Item
1. Financial Statements.
MedeFile
International, Inc.
Consolidated
Balance Sheets
(Unaudited)
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2016
|
|
|
2015
|
|
Assets
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Cash
|
|
$
|
21,403
|
|
|
$
|
38,371
|
|
Accounts receivable
|
|
|
-
|
|
|
|
4,965
|
|
Merchant services reserve
|
|
|
2,938
|
|
|
|
2,938
|
|
Total assets
|
|
$
|
24,341
|
|
|
$
|
46,274
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Deficit
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
38,715
|
|
|
$
|
14,857
|
|
Note payable - related party
|
|
|
177,720
|
|
|
|
-
|
|
Convertible debenture - related party
|
|
|
16,459
|
|
|
|
15,681
|
|
Deferred revenues
|
|
|
350
|
|
|
|
439
|
|
Derivative liability convertible note
|
|
|
19,122
|
|
|
|
19,067
|
|
Total current liabilities
|
|
|
252,366
|
|
|
|
50,044
|
|
|
|
|
|
|
|
|
|
|
Stockholders' deficit
|
|
|
|
|
|
|
|
|
Preferred stock, $.0001 par value: 10,000,000 authorized,
no shares issued and outstanding
|
|
|
-
|
|
|
|
-
|
|
Common stock, $.0001 par value: 700,000,000 authorized;
28,756,010 and 28,756,010 shares issued and outstanding on June 30, 2016 and December 31, 2015, respectively
|
|
|
2,875
|
|
|
|
2,875
|
|
Additional paid-in capital
|
|
|
28,504,754
|
|
|
|
28,504,754
|
|
Accumulated deficit
|
|
|
(28,735,654
|
)
|
|
|
(28,511,399
|
)
|
Total stockholders' deficit
|
|
|
(228,025
|
)
|
|
|
(3,770
|
)
|
Total liabilities and stockholders'
deficit
|
|
$
|
24,341
|
|
|
$
|
46,274
|
|
The
accompanying notes are an integral part of these unaudited consolidated financial statements.
MedeFile
International, Inc.
Consolidated
Statements of Operations
(Unaudited)
|
|
For the
|
|
|
For the
|
|
|
For the
|
|
|
For the
|
|
|
|
three months
|
|
|
three months
|
|
|
six months
|
|
|
six months
|
|
|
|
ended
|
|
|
ended
|
|
|
ended
|
|
|
ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Revenue
|
|
$
|
10,498
|
|
|
$
|
12,742
|
|
|
$
|
15,493
|
|
|
$
|
25,330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
|
-
|
|
|
|
279
|
|
|
|
-
|
|
|
|
595
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
10,498
|
|
|
|
12,463
|
|
|
|
15,493
|
|
|
|
24,735
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
|
119,372
|
|
|
|
274,118
|
|
|
|
236,195
|
|
|
|
439,724
|
|
Depreciation and amortization expenses
|
|
|
-
|
|
|
|
22,149
|
|
|
|
-
|
|
|
|
44,299
|
|
Total operating expenses
|
|
|
119,372
|
|
|
|
296,267
|
|
|
|
236,195
|
|
|
|
484,023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(108,874
|
)
|
|
|
(283,804
|
)
|
|
|
(220,702
|
)
|
|
|
(459,288
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(2,605
|
)
|
|
|
(352
|
)
|
|
|
(3,498
|
)
|
|
|
(2,393
|
)
|
Change in fair value of derivative liabilities
|
|
|
(5,509
|
)
|
|
|
30,213
|
|
|
|
(55
|
)
|
|
|
(3,030
|
)
|
Change in derivative liability - warrant
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
51
|
|
Total other income (expense)
|
|
|
(8,114
|
)
|
|
|
29,861
|
|
|
|
(3,553
|
)
|
|
|
(5,372
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(116,988
|
)
|
|
$
|
(253,943
|
)
|
|
$
|
(224,255
|
)
|
|
$
|
(464,660
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share: basic and diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average share outstanding: basic and diluted
|
|
|
28,756,010
|
|
|
|
13,777,618
|
|
|
|
28,756,010
|
|
|
|
20,487,123
|
|
The
accompanying notes are an integral part of these unaudited consolidated financial statements.
MedeFile
International, Inc.
Consolidated
Statements of Cash Flows
(Unaudited)
|
|
For the
|
|
|
For the
|
|
|
|
six months
|
|
|
six months
|
|
|
|
ended
|
|
|
ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2016
|
|
|
2015
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(224,255
|
)
|
|
$
|
(464,660
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Amortization
|
|
|
-
|
|
|
|
44,299
|
|
Stock based compensation
|
|
|
-
|
|
|
|
111,000
|
|
Change in derivative liabiliy - convertible debenture
|
|
|
55
|
|
|
|
3,030
|
|
Change in derivative liabiliy - warrants
|
|
|
-
|
|
|
|
(51
|
)
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
4,965
|
|
|
|
1,499
|
|
Inventory
|
|
|
-
|
|
|
|
596
|
|
Prepaid expense
|
|
|
-
|
|
|
|
5,709
|
|
Accounts payable and accrued liabilities
|
|
|
23,858
|
|
|
|
601
|
|
Accrued interest - convertible debenture
|
|
|
779
|
|
|
|
2,393
|
|
Accrued interest - note payable
|
|
|
2,719
|
|
|
|
-
|
|
Deferred revenue
|
|
|
(89
|
)
|
|
|
218
|
|
Net cash used in operating activities
|
|
|
(191,968
|
)
|
|
|
(295,366
|
)
|
|
|
|
|
|
|
|
|
|
Cash flow from financing activities
|
|
|
|
|
|
|
|
|
Proceeds from note payable - related party
|
|
|
175,000
|
|
|
|
-
|
|
Payment on convertible note
|
|
|
-
|
|
|
|
(70,000
|
)
|
Proceeds from common stock subscriptions
|
|
|
-
|
|
|
|
620,000
|
|
Net cash provided by financing activities
|
|
|
175,000
|
|
|
|
550,000
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
(16,968
|
)
|
|
|
254,634
|
|
Cash and cash equivalents at beginning of period
|
|
|
38,371
|
|
|
|
36,170
|
|
Cash and cash equivalents at end of period
|
|
$
|
21,403
|
|
|
$
|
290,804
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
-
|
|
|
$
|
-
|
|
Cash paid for income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Noncash investing and financing activities
|
|
|
|
|
|
|
|
|
Stock issued for conversion of debt
|
|
$
|
-
|
|
|
$
|
40,000
|
|
The
accompanying notes are an integral part of these unaudited consolidated financial statements.
MedeFile
International, Inc.
Notes
to Unaudited Consolidated Financial Statements
1.
BASIS OF PRESENTATION AND GOING CONCERN
Basis
of Presentation
The
accompanying unaudited consolidated financial statements of MedeFile International Inc., a Nevada corporation (the "Company"),
have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required
by accounting principles generally accepted in the United States of America for complete consolidated financial statements. These
unaudited consolidated financial statements and related notes should be read in conjunction with the Company's Form 10-K for the
fiscal year ended December 31, 2015. In the opinion of management, these unaudited consolidated financial statements reflect all
adjustments that are of a normal recurring nature and which are necessary to present fairly the financial position of the Company
as of June 30, 2016, and the results of operations and cash flows for the three and six months ended June 30, 2016 and 2015. The
results of operations for the three and six months ended June 30, 2016 are not necessarily indicative of the results that may
be expected for the entire fiscal year.
Going
Concern
The
accompanying financial statements have been prepared contemplating a continuation of the Company as a going concern. However,
the Company has reported a net loss of $224,255 for the six months ended June 30, 2016 and has negative working capital of $228,025
as of June 30, 2016.
The
accompanying financial statements have been prepared assuming the Company will continue as a going concern. The operating losses
and working capital deficit raise substantial doubt about the Company's ability to continue as a going concern. The Company's
ability to obtain additional financing depends on the success of its growth strategy and its future performance, each of which
is subject to general economic, financial, competitive, legislative, regulatory, and other factors beyond the Company's control.
