Notes to Consolidated Financial Statements

March 31, 2019 (unaudited)

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. The company has started to hire a salesforce and sign distribution agreements in anticipation of future sales.

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 and foreign markets.

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.

On April 18, 2018, the Company incorporated Concierge Concepts Rx (CCRx), in the State of New Jersey, to be an 80% majority-owned subsidiary. In consideration for his contribution of know-how, CCRx’s co-founder, Walter Molokie, CCRx has agreed to issue a 20% minority interest in CCRx to Mr. Molokie and/or his designees.On July 1, 2018 the Company acquired 100% of the equity interest in Concierge Concepts Rx, Inc. (“CCRx”) with the total purchase price of $20. The fair value of the acquired entity was $20 since the entity was just recently formed and had no identifiable assets or liabilities. The $20 cash payment is for the purchase of CCRx common stock upon acquisition. Medifirst launched Concierge Concepts Rx, a new division focused on the pharmaceutical industry.CCRx that provides unique specialty drug consulting and niche billing services to independent pharmacies and retail pharmacy chains. This division commenced operations in the quarter ended September 30, 2018 with limited activity and is included in the accompanying consolidated financial statements.

The Consolidated financial statements include the accounts of MSI and its wholly owned subsidiaries, MLM and CCRx. 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.

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., and Concierge Concepts Rx (CCRx) (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, 2019, the consolidated results of its operations for the three-month periods ended March 31, 2019 and 2018, the consolidated change in stockholders’ equity for the three-month period ended March 31, 2019 and 2018 and the consolidated cash flows for the three-month periods ended March 31, 2017 and 2018. The results of operations for the three-month period ended March 31, 2019 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, 2018 included in the Company’s Annual Report on Form 10-K for the year then ended.

Some items in the prior year financial statements were reclassified to conform to the current presentation. Reclassifications had no effect on prior year net income or shareholders’ equity.

Effective July 23, 2018, the Company effected a 1-for-1,000 reverse stock split of its issued and outstanding common stock. The number of shares of common stock issued and outstanding post- reverse stock split is 1,404,073. All fractional shares have been rounded up to the next whole share. There is no reduction in the number of the Company’s shareholders of record. Unless otherwise noted, impacted amounts and share information included in the financial statements and notes thereto have been retroactively adjusted for the reverse stock split as if such reverse stock split occurred on the first day of the first period presented.

Medifirst Solutions, Inc.

Notes to Consolidated Financial Statements

March 31, 2019 (unaudited)

Revenue Recognition

The Company also derives consulting revenue from it’s CCRx division. Such revenue is recognized at the time services are performed.

The Company adopted the new accounting standard on revenue recognition, ASU No. 2014-09 (Topic 606) “Revenue from Contracts with Customers”, which became effective on January 1, 2018. Since the Company was classified as an Emerging Growth Company under SEC rules, ASC 606 was not adopted until January 1, 2019.

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. The Company’s revenue recognition policy standards include the following elements under ASU No. 2014-09 (Topic 606):

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, 2019 or December 31, 2018.

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, their carrying cases and goggles.

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.

Medifirst Solutions, Inc.

Notes to Consolidated Financial Statements

March 31, 2019 (unaudited)

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:

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. On September 15, 2017 the Note was amended to include provisions to allow conversion of the Note into common stock of the Company. On September 25, 2017, $16,250 in principal on this note was satisfied by the conversion into 25,000,000 shares of the Company’s common stock. During the quarter ended June 30, 2018, the original noteholder assigned $20,000 in principal to an unrelated third-party. There were $32,550 in cash principal paydowns to the original noteholder during the year ended December 31, 2018. There were an additional $33,345 in conversions to common stock that took place on these two notes during the year ended December 31, 2018. During the quarter-ended March 31, 2019 there were $5,700 in principal paydowns to the original noteholder and $3,800 in conversions to common stock. The principal balance on this note as of March 31, 2019 is $41,505 to the original noteholder and $16,650 in principal balance to the new unrelated third-party noteholder.

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 its ten-year period and charged to income on a straight-line basis.

Product Warranty

We generally provide a one-year warranty on our products. Currently no material evaluations or studies have been performed to obtain warranty data since there are so few sold products outstanding. As sales increase, the Company will estimate future warranty costs from historical data and trends of product reliability and costs of repairing and replacing defective products.

Debt Issue 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).

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. 

Medifirst Solutions, Inc.

Notes to Consolidated Financial Statements

March 31, 2019 (unaudited)

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. As described in Note 5 to the financial statements, as of March 31, 2019, convertible debt can be converted into approximately 49,753,279 shares of common stock.

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, 2019, 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. The Company adopted the provisions of ASU 2018-07 in the quarter beginning January 1, 2019. The adoption of ASU 2018-07 did not have any impact on the Company’s financial statement presentation or disclosures. The Company did not have any equity instruments that required revaluation under this new standard. 

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 December 31, 2018 and March 31, 2019, the Company had $83,382 and $275,705 in cash equivalents respectively.

Medifirst Solutions, Inc.

Notes to Consolidated Financial Statements

March 31, 2019 (unaudited)

Recent Pronouncements

The Company is no longer an “emerging growth company” as defined in Section 2(a)(19) of the Securities Act.

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-15, “Intangibles-Goodwill and Other-Internal-Use Software (Topic 350): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract”, which align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). ASU 2018-15 is effective for the Company beginning in the first fiscal quarter of 2022, with early adoption permitted. The Company is currently evaluating the impact of this ASU on the consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments,” which amends the guidance on measuring credit losses on financial assets held at amortized cost. The amendment is intended to address the issue that the previous “incurred loss” methodology was restrictive for an entity’s ability to record credit losses based on not yet meeting the “probable” threshold. The new language will require these assets to be valued at amortized cost presented at the net amount expected to be collected with a valuation provision. This update standard is effective for fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact of this ASU on the consolidated financial statements.

In August 2018, the Securities and Exchange Commission (the “SEC”) issued a final rule that amends certain of the SEC’s disclosure requirements, including requirements relating to disclosures about changes in stockholders’ equity. For Quarterly Reports on Form 10-Q, the final rule extends to interim periods the annual requirement in Rule 3-04 of Regulation S-X, to disclose (1) changes in stockholders’ equity and (2) the amount of dividends per share for each class of shares (as opposed to common stock only, as previously required). Pursuant to the final rule, registrants must now analyze changes in stockholders’ equity, in the form of a reconciliation, for “the current and comparative year-to-date [interim] periods, with subtotals for each interim period,” i.e., a reconciliation covering each period for which an income statement is presented. Rule 3-04 of Regulation S-X permits the disclosure of changes in stockholders’ equity (including dividend-per-share amounts) to be made either in a separate financial statement or in the notes to the financial statements. The final rule is effective for all filings made on or after November 5, 2018. SEC staff has indicated it would not object if a registrant’s first presentation of the changes in shareholders’ equity is included in its Form 10-Q for the quarter that begins after the effective date of the amendments. Therefore, the Company conformed to this rule in its Quarterly Report on Form 10-Q for the quarter ended March 31, 2019.   

Depreciation expense was $159 and $159, for the quarters ended March 31, 2019 and 2018 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, 2019 and December 31, 2018, respectively. The loan bears no interest and is payable on demand. See Note 10 for additional related party transactions.

Medifirst Solutions, Inc.

Notes to Consolidated Financial Statements

March 31, 2019 (unaudited)

Note 4. LOANS PAYABLE - STOCKHOLDERS

During the quarter ended March 31, 2019 and the year ended December 31, 2018 a stockholder of the Company advanced the Company $-0- and $-0- respectively. The loan has a balance of $6,375 at March 31, 2019 and $8,375 at December 31, 2018, respectively. 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 transaction, the note holder transferred $2,500 of note principal to third parties and the new holders converted their holdings into 2,500 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 shares of the Company’s common stock. At March 31, 2019 and December 31, 2018, the loan balance was $100 and $100, respectively.

At March 31, 2019 and December 31, 2018, the Company was indebted to a stockholder in the amount of $1,000 and $1,000, respectively. The loan has an interest rate of 26.7%. Principal and accrued interest were due and payable on January 1, 2014.

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 shares of common stock as follows:

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 shares of common stock.

In September 2013, the new note holder converted $100 of note principal into 1,000 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 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:

Subsequent to these conversions there remains $125 in note principal outstanding at March 31, 2019.

Note Payable-SF

In July 2013, the holder of the second note converted $240 of note principal into 400 shares of the Company’s common stock at $0.0006 per share. At March 31, 2019 and December 31, 2018, 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 580,307 shares at March 31, 2019 and 347,936 shares at December 31, 2018.

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 shares of common stock as follows:

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 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 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 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 347,936 shares at December 31, 2018 and 49,753,279 shares at March 31, 2019.

Medifirst Solutions, Inc.

Notes to Consolidated Financial Statements

March 31, 2019 (unaudited)

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, 2019 and December 31, 2018, the remaining principal balance on this portion of the note is $715 and $715 respectively.

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 shares of common stock. During the same period, the current noteholder transferred $600 of the remaining principal balance to another investor who then converted the entire principal balance he received into 6,000 shares of common stock. During April 2017, the current noteholder converted $410 of remaining principal into 6,000 shares of common stock. There remains $890 in principal balance at March 31, 2019 and at December 31, 2018.

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 23,490 shares of common stock thereby leaving a principal balance of $25,452 on the note at December 31, 2017. During the first quarter of 2018, the noteholder converted $23,000 of the principle balance into 122,727 shares of common stock thereby leaving a principal balance of $2,452 on the note at June 30, 2018. During the quarter ended September 30, 2018, the noteholder converted the remaining balance of the note into 148,316 shares on common leaving no balance due on the note as of December 31, 2018. There is $12,896 in accrued interest and penalty assessments on this note as of December 31, 2018 which is included in accrued expenses payable on the balance sheet. During the quarter-ended March 31, 2019 the Company reached a settlement agreement with the noteholder where it paid in cash or through conversion all the outstanding interest and penalty and nothing is due to the noteholder as of March 31, 2019. The noteholder converted $5,813 of interest and penalty into  398,859 shares of common stock of the Company and $9,815 was paid in cash to the noteholder by the Company thereby resulting in a recognized loss on the extinguishment of the debt in the amount of $2,732. 

Convertible Notes Payable - Funding (8%)

On May 1, 2017, 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 $1,012,500. The back end-notes were all cancelled so only a total of $506,250 were actually funded. On May 1st, 2017 and June 2, 2017, the Company and the Investor conducted the first two closings under the Purchase Agreement, pursuant to which the Company issued to the Investor (i) a convertible redeemable note in principal amount of $131,250 (the “$131K Note”); and (ii) a convertible redeemable note in principal amount of $125,000 (the “$125K Note”). On July 10, 2017 and August 7, 2017, the Company and the Investor conducted the second two closings under the Purchase Agreement, pursuant to which the Company issued to the Investor two convertible redeemable notes each in the principal amount of $125,000;

The two notes issued May 1, 2017 ($131,250) and June 2, 2017 ($125,000) became convertible on October 28, 2017 and December 4, 2017 respectively and required derivative treatment at that time. The embedded derivative was bifurcated and accounted for separately along with the derivative discount. The derivative liability is marked-to-market each quarter with the resulting gain or loss valuation being reported in the statement of operations.

During the quarter ended December 31, 2017 (after the six-month waiting period) the holder of the original note in the principal amount of $131,250 converted $21,500 and $15,350 of the note’s principal balance into 35,058 and 39,714 shares of the Company’s common stock, respectively. The principal balance remaining on this convertible note is $94,400 as of December 31,2017. During the quarter ended March 31, 2018 the holder of the original note converted, through four separate conversion transactions, a total of $38,870 of the note’s principal balance into total of 193,384 shares of the Company’s common stock. During the quarter ended June 30, 2018 the holder of the original note converted $10,030 of the note’s principal balance into total of 62,015 shares of the Company’s common stock. During the quarter ended September 30, 2018 the holder of the original note converted $2,200 of the note’s principal balance into total of 69,439 shares of the Company’s common stock. During the quarter ended December 31, 2018 the holder of the original note converted $10,640 of the note’s principal balance and $1,312 of accrued interest into total of 148,545 shares of the Company’s common stock. During the quarter-ended March 31, 2019 the noteholder converted $21,125 in principal and $2,977 in accrued interest into 1,249,684 shares of common stock. The principal balance remaining on this convertible note is $11,535 as of March 31, 2019.

Convertible Notes Payable - JR (5%)

On August 2, 2017 the Company issued a convertible note payable (promissory note) to an investor in the principal amount of $50,000. The note matures on August 2, 2018 and bears interest at 5%. The note holder has the right at any time on or after the day that is six months from August 2, 2018 to convert any part or all of the outstanding unpaid principal balance into shares of the Company’s common stock at a fixed price of .003 per share. The embedded derivative on the note was valued and bifurcated effective October 1, 2018. During the quarter ended December 31, 2018, $4,500 in principal on this note was satisfied by the noteholder converting such amount into 150,000 shares of the Company’s common stock. During the quarter-ended March 31, 2019 the noteholder converted $3,300 in principal balance into 200,000 shares of the Company’s common stock. The remaining principal balance outstanding on the note is $42,200 as of March 31, 2019.

Medifirst Solutions, Inc.

Notes to Consolidated Financial Statements

March 31, 2019 (unaudited)

Convertible Notes Payable - MLM (10%)

As more fully described in Note 1 to the financial statements, 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 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. During the quarter-ended June 30, 2017, $18,986 in accrued interest was satisfied through the issuance of 17,273 shares of the Company’s common stock. On September 15, 2017 the Note was amended to include provisions to allow conversion of the Note into common stock of the Company. At such time the Note was valued with it’s embedded derivative and discount. On September 25, 2017, $16,250 in principal on this note was satisfied by the conversion into 25,000 shares of the Company’s common stock leaving a balance on the note of $133,750 at December 31, 2017. During the year ended December 31, 2018 the Company made cash paydowns to the noteholder in the total amount of $32,550. In addition, $30,195 in principal balance on the note was converted into 495,000 shares of the Company’s common stock. The ending principal balance on this note at December 31, 2018 is $51,005 to the original noteholder. During the year-ended December 31, 2018 the unrelated third-party noteholder converted $3,350 in principal balance into 120,000 shares of the Company’s common stock thereby leaving a principal balance to this unrelated noteholder in the amount of $16,650. During the quarter-ended March 31, 2019 the Company made principal paydowns in the amount of $5,700 to the original noteholder and the original noteholder converted $3,800 in principal balance into 200,000 shares of the Company’s common stock. The ending principal balance on this note at March 31, 2019 is $41,505 to the original noteholder and $16,650 to the unrelated third-party noteholder.

Convertible Notes Payable - LG (8%) (Notes 5 & 6)

On January 25, 2018 the Company issued a convertible note payable (promissory note) to an investor in the principal amount of $78,750. The note matures on January 25, 2019 and bears interest at 8%. The note holder has the right at any time on or after the day that is six months from January 25, 2018 to convert any part or all of the outstanding unpaid principal balance into shares of the Company’s common stock. The entire principal balance of $78,750 is outstanding as of March 31, 2019.

On June 4, 2018 the Company issued a convertible note payable (promissory note) to an investor in the principal amount of $52,500. The note matures on June 4, 2019 and bears interest at 8%. The note holder has the right at any time on or after the day that is six months from June 4, 2018 to convert any part or all of the outstanding unpaid principal balance into shares of the Company’s common stock. The entire principal balance of $52,500 is outstanding as of March 31, 2019.

Convertible Notes Payable - PULG (8%) (Notes 1 & 2)

On October 1, 2018 the Company issued a convertible note payable (convertible promissory note PULG (8%) Note 1) to an investor in the principal amount of $58,000. The note matures on April 1, 2020 and bears interest at 8%. The note holder has the right at any time on or after the day that is six months from October 1, 2018 to convert any part or all of the outstanding unpaid principal balance into shares of the Company’s common stock. The entire principal balance of $58,000 is outstanding as of March 31, 2019.

On November 19, 2018 the Company issued a convertible note payable (convertible promissory note PULG (8%) Note 2) to an investor in the principal amount of $65,000. The note matures on May 19, 2020 and bears interest at 8%. The note holder has the right at any time on or after the day that is six months from November 19, 2018 to convert any part or all of the outstanding unpaid principal balance into shares of the Company’s common stock. The entire principal balance of $65,000 is outstanding as of March 31, 2019.

Convertible Notes Payable - PULG (8%) (Notes 3, 4 & 5)

On January 24, 2019 the Company issued a convertible note payable (convertible promissory note PULG (12%) Note 3) to an investor in the principal amount of $43,000. The note matures on May 24, 2020 and bears interest at 12%. The note holder has the right at any time on or after the day that is six months from January 24, 2019 to convert any part or all of the outstanding unpaid principal balance into shares of the Company’s common stock. The entire principal balance of $43,000 is outstanding as of March 31, 2019.

On February 4, 2019 the Company issued a convertible note payable (convertible promissory note PULG (12%) Note 4) to an investor in the principal amount of $38,000. The note matures on November 30, 2019 and bears interest at 12%. The note holder has the right at any time on or after the day that is six months from February 4, 2019, 2018 to convert any part or all of the outstanding unpaid principal balance into shares of the Company’s common stock. The entire principal balance of $38,000 is outstanding as of March 31, 2019.

On March 26, 2019 the Company issued a convertible note payable (convertible promissory note PULG (8%) Note 5) to an investor in the principal amount of $43,000. The note matures on September 21, 2020 and bears interest at 8%. The note holder has the right at any time on or after the day that is six months from March 26, 2019 to convert any part or all of the outstanding unpaid principal balance into shares of the Company’s common stock. The entire principal balance of $43,000 is outstanding as of March 31, 2019.

Convertible Notes Payable - BR (12%) (Note 1)

On February 25, 2019 the Company issued a convertible note payable (convertible promissory note BR (12%) Note 1) to an investor in the principal amount of $65,000. The note matures on February 25, 2020 and bears interest at 12%. The note holder has the right at any time on or after the day that is six months from February 25, 2019 to convert any part or all of the outstanding unpaid principal balance into shares of the Company’s common stock. The entire principal balance of $65,000 is outstanding as of March 31, 2019.

Medifirst Solutions, Inc.

Notes to Consolidated Financial Statements

March 31, 2019 (unaudited)

Convertible Notes Payable - CB (8%) (Note 1)

On February 27, 2019 the Company issued a convertible note payable (convertible promissory note CB (8%) Note 2) to an investor in the principal amount of $51,500. The note matures on August 20, 2020 and bears interest at 8%. The note holder has the right at any time on or after the day that is six months from February 27, 2019 to convert any part or all of the outstanding unpaid principal balance into shares of the Company’s common stock. The entire principal balance of $51,500 is outstanding as of March 31, 2019.

Convertible Notes Payable - GS (8%) (Note 1)

On February 20, 2019 the Company issued a convertible note payable (convertible promissory note GS (8%) Note 1) to an investor in the principal amount of $54,000. The note matures on August 20, 2020 and bears interest at 8%. The note holder has the right at any time after issuance to convert any part or all of the outstanding unpaid principal balance into shares of the Company’s common stock. The entire principal balance of $54,000 is outstanding as of March 31, 2019.

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, 2019   as follows:

As of March 31, 2019, the convertible notes payable can be converted into approximately 49,753,279 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, the 9% Convertible Note payable issued October 1, 2016 the 8% Convertible Notes Payable issued January 25, 2018 and June 4, 2018, the 8% convertible notes payable issued October 1, 2018 and November 19, 2018, the 8% convertible notes payable issued February 20, 2019 and February 27, 2019 and March 26, 2019 and to the 12% convertible notes payable issued January 28, 2019 and February 6, 2019 and February 25, 2019. 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 “Change in Fair Value - derivatives.” 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.

Medifirst Solutions, Inc.

Notes to Consolidated Financial Statements

March 31, 2019 (unaudited)

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 unobservable 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.

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 May 1, 2017 and June 2, 2017 and July 10, 2017 and August 15, 2017, the 9% Convertible Note payable issued October 1, 2016, The 8% Convertible note payable issued January 25, 2018, the 8% Convertible note payable issued June 4, 2018 and the 8% convertible notes payable issued October 1, 2018 and November 19, 2018, the 8% convertible notes payable issued February 20, 2019 and February 27, 2019 and March 26, 2019 and to the 12% convertible notes payable issued January 28, 2019 and February 6, 2019 and February 25, 2019 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 March 31, 2019. The primary assumptions include: projected annual volatility of 296%-417%; 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, 2019 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, the 9% convertible note payable and the 12% convertible notes payable are valued at March 31,2019. The following assumptions were used for the valuation of the embedded derivative:

Medifirst Solutions, Inc.

Notes to Consolidated Financial Statements

March 31, 2019 (unaudited)

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, 2019 as follows:

The Company’s mark-to-market fair value adjustment ((income)/expense) for the quarter ended March 31, 2019 totaled $437,126. 

Medifirst Solutions, Inc.

Notes to Consolidated Financial Statements

March 31, 2019 (unaudited)

Note 7. STOCKHOLDERS’ EQUITY

Effective July 23, 2018, the Company effected a 1-for-1,000 reverse stock split of its issued and outstanding common stock. The number of shares of common stock issued and outstanding post- reverse stock split is 1,404,073. All fractional shares have been rounded up to the next whole share. There is no reduction in the number of the Company’s shareholders of record. Unless otherwise noted, impacted amounts and share information included in the financial statements and notes thereto have been retroactively adjusted for the reverse stock split as if such reverse stock split occurred on the first day of the first period presented. As a result of the aforementioned reverse stock split, additional paid-in-capital was increased by $140,169 as of December 31, 2018 on the balance sheet with a corresponding decrease in the par value of common stock issued as of the same dates.

The Company has authorized 4,000,000,000 shares of common stock with a par value of $0.0001 per share. Effective September 19, 2017, the Company amended its Articles of Incorporation to increase its authorized Common Stock to 4,000,000,000 shares. There were 5,808,883 and 3,482,840 shares of common stock issued and outstanding at March 31, 2019 and December 31, 2018, respectively.

The Company has authorized 1,000,000 shares of Series A preferred stock with a par value of $0.0001 per share. At March 31, 2018 and December 31, 2018, there were 500,000 shares of Series A preferred stock issued and outstanding respectively. The preferred stock has preferential voting rights of 2,000 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 December 31, 2018. 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.

On October 12, 2018, the Company filed with the State of Nevada a certificate of designation pursuant to which the Company designated a new class of preferred stock as the Company’s Series C Convertible Preferred Stock (“Series C Preferred”) having a $100.00 stated value per share (“Stated Value”) and a par value equal to $0.0001 per share. The Company designated 5,000 shares of Series C Preferred. Subject to a beneficial ownership limitation equal to 4.99%, each share of Series C Preferred is convertible into 25,000 shares of the Company’s common stock. Holders of Series C Preferred are not entitled to receive dividends. In the event of any liquidation, dissolution or winding up of the Company, holders of Series C Preferred are entitled to distributions from the assets in an amount equal to, or if less, on a prorated basis, the Stated Value per share of Series C Preferred held by such holders. Holders of Series C Preferred are entitled to vote, on an as-converted basis, together with holders of Common Stock on all actions to be taken by the shareholder of the Company.

During the quarter-ended December 31, 2018 the company issued 177 shares of Series C Convertible Preferred Stock for services provided to the company by various professionals. As of December 31, 2018 there are 177 shares issued and outstanding with a stated value of $17,700 and par value of $-0-. The preferred shares issued to professionals for their services were valued, in total, at $204,212 based upon a valuation using the underlying convertible feature of the company’s common stock and a Black-Scholes calculation methodology.

For quarter-ended December 31, 2018, the fair value of each issuance of Series C Preferred Stock on the date of issuance is estimated using the Black-Scholes option-pricing model reflecting the following assumptions:

During the quarter-ended March 31, 2019 the company issued 138 shares of Series C Convertible Preferred Stock for services provided to the company by various professionals. The preferred shares issued to professionals for their services were valued, in total, at $184,506 based upon a valuation using the underlying convertible feature of the company’s common stock and a Black-Scholes calculation methodology.

As of March 31, 2019 there are a total of 315 shares Series C Convertible Preferred Stock issued and outstanding with a stated value of $31,500 and par value of $-0-.

During the quarter ended March 31, 2018, the Company issued an aggregate 18,000 shares of common stock at prices ranging from $0.0006 to $0.0011 per share for services provided to the Company.

During the quarter ended March 31, 2018, the Company issued an aggregate 376,111 shares of common stock at prices ranging from $0.0004 to $0.0006 per share as partial conversion of notes and accrued interest.

During the quarter ended June 30, 2018, the Company issued an aggregate 67,500 shares of common stock at prices ranging from $0.0004 to $0.0004 per share for services provided to the Company.

During the quarter ended June 30, 2018, the Company issued an aggregate 92,015 shares of common stock at prices ranging from $0.000174 to $0.00025 per share as partial conversion of notes and accrued interest.

During the quarter ended September 30, 2018, the Company issued an aggregate 634,053 shares of common stock at prices ranging from $0.0525 to $0.18 per share for services provided to the Company.

During the quarter ended September 30, 2018, the Company issued an aggregate 427,755 shares of common stock at prices ranging from $0.0190 to $0.1173 per share as partial conversion of notes and accrued interest.

During the quarter ended December 31, 2018, the Company issued an aggregate 1,017,959 shares of common stock at prices ranging from $0.019 to $0.025 per share as partial conversion of notes and accrued interest.

During the quarter ended March 31, 2019, the Company issued an aggregate 277,000 shares of common stock at a price of $0.051 per share for services provided to the Company.

During the quarter ended March 31, 2019, the Company issued an aggregate 2,049,043 shares of common stock at prices ranging from $0.015 to $0.029 per share as partial conversion of notes.

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, 2019 and 2018 respectively. 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, 2019 and 2018 was $300. These two aforementioned commitments meet the definition of a “short-term lease” under ASC 842.20.25.2 (generally less than 12 months in duration) and therefore, the company has elected an accounting policy to not to apply the recognition requirements under ASC 842 and instead recognizes these lease payments on a straight line basis.

Total rent expense for the quarter-ended March 31, 2018 was $5,822 and was $3,188 for the quarter-ended March 31, 2019.

The following are the minimum required lease payments for the remainder of the lease term for the one operating lease (see below) under ASC 840:

LEASES

The Company has one operating lease for its main office location occupancy. On September 12th 2016 the Company entered into a commercial lease agreement for office premises at an original cost of $650 per month for a one-year term with the option to renew for one extended term of three years. In July 2017 the Company leased additional space at this location thereby increasing the monthly rent to $1,550. A new lease was signed in March 2018 for the same space with the rent increasing to $2,050 effective January 1, 2020 (after negotiation with the landlord). The Company has no finance leases.

Effective January 1, 2019, we adopted ASU 2016-02 “Leases” (Topic 842), which requires the recognition of lease assets and liabilities for items classified as operating leases under previous guidance. The original guidance required application on a modified retrospective basis with the earliest year presented. In August 2018, the FASB issued ASU 2018-11 “Targeted Improvements to ASC 842” that included an option to not restate comparative periods in transition and elect to use the effective date of Topic 842 as the date of initial application of transition, which we elected. Adoption of the new standard resulted in the recording of additional net operating lease assets and lease liabilities of $41,382 and $43,326 respectively, as of January 1, 2019. The difference between the additional lease assets and lease liabilities was recorded as deferred rent. The standard did not materially impact our statements of operations and cash flows.

OTHER COMMITMENTS

The Company has a distribution agreement with Dr. Ronald L. Rubin where upon any sales generated by him he will receive the following commissions:

The Company has a distribution agreement with Dr. Gupta Pharma LLC with the following provisions:

Note 9. INCOME TAXES

The Company accounts for income taxes under the asset and liability approach. Deferred tax assets and liabilities are recognized for the expected future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse.

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. As of March 31, 2019, the Company had provided a valuation allowance to fully reserve its net operating loss carryforwards and other items giving rise to deferred tax assets, primarily as a result of anticipated net losses for income tax purposes and has therefore recorded a full valuation allowance.

The company has entered into an employment agreement with its Chief Executive Officer (CEO). The agreement provides for base compensation, annual bonus, benefits, vacation and reimbursements. Under this agreement, the current base compensation of the Company’s CEO is $150,000 per annum. Prior CEO employment agreements accrued $100,000 in annual salary for the years ended December 31, 2015 and 2014. In mid-year 2016 the Company commenced payroll and is paying the CEO for current wages in this manner. As of March 31, 2019, the company owes accrued compensation to it’s CEO in the amount of $403,185.

Medifirst Solutions, Inc.

Notes to Consolidated Financial Statements

March 31, 2019 (unaudited)

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 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 into 9,050 shares of common stock in accordance with the terms of the Series B Preferred stock. 

As more fully described in Note 1 and Note 5 to the financial statements, $18,986 in accrued interest on the $150,000 note was satisfied through the issuance of 17,273 shares of the Company’s common stock. On September 15, 2017 the Note was amended to include provisions to allow conversion of the Note into common stock of the Company. At such time the Note was valued with it’s embedded derivative and discount. On September 25, 2017, $16,250 in principal on this note was satisfied by the conversion into 25,000 shares of the Company’s common stock. During the quarter ended March 31, 2018, $15,000 in principal on this note was satisfied by the conversion into 60,000 shares of the Company’s common stock. During the quarter ended June 30, 2018, $7,500 in principal on this note was satisfied by the conversion into 30,000 shares of the Company’s common stock. During the quarter ended June 30, 2018 the original related-party noteholder sold $20,000 in principal on this note to an unrelated third party investor thereby leaving $80,250 in principal balance due to the related party original noteholder and $20,000 in principal due to the unrelated third-party investor. During the year ended December 31, 2018 the Company made cash paydowns to the noteholder in the total amount of $32,550. In addition, $30,195 in principal balance on the note was converted into 495,000 shares of the Company’s common stock. The ending principal balance on this note at December 31, 2018 is $51,005 to the original noteholder. During the year-ended December 31, 2018 the unrelated third-party noteholder converted $3,350 in principal balance into 120,000 shares of the Company’s common stock thereby leaving a principal balance to this unrelated noteholder in the amount of $16,650. During the quarter-ended March 31, 2019 the Company made cash paydowns to the noteholder in the total amount of $5,700. In addition, $3,800 in principal balance on the note was converted into 200,000 shares of the Company’s common stock. The remaining principal balance to the original noteholder is $41,505 as of March 31, 2019 and is $16,650 to the third-party unrelated noteholder at the same date.

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 $5,542,067 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 its 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. Management believes the Company’s present cash and cash equivalents will not enable it to meet its obligations for twelve months from the date these financial statements are available to be issued unless the Company received additional funding.

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.

During the quarter ended March 31, 2017, the Company issued from the Plan a total of 27,100 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.

Medifirst Solutions, Inc.

Notes to Consolidated Financial Statements

March 31, 2019 (unaudited)

In May 2017, the Company adopted the Medifirst Solutions, Inc. 2017 Equity Incentive Plan (the “2017 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 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. During the year ended December 31, 2017, the Company issued from the Plan 108,000 shares to non-employees for services rendered. As of December 31, 2017 there is a balance of 17,000 shares available for future issuance under the Medifirst Solutions, Inc. 2017 Equity Incentive Plan.

In January 2018, the Company adopted the Medifirst Solutions, Inc. 2018 Equity Incentive Plan (the “2018 Plan”) pursuant to which the Company may grant stock options, restricted stock purchase offers and other equity-based awards up to an aggregate of 175,000 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.

During the quarter ended March 31, 2019 the Company created the Medifirst Solutions, Inc. 2019 EQUITY Incentive Plan which 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. The total number of shares of Common Stock which may be purchased or granted directly by Options, Stock Awards or Restricted Stock Purchase Offers, or purchased indirectly through exercise of Options granted under the Plan shall not exceed 5,000,000 shares.

During the quarter ended March 31, 2018, the Company issued from the 2018 Plan a total of 4,000 shares of common stock to non-employees for services rendered. As of March 31, 2018 there is a balance of 188,000 shares available for future issuance under the Medifirst Solutions, Inc. 2018 Equity Incentive Plan.

During the quarter ended June 30, 2018, the Company issued from the 2018 Plan a total of 17,500 shares of common stock to non-employees for services rendered. As of June 30, 2018 there is a balance of 170,500 shares available for future issuance under the Medifirst Solutions, Inc. 2018 Equity Incentive Plan.

During the quarter ended September 30, 2018, there were no issuances from the 2018 Plan and therefore as of September 30, 2018 there is a balance of 170,500 shares available for future issuance under the Medifirst Solutions, Inc. 2018 Equity Incentive Plan.

During the quarter ended December 30, 2018, there were no issuances from the 2018 Plan and therefore as of December 31, 2018 there is a balance of 170,500 shares available for future issuance under the Medifirst Solutions, Inc. 2018 Equity Incentive Plan.

During the quarter ended March 31, 2019, 277,000 shares were issued from the 2019 Plan and therefore as of March 31, 2019 there is a balance of 4,723.000 shares available for future issuance under the Medifirst Solutions, Inc. 2019 Equity Incentive Plan.