UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

  

FORM 10-Q

 

(Mark One)

 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended: March 31, 2017

 

OR

 

☐ 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:

000-55465

 

MEDIFIRST SOLUTIONS, INC.

(Exact name of registrant as specified in its charter)

 

4400 Route 9 South, Suite 1000, Freehold NJ 07728

(Address of principal executive offices)

 

732-786-8044

(Issuer’s telephone number)

   

(Former name, former address and former fiscal year, if changed since last report) N/A

 

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 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 smaller reporting company. See definition 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  ☐  (check one) Smaller reporting company
      Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

As of May 18, 2017, there were 498,264,499 shares of Common Stock, $0.0001 par value, issued and outstanding.

 

 

 

 

 

 

TABLE OF CONTENTS

 

  Page
   
PART I. FINANCIAL INFORMATION  
   
Item 1. Financial Statements. 1
   
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 35
   
Item 3. Quantitative and Qualitative Disclosures About Market Risk. 37
   
Item 4.  Controls and Procedures. 37
   
PART II. OTHER INFORMATION  
   
Item 1. Legal Proceedings. 38
   
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 38
   
Item 3. Defaults Upon Senior Securities. 38
   
Item 4. Mine Safety Disclosures 38
   
Item 5. Other Information. 38
   
Item 6. Exhibits. 39

 

 

 

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

INDEX TO FINANCIAL STATEMENTS

 

Consolidated Balance Sheets as of December 31, 2016 and March 31, 2017 (unaudited) 3
   
Consolidated Statements of Operations (unaudited) for the three months ended March 31, 2017 and 2016 4
   
Consolidated Statement of Stockholders’ Equity (unaudited) for the three months ended March 31, 2017 5
   
Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2017 9
   
Notes to Unaudited Consolidated Financial Statements 10

 

  1  

 

 

 

 

 

 

 

 

 

 

MEDIFIRST SOLUTIONS, INC.

 

 

 

 

CONSOLIDATED FINANCIAL STATEMENTS

 

 

 

FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016

 

 

 

 

 

 

 

 

 

  2  

 

   

Medifirst Solutions, Inc.

Consolidated Balance Sheets

March 31, 2017 and December 31, 2016

  

    March 31, 2017     December 31, 2016  
    (Unaudited)        
ASSETS            
Current Assets:            
Cash   $ 101,768     $ 165,017  
Inventory     25,430       14,023  
Prepaid items     -       15,720  
Total current assets     127,198       194,760  
                 
Property, Plant and Equipment, net     1,711       1,871  
                 
Other Assets                
Security Deposit     650       650  
Intangible Asset -License Agreement, net     127,502       137,502  
Total other assets     128,152       138,152  
                 
Total Assets   $ 257,061     $ 334,783  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
                 
Liabilities                
Accounts payable and accrued expenses   $ 83,572     $ 75,368  
Accrued expenses - officer's compensation     415,197       405,197  
Due to related party     8,921       8,921  
Loans payable - stockholders     16,630       10,555  
Note Payable for license agreement     150,000       150,000  
Convertible notes payable     178,628       391,653  
Derivative Liabilities     504,823       144,792  
Total current liabilities     1,357,771       1,186,486  
                 
Commitments & Contingencies (Note 8)     -       -  
                 
Stockholders' Equity:                
Series A preferred stock, $0.0001 par value; 1,000,000 shares authorized, 50,000 and 50,000 shares issued and outstanding, respectively     5       5  
Series B convertible preferred stock, $0.0001 par value; 50,000 shares authorized, 8,000 and -0- shares issued and outstanding, respectively     1       3  
Common stock, $0.0001 par value; 1,500,000,000 shares authorized, 390,395,684 and 225,847,976 shares issued and outstanding, respectively     39,041       22,586  
Additional paid in capital     1,809,234       1,232,996  
Accumulated deficit     (2,948,991 )     (2,107,293 )
Total Stockholders' Equity     (1,100,710 )     (851,703 )
                 
Total Liabilities & Stockholders' Equity   $ 257,061     $ 334,783  

 

  3  

 

 

Medifirst Solutions, Inc.

Consolidated Statements of Operations

For the Three Months Ended March 31, 2017 and 2016

(Unaudited)

 

    For the Three Months Ended March 31,  
    2017     2016  
             
Product sales, net   $ 9,995     $ -  
      9,995       -  
Cost of goods sold     353       -  
Gross income     9,642       -  
                 
Expenses:                
Officer's compensation     25,000       25,000  
Advertising and promotion     19,797       1,623  
Computer and internet     206       120  
Consulting fees     189,300       20,798  
Professional fees     124,265       24,560  
Rent     3,822       2,071  
Travel     6,505       260  
Dues and subscriptions     1,083       -  
Other     25,343       9,371  
      395,321       83,803  
                 
Net loss from Operations before other income, expenses     (385,679 )     (83,803 )
                 
Other income and (expense)                
Interest expense     (91,034 )     (191,815 )
Interest income     -       1,167  
Loss on extinguishment of debt     -       -  
Change in fair value -derivatives     (364,985 )     (60,163 )
                 
Net loss before provision for income tax   $ (841,698 )   $ (334,614 )
                 
Provision for income taxes     -       -  
                 
Net Loss   $ (841,698 )   $ (334,614 )
                 
Loss per common share - Basic and fully diluted   $ (0.003 )   $ (0.009 )
                 
Weighted average number of shares outstanding - Basic and fully diluted     329,731,464       38,705,017  

 

  4  

 

 

Medifirst Solutions, Inc.

Consolidated Statement of Stockholders' Equity

For the Three Months Ended March 31, 2017

(Unaudited)

 

    Common Stock     Preferred Class A     Preferred Class B     Additional Paid in     Accumulated     Total Stockholders'  
    Shares     Amount     Shares     Amount     Shares     Amount     Capital     Deficit     Equity  
                                                       
Balance January 1, 2016     35,101,750       3,510       50,000       5       -       -       310,183       (969,609 )     (655,911 )
                                                                         
Issuance of common shares upon partial conversion of note at $0.00275 per share     1,095,036       110       -       -       -       -       2,901       -       3,011  
Issuance of common shares upon partial conversion of note at $0.00275 per share     1,285,560       129       -       -       -       -       3,406       -       3,535  
Issuance of common shares upon partial conversion of note at $0.003355 per share     906,533       91       -       -       -       -       2,950       -       3,041  
Issuance of common shares upon partial conversion of note at $0.00275 per share     1,500,000       150       -       -       -       -       600       -       750  
Issuance of Series B Preferred shares as part consideration for license agreement     -       -       -       -       25,000       3       -       -       3  
Issuance of common shares upon conversion  of 3,400 shares of Series B Preferred Stock     1,700,000       170       -       -       (3,400 )     (1 )     (170 )     -       (1 )
Additional paid in capital from derivative  liability on debt conversion     -       -       -       -       -       -       10,152       -       10,152  
Issuance of Series B Preferred shares as  payment for inventory     -       -       -       -       10,000       1       49,999               50,000  
Issuance of common shares upon conversion of 3,400 shares of Series B Preferred Stock     1,700,000     $ 170       -       -       (3,400 )   $ 0     $ (170 )     -       0  
Issuance of common shares upon partial conversion of note at $.0033 per share     1,584,873     $ 158       -       -       -       -     $ 5,072       -       5,230  
Issuance of common shares upon partial conversion of note at $.0033 per share     2,194,200     $ 219       -       -       -       -     $ 7,021       -       7,240  
Issuance of common shares upon partial conversion of note at $.0044 per share     2,000,000     $ 200       -       -       -       -     $ 8,600       -       8,800  
Issuance of common shares upon conversion of 3,900 shares of Series B Preferred Stock     1,950,000     $ 195       -       -       (3,900 )   $ (0 )   $ (195 )     -       (0 )

 

  5  

 

 

Medifirst Solutions, Inc.

Consolidated Statement of Stockholders' Equity

For the Three Months Ended March 31, 2017

(Unaudited)

 

    Common Stock     Preferred Class A     Preferred Class B     Additional Paid in     Accumulated     Total Stockholders'  
    Shares     Amount     Shares     Amount     Shares     Amount     Capital     Deficit     Equity  
                                                       
Issuance of common shares to extend due date  of a note payable at par value per share     300,000     $ 30       -       -       -       -       -       -       30  
Issuance of Series B Preferred shares as consideration for trademark purchase     -       -       -       -       4,000     $ 0     $ 19,999       -       19,999  
Issuance of common shares upon partial conversion of note at $.0029 per share     2,500,000     $ 250       -       -       -       -     $ 7,038       -       7,288  
Issuance of common shares upon partial conversion of note at $.0038 per share     783,062     $ 78       -       -       -       -     $ 2,980       -       3,058  
Issuance of common shares upon conversion  of 2,200 shares of Series B Preferred Stock     1,100,000     $ 110       -       -       (2,200 )   $ (0 )   $ (110 )     -       (0 )
Issuance of common shares upon partial conversion of note at $.0036 per share     768,026     $ 77       -       -       -       -     $ 2,723       -       2,800  
Issuance of common shares upon partial conversion of note at $.0028 per share     853,643     $ 85       -       -       -       -     $ 2,315       -       2,400  
Issuance of common shares for services $0.01 per share     500,000     $ 50       -       -       -       -     $ 4,950       -       5,000  
Additional paid in capital from derivative liability on debt conversion     -       -       -       -       -       -     $ 42,092       -       42,092  
Issuance of common shares upon partial conversion of note at $.002915 per share     1,356,747       136       -       -       -       -       3,664       -       3,800  
Issuance of common shares upon partial conversion of note at $..002915 per share     2,500,000       250       -       -       -       -       7,038       -       7,288  
Issuance of common shares upon partial conversion of note at $.0029 per share     2,213,714       221       -       -       -       -       6,199       -       6,420  
Issuance of common shares upon partial conversion of note at $..002915 per share     3,193,941       319       -       -       -       -       8,621       -       8,940  
Issuance of common shares upon partial conversion of note at $..002915 per share     3,180,000       318       -       -       -       -       8,952       -       9,270  
Issuance of common shares upon partial conversion of note at $.0029 per share     2,995,816       300       -       -       -       -       8,388       -       8,688  
Issuance of common shares upon partial conversion of note at $.002915 per share     3,352,874       335       -       -       -       -       9,040       -       9,375  
Issuance of common shares upon partial conversion of note at $..002915 per share     1,194,500       119       -       -       -       -       3,360       -       3,480  
Issuance of common shares upon partial conversion of note at $..00352 per share     3,333,073       333       -       -       -       -       10,902       -       11,235  
Issuance of common shares upon partial conversion of note at $.0039 per share     2,693,624       269       -       -       -       -       10,181       -       10,450  
Issuance of common shares upon partial conversion of note at $.003465 per share     2,886,003       289       -       -       -       -       9,711       -       10,000  
Issuance of common shares upon partial conversion of note at $.0029 per share     2,226,772       223       -       -       -       -       5,777       -       6,000  
Issuance of common shares upon conversion  of note payable at $.0005 per share     2,400,000       240       -       -       -       -       960       -       1,200  
Issuance of common shares for services $.0092 per share     4,000,000       400       -       -       -       -       36,400       -       36,800  
Issuance of common shares for services $.0092 per share     3,000,000       300       -       -       -       -       27,300       -       27,600  
Issuance of common shares for services $.0083 per share     2,000,000       200       -       -       -       -       16,400       -       16,600  
Issuance of common shares for services $.00083 per share     2,000,000       200       -       -       -       -       16,400       -       16,600  

 

  6  

 

 

Medifirst Solutions, Inc.