We
will need additional investments in order to continue operations. Additional investments are being sought, but we cannot guarantee
that we will be able to obtain such investments. Financing transactions may include the issuance of equity or debt securities,
obtaining credit facilities, or other financing mechanisms.
However,
the trading price of our common stock could make it more difficult to obtain financing through the issuance of equity or debt
securities. Even if we are able to raise the funds required, we may incur unexpected costs and expenses, fail to collect significant
amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Further, if
we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may
have rights, preferences or privileges senior to those of existing holders of our common stock. If additional financing is not
available or is not available on acceptable terms, we will have to curtail our operations.
Fair
Value of Financial Instruments
Cash
and Equivalents, Deposits In-Transit, Receivables, Prepaid and Other Current Assets, Accounts Payable, Accrued Salaries and Wages
and Other Current Liabilities
The
carrying amounts of these items approximated fair value.
Fair
value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. To increase the comparability of fair value measures, Financial Accounting
Standards Board (“FASB”) ASC Topic 820-10-35 establishes a fair value hierarchy that prioritizes the inputs to valuation
techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets
for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurements).
Level 1
—Valuations
based on quoted prices for identical assets and liabilities in active markets.
Level 2
—Valuations
based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities
in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs
that are observable or can be corroborated by observable market data.
Level 3
—Valuations
based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market
participants. These valuations require significant judgment.
The
application of the three levels of the fair value hierarchy under Topic 820-10-35 to our assets and liabilities as of June 30,
2016 and December 31, 2015 are described below:
|
|
Fair
Value Measurements
|
|
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
|
Total
|
|
June
30, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative
Liabilities
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
19,122
|
|
|
$
|
19,122
|
|
Total
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
19,122
|
|
|
$
|
19,122
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative
Liabilities
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
19,067
|
|
|
$
|
19,067
|
|
Total
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
19,067
|
|
|
$
|
19,067
|
|
Derivative
liability as of June 30, 2016 is $19,122, compared to $19,067 as of December 31, 2015.
2.
NOTE PAYABLE – RELATED PARTY
During
the six months ended June 30, 2016, the Company entered into five unsecured 7% Promissory Notes with a significant shareholder.
The notes have six month terms and total $175,000.
The
changes in notes payable to related party consisted of the following during the six months ended June 30, 2016:
|
|
Six Months
Ended
June
30,
2016
|
|
Notes
payable – related party at beginning of period
|
|
$
|
-
|
|
Borrowings
on notes payable – related party
|
|
|
175,000
|
|
Accumulated
interest
|
|
|
2,720
|
|
Notes
payable – related party at end of period
|
|
$
|
177,720
|
|
3.
CONVERTIBLE DEBEBTURE – RELATED PARTY
The
Company has entered into two 10% Secured Convertible Debentures with a significant shareholder, one in the amount of $50,000 on
November 4, 2013 and the other in the amount of $60,000 on December 17, 2013. The debentures carry a one year term. Both debentures
are convertible into common stock at a share price of the lower of $1.00 or 80% of the previous day’s closing price. During
the year ended December 31, 2015, the lender converted $40,000 of the note principal and the Company made a payment of $70,000.
The
outstanding notes payable to related party consisted of the following as of June 30, 2016 and December 31, 2015:
|
|
June
30,
2016
|
|
|
December 31,
2015
|
|
Convertible
debenture – related party at beginning of period
|
|
$
|
15,681
|
|
|
|
122,538
|
|
Conversion
|
|
|
-
|
|
|
|
40,000
|
|
Repayment
|
|
|
-
|
|
|
|
70,000
|
|
Accumulated
interest
|
|
|
778
|
|
|
|
3,143
|
|
Convertible
debenture – related party at end of period
|
|
$
|
16,459
|
|
|
|
15,681
|
|
4.
DERIVATIVE LIABILITIES
In
connection with certain securities purchase agreements entered into during the third quarter of 2011 and the second quarter of
2012, the Company granted warrants with ratchet provisions. The warrants expired four years from the date of grant. During the
first two years of grant, if the Company were to issue any additional shares of common stock at a price per share less than the
exercise price in effect, the exercise price would be adjusted to equal the average price per share received by the Company for
the additional shares issued. After the first two years following the issuance date, if the Company were to issue any additional
shares of common stock at a price per share less than the exercise price in effect, the exercise price would be adjusted using
a formula based on the existing exercise price, the outstanding shares before and after the issuance of such shares, and the average
price during the issuance of such shares. In addition to the exercise price adjustment, the number of shares upon exercise of
the warrants was also subject to adjustment.
Upon
grant, the Company assesses the fair value of the warrants using the Black Scholes pricing model and records a warrant liability
for the value. The Company then assesses the fair value of the warrants quarterly based on the Black Scholes Model and increases
or decreases the warrant liability to the new value, and records a corresponding gain or loss (see below for variables used in
assessing the fair value).
Due
to the ratchet provisions, the Company treats the warrants as a derivative liability in accordance with the provisions of ASC
815 “Derivatives and Hedging” (ASC 815). ASC 815 applies to any freestanding financial instruments or embedded features
that have the characteristics of a derivative and to any freestanding financial instruments that potentially settle in an entity’s
own common stock.
Transactions
involving warrants with ratchet provisions during the six months ended June 30, 2016 are as follows: All remaining warrants have
expired.
|
|
Number
of Warrants
|
|
|
Weighted-Average
Price Per Share
|
|
Outstanding
at December 31, 2015
|
|
|
60,000
|
|
|
$
|
10
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
Canceled
or expired
|
|
|
60,000
|
|
|
|
10
|
|
Addition
due to ratchet trigger
|
|
|
-
|
|
|
|
-
|
|
Outstanding
at June 30, 2016
|
|
|
|
|
|
$
|
0
|
|
The
fair value of the warrant derivative liabilities was estimated using the Black-Scholes Option Pricing Model and the following
assumptions as of June 30, 2016:
|
|
June
30,
2016
|
|
Risk-free
interest rate
|
|
|
0.18
|
%
|
Expected
stock price volatility
|
|
|
269
|
%
|
Expected
dividend payout
|
|
|
-
|
|
Expected
option in life-years
|
|
|
.05
|
|
The
change in fair value of the warrant derivative liability consisted of the following during the three months ended June 30, 2016:
|
|
June
30,
2016
|
|
Warrant
liability (beginning fair value)
|
|
$
|
1,271
|
|
Additional
liability due to new grants
|
|
|
-
|
|
Loss
(gain) on changes in fair market value of warrant liability
|
|
|
(1,271
|
)
|
Warrant
liability (ending fair value)
|
|
$
|
-
|
|
Change
in fair market value of warrant liability resulted in a gain of $1,271 for the six months ended June 30, 2016.
The
Company entered into two 10% Secured Convertible Debentures with a significant shareholder, one in the amount of $50,000 on November
4, 2013 and the other in the amount of $60,000 on December 17, 2013. The debentures carry a one year term. Debentures are convertible
into common stock at a share price of the lower of $1.00 or 80% of the previous day’s closing price.
The
Company assesses the fair value of the convertible debenture using the Black Scholes pricing model and records a derivative liability
for the value. The Company then assesses the fair value of the warrants quarterly based on the Black Scholes Model and increases
or decreases the liability to the new value, and records a corresponding gain or loss (see below for variables used in assessing
the fair value).
