Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 12, 2015 | |
Document And Entity Information | ||
Entity Registrant Name | MMRGlobal, Inc. | |
Entity Central Index Key | 1,285,701 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 1,059,255,881 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,015 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 0 | $ 309,393 |
Accounts receivable, less allowances of $173,591 in 2015 and 2014 | 96,829 | 47,718 |
Inventory | 13,537 | 13,537 |
Prepaid expenses and other current assets | 47,885 | 162,184 |
Total current assets | 158,251 | 532,832 |
Property and equipment, net | 22,645 | 32,118 |
Intangible assets, net | 1,757,109 | 1,790,622 |
Total assets | 1,938,005 | 2,355,572 |
Current liabilities: | ||
Line of credit, related party | 990,723 | 753,704 |
Related party payables | 1,472,150 | 952,835 |
Compensation payable | 594,034 | 491,109 |
Severance liability | 620,613 | 620,613 |
Accounts payable and accrued expenses | 4,891,497 | 4,668,960 |
Deferred revenue | 40,262 | 51,312 |
Convertible notes payable | 887,027 | 932,047 |
Notes payable, current portion | 369,410 | 360,343 |
Notes payable, related party | 253,664 | 253,664 |
Capital leases payable, current portion | 13,221 | 13,221 |
Total current liabilities | $ 10,132,601 | $ 9,097,808 |
Commitments and contingencies (See Note 9) | ||
Stockholders' deficit: | ||
Preferred stock - $0.001 per value, 5,000,000 shares authorized, 0 issued and outstanding. | ||
Common stock, $0.001 par value, 1,250,000,000 shares authorized, 902,504,231 and 774,417,739 shares issued and outstanding as of September 30, 2015 and December 31, 2014, respectively | $ 902,298 | $ 774,211 |
Additional paid-in capital | 56,780,651 | 56,437,812 |
Accumulated deficit | (65,877,545) | (63,954,259) |
Total stockholders' deficit | (8,194,596) | (6,742,236) |
Total liabilities and stockholders' deficit | $ 1,938,005 | $ 2,355,572 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Allowances | $ 173,591 | $ 173,591 |
Stockholders' deficit: | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 1,250,000,000 | 1,250,000,000 |
Common stock, shares issued | 902,504,231 | 774,417,739 |
Common stock, shares outstanding | 902,504,231 | 774,417,739 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Revenues | ||||
Subscriber | $ 68,996 | $ 50,863 | $ 116,248 | $ 109,581 |
MMR Pro | 2,899 | 17,408 | 7,219 | 29,476 |
License fees | 5,769 | 1,828,000 | 15,249 | 2,290,538 |
Other income | 0 | 0 | 0 | 7,500 |
Total revenues | 77,664 | 1,896,271 | 138,716 | 2,437,095 |
Cost of revenues | 45,298 | 88,960 | 179,554 | 230,402 |
Gross profit | 32,366 | 1,807,311 | (40,838) | 2,206,693 |
General and administrative expenses | 383,147 | 1,186,972 | 1,331,644 | 3,530,193 |
Sales and marketing expenses | 102,504 | 261,553 | 420,199 | 1,087,943 |
Technology development | 0 | 7,254 | 0 | 57,890 |
(Loss) income from operations | (453,285) | 351,532 | (1,792,681) | (2,469,333) |
Other income | 8,914 | 1,672,820 | 60,750 | 1,672,820 |
Interest and other finance charges, net | (44,629) | (104,031) | (191,355) | (362,678) |
Net (loss) income | $ (489,000) | $ 1,920,321 | $ (1,923,286) | $ (1,159,191) |
Net (loss) income per share: | ||||
Basic and diluted | $ 0 | $ 0 | $ 0 | $ 0 |
Weighted average common shares outstanding: | ||||
Basic | 893,373,796 | 754,463,150 | 830,417,188 | 731,355,958 |
Diluted | 893,373,796 | 756,876,594 | 830,417,188 | 731,355,958 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Operating activities: | ||
Net loss | $ (1,923,286) | $ (1,159,191) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
Depreciation and amortization | 217,208 | 227,488 |
Accounts payable write-off | 0 | (1,672,820) |
Deferred rent | 0 | 54,151 |
Warrants issued for services | 11,170 | 144,232 |
Stock-based compensation | 16,759 | 582,485 |
Common stock issued for services | 38,199 | 293,422 |
Amortization of loan discount | 55,780 | 176,262 |
Subtotal - non-cash adjustments | 339,116 | (194,780) |
Effect of changes in: | ||
Accounts receivable | (49,110) | 36,626 |
Inventory | 0 | (13,643) |
Prepaid expenses and other current assets | 114,744 | 923 |
Accounts payable and accrued expenses | 258,667 | 1,200,171 |
Related party payables | 519,315 | 279,885 |
Compensation payable | 102,925 | 77,861 |
Deferred revenue | (11,050) | (1,470) |
Subtotal - net change in operating assets and liabilities | 935,491 | 1,580,353 |
Net cash (used in) provided by operating activities | (648,679) | 226,382 |
Investing activities: | ||
Purchase of property and equipment | (1,252) | 0 |
Filing of patents | 0 | (246,868) |
Cost of continuing MMRPro and website development | 0 | (53,627) |
Net cash used in investing activities | (1,252) | (300,495) |
Financing activities: | ||
Net proceeds from convertible notes | 0 | 200,000 |
Proceeds from shares issued for financing activities | 29,774 | 1,419,561 |
Book overdraft | 56,163 | 0 |
Net proceeds from warrant exercises | 0 | 42,000 |
Proceeds from note payable | 30,000 | 88,134 |
Payments of note payable | (30,000) | (50,000) |
Proceeds (payments) of line of credit | 254,601 | (140,794) |
Payments of capital lease | 0 | (3,637) |
Net cash provided by financing activities | 340,538 | 1,555,264 |
Net (decrease) increase in cash | (309,393) | 1,481,151 |
Cash, beginning of period | 309,393 | 10,359 |
Cash, end of period | 0 | 1,491,510 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 0 | 140,794 |
Cash paid for income taxes | 0 | 1,600 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Conversion of convertible notes into common stock | 100,800 | 190,000 |
Shares issued for reduction of payables | $ 299,420 | $ 196,812 |
NATURE OF OPERATIONS AND BASIS