Consolidated Statement of Stockholders' Equity

For the Three Months Ended March 31, 2017

(Unaudited)

 

    Common Stock     Preferred Class A     Preferred Class B     Additional Paid in     Accumulated     Total Stockholders'  
    Shares     Amount     Shares     Amount     Shares     Amount     Capital     Deficit     Equity  
                                                       
Issuance of common shares for services $.0078 per share     500,000       50       -       -       -       -       3,850       -       3,900  
Issuance of common shares for services $.0065 per share     2,000,000       200       -       -       -       -       12,800       -       13,000  
Issuance of common shares upon conversion  of note payable at $.001 per share     3,000,000       300       -       -       -       -       2,700       -       3,000  
Issuance of common shares upon conversion  of note payable at $.0028 per share     2,516,666       251       -       -       -       -       6,997       -       7,248  
Additional paid in capital from derivative liability on debt conversion     -       -       -       -       -       -       99,387       -       99,387  
Issuance of common shares upon partial conversion of note at $.0025     5,000,000       500       -       -       -       -       12,000       -       12,500  
Issuance of common shares upon partial conversion of note at $.0033     3,696,081       370       -       -       -       -       12,130       -       12,500  
Issuance of common shares upon partial conversion of note at $.0022     5,705,841       571       -       -       -       -       11,929       -       12,500  
Issuance of common shares upon partial conversion of note at $.002     5,750,000       575       -       -       -       -       10,925       -       11,500  
Issuance of common shares upon partial conversion of note at $.0018     5,251,122       525       -       -       -       -       9,032       -       9,557  
Issuance of common shares upon partial conversion of note at $.0015     6,666,667       667       -       -       -       -       9,333       -       10,000  
Issuance of common shares upon partial conversion of note at $.0016     6,436,527       644       -       -       -       -       9,356       -       10,000  
Issuance of common shares upon partial conversion of note at $.0017     6,679,822       668       -       -       -       -       10,354       -       11,022  
Issuance of common shares upon partial conversion of note at $.0015     8,000,000       800       -       -       -       -       11,200       -       12,000  
Issuance of common shares upon partial conversion of note at $.0017     7,955,721       796       -       -       -       -       12,331       -       13,127  
Issuance of common shares upon partial conversion of note at $.0016     6,451,139       645       -       -       -       -       9,355       -       10,000  
Issuance of common shares upon partial conversion of note at $.0012     3,231,334       323       -       -       -       -       3,677       -       4,000  
Issuance of common shares for services $.0052 per share     2,000,000       200       -       -       -       -       10,200       -       10,400  
Issuance of common shares for services $.0045 per share     3,500,000       350       -       -       -       -       15,400       -       15,750  
Issuance of common shares for services $.0054 per share     3,000,000       300       -       -       -       -       15,900       -       16,200  
Issuance of common shares for services $.0035 per share     2,000,000       200       -       -       -       -       6,800       -       7,000  
Issuance of common shares for services $.0035 per share     1,000,000       100       -       -       -       -       3,400       -       3,500  
Issuance of common shares for services $.0036 per share     7,900,000       790       -       -       -       -       27,650       -       28,440  
Issuance of common shares for services $.0052 per share     2,000,000       200       -       -       -       -       10,200       -       10,400  
Issuance of common shares for services $.005 per share     4,000,000       400       -       -       -       -       19,600       -       20,000  
Issuance of common shares for services $.0036 per share     5,000,000       500       -       -       -       -       17,500       -       18,000  
Issuance of common shares for services $.0032 per share     6,500,000       650       -       -       -       -       20,150       -       20,800  
Issuance of common shares upon final conversion of note at $.0013     7,757,309       777       -       -       -       -       9,224       -       10,001  
Additional paid in capital from derivative liability on debt conversion     -       -       -       -       -       -       155,150       -       155,150  
Additional paid in capital from conversion of accrued interest on notes     -       -       -       -       -       -       2,836       -       2,836  
Net Loss     -       -       -       -       -       -       -       (1,137,684 )     (1,137,684 )
Balance - December 31, 2016     225,847,976       22,586       50,000       5       26,100       3       1,232,996       (2,107,293 )     (851,702 )

  

  7  

 

 

Medifirst Solutions, Inc.

Consolidated Statement of Stockholders' Equity

For the Three Months Ended March 31, 2017

(Unaudited)

 

    Common Stock     Preferred Class A     Preferred Class B     Additional Paid in     Accumulated     Total Stockholders'  
    Shares     Amount     Shares     Amount     Shares     Amount     Capital     Deficit     Equity  
                                                       
Issuance of common shares upon conversion of note at $.0014     9,421,629       942       -       -       -       -       12,013       -       12,955  
Issuance of common shares upon of note at $.0014     10,221,272       1,022       -       -       -       -       13,032       -       14,054  
Issuance of common shares upon conversion of note at $.0005     4,940,180       494       -       -       -       -       1,976       -       2,470  
Issuance of common shares upon conversion of note at $.0001     5,000,000       500       -       -       -       -       -       -       500  
Issuance of common shares upon conversion of note at $.0014     23,489,690       2,349       -       -       -       -       29,949       -       32,298  
Issuance of common shares upon conversion of note at $.0001     6,000,000       600       -       -       -       -       -       -       600  
Issuance of common shares upon conversion of note at $.0001     6,000,000       600       -       -       -       -       -       -       600  
Issuance of common shares upon conversion of note at $.0014     23,489,687       2,349       -       -       -       -       29,949       -       32,298  
Issuance of common shares upon conversion of note at $.0001     5,000,000       500       -       -       -       -       -       -       500  
Issuance of common shares upon conversion of note at $.0028     18,935,250       1,894       -       -       -       -       50,178       -       52,072  
Issuance of common shares for services $.0028 per share     2,000,000       200       -       -       -       -       5,400       -       5,600  
Issuance of common shares for services $.0054 per share     4,000,000       400       -       -       -       -       21,200       -       21,600  
Issuance of common shares for services $.0054 per share     3,000,000       300       -       -       -       -       15,900       -       16,200  
Issuance of common shares for services $.0060 per share     3,100,000       310       -       -       -       -       18,290       -       18,600  
Issuance of common shares for services $.0066 per share     5,000,000       500       -       -       -       -       32,500       -       33,000  
Issuance of common shares for services $.0057 per share     8,000,000       800       -       -       -       -       44,800       -       45,600  
Issuance of common shares for services $.0094 per share     5,000,000       500       -       -       -       -       46,500       -       47,000  
Issuance of common shares for services $.0094 per share     5,000,000       500       -       -       -       -       46,500       -       47,000  
Issuance of common shares for services $.0063 per share     4,000,000       400       -       -       -       -       24,800       -       25,200  
Issuance of common shares for services $.0052 per share     1,000,000       100       -       -       -       -       5,100       -       5,200  
Issuance of common shares for services $.0034 per share     2,000,000       200       -       -       -       -       6,600       -       6,800  
Issuance of common shares for services $.0052 per share     900,000       90       -       -       -       -       4,590       -       4,680  
Issuance of common shares upon conversion of 18,100 shares of Series B Preferred Stock     9,050,000       905       -       -       (18,100 )     (2 )     (903 )     -       (0 )
Additional paid in capital from derivative liability on debt conversion     -       -       -       -       -       -       171,439       -       171,439  
Adjustment for note conversion     -       -       -       -       -       -       (3,576 )     -       (3,576 )
Net Loss     -       -       -       -       -       -       -       (841,698 )     (841,698 )
Balance - March 31, 2017     390,395,684       39,042       50,000       5       8,000       1       1,809,234       (2,948,991 )     (1,100,710 )

  

  8  

 

 

Medifirst Solutions, Inc.

Consolidated Statement of Cash Flows

For the Three Months Ended March 31, 2017 and 2016

(Unaudited)

 

    2017     2016  
             
Cash flows from operating activities:            
Net loss   $ (841,698 )   $ (334,614 )
Adjustments to reconcile net loss to net cash used by operating activities:                
Depreciation & amortization expense     10,160       1,596  
Stock Based Compensation     276,480       -  
Change in assets and liabilities                
Accrued Interest Receivable     -       (1,167 )
Accounts payable and accrued expenses     34,378       17,627  
Loss on fair market value of derivatives     364,985          
Amortization of debt discount & other financing costs     83,133       211,922  
Stockholder's loan     -       (3,969 )
Prepaid expenses     15,720       -  
Inventory     (11,407 )     -  
Net cash used by operating activities     (68,249 )     (108,605 )
                 
Cash flows from investing activities:                
Purchase of equiment     -       -  
Net cash used by investing activities     -       -  
                 
Cash flows from financing activities:                
Repayment of bank overdraft     -       -  
Proceeds from issuance of common stock     -       -  
Contribution of additional paid in capital     -       -  
Proceeds from stockholder loan     5,000       -  
Repayment of stockholders' loan     -       -  
Proceeds from sale of Convertible notes payable     -       155,000  
Net cash provided by financing activities     5,000       155,000  
                 
Net increase (decrease) in cash     (63,249 )     46,395  
Cash at beginning of period     165,017       156,958  
Cash at end of period   $ 101,768     $ 203,353  
                 
Supplemental cash flow information:                
Cash paid during the period for:                
Interest   $ -     $ -  
Income taxes   $ 750     $ -  
                 
Non-cash investing and financing activities:                
Common stock issued for note interest and note conversions   $ 316,211     $ -  
                 
Accounts Payable exchanged for promissory note   $ 15,000     $ -  

 

  9  

 

 

Medifirst Solutions, Inc.

