In August 2009, the FASB issued ASU No. 2009-05 – Fair Value Measurements and Disclosures (Topic 820) – Measuring Liabilities at Fair Value. This ASU clarifies the fair market value measurement of liabilities. In circumstances where a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using one or more of the following techniques: a technique that uses quoted price of the identical or a similar liability or liabilities when traded as an asset or assets, or another valuation technique that is consistent with the principles of Topic 820 such as an income or market approach. ASU No. 2009-05 was effective upon issuance and it did not result in any significant financial impact on the Company upon adoption.

In September ~~2006,~~2009, the FASB issued ASU No. 2009-12 – Fair Value Measurements and Disclosures (Topic 820) – Investments in Certain Entities That Calculate Net Asset Value per Share (or its equivalent). This ASU permits use of a practical expedient, with appropriate disclosures, when measuring the fair value of an alternative investment that does not have a readily determinable fair value. ASU No. 2009-12 is effective for interim and annual periods ending after December 15, 2009, with early application permitted. Since the Company does not currently have any such investments, it does not anticipate any impact on its financial statements upon adoption.

In June 2009, the FASB issued SFAS No. ~~157,~~166, “Accounting for Transfers of Financial Assets – an amendment of FASB Statement No. 140”. SFAS No. 166 amends SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities” by eliminating the concept of special-purpose entity, requiring the reporting entity to provide more information about sales of securitized financial assets and similar transactions, particularly if the seller retains some risk to the assets, changes the requirements for the de-recognition of financial assets, and provides for the sellers of the assets to make additional disclosures. This Statement shall be effective as of the Company’s first interim reporting period that begins after November 15, 2009. Earlier applicati on is prohibited. The Company does not anticipate any significant financial impact from adoption of SFAS No. 166. As of September 30, 2009, SFAS No. 166 has not been added to the Codification.

In May 2009, the FASB issued FASB ASC 855, “Subsequent Events”. This Statement addresses accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or available to be issued. FASB ASC 855 requires disclosure of the date through which an entity has evaluated subsequent events and the basis for that date, the date issued or date available to be issued. The Company adopted this Statement in the second quarter of 2009. As a result the date through which the Company has evaluated subsequent events and the basis for that date have been disclosed in Note 1, Subsequent Events.

In April 2009, the FASB issued an update to FASB ASC 820, “Fair Value ~~Measurements.” SFAS No. 157 establishes a single definition~~Measurements and Disclosures”, related to providing guidance on when the volume and level of ~~fair value~~hactivity for the asset or liability have significantly decreased and ~~a framework for measuring fair value, sets out a fair value hierarchy~~identifying transactions that are not orderly. The update clarifies the methodology to be used to ~~classify the source of information used in~~determine fair value ~~measurements,~~when there is no active market or where the price inputs being used represent distressed sales. The update also reaffirms the objective of fair value measurement, as stated in FASB ASC 820, which is to reflect how much an asset would be sold in and ~~requires new~~orderly transaction, and the need to use judgment to determine if a formerly active market has become inactive, as well as to determine fair values when markets have become inactive. The Company adopte d this Statement in the second quarter of 2009 without significant financial impact.

In April 2009, the FASB ASC 320, “Investments – Debt and Equity”, amends current other-than-temporary guidance for debt securities through increased consistency in the timing of impairment recognition and enhanced disclosures related to credit and noncredit components impaired debt securities that are not expected to be sold. Also, the Statement increases disclosures for both debt and equity securities regarding expected cash flows, securities with unrealized losses, and credit losses. The Company adopted this Statement in the second quarter of 2009 without significant impact to our financial statements.

In April 2009, the FASB issued an update to FASB ASC 825, “Financial Insturments”, to require interim disclosures about the fair value of financial instruments”. This update enhances consistency in financial reporting by increasing the frequency of fair value disclosures of those assets and liabilities ~~measured at fair value based on their level~~falling within the scope of FASB ASC 825. The Company adopted this update in the ~~hierarchy. SFAS No. 157 is effective for~~second quarter of 2009 without significant impact to the financial statements.

In April 2009, the FASB issued an update to FASB ASC 805, “Business Combinations”, that clarifies and amends FASB FASB ASC 805, as it applies to all ~~fiscal years beginning after November 15, 2007 (January 1, 2008 for 3M)~~assets acquired and isliabilities assumed in a business combination that arise from contingencies. This update addresses initial recognition and measurement issues, subsequent measurement and accounting, and disclosures regarding these assets and liabilities arising from contingencies in a business combination. The Company adopted this Statement in the second quarter of 2009 without significant impact to the financial statements.

In January 2009, the FASB issued an update to FASB ASC 325, “Investments – Other”, which amends the impairments guidance on recognition of interest income and impairment on purchased beneficial interests and beneficial interests that continue to be ~~applied prospectively.~~ held by a transferor in securitized financial assets to achieve more consistent determination of whether an other-than-temporary impairment has occurred. The update also retains and emphasizes the objective of an other than-temporary impairment assessment and the related disclosure requirements in FASB ASC 320, “Investments – Debt and Equity Securities”, and other related guidance. The adoption of this update in the second quarter of 2009 did not have a significant impact on the Company’s financial statements.

In ~~February~~November 2008, EITF issued new guidance under FASB ASC 350, “Intangibles – Goodwill and Other” on accounting for defensive intangible assets”. The new guidance applies to all acquired intangible assets in which the acquirer does not intend to actively use the asset but intends to hold (lock up) the asset to prevent its competitors from obtaining or using the asset (a defensive asset). This guidance was adopted by the Company in January 2009 without impact to the financial statements.

In May 2008, the FASB issued ~~Staff Positions No. 157-1 and No. 157-2 which partially defer~~an update to FASB ASC 470, “Debt”, with respect to accounting for convertible debt instruments that may be settled in cash upon conversion including partial cash settlement. This update applies to convertible debt instruments that, by their stated terms, may be settled in cash (or other assets) upon conversion, including partial cash settlement, unless the ~~effective date of SFAS No. 157 for one year for certain nonfinancial assets and liabilities and remove certain leasing transactions from its scope. The Company~~embedded conversion option is currently evaluating the impacts and disclosures of this standard, but would not expect SFAS No. 157 to have a material impact on the Company’s consolidated results of operations or financial condition.

In September 2006, the SEC staff issued Staff Accounting Bulletin Topic 1N, Financial Statements - Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (SAB 108). SAB 108 provides guidance on how prior year misstatements should be evaluated when determining the materiality of misstatements in the current year financial statements. SAB 108 requires materiality to be determined by considering the effect of prior year misstatements on both the current year balance sheet and income statement, with consideration of their carryover and reversing effects. SAB 108 also addresses how to correct material misstatements. The Company adopted the provisions of this bulletin effective October 1, 2007. The Company did not incur any material impact to its financial condition or results of operations due to the adoption of SAB 108.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities”. SFAS No. 159 permits an entity to choose, at specified election dates, to measure eligible financial instruments and certain other items at fair value that are not currently required to be ~~measured at fair value. An entity shall report unrealized gains~~separately accounted for as a derivative under FASB ASC 815, “Derivatives and ~~losses on items~~Hedging”. Additionally, this update specifies that issuers of such instruments should separately account for ~~which~~ the ~~fair value option has been elected~~liability and equity components in ~~earnings at each subsequent reporting date. Upfront costs and fees related to items for which~~a manner that will reflect the ~~fair value option is elected shall be~~entity’s nonconvertible debt borrowing rate when interest cost recognized in earnings as incurred and not deferred. SFAS No. 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. SFAS No. 159subsequent period s. The update is effective for financial statements issued for fiscal years beginning after ~~November~~December 15, ~~2007~~2008, and interim periods within those fiscal years. At the effective date, an entity may elect the fair value option for eligible items that exist at that date. The entity shall report the effect of the first remeasurement to fair value as a cumulative-effect adjustment to the opening balance of retained earnings. The Company ~~has~~does not ~~elected the fair value option~~currently have any debt instruments for ~~eligible items that existed as of December 31, 2007.~~

~~In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interest~~which this update would apply. This update was adopted in Consolidated Financial Statements, an amendment of ARB No. 51" ("SFAS No. 160"), which will change the accounting and reporting for minority interests, which will be recharacterized as noncontrolling interests and classified as a component of equity within the consolidated balance sheets. SFAS No. 160 is effective as of the beginning of the first fiscal year beginning on or after December 15, 2008. Earlier adoption is prohibited and the Company is currently evaluating the effect, if any, that the adoption will have on itsJanuary 2009 without significant financial ~~position, results of operations or cash flows.~~

In December 2007, the FASB issued SFAS No. 141R, “Business Combinations,” which changes how business acquisitions are accounted. SFAS No. 141R requires the acquiring entity in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction and establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed in a business combination. Certain provisions of this standard will, among other things, impact the determination of acquisition-date fair value of consideration paid in a business combination (including contingent consideration); exclude transaction costs from acquisition accounting; and change accounting practices for acquired contingencies, acquisition-related restructuring costs, in-process research and development, indemnification assets, and tax benefits. For 3M, SFAS No. 141R is effective for business combinations and adjustments to an acquired entity’s deferred tax asset and liability balances occurring after December 31, 2008. The Company is currently evaluating the future impacts and disclosures of this standard.

In December 2007, the SEC issued Staff Accounting Bulletin (SAB) No. 110 regarding the use of a simplified method, as discussed in SAB No. 107 (SAB 107), in developing an estimate of expected term of plain vanilla share options in accordance with SFAS No. 123 (R), Share-Based Payment. In particular, the staff indicated in SAB 107 that it will accept a company's election to use the simplified method, regardless of whether the company has sufficient information to make more refined estimates of expected term. At the time SAB 107 was issued, the staff believed that more detailed external information about employee exercise behavior (e.g., employee exercise patterns by industry and/or other categories of companies) would, over time, become readily available to companies. Therefore, the staff stated in SAB 107 that it would not expect a company to use the simplified method for share option grants after December 31, 2007. The staff understands that such detailed information about employee exercise behavior may not be widely available by December 31, 2007. Accordingly, the staff will continue to accept, under certain circumstances, the use of the simplified method beyond December 31, 2007. The Company currently uses the simplified method for “plain vanilla” share options and warrants, and will assess the impact of SAB 110 for fiscal year 2009. It is not believed that this will have an impact on the Company’s financial position, results of operations or cash flows.impact.

In March 2008, the ~~Financial Accounting Standards Board, or~~ FASB issued ~~SFAS No. 161, Disclosures about Derivative Instruments~~an update to FASB ASC 815, “Derivatives and ~~Hedging Activities—an amendment of~~Hedging” This update is intended to enhance the current disclosure framework in FASB ~~Statement No. 133. This standard requires companies~~ASC 815. Under this update, entities will have to provide ~~enhanced~~ disclosures about (a) how and why anand entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under ~~Statement 133~~FASB ASC 815 and its related interpretations, and (c), how derivative instruments and related hedged items ~~affect~~effect an entity’s financial position, financial performance and cash flows. This ~~Statement~~update is effective for all financial statements issued for fiscal ~~years~~ and interim periods beginning after November 15, ~~2008, with early application encouraged.~~2008. The Company ~~has not yet adopted the provisions of SFAS No. 161, but~~ does not ~~expect~~currently have any derivative instruments, nor does it engage in hedgi ng activities, therefore, the Company’s adoption of this update in the first quarter of 2009 was without significant financial impact.

Certain amounts previously reported have been reclassified to ~~have a material impact on its financial position, results of operations or cash flows.~~conform to the current year presentation.

In May 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles”. SFAS No. 162 sets forth the level of authority to a given accounting pronouncement or document by category. Where there might be conflicting guidance between two categories, the more authoritative category will prevail. SFAS No. 162 will become effective 60 days after the SEC approves the PCAOB’s amendments to AU Section 411 of the AICPA Professional Standards. SFAS No. 162 has no effect on the Company’s financial position, statements of operations, or cash flows at this time.