NATURE OF OPERATIONS AND BASIS OF PRESENTATION - Note 1 | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NATURE OF OPERATIONS AND BASIS OF PRESENTATION - Note 1 | NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION MMRGlobal Inc. (referred to herein, unless otherwise indicated, as "MMR," the "Company," the "issuer," "we," "us," and "our") was originally incorporated as Favrille, Inc. ("Favrille") in Delaware in 2000, and since its inception and before the Merger (as defined below), operated as a biopharmaceutical company focused on the development and commercialization of targeted immunotherapies for the treatment of cancer and other diseases of the immune system. In May 2008, Favrille's ongoing Phase 3 registration trial for the FavId vaccine failed to show a statistically significant improvement in the treatment of patients with follicular B-cell Non-Hodgkin's lymphoma. On January 27, 2009, the Company, through MyMedicalRecords, Inc. ("MMR Inc."), what is now our wholly-owned operating subsidiary, conducted a reverse merger with Favrille. Through our wholly-owned operating subsidiary MMR Inc., the Company's primary business is to license and provide secure and easy-to-use online Personal Health Records ("PHRs") and MyEsafeDepositBox storage solutions, including a professional offering to physicians' offices and similar organizations known as MMRPro. In January 2009, as a result of the Merger, we acquired biotech assets and other intellectual property including anti-CD20 antibodies as well as data and samples from the FavId/Specifid vaccine clinical trials for the treatment of B-cell Non-Hodgkin's lymphoma. On March 8, 2011, we formed a subsidiary, which we named MMR Life Sciences Group, Inc., exclusively to maximize the value of our biotech assets including our patents, anti-CD20 antibodies, and FavId vaccine technologies acquired by MyMedicalRecords, Inc. through the merger with Favrille. As of this date the assets have not been transferred to the subsidiary. We (formerly Favrille) were incorporated in Delaware in 2000, MMR Inc. was incorporated in Delaware in 2005, and both are headquartered in Los Angeles, CA. Principles of Consolidation The consolidated financial statements include the accounts of MMRGlobal, and its wholly-owned subsidiaries MMR and MMR Life Sciences Group, Inc. All intercompany transactions and balances are eliminated upon consolidation. Basis of Presentation We have prepared the accompanying consolidated unaudited financial statements in accordance with accounting principles generally accepted in the United States of America, or GAAP, for interim financial statements and with instructions to Form 10-Q pursuant to the rules and regulations of Securities and Exchange Act of 1934, as amended, or the Exchange Act and Article 8-03 of Regulation S-X promulgated under the Exchange Act. Accordingly, these financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of our management, we have included all adjustments considered necessary (consisting of normal recurring adjustments) for a fair presentation. Operating results for the nine months ended September 30, 2015 are not indicative of the results that may be expected for the fiscal year ending December 31, 2015. You should read these unaudited condensed consolidated financial statements in conjunction with the audited financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2014. Going Concern and Management's Plan As of September 30, 2015, our current liabilities exceeded our current assets by $9.97 million. Furthermore, during the nine months ended September 30, 2015, we incurred losses of $1,923,286, as further explained in Management's Discussion and Analysis of Financial Condition and Results of Operations appearing in Item 2 of Part I of this Quarterly Report on Form 10-Q. At September 30, 2015 and December 31, 2014, we had $0 and $303,393, respectively, in cash and cash equivalents. Historically, we issued capital stock, sold convertible debt and equity securities and received funds from The RHL Group, Inc. (a significant stockholder that is wholly-owned by our Chairman and Chief Executive Officer, Robert H. Lorsch) to operate our business. Although we received additional funding from The RHL Group pursuant to the Tenth Amended and Restated Note effective May 20, 2015 (the "Line of Credit"), we will still be required to obtain additional financing in order to meet installment payment obligations and the previously existing obligations under the Line of Credit, which had a balance of $1.81 million at September 30, 2015 and a total Unpaid Balance (as defined in the Line of Credit) of $2.06 million, which includes amounts borrowed under the Line of Credit, unpaid interest fees, any amounts guaranteed by The RHL Group, and other obligations due the RHL Group pursuant to the terms of the Tenth Amended and Restated Note and the Second Amended Security Agreement dated May 20, 2015 (the "Security Agreement"). As a result of the above, we express uncertainty about our ability to continue as a going concern. The components of the RHL Group Note payable and the related balance sheet presentation as of September 30, 2015 are as follows: $0.99 million, which is included in the line of credit, related party; and $0.82 million related to other obligations due to The RHL Group which are included in related party payables. Management's plan regarding our going concern is to continue utilizing the Line of Credit. According to the terms of the agreement, at September 30, 2015, there was approximately $2.37 million available under the Line of Credit at the discretion of the lender. Finally, we plan to sell additional convertible debt and equity securities, settle our existing liabilities through the issuance of equity securities, explore other debt financing arrangements, increase our existing subscriber and affiliate customer base, sell our products and services, and collect licensing fees from parties utilizing our intellectual property to obtain additional cash flow over the next twelve months. There can be no assurance that funds from these sources will be available when needed or, if available, will be on terms favorable to us or to our stockholders. If additional funds are raised by issuing equity securities, the percentage of ownership of our stockholders will be reduced, stockholders will experience additional dilution and/or such equity securities may provide for rights, preferences or privileges senior to those of the holders of our common stock. If we are unable to utilize our Line of Credit, obtain suitable alternative debt or equity financing, or increase sales of our products of increase licensing fees from the use of our intellectual property, our ability to execute our business plan and continue as a going concern may be adversely affected. These matters raise substantial doubt about our ability to continue as a going concern. These financial statements were prepared under the assumption that we will continue as a going concern and do not include any adjustments that might result from the outcome of that uncertainty. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Note 2 | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Note 2 | NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) MANAGEMENT'S USE OF ESTIMATES The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net revenue and expenses during each reporting period. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, allowances for doubtful accounts, the valuation of deferred income taxes, tax contingencies, long-lived and intangible assets, valuation of derivative liabilities and stock-based compensation. These estimates are based on historical experience and on various other factors that management believes to be reasonable under the circumstances, although actual results could differ from those estimates. (b) CASH AND CASH EQUIVALENTS We consider cash equivalents to be only those investments that are highly liquid, readily convertible to cash and with maturities of 90 days or less at the purchase date. We maintain our cash in bank deposit accounts that, at times, may exceed federally insured limits. We have not experienced any losses in such accounts and believe that we are not exposed to any significant credit or deposit risk on our cash. We had cash and cash equivalents of $0 and $303,393 as of September 30, 2015 and December 31, 2014, respectively. (c) TRADE AND OTHER RECEIVABLES Receivables represent claims against third parties that will be settled in cash. The carrying value of receivables, net of an allowance for doubtful accounts, if any, represents their estimated net realizable value. We estimate the allowance for doubtful accounts, if any, based on historical collection trends, type of customer, the age of outstanding receivables and existing economic conditions. If events or changes in circumstances indicate that specific receivable balances may be impaired, we give further consideration to the collectability of those balances and the allowance is adjusted accordingly. We write off past due receivable balances when collection efforts have been unsuccessful in collecting the amount due. (d) INVENTORY Inventory is stated at the actual cost, using the first-in-first-out method. On an on-going basis, we evaluate our inventory for obsolescence. This evaluation includes analysis of sales levels, sales projections, and purchases by item. If future demand or market conditions are different than our current estimates, an inventory adjustment may be required, and would be reflected in cost of goods sold in the period the revision is made. (e) FAIR VALUE OF FINANCIAL INSTRUMENTS ASC 820-10, Fair Value Measurements and Disclosures, We utilize ASC 820-10 for valuing financial assets and liabilities measured on a recurring basis. ASC 820-10 defines fair value, establishes a framework for measuring fair value and generally accepted accounting principles, and expands disclosures about fair value measurements. This standard applies in situations where other accounting pronouncements either permit or require fair value measurements. ASC 820-10 does not require any new fair value measurements. Accounting guidance also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: Level 1: Quoted prices in active markets for identical or similar assets and liabilities. Level 2: Quoted prices for identical or similar assets and liabilities in markets that are not active or observable inputs other than quoted prices in active markets for identical or similar assets and liabilities. Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. (f) IMPAIRMENT OF LONG-LIVED ASSETS AND INTANGIBLES We account for long-lived assets, which include property and equipment and identifiable intangible assets with finite useful lives (subject to amortization), in accordance with ASC 350-30. ASC 350-30 requires that we review long-lived assets for impairment whenever events or changes in circumstances indicate that we may not recover the carrying amount of an asset. We measure recoverability by comparing the carrying amount of an asset to the expected future undiscounted net cash flows generated by the asset. If we determine that the asset may not be recoverable, or if the carrying amount of an asset exceeds its estimated future undiscounted cash flows, we recognize an impairment charge to the extent of the difference between the fair value and the asset's carrying amount. We had no impairment charges during the nine months ended September 30, 2015 and 2014. (g) REVENUE RECOGNITION We generate our revenues from services, which are comprised of providing electronic access to consumer medical records and other vital documents, and from the licensing of our intellectual property and services. We recognize revenue only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed, and we are reasonably assured of collectability of the resulting receivable. Our subscriber revenues consist of annual and monthly recurring retail subscriptions and usage-based fees, which are primarily paid in advance by credit card, and corporate accounts that are based on either an access-fee or actual number of users, and in each case billed in advance at the beginning of each month of service. We defer the portions of annual recurring subscription fees collected in advance and recognize them on a straight line basis over the subscription period. We license the rights to use portions of our intellectual property portfolio, which includes certain patent rights essential to the sale of certain PHR products. Licensees typically pay a license fee in one or more installments and ongoing royalties based on their sales of products incorporating or using the Company's licensed intellectual property. License fees are recognized over the estimated period of benefit to the licensee, typically five to fifteen years. The Company earns royalties on such licensed products sold by its licensees at