UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| x | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended March 31,June 30, 2008
| ¨ | Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Commission file number: 33-55254-36
E Med Future, Inc.
(Exact name of registrant as specified in its charter)
| Nevada | 87-0485314 | |
| (State of incorporation) | (I.R.S. Employer Identification No.) |
34 South Clay Street, Millersburg, Ohio 44654
(Address of principal executive offices)
| 330-674-1363 | www.NeedleZap.com | |
| (Registrant’s telephone number) | (Registrant’s website) |
Indicate by a check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by a check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
| Large Accelerated Filer | ¨ | Accelerated Filer | ¨ | |||
| Non-Accelerated Filer | ¨ | Smaller Reporting Company | x | |||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:42,513,415 shares of common stock, $0.001 par value per share, as of MayAugust 15, 2008.
| 2 | ||||||
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Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |||||
| 4 | ||||||
| 4 | ||||||
| 4 | ||||||
| 5 | ||||||
| 5 | ||||||
| Controls and Procedures | ||||||
| 8 | ||||||
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Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | |||||
| 8 | |||||
| 8 | |||||
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| 8 | ||||||
| 8 | ||||||
| SIGNATURES | 9 | |||||
| FINANCIAL STATEMENTS | F-1 |
PART I — FINANCIAL INFORMATION
| Item 1. | Financial Statements |
Our March 31,June 30, 2008 unaudited consolidated financial statements follow this quarterly report beginning on page F-1.
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Headquartered in Millersburg, Ohio, E Med Future, Inc. manufactures and markets products designed to reduce accidental hypodermic needlestick injuries. Our primary product, NeedleZap®NeedleZap®, completely disintegrates the sharp portion of the needle. According to the American Nursing Association, there are an estimated one million accidental needlesticks reported in the United States in the healthcare industry alone. We believe the applications for the product are far reaching, and include healthcare professionals, law enforcement and correctional personnel, veterinarians, military, clinical researchers, hospitality, and sanitation workers. NeedleZap®NeedleZap® is designed to work within the parameters of OSHA needlestick mandates which require employers to take advantage of new technologies to prevent needlesticks in the workplace.
Our primary product is NeedleZap®the NeedleZap®, a revolutionary safety device intended to help reduce accidental needlestick injuries by disintegrating the sharp portion of a hypodermic needle. When a hypodermic needle is inserted into the unit, the patented electrode system disintegrates the needle in approximately two seconds at 2200° F.
In July 2003, we announced the beginning of clinical testing and market evaluation of the first extensions to the NeedleZap®NeedleZap® product line which include a dental parking station and butterfly needle burner. We are presently in the process of obtaining patent protection for these new products. Because we lack sufficient funds to expedite the development of these products, both products remain in the development phase. We anticipate that both products will involve supplements to our existing FDA pre-market approval; therefore, introduction and timing of these products into the marketplace will be contingent on FDA approval.
The dental parking station is intended to provide a safer, temporary resting place for a hypodermic syringe. During a procedure, dentists often reuse a hypodermic needle on the same patient when additional anesthesia is required. Since the needle is not destroyed immediately after the initial use, dentists generally recap the needle or leave the needle exposed, increasing the risk of an accidental needlestick injury. The NeedleZap®NeedleZap® unit sets directly on the dental parking station enabling the dentist to recap, or disintegrate, the hypodermic needle easily with one hand at the end of the procedure, and significantly reducing the risk of a needlestick injury.
The butterfly needle burner is intended to accommodate needles not secured to a hypodermic syringe. Butterfly needles are used primarily for IV’s and kidney dialysis. Since the original NeedleZap®
NeedleZap® unit was intended to disintegrate hypodermic needles held by a syringe, the butterfly needle burner necessitated design modifications, including a change to the housing and repositioning of the electrode system.
On December 30, 2003, we acquired Medical Safety Technologies, Inc. from UTEK Corporation (AMEX:UTK), an innovative technology transfer company dedicated to building bridges between university developed technologies and commercial organizations. Medical Safety Technologies, or MSTI, holds the worldwide exclusive license to a patented invention, known as the “Safe Receptacle for Sharps,” that is designed to aid in the safe transport of sterile and used sharp medical instruments. This Emory University invention was developed to help reduce the possibility of needlestick injuries by maintaining medical instruments in an angled, accessible position while encasing their sharp edges. We believe the Safe Receptacle for Sharps device is complimentarycomplementary to our NeedleZap® product. By expanding our future product line, we hope to bring added value to the sales and distribution channel we are building. However, we are not presently pursuing the sharps receptacle as management believes resources should be conserved for marketing the currently approved product.