In May 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 163, “Accounting for Financial Guarantee Insurance Contracts-and interpretation of FASB Statement No. 60”. SFAS No. 163 clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement of premium revenue and claims liabilities. This statement also requires expanded disclosures about financial guarantee insurance contracts. SFAS No. 163 is effective for fiscal years beginning on or after December 15, 2008, and interim periods within those years. SFAS No. 163 has no effect on the Company’s financial position, statements of operations, or cash flows at this time.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide information under this item.

ITEM 8. FINANCIAL STATEMENTS

Our financial statements and related notes are set forth at pages F - 1 to F- 19.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Medefile International, Inc.

We have audited the accompanying consolidated balance sheets of Medefile International, Inc. as of December 31, 2009 and 2008, and the related consolidated statement of operation, stockholders’ deficit, and cash flows for each of the years in the two-year period ended December 31, 2009. Medefile International, Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Medefile International, Inc. as of December 31, 2009 and 2008, and the results of its operations and cash flows for each of the years in the two-year period ended December 31, 2009 in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations with a significant accumulated deficit, all of which raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/L.L. Bradford & Company, LLC

April 15, 2010

Las Vegas, Nevada

F-1

Medefile International, Inc

Consolidated Balance Sheet




	As of			As of
	December			December
Assets		31, 2009			31, 2008
Current assets
Cash and cash equivalents	$	1,513		$	7,844
Prepaid expenses		-			17,810
Total current assets		1,513			25,654
Website development		41,145			-
Furniture and equipment, net of accumulated depreciation		34,539			54,514
Deposits and other assets		14,475			14,475
Intangibles		1,339			1,339
Total assets	$	93,011		$	95,982

Liabilities and Stockholders' Deficit
Accounts payable and accrued liabilities	$	146,556		$	79,069
Cash overdraft		862			-
Deferred revenues		1,362			5,942
Notes payable		411,253			76,390
Notes Payable - related parties		132,924			93,518
Total Current Liabilities		692,957			254,919


Stockholders' Deficit
Preferred stock, $.0001 par value: 10,000 authoriaed,
no shares issued and outstanding		-			-
Common stock, $.0001 par value: 1,500,000 and 300,000 authorized;
1,463,021,410 and 218,493,971 shares issued and
outstanding on December 31, 2009 and 2008 respectively		146,302			21,849
Additional paid in capital		12,923,998			11,324,821
Accumulated deficit		(13,670,246	)		(11,505,607	)
Total stockholders deficit		(599,946	)		(158,937	)
Total liability and stockholders' deficit	$	93,011		$	95,982




The accompanyng notes are an integral part of these consolidated financial statements

F-2

Medefile International, Inc

Consolidated Statements of Operations

For the Years Ended December 31, 2009 and 2008





	2009			2008
Revenue	$	14,264		$	53,235

Operating expenses
Selling, general and administrative expenses		2,139,381			1,972,229
Depreciation and amortization expense		19,975			20,240
Total operating expenses		2,159,356			1,992,469

Loss from operations		(2,145,092	)		(1,939,234	)

Other Income/Expenses
Loss on securities		-			192
Interest expense note payable		12,871			3,136
interest expense - related party note payable		6,676			34,596
Total other income(expense)		19,547			37,924

Loss before income tax		(2,164,639	)		(1,977,158	)
Provision for income tax		-			-
Net Loss	$	(2,164,639	)	$	(1,977,158	)

Net loss per share: basic and diluted	$	(0.00	)	$	(0.01	)

Weighted average share outstanding		791,455,976			200,953,132




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

F-3

Medefile International, Inc

Consolidated Statement of Stockholders' Equity

For the Years ended December 31, 2009 and 2008





																Other
										Common						Accumulated
	Shares									Stock			Accumulated			Comprehensive
	Outstanding			Amount			APIC			Subscribed			Deficit			Gain			Total
December 31, 2007		178,733,910		$	17,873		$	5,893,302		$	3,750,000		$	(9,528,803	)	$	354		$	132,726
Common stock issured
for exercise of stock
options		37,500			4			(4	)
Common stock sale		2,000,000			200			299,800												300,000
Common stock issued
for reduction
in note payable		14,000,000			1,400			2,098,600			(2,100,000	)
Common stock issued
for stock subscriptions		11,000,000			1,100			1,648,900			(1,650,000	)
Recharacterize
comprehensive gain														354			(354	)
Common stock warrants								41,558												41,558
issued for
compensation								61,120												61,120
Common stock sale		2,000,000			200			299,800												300,000
cancellation of
debt by related
party								636,701												636,701
Cancellation of
Shares - related party		(14,000,000	)		(1,400	)		1,400
S-8 Share issued
for employee and
consultants		24,722,561			2,472			343,644												346,116
Net loss														(1,977,158	)					(1,977,158	)
December 31, 2008		218,493,971			21,849			11,324,821			-			(11,505,607	)		-			(158,937	)

S-8 Share issued
for consultants anc
employees		1,244,527,439			124,453			1,599,177												1,723,630

Net loss														(2,164,639	)					(2,164,639	)
December 31, 2009		1,463,021,410		$	146,302		$	12,923,998			-		$	(13,670,246	)		-		$	(599,946	)

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

F-4

Medefile International, Inc

Consolidated Statements of Cash Flows

For the Years Ended December 31, 2009 and 2008




	2009			2008
Cash flows from operating activities
Net loss	$	(2,164,639	)	$	(1,977,158	)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation and amortization		19,975			20,240
Non cash compensation		-			102,678
S-8 issuance of shares		1,723,630			346,116
Interest Expense		12,871			3,136
Interest Expense - related party		6,676			34,596
Bad debt expense		-			(3,134	)

Changes in operating assets and liabilities
Accounts Receivable		-			2,808
Prepaid Expenses		17,810			8,272
Deferred revenue		(4,580	)		(401	)
Accounts payable and accrued liabilities		67,487			(105,745	)
Cash overdraft		862			-
Deposits and other assets		-			515
Advance customer payments		-			(50,000	)
Net Cash used in operating activities		(319,908	)		(1,618,077	)
Cash flows from investing activities
Website Development		(41,145	)		-
Purchase equipment		-			(11,402	)
Net cash used in investing activities		(41,145	)		(11,402	)
Cash flows from financing activities
Proceeds from notes payable by related parties		32,730			93,518
Proceeds from note payable		(67,487	)		76,390
Payments of loans from related parties		-			(500,000	)
Proceeds from common stock sale		-			600,000
Net cash provided by financing activities		354,722			269,908
Net increase(decrease) in cash and cash equivalents		(6,331	)		(1,359,571	)
Cash and cash equivalents at beginning of period		7,844			1,367,415
Cash and cash equvalents at end of period	$	1,513		$	7,844

Supplemental disclosure of cash flow information
Cash paid during period for
Cash paid for interest	$	-		$	-
Cash paid for income taxes	$	-		$	-
Common stock issued for stock subscriptions	$	-		$	3,750,000
Cancelleation of debt by stockholder
recorded as contribution to additional paid in capital	$	-		$	636,701

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

F-5

MEDEFILE INTERNATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009

1. BASIS OF PRESENTATION AND NATURE OF BUSINESS OPERATIONS

Basis of Presentation

The accompanying financial statements present on a consolidated basis the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

Nature of Business Operations

On November 1, 2005, Bio-Solutions International, Inc. ("Bio-Solutions") entered into an Agreement and Plan of Merger (the "Agreement") with OmniMed Acquisition Corp., (the "Acquirer), a Nevada corporation and a wholly owned subsidiary of Bio-Solutions, OmniMed International, Inc., a Nevada corporation ("OmniMed"), and the shareholders of OmniMed (the "OmniMed Shareholders"). Pursuant to the Agreement, Bio-Solutions acquired all of the outstanding equity stock of OmniMed from the OmniMed Shareholders. As consideration for the acquisition of OmniMed, Bio-Solutions agreed to issue 9,894,900 shares of Bio-Solutions' common stock to the OmniMed Shareholders. These issuances were deemed to be exempt under rule 506 of Regulation D and Section 4(2) of the Securities Act of 1933, as amended since, among other things, the transaction did not involve a public offering, the investors were accredited investors and/or qualified institutional buyers, the investors had access to information about the company and their investment, the investors took the securities for investment and not resale, and the Company took appropriate measures to restrict the transfer of the securities.

As a result of the Agreement, the OmniMed Shareholders assumed control of Bio-Solutions. Effective November 21, 2005 Bio-Solutions changed its name to OmniMed International, Inc. Effective January 17, 2006 OmniMed changed its name to Medefile International, Inc. ("Medefile" or "the Company").

Medefile has developed a system for gathering, digitizing, storing and distributing information for the healthcare field. Medefile's goal is to bring digital technology to the business of medicine. Medefile intends to accomplish its objective by providing individuals with a simple and secure way to access their lifetime of actual medical records in an efficient and cost-effective manner. Medefile's products and services are designed to provide Healthcare providers with the ability to reference their patient's actual past medical records, thereby ensuring the most accurate treatment and services possible while simultaneously reducing redundant procedures. Medefile's primary product is the MedeFile system, a highly secure system for gathering and maintaining medica l records. The MedeFile system is designed to gather all of its members' medical records and create a single, comprehensive medical record that is accessible 24 hours a day, seven days a week.

Going Concern

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. However, the Company has reported a net loss of $2,164,639 and $1,977,158 for the years ended December 31, 2009 and 2008, respectively and had an accumulated deficit of $13,670,246 as of December 31, 2009.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The operating losses raise substantial doubt about the Company's ability to continue as a going concern. The Company's ability to obtain additional financing depends on the availability of its borrowing capacity, the success of its growth strategy and its future performance, each of which is subject to general economic, financial, competitive, legislative, regulatory, and other factors beyond the Company's control.

F-6

However, the trading price of our common stock could make it more difficult to obtain financing through ~~F-14~~the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Further, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. If additional financing is not available or is not available on acceptable terms, we will have to curtail our operations.

Cash and Cash Equivalents

For purposes of these financial statements, cash equivalents include a highly liquid debt instruments with a maturity of less than three months.

Concentrations of Credit Risk

Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents. The Company places its cash and temporary cash investments with high credit quality institutions. At times, such investments may be in excess of the FDIC insurance limit.

Advertising

The Company follows the policy of charging the costs of advertising to expense as incurred. The Company incurred advertising costs for the year ended December 31, 2009 of approximately $51,106. The Company incurred $118,491 advertising costs for the year ended December 31, 2008.

Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. A valuation allowance is established against deferred tax assets that do not meet the criteria for recognition. In the event the Company were to determine that it would be able to realize deferred income tax assets in the future in excess of their net recorded amount, the would make an adjustment to the valuation allowance which would reduce the provision for income taxes.

The Company follows the accounting guidance which provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized initially and in subsequent periods. Also included is guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition

16F-7

Property and Equipment

Property and equipment are stated at cost. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings. Minor additions and renewals are expensed in the year incurred. Major additions and renewals are capitalized and depreciated over their estimated useful lives being 3 years up to 10 years.

Trademark Costs

Trademark costs incurred in the registration and acquisition of trademarks and trademark rights are capitalized. These costs will be amortized over the legal life of the related trademark once the trademark is awarded. The Company performs an annual review of its identified intangible assets to determine if facts and circumstances exist which indicate that the useful life is shorter than originally estimated or that the carrying amount of the assets may not be recoverable.

The Company expenses all software costs associated with the conceptual formulation and evaluation of alternatives until the application development stage has been reached. Costs to improve or support the technology are expensed as these costs are incurred.

Website Development Costs

The Company's policy is to capitalize website development costs at original cost and amortize the balance over the life of the product. The life of website will be determined at the completion of the project. The Company reviews the amounts capitalized for impairment whenever events or circumstances indicate that the carrying amounts of the assets may not be recoverable.