the time that the licensees' sales occur. The Company recognizes royalty revenues based on royalties reported by licensees during the quarter and when other revenue recognition criteria are met. We grant exclusive and non-exclusive licenses for the sale and marketing of our services in international territories in consideration of license fees and ongoing royalties. The royalty fee is usually a percentage of revenue earned by the licensee and there are usually certain minimum guarantees. We defer the recognition of license fee revenues received in advance from international licensees for the grant of the license and recognize them over the period covered by the agreement. We defer the recognition of minimum guaranteed royalty payments received in advance and recognize them over the period to which the royalty relates. We include all such revenues under "License Fees." In those cases where a license agreement contains multiple deliverables, we account for the agreement in accordance with ASC 605-25 Revenue Recognition - Multiple-Element Arrangements We recognize revenue on sales of our MMRPro system in accordance with ASC 605-25, Revenue Recognition, Multiple-Element Arrangements Our multiple-deliverable arrangements consist solely of our MMRPro product. Significant deliverables within these arrangements include scanning equipment, various licenses to use third party software, a license to use our proprietary MMRPro application software, installation and training, dedicated telephone lines, secure online storage and warranties. We determined all elements to be separate units of accounting as they have standalone value to the customers and/or they are sold by other vendors on a standalone basis. Delivery of the hardware and certain software elements of these arrangements occur at the inception of the agreement. We deliver installation and training at the inception of the agreement. We provide other software licenses, telephone lines and online secure storage over the three year term of the agreement. We include warranties in the arrangements, however the third party product manufacturer, and not us, is obligated to fulfill such warranties. The third-party warranty contracts are paid in advance and are not refundable. We allocate the revenue derived from these arrangements among all the deliverables. We base such allocation on the relative selling price of each deliverable. With the exception of our proprietary MMRPro application software, we use third party evidence to set the selling prices used for this allocation. In all such cases, third parties sell the same or very similar products. For the MMRPro application software, we estimate the selling price. We recognize the allocated revenue for each deliverable in accordance with SEC Staff Accounting Bulletin ("SAB") No. 104, Topic 13: Revenue Recognition Revenue from the licensing of our biotech assets may include non-refundable license and up-front fees, non-refundable milestone payments that are triggered upon achievement of a specific event, and future royalties or lump-sum payments on sales of related products. For agreements that provide for milestone payments, we adopted ASC 605-28-25, Revenue Recognition Milestone Method. (h) SHARE-BASED COMPENSATION We account for share-based compensation in accordance with ASC 718-20, Awards Classified as Equity We account for options and warrants issued to non-employees in accordance with ASC 505-50, Equity-Based Payments to Non- Employees We estimate the fair value of each stock option on the date of grant using the Black-Scholes option pricing model. We determine assumptions relative to volatility and anticipated forfeitures at the time of grant. We valued grants of stock options and warrants during the nine months ended September 30, 2015 and 2014 using the following assumptions. September 30, 2015 September 30, 2014 Expected life in years 2 - 5 Years 0 - 5 Years Stock price volatility 120.51% - 122.72% 123.47% - 124.21% Risk free interest rate 0.04% - 1.38% 0.35% - 0.46% Expected dividends None None Forfeiture rate 0% 0% We base the assumptions used in the Black-Scholes models upon the following data: (1) our use of the contractual life of the underlying non-employee warrants as the expected life; the expected life of the employee options used in this calculation is the period of time the options are expected to be outstanding and has been determined based on historical exercise experience; (2) in the absence of an extensive public market for our shares, the expected stock price volatility of the underlying shares over the expected term of the option or warrant was taken at approximately the mid-point of the range for similar companies at the various grant dates; (3) we base the risk free interest rate on published U.S. Treasury Department interest rates for the expected terms of the underlying options or warrants; (4) we base expected dividends on historical dividend data and expected future dividend activity; and (5) we base the expected forfeiture rate on historical forfeiture activity and assumptions regarding future forfeitures based on the composition of current grantees. (i) NET INCOME/LOSS PER SHARE We apply the guidance of ASC 260-10, Earnings Per Share We excluded all potential anti-dilutive common shares from the computation of diluted net loss per common share for the nine months ended September 30, 2015 and 2014 because they were anti-dilutive due to our net loss position. (j) RECENT ACCOUNTING PRONOUNCEMENTS In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. This new guidance is effective for the Company in the first quarter of 2018, with no early adoption permitted. The standard permits the use of either the retrospective or cumulative effect transition method. At this time we have not selected a transition method. We are currently evaluating the effect that ASU 2014-09 will have on our consolidated financial statements and related disclosures. In August 2014, the FABS issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern ("ASU 2014-15"). ASU 2014-15 will explicitly require management to assess an entity's ability to continue as a going concern, and to provide related footnote disclosure in certain circumstances. The new standard will be effective for all entities in the first annual period ending after December 15, 2016. Earlier adoption is permitted. We are currently evaluating the impact of the adoption of ASU 2014-15. The adoption of this standard is not expected to have a material impact on the Company's consolidated financial statements. |