Due
to the variable conversion rates, the Company treats the convertible debenture as a derivative liability in accordance with the
provisions of ASC 815 “Derivatives and Hedging” (ASC 815). ASC 815 applies to any freestanding financial instruments
or embedded features that have the characteristics of a derivative and to any freestanding financial instruments that potentially
settle in an entity’s own common stock. The fair value of the conversion options was determined using the Black-Scholes
Option Pricing Model and the following significant assumptions during the six months ended June 30, 2016:
|
|
June
30,
2016
|
|
Risk-free
interest rate
|
|
|
.08
|
%
|
Expected
stock price volatility
|
|
|
120
|
%
|
Expected
dividend payout
|
|
|
-
|
|
Expected
option in life-years
|
|
|
.25
|
|
The
change in fair value of the conversion option derivative liability consisted of the following during the six months ended June
30, 2016:
|
|
June
30,
2016
|
|
Conversion
option liability (beginning fair value)
|
|
$
|
17,796
|
|
Additional
liability due to new grants
|
|
|
-
|
|
Loss
(gain) on changes in fair market value of warrant liability
|
|
|
1,326
|
|
Conversion
option liability (ending fair value)
|
|
$
|
19,122
|
|
Change
in fair market value of conversion option liability resulted in a loss of $1,326 for the six months ended June 30, 2016.
5.
SUBSEQUENT EVENT
On
July 15, 2016 the Company entered into a 7% Promissory Note in the amount of $100,000. The note has a one year term.
Item
2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
This
Management’s Discussion and Analysis of Financial Condition and Results of Operations may contain "forward-looking
statements." The terms "believe," "anticipate," "intend," "goal," "expect,"
and similar expressions may identify forward-looking statements. These forward-looking statements represent the Company's current
expectations or beliefs concerning future events. The matters covered by these statements are subject to certain risks and uncertainties
that could cause actual results to differ materially from those set forth in the forward-looking statements, including customer
acceptance of new products, the impact of competition and price erosion, as well as other risks and uncertainties. In light of
the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should
not be regarded as a representation that the strategy, objectives or other plans of the Company will be achieved. The Company
wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date
made. Except as may be required under applicable securities laws, we undertake no duty to update this information.
OVERVIEW
Organizational
History
On
November 1, 2005, Bio-Solutions International, Inc. ("Bio-Solutions") entered into an Agreement and Plan of Merger (the
"Agreement") with OmniMed Acquisition Corp., (the "Acquirer), a Nevada corporation and a wholly owned subsidiary
of Bio-Solutions, OmniMed International, Inc., a Nevada corporation ("OmniMed"), and the shareholders of OmniMed (the
"OmniMed Shareholders"). Pursuant to the Agreement, Bio-Solutions acquired all of the outstanding equity stock of OmniMed
from the OmniMed Shareholders.
As
a result of the Agreement, the OmniMed Shareholders assumed control of Bio-Solutions. Effective November 21, 2005, Bio-Solutions
changed its name to OmniMed International, Inc. Effective January 17, 2006, OmniMed changed its name to MedeFile International,
Inc. ("MedeFile" or the "Company").
Overview
of Business
MedeFile
International, Inc., through its MedeFile, Inc. subsidiary, has developed and globally markets a proprietary, patient-centric,
Internet-enabled Personal Health Record (iPHR) system for gathering, digitizing, maintaining, accessing and sharing an individual’s
actual medical records. Our goal is to revolutionize the medical industry by bringing patient-centric digital technology to the
business of medicine. We intend to accomplish our objective by providing individuals with a simple and secure way to access their
lifetime of actual medical records in an efficient and cost-effective manner. Our products and services are designed to provide
healthcare providers with the ability to reference their patient's actual past medical records, thereby ensuring the most accurate
treatment and services possible while simultaneously reducing redundant procedures.
Interoperable
with most electronic medical record systems utilized by physician practices, clinics, hospitals and other care providers, the
highly secure, feature-rich MedeFileiPHR solution has been designed to gather all of its members’ actual medical records
on behalf of each member, and create a single, comprehensive Electronic Health Record (EHR). The member can access
his/her records 24-hours a day, seven days a week – or authorize a third party user – on any web-enabled device (PC,
cell phone, PDA, e-reader, et al), as well as the portable MedeFile flash drive/keychain or branded UBS-bracelet.
By
subscribing to the MedeFile system, members can empower themselves to take control of their own health and well-being, as well
as empower their healthcare providers to make sound and lifesaving decisions with the most accurate, up-to-date medical information
available. In addition, with MedeFile, members enjoy the peace of mind that comes from knowing that their medical records
are protected from fire, natural disaster, document misplacement or the closing of a medical or dental practice.
We
believe we enjoy a number of direct, competitive advantages over others in the medical records marketplace, including that:
|
●
|
we
have developed products and services geared to the patient, which also have the depth and breadth of information required
by treating physicians and medical personnel;
|
|
|
|
|
●
|
we
do all the work of collecting and updating medical information on an ongoing basis; our products’ dependence on the
patient taking action is minimal – particularly when compared to patient action required to support competing solutions;
|
|
|
|
|
●
|
we
provide a complete medical record. Other companies claim complete longitudinal records, but in reality only provide
histories (usually completed by the member/patient), which are by no means complete or necessarily accurate records; and
|
|
|
|
|
●
|
we
provide a coherent mix of services and products that are intended to improve the quality of healthcare by enabling the patient
to manage and access the information normally retained by doctors and other care providers.
|
RESULTS
OF OPERATIONS
FOR
THE THREE MONTHS ENDED JUNE 30, 2016 COMPARED TO THE THREE MONTHS ENDED JUNE 30, 2015
Revenues
Revenues
for the three months ended June 30, 2016 totaled $10,498 compared to revenues of $12,742 during the three months ended June 30,
2015. The decrease in membership revenue is primarily related to amount of members and medical record reimbursement
revenue received from members. Medical record reimbursement revenue is a dollar for dollar reimbursement for charges from members’
doctors for sending updated medical records to MedeFile. The off-setting expense is charged to selling general and administrative
expense. Revenues received from memberships are recognized through the period of the membership, and, therefore, revenue
recognized represents a fraction of the membership in the quarter being reported.
Selling,
General and Administrative Expenses
Selling,
general and administrative expenses for the three months ended June 30, 2016 totaled $119,372, a decrease of $154,746 or approximately
56.4% compared to selling, general and administrative expenses of $274,118 for the three months ended June 30, 2015. The decrease
was due mainly to decreased payroll, legal expense, and consulting fees.
Amortization
Expense
Amortization
expense for the three months ended June 30, 2016 was $0, compared to $22,149 the three months ended June 30, 2015. Amortization
expense in 2015 is the expensing of the website development. Website costs were impaired in the previous year and the Company
incurred an impairment expense of $182,195.
Interest
Expense
Interest
expense on convertible debentures for the three months ended June 30, 2016 and 2015, was $2,605 and $352 respectively. The
Company entered into two secured convertible debentures during the third quarter of 2013. The notes have a one year
term at a 10% interest rate.
Other
Expense
Loss
on change in fair value of derivate liabilities for the three months ended June 30, 2016 was $5,509 compared to a gain of $30,213
for the three months ended June 30, 2015.
Net
Loss
For
the reasons stated above, our net loss for the three months ended June 30, 2016 was $116,988, or $0.00 per share, a decrease of
$136,955, compared to net loss of $253,943, or $0.02 per share, for the three months ended June 30, 2015. The significant change
is directly related to adjustments in the fair value of our derivative liability and a decrease in our general and administrative
and compensation expenses.
FOR
THE SIX MONTHS ENDED JUNE 30, 2016 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2015
Revenues
Revenues
for the six months ended June 30, 2016 totaled $15,493 compared to revenues of $25,330 during the six months ended June 30, 2015. The
decrease in membership revenue is primarily related to amount of members and medical record reimbursement revenue received
from members. Medical record reimbursement revenue is a dollar for dollar reimbursement for charges from members’ doctors
for sending updated medical records to MedeFile. The off-setting expense is charged to selling general and administrative expense. Revenues
received from memberships are recognized through the period of the membership, and, therefore, revenue recognized represents a
fraction of the membership in the quarter being reported.
Selling,
General and Administrative Expenses
Selling,
general and administrative expenses for the six months ended June 30, 2016 totaled $236,195, a decrease of $203,529 or approximately
46.0% compared to selling, general and administrative expenses of $439,724 for the six months ended June 30, 2015. The decrease
was due mainly to decreased payroll, legal expense, and consulting fees.