On November 22, 2006, Martin Management Services, Inc. was appointed as receiver for E Med by the Franklin County, Ohio Common Pleas Court in the action filed on August 6, 2006 by Complete Investment Management, Ltd., or CIM, against the Company. CIM has sought the repayment of a loan made by CIM to E Med in the amount of $548,000. E Med is in default in its payments to CIM due to declining revenue and cash flow. The receiver is currently operating the company for the benefit of its creditors. The receiver has receivedobtained offers to purchase the assets of E Med or to purchase a controlling interest of the shares of the company. The receiver is currently evaluating these offersnegotiating a potential sale and expects to have agreementsan agreement in place to sell each component withinin the next 90 days.third quarter. However, there can be no assurances that the receiver will be able to complete a transaction in that time frame or at all.
We have incurred net losses while we obtained FDA approval and patent protection for our NeedleZap® product and entered into distribution relationships. We have not had significant sales volume to date. We believe we have now obtained significant experience in how to market our products effectively and we had an increase in sales in 2007, which none the less were less than projected. We cannot guarantee that sales will increase or that we will be able to attain profitability. We are currently in receivership and our future is uncertain.
The Company was formed under the laws of the State of Nevada on March 14, 1990, but until 2003 we were a shell company with no significant operations other than seeking to identify an existing business to acquire. Trading in our stock was dependant on our acquisition of an operating business. On April 4, 2003, we participated in a merger in which we acquired E Med Future, Inc., our operating subsidiary. In connection with the transaction, we issued 19,850,000 unregistered shares of our common stock (95% of our then outstanding shares) to the former stockholders of E Med Future.
Pursuant to the terms of the merger agreement, we changed our corporate name from “Micro-Economics, Inc.” to “E Med Future, Inc.” In addition, our original directors resigned and were replaced by Robert J. Ochsendorf, D. Dane Donohue and Juan J. Perez. Our shares began trading on the OTC Bulletin Board under the symbol “EMDF.OB” on April 17, 2003.
We are a development stage company and did not have full approval to market and sell our products until March 2003. Initial sales in 2003 caused us to be optimistic that our revenues and profits would increase in subsequent years. However, our results have not met expectations due to lower than anticipated sales. In 2007 we voluntarily suspended shipment of our products due to a Food and Drug Administration investigator that found deficiencies in or operating procedures. We believe that we are now in compliance and resumed shipping product in the second quarter.
Second Quarter of 2008 Compared to 2007
We did not have anyhad sales of $61,563 in the quarter ended March 31,June 30, 2008, compared with $104,625$17,546 for the same period in 2007, a decreasean increase of $104,625,$44,017, or 100.0%250.9%. The lack of sales inIn the firstsecond quarter of 2008 was caused2007, we completed several international sales that had been delayed by our voluntary suspension of sales and shipments until we achieved FDA compliance, resulting in an increase in sales over the second quarter of 2007.
Operating costs and expenses increased $22,165, or 27.5%, in the second quarter of 2008 to $102,821 from $80,656 in 2007. Operating costs and expenses for the second quarter of 2008 were higher due to costs relating to the receivership and a consultant hired to assist in achieving FDA compliance. Cost of goods sold was 41.1% and 46.0% for the second quarter of 2008 and 2007 respectively.
Other expenses were flat at $15,456 in 2008 and $15,455 in 2007.
In the second quarter of 2008, our net loss decreased to $56,714 from a net loss of $78,565 in 2007 primarily as a result of increased sales in 2008 which offset more of the costs associated with the receivership and achieving FDA compliance.
First Half of 2008 Compared to 2007
We had sales of $61,563 in the six months ended June 30, 2008, compared with $122,171 for the same period in 2007, a decrease of $60,608, or 49.6%. The reduction in sales for 2008 was caused by our voluntary suspension of sales and shipments during the first quarter while we achieved FDA compliance, partially offset by increased sales in the second quarter.
Operating costs and expenses decreased $68,399,$48,452, or 64.6%25.7%, in the first quarterhalf of 2008 to $37,509$140,330 from $105,908$188,782 in 2007. Operating costs and expenses for the first quarter of 2008 were lower due to a reduction in staff and operating activities and no costactivities. Cost of goods sold.sold as a percentage of sales was 41.1% in 2008 compared to 34.7% in 2007.
Other expenses increased $1,918,$1,919, or 14.2%6.6%, to $15,455$30,911 in the first half of 2008 compared to $13,537$28,992 in 2007.
In the first quarterhalf of 2008, our net loss increased to $52,964$109,678 from a net loss of $14,820$95,603 in 2007 primarily as a result of the lack ofreduced sales in 2008 due to our voluntary suspension of shipments until FDA compliance was achieved as well as costs associated with the receivership.