RELATED PARTY PAYABLES, LINE OF
RELATED PARTY PAYABLES, LINE OF CREDIT AND NOTE PAYABLE - Note 3 | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
RELATED PARTY PAYABLES, LINE OF CREDIT AND NOTE PAYABLE - Note 3 | NOTE 3 - RELATED PARTY PAYABLES, LINE OF CREDIT AND NOTE PAYABLE On May 20, 2015, we and The RHL Group entered into a Tenth Amended and Restated Promissory Note (the " Amended Note Existing Note Credit Facility Historically, the predecessor notes have increased over time the maximum amount of credit available under the Credit Facility from $100,000 to $1,000,000 to $3,000,000 to $4,500,000. The maximum amount of the Amended Note is $4,500,000. The Amended Note continues to bear interest at the lesser of 10% or the highest rate then permitted by law, and is secured (similar to the Existing Note) by a Security Agreement, which has been in effect since July 31, 2007, as renewed and amended to date (the "Security Agreement"). The Tenth Amended Note had a current balance of $1.81 million at September 30, 2015. The components of the Tenth Amended Note and the related balance sheet presentation as of September 30, 2015 are as follows: $0.99 million, which is included in the line of credit, related party; and $0.82 million for other obligations due to The RHL Group, which is included in related party payables. Total interest expense for the three months ended September 30, 2015 and September 30, 2014 was $36,699 and $36,952, respectively. Total interest expense on the Line of Credit for the nine months ended September 30, 2015 and 2014 amounted to $102,433 and $98,985, respectively. The unpaid interest balances as of September 30, 2015 and December 31, 2014 were $36,757 and $30,160, respectively. In conjunction with the Tenth Amended Note, we were required to maintain certain financial covenants, including the requirement that we have at least $200,000 of cash in our bank accounts or such other amount as necessary to maintain operations through the subsequent thirty (30) days and timely pay any obligations due respecting payroll and all associated payroll taxes on and after September 30, 2015. Since we did not meet these covenants as of September 30, 2015, we received a waiver from The RHL Group until November 30, 2015. |
INCOME TAXES - Note 4
INCOME TAXES - Note 4 | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
INCOME TAXES - Note 4 | NOTE 4 - INCOME TAXES Under ASC 740-270, Income Taxes - Interim Reporting Pursuant to ASC 740, Income MMR Inc., in its capacity as the operating company taking over our income tax positions in addition to its own positions after January 27, 2009 (see Note 1), has estimated its annual effective tax rate to be zero. MMRGlobal has based this on an expectation that the combined entity will generate net operating losses in 2015, and it is not likely that those losses will be recovered using future taxable income. Therefore, no provision for income tax has been recorded as of and for the nine months ended September 30, 2015. |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Note 5 | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
COMMITMENTS AND CONTINGENCIES - Note 5 | NOTE 5 - COMMITMENTS AND CONTINGENCIES Leases Effective September 1, 2013, we renewed our lease for office space in Los Angeles, California with a term through August 31, 2018. The lease currently requires a monthly payment of $8,250. Total rent expense for the nine months ended September 30, 2015 and 2014 were $86,854 and $129,276 respectively. Future minimum lease payments as of September 30, 2015, under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) are as follows: Year Ending Operating Capital December 31, Leases Leases 2015 (Remainder of) $ 26,445 $ 13,221 2016 187,550 - 2017 206,305 - 2018 and there after 146,410 - 566,710 13,221 Less current portion - (13,221) Total minimum lease payments $ 566,710 $ - |
Legal Matters and Contingencies - Note 5 | Litigation Matters From time to time, we are involved in various legal proceedings generally incidental to our business. While the result of any litigation contains an element of uncertainty, our management presently believes that the outcome of any known, pending or threatened legal proceeding or claim, individually or combined, will not have a material adverse effect on our financial statements. On December 9, 2011, MyMedicalRecords, Inc. entered into a Non-Exclusive Settlement and Patent License Agreement with Surgery Center Management LLC ("SCM"). In consideration for the rights granted under that Agreement and in consideration of a settlement and release agreement, SCM contracted to pay MyMedicalRecords, Inc. an initial payment of $5 million payable on December 23, 2011, and additional payments of $5 million per year for five consecutive years. After unsuccessful attempts to collect the past due amount of $5 million, on January 19, 2012, MyMedicalRecords, Inc. filed a lawsuit in the Superior Court of the State of California for the County of Los Angeles for breach of contract. At this time, MMR believes that SCM owes the Company $30 million plus interest, and on August 4, 2015, the Court granted MMR leave to amend its complaint to seek damages of $30 million (plus interest) from SCM since the end of 2011. On February 13, 2014, SCM filed an answer to MMR's original complaint along with a cross-complaint alleging claims for breach of that contract, among other things. On July 10, 2014, the court granted SCM's motion for summary adjudication on the claim for breach of contract in the complaint and its counterclaim for declaratory relief. On July 30, 2014, SCM filed its second amended cross-complaint, alleging substantially the same claims against the same parties. On December 5, 2014, the Court of Appeal issued an Alternative Writ of Mandate, finding the trial court erred in granting SCM's motion for summary adjudication. Pursuant to