Amortization
Expense
Amortization
expense for the six months ended June 30, 2016 was $0, compared to $44,299 the six months ended June 30, 2015. Amortization
expense in 2015 is the expensing of the website development. Website costs were impaired in the previous year and the Company
incurred an impairment expense of $182,195
.
Interest
Expense
Interest
expense on convertible debentures for the six months ended June 30, 2016 and 2015, was $3,498 and $2,392 respectively. The
Company entered into two secured convertible debentures during the third quarter of 2013. The notes have a one year
term at a 10% interest rate.
Other
Expense
Loss
on change in fair value of derivate liabilities for the six months ended June 30, 2016 was $55 compared to a loss of $3,030 for
the six months ended June 30, 2015.
Net
Loss
For
the reasons stated above, our net loss for the six months ended June 30, 2016 was $224,255, or $0.01 per share, a decrease of
$240,405, compared to net loss of $464,660, or $0.01 per share, for the six months ended June 30, 2015. The significant change
is directly related to adjustments in the fair value of our derivative liability and a decrease in our general and administrative
and compensation expenses.
FINANCIAL
CONDITION
Liquidity
and Capital Resources
As
of June 30, 2016, we had cash and cash equivalents of $21,403, and merchant services reserve of $2,938. Net cash
used in operating activities for the six months ended June 30, 2016 was approximately $191,968. Our current liabilities as of
June 30, 2016 of $252,366 consisted of: $38,715 for accounts payable and accrued liabilities, deferred revenues of $350, convertible
debenture of $16,459, note payable of $177,720, and derivative liability of $19,122. We have negative working capital of $228,025
as of June 30, 2016.
The
accompanying financial statements have been prepared contemplating a continuation of the Company as a going concern. The Company
has reported a net loss of $224,255 for the six months ended June 30, 2016 and had an accumulated deficit of $28,735,654
as of June 30, 2016.
The
Company currently estimates that it will require approximately $420,000 to continue its operations for the next twelve months. Additional
investments are being sought, but we cannot guarantee that we will be able to obtain such investments. Financing transactions
may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the
trading price of our common stock and conditions in the U.S. stock and debt markets could make it more difficult to obtain financing
through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could
incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements
that would force us to seek alternative financing. Further, if we issue additional equity or debt securities, stockholders may
experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing
holders of our common stock. If additional financing is not available or is not available on acceptable terms, we will have to
curtail our operations
Off-Balance
Sheet Arrangements
We
do not have any off balance sheet arrangements as of June 30, 2016 or as of the date of this report.
Critical
Accounting Policies
The
preparation of our condensed consolidated financial statements in conformity with accounting principles generally accepted in
the United States requires us to make estimates and judgments that affect our reported assets, liabilities, revenues, and expenses,
and the disclosure of contingent assets and liabilities.
We
base our estimates and judgments on historical experience and on various other assumptions we believe to be reasonable under the
circumstances. Future events, however, may differ markedly from our current expectations and assumptions. While there are a number
of significant accounting policies affecting our condensed consolidated financial statements, we believe the following critical
accounting policies involve the most complex, difficult and subjective estimates and judgments:
Revenue
Recognition
The
Company generates revenue from licensing the right to utilize its proprietary software for the storage and distribution of healthcare
information to individuals and affinity groups. For revenue from product sales, the Company recognizes revenue on four basic criteria
which must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred;
(3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and
(4) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and the collectability
of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are
provided for in the same period the related sales are recorded. The Company defers any revenue for which the product has not been
delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been
delivered or no refund will be required.
Stock-based
Compensation
The
Company accounts for all compensation related to stock, options or warrants using a fair value based method whereby compensation
cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually
the vesting period. The Company uses the Black-Scholes pricing model to calculate the fair value of options and warrants issued
to both employees and non-employees. Stock issued for compensation is valued using the market price of the stock on the date of
the related agreement.