The Company expenses all development costs associated with the conceptual formulation and evaluation of alternatives until the application development stage has been reached. Costs to improve or support the technology are expensed as these costs are incurred.

Revenue Recognition

Deferred Revenue

The Company generally receives subscription fees for its services. From time to time, the Company will receive quarterly or annual subscriptions paid in advance and deferred revenue is recorded at that time. The deferred revenue is amortized into revenue on a pro- rata basis each month. Customers with quarterly or annual subscriptions may cancel their subscriptions and request a refund for future months' revenues at any time. Therefore, a liability is recorded to reflect the amounts which are potentially refundable. At December 31, 2009 the amount of $1,362 was in deferred revenue compared to $5,941 at December 31, 2008.

F-8

Reclassifications

Certain reclassifications have been made in prior year's financial statements to conform to classifications used in the current year.

Fair Value of Financial Instruments

The Company's financial instruments, which include cash, prepaid expenses, securities, and accounts payable approximate fair value due to the short-term nature of these assets and liabilities.

Use of Estimates

The preparation of 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 disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates.

Net Loss Per Share

Basic and diluted loss per share amounts are computed based on net loss divided by the weighted average number of common shares outstanding. Outstanding options to purchase 5,640,000 common shares, warrants to the purchase of 8,175,000 common shares were not included in the computation of diluted loss per share because the assumed conversion and exercise would be anti-dilutive for the year ended December 31, 2009. The warrants to the purchase of 8,175,000 common shares and outstanding options to purchase 5,640,000 common shares were not included in the computation of diluted loss per share because the assumed conversion and exercise would be anti-dilutive for the year ended December 31, 2009.

Stock Based Compensation

The Company accounts for all compensation related to stock, options or warrants using a fair value based method whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. The Company uses the Black-Scholes pricing model to calculate the fair value of options and warrants issued to both employees and non-employees. Stock issued for compensation is valued using the market price of the stock on the date of the related agreement

New Accounting Pronouncements

On July 1, 2009, the FASB officially launched the FASB ASC 105 -- Generally Accepted Accounting Principles, which established the FASB Accounting Standards Codification (“the Codification”), as the single official source of authoritative, nongovernmental, U.S. GAAP, in addition to guidance issued by the Securities and Exchange Commission. The Codification is designed to simplify U.S. GAAP into a single, topically ordered structure. All guidance contained in the Codification carries an equal level of authority. The Codification is effective for interim and annual periods ending after September 15, 2009. Accordingly, the Company refers to t he Codification in respect of the appropriate accounting standards throughout this document as “FASB ASC”. Implementation of the Codification did not have any impact on the Company’s consolidated financial statements.

On June 30, 2009, the FASB issued Accounting Standard Update (ASU) No. 2009-01 (Topic 105) – Generally Accepted Accounting Principles – amendments based on – Statement of Financial Accounting Standards No. 168 – The FASB Accounting and Standards Codification and the Hierarchy of Generally Accepted Accounting Principles. Beginning with this Statement the FASB will no longer issue new standards in the form of Statements, FASB Staff Positions, or Emerging Issues Task Force Abstracts. Instead, it will issue Accounting Standard Updates. This ASU includes FASB Statement No. 168 in its entirety. While ASU’s will not be considered authoritative in their own right, they will serve to update the Codification , provide the bases for conclusions and changes in the Codification, and provide background information about the guidance. The Codification modifies the GAAP hierarchy to include only two levels of GAAP: authoritative and nonauthoritative. ASU No. 2009-01 is effective for financial statements issued for the interim and annual periods ending after September 15, 2009, and the Company does not expect any significant financial impact upon adoption.

F-9

In September 2009, the FASB issued ASU No. 2009-12 – Fair Value Measurements and Disclosures (Topic 820) – Investments in Certain Entities That Calculate Net Asset Value per Share (or its equivalent). This ASU permits use of a practical expedient, with appropriate disclosures, when measuring the fair value of an alternative investment that does not have a readily determinable fair value. ASU No. 2009-12 is effective for interim and annual periods ending after December 15, 2009, with early application permitted. Since the Company does not currently have any such investments, it does not anticipate any impact on its financial statements upon adoption.

In June 2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial Assets – an amendment of FASB Statement No. 140”. SFAS No. 166 amends SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities” by eliminating the concept of special-purpose entity, requiring the reporting entity to provide more information about sales of securitized financial assets and similar transactions, particularly if the seller retains some risk to the assets, changes the requirements for the de-recognition of financial assets, and provides for the sellers of the assets to make additional disclosures. This Statement shall be effective as of the Company’s first in terim reporting period that begins after November 15, 2009. Earlier application is prohibited. The Company does not anticipate any significant financial impact from adoption of SFAS No. 166. As of September 30, 2009, SFAS No. 166 has not been added to the Codification.

In April 2009, the FASB issued an update to FASB ASC 820, “Fair Value Measurements and Disclosures”, related to providing guidance on when the volume and level of hactivity for the asset or liability have significantly decreased and identifying transactions that are not orderly. The update clarifies the methodology to be used to determine fair value when there is no active market or where the price inputs being used represent distressed sales. The update also reaffirms the objective of fair value measurement, as stated in FASB ASC 820, which is to reflect how much an asset would be sold in and orderly transaction, and the need to use judgment to determine if a formerly active market has become inactive, as well as to determine fair values when markets have become inactive. The Company adopted this Statement in the second quarter of 2009 without significant financial impact.

In April 2009, the FASB issued an update to FASB ASC 825, “Financial Insturments”, to require interim disclosures about the fair value of financial instruments”. This update enhances consistency in financial reporting by increasing the frequency of fair value disclosures of those assets and liabilities falling within the scope of FASB ASC 825. The Company adopted this update in the second quarter of 2009 without significant impact to the financial statements.

F-10

In April 2009, the FASB issued an update to FASB ASC 805, “Business Combinations”, that clarifies and amends FASB FASB ASC 805, as it applies to all assets acquired and liabilities assumed in a business combination that arise from contingencies. This update addresses initial recognition and measurement issues, subsequent measurement and accounting, and disclosures regarding these assets and liabilities arising from contingencies in a business combination. The Company adopted this Statement in the second quarter of 2009 without significant impact to the financial statements.

In January 2009, the FASB issued an update to FASB ASC 325, “Investments – Other”, which amends the impairments guidance on recognition of interest income and impairment on purchased beneficial interests and beneficial interests that continue to be held by a transferor in securitized financial assets to achieve more consistent determination of whether an other-than-temporary impairment has occurred. The update also retains and emphasizes the objective of an other than-temporary impairment assessment and the related disclosure requirements in FASB ASC 320, “Investments – Debt and Equity Securities”, and other related guidance. The adoption of this update in the second quarter of 2009 did not have a significant impa ct on the Company’s financial statements.

In November 2008, EITF issued new guidance under FASB ASC 350, “Intangibles – Goodwill and Other” on accounting for defensive intangible assets”. The new guidance applies to all acquired intangible assets in which the acquirer does not intend to actively use the asset but intends to hold (lock up) the asset to prevent its competitors from obtaining or using the asset (a defensive asset). This guidance was adopted by the Company in January 2009 without impact to the financial statements.

In May 2008, the FASB issued an update to FASB ASC 470, “Debt”, with respect to accounting for convertible debt instruments that may be settled in cash upon conversion including partial cash settlement. This update applies to convertible debt instruments that, by their stated terms, may be settled in cash (or other assets) upon conversion, including partial cash settlement, unless the embedded conversion option is required to be separately accounted for as a derivative under FASB ASC 815, “Derivatives and Hedging”. Additionally, this update specifies that issuers of such instruments should separately account for the liability and equity components in a manner that will reflect the entity’s nonconve rtible debt borrowing rate when interest cost recognized in subsequent periods. The update is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. The Company does not currently have any debt instruments for which this update would apply. This update was adopted in January 2009 without significant financial impact.

In March 2008, the FASB issued an update to FASB ASC 815, “Derivatives and Hedging” This update is intended to enhance the current disclosure framework in FASB ASC 815. Under this update, entities will have to provide disclosures about (a) how and why and entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under FASB ASC 815 and its related interpretations, and (c), how derivative instruments and related hedged items effect an entity’s financial position, financial performance and cash flows. This update is effective for all financial statements issued for fiscal and interim periods beginning after November 15, 2008. The Company do es not currently have any derivative instruments, nor does it engage in hedging activities, therefore, the Company’s adoption of this update in the first quarter of 2009 was without significant financial impact.

Certain amounts previously reported have been reclassified to conform to the current year presentation.

F-11

2. FURNITURE AND EQUIPMENT

Furniture and equipment consists of the following at December 31, 2009 and 2008:

	December 31, 2009			December 31, 2008

Computer and Equipment	$	169,286		$	169,286
Furniture and Fixtures		38,618			38,618
Subtotal		207,904			207,904
Less: Accumulated depreciation		(173,365	)		(153,390	)
Total Furniture and Fixtures	$	34,539		$	54,514

Depreciation is calculated by using the straight-line method over the estimated useful life. Depreciation and amortizations expense totaled $19,975 and $20,241 for the year ended December 31, 2009 and 2008, respectively.

3. INTANGIBLE ASSETS

The Company has adopted SFAS No. 142, Goodwill and Other Intangible Assets, whereby the Company periodically tests its intangible assets for impairment. On an annual basis, and when there is reason to suspect that their values have been diminished or impaired, these assets are tested for impairment, and write-downs will be included in results from operations. There was no impairment of acquired intangibles as of December 31, 2008.

Identifiable intangible assets consist of the carrying value of a trademark totaling $1,339 as of December 31, 2009. The trademark acquired is considered to have an undeterminable life, and as such will not be amortized. Instead, the trademark is tested annually for impairment, with any impairment charged against earnings in the Company’s consolidated statement of earnings. Management determined the fair value of the trademark acquired exceeded its recorded book value at December 31, 2009.

4. NOTES PAYABLE.

On September 26, 2008, the Company issued a Demand Note in the principal amount of $75,000 to an individual. This Note bears interest at a rate of seven percent per annum

	December 31, 2009		December 31, 2008
Beginning Balance	$	76,390	$	--
Borrowing		--		75,000
Accrued Interest		5,522		1,390
Balance	$	81,912	$	76,390

The Company issued an unsecured Demand Note to Digital Health Inc. The note bears an interest at a rate of seven percent per annum and is due on deman after two years.

	December 31, 2009
Beginning Balance	$	--
Borrowing		321,993
Accrued Interest		7,349
Balance	$	329,342

F-12

5. NOTES PAYABLE – RELATED PARTY

On July 31, 2008, the Company issued an unsecured Demand Note in the principal amount of $44,771 to Cybervault LLC, a company wholly owned by Medefile CEO. The Note bears interest at a rate of seven percent per annum. Additionally, during the fourth quarter of 2008, an additional $ 45,000 has been received from Cybervault LLC.

	December 31, 2009		December 31, 2008
Beginning Balance	$	91,518	$	--
Borrowings		3,530		89,771
Accrued Interest		6,676		1,747
Balance at year end	$	101,724	$	91,518

During the years ended December 31, 2009 and 2008, the Company received funds totaling $29,200 and $2,000 respectively from a relative of the Company’s CEO. The amount totaling $31,200 as of December 31, 2009 are due on demand and bears no interest.

6. LOAN PAYABLE - RELATED PARTY

The Company has been and continues to be dependent upon the funding from The Vantage Group, Ltd., (“Vantage”) the Company’s largest stockholder. On April 11, 2007, the Company issued two unsecured promissory notes to The Vantage Group as evidence of this indebtedness outstanding. Both notes bear interest at the rate of seven percent per annum. One note, with a principal amount of $1,115,379, was payable on July 1, 2008. The other note, is payable on demand in the principal amount of $700,000. During the year ended December 31, 2007, the Company borrowed a total of $1,245,000 against the demand note and repaid $20,979. On November 15, 2007, the Company and Vantage, entered into a debt conversion agreement. Pursuant to the debt conversio n agreement, Vantage agreed to convert the aggregate principal amount of $2,100,000, of its indebtedness into an aggregate of 14,000,000 restricted shares of common stock of the Company. The conversion amount was used to satisfy the note maturing on July 1, 2008, and the remaining conversion amount was used to pay down the demand loan. In addition, the Company issued to Vantage 8,400,000 three year warrants to purchase an aggregate of 8,400,000 restricted shares of the Company’s common stock at an exercise price of $0.60 per share. As of December 31, 2007, the shares of common stock had not been issued and were recorded as common stock subscribed, until issuance. The shares were issued on February 7, 2008.

As of December 31, 2007, the Company was indebted to the Vantage Group Ltd. in the amount of $1,102,104, including accrued interest for the demand note bearing interest at 7% per annum. During the quarter ended March 31, 2008, the Company made payments on the demand note to Vantage for $500,000.

On September 23, 2008 the Company received a Cancellation of Debt from Vantage Group Ltd, canceling the remaining balance of the Loan Payable, including all outstanding interest as of that date. In addition Vantage Group Ltd surrendered 14,000,000 shares of common stock and 8,400,000 warrants at $0.60.

F-13

7. EQUITY

Common Stock

The Company has authorized 10,000 shares of Series A Preferred Stock with a par value of $0.0001 per share.

Milton Hauser is entitled to receive 10,000 shares of the Company’s newly designated Series A preferred stock (the “Series A Preferred”). Each share of Series A Preferred is convertible at the option of the holder, into 50 shares of the Company’s common stock. In addition, the holders of the Series A Preferred shall be entitled that number of votes at any regular or special meeting of the shareholders of the Company .equal to that number of common shares which is not less than 51% of the vote required to approve any action.

The Company has authorized 1,500,000,000 shares of common stock with a par value of $0.0001 per share. As of December 31, 2009, the Company has 1,463,021,410 shares of common stock issued and outstanding.

On January 20, 2006, the Company paid an in-kind dividend of 14 shares of common stock for each share of common stock held by shareholders of record at the close of business on January 16, 2006. There were 11,915,594 shares of common stock outstanding immediately before the in-kind dividend. A total of 166,818,316 shares of common stock were issued pursuant to the in-kind dividend, and there were 178,733,910 shares of common stock outstanding immediately after the in-kind dividend.

On November 15, 2007, the Company and Vantage, the Company’s largest stockholder and primary source of funding, entered into a debt conversion agreement. Pursuant to the debt conversion agreement, Vantage agreed to convert the aggregate principal amount of $2,100,000 of its indebtedness into an aggregate of 14,000,000 restricted shares of common stock of the Company. As of December 31, 2007, the shares of common stock had not been issued

On November 16, 2007, pursuant to the terms of a securities purchase agreement the Company sold subscriptions for 11,000,000 restricted shares of the Company’s common stock and three year warrants to purchase an aggregate of 6,600,000 restricted shares of the Company’s common stock at an exercise price of $0.60 per share for aggregate proceeds of $1,650,000. As of December 31, 2007, the shares of common stock had not been issued and the funds were recorded as capital in excess of par value until issuance.

During the quarter ended March 31, 2008, pursuant to the terms of the Purchase Agreement, the Company issued and sold 2,000,000 restricted shares of the Company’s common stock and three year warrants to purchase an aggregate of 1,200,000 restricted shares of the Company’s common stock at an exercise price of $0.60 per share for aggregate proceeds of $300,000. The Company claims an exemption from the registration requirements of the Act for the private placement of these securities pursuant to Section 4(2) of the Act and/or Regulation D promulgated thereunder since, among other things, these transactions did not involve a public offering, the investors were accredited investors and/or qualified institutional buyers, the investors had ac cess to information about us and their investment, the investors took the securities for investment and not resale, and the Company took appropriate measures to restrict the transfer of the securities.

The Company issued 37,500 shares of common stock to an employee per their employment agreement during the quarter ended March 31, 2008. The Company recognized compensation expense of $22,125 based on the closing price of the Company’s common stock as of the grant date.

On September 23, 2008, in connection with the Cancellation of Debt Agreement with Vantage Group (Note 6) 14,000,000 share of restricted common stock, previously issued on February 27, 2008 were cancelled and returned to the Company.

On September 30, 2008 the Company issued 2,000,000 shares of restricted common stock in exchange for $300,000

On December 16, 2008 the Company issued 24,722,561 shares of common stock for amount due of $29402 to consultants. The market value of the shares issued was $346,116.

On January 23, 2009 the Company issued 109,579,135 shares of common stock for amounts due to consultants. The share issuance had a market value of $202,381.

On January 28, 2009 the Company issued 14,027,439 shares of common stock for amounts due to consultants. The share issuance had a market value of $28,410.

F-14

On February 20, 2009 the Company issued 28,410,864 shares of common stock for amounts due to consultants. The share issuance had a market value of $28,410.

On March 04, 2009 the Company issued 87,826,007 shares of common stock for amounts due to consultants. The share issuance had a market value of $70,261.

On March 16, 2009 the Company issued 45,689,216 shares of common stock for amounts due to consultants. The share issuance had a market value of $27,413.

On April 08, 2009 the Company issued 11,397,420 shares of common stock for amounts due to consultants. The share issuance had a market value of $6,838.

On May 05, 2009 the Company issued 120,189,675 shares of common stock for amounts due to consultants. The share issuance had a market value of $96,152.

On May 19, 2009 the Company issued 7,142,857 shares of common stock for amounts due to consultants. The share issuance had a market value of $3,572.

On May 26, 2009 the Company issued 8,000,000 shares of common stock for amounts due to consultants. The share issuance had a market value of 6,400.

On June 11, 2009 the Company issued 107,189,500 shares of common stock for amounts due to consultants. The share issuance had a market value of $96,470.

On June 22, 2009 the Company issued $25,000,000 shares of common stock for amounts due to consultants. The share issuance had a market value of $20,000

On July 20, 2009 the Company issued 64,147,106 share of common stock for amounts due to consultants. The share issuance had a market value of $32,074.

On July 27, 2009 the Company issued 2,500,000 shares of common stock for amounts due to consultants. The share issuance had a market value of $2,500.

On July 29, 2009 the Company issued 60,073,553 shares of common stock for amounts due to consultants. The share issuance had a market value of $72,088.

On July 31, 2009 the Company issued 25,000,000 shares of common stock for amounts due to consultants. The share issuance had a market value of $20,000.

On August 1, 2009 the Company issued 500,000 shares of common stock for amounts due to consultants. The share issuance had a market value of $450.

On August 6, 2009 the Company issued 65,972,222 shares of common stock for amounts due to consultants. The share issuance had a market value of59,375.

On August 13, 2009 the Company issued 21,040,667 shares of common stock for amounts due to consultants. The share issuance had a market value of $16,833.

On August 28, 2009 the Company issued 98,000,000 shares of common stock for amounts due to consultants. The share issuance had a market value of $58,800.

On September 30, 2009 the Company issued 12,841,778 shares of common stock for amounts due to consultants. The share issuance had a market value of $11,558.

On December 29, 2009 the Company issued 211,500,000 shares of common stock for amounts due to consultants. The shares had a market value of $401,850.

On December 31, 2009 the Company issued 118,500,000 shares of common stock for amounts due to consultants. The shares had a market value of $462,150.

F-15

Stock Options

2006 Incentive Stock Plan

In January 2006, the Board of Directors of the Company approved an Incentive Stock Plan, pursuant to which they have initially reserved 10,000,000 shares of common Stock for issuance. Under the 2006 Incentive Stock, the Board has granted an aggregate of 5,640,000 options to employees pursuant to certain employment agreement that are more fully described below

2008 Amended and Restated Incentive Stock Plan

In November 2008, our board of directors adopted the 2008 Equity Incentive Plan and subsequently amended it in January 2009, June 2009 and July 2009 (the “2008 Plan”). The purpose of the 2008 Plan was to provide an incentive to attract and retain directors, officers, consultants, advisors and employees whose services are considered valuable, to encourage a sense of proprietorship and to stimulate an active interest of such persons into our development and financial success. Under the 2008 Plan, we are authorized to issue incentive stock options intended to qualify under Section 422 of the Code, non-qualified stock options, stock appreciation rights, performance shares, restricted stock and long term incentive awards. The 2008 Plan will be adminis tered by our board of directors until such time as such authority has been delegated to a committee of the board of directors.

2010 Incentive Stock Plan

In December 2009, our board of directors adopted the 2010 Equity Incentive Plan (the “2010 Plan”). The purpose of the 2010 Plan was to provide an incentive to attract and retain directors, officers, consultants, advisors and employees whose services are considered valuable, to encourage a sense of proprietorship and to stimulate an active interest of such persons into our development and financial success. Under the 2010 Plan, we are authorized to issue incentive stock options intended to qualify under Section 422 of the Code, non-qualified stock options, stock appreciation rights, performance shares, restricted stock and long term incentive awards. The 2010 Plan will be administered by our board of directors until such time as such authority has been delegated to a committee of the board of directors.

A summary of option activity under the Plan as of December 31, 2009, and changes during the period then ended are presented below:

	Options			Weighted Average Exercise Price
Outstanding at December 31, 2005		150,000		$	1.17
Granted		5,660,000			0.80
Exercised
Forfeited or Expired		(150,000	)		(1.17	)
Outstanding at December 31, 2006		5,660,000			0.80
Granted		--			--
Exercised		--			--
Forfeited or Expired		(20,000	)	$	(2.00	)
Outstanding at December 31, 2007		5,640,000		$	0.80
Granted		--			--
Exercised		--			--
Forfeited or Expired		--			--
Outstanding at December 31, 2008		5,640,000		$	0.80
Granted		--			--
Exercised		--			--
Forfeited or Expired		--			--
Outstanding at December 31, 2009		5,640,000		$	0.80
Non-vested at December 31 2009		--
Exercised at December 31, 2009		5,640,000		$	0.80

F-16

The options outstanding as of December 31, 2009 have been segregated for additional disclosure as follows:

Options Outstanding						Options Exercisable
						Weighted
				Weighted		Average				Weighted
Range of				Average		Remaining				Average
Exercise		Number		Exercise		Contractual		Number		Exercise
Price		Outstanding		Price		Life		Exercisable		Price
$	0.80		5,640,000	$	0.80		1.00		5,640,000	$	0.80
Total			5,640,000	$	0.80		1.00		5,640,000	$	0.80

At December 31, 2009, the exercisable and outstanding options had no intrinsic value. Intrinsic value represents the difference between the company’s closing stock price on the last trading day of the fiscal period, which was $0.19 and as of December 31, 2008, and the exercise price multiplied by the number of options outstanding.

Stock-based compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period. Share based compensation expense for the year ended December 31, 2009 and December 31, 2008 was $0 and $102,678 respectively.