the Court of Appeal's Alternative Writ, on January 7, 2015, the trial court vacated its order granting SCM's motion for summary adjudication. On April 24, 2015, the trial court held a new hearing on that motion, and it entered an order denying SCM's motion in its entirety. MyMedicalRecords, Inc. will continue to pursue its claim and defenses, but the Company cannot predict the chances of either a favorable or unfavorable outcome, nor does the Company have sufficient information regarding its ability to collect any judgment MyMedicalRecords, Inc. may obtain. On April 10, 2013, MMR filed a complaint for patent infringement against Quest Diagnostics Inc. ("Quest") in the United States District Court for the Central District of California, alleging that Quest Diagnostics Inc. is infringing U.S. Patent No. 8,301,466. On October 11, 2013, MMR filed an unopposed motion to add a claim of infringement of U.S. Patent 8,498,883 to its complaint against Quest, which was granted on October 29, 2013. On December 22 and 23, 2014, the Court entered orders finding that the eight claims asserted (of the 42 total claims present) under the two asserted MMR patents were invalid. On January 9, 2015, as previously reported by the Company, the case was closed. Defendants filed a motion with the District Court to recover a portion of their fees incurred in defense of the matter, which has been denied by the Court in favor of MMR. On February 11, 2013, MMR filed a complaint for patent infringement against WebMD Health Corp. and its wholly owned subsidiary WebMD Health Services Group, Inc. (collectively, "WebMD"), titled MyMedicalRecords, Inc. v. WebMD Health Corp et al., United States District Court, Central District of California. That complaint alleged that WebMD is infringing MMR's Personal Health Records patent U.S. Patent No. 8,301,466. On October 2, 2013, MMR filed a new complaint against WebMD in the United States District Court for the Central District of California, alleging infringement of U.S. Patent Nos. 8,301,466 and 8,498,883. On December 22 and 23, 2014, the Court entered orders finding that the eight claims asserted (of the 42 total claims present) under the two asserted MMR patents were invalid. On January 9, 2015, as previously reported by the Company, the case was closed. Defendants filed a motion with the District Court to recover a portion of their fees incurred in defense of the matter, which has been denied by the Court in favor of MMR. On May 17, 2013, MMR filed a complaint for patent infringement against Jardogs, LLC (the "Jardogs Complaint") in the United States District Court for the Central District of California, alleging that Jardogs, LLC infringes U.S. Patent No. 8,301,466. On September 23, 2013, MMR filed a separate complaint for patent infringement against Allscripts Healthcare Solutions Inc. ("Allscripts") titled MyMedicalRecords, Inc. v. Allscripts Healthcare Solutions Inc., United States District Court, Central District of California (the "Separate Allscripts Complaint"). The Separate Allscripts Complaint alleged that Allscripts is infringing U.S. Patent Nos. 8,301,466 and 8,498,883. On October 4, 2013, MMR filed a motion to amend the Jardogs Complaint to add Allscripts as a party defendant and to allege that Allscripts is infringing U.S. Patent Nos. 8,301,466 and 8,498,883. The Court granted that motion on November 1, 2013. Thereafter, MMR dismissed the Separate Allscripts Complaint. On December 22 and 23, 2014, the Court entered orders finding that the eight claims asserted (of the 42 total claims present) under the two asserted MMR patents were invalid. On January 9, 2015, as previously reported by the Company, the case was closed. Defendants filed a motion with the District Court to recover a portion of their fees incurred in defense of the matter, which has been denied by the Court in favor of MMR. Allscripts also filed a Covered Business Method ("CBM") petition on November 3, 2014, before the Patent Trial and Appeal Board ("PTAB') alleging that claims 8-12 of U.S. Patent No. 8,301,466 are invalid. MMR filed a preliminary response on February 20, 2015. On May 5th the PTAB decided to implement the CBM. On January 15, 2015, MMR filed a notice of appeal in the Federal Circuit. Subsequently, MMR filed for voluntary dismissal of the appeal which was granted on July 7, 2015. On July 30, 2015, MMR informed the PTAB of the voluntary dismissal of the appeal, and on August 26, 2015, the PTAB entered a Final Written Decision consistent with the Court's prior rulings. On April 2, 2015, the Company and Stradling Yocca Carlson & Rauth, P.C. ("SYCR"), received a letter from an arbitrator in regards to disputes over amounts of monies due SYCR regarding prior services rendered. SYCR and the Company agreed to a mediation of the matter. As of the date hereof, the Company cannot predict the chances of either a favorable or unfavorable outcome. On August 14, 2013, Gemini Master Fund, Ltd. purchased a convertible note from the Company. On or about February 23, 2015, Gemini filed an action against the Company for breach of contract seeking damages allegedly owed pursuant to the convertible note in the amount of $210,000 in the United States District Court for the Southern District of New York. The case has since been settled and dismissed. |
STOCKHOLDERS' DEFICIT - Note 6
STOCKHOLDERS' DEFICIT - Note 6 | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
STOCKHOLDERS' DEFICIT - Note 6 | NOTE 6 - STOCKHOLDERS' DEFICIT Preferred Stock We have 5,000,000 shares of preferred stock authorized. As of September 30, 2015, and December 31, 2014, there were no shares of preferred stock issued and outstanding. Common Stock As of September 30, 2015, we are authorized to issue 1,250,000,000 shares of common stock. As of September 30, 2015, the total shares of our common stock issued and outstanding amounted to 902,504,231. |
EQUITY ISSUANCES - Note 7
EQUITY ISSUANCES - Note 7 | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
EQUITY ISSUANCES - Note 7 | 0.15 1,630,261 4.45 $ 0.19 1,630,261 4.45 $ 0.19
37,541,722 37,541,722 Warrants A summary of the activity of our warrants
for the nine months ended September 30, 2015 is presented below:
Weighted Avg.
