
the period covered by this report;
3. Based
on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented
in this report;
4. The small business
issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:
| a. | Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this
report is being prepared; |
| b. | Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles; |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls
and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures,
as of the end of the period covered by this report based on such evaluation; and |
| d. | Disclosed in this report any change in the registrant’s internal
control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s
fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect,
the registrant’s internal control over financial reporting; and |
5. The small business
issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of
directors (or persons performing the equivalent functions):
| a. | All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s
ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other
employees who have a significant role in the small business issuer’s internal control over financial reporting. |
Date: February 18,
2015
|
By: |
/s/ |
Ronnie Adams |
|
|
|
Ronnie Adams |
|
|
|
Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer |
Exhibit 32.1
CERTIFICATION PURSUANT
TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In
connection with the Quarterly Report of Medical Alarm Concepts Holding, Inc. (the “Company”) on Form 10-Q for the quarter
ended March 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ronnie
Adams, Chief Executive Officer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) The
Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The
information contained in the Report fairly presents, in all material respects, the financial condition and results of operations
of the Company for the period presented therein.
Date: February 18, 2015
|
By: |
/s/ |
Ronnie Adams |
|
|
|
|
Ronnie Adams |
|
|
|
|
Principal
Executive Officer, Principal Financial Officer and Principal Accounting Officer |
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