Financial Condition and Liquidity
We had available cash of $2,191$24,200 on March 31,June 30, 2008, compared to $3,216 cash available at the end of 2007. The decrease is primarilyDuring the second quarter of 2008, Ronald L. Alexander, one of our directors, loaned E Med $47,744. Available cash increased as a result of not havingthese loans partially offset by our lack of sales in the first quarter of 2008 due to the FDA requirement that we not make any shipments until full compliance with FDA regulations was achieved.quarter. We had cash used in operations of $1,025$26,760 in the first quarterhalf of 2008 compared to cash provided by operations of $10,987$55,320 in 2007. The change was primarily the result of the net loss in 2008.
On November 12, 2002, we entered into a credit facility with Key Bank (NA). The facility provides us with a working capital line-of-credit of up to $150,000 and currently bears interest at 10.75%. The credit facility is secured by all of E Med’s assets and must be paid back in full on demand. We presently have drawn $121,396 on the facility.
On April 1, 2004, we entered into a loan agreement with a private investor in the amount of $750,000. The convertible promissory note bears interest at 7.5% payable quarterly with the principal due in five years and is secured by all of our assets. The note is convertible at the holder’s option into 1.5 million shares of our unregistered common stock, subject to adjustment for dilutive
issuances. In connection with the loan, we also agreed to pay the lender a $3.00 royalty on each of the first 1.0 million and $2.00 on the second 1.0 million NeedleZap® units sold, with maximum total royalty payments of $5.0 million. The loan agreement was amended effective December 31, 2004 to reduce the loan amount to $548,000. Payment of interest and royalties was deferred until January 1, 2006, provided we provide monthly sales reports to the lender when due. In addition, if we arrange an increase in bank financing, the lender agreed to subordinate its security interests to the secured interests of the banking institution up to a maximum of $500,000. We have not paid royalties to the lender and are currently in default under the loan.
From September 2004 to June 2006, Ronald L.Mr. Alexander one of our directors, loaned E Med a total of $136,120. On June 15, 2006, we issued Mr. Alexander 3.5 million unregistered shares in partial satisfaction of this loan. On June 28, 2006, a private investor purchased 1.5 million shares of our unregistered shares for $45,000, or $0.03 a share. On June 15, 2006, we issued 3.5 million unregistered shares to Donald Sullivan, our CFO, interim CEO and a director, for payment of accrued wages from January 1, 2005 through May 31, 2006.
Our primary need for capital is to fund operations and the development of new products. More recently we have been forced to expend significant funds to defend the company from various legal actions. Historically, our capital requirements have been met by a combination of loans from stockholders and other investors, our line of credit with Key Bank, and funds from operations. Although sales continue to be disappointing, we believe increased sales may eventually meet our capital needs in the long-term. However, current sales are not adequate to meet our cash needs, and without additional loans or equity infusions we will not be able to continue our operations.
Off-Balance Sheet Arrangements
We do not have any material off-balance sheet arrangements.
Some of the statements that we make in this report, including statements about our confidence in E Med’s prospects and strategies and our expectations about E Med’s sales expansion, are forward-looking statements within the meaning of § 21E of the Securities Exchange Act. Some of these forward-looking statements can be identified by words like “believe,” “expect,” “will,” “should,” “intend,” “plan,” or similar terms; others can be determined by context. Statements contained in this report that are not historical facts are forward-looking statements. These statements are necessarily estimates reflecting our best judgment based upon current information, and involve a number of risks and uncertainties. Many factors could affect the accuracy of these forward-looking statements, causing our actual results to differ significantly from those anticipated in these statements. While it is impossible to identify all applicable risks and uncertainties, they include:
our ability to continue operating as a going concern and emerge from receivership;
our ability to execute our business plan;
our ability to successfully market and sell our products;
our ability to continue to comply with rules and regulations governing our products;
our ability to gain and retain market share from our competitors, many of whom have greater financial and other resources than we do;
the introduction of competing products by other companies;
our ability to protect our patents, copyrights and other intellectual property rights;
pressure on pricing from our competitors or customers;
continued availability of components for our products and stability in the cost of these components;
our reliance on subcontractors to manufacture our products;
our reliance on independent distributors to market and sell our products;
our financial resources are limited and we are dependantdependent on increasing sales to generate cash for operations; and
our ability to comply with SEC regulations and filing requirements applicable to us as a public company.
You should not place undue reliance on our forward-looking statements, which reflect our analysis only as of the date of this report. The risks and uncertainties listed above and elsewhere in this report and other documents that we file with the Securities and Exchange Commission, including our annual report on Form 10-KSB, quarterly reports on Form 10-Q, and any current reports on Form 8-K, must be carefully considered by any investor or potential investor in E Med.
We file annual, quarterly and special reports and other information with the SEC. Our SEC filings are available to the public over the internet at the SEC’s web site at SEC.gov. You may also read and copy any document we file at the SEC’s public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on the operation of the SEC’s public reference room in Washington, D.C. by calling the SEC at 1-800-SEC-0330. To learn more about E Med you can also visit our website at NeedleZap.com or contact us directly at the address or phone number listed below.
E Med Future, Inc.
34 Clay Street
Millersburg, Ohio 44654
Phone: 330-674-1363
Email: info@NeedleZap.com
| Item 4. | Controls and Procedures |
Donald Sullivan, our chief financial officer and interim president and chief executive officer, has evaluated the effectiveness of E Med’s disclosure controls and procedures as of March 31,June 30, 2008. Based upon his review, he concluded that our disclosure controls and procedures are effective in ensuring that material information related to E Med is communicated to him by others within the
company responsible for reporting this information. There were no changes in our internal controls over financial reporting during the fiscal quarter ended March 31,June 30, 2008 that have materially affected, or are reasonably likely to affect, our internal controls over financial reporting.
| Item 1. | Legal Proceedings |
On July 1, 2006, Kenneth Jackson filed a petition for cancellation of the registration of the NeedleZap trademark (Registration Number 2620168) in the United States Patent and Trademark Office before the Trademark Trial and Appeal Board, or TTAB. The petition claimed that the trademark was being used so as to misrepresent the source of goods or services on or in connection with which the mark is used. On January 31, 2008 Jackson agreed to dismiss the trademark cancellation petition. On July 15, 2008 Jackson filed a voluntary dismissal with prejudice which was accepted and the proceeding dismissed July 23, 2008.
We are currently involved in several actions that we have disclosed in our previously filings with the SEC. For additional information about these suits, please reference Item 3 of our December 31, 2007 Form 10-KSB that we filed with the SEC on April 22, 2008 and our 2006 10-KSB filed on April 17, 2007.
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Not applicable.
| Item 3. | Defaults Upon Senior Securities |
Complete Investment Management (“CIM”) has loaned E Med a total of $548,000. E Med is in default of its payment obligations and CIM has instituted suit in connection with this loan. We hope to arrive at a mutually agreeable settlement with CIM. In connection with this suit, Martin Management Services, Inc. was appointed as receiver for the Company on November 22, 2006. Martin Management is currently operating E Med for the benefit of its creditors.
| Item 4. | Submission of Matters to a Vote of Security Holders |
Not applicable.
| Item 5. | Other Information |
Not applicable.
| Item 6. | Exhibits |
| 31 | Chief Financial Officer and Interim President and Chief Executive Officer’s Rule 13a-14(a)/15d-14(a) Certification Pursuant to § 302 of the Sarbanes-Oxley Act of 2002 | |
| 32 | Rule 13a-14(b)/15d-14(b) Certification Pursuant to § 906 of the Sarbanes-Oxley Act of 2002 | |
In accordance with the requirements of the Exchange Act, E Med Future, Inc. caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| E MED FUTURE, INC. | ||||||
| Date: | By | /s/ Donald Sullivan | ||||
E MED FUTURE, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
ASSETS
| March 31, 2008 | December 30, 2007 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash | $ | 2,191 | $ | 3,216 | ||||
Accounts receivable, net | — | — | ||||||
Inventory | 61,574 | 61,574 | ||||||
Deposit | 4,575 | 4,575 | ||||||
Total Current Assets | 68,340 | 69,365 | ||||||
EQUIPMENT, net of accumulated depreciation of $8,317 and $7,770, respectively | 8,544 | 9,090 | ||||||
Total Assets | $ | 76,884 | $ | 78,455 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
CURRENT LIABILITIES | ||||||||
Notes payable to bank | $ | 121,396 | $ | 121,396 | ||||
Current portion of notes payable | 1,089 | 1,089 | ||||||
Notes payable to related party | 71,821 | 71,821 | ||||||
Accounts payable | 354,442 | 321,004 | ||||||
Accounts payable to related party | 41,716 | 39,216 | ||||||
Accrued expenses | 406,429 | 390,974 | ||||||
Customer deposits | 75,000 | 75,000 | ||||||
Total Current Liabilities | 1,071,893 | 1,020,500 | ||||||
LONG –TERM DEBT | ||||||||
Convertible promissory note payable | 548,000 | 548,000 | ||||||
STOCKHOLDERS’ DEFICIT | ||||||||
Common stock $0.001 par value, 50,000,000 authorized, 42,513,415 issued and outstanding at March 31, 2008 and December 30, 2007 | 42,513 | 42,513 | ||||||
Paid-in Capital | 3,476,637 | 3,476,637 | ||||||
Deficit accumulated during development stage | (5,062,159 | ) | (5,009,195 | ) | ||||
Total Stockholders’ Deficit | (1,543,009 | ) | (1,490,045 | ) | ||||
Total Liabilities and Stockholders’ Deficit | $ | 76,884 | $ | 78,455 | ||||
| June 30, 2008 | December 31, 2007 | |||||||
| (Unaudited) | ||||||||
CURRENT ASSETS | ||||||||
Cash | $ | 24, 200 | $ | 3,216 | ||||
Inventory | 76,953 | 61,574 | ||||||
Deposit | 4,575 | 4,575 | ||||||
Total Current Assets | $ | 105,728 | 69,365 | |||||
EQUIPMENT, net of accumulated depreciation of $ 8,863 and $7,770, in 2008 and 2007, respectively | 7,997 | 9,090 | ||||||
TOTAL ASSETS | $ | 113,725 | $ | 78,455 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
CURRENT LIABILITIES | ||||||||
Notes payable to bank | $ | 121,396 | $ | 121,396 | ||||
Current portion of note payable | 1,089 | 1,089 | ||||||
Notes payable to related party | 119,565 | 71,821 | ||||||
Accounts payable | 376,789 | 321,004 | ||||||
Accounts payable to related party | 44,278 | 39,216 | ||||||
Accrued expenses | 427,331 | 390,974 | ||||||
Customer deposits | 75,000 | 75,000 | ||||||
| 1,165,448 | 1,020,500 | |||||||
LONG-TERM DEBT | ||||||||
Convertible promissory note payable | 548,000 | 548,000 | ||||||
Total Long-Term Liabilities | 548,000 | 548,000 | ||||||
STOCKHOLDERS’ DEFICIT | ||||||||
Common stock $0.001 par value, 50,000,000 authorized, 42,513,415 issued and outstanding at June 30, 2008 and December 31, 2007, respectively | 42,513 | 42,513 | ||||||
Paid-in-capital | 3,476,637 | 3,476,637 | ||||||
Deficit accumulated during development stage | (5,118,873 | ) | (5,009,195 | ) | ||||
Total Stockholders’ Deficit | (1,599,723 | ) | (1,490,045 | ) | ||||
Total Liabilities and Stockholders’ Deficit | $ | 113,725 | $ | 78,455 | ||||
See accompanying notes to consolidated financial statementsstatements.
E MED FUTURE, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| Three Months Ended | Period March 14, 1990 (Inception) to March 31, 2008 | Three Months Ended June 30, | Six Months Ended June 30, | Period March 14, 1990 (Inception) to June 30, 2008 | ||||||||||||||||||||||||||||
| March 31, 2008 | March 31, 2007 | 2008 | 2007 | 2008 | 2007 | |||||||||||||||||||||||||||
NET SALES | — | $ | 104,625 | $ | 1,126,279 | $ | 61,563 | $ | 17,546 | $ | 61,563 | $ | 122,171 | $ | 1,187,842 | |||||||||||||||||
COSTS AND EXPENSES | ||||||||||||||||||||||||||||||||
Cost of goods sold | — | 34,281 | 1,045,711 | 32,321 | 8,072 | 32,321 | 42,353 | 1,078,032 | ||||||||||||||||||||||||
Selling, general and administrative | 36,962 | 71,049 | 2,193,409 | 69,954 | 72,180 | 106,916 | 145,450 | 2,263,363 | ||||||||||||||||||||||||
Impairment of long lived assets | — | — | 273,844 | — | — | — | — | 273,844 | ||||||||||||||||||||||||
Research and development | — | — | 16,747 | — | — | — | — | 16,747 | ||||||||||||||||||||||||
Consulting expense | — | — | 2,112,400 | — | — | — | — | 2,112,400 | ||||||||||||||||||||||||
Impairment of goodwill | — | — | 188,500 | — | — | — | — | 188,500 | ||||||||||||||||||||||||
Depreciation and amortization | 547 | 578 | 148,614 | 546 | 404 | 1,093 | 979 | 149,160 | ||||||||||||||||||||||||
Total Costs and Expenses | 37,509 | 105,908 | 5,979,225 | 102,821 | 80,656 | 140,330 | 188,782 | 6,082,046 | ||||||||||||||||||||||||
NET OPERATING LOSS | (37,509 | ) | (1,283 | ) | (4,852,946 | ) | (41,258 | ) | (63,110 | ) | (78,767 | ) | (66,611 | ) | (4,894,204 | ) | ||||||||||||||||
OTHER INCOME (EXPENSE) | ||||||||||||||||||||||||||||||||
Interest and other income | — | — | 5,865 | — | — | — | — | 5,865 | ||||||||||||||||||||||||
Interest expense | (15,455 | ) | (13,537 | ) | (215,078 | ) | (15,456 | ) | (15,455 | ) | (30,911 | ) | (28,992 | ) | (230,534 | ) | ||||||||||||||||
Total Other Income (Expense) | (15,455 | ) | (13,537 | ) | (209,213 | ) | (15,456 | ) | (15,455 | ) | (30,911 | ) | (28,992 | ) | (224,669 | ) | ||||||||||||||||
NET LOSS | $ | (52,964 | ) | $ | (14,820 | ) | $ | (5,062,159 | ) | $ | (56,714 | ) | $ | (78,565 | ) | $ | (109,678 | ) | $ | (95,603 | ) | $ | (5,118,873 | ) | ||||||||
NET LOSS PER COMMON SHARE | ||||||||||||||||||||||||||||||||
(Basic and diluted) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.48 | ) | |||||||||||||||||||||||
NET LOSS PER COMMON SHARE | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.46 | ) | |||||||||||||||||
WEIGHTED AVERAGE SHARES OUTSTANDING | 42,513,415 | 42,513,415 | 10,561,793 | 42,513,415 | 42,513,415 | 42,513,415 | 42,513,415 | 11,021,492 | ||||||||||||||||||||||||
See accompanying notes to consolidated financial statements
E MED FUTURE, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| Three Months Ended March 31, | Period March 14, 1994 (Inception) to March 31, 2008 | |||||||||||
| 2008 | 2007 | |||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
Net loss | $ | (52,964 | ) | $ | (14,820 | ) | $ | (5,062,159 | ) | |||
Adjustments to reconcile net loss to net cash flows from operating activities: | ||||||||||||
Depreciation and amortization | 547 | 578 | 148,614 | |||||||||
Consulting expense | — | — | 2,112,400 | |||||||||
Research and development | — | — | 8,808 | |||||||||
Start-up costs | — | — | 19,177 | |||||||||
Amortization of prepaid expenses | — | — | 39,913 | |||||||||
Loss on inventory obsolescence | — | — | 225,110 | |||||||||
Impairment of long lived assets | — | — | 273,844 | |||||||||
Impairment of goodwill | — | — | 188,500 | |||||||||
Changes in operating assets and liabilities | ||||||||||||
Accounts receivable | — | (82,212 | ) | — | ||||||||
Inventory | — | 15,185 | (135,669 | ) | ||||||||
Prepaid expenses | — | — | (9,312 | ) | ||||||||
Deposits | — | — | (4,575 | ) | ||||||||
Accounts payable to related party | 2,500 | 10,318 | 41,716 | |||||||||
Accounts payable | 33,438 | 33,876 | 366,436 | |||||||||
Accrued expenses | 15,454 | 48,062 | 476,428 | |||||||||
Customer deposits | — | — | 75,000 | |||||||||
Net cash provided by (used in) operating activities | (1,025 | ) | 10,987 | (1,235,769 | ) | |||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||
Purchases of property and equipment | — | — | (94,806 | ) | ||||||||
Net cash used in investing activities | — | — | (94,806 | ) | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
Proceeds from issuance of common stock | — | — | 45,000 | |||||||||
Initial capitalization | — | — | 1,666 | |||||||||
Cash acquired in acquisition | — | — | 200,000 | |||||||||
Notes payable | — | — | 122,485 | |||||||||
Convertible promissory notes payable | — | — | 415,615 | |||||||||
Notes payable to related party | — | — | 548,000 | |||||||||
Net cash provided by financing activities | — | — | 1,332,766 | |||||||||
NET INCREASE(DECREASE) IN CASH | (1,025 | ) | 10,987 | 2,191 | ||||||||
CASH, BEGINNING OF YEAR | 3,216 | 8,947 | ||||||||||
CASH, END OF PERIOD | $ | 2,191 | $ | 19,934 | $ | 2,191 | ||||||
See accompanying notes to consolidated financial statementsstatements.
E MED FUTURE, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
| Three Months Ended March 31, | Period March 14, 1994 (Inception) to March 31, 2008 | ||||||
| 2008 | 2007 | ||||||
Supplemental Disclosure of Cash Flow Information: | |||||||
Interest paid | — | — | $ | 46,207 | |||
Supplemental Schedule of Non-Cash Investing and Financing Activities: | |||||||
Needlezap Partnership Contribution of Assets to Company | |||||||
Inventory | — | — | 151,015 | ||||
Equipment | — | — | 133,912 | ||||
Patent | — | — | 189,089 | ||||
Issuance of common stock for consulting services and compensation | — | — | 2,259,067 | ||||
Loss on inventory obsolescence | — | — | 225,110 | ||||
Impairment of long lived assets | — | — | 273,844 | ||||
Issuance of 750,000 shares valued at $0.03 to acquire Trademark | — | — | 22,500 | ||||
Issuance of 1,250,000 shares valued at $0.3108 per share to acquire MSTI and allocation of purchase price to license | — | — | 188,500 | ||||
Issuance of common stock in payment of loan | — | — | 336,484 | ||||
Issuance of common stock in payment of accounts payable | — | — | 70,000 | ||||
Issuance of common stock in payment of accrued wages | — | — | 70,000 | ||||
Settlement of notes payable with fixed assets | — | — | 7,310 | ||||
Six Months Ended June 30, | Period March 14, 1990 (Inception) to June 30, 2008 | |||||||||||
| 2008 | 2007 | |||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
Net loss | $ | (109,678 | ) | $ | (95,603 | ) | $ | 5,118,873 | ||||
Adjustments to reconcile net loss to net cash flows from operating activities: | ||||||||||||
Depreciation and amortization | 1,093 | 979 | 149,160 | |||||||||
Consulting expense | — | — | 2,112,400 | |||||||||
Research and development | — | — | 8,808 | |||||||||
Start-up costs | — | — | 19,177 | |||||||||
Amortization of prepaid expenses | — | — | 39,913 | |||||||||
Loss on inventory obsolescence | — | — | 225,110 | |||||||||
Impairment of long lived assets | — | — | 273,844 | |||||||||
Impairment of goodwill | — | — | 188,500 | |||||||||
Changes in operating assets and liabilities: | ||||||||||||
Accounts receivable | — | (137 | ) | — | ||||||||
Inventory | (15,379 | ) | 21,136 | (151,048 | ) | |||||||
Prepaid expenses | — | — | (9,312 | ) | ||||||||
Deposits | — | — | (4,575 | ) | ||||||||
Accounts payable | 55,785 | 51,714 | 391,692 | |||||||||
Accounts payable to related party | 5,062 | (2,153 | ) | 41,369 | ||||||||
Accrued expenses | 36,357 | 79,384 | 497,331 | |||||||||
Customer deposits | — | — | 75,000 | |||||||||
Net cash provided by (used in) operating activities | (26,760 | ) | 55,320 | (1,261,504 | ) | |||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||
Purchases of property and equipment | — | — | (94,806 | ) | ||||||||
Net cash used in investing activities | — | — | (94,806 | ) | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
Proceeds from issuance of common stock | — | — | 45,000 | |||||||||
Initial capitalization | — | — | 1,666 | |||||||||
Cash acquired in acquisition | — | — | 200,000 | |||||||||
Notes payable | — | (27,702 | ) | 122,485 | ||||||||
Convertible promissory notes payable | — | — | 548,000 | |||||||||
Notes payable to related party | 47,744 | — | 463,359 | |||||||||
Net cash provided by financing activities | 47,744 | (27,702 | ) | 1,380,510 | ||||||||
NET INCREASE IN CASH | 20,984 | 27,618 | 24,200 | |||||||||
CASH, BEGINNING OF PERIOD | 3,216 | 8,947 | ||||||||||
CASH, END OF PERIOD | $ | 24,200 | $ | 36,565 | $ | 24,200 | ||||||
See accompanying notes to consolidated financial statementsstatements.
E MED FUTURE, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (UNAUDITED)
Six Months Ended June 30, | Period March 14, 1994 (Inception) to June 30, 2008 | |||||||
| 2008 | 2007 | |||||||
Supplemental Disclosure of Cash Flow Information: | ||||||||
Interest paid | — | $ | 7,298 | $ | 46,207 | |||
Supplemental Schedule of Non-Cash Investing and Financing Activities: | ||||||||
Needlezap Partnership Contribution of Assets to Company | ||||||||
Inventory | — | — | 151,015 | |||||
Equipment | — | — | 133,912 | |||||
Patent | — | — | 189,089 | |||||
Issuance of 750,000 shares valued at $0.03 to acquire Trademark | — | — | 22,500 | |||||
Issuance of common stock for consulting services and compensation | — | — | 2,259,067 | |||||
Loss on inventory obsolescence | — | — | 225,110 | |||||
Impairment of long lived assets | — | — | 273,844 | |||||
Issuance of 1,250,000 shares valued at $0.3108 per share to acquire MSTI and allocation of purchase price to license | — | — | 188,500 | |||||
Issuance of common stock in payment of loan | — | — | 70,000 | |||||
Issuance of common stock in payment of accounts payable | — | — | 12,000 | |||||
Issuance of common stock in payment of accrued wages | — | — | 70,000 | |||||
Settlement of notes payable with fixed assets | — | — | 7,310 | |||||
E MED FUTURE, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2008
(Unaudited)
NOTE A - A—BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary in order to make the financial statements not misleading have been included. Results for the three and six months ended March 31,June 30, 2008 are not necessarily indicative of the results that may be expected for the year ending December 31, 2008. For further information, refer to the financial statements and footnotes thereto included in the E Med Future, Inc., formerly Micro-Economics, Inc., annual report on Form 10-KSB for the year ended December 31, 2007.
NOTE B - B—GOING CONCERN
As indicated in the accompanying financial statements, the Company incurred a net loss of $52,964$109,678 for the threesix months ended March 31,June 30, 2008, and has a negative working capital of $1,000,553$1,059,720 and an Accumulated Deficit Accumulated During Development Stage of $5,062,159$5,118,873 at March 31,June 30, 2008, and is considered a company in the development stage. Management’s plans include the raising of capital through short term financing to fund future operations and the generating of revenue through its business. Failure to raise capital, keep its products and manufacturing facilities in FDA compliance, and generate sales revenues could result in the Company having to curtail or cease operations. Additionally, even if the Company does raise sufficient capital to support its operating expenses and generate revenues, there can be no assurances that the revenue will be sufficient to enable it to develop business to a level where it will generate profits and cash flows from operations. These matters raise substantial doubt about the Company’s ability to continue as a going concern. However, the accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE C - C—CONCENTRATION
Approximately 75%90% of the Company’s sales for the threesix months ended March 31, 2007June 30, 2008 were with one customer. The Company did not have any sales in the three months ended March 31, 2008.six customers.
NOTE D -– CONVERTIBLE PROMISSORY NOTE PAYABLE
On November 22, 2006, Martin Management Services, Inc. (“Martin Management”) was appointed as receiver for the Company by the Franklin County, Ohio Common Pleas Court in the action filed on August 6, 2006 by Complete Investment Management, Ltd. (“CIM”). CIM has sought the repayment of a loan made by CIM to the Company in the amount of $548,000. The Company is in default in its payments to CIM due to declining revenue and cash flow. Martin Management has been operating the Company for the benefit of its creditors.
E MED FUTURE, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2008
(Unaudited)
NOTE E - E—COMMITMENTS AND CONTINGENCIES
From July 9 through July 25, 2007, a Food and Drug Administration investigator conducted an inspection of the Company’s operations. At the conclusion of the inspection an FDA Form 483 was issued to the companyCompany listing observations of the inspector, which the Company responded to on August 7, 2007. The observations included deficiencies in the Company’s operating procedures, which will require correction. The Company voluntarily suspended shipment of our products to assure that the Company is compliant. The Company has completed the corrections and requested a re-inspection by the FDA. The Company has received verbal approval from the FDA to resume shipments if the Company believes it is in compliance. The Company believes it is now in compliance and has accepted twosix orders which we expect to ship beforewe’ve shipped in the end of May.second quarter.
On or about January 20, 2008, the Receiver entered into a settlement agreement with Kenneth Jackson and Safe Medical Solutions, LLC, which was filed of record inComplete Investment Management, Inc. v. E Med Future, Inc., Case No. 06 CVH 10019 (Franklin County, Ohio Court of Common Pleas, J. Frye) on January 25, 2008. On January 31, 2008, an Agreed Order for Permanent Injunctive Relief was filed in the same case. Pursuant to the agreement, the parties agree to dismiss and release all claims withinSafe Medical Solutions, LLC v. Sullivan, et al., Case No. 06 CV 9757 (Franklin County Court of Common Pleas, J. Brown). Jackson and Safe Medical agree to dismiss the Cancellation Action No. 92045999, pending before the U.S. Trademark Trial Appeal Board, with regard to the Needlezap trademark. The Receiver agreesagreed to release all cross-claims as against Jackson and Safe Medical in theSafe Medical case. Jackson and Safe Medical surrender and waive any claim of ownership or license with regard to any intellectual property, including trademarks and patents, related to the Needlezap product, but retain the right to receive royalties on the future sale of Needlezap units. Jackson and Safe Medical also retain the right to sell any Needlezap units they currently own. The Receiver agreed with Jackson to either contract for the sale of, or offer up for public sale, all assets of E Med within 120 days of the agreement. Jackson and Safe Medical retain a limited “right of first refusal” with regard to any sale of the E Med assets. While IMET Corporation remains a third-party defendant in theComplete Investment case, the Receiver anticipates that all claims will shortly be resolved and IMET dismissed from the action.
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