Warrants

On June 19, 2006 the Company issued 200,000 warrants to consultants for services to be provided. The warrants vested in 50,000 increments on June 19, 2006; September 18, 2006, December 17, 2006 and March 17, 2007. The estimated value of the compensatory warrants granted to non-employees in exchange for services and financing expenses was determined using the Black-Scholes pricing model and the following assumptions:

Risk-free interest rate at grant date	4.75	%
Expected stock price volatility	86	%
Expected dividend payount	--
Expected option in life-years	4

As of December 31, 2007, all warrants were fully vested. During the quarter ended March 31, 2008, the Company issued 16,200,000 three year warrants to purchase an aggregate of 16,200,000 restricted shares of the Company’s common stock at an exercise price of $0.60 per share as part of the common stock sales. On September 23, 2008, in connection with the Vantage Group Ltd Cancellation of Debt Agreement, 8,400,000 warrants previously mentioned were cancelled (See Note 8). A summary of the warrants outstanding and exercisable appears below:

Warrants Outstanding						Warrants Excercisable
Exercise Price		Number Outstnding		Weighted Average Remaining Contractual Life(years)		Weighted Average Exercise Price		Number Excercisable		Weighted Average Remaining Contractual Life (years)
$	3.50		50,000		1.22		3.50		50,000		1.22
$	5.00		50,000		1.47		5.00		50,000		1.47
$	6.50		50,000		1.72		6.50		50,000		1.72
$	8.00		50,000		1.97		8.00		50,000		1.97
$	0.60		7,800,000		1.75		0.60		7,800,000		1.75
$	0.56		175,000		3.75		0.56		175,000		3.75
			8,175,000		11.88		.073		8,175,000		11.88

F-17

The Company awarded 175,000 Common Stock warrants, at an exercise price of $0.56 per share, to former board members at the quoted stock price on the effective date of the awards. The warrants have an expiration date of five years from the issue date and contain provisions for a cash exercise. The estimated value of the compensatory warrants granted to non-employees in exchange for services and financing expenses was determined using the Black-Scholes pricing model and the following assumptions:

Risk-free interest rate at grant date	4.75	%
Expected stock price volatility	155	%
Expected dividend payount	--
Expected option in life-years	3

Transactions involving warrants are summarized as follows:

	Number of Warrants			Weighted Average Price Per Share
Outstanding at December 31, 2007		200,000		$	5.75
Granted		16,375,000			0.60
Exercised		--			--
Canceled or expired		(8,400,000	)		0.60
Outstanding at December 31, 2008		8,175,000			0.73
Granted		--			--
Exercised		--			--
Canceled or expired		--			--
Outstanding at December 31, 2009		8,175,000			0.73

The estimated value of the compensatory warrants granted to non-employees in exchange for services and financing expenses was determined using the Black-Scholes pricing model and the following assumptions:

Risk-free interest rate at grant date	4.75	%
Expected stock price volatility	86	%
Expected dividend payout	--
Expected option in life-years	4

F-18

8. INCOME TAXES

The Company’s recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Temporary differences between taxable income reported for financial reporting purposes and income tax purposes are insignificant.

9. COMMITMENTS

Medefile leases its main office, which is located at 301 Yamato Rd, Boca Raton, FL 33431, commencing March 01, 2009. Medefile’s previous location was 240 Cedar Knolls Rd, Cedar Knolls, NJ 07927 , commencing September 2007 and expiring in August 2012. By mutual agreement the lease was cancelled and Medefile chose Florida for its main office location. With new business development and more favorable conditions and costs with the transition to operations in Florida. The current lease is for a term of 24 months.

		2009			2010
12 Months ending 12/31		$	34,686		$	30,720

On December 10, 2008, Medefile entered into an employment agreement with Milton Hauser, pursuant to which Milton Hauser agreed to continue to serve as the Company’s President and Chief Executive Officer for a term of three years. The term of his agreement shall automatically extend for successive one year periods unless otherwise terminated by the parties in accordance with the terms of the agreement. Pursuant to his agreement, Milton Hauser shall be entitled to receive an annual salary of $216,000, which amount may be payable in shares of the Company’s common stock in the sole discretion of the Company. He shall also be entitled to a discretionary bonus from time to time during the term of the agreement in an amount determined by the sole discretion of the Company’s board of directors. In addition, Milton Hauser is entitled to receive 10,000 shares of the Company’s newly designated Series A preferred stock (the “Series A Preferred”). Each share of Series A Preferred is convertible at the option of the holder, into 50 shares of the Company’s common stock. In addition, the holders of the Series A Preferred shall be entitled that number of votes at any regular or special meeting of the shareholders of the Company .equal to that number of common shares which is not less than 51% of the vote required to approve any action.

On December 10, 2008, Medefile entered into an employment agreement with Kevin Hauser pursuant to which Kevin Hauser agreed to continue to serve as the Company’s Vice President of Sales and New Business Development for a term of three years. The term of his agreement shall automatically extend for successive one year periods unless otherwise terminated by the parties in accordance with the terms of the agreement. Pursuant to his agreement, Kevin Hauser shall be entitled to receive an annual salary of $216,000. He shall also be entitled to a discretionary bonus from time to time during the term of the agreement in an amount determined by the sole discretion of the Company’s board of directors.

On December 10, 2008, Medefile entered into an employment agreement with Rachel Hauser pursuant to which Rachel Hauser agreed to serve as the Company’s Director of Marketing and Public Relations for a term of three years. The term of his agreement shall automatically extend for successive one year periods unless otherwise terminated by the parties in accordance with the terms of the agreement. Pursuant to his agreement, Kevin Hauser shall be entitled to receive an annual salary of $216,000. She shall also be entitled to a discretionary bonus from time to time during the term of the agreement in an amount determined by the sole discretion of the Company’s board of directors.

On April 3, 2009, Realty Associates Fund VI, LP filed suit against the Company in the Superior Court of New Jersey, Law Division, Morris County, alleging amounts owed under the Company's lease with Realty Associates. On August 5, 2009, Realty Associates requested that the court enter a default judgement against the Company, The Company has reached a settlement with the Plaintiff in the amount of $40,000 which shall be payable $20,000 upon execution of the settlement agreement and $20,000 within 120 days of execution. the initial payment was made on March 26, 2010. The Company recorded the $40,000 during the year ended December 31, 2009.

10. MAJOR CUSTOMERS

For the years ended December 31, 2009 and 2008, there was no single customer which accounted for a majority of the revenues. We do not have a written agreement with our customers. Therefore, the provision of services to these customers is provided by us “at will” and the customers may decide not to use our services at any time.

11. SUBSEQUENT EVENTS

None

F - 19

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosure.

As of the end of the period covered by this Annual Report, we conducted an evaluation, under the supervision and with the participation of our Chief Executive Officer (Principal Executive, Financial and Accounting Officer), of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation, our Chief Executive Officer (Principal Executive, Financial and Accounting Officer) concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and which also are effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer (Principal Executive, Financial and Accounting Officer), to allow timely decisions regarding required disclosure.

Management's Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting of the Company. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

Management, with the participation of our principal executive officer, financial and accounting officer, has evaluated the effectiveness of our internal control over financial reporting as of December 31, ~~2008~~2009 based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, because of the Company’s limited resources and limited number of employees, management concluded that, as of December 31, ~~2008,~~2009, our internal control over financial reporting is not effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this annual report.

Limitations on Effectiveness of Controls and Procedures

Our management, including our Chief Executive Officer (Principal Executive, Financial and Accounting Officer), does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include, but are not limited to, the ~~realities~~rea lities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes in internal controls

There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or 15d-15 under the Exchange Act that occurred during the quarter ended December 31, 2008 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

~~None~~On April 13, 2010, the Company filed a Certificate of Amendment to its Articles of Incorporation, pursuant to which it increased the number of shares of common stock that the Company has the authority to issue from 1,500,000,000 to 3,000,000,000.

~~PART III~~

PART III

ITEM 10. DIRECTORS, OFFICERS AND CORPORATE GOVERNANCE.

The following tables set forth certain information with respect to our directors and officers as of March 31, 2009. The following persons serve as our directors and executive officers:

Name	Age	Position

Milton Hauser	6567	President, Chief Executive Officer, Acting Chief Financial Officer, Director

Eric Rosenfeld*	45	~~Chief Information Officer, Secretary, Director~~

Michael S. Delin**Delin	45	Director

* On November 11, 2008, Eric Rosenfeld resigned from his position as Chief Information Officer, Secretary and as a member of the Board Directors of MedeFile International, Inc.

** Effective December 12, 2008, Michael S. Delin was appointed to the Board of Directors of Medefile International, Inc.

Our executive officers are appointed by and serve at the discretion of our Board of Directors. There are no family relationships between any director and/or any executive officer.

Background of Executive Officers and Directors

Milton Hauser, President, Chief Executive Officer and Acting Chief Financial Officer. Milton. Hauser has been President of Medefile International since 2001. Prior to his joining Medefile International, his career was in the Marketing and Advertising field and included creating marketing campaigns and programs for such companies as Panasonic, Sanyo, Avon, Lederle International, and other Fortune 500 companies.

Eric Rosenfeld, Chief Information Officer. Mr. Rosenfeld became the Chief information Officer in April 2004. Prior to that time, Mr. Rosenfield had been Chief Technical Officer since 2002. He designs and develops the technology utilized by all the divisions of the company. On November 13, 2007, Mr. Rosenfeld was appointed to the Baord of Directors. Before working for Medefile, Mr. Rosenfeld owned and operated a successful consulting company that was engaged in various healthcare and pharmaceutical projects for Fortune 500 companies. Prior to that, he was a senior member of Oracle Corporation and helped establish its NY Metro consulting practice. He was a contributing author of Oracle's development tools and consulting methodologies, including its Designer and CDM products. Throughout his career, Mr. Rosenfeld has played a key role in the development and architecture of Oracle Corporation's Clinical and Pharmaceutical products and has authored clinical data management computer systems for Merck, Parke-Davis, Schering-Plough, and Johnson & Johnson/PRD. Mr. Rosenfeld was also a senior member of Sybase Inc. On November 11, 2008, Eric Rosenfeld resigned from his position as Chief Information Officer, Secretary and as a member of the Board Directors of MedeFile International, Inc.

Michael Delin, Director. Mr. Delin is the sole proprietor and operator of an accounting and tax preparation service. He has previously provided consulting services to the Company. Mr. Delin also currently serves as the Chief Financial Officer of a construction company based in southwest Florida. Mr. Delin graduated from the University of South Florida with a Bachelor of Arts degree in accounting

COMMITTEES

Audit Committee

The purpose of the Audit Committee is to assist the board of directors in fulfilling its oversight responsibilities for (1) the integrity of the Company's financial statements, (2) the Company's compliance with legal and regulatory requirements, (3) the independent auditor's qualifications and independence, and (4) the performance of the Company's internal audit function and independent auditors. Currently, the Company does not have an audit committee.

Compensation and Personnel Committee

The purpose of the Compensation and Personnel Committee is to provide oversight review of compensation and benefits of the employees of the Company. The Committee evaluates and makes regular reports to the Board of Directors on matters concerning management performance, employee compensation and human resources policies, programs and plans, including management development and continuity plans, and approves employee compensation programs and benefit programs. Currently the Company does not have a compensation and personnel committee.

Nominating and Governance Committee

The purpose of the Nominating and Governance Committee is to ensure that the Board of Directors is appropriately constituted to meet its fiduciary obligations to the shareholders and the Company. To accomplish this purpose, the Nominating and Governance Committee develops and implements policies and processes regarding corporate governance matters, assesses Board membership needs, makes recommendations regarding potential director candidates and makes regular reports to the Board of Directors. Currently the Company does not have a nominating and governance committee.

CODE OF ETHICS

We have adopted a Code of Ethics and Business Conduct that applies to our officers, directors and employees.

~~SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE~~

Section 16(a) of the Securities Exchange Act of 1934 requires our officers, directors, and persons who beneficially own more than 10% of our common stock to file reports of securities ownership and changes in such ownership with the Securities and Exchange Commission ("SEC"). Officers, directors and greater than 10% beneficial owners are also required by rules promulgated by the SEC to furnish us with copies of all Section 16(a) forms they file.

Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to us under Rule 16a-3(e) during the fiscal year ended December 31, 2008, we believe that during the year ended December 31, 2008, our executive officers, directors and all persons who own more than ten percent of a registered class of our equity securities complied with all Section 16(a) filing requirements.

1920

ITEM 11. EXECUTIVE COMPENSATION

The following table sets forth information concerning the compensation for services in all capacities rendered to us for the ~~three~~two fiscal years ended December 31, ~~2008,~~2009, of our Chief Executive Officer and our other executive officers whose annual compensation exceeded $100,000 in the fiscal year ended December 31, ~~2008,~~2009, if any. We refer to the Chief Executive Officer and these other officers as the named executive officers.