Notes to Consolidated Financial Statements
March 31, 2017

 

Note 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Organization

 

Medifirst Solutions, Inc. (“MSI” or the “Company”) was incorporated in Nevada in November 2010. The Company has not generated significant sales to date. The Company intends to have a diverse product line of consumer products. Since inception, the Company has been engaged in business planning activities, including researching the industry, identifying target markets for the Company’s products, developing the Company’s models and financial forecasts, performing due diligence regarding potential geographic locations most suitable for establishing the Company’s offices and identifying future sources of capital. At the present time, the Company is building products and affiliations in and related to the cosmetic healthcare industry.

 

In July 2016, Medifirst, in response to its Premarket Notification 510(k) submission for “The Time Machine” Series Laser, received clearance from the U.S. Food and Drug Administration (“FDA”) to market its infrared Time Machine TTML- 8102000 Laser Thermal Therapeutic Device.The Company is actively putting together a sales and distribution team to offer our lasers in the US market.

 

Pursuant to a sale and purchase agreement dated August 19, 2015 between the Company and the Company’s president, the Company acquired 100% of the equity interests in Medical Lasers Manufacturer, Inc. (“MLM”) with the total purchase price of 20,000 shares of the Company’s common stock at $0.001 per share (or $20). The fair value of the acquired entity was $20.

 

The transaction was considered as a business acquisition and accordingly the acquisition method of accounting has been applied. MLM had no assets at the date of the business combination.

 

The Consolidated financial statements include the accounts of MSI and its only wholly owned subsidiary, MLM. All material intercompany balances and transactions have been eliminated in consolidation.

 

The Company’s activities are subject to significant risks and uncertainties, including failing to secure additional funding to operationalize the Company’s current technology.

 

  10  

 

 

Medifirst Solutions, Inc.

Notes to Consolidated Financial Statements
March 31, 2017

 

Basis of Presentation

 

The unaudited interim consolidated financial statements include the accounts of Medifirst Solutions Inc. and its wholly owned subsidiary (Medical Laser Manufactures, Inc., (collectively referred to as the “Company”). All material intercompany balances and transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the consolidated financial position of the Company as of March 31, 2017, the consolidated results of its operations for the three-month periods ended March 31, 2016 and 2017, the consolidated change in stockholders’ equity for the three-month period ended March 31, 2017 and the consolidated cash flows for the three-month periods ended March 31, 2016 and 2017. The results of operations for the three-month period ended March 31, 2017 are not necessarily indicative of the operating results for the full year. These financial statements should be read in conjunction with the audited consolidated financial statements and related disclosures for the year ended December 31, 2016 included in the Company’s Annual Report on Form 10-K for the year then ended.

 

Revenue Recognition

 

In general, the Company records revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. The following policies reflect specific criteria for the various revenues streams of the Company:

 

Revenue is recognized at the time the product is delivered or services are performed. Provision for sales returns are estimated based on the Company’s historical return experience. Revenue is presented net of returns.

 

Accounts Receivable

 

The Company extends credit to its customers in the normal course of business and performs ongoing credit evaluations of its customers, maintaining an allowance for potential credit losses. Accounts receivable is reported net of the allowance for doubtful accounts. The allowance is based on management’s estimate of the amount of receivables that will actually be collected. The Company has not recorded an allowance for doubtful accounts as of March 31, 2017 or December 31, 2016.

 

Inventory

 

Inventory consists of finished goods and is stated at the lower of cost (first-in, first-out) or market value. Finished goods inventory includes hand held laser devices and their carrying cases.

 

Equipment

 

Equipment, consisting of computer equipment, is stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, of five years.

 

Long-Lived Assets

 

The Company reviews long-lived assets, such as equipment, for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds the estimated future cash flows, an impairment loss will be recorded by the amount the carrying value exceeds the fair value of the asset.

 

  11  

 

 

Medifirst Solutions, Inc.

Notes to Consolidated Financial Statements
March 31, 2017

 

In August 2015, the Company’s wholly-owned subsidiary MLM, acquired a trademark for $20,000. Due to the uncertainty of future cash flows from the trademark, management has deemed it to be impaired and recorded an impairment expense of $20,000 in 2015.

 

Intangible Asset- Licensing Agreement

 

On March 8th 2016 (with an effective date of October 1, 2015), the company, through it’s sole wholly-owned subsidiary (“Licensee”), entered into a Product and Know-How License Agreement (“Agreement”) with a Florida Corporation (“Licensor”) which is owned by a related party - the son of the Company’s CEO. The license provides with respect to the Technology, Licensor hereby grants to Licensee an irrevocable, nontransferable, royalty-bearing license, with a right of sublicense (the “License”), throughout the Territory in the Field of Use, whether or not under the Licensed Patent, to:

 

- use or submit or deliver the Technology and/or any Product to any regulatory body throughout the Territory for purposes of obtaining approval to make, Sell, o+A568ffer for Sale, import, export and distribute the Technology or Products; and

 

- use or copy the Technology and/or any Product; and

 

- market, make, have made, Sell, offer for Sale, import and distribute Products; and

 

- sublicense the Technology; and

 

- prepare, or have prepared on its behalf, modifications, enhancements and/or derivative works of the Technology.

 

In connection with the license granted, Licensor hereby grants to Licensee a license to the Licensed Patents, whether now existing or hereafter acquired.

 

The consideration for the licensing agreement consisted of the issuance of 25,000 Series B Preferred stock shares to the Licensor (at par) plus a $150,000 promissory note issued by the Company to the licensor. The promissory note is payable 18 months from the date of issuance and bears interest at the rate of 10% per annum. The last part of the consideration in this license agreement is the royalty payments which have not taken effect yet since they are based on sales for which the company has had only minimum thus far.

 

The licensing agreement is for a ten year period effective from October 1, 2015. The cost of the licensing agreement is being amortized over it’s ten-year period and charged to income on a straight-line basis.

 

Debt Issues Costs and Debt Discount

 

The Company may pay debt issue costs, and record debt discounts in connection with raising funds through the issuance of convertible debt. These costs are amortized over the life of the debt to interest expense. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts are immediately expensed. Beginning in 2015, the Company adopted ASU 2015-03: Simplifying the Presentation of Debt Issuance Costs and has reflected the deferred financing costs as a direct reduction of the related debt (See table included in Note 5 to Consolidated Financial Statements).

 

  12  

 

 

Medifirst Solutions, Inc.

Notes to Consolidated Financial Statements
March 31, 2017

 

Original Issue Discount

 

For certain convertible debt issued, the Company provides the debt holder with an original issue discount. The original issue discount is recorded to debt discount, reducing the face amount of the note and is amortized to interest expense over the life of the debt.

 

Derivative Liabilities

 

Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments, and measurement of their fair value for accounting purposes. The Company assessed its securities for purposes of determining the proper accounting treatment and valuation as set forth in the Statement of Financial Accounting Standard ASC 820–10–35–37 Fair Value in Financial Instruments ; Statement of Financial Accounting Standard ASC 815 Accounting for Derivative Instruments and Hedging Activities ; and Emerging Issues Task Force (“EITF”) Issue No. 00–19 and EITF 07–05.

 

In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt, the Company will continue its evaluation process of these instruments as derivative financial instruments.

 

Once the derivative liabilities are determined, they are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives.

 

Use of Estimates

 

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the condensed consolidated balance sheets and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

 

Financial Instruments

 

The carrying amounts reported in the balance sheets for cash, accounts receivable, accounts payable, and other accrued liabilities approximate their fair values.

 

Segment Information

 

The Company follows Accounting Standards Codification (“ASC”) 280, “Segment Reporting”. The Company currently operates in a single segment and will evaluate additional segment disclosure requirements as it expands its operations.

 

Net Income (Loss) Per Common Share

 

The Company calculates net income (loss) per share based on the authoritative guidance. Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares and dilutive common stock equivalents outstanding. During periods in which the Company incurs losses, common stock equivalents, if any, are not considered, as their effect would be anti-dilutive.

 

  13  

 

 

Medifirst Solutions, Inc.

Notes to Consolidated Financial Statements
March 31, 2017

 

Income Taxes

 

The Company utilizes the accrual method of accounting for income taxes. Under the accrual method, deferred tax assets and liabilities are determined based on the differences between the financial reporting basis and the tax basis of the assets and liabilities, and are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. An allowance against deferred tax assets is recognized, when it is more likely than not, that such tax benefits will not be realized.

 

The Company recognizes the financial statement benefit of an uncertain tax position only after considering the probability that a tax authority would sustain the position in an examination. For tax positions meeting a “more-likely-than-not” threshold, the amount recognized in the financial statements is the benefit expected to be realized upon settlement with the tax authority. For tax positions not meeting the threshold, no financial statement benefit is recognized. The Company recognizes interest and penalties, if any, related to uncertain tax positions in income tax expense. The Company did not have any unrecognized tax benefits as of March 31, 2017, and does not expect this to change significantly over the next 12 months.

 

Stock-Based Compensation

 

The Company accounts for equity instruments issued to employees in accordance with ASC 718, Compensation - Stock Compensation. ASC 718 requires all share-based compensation payments to be recognized in the financial statements based on the fair value on the issuance date.

 

Equity instruments granted to non-employees are accounted for in accordance with ASC 505, Equity. The final measurement date for the fair value of equity instruments with performance criteria is the date that each performance commitment for such equity instrument is satisfied or there is a significant disincentive for non-performance.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. At March 31, 2017 and December 31, 2016, the Company had cash equivalents of $101,768  and $165,017 respectively.

 

Recent Pronouncements

 

In May 2014, FASB and IASB issued a new joint revenue recognition standard that supersedes nearly all GAAP guidance on revenue recognition. The core principle of the standard is that revenue recognition should depict the transfer of goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The new standard is effective for the Company to annual reporting periods beginning after December 15, 2017 (that is, a public organization is required to apply the new revenue standard beginning in the first interim period within the year of adoption). Additionally, the Board decided to permit public organizations to adopt the new revenue standard early, but not before the original public organization effective date (that is, annual periods beginning after December 15, 2016). A public organization should apply the new revenue standard to all interim reporting periods within the year of adoption. The Company has evaluated the impact of this ASU on the consolidated financial statements and has determined, at this time, the ASU’s implementation would not have a material impact on revenue recognition. See below - Accounting Standards Update 2016-10 - Revenue from Contracts with Customers (Topic 606) Identifying Performance Obligations and Licensing.

 

  14  

 

 

Medifirst Solutions, Inc.

Notes to Consolidated Financial Statements
March 31, 2017

 

On January 05, 2016, the FASB completed its Classification and Measurement of Financial Instruments project by issuing ASU No. 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The new guidance improves certain aspects of recognition, measurement, presentation and disclosure of financial instruments. For public business entities, the new guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company does not believe the impact of its pending adoption of this ASU on the Company’s consolidated financial statements will be material.