Shares Exercise Price
Outstanding at December 31, 2014 70,028,410 $ 0.07
Granted 1,764,642 $ 0.003
Exercised - $ -
Cancelled (14,650,000) $ 0.08
Outstanding at September 30, 2015 (Unaudited) 57,143,052 $ 0.06
Exercisable at September 30, 2015 (Unaudited) 55,719,441 $ 0.06 Total warrant expenses recorded during the
nine months ended September 30, 2015 and 2014 were $11,170 and $144,232, respectively. The inputs used for the Black-Scholes option
and warrant valuation model were as follows:
September 30, 2015 September 30, 2014
Expected life in years 2 - 5 Years 0 - 5 Years
Stock price volatility 120.51% - 122.72% 123.47% - 124.21%
Risk free interest rate 0.04% - 1.38% 0.35% - 0.46%
Expected dividends None None
Forfeiture rate 0% 0% Shares Issued for Services or Reduction
to Liabilities During the nine months ended September 30,
2015, we issued 120,100,000 shares of common stock with a value of $413,220 to various third parties and related parties and charged
the proceeds to the appropriate accounts for the following reasons:
Nine Months Ended September 30, 2015
Purpose Shares Value
Reduction of payables and notes 112,100,000 $ 375,021
Services provided 8,000,000 38,199
Totals 120,100,000 $ 413,220 The 120,100,000 issued shares were not contractually
restricted. However, as these shares have not been registered under the Securities Act of 1933, as amended (the "Act"),
they are restricted from sale until they are registered under the Act, or qualify for resale under the rules promulgated under
the Act. All such shares were calculated at the trading closing price on the date of issuance. Stock Bonus Agreements From time to time, we issue shares of our
common stock as a bonus for services rendered. Stock bonuses may be awarded upon satisfaction of specified performance goals pursuant
to the Performance Stock Bonus Agreement. On each grant date, we valued the stock bonus
based on the share price and the expenses were amortized using the straight line method. Total stock bonus expenses recorded during
the nine months ended September 30, 2015 and 2014 were $0 and $ 245,375, respectively and are reflected in operating expenses in
the accompanying consolidated statements of operations. " id="sjs-B4" xml:space="preserve">NOTE 7 - EQUITY ISSUANCES Stock Option Activity Our 2001 Equity Incentive Plan (the "2001 Plan") expired on June 5, 2011 and no options were issued under the 2001 Plan since that date. As of September 30, 2015, 14,184,557 shares remain issued under the 2001 Plan. On September 1, 2011, our Board of Directors approved the adoption of a new plan to replace the 2001 Plan under the same general terms as the 2001 Plan. On June 20, 2012, our stockholders voted and approved the 2011 Equity Incentive Plan (the " 2011 Plan") at our 2012 Annual Stockholder Meeting. As of September 30, 2015, 23.36 million shares remain issued under the 2011 Plan, and 36.45 million shares of our common stock are reserved for future issuance under our 2011 Plan, which includes an automatic 5 million share annual increase pursuant to the terms of the 2011 Plan and a 20 million share increase authorized during our 2013 Annual Stockholder's Meeting. A summary of option activity for the nine months ended September 30, 2015 is presented below. Options granted by MMR Inc. prior to the date of the Merger have been retroactively restated to reflect the conversion ratio of MMR Inc. to MMR shares. Weighted-Average Weighted- Remaining Average Contractual Aggregate Exercise Life Intrinsic Options Price (Years) Value Outstanding at December 31, 2014 37,541,722 $ 0.10 4.29 $ - Granted - $ - - $ - Exercised - $ - - $ - Cancelled - $ - - $ - Outstanding at September 30, 2015 (Unaudited) 37,541,722 $ 0.10 3.54 $ - Vested and expected to vest at September 30, 2015 (Unaudited) 37,541,722 $ 0.10 3.54 $ - Exercisable at September 30, 2015 (Unaudited) 37,541,722 $ 0.10 3.54 $ - The aggregate intrinsic value in the table above is before applicable income taxes and is calculated based on the difference between the exercise price of the options and the quoted price of the common stock as of the reporting date. There were no options issued during the nine months ended September 30, 2015. Total stock option expenses recorded during the nine months ended September 30, 2015 and 2014 were $16,759 and $151,634, respectively. The following table summarizes information about stock options outstanding and exercisable at September 30, 2015. Options Outstanding Options Exercisable Weighted Weighted Weighted Weighted Average Average Average Average Exercise Number Remaining Exercise Number Remaining Exercise Price of Shares Life (Years) Price of Shares Life (Years) Price $ 0.05 - 0.09 12,900,000 6.66 $ 0.07 12,900,000 6.66 $ 0.07 $ 0.10 - 0.15 23,011,461 3.44 $ 0.11 23,011,461 3.44 $ 0.11 $ > 0.15 1,630,261 4.45 $ 0.19 1,630,261 4.45 $ 0.19 37,541,722 37,541,722 Warrants A summary of the activity of our warrants for the nine months ended September 30, 2015 is presented below: Weighted Avg. Shares Exercise Price Outstanding at December 31, 2014 70,028,410 $ 0.07 Granted 1,764,642 $ 0.003 Exercised - $ - Cancelled (14,650,000) $ 0.08 Outstanding at September 30, 2015 (Unaudited) 57,143,052 $ 0.06 Exercisable at September 30, 2015 (Unaudited) 55,719,441 $ 0.06 Total warrant expenses recorded during the nine months ended September 30, 2015 and 2014 were $11,170 and $144,232, respectively. The inputs used for the Black-Scholes option and warrant valuation model were as follows: September 30, 2015 September 30, 2014 Expected life in years 2 - 5 Years 0 - 5 Years Stock price volatility 120.51% - 122.72% 123.47% - 124.21% Risk free interest rate 0.04% - 1.38% 0.35% - 0.46% Expected dividends None None Forfeiture rate 0% 0% Shares Issued for Services or Reduction to Liabilities During the nine months ended September 30, 2015, we issued 120,100,000 shares of common stock with a value of $413,220 to various third parties and related parties and charged the proceeds to the appropriate accounts for the following reasons: Nine Months Ended September 30, 2015 Purpose Shares Value Reduction of payables and notes 112,100,000 $ 375,021 Services provided 8,000,000 38,199 Totals 120,100,000 $ 413,220 The 120,100,000 issued shares were not contractually restricted. However, as these shares have not been registered under the Securities Act of 1933, as amended (the "Act"), they are restricted from sale until they are registered under the Act, or qualify for resale under the rules promulgated under the Act. All such shares were calculated at the trading closing price on the date of issuance. Stock Bonus Agreements From time to time, we issue shares of our common stock as a bonus for services rendered. Stock bonuses may be awarded upon satisfaction of specified performance goals pursuant to the Performance Stock Bonus Agreement. On each grant date, we valued the stock bonus based on the share price and the expenses were amortized using the straight line method. Total stock bonus expenses recorded during the nine months ended September 30, 2015 and 2014 were $0 and $ 245,375, respectively and are reflected in operating expenses in the accompanying consolidated statements of operations. |