SUMMARY COMPENSATION TABLE

Name and Principal Position	Year	Salary ($)	Bonus ($)	Stock Awards ($)	Option Awards ($)	Non-Equity Incentive Plan Compensation ($)	Nonqualified Deferred Compensation Earnings ($)	All Other Compensation ($)	Total ($)
Milton Hauser (1) President, CEO, Acting CFO and Director	2009 2008	-- 180,000	-- --	70,593 (4) --	-- --	-- --	-- --	22,300	202,300
Kevin Hauser Director of New Business Development	2009 2008	-- 121,016	-- --	270,343 (5) --	-- 718,243 (2)	-- --	-- --	5,600	809,843
Eric Rosenfeld (3) Chief Information Officer and Director	2009 2008	-- 133,857	-- --	-- --	-- 718,243 (2)	-- --	-- --	13,858	842,751
Peter LoPrimo Vice President, Sales and Marketing	2009 2008	-- 96,000	-- --	-- --	-- 718,243 (2)	-- --	-- --	--	814,243

~~The accompanying notes are an integral part of these consolidated financial statements~~

~~F-3~~

~~Medefile International, Inc~~

~~Consolidated Statements of Operations~~

~~For the Years Ended December 31, 2008 and 2007~~

2008 2007
Revenue $ 53,235 $ 44,847

Operating expenses 1,972,229 4,022,396
Selling, general and administrative expenses 1,869,551 1,733,565
Depreciation 20,240 22,518
Total operating expenses 1,992,469 4,044,914

Loss from operations (1,939,234 ) (4,000,067 )

Other Expenses
Interest expense note payable 3,136 -
Loss on securities 192 -
Interest expense - related party note payable 34,596 160,779
Total other expense 37,924 160,779

Loss before income tax (1,977,158 ) (4,160,846 )
Provision for income tax - -
Net Loss $ (1,977,158 ) $ (4,160,846 )

Comprehensive loss $ (1,977,158 ) $ (4,160,846 )

Net loss per share: basic and diluted $ (0.01 ) $ (0.02 )

Weighted average share outstanding 200,953,132 178,733,910

~~The accompanying notes are an integral part of these consolidated financial statements~~

~~F-4~~

~~Medefile International, Inc~~

~~Consolidated Statement of Stockholders' Equity~~

~~For the Year ended December 31, 2008 and 2007~~

Other
Common Accumulated
Shares Stock Accumulated Comprehensive
Outstanding Amount APIC Subscribed Deficit Gain Total
Balance as of
December 31, 2006 178,733,910 $ 17,873 $ 3,604,471 $ - $ (5,367,958 ) $ 354 $ (1,745,260 )
Non-cash
compensation 2,288,831 2,288,831
Common stock
subscribed for
reduction in notes
payable 2,100,000 2,100,000
Common stock
subcriptions 1,650,000 1,650,000
Net Loss (4,160,846 ) (4,160,846 )
Balance as of
December 31, 2007 178,733,910 $ 17,873 $ 5,893,302 $ 3,750,000 $ (9,528,804 ) $ 354 $ 132,725
Common stock issured
for exercise of stock
options 37,500 4 (4 )
Common stock sale 2,000,000 200 299,800 300,000
Common stock issued
for reduction
in note payable 14,000,000 1,400 2,098,600 (2,100,000 )
Common stock issued
for stock subscriptions 11,000,000 1,100 1,648,900 (1,650,000 )
Recharacterize
comprehensive gain 354 (354 )
Common stock warrants 41,558 41,558
issued for
compensation 61,120 61,120
Common stock sale 2,000,000 200 299,800 300,000
cancellation of
debt by related
party 636,701 636,701
Cancellation of
Shares - related party (14,000,000 ) (1,400 ) 1,400
S-8 Share issued
for employees and
comsultants 24,722,561 2,472 343,644 346,116

Net Loss (1,977,158 ) (1,977,158 )
Balance as of December 31, 2008 218,493,971 21,849 11,324,821 - (11,505,608 ) - (158,938 )

~~The accompanying notes are an integral part of these consolidated financial statements~~

~~F-5~~

~~Medefile International, Inc~~

~~Consolidated Statement of Cash Flows~~

~~For the Year Ended December 31, 2008 and 2007~~

2008 2007
Cash flows from operating activities
Net loss $ (1,977,158 ) $ (4,160,846 )

Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation 20,240 22,518
Non cash compensation 102,678 2,288,831
S-8 issuance of shares 346,116 -
Interest Expense 3,136 -
Interest Expense - related party 34,596 161,504
Bad debt expense (3,134 ) -
Changes in operating assets and liabilities
Accounts Receivable 2,808 (2,808 )
Prepaid Expenses 8,272 (16,082 )
Marketable securities - 126,960
Deferred revenue (401 ) (27,525 )
Accounts payable and accrued liabilities (105,745 ) 720
Deposits and other assets 515 (12,205 )
Advance customer payments (50,000 ) 50,000
Net Cash used in operating activities (1,618,077 ) (1,568,933 )
Cash flows from investing activities
Purchase equipment (11,402 ) (36,628 )
Net cash used in investing activities (11,402 ) (36,628 )
Cash flows from financing activities
Proceeds from loans by related parties 93,518 1,245,000
Proceeds from note payable 76,390 -
Payments of loans from related parties (500,000 ) (20,979 )
Proceeds from common stock sale 600,000 -
Proceeds from common stock subscriptions - 1,650,000
Net cash provided by financing activities 269,908 2,874,021
Net increase(decreast) in cash and cash equivalents (1,359,571 ) 1,268,460
Cash and cash equivalents at beginning of period 1,367,415 98,955
Cash and cash equvalents at end of period $ 7,844 $ 1,367,415

Supplemental disclosure of cash flow information
Cash paid during period for
Cash paid for interest $ - $ 20,979
Cash paid for income taxes $ - $ 2,439
Common stock issued for stock subscriptions $ 3,750,000 $ -
Cancelleation of debt by stockholder
recorded as contribution to additional paid in capital $ 636,701
Common stock to be issued to cancel debt $ - $ 2,100,000

~~The accompanying notes are an integral part of these consolidated financial statements~~

~~F-6~~

~~MEDEFILE INTERNATION, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~December 31, 2008~~

~~1. BASIS OF PRESENTATION AND NATURE OF BUSINESS OPERATIONS~~

~~Basis of Presentation~~

~~Nature of Business Operations~~

Medefile has developed a system for gathering, digitizing, storing and distributing information for the healthcare field. Medefile's goal is to bring digital technology to the business of medicine. Medefile intends to accomplish its objective by providing individuals with a simple and secure way to access their lifetime of actual medical records in an efficient and cost-effective manner. Medefile's products and services are designed to provide Healthcare providers with the ability to reference their patient's actual past medical records, thereby ensuring the most accurate treatment and services possible while simultaneously reducing redundant procedures. Medefile's primary product is the MedeFile system, a highly secure system for gathering and maintaining medical records. The MedeFile system is designed to gather all of its members' medical records and create a single, comprehensive medical record that is accessible 24 hours a day, seven days a week.

~~Going Concern~~

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. However, the Company has reported a net loss of $1,977,158 and $4,160,846 for the years ended December 31, 2008 and 2007, respectively and had an accumulated deficit of $11,505,607 as of December 31, 2008.

~~F-7~~

~~MEDEFILE INTERNATION, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~December 31, 2008~~

However, the trading price of our common stock could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Further, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. If additional financing is not available or is not available on acceptable terms, we will have to curtail our operations.

~~Cash and Cash Equivalents~~

~~For purposes of these financial statements, cash equivalents include a highly liquid debt instruments with a maturity of less than three months.~~

~~Concentrations of Credit Risk~~

~~Advertising~~

The Company follows the policy of charging the costs of advertising to expense as incurred. The Company incurred advertising costs for the year ended December 31, 2008 of approximately $118,491. The Company incurred $41,713 advertising costs for the year ended December 31, 2007. An advertising contract was entered into in May 2008 which included advertising and promotion through advertising media and website promotions. Total cost of the advertising was to be, $99,999 at signing of contract. A total of $99,999 had been paid through June 30, 2008.

The Company contracted with Ruckus Marketing in 2007. There developed a disagreement between parties as to the accuracy of deliverables. The contract was cancelled. Ruckus Market filed suit for payment and a judgment resulted in $15,000 being due. The judgment was paid in full on July 21, 2008

~~F-8~~

~~MEDEFILE INTERNATION, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~December 31, 2008~~

~~Impairment of Long-Lived Assets~~

The company has adopted Statement of Financial Accounting Standards No.144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS 144). The Statement requires that long-lived assets and certain identifiable intangibles held and used by the company are reviewed for impairment whenever events or changes in ircumstances indicate that the carrying amount of an asset may not be recoverable. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses, or a forecasted inability to achieve break even operating results over an extended period. The company evaluates the recoverability of long-lived assets based upon forecasted undiscounted cash flows. Should an impairment in value be indicated, the carrying value of intangible assets will be adjusted, based on estimates of future discounted cash flows resulting from the use of and ultimate disposition of the intangible, to be reported at the lower of the carrying amount or the fair value less costs to sell.

~~Income Taxes~~

The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, "Accounting For Income Taxes". The provision for income taxes is comprised of current and deferred components. The current component presents the amount of federal and state income taxes that are currently reportable to the respective tax authorities and is measured by applying statutory rates to the Company's taxable income as reported in its income tax returns.

Deferred income taxes are provided for the temporary differences between the carrying values of the Company's assets and liabilities for financial reporting purposes and their corresponding income tax basis. These temporary differences are primarily attributable to net operating losses. The temporary differences give rise to either a deferred tax asset or liability in the financial statements, which is computed by applying statutory tax rates to taxable or deductible temporary differences based upon classification (i.e., current or non-current) of the asset or liability in the financial statements which relate to the particular temporary difference.

~~Property and Equipment~~

~~Trademark Costs~~

Trademark costs incurred in the registration and acquisition of trademarks and trademark rights are capitalized. These costs will be amortized over the legal life of the related trademark once the trademark is awarded. In accordance with the provisions of Statement of Financial Accounting Standards No. 142 (SFAS No. 142), Goodwill and Other Intangible Assets, the Company performs an annual review of its identified intangible assets to determine if facts and circumstances exist which indicate that the useful life is shorter than originally estimated or that the carrying amount of the assets may not be recoverable.

~~Capitalized Software Development Costs~~

The Company's policy is to capitalize computer software costs in accordance with Statement of Position 98-1,"Accounting for the Costs of Computer Software Developed or Obtained for Internal Use" Under SOP 98-1, costs incurred in creating software to gather, digitize, store and distribute medical information once the application development stage is reached, are capitalized. The application development stage is when a working model/concept is established. Costs incurred in developing the product from this point until the product is available for release to customers are capitalized and includes contracted labor including supervision of the product developers and other outside consultant costs. Amortization of these costs started February 2004, when the product was first available for release to customers and is being recovered on the straight-line basis over the estimated economic life of sixty months. The Company reviews the amounts capitalized for impairment whenever events or circumstances indicate that the carrying amounts of the assets may not be recoverable.

~~F-9~~

~~MEDEFILE INTERNATION, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~December 31, 2008~~

~~Long-Lived Assets~~

The Company evaluates long-lived assets for impairment under Financial Accounting Standards Board (FASB) Statement No. 121 "Accounting for the Impairment of Long-Lived Assets to be Disposed Of". Under these rules, long-term and intangible assets are evaluated for possible impairment when events or circumstances indicate that the carrying amount of those assets may not be recoverable. Measurement of the impairment loss, if any, is based upon the difference between the assets carrying value in the financial statements and its estimated fair value.

~~Revenue Recognition~~

The Company generates revenue from licensing the right to utilize its proprietary software for the storage and distribution of healthcare information to individuals and affinity groups. For revenue from product sales, the Company recognizes revenue in accordance with Staff Accounting Bulletin ("SAB") No. 104, "Revenue Recognition," which superseded SAB No. 101, "Revenue Recognition in Financial Statements." SAB No.101 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectibility is reasonably assured. Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and the collectibility of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company defers any revenue for which the product has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required. SAB No. 104 incorporates Emerging Issues Task Force ("EITF") No. 00-21, "Multiple-Deliverable Revenue Arrangements." EITF No. 00-21 addresses accounting for arrangements that may involve the delivery or performance of multiple products, services and/or rights to use assets. The effect of implementing EITF No. 00-21 on the Company's consolidated financial position and results of operations was not significant. This issue addresses determination of whether an arrangement involving more than one deliverable contains more than one unit of accounting and how the arrangement consideration should be measured and allocated to the separate units of accounting.

~~Deferred Revenue~~

~~Investments~~

The Company's investments in marketable securities are classified as "available for sale" securities, and are carried on the financial statements at market value. Realized gains and losses are included in earnings; unrealized gains and losses are reported as a separate component of stockholders' equity and as a component of "Other Comprehensive Income."

~~Reclassifications~~

~~Certain reclassifications have been made in prior year's financial statements to conform to classifications used in the current year.~~

~~F-10~~

~~MEDEFILE INTERNATION, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~December 31, 2008~~

~~Fair Value of Financial Instruments~~

~~The Company's financial instruments, which include cash, prepaid expenses, securities, and accounts payable approximate fair value due to the short-term nature of these assets and liabilities.~~

~~Off-balance Sheet Arrangements~~

~~The Company does not have any off-balance sheet financing or any unconsolidated special purpose entities.~~

~~Use of Estimates~~

~~Liquidity~~

As of December 31, 2008 we had cash and cash equivalents of $7,844. Net cash used in operating activities for the year was approximately $1,618,077. Current liabilities are approximately $254,919 of which $79,069 is for accounts payable, $5,942 is Deferred Revenues and $76,930 for a Note Payable and an additional $93,518 for a Note Payables from a Related Party. We have negative working capital of approximately $229,269

As reflected in the accompanying consolidated financial statements, the Company incurred net losses of $1,977,158 for the year ended December 31, 2008, and has an accumulated deficit of $11,505,607 as of December 31, 2008. Consequently, its operations are subject to all risks inherent in the establishment of a new business enterprise.

We will need additional investments in order to continue operations to cash flow break even. Additional investments are being sought, but we cannot guarantee that we will be able to obtain such investments. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the trading price of our common stock and the downturn in the U.S. stock and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Further, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. If additional financing is not available or is not available on acceptable terms, we will have to curtail our operations.

~~Net Loss Per Share~~

~~Basic and diluted loss per share amounts are computed based on net loss divided by the weighted average number of common shares outstanding.~~

~~Comprehensive Income~~

Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income (SFAS 130), requires the reporting of comprehensive income in addition to net income from operations. Comprehensive income is a more inclusive financial reporting methodology that includes disclosures of certain financial information that historically has not been recognized in the calculation of net income. For all of the periods presented, the Company's comprehensive income is presented in the Statement of Comprehensive Income, and includes unrealized gains and losses on marketable securities net of the related estimated deferred income tax effect associated with those gains and losses.

~~F-11~~

~~MEDEFILE INTERNATION, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~December 31, 2008~~

~~Management Estimates~~

The presentation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.

~~Stock Based Compensation~~

On January 1, 2006 the Company adopted Statement of Financial Accounting Standards No. 123 (revised 2004) "Share-Based Payment" ("SFAS 123 (R) which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including employee stock options and employee stock purchases related to a Employee Stock Purchase Plan based on the estimated fair values. SFAS 123 (R) supersedes the Company's previous accounting under Accounting Principles Board Opinion No.25, "Accounting for Stock Issued to Employees" ("APB 25") for the periods beginning fiscal 2006.

~~New Accounting Pronouncements~~

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” SFAS No. 157 establishes a single definition of fair value and a framework for measuring fair value, sets out a fair value hierarchy to be used to classify the source of information used in fair value measurements, and requires new disclosures of assets and liabilities measured at fair value based on their level in the hierarchy. SFAS No. 157 is effective for all fiscal years beginning after November 15, 2007 (January 1, 2008 for 3M) and is to be applied prospectively. In February 2008, the FASB issued Staff Positions No. 157-1 and No. 157-2 which partially defer the effective date of SFAS No. 157 for one year for certain nonfinancial assets and liabilities and remove certain leasing transactions from its scope. The Company is currently evaluating the impacts and disclosures of this standard, but would not expect SFAS No. 157 to have a material impact on the Company’s consolidated results of operations or financial condition.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities”. SFAS No. 159 permits an entity to choose, at specified election dates, to measure eligible financial instruments and certain other items at fair value that are not currently required to be measured at fair value. An entity shall report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. Upfront costs and fees related to items for which the fair value option is elected shall be recognized in earnings as incurred and not deferred. SFAS No. 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. SFAS No. 159 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. At the effective date, an entity may elect the fair value option for eligible items that exist at that date. The entity shall report the effect of the first remeasurement to fair value as a cumulative-effect adjustment to the opening balance of retained earnings. The Company has not elected the fair value option for eligible items that existed as of December 31, 2007.

~~F-12~~

~~MEDEFILE INTERNATION, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~December 31, 2008~~

In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interest in Consolidated Financial Statements, an amendment of ARB No. 51" ("SFAS No. 160"), which will change the accounting and reporting for minority interests, which will be recharacterized as noncontrolling interests and classified as a component of equity within the consolidated balance sheets. SFAS No. 160 is effective as of the beginning of the first fiscal year beginning on or after December 15, 2008. Earlier adoption is prohibited and the Company is currently evaluating the effect, if any, that the adoption will have on its financial position, results of operations or cash flows.

In March 2008, the Financial Accounting Standards Board, or FASB, issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133. This standard requires companies to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. This Statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company has not yet adopted the provisions of SFAS No. 161, but does not expect it to have a material impact on its financial position, results of operations or cash flows.

~~F-13~~

~~MEDEFILE INTERNATION, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~December 31, 2008~~

~~Certain amounts previously reported have been reclassified to conform to the current year presentation.~~

~~2. FURNITURE AND EQUIPMENT~~

~~Furniture and equipment consists of the following at December 31, 2008 and 2007:~~

December 31, 2008 December 31, 2007

Computer and Equipment $ 169,286 $ 157,884
Furniture and Fixtures 38,618 38,618
Subtotal 207,904 196,502
Less : accumulated depreciation (153,390 ) (133,150 )
Total Furniture and equipment $ 54,514 63,352

Depreciation is calculated by using the straight-line method over the estimated useful life. Depreciation and amortizations expense totaled $20,240 and $22,518 for the year ended December 31, 2008 and 2007, respectively.

~~3. INTANGIBLE ASSETS~~

Identifiable intangible assets consist of the carrying value of a trademark totaling $1,339 as of December 31, 2008. The trademark acquired is considered to have an undeterminable life, and as such will not be amortized. Instead, the trademark is tested annually for impairment, with any impairment charged against earnings in the Company’s consolidated statement of earnings. Management determined the fair value of the trademark acquired exceeded its recorded book value at December 31, 2008.

~~4. NOTE PAYABLE.~~

~~On September 26, 2008, the Company issued a Demand Note in the principal amount of $75,000 to an individual. This Note bears interest at a rate of seven percent per annum~~

December 31, 2008
Borrowings $ 75,000
Accrued Interest 1,390
Balance December 31, 2008 $ 76,390

~~F-14~~

~~MEDEFILE INTERNATION, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~December 31, 2008~~

~~5. NOTE PAYABLE – RELATED PARTY~~

December 31, 2008
Borrowings $ 89,771
Accrued Interest 1,747
Balance December 31, 2008 $ 91,518

~~6. LOAN PAYABLE - RELATED PARTY~~

The Company has been and continues to be dependent upon the funding from The Vantage Group, Ltd., (“Vantage”) the Company’s largest stockholder. On April 11, 2007, the Company issued two unsecured promissory notes to The Vantage Group as evidence of this indebtedness outstanding. Both notes bear interest at the rate of seven percent per annum. One note, with a principal amount of $1,115,379, was payable on July 1, 2008. The other note, is payable on demand in the principal amount of $700,000. During the year ended December 31, 2007, the Company borrowed a total of $1,245,000 against the demand note and repaid $20,979. On November 15, 2007, the Company and Vantage, entered into a debt conversion agreement. Pursuant to the debt conversion agreement, Vantage agreed to convert the aggregate principal amount of $2,100,000, of its indebtedness into an aggregate of 14,000,000 restricted shares of common stock of the Company. The conversion amount was used to satisfy the note maturing on July 1, 2008, and the remaining conversion amount was used to pay down the demand loan. In addition, the Company issued to Vantage 8,400,000 three year warrants to purchase an aggregate of 8,400,000 restricted shares of the Company’s common stock at an exercise price of $0.60 per share. As of December 31, 2007, the shares of common stock had not been issued and were recorded as common stock subscribed, until issuance. The shares were issued on February 7, 2008.

~~F-15~~

~~MEDEFILE INTERNATION, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~December 31, 2008~~

~~7. EQUITY~~

~~Common Stock~~

~~The Company has authorized 300,000,000 shares of common stock with a par value of $0.0001 per share. As of December 31, 2008, the Company has 218,493,971 shares of common stock issued and outstanding.~~

During the quarter ended March 31, 2008, pursuant to the terms of the Purchase Agreement, the Company issued and sold 2,000,000 restricted shares of the Company’s common stock and three year warrants to purchase an aggregate of 1,200,000 restricted shares of the Company’s common stock at an exercise price of $0.60 per share for aggregate proceeds of $300,000. The Company claims an exemption from the registration requirements of the Act for the private placement of these securities pursuant to Section 4(2) of the Act and/or Regulation D promulgated thereunder since, among other things, these transactions did not involve a public offering, the investors were accredited investors and/or qualified institutional buyers, the investors had access to information about us and their investment, the investors took the securities for investment and not resale, and the Company took appropriate measures to restrict the transfer of the securities.

~~On September 30, 2008 the Company issued 2,000,000 shares of restricted common stock in exchange for $300,000~~

~~On December 16, 2008 the Company issued 24,722,561 shares of common stock for amount due of $29402 to employees and consultants. The market value of the shares issued was $346,116.~~

~~F-16~~

~~MEDEFILE INTERNATION, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~December 31, 2008~~

~~Stock Options~~

~~A summary of option activity under the Plan as of December 31, 2008, and changes during the period then ended are presented below:~~

Options Weighted-Average Exercise Price
Outstanding at December 31, 2005 150,000 $ 1.17
Granted 5,660,000 0.80
Exercised
Forfeited or expired (150,000 (1.17
Outstanding at December 31, 2006 5,660,000 0.80
Issued -- --
Exercised -- --
Forfeited or expired (20,000 $ (2.00
Outstanding at December 31, 2007 5,640,000 $ 0.80
Issued -- --
Excercised -- --
Forfeited or Expired -- --
Outstanding at December 31, 2008 5,640,000 0.80
Non-vested at December 31, 2008 -- $ 0.80
Exercisable at December 31, 2008 5,640,000 $ 0.80

~~The options outstanding as of December 31, 2008 have been segregated for additional disclosure as follows:~~

Options Outstanding Options Exercisable
Weighted
Weighted Average Weighted
Range of Average Remaining Average
Exercise Number Exercise Contractual Number Exercise
Price Outstanding Price Life Exercisable Price
$ 0.80 5,640,000 $ 0.80 1.25 5,640,000 $ 0.80
Total 5,640,000 $ 0.80 1.25 5,640,000 $ 0.80

At December 31, 2008, the exercisable and outstanding options had no intrinsic value. Intrinsic value represents the difference between the company’s closing stock price on the last trading day of the fiscal period, which was $0.19 and as of December 31, 2007, and the exercise price multiplied by the number of options outstanding.

Stock-based compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period. Share based compensation expense recognized under SFAS 123 (R) for the year ended December 31, 2008 and December 31, 2007 was $102,678 and $2,288,831 respectively.

~~On December 16, 2008, the company issued 24,722,561 share of common stock for payments to employees and independent contractions, the market value of the shares issued was $351,527.~~

~~F-17~~

~~MEDEFILE INTERNATION, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~December 31, 2008~~

~~Warrants~~

~~Risk-free interest rate at grant date~~	~~4.75~~	%
~~Expected stock price volatility~~	86	%
~~Expected dividend payout~~	--
~~Expected option in life-years~~	4

Warrants Outstanding Warrants Exercisable
Weighted Weighted
Average Weighted Average
Remaining Average Remaining
Exercise Number Contractual Exercise Number Contractual
Prices Outstanding Life (years) Price Exercisable Life (years)

$

3.50

50,000

1.47

$

3.50

50,000

1.47

$

5.00

50,000

1.72

$

5.00

50,000

1.72

$

6.50

50,000

1.97

$

6.50

50,000

1.97

$

8.00

50,000

2.22

$

8.00

50,000

2.22

$

0.60

7,800,000

2.00

$

0.60

7,800,000

2.00

$

0.56

175,000

4.00

$

0.56

175,000

4.00

8,175,000

2.04

$

0.73

8,175,000

2.04

~~Risk-free interest rate at grant date~~	~~4.75~~	%
~~Expected stock price volatility~~	~~155~~	%
~~Expected dividend payout~~	--
~~Expected option in life-years~~	5

~~F-18~~

~~MEDEFILE INTERNATION, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~December 31, 2008~~

~~Transactions involving warrants are summarized as follows:~~

Number of Warrants Weighted-Average Price Per Share
Outstanding at December 31, 2007

200,000

$

5.75

Granted

16,375,000

0.60

Exercised

-

-

Canceled or expired

(8,400,000)

0.60

Outstanding at December 31, 2008

8,175,000

0.73

~~Risk-free interest rate at grant date~~	~~4.75%~~
~~Expected stock price volatility~~	~~86%~~
~~Expected dividend payout~~	--
~~Expected option in life-years~~	4

~~8. INCOME TAXES~~

The Company has adopted Financial Accounting Standard number 109, which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Temporary differences between taxable income reported for financial reporting purposes and income tax purposes are insignificant.

For income tax reporting purposes, the Company's aggregate unused net operating losses approximate $4,600,000, expire at various times through 2027, subject to limitations of Section 382 of the Internal Revenue Code, as amended. The deferred tax asset related to the carry forward is approximately $1,669,000. The Company has provided a valuation reserve against the full amount of the net operating loss benefit, since in the opinion of management based upon the earning history of the Company, it is more likely than not that the benefits will not be realized.

~~9. COMMITMENTS~~

2009 2010
12 Months ending 12/31 $ 34,686 $ 30,720

~~F-19~~

~~MEDEFILE INTERNATION, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~December 31, 2008~~

~~10. MAJOR CUSTOMERS~~

For the years ended December 31, 2008, there was no single customer which accounted for a majority of the revenues. and for the year ended December 31, 2007, there was a single customer accounted for approximately 63% of revenues. We do not have a written agreement with our customers. Therefore, the provision of services to these customers is provided by us “at will” and the customers may decide not to use our services at any time.

~~11. SUBSEQUENT EVENTS~~

~~On January 28, 2008 the Company issued 14,027,439 shares of common stock for amounts due employees and consultants. The share issuance had a market value of $28,055.~~

~~On January 23, 2009 the Company issued 119,201,668 shares of common stock for amounts due employees and consultants. The share issuance had a market value of $214,563.~~

~~On February 20, 2009 the Company issued 30,798,331 shares of common stock for amounts due employees and consultants. The share issuance had a market value of $30,798.~~

~~On March 04, 2009 the Company issued 92,913,364 shares of common stock for amounts due employees and consultants. The share issuance had a market value of $92,913.~~

~~On March 16, 2009 the Company issued 45,689,216 shares of common stock for amounts due employees and consultants. The share issuance had a market value of $45,689~~

~~On March 19, 2009 the Company cancelled 12,010,000 shares of common stock issued in excess of shares required.~~

Nevada		85-0368333
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Large accelerated filer o 	Accelerated filer o 
Non-accelerated filer o 	Smaller reporting company x


		Page
	PART I
Item 1	Business	3
Item 1A	Risk Factors	6
Item 1B	Unresolved Staff Comments	9
Item 2	Properties	9
Item 3	Legal Proceedings	9
Item 4	~~Submission of Matters to a Vote of Security Holders~~Reserved	9 10
	PART II
Item 5	Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities	10
Item 6	Selected Financial Data	12
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	16 17
Item 8	Financial Statements and Supplementary Data	16 17
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	17 18
Item 9A	Controls and Procedures	17 18
Item 9B	Other Information	18 19
	PART III
Item 10	Directors, Executive Officers, and Corporate Governance	18 19
Item 11	Executive Compensation	20 21
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	24 26
Item 13	Certain Relationships and Related Transactions	25 27
Item 14	Principal Accountant Fees and Services	25 27
	PART IV
Item 15	Exhibits and Financial Statement Schedules	26 29
	Signatures	27 30

	High		Low		High		Low
Quarter ended 03/31/07	$	0.80	$	0.21
Quarter ended 06/30/07	$	0.32	$	0.12
Quarter ended 09/30/07	$	0.19	$	0.11
Quarter ended 12/31/07	$	0.63	$	0.16
Quarter ended 03/31/08	$	0.27	$	0.11	$	0.27	$	0.11
Quarter ended 06/30/08	$	0.44	$	0.11	$	0.44	$	0.11
Quarter ended 09/30/08	$	0.19	$	0.09	$	0.19	$	0.09
Quarter ended 12/31/08	$	0.10	$	0.001	$	0.10	$	0.01
Quarter ended 03/31/09					$	0.004	$	0.0005
Quarter ended 06/30/09					$	0.0015	$	0.0004
Quarter ended 09/30/09					$	0.002	$	0.0004
Quarter ended 12/31/09					$	0.007	$	0.0008

			Number of securities
	Number of securities		remaining available for
	to be issued upon	Weighted average	future issuance under
	exercise of	exercise price of	equity compensation plans
	outstanding options,	outstanding options,	(excluding securities
Plan category	warrants and rights	warrants and rights	reflected in column (a)

	(a)	(b)	(c)

Equity compensation plans approved	-0-	-0-	-0-
by security holders

Equity compensation plans not	5,640,000	$ 0.80	4,360,000
approved by security holders

Total	5,640,000	$ 0.80	4,360,000

	-	MedeFile Website - through normal e-commerce mechanisms, patients may enroll in the service directly from the MedeFile website. Membership may be purchased on an annual basis and may be paid all at once, or over time at the patient's discretion.
	-	Physician Referrals - Patients may enroll based on a doctor's referral. In the event that these physicians are also Medefile CIS customers, they may easily transfer their patients' information into the MedeFile system.
	-	Large group offerings (e.g., AARP, trade unions) - Large, membership-driven organizations may offer the MedeFile system to their members at a discounted rate, which may be negotiated with Medefile based on the size of the expected enrollment. An additional promotional advantage may be derived from the use of MedeFile through the website of the client organization. Hence, MedeFile functionality may be accessed using each organization's site.
	-	Insurance companies - Similar to large group offerings identified above, insurance companies will be able to offer the MedeFile service to their insured as a means to decrease the cost of medical care.

	Option Awards										Stock Awards								Option Awards										Stock Awards
Name	Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable		Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)		Option Exercise Price ($)		Option Expiration Date		Number of Shares or Units of Stock That Have Not Vested (#)		Market Value of Shares or Units of Stock That Have Not Vested ($)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)		Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable		Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)		Option Exercise Price ($)		Option Expiration Date		Number of Shares or Units of Stock That Have Not Vested (#)		Market Value of Shares or Units of Stock That Have Not Vested ($)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
Mitlon Hauser President, CEO, Acting CFO and Director		--		--		--		--		--		--		--		--		--		--		--		--		--		--		--		--		--		--
Kevin Hauser Director of New Business Development		1,800,000		--		--	$	0.80	12/31/2009			--		--		--		--		1,800,000		--		--	$	0.80	12/31/2009			--		--		--		--
Eric Rosenfeld Chief Technical Office and Directorr		1,800,000		--		--	$	0.80	12/31/2009			--		--		--		--
Peter LoPrimo Vice President, Sales and Marketing		1,800,000		--		--	$	0.80	12/31/2009			--		--		--		--

Name of Beneficial Owner (1)	Common Stock Beneficially Owned(2)(3)	Percentage of Common Stock (2)	Common Stock Beneficially Owned(2)(3)	Percentage of Common Stock (2)

Vantage Holding Ltd.(4)	93,318,750	18.3%	93,318,750	6.38%
Milton Hauser (5)	45,000,000	8.8%	45,000,000	3.0%
Eric Rosenfeld (6)	1,800,000	*
Michael Delin	3,680,000	*
David Dorrance (7)	1,980,000	*
David Dorrance (6)			1,980,000	*
All officers and directors as a group (3 persons)	52,460,000	10.3%	140,298,750	9.6

* Less than 1%


		2009		2008

Audit Fees	$	45,000	$	37,500
Audit Related Fees		1,200		-
Tax Fees				-
All Other Fees				-
Total Fees	$	46,200	$	37,500

		2008		2007

Audit Fees	$	35,000	$	70,692
Audit Related Fees				-
Tax Fees				3,500
All Other Fees				-
Total Fees	$	35,000	$	74,192

	MEDEFILE INTERNATIONAL, INC.

Date: April ~~15, 2009~~ 21, 2010	By:	/s/ Milton Hauser
		Milton Hauser
		President, Chief Executive Officer, Acting Chief Financial Officer and Director

SIGNATURE	TITLE	DATE

/ss// Milton Hauser	President, Chief Executive Officer and Chairman of	April ~~15, 2009~~21, 2010
Milton Hauser	the Board of Directors (Principal Executive, Financial and Accounting Officer)
~~/s/ Michael S. Delin~~
/s/ Michael S. Delin	Director	April ~~15, 2009~~21, 2010
Michael S. Delin

	Options		Weighted-Average Exercise Price
Outstanding at December 31, 2005		150,000	$	1.17
Granted		5,660,000		0.80
Exercised
Forfeited or expired		(150,000		(1.17
Outstanding at December 31, 2006		5,660,000		0.80
Issued		--		--
Exercised		--		--
Forfeited or expired		(20,000	$	(2.00
Outstanding at December 31, 2007		5,640,000	$	0.80
Issued		--		--
Excercised		--		--
Forfeited or Expired		--		--
Outstanding at December 31, 2008		5,640,000		0.80
Non-vested at December 31, 2008		--	$	0.80
Exercisable at December 31, 2008		5,640,000	$	0.80

Warrants Outstanding							Warrants Exercisable
					Weighted						Weighted
					Average		Weighted				Average
					Remaining		Average				Remaining
Exercise			Number		Contractual		Exercise		Number		Contractual
Prices			Outstanding		Life (years)		Price		Exercisable		Life (years)
	$	3.50		50,000		1.47	$	3.50		50,000		1.47
	$	5.00		50,000		1.72	$	5.00		50,000		1.72
	$	6.50		50,000		1.97	$	6.50		50,000		1.97
	$	8.00		50,000		2.22	$	8.00		50,000		2.22
	$	0.60		7,800,000		2.00	$	0.60		7,800,000		2.00
	$	0.56		175,000		4.00	$	0.56		175,000		4.00
				8,175,000		2.04	$	0.73		8,175,000		2.04

	Number of Warrants	Weighted-Average Price Per Share
Outstanding at December 31, 2007	200,000	$	5.75
Granted	16,375,000		0.60
Exercised	-		-
Canceled or expired	(8,400,000)		0.60
Outstanding at December 31, 2008	8,175,000		0.73