 

In November 2015, FASB issued ASU 2015-17 - Income Taxes (Topic 740) Balance Sheet Classification of Deferred Taxes which simplifies the presentation of deferred income taxes. For public business entities, the amendments in this Update are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company does not believe the impact of its pending adoption of this ASU on the Company’s consolidated financial statements will be material.

 

In March 2016, the FASB issued Accounting Standards Update 2016-09 Compensation—Stock Compensation (Topic 718) Improvements to Employee Share-Based Payment Accounting. The Board is issuing this Update as part of its Simplification Initiative. The objective of the Simplification Initiative is to identify, evaluate, and improve areas of generally accepted accounting principles (GAAP) for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements. The areas for simplification in this Update were identified through outreach for the Simplification Initiative, pre-agenda research for the Private Company Council, and the August 2014 Post-Implementation Review Report on FASB Statement No. 123(R), Share-Based Payment. The Company is currently evaluating the impact of this ASU on the consolidated financial statements.

 

In April 2016, the FASB issued Accounting Standards Update 2016-10 - Revenue from Contracts with Customers (Topic 606) Identifying Performance Obligations and Licensing. The core principle of the guidance in Topic 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: 1. Identify the contract(s) with a customer. 2. Identify the performance obligations in the contract. 3. Determine the transaction price. 4. Allocate the transaction price to the performance obligations in the contract. 5. Recognize revenue when (or as) the entity satisfies a performance obligation. The amendments in this Update do not change the core principle of the guidance in Topic 606. Rather, the amendments in this Update clarify the following two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. The Company is currently evaluating the impact of this ASU on the consolidated financial statements.

 

  15  

 

 

Medifirst Solutions, Inc.

Notes to Consolidated Financial Statements
March 31, 2017

 

Note 2. PROPERTY, PLANT AND EQUIPMENT (NET)

 

Equipment is recorded at cost and consisted of the following at March 31, 2017 and December 31, 2016:

 

    March 31, 2017     December 31,
2016
 
Computer equipment   $ 8,956     $ 8,956  
Less: accumulated depreciation     (7,245 )     (7,085 )
                 
    $ 1,711     $ 1,871  

 

Depreciation expense was $159 and $346, for the three months ended March 31, 2017 and 2016 respectively.

 

Note 3. DUE TO RELATED PARTY

 

The Company was indebted to a related party through common management in the amount of $8,921 at March 31, 2017 and December 31, 2016, respectively. The loan bears no interest and is payable on demand. See Note 10 for additional related party transactions.

 

Note 4. LOANS PAYABLE - STOCKHOLDERS

 

During the periods ended March 31, 2017 and 2016 a stockholder of the Company advanced the Company $-0- and $-0- respectively. The loan has a balance of $16,630 at March 31, 2017 and a balance of $8,955 as of December 31, 2016. The loan bears no interest and is payable on demand.

 

In December 2012, the Company issued a promissory note to a stockholder in the amount of $5,000 with interest at 10% per annum. Principal and interest were due and payable on June 2, 2013. In April 2014, the note was amended to provide the note holder with the option to convert the note to the Company’s common stock at $0.0001 per share. Subsequently, in 2014, in a private transactions, the note holder transferred $2,500 of note principal to third parties and the new holders converted their holdings into 2,500,000 shares of the Company’s common stock. During 2015, the original note holder transferred an additional $2,400 of note principal to third parties who converted their holdings into 2,400,000 shares of the Company’s common stock. At March 31, 2017 and December 31, 2016, the loan had balance was $100 and $100, respectively.

 

At March 31, 2017 and December 31, 2016, the Company was indebted to a stockholder in the amount of $1,000 and $1,500, respectively. The loan has an interest rate of 26.7%. In February 2017 the note was sold to another investor and that noteholder converted $500 in principal into 5,000,000 shares of common stock. Principal and accrued interest were due and payable on January 1, 2014.

 

In February 2016, the Company issued a promissory note to a stockholder in the amount of $7,000 with interest at the rate of 6% per annum. On September 6, 2016 the note holder converted the entire principal balance and accrued interest into common stock and therefore at March 31, 2017 there is no principal balance remaining on the note.

 

  16  

 

 

Medifirst Solutions, Inc.

Notes to Consolidated Financial Statements
March 31, 2017

 

Note 5. CONVERTIBLE NOTES PAYABLE

 

Note Payable-BS

 

In March 2011, the Company issued $800 aggregate principal amount of 6% convertible notes due in January 2012. Interest on the notes accrue at the rate of 6% per annum and are payable when the notes mature. The notes matured prior to conversion but have not been repaid. Interest continues to accrue at the rate of 6% per annum.

 

The holder of one of the notes converted $110 of note principal into 1,100,000 shares of common stock as follows:

 

Date of Conversion  

Principal
Amount

Converted

   

Conversion

Rate

   

Shares

Received

 
June 2013   $ 70     $ 0.0001       700,000  
August 2013   $ 40     $ 0.0001       400,000  

 

In August 2013, in a private transaction, the same note holder transferred $330 of the remaining note principal plus $55 in accrued interest to a third party.

 

In August 2013, in a private transaction, the new note holder transferred $5 of the remaining note principal to a third party who then converted the note into 50,000 shares of common stock.

 

In September 2013, the new note holder converted $100 of note principal into 1,000,000 shares of common stock.

 

In September 2013, in a private transaction, the new note holder transferred $35 of the remaining note principal to a third party who then converted the note into 350,000 shares of common stock.

 

In November and December 2013, the new note holder converted an additional $90 of note principal into 900,000 shares of common stock as follows:

 

Date of Conversion  

Principal Amount

Converted

   

Conversion

Rate

   

Shares

Received

 
November 2013   $ 40     $ 0.0001       400,000  
December 2013   $ 50     $ 0.0001       500,000  

 

  17  

 

 

Medifirst Solutions, Inc.

Notes to Consolidated Financial Statements
March 31, 2017

 

In March and April 2014, the new note holder converted an additional $90 of note principal into 900,000 shares of common stock as follows:

 

Date of Conversion  

Principal Amount

Converted

   

Conversion

Rate

   

Shares

Received

 

March 2014

  $ 50     $ 0.0001       500,000  

April 2014

  $ 40     $ 0.0001       400,000  

 

Subsequent to these conversions there remains $125 in note principal outstanding at March 31, 2017.

 

Note Payable-SF

 

In July 2013, the holder of the second note converted $240 of note principal into 400,000 shares of the Company’s common stock at $0.0006 per share. At March 31, 2017 and December 31 2016, the note had a remaining principal balance of $60 and $60, respectively.

 

At any time on or after the maturity date, the holders of the notes, have the option of converting any of the unpaid principal and interest into the Company’s common stock. The notes plus any accrued but unpaid interest are convertible at the rate of $0.0001 per share at the time of conversion up to a maximum of 9.99% of the then issued and outstanding common stock, or 39,000,529 shares at March 31, 2017 and 22,562,213 shares at December 31, 2016.

 

Note Payable-RK

 

In May 2012, the Company issued a $25,000 6% per annum note that matured in November 2012. In December 2012 the note was amended to be a convertible note. Interest on the note accrues interest at 6% per annum and is payable when the note matures.

 

The holder of the $25,000 note had the option of converting it at any time prior to maturity. The note plus any accrued but unpaid interest were convertible at the rate of $0.001 per share at the time of conversion up to a maximum of 9.99% of the then issued and outstanding common stock.

 

The holder of the note converted $1,010 of note principal into 1,010,000 shares of common stock as follows:

 

Date of Conversion  

Principal Amount

Converted

   

Conversion

Rate

   

Shares

Received

 
December 2012   $ 150     $ 0.001     $ 150,000  
January 2013   $ 660     $ 0.001     $ 660,000  
March 2013   $ 200     $ 0.001     $ 200,000  

 

  18  

 

 

Medifirst Solutions, Inc.

Notes to Consolidated Financial Statements
March 31, 2017

 

In July 2013, the Company retired $14,000 of note principal in payment for consulting services provided to the note holder.

 

In July 2013, the note holder converted $300 of note principal into 300,000 shares of the Company’s common stock.

 

In July 2013, in a private transaction, the note holder transferred the remaining note principal balance of $9,690 to a third party (See Note Payable-NW below).

 

Note Payable-NW

 

After receiving the transfer of the principal balance of $9,690 in July 2013 in the private transaction noted in Note Payable-RK above, in August 2013, in a private transaction, the new note holder of the aforementioned note transferred $4,475 of principal to a stockholder of the company.

 

In October 2013, the note holder converted $400 of note principal into 400,000 shares of the Company’s common stock at $0.001 per share.

 

In October 2014, the note holder converted $1,100 of note principal into 1,100,000 of the Company’s common stock.The note holder has the option of converting the balance at any time with the approval of the Board of Directors. The note plus any accrued but unpaid interest are convertible at the rate of $0.001 per share at the time of conversion up to a maximum of 9.99% of the then issued and outstanding common stock, or 22,562,213 shares at December 31, 2016 and 3,506,665 shares at December 31, 2015.

 

  19  

 

 

Medifirst Solutions, Inc.

Notes to Consolidated Financial Statements
March 31, 2017

 

In August 2016, the note holder converted $3,000 of note principal into 3,000,000 shares of the Company’s common stock. At March 31, 2017 and December 31, 2016, the remaining principal balance on this portion of the note is $715 and $715 respectively.

 

Note Payable-MC #1

 

In August 2013, the note holder/stockholder who received the $4,475 in principal from the aforementioned noteholder, converted $700 of note principal into 700,000 shares of the Company’s common stock at $0.001 per share. In October 2013, in a private transaction, this note holder transferred $1,000 of note principal to a third party of which $700 was converted into 700,000 shares in June 2014. In January 2017 the remaining $2,075 principal balance on this note was transfered to another investor who during the same period converted the entire remaining principal balance into 4,190,480 common shares.

 

Note Payable-MC #2

 

In April 2015, the Company issued a $3,000 8% per annum note that matures in October 2015. The holder of the note has the right to convert the principal into shares of the Company’s common stock at any time 180 days after the closing date at $0.0001 per share. Interest on the note accrues interest at 8% per annum and is payable when the note matures. During January 2017, the current noteholder converted $1,100 in principal balance into 11,000,000 shares of common stock. During the same period, the current noteholder transfered $600 of the remaining principal balance to another investor who then converted the entire principal balance he received into 6,000,000 shares of common stock. There remains $1,300 in principal balance at March 31, 2017 with the current noteholder and $3,000 in principal balance at December 31, 2016.

 

Convertible Note Payable-VV to LG (8%)#1

 

In July 2015, the Company issued a convertible note payable in the principal amount of $59,000. The note matured in March 2016 and bears interest at 8%. Beginning 180 days following the closing date the note holder shall have the right to convert any or all of the outranking principal balance into shares of the Company’s common stock at the discounted rate of 55% of the average of the three lowest market trading prices during the 10 days immediately preceding the conversion date. Through a series of conversions during 2016, the note holder converted all of the entire note principal and accrued interest into common stock thereby leaving no principal balance remaining on the note at March 31, 2017 and December 31, 2016.

 

Convertible Note Payable-VV (8%) #2

 

In August 2015, the Company issued a convertible note payable in the principal amount of $38,000. The note matured in March 2016 and bears interest at 8%. Beginning 180 days following the closing date the note holder shall have the right to convert any or all of the outranking principal balance into shares of the Company’s common stock at the discounted rate of 55% of the average of the three lowest market trading prices during the 10 days immediately preceding the conversion date. Through a series of conversions during 2016, the note holder converted all of the entire note principal and accrued interest into common stock thereby leaving no principal balance remaining on the note at March 31,2017 and December 31, 2016.

 

  20  

 

 

Medifirst Solutions, Inc.

Notes to Consolidated Financial Statements
March 31, 2017

 

Convertible Note Payable-LGC(8%)

 

On October 8, 2015, the Company issued a convertible note payable in the principal amount of $31,000 with an Original Issue Discount of $1,500. The note matures on October 8, 2016 and bears interest at 8%. The note holder has the right at any time to convert any part or all of the outstanding unpaid principal balance into shares of the Company’s common stock at the discounted rate of 58% of the lowest market trading price during the 20 days prior to and including the conversion date. Through a series of conversions during 2016, the note holder converted all of the entire note principal and accrued interest into common stock thereby leaving no principal balance remaining on the note at March 31, 2017 and December 31, 2016.

 

Debenture Payable - (5%) B (Original $100K)

 

In June 2015, the Company issued a convertible note payable in the principal amount of $100,000. The note matures in December 2015 and bears interest at 5%. Beginning 180 days following the closing date the note holder shall have the right to convert any or all of the outranking principal balance into shares of the Company’s common stock at the discounted rate of 50% of the average of the three lowest market trading prices during the 3 days immediately preceding the conversion date. The remaining principal balance on the note at June 30, 2016 was $40,000 after a private sale of $60,000 in principal and deemed accrued interest on May 2, 2016 to another investor and the issuance of a replacement note by the Company - see below- Convertible Note Payable-SO-B (8%) (Original $60k) .

 

On September 27, 2016 the remaining $40,000 in principal balance and accrued interest on the note was sold in a private transaction to another investor and the Company issued a replacement note in the amount of $50,000. Both of the above noted transactions which took place on May 2, 2016 and September 27, 2016 respectively, resulted in a loss on the extinguishment of the original debt in the amount of $4,733 from deeming accrued interest in excess of actual accruals. This loss is reported in the statement of operations for the year ended December 31, 2016. Through a series of conversions during 2016, the note holder converted all of the entire note principal and accrued interest into common stock thereby leaving no principal balance remaining on the note at March 31, 2017 and December 31, 2016.

 

As a result of the aforementioned transactions and conversions, there is no principal balance remaining on the original $100,000 note as of March 31, 2017 and December 31, 2016.

 

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Medifirst Solutions, Inc.

Notes to Consolidated Financial Statements
March 31, 2017

 

Convertible Note Payable-SO-B (8%) (Original $60k)

 

On May 2, 2016, the Company issued to an Investor a replacement redeemable convertible note in the principal amount of $60,000 (“the Replacement Note”). The Note, which matures on May 2, 2017, pays interest at the rate of 8% per annum. This Replacement Note partially replaces a note originally issued on June 12, 2015 in the principal amount of $100,000 The holder of the note is entitled, at its option beginning on the 6 month anniversary, to convert all or any of the principal face amount of the Note then outstanding into shares of the Company’s common stock at the price equal to 55% of the lowest trading price for the twenty prior trading days including the date of conversion. Any unamortized original issue discount and deferred financing costs from the original note was expensed upon replacement. The derivative discount and liability on the original note was appropriately accounted for upon replacement and a new derivative discount and liability for the replacement note appropriately recorded.

 

Through a series of conversions during 2016, the note holder converted all of the entire note principal and accrued interest into common stock thereby leaving no principal balance remaining on the note at December 31, 2016.

 

Convertible Note Payable-CB (5%) (Original $35k)

 

On October 15, 2015 the Company issued a convertible note payable in the principal amount of $35,000 with an Original Issue Discount of $5,000. The note matures on October 15, 2016 and bears interest at 5%. The note holder has the right at any time on or after the day that is six months from October 15, 2015 to convert any part or all of the outstanding unpaid principal balance into shares of the Company’s common stock at the discounted rate of 55% of the lowest market trading prices during the 20 days prior to the conversion date.

 

During the months of May, June and July 2016, the holder of the above $35,000 Note converted all of the principal to common stock thereby leaving no principal balance payable on the note as of March 31, 2017 and December 31, 2016.

 

  22  

 

 

Medifirst Solutions, Inc.

Notes to Consolidated Financial Statements
March 31, 2017

 

Convertible Note Payable-LGC (8%)

 

On January 7 2016, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an accredited investor (the “Investor”) for the sale of convertible redeemable notes in aggregate principal amount of $251,803. On January 7, 2016, the Company and the Investor conducted the first closing under the Purchase Agreement, pursuant to which the Company issued to the Investor (i) a convertible redeemable note in principal amount of $105,000 containing an original issue discount of $20,000 (the “$105K Note”); and (ii) a convertible redeemable note in principal amount of $50,000 (the “$50K Note” and together with the $105K Note, the “Notes”). Under the Purchase Agreement, on March 15, 2016 and June 15, 2016, the Company and the Investor conducted additional closings for the sale and purchase of additional notes having the same terms as the Notes in principal amounts equal to $50,000 and $46, 803, respectively (see Convertible Notes Payable-LGC (8%) BEN below). During the quarter ended March 31, 2017 the noteholder converted the entire principal balance into 62,067,838 shares of common stock and therefore there is no principle balance outstanding at March 31, 2017. At December 31, 2016 the entire principal balance of $105,000 was outstanding.

 

Convertible Notes Payable-LGC (8%) BEN

 

In consideration for the issuance of the $105K Note, on January 13, 2016, the Company received net proceeds (after deducting the original issue discount and legal fees) in the amount of $75,697. In consideration for the issuance of the $50K Note, the Investor issued to the Company a $50,000 fully-collateralized secured promissory note (the “Investor Note”), pursuant to which the Investor agreed to pay the Company $50,000 on or before April 30, 2016. The Notes, which are due on January 7, 2017, bear interest at the rate of 8% per annum. Subject to a beneficial ownership limitation equal to 9.99%, principal and interest on the Notes is convertible into shares of the Company’s common stock (“Common Stock”) at a conversion price equal to 55% of the lowest trading price of Common Stock during the 20 trading day period prior to conversion.

 

In accordance with the terms of the Purchase Agreement, the investor and the Company closed on the two outstanding notes ($50,000 and $46,803) in May and June 2016. The Company received the cash funding. As of March 31, 2017 and December 31, 2016 the entire remaining principal balances of $50,000 and $46,803 respectively was outstanding.  

 

  23  

 

 

Medifirst Solutions, Inc.

Notes to Consolidated Financial Statements
March 31, 2017

 

Convertible Notes Payable-SO (8%)

 

On May 2, 2016, the Company issued to an Investor a convertible redeemable note in the principal amount of $57,750 (“the Note”). The Note, which matures on May 2, 2017, pays interest at the rate of 8% per annum. The note contains a 10% original issue discount. The holder of the note is entitled, at its option beginning on the 6 month anniversary, to convert all or any of the principal face amount of the Note then outstanding into shares of the Company’s common stock at the price equal to 55% of the lowest trading price for the twenty prior trading days including the date of conversion.

 

During the quarter ended March 31, 2017 the noteholder converted $32,298 of the principle balance into 23,489,690 shares of common stock thereby leaving a principal balance of $25,452 on the note at March 31, 2017. The entire principal balance in the amount of $57,750 was outstanding on the note at December 31, 2016.

 

Convertible Notes Payable-LG (9%)

 

On October 11, 2016, the Company issued to an Investor a replacement convertible note in the principal amount of $50,000 (“the Replacement Note”). The Note, which matures on March 27, 2018, pays interest at the rate of 9% per annum. This Replacement Note partially replaces a note originally issued on June 12, 2015 in the principal amount of $100,000. During the quarter ended December 31, 2016 the noteholder converted the entire principal balance into shares of common stock thereby leaving $-0- principal balance remaining on the note as of March 31, 2017 and December 31, 2016.

 

Convertible Notes Payable-BBCG (9%)

 

On October 11, 2016, the Company issued to an Investor a convertible note in the principal amount of $157,895 (“the Note”). The Note, which matures on March 27, 2018, pays interest at the rate of 9% per annum. The note contains an original issue discount in the amount of $7,895. The holder of the note is entitled, at its option beginning on the 6 month anniversary, to convert all or any of the principal face amount of the Note then outstanding into shares of the Company’s common stock at the price equal to 57.5% of the lowest trading price for the twenty prior trading days including the date of conversion. The entire $157,895 in principal balance remains outstanding on the note as of March 31, 2017 and December 31, 2016.

 

  24  

 

 

Medifirst Solutions, Inc.

Notes to Consolidated Financial Statements
March 31, 2017

 

The Company’s convertible notes payable and the related derivative liabilities, derivative discount, deferred financing costs and original-issue discount are presented in the financial statements at March 31, 2017 as follows:

 

  Remaining     Original           Deferred     Total        
3/31/2017   Principal     Issue     Derivative     Financing     Convertible     Derivative  
Debt   Amount     Discount     Discount     Costs     Notes Payable     Liability  
                                     
Note Payable - BS   $ 125                             $ 125          
Note Payable - SF     60                               60          
Note Payable - SD     15,000                               15,000          
Note Payable - NW     715                               715          
Note Payable - MC #2     1,300                               1,300          
Convertible Note Payable - CB (5%)     -                               -       1,358  
Convertible Note Payable - LGC (8%) BEN     50,000                               50,000       82,788  
Convertible Note Payable - LGC (8%) BEN     46,803                               46,803       76,566  
Convertible Note Payable - LGC (9%)     50,000                               50,000       81,797  
Convertible Notes Payable- SO (8%)     25,452       (446 )     (6,893 )     (410 )     17,703       41,481  
Convertible Notes Payable- BBCG (9%)     157,895       (5,234 )     (155,738 )             (3,077 )     220,833  
    $ 347,350     $ (5,680 )   $ (162,631 )   $ (410 )   $ 178,628     $ 504,823  

 

As of March 31, 2017, the convertible notes payable can be converted into approximately 82,730,976 shares of common stock.

 

Note 6. DERIVATIVES AND FAIR VALUE INSTRUMENTS

 

The Company applied paragraph 815-10-05-4 of the FASB Accounting Standards Codification to the 5% Convertible Notes Payable issued June 12th 2015 and the 8% Convertible Note payable issued June 25th 2015 and for the 8% Convertible Notes Payable issued January 7, 2016 and March 7, 2016 and the 9% Convertible Note payable issued October 1, 2016. Based on the guidance in paragraph 815-10-05-4 of the FASB Accounting Standards Codification the Company concluded these instruments were required to be accounted for as derivatives on issuance date. The Company records the fair value of the Convertible Notes Payable and certain warrants that are classified as derivatives on issuance date and the fair value changes on each reporting date reflected in the consolidated statements of operations as “Gain (loss) on derivative liabilities.” These derivative instruments are not designated as hedging instruments under paragraph 815-10-05-4 of the FASB Accounting Standards Codification and are disclosed on the balance sheet under Derivative Liabilities.

 

  25  

 

 

Medifirst Solutions, Inc.

Notes to Consolidated Financial Statements
March 31, 2017

 

The Company follows 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 and paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. 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 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.

 

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

 

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. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

 

The carrying amounts of the Company’s financial assets and liabilities, such as cash, prepayments and other current assets, accounts payable, and accrued expenses, approximate their fair values because of the short maturity of these instruments.

 

  26  

 

 

Medifirst Solutions, Inc.

Notes to Consolidated Financial Statements
March 31, 2017

 

The Company’s Level 3 financial liabilities consist of the 5% Convertible Notes Payable issued June 12th 2015 and the 8% Convertible Note payable issued June 25th 2015 and for the 8% Convertible Notes Payable issued January 7, 2016 and March 7, 2016 and the 9% Convertible Note payable issued October 1, 2016, for which there is no current market for these securities such that the determination of fair value requires significant judgment or estimation. We have valued the automatic conditional conversion, re-pricing/down-round, change of control; default and follow-on offering provisions using a lattice model, with the assistance of a valuation consultant, for which management understands the methodologies. These models incorporate transaction details such as Company stock price, contractual terms, maturity, risk free rates, as well as assumptions about future financings, volatility, and holder behavior as of issuance and December 31, 2016. The primary assumptions include: projected annual volatility of 98%-223%; the follow-on securities purchase option; the conversion feature as a percentage of Market; automatic/conditional conversions; market price trigger events.

 

As of March 31, 2017 the Company’s derivative financial instruments included:

 

1) Embedded derivatives associated with certain of the Company’s unsecured convertible notes payable. The Company’s 5 % convertible notes payable and 8% convertible notes payable and 9% convertible note payable issued to unrelated investors is a hybrid instrument, which warrants separate accounting as a derivative instrument. The embedded derivative feature has been bifurcated from the debt host contract, referred to as the Derivative Liability, which resulted in a reduction of the initial carrying amount (as unamortized discount) of the Convertible Notes Payable. The unamortized discount is amortized to interest expense using the effective interest method over the life of the Notes. The embedded derivative feature includes the conversion feature within the notes and an early redemption option. The compound embedded derivatives within the convertible notes have been recorded at fair value at the date of issuance; and are marked-to-market each reporting period with changes in fair value recorded to the Company’s statement of operations as Change in fair value of derivative liabilities.

 

The 5% Convertible Note Payable and the 8% Convertible Notes Payable and the 9% convertible note payable are valued at March 31, 2017. The following assumptions were used for the valuation of the embedded derivative:

 

- The stock price of $0.0032 increased to $0.0091 in this period (basis for the variable conversion price) would fluctuate with the Company projected volatility;

 

- An event of default for the Convertible Note would occur 0% of the time, increasing 1.00% per month to a maximum of 5.0%;

 

- Alternative financing for the Convertible Note would be initially available to redeem the note 0% of the time and increase monthly by 1% to a maximum of 10%;

 

- Capital raising events (a single financing at 1 month from the valuation date) are a factor for the VV to LG Convertible Note. The full reset events projected to occur based on future stock issuance (single event) resulting in a reset exercise price.

 

- The monthly trading volume would average $262,255 and would increase at 5% per month; ownership limits conversion across LG’s 6 notes based on 4.99% with shares outstanding increasing monthly by 1%.

 

- The variable conversion price of 50% to 58% over 3 to 20 trading days would have effective rates of 35.76% to 49.73%;

 

- The Note Holders would automatically convert the notes early (and not hold to maturity) with variable conversion prices and full ratchet resets if the registration was effective and not in default;

 

- The projected annual volatility for each valuation period was based on the historical volatility of the company:

 

12/31/2016   154%   1/23/2017   152%
1/10/2017   159%   3/6/2017   165%
1/17/2017   149%   3/26/2017   168%
1/19/2017   171%   3/31/2017   174%

 

  27  

 

 

Medifirst Solutions, Inc.

Notes to Consolidated Financial Statements
March 31, 2017

 

The foregoing assumptions are reviewed quarterly and are subject to change based primarily on management’s assessment of the probability of the events described occurring. Accordingly, changes to these assessments could materially affect the valuation.

 

The Company’s derivative liabilities on convertible notes payable are presented at market value in the financial statements at March 31, 2017 as follows:

 

Convertible Note   Derivative Treatment Date   Maturity Date   Principal Note
Amount
    Original Derivative Valuation     Derivative Valuation December 31, 2017     Quarter Ended March 31, 2017 Issuances     Quarter Ended March 31, 2017 Conversions     Quarter Ended March 31, 2017 Mark-to- Market     Derivative Valuation March 31, 2017  
                                                   
8% Convertible Note Payable- issued 5/2/2016   10/1/2016   5/2/2017   $ 57,750     $ 58,355     $ 58,355             $ (34,680 )   $ 17,806     $ 41,481  
                                                                 
5 % Convertible Note- Payable - issued 6/12/2015   4/12/2016   1/7/2017     35,863       37,827       918                       440     $ 1,358  
                                                                 
9% Convertible Notes Payable- issued 10/01/2016   3/26/2017   3/27/2018     157,895       56,956               162,463               58,370     $ 220,833  
                                                                 
8% Convertible Notes Payable- issued January 7, 2016   1/7/2016   1/7/2017     105,000       87,287       21,395               (136,759 )     115,364     $ -  
                                                                 
8% Convertible Notes Payable- issued January 7, 2016   1/7/2016   1/7/2017     50,000       15,803       15,803                       66,985     $ 82,788  
                                                                 
8% Convertible Notes Payable- issued March 7, 2016   3/7/2016   3/7/2017     50,000       87,538       36,449                       45,348     $ 81,797  
                                                                 
8% Convertible Notes Payable- issued March 7, 2016   3/7/2016   1/7/2017     46,803       82,115       15,894                       60,672     $ 76,566  
                                                                 
            $ 503,311     $ 425,881     $ 148,814     $ 162,463     $ (171,439 )   $ 364,985     $ 504,823  

 

The Company’s total mark-to-market fair value adjustment ((income)/expense) for the quarter ended March, 2017 amounted to $364,985.

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Medifirst Solutions, Inc.

Notes to Consolidated Financial Statements
March 31, 2017

 

Note 7. STOCKHOLDERS’ EQUITY

 

The Company has authorized 1,500,000,000 shares of common stock with a par value of $0.0001 per share. There were 390,395,684 and 225,847,976 shares of common stock issued and outstanding at March 31, 2017 and December 31, 2015, respectively.

  

The Company has authorized 1,000,000 shares of Series A preferred stock with a par value of $0.0001 per share. At December 31, 2016 and December 31, 2015, 50,000 shares of Series A preferred stock were issued and outstanding. The preferred stock has preferential voting rights of 100 votes per outstanding share.

 

The Company has authorized 50,000 shares of Series B convertible preferred stock with a par value of $0.0001 per share. At December 31, 2016 there were 39,000 shares issued of which 12,900 shares of Series B preferred were converted into common stock in accordance with the terms of the Series B Preferred stock. Therefore; there were 26,100 shares outstanding at December 31, 2016. The Series B preferred stock has no voting rights. During the quarter ended March 31, 2017, 18,100 shares of Series B preferred shares were converted into common stock in accordance with the terms of the Series B preferred stock. As of result there were 8,000 shares of Series B preferred shares outstanding at March 31, 2017. The holders of the Series B convertible preferred stock have the right to convert the same into Common Stock of the Corporation at the ratio of one (1) share of Series B Convertible Preferred for five hundred (500) shares of Common Stock.

 

During the quarter ended March 31, 2016, the Company issued an aggregate 4,787,129 shares of common stock at prices ranging from $0.00275 to $0.003355 per share as partial conversion of notes.

 

During the quarter ended March 31, 2016, the Company issued 1,700,000 shares of common stock upon conversion of 3,400 shares of Series B preferred stock.

 

During the quarter ended March 31, 2016, the Company issued 10,000 shares of Series B Preferred stock in settlement of the $50,000 liability to a related party for the purchase of inventory.

 

During the quarter ended June 30, 2016, the Company issued an aggregate 10,683,804 shares of common stock at prices ranging from $0.0028 to $0.0044 per share as partial conversion of notes.

 

During the quarter ended June 30, 2016 the Company amended a Convertible Debenture originally issued June 12, 2015. The Company issued 300,000 shares to the debenture holder for the main purpose of extending the maturity date to one year from the date of the amendment.

 

During the quarter ended June 30, 2016, the Company issued 1,950,000 shares of common stock upon conversion of 3,900 shares of Series B preferred stock.

 

During the quarter ended June 30, 2016, the Company issued 1,100,000 shares of common stock upon conversion of 2,200 shares of Series B preferred stock.

 

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Medifirst Solutions, Inc.

Notes to Consolidated Financial Statements
March 31, 2017

 

During the quarter ended June 30, 2016, the Company issued 1,700,000 shares of common stock upon conversion of 3,400 shares of Series B preferred stock.

 

During the quarter ended June 30, 2016, the Company issued 4,000 shares of Series B Preferred stock in settlement of the $20,000 liability to a related party for the purchase of a trademark.

 

On April 15, 2016 the Company entered into a Business Consulting Agreement with a Michigan limited liability company (“Consultant”). The agreement provides for the Company retaining the Consultant for 125 days for general business and product development services. The Consultant shall be paid $750 per month in cash and 500,000 shares of common stock of the Company valued at $5,000 as of the effective date and another 500,000 common shares upon determination of the Company in its sole and absolute discretion.

 

During the quarter ended June 30, 2016 pursuant to the Business Consulting Agreement, the Company issued 500,000 shares of common stock at $0.01 per share for services provided to the Company.

 

During the quarter ended September 30, 2016, the Company issued an aggregate 39,043,730 shares of common stock at prices ranging from $0.0001 to $0.0092 per share as partial conversion of notes.

 

During the quarter ended September 30, 2016, the Company issued 4,000,000 shares of common stock at $0.0092 per share for services provided to the Company.

 

During the quarter ended September 30, 2016, the Company issued an aggregate 13,500,000 shares of common stock at prices ranging from $0.0001 to $0.0092 per share for services provided to the Company.

 

During the quarter ended December 31, 2016, the Company issued an aggregate 78,581,563 shares of common stock at prices ranging from $0.0012 to $0.0054 per share as partial conversion of notes.

 

During the quarter ended December 31, 2016, the Company issued an aggregate 36,900,000 shares of common stock at prices ranging from $0.0012 to $0.0054 per share for services provided to the Company.

 

During the quarter ended March 31, 2017, the Company issued an aggregate 43,000,000 shares of common stock at prices ranging from $0.0028 to $0.0094 per share for services provided to the Company.

 

During the quarter ended March 31, 2017, the Company issued an aggregate 112,497,708 shares of common stock at prices ranging from $0.0001 to $0.0028 per share as partial conversion of notes.

 

During the quarter ended March 31, 2017, the Company issued an aggregate 9,050,000 shares of common stock for conversion of 18,100 shares of Preferred Series B stock.

 

  30  

 

 

Medifirst Solutions, Inc.

Notes to Consolidated Financial Statements
March 31, 2017

 

Note 8. COMMITMENTS AND CONTINGENCIES

 

The Company currently has three office locations. It rents offices on a month-to-month basis from the Company’s President and stockholder for $525 per month which amounted to $1,575 for the quarter-ended March 31, 2017. The Company also has ready-to-go office space available to be used for meetings etc. at a nominal cost of approximately $100 per month with no commitment. The cost of this space for the quarter-ended March 31, 2017 was $297. On September 12th 2016 the Company entered into a commercial lease agreement for office premises at a cost of $650 per month for a one-year term with the option to renew for one extended term of three years. The cost of this space for the quarter ended March 31, 2017 was $1,950.

 

Total rent expense for the quarter ended March 31, 2017 and 2016, totaled $3,822 and $2,071.

 

The Company has agreements with consultants for ongoing services to be rendered with the following commitments:

 

    Commitment   Term
         
Consultant - FDA requirements and compliance   $2,000 per month   12 Months
         
Consultant - capital formation and market services   Various equity percentage issuances of restricted stock for fundings   6 Months
         
Consultant - tradeshow attendance, strategy and collaboration, coordination regarding FDA compliance, manufacturing operations, sales and marketing, other related services   $10,000 per month (payable quarterly in cash or common stock from the 2016 Equity Incentive Plan)   12 Months

 

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Medifirst Solutions, Inc.

Notes to Consolidated Financial Statements
March 31, 2017

 

Note 9. INCOME TAXES

 

The Company’s deferred tax asset consists primarily of carryforward net operating losses (NOLs). The Company believes that, at this time, it is more likely than not that the benefit of the NOLs will not be realized and has therefore recorded a full valuation allowance.

 

The income tax benefit differs from the amount computed by applying the statutory federal and state income tax rates to the loss before income taxes. The sources and tax effects of the differences are as follows:

 

    December 31,
2016
    December 31,
2015
 
             
Statutory federal income tax rate     34 %     34 %
State income taxes, net of federal taxes     9 %     9 %
Valuation allowance     (43 )%     (43 )%
Effective income tax rate     0 %     0 %

 

As of December 31, 2016, the Company has a net operating loss carryforward of approximately $1,125,667 to reduce future federal taxable income which begins to expire in the year 2030. The Company is also subject to corporate taxes in the State of New Jersey which has similar net operating loss carryover provisions which start to expire in the year 2030.

 

The Company currently has no federal or state tax examinations in progress, nor has it had any federal or state examinations since its inception. All of the Company’s open tax years beginning in tax year 2013 are subject to federal and state tax examinations.

 

Note 10. RELATED PARTY TRANSACTIONS

 

In August 2015, the Company acquired 100% of the issued and outstanding common stock of Medical Lasers Manufacturer, Inc. (“MLM”) from a stockholder and officer of the Company for 20,000 common shares which were valued at $0.001 per share. All intercompany transactions were eliminated during consolidation.

 

As more fully described in Note 3 to the Consolidated Financial Statements, the Company owed the following amounts to related parties as of the following:

 

    March 31,     December 31,  
    2017     2016  
Due to Related Party   $ 8,921     $ 8,921  
Due to officer/stockholder     16,630       10,555  
Due to other stockholders     17,200       5,975  
Total Related Party Obligations   $ 42,751     $ 25,451  

 

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Medifirst Solutions, Inc.

Notes to Consolidated Financial Statements
March 31, 2017

 

The company has entered into an employment agreement with its Chief Executive Officer (CEO) for the five year period beginning January 1, 2012. The agreement provides for base compensation, annual bonus, benefits, vacation and reimbursements. Under this agreement, the base compensation of the Company’s CEO is $100,000 per annum which has been accrued for the years ended December 13, 2015 and 2014. In mid-year 2016 the Company commenced payroll and is paying the CEO for current wages in this manner. During the year ended December 31, 2016, $18,974 in accrued compensation was paid. Accrued compensation in the amount of $30,000 was converted to shares of common stock during 2015.

 

In August 2015, MLM acquired a trademark from the son of the Company’s President for $20,000 due 90 days from the date of acquisition. During the quarter ended June 30, 2016, the Company issued 3,400 shares of Preferred Series B stock as settlement on this liability. Due to the uncertainty of future cash flows from the trademark management has deemed it to be impaired and recorded an impairment expense of $20,000 at September 30, 2015.

 

In August 2015, subsequent to the date the Company acquired MLM, MLM purchased $50,000 in inventory from the son of the Company’s President. The inventory consisted of 20 hand-held laser devices. During the quarter-ended March 31, 2016, 10,000 shares of Series B Preferred stock were issued in settlement of this liability.

 

As more fully described in Note 1-Intangible Asset-Licensing Agreement, on March 8th 2016 (with an effective date of October 1, 2015) the Company entered into a Licensing Agreement with a Florida Corporation (Licensor) that is owned by a related party. The Company issued 25,000 shares of Series B Preferred stock to the Licensor as partial consideration for the Licensing agreement plus a $150,000 promissory note to the Licensor for the balance of the consideration. During the quarter-ended March 31, 2016, 3,400 shares of Series B Preferred stock were converted into 1,700,000 shares of common stock in accordance with the terms of the Series B Preferred stock. During the quarter ended March 31, 2017, 18,100 shares of Series B preferred stock was converted in 9,050,000 shares of common stock in accordance with the terms of the Series B Preferred stock.

 

Note 11. BASIS OF REPORTING - GOING CONCERN

 

The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business.

 

The Company has incurred losses from inception of approximately $2,948,991   which, among other factors, raises substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon management’s plans to raise additional capital from the sale of stock and to receive additional financing and to commence sales of it’s flagship product and create revenue. The accompanying financial statements do not include any adjustments that might be required should the Company be unable to continue as a going concern.

 

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Medifirst Solutions, Inc.

Notes to Consolidated Financial Statements
March 31, 2017

 

Note 12. STOCK COMPENSATION - EQUITY INCENTIVE PLAN

 

In July 2016, the Company adopted the Medifirst Solutions, Inc. 2016 Equity Incentive Plan (the “Plan”) pursuant to which the Company may grant stock options, restricted stock purchase offers and other equity-based awards up to an aggregate of 20,000,000 shares of common stock. The Plan is designed to retain directors, executives and selected employees and consultants and reward them for making contributions to the success of the Company. These objectives are accomplished by making long-term incentive awards under the Plan thereby providing Participants with a proprietary interest in the growth and performance of the Company.

 

On December 6th, 2016 the company amended the terms of the Plan and filed an S-8 Registration Statement with the Securities and Exchange Commission (“SEC”) increasing the number of shares permitted to be issued under the Plan to 32,000,000.

 

During the quarter ended March 31, 2017, the Company issued from the Plan a total of 27,100,000 shares of common stock to non-employees for services rendered. As of March 31, 2017 there is a balance of -0- shares available for future issuance under the Medifirst Solutions, Inc. 2016 Equity Incentive Plan.

 

Note 13. SUBSEQUENT EVENTS

 

Subsequent to the quarter ended March 31, 2017, the Company issued an aggregate of 21,000,000 shares of Common Stock for services rendered by consultants and professionals.

 

Subsequent to the quarter ended March 31, 2017, the Company issued an aggregate 86,868,815 shares of Common Stock upon conversions of an aggregate principal amount equal to approximately $200,150 outstanding convertible promissory notes.

 

In May 2017, the Company adopted the Medifirst Solutions, Inc. 2017 Equity Incentive Plan (the “Plan”) pursuant to which the Company may grant stock options, restricted stock purchase offers and other equity-based awards up to an aggregate of 125,000,000 shares of common stock. The Plan is designed to retain directors, executives and selected employees and consultants and reward them for making contributions to the success of the Company. These objectives are accomplished by making long-term incentive awards under the Plan thereby providing Participants with a proprietary interest in the growth and performance of the Company. As of May 19, 2017 there are 104,000,000 shares available for future issuance under the Medifirst Solutions, Inc. 2017 Equity Incentive Plan.

 

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

 

In this report, unless the context indicates otherwise, the terms “Medifirst,” “Company,” “we,” “us,” and “our” refer to Medifirst Solutions, Inc., a Nevada corporation, and its subsidiary, Medical Lasers Manufacturer, Inc., a Nevada corporation.

 

Forward-Looking Statements

 

The information in this report contains forward-looking statements. All statements other than statements of historical fact made in this report are forward looking. In particular, the statements herein regarding industry prospects and future results of operations or financial position are forward-looking statements. These forward-looking statements can be identified by the use of words such as “believes,” “estimates,” “could,” “possibly,” “probably,” anticipates,” “projects,” “expects,” “may,” “will,” or “should” or other variations or similar words. No assurances can be given that the future results anticipated by the forward-looking statements will be achieved. Forward-looking statements reflect management’s current expectations and are inherently uncertain. Our actual results may differ significantly from management’s expectations.

 

The following discussion and analysis should be read in conjunction with our financial statements, included herewith. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of our management.

 

Plan of Operation

 

Medifirst Solutions, Inc. was incorporated in Nevada in November 2010. Our principal executive office is located at 4400 U.S. 9 South, Suite 1000, Freehold NJ, 07726, and our telephone number is (732) 786-8044. Our website address is www.medifirstsolutions.com. The Company began as a development stage company focused on developing products within the healthcare market for both consumer and professional applications. In 2013, Medifirst began developing its own line of disposable electronic cigarettes (“e-cigs”) but the e-cig industry subsequently encountered significant government push-back to try to heavily regulate their use and production, including a ban on e-cigs. In order to avoid the uncertainties and costs of the regulated e-cig industry, Medifirst entered into an agreement with Panacea Photonics Corporation that allowed Medifirst to exclusively market and distribute a series of Botanical LED Light Therapy Systems, including skin care and pain relief products. Under the terms of the marketing and distribution agreement, Medifirst became the exclusive distributor of the light therapy products in both New York and New Jersey. In 2014, in addition to the LED light therapy division, the Company became a dealer for Atmospheric Water Solutions, a Florida based company that sells water generators that makes drinking water from air. In 2015, the Company made a strategic decision to add laser technology to its health and wellness division and discontinue its efforts with its light therapy and water generator products. Management believed that it was in the best interest of the Company and its shareholders to narrow its focus and business to developing its laser technology, which lasers are expected to target professionals that treat pain and inflammation, as well as cosmetic and skincare related conditions. In connection with the changed focus, the Company began to develop a product that if successfully cleared by the U.S. Food and Drug Administration, would be the first in a series of proprietary medical devices for the Company. The Company entered into an exclusive manufacturing agreement to produce what is now its hand-held mobile laser system known as “The Time Machine Program” for which the Company purchased the registered trademark. Furthermore, the Company purchased inventory from the developer of the lasers.

 

Additionally, Medifirst, through its wholly-owned subsidiary Medical Laser Manufacturer, Inc., entered into a Product and Know-How License Agreement (the “License Agreement”) with Laser Lab Corp to license the use of various intellectual property in connection with seeking regulatory approval for and marketing, distributing and selling The Time Machine Series Lasers (“TTM Series”). The License Agreement grants a license to the Company to use various technology, trade secrets, invention records, research records, reports and data, test results, clinical studies, engineering and technical data, designs, production specifications, processes, methods, procedures, facilities and know-how related to the inventions identified in the License Agreement, which inventions include the infrared laser in the TTM Series for which the Company previously filed a Premarket Notification 510(k) submission with the FDA. Although the License is not exclusive, Laser Lab Corp may not license the know-how or inventions to a third party and may only directly, or through its wholly-owned subsidiary, use the know-how and inventions. In addition to the license granted to the Company, the License Agreement provides for an option to license other fields of use of the infrared laser in the TTM Series, as well as additional wavelengths and colors, allowing the Company to develop a broader range of product offerings in the future. Furthermore, Laser Lab Corp granted the Company a right of first refusal to consider matching any bona fide offer to license other technologies of Laser Lab Corp.

 

  35  

 

 

After having received clearance to market the infrared laser in the TTM Series, the Company has completed its internal controls and procedures as required by the FDA and has initiated its sales division, which has begun soliciting sales in both the U.S. and overseas.

 

During fiscal year 2015, we submitted to the FDA a Premarket Notification 510(k) for two of our lasers in the TTM Series, which submission noted the intended use of the lasers to treat specific skin conditions, including Vascular and Pigmented Lesions, as well as relief of muscle and joint pain, muscle spasms and inflammation. On July 8, 2016, we received clearance from the FDA to market its infrared Time Machine TTML-8102000 Laser Thermal Therapeutic Device.

 

Our auditors have issued a going concern opinion. This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next twelve (12) months. Our auditors’ opinion is based on the uncertainty of our ability to establish profitable operations. The opinion results from the fact that we have not generated significant revenues.  Accordingly, we must raise cash from operations or from investments by others in the Company to continue our operations.

 

Our sole officer and director is responsible for our managerial and organizational structure, which will include preparation of disclosure and accounting controls under the Sarbanes Oxley Act of 2002. When these controls are implemented, he will be responsible for the administration of the controls. Should he not have sufficient experience, he may be incapable of creating and implementing the controls which may cause us to be subject to sanctions and fines by the SEC which ultimately could cause you to lose your investment.

 

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2017 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2016


Revenues

 

During the three months ended March 31, 2017 and 2016, the Company sold its first product for $9,955 and $-0-, respectively. The company is still in developmental stage and does not generate significant revenue .

 

Expenses

 

For the three months ended March 31, 2017 and 2016, expenses were $395,321 and $83,803, respectively. The reason for the increase in expenses was primarily due to substantial increases in: advertising and promotions costs, consulting fees, professional fees, lab testing and dues and subscriptions. These increases are in-line with the Company’s mission as they start to plan to enter the market with product.

 

Legal, Accounting and Professional Fees

 

For the three months ended March 31, 2017 and 2016 professional fees were $124,265 and $24,540, respectively. The substantial increases were due to additional accounting, consulting and professional fees incurred in the connection with accounting for derivatives, SEC compliance, legal services for an increased number of conversions and contracts, and general bookkeeping and financial statement preparation.

 

Other Income/(Expense)

 

For the three months ended March 31, 2017 and 2016, other income was $-0- and $1,167 respectively, and other expenses were ($456,019) and ($251,978), respectively. These changes were all due to the changes in fair value of derivatives for the quarter and interest expense on debt, amortization of original issue discount, amortization of deferred financing costs and derivative discount amortization.

 

  36  

 

 

Net Income/(Loss)

 

For the three months ended March 31, 2017 and 2016 the company had a net loss of ($841,798) and ($334,614).

 

Liquidity and Capital Resources

 

Since incorporation, we have financed our operations through the private placement of our common stock to selected investors and periodic borrowings from our stockholders. At March 31, 2017 and December 31, 2016, our principal sources of liquidity included cash of $101,768 and $165,017, respectively.

 

As of March 31, 2017, we did not have any significant commitments for capital expenditures.

 

If we do not generate sufficient cash flow to support our operations over the next twelve (12) months, in order to continue as a going concern we may need to raise additional capital by issuing capital stock in exchange for cash. There are no formal or informal agreements to attain such financing. The Company’s ability to obtain additional capital on acceptable terms is subject to a variety of uncertainties, including: investors’ perception of, and demand for, securities of companies in our industry; conditions of the U.S. and other capital markets in which we may seek to raise funds; future results of operations, financial condition and cash flow. Therefore, the Company’s management cannot assure that financing will be available in amounts or on terms acceptable to the Company, or if at all. Any failure by the Company’s management to raise additional funds on terms favorable to the Company could have a material adverse effect on the Company’s liquidity and financial condition.

 

Critical Accounting Policies

 

Our significant accounting policies are summarized in Note 1 of our consolidated financial statements. While all these significant accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause an effect on our consolidated results of operations, financial position or liquidity for the periods presented in this report.

 

Off Balance Sheet Arrangements

 

The Company has no off-balance sheet arrangements.

 

Recently Adopted Accounting Pronouncements

 

Please see Note 2 of our consolidated financial statements that describe the impact, if any, from the adoption of Recent Accounting Pronouncements.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

The Company is a smaller reporting company, as defined by Rule 229.10(f)(1) and is not required to provide the information required by this Item.

 

Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

Our management has evaluated, under the supervision and with the participation of our principal executive and principal financial officers, the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (the “Exchange Act”). Based on that evaluation, our principal executive and financial officers concluded that, as of the end of the period covered by this report, due to the inadequate recordation of certain transactions and communication of those transactions to those integral to our disclosure procedures, our disclosure controls and procedures were not effective in ensuring that information required to be disclosed in our Exchange Act reports is (1) recorded, processed, summarized and reported in a timely manner, and (2) accumulated and communicated to our management, including our principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosure. 

 

Changes in Internal Control over Financial Reporting

 

There have been no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

  37  

 

 

PART II. OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

None

  

I tem 2. Unregistered Sales of Equity Securities and Use of Proceeds.

   

Recent Sales of Unregistered Securities

 

During the 3-month period ended March 31, 2017, the Company issued 112,497,708 shares of Common Stock upon conversions of a principal amount equal to $316,211 of outstanding convertible promissory notes.

 

During the 3-month period ended March 31, 2017, the Company issued an aggregate of 9,050,000 shares of Common Stock upon conversion of an aggregate of 18,100 shares of Series B Preferred.

 

During the 3-month period ended March 31, 2017, the Company issued an aggregate of 3,900,000 shares of Common Stock for consulting services.

 

Subsequent to March 31, 2017 the Company issued 86,868,815 shares of Common Stock upon conversions of an aggregate principal amount of $200,150 of outstanding convertible promissory notes and $8,640 in accrued interest thereon .

 

Each of the foregoing transactions was exempt from the registrations requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof. In the alternative, the common stock issued upon the exercise of conversion rights is an exempt security pursuant to Section 3(a) (9) of the Securities Act of 1933, as amended.

 

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

 

None

 

Item 3. Defaults Upon Senior Securities.

 

None

 

Item 4. Mine Safety Disclosures

 

Not Applicable

 

Item 5. Other Information.

 

There have been no material changes to the procedures by which our security holders may recommend nominees to the board of directors.

 

  38  

 

 

Item 6. Exhibits.

 

31.1. Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   
31.2. Certification of the Chief Executive Officer and Principal Executive Officer Pursuant to 13a-14 and 15d-14 of the Securities Exchange Act of 1934.
   
32.1. Certification of the Chief Financial Officer and Principal Financial Officer Pursuant to 13a-14 and 15d-14 of the Securities Exchange Act of 1934.
   
101.INS XBRL Instance Document
   
101.SCH XBRL Taxonomy Extension Schema
   
101.CAL XBRL Taxonomy Extension Calculation Linkbase
   
101.DEF XBRL Taxonomy Extension Definition Linkbase
   
101.LAB XBRL Taxonomy Extension Label Linkbase
   
101.PRE XBRL Taxonomy Extension Presentation Linkbase

 

  39  

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this quarterly report to be signed on its behalf by the undersigned hereunto duly authorized.

 

May 22, 2017 By : /s/ Bruce Schoengood
   

Bruce Schoengood

Chief Executive Officer

(Principal Executive Officer)

 

  By: /s/ Bruce Schoengood
   

Bruce Schoengood

Chief Financial Officer

    (Principal Financial Officer)

 

 

40