NOTES PAYABLE - Note 8
NOTES PAYABLE - Note 8 | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NOTES PAYABLE - Note 8 | NOTE 8 - NOTES PAYABLE Notes payable consisted of the following: September 30, December 31, 2015 2014 Promissory notes payable due to the former officers of MMRGlobal as part of severance packages, due in full on August 31, 2009, with no stated interest $ 76,783 $ 76,783 Promissory notes payable due to the former officers of MMRGlobal pursuant to the Resignation and Post-Merger Employment Arrangement, due in full on August 31, 2009, with no stated interest 25,444 25,444 Promissory notes payable due to vendors relating to settlement of certain outstanding accounts payable, payable in 18 equal monthly installments commencing on July 27, 2009 and ending on January 27, 2011, with no stated interest 223,116 223,116 Short term loan due to a third-party with 6% interest 44,067 35,000 369,410 360,343 Less: current portion (369,410) (360,343) Notes payable, less current portion $ - $ - Short term loan due to a related-party, payable in full on January 2, 2014 with 12% interest $ 203,664 $ 203,664 Short term loan due to a related-party, payable in full on May 31, 2014 with 12% interest 50,000 50,000 Notes payable related party, current portion 253,664 253,664 Less: current portion (253,664) (253,664) Notes payable related party, less current portion $ - $ - |
CONVERTIBLE PROMISSORY NOTES -
CONVERTIBLE PROMISSORY NOTES - Note 9 | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
CONVERTIBLE PROMISSORY NOTES - Note 9 | NOTE 9 - CONVERTIBLE PROMISSORY NOTES From time to time, we issue Convertible Promissory Notes. As of September 30, 2015, a total of $887,027 in convertible notes remained outstanding. As of September 30, 2015, all of these Notes have matured, however, the Company and the Holders have agreed to keep the balance as a Note Payable and the note holders have elected not to convert their note balances into shares of our common stock as of September 30, 2015. Each Note contains the following general terms and provisions: The principal amount owed under each note becomes due and payable one year or less from the investment date provided that, upon ten (10) days' prior written notice to the holder, we may, in our sole discretion, extend the maturity date for an additional six month term. The Notes can be further extended upon mutual agreement. These notes bear interest at a rate of 6% per annum payable in cash or shares of common stock or a combination of cash and shares of common stock at our option. During the third quarter of 2015, we did not enter into any Convertible Promissory Notes. Shares issuable upon conversion for convertible notes payable was 41,679,061 as of September 30, 2015. The total interest expense attributed to the Beneficial Conversion Feature of the Notes and related warrants for the nine months ended September 30, 2015 and 2014 was $55,780 and $124,120, respectively. |
RESTRUCTURING ACTIVITIES - Note
RESTRUCTURING ACTIVITIES - Note 10 | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
RESTRUCTURING ACTIVITIES - Note 10 | NOTE 10 - RESTRUCTURING ACTIVITIES In connection with the merger with Favrille, Inc. in 2009, we signed promissory notes with certain former executives totaling $76,783. As of September 30, 2015, the total remaining severance liabilities amounted to $620,613, which is reflected as severance liability on the accompanying consolidated balance sheets. This consists of $571,362 payable to former non-executive employees. |
RELATED PARTY TRANSACTIONS - No
RELATED PARTY TRANSACTIONS - Note 11 | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
RELATED PARTY TRANSACTIONS - Note 11 | NOTE 11 - RELATED PARTY TRANSACTIONS Our Chairman and Chief Executive Officer, Robert H. Lorsch, is also the Chief Executive Officer of The RHL Group, Inc. and has full voting power over all of the capital stock of The RHL Group, Inc. Mr. Lorsch directly and indirectly through The RHL Group, Inc., beneficially owns approximately 16.4% our total outstanding voting stock. The RHL Group, Inc. has loaned us money pursuant to the Tenth Amended Note and all predecessor notes. See Note 3 - Related Party Note Payable above. The RHL Group is an investment holding company which provides consulting, operational and technical services to us, which we refer to as the RHL Services. As part of the RHL Services, The RHL Group provides us with unrestricted access to its internal business and relationship contact database of more than 10,000 persons and entities, which includes clients of The RHL Group and other individuals which may hold value to us. The RHL Group also provides infrastructure support to us, including allowing us unlimited access to its facilities, equipment, and data, information management and server systems. In addition to allowing us the use of its office support personnel, The RHL Group has also consented to allow us to utilize the full-time services of Mr. Lorsch as our President, Chairman and Chief Executive Officer, which requires substantial time and energy away from his required duties as The RHL Group's Chairman and Chief Executive Officer. In addition, The RHL Group has made its President, Kira Reed, available as our spokesperson. Ms. Reed, who is Mr. Lorsch's spouse, also manages our social networking activities. In consideration for the above, The RHL Group, Inc. has a consulting arrangement with MMR. A copy of the consulting agreement is filed as an exhibit in our Form 8-K, as filed with the SEC on May 4, 2009 and is hereby incorporated by reference. We incurred $12,500 during the nine months ended September 30, 2015 and 2014, toward marketing consulting services from Bernard Stolar, a director. We included $198,514 and $174,273 in related party payables as of September 30, 2015 and December 31, 2014, respectively, in connection with these services and board fees. We contract with a significant vendor for the development and maintenance of the software applications necessary to run our MyMedicalRecords PHR, MyEsafeDepositBox and MyMedicalRecords Pro products. Our outside developer supports our software development needs through a team of software engineers, programmers, quality control personnel and testers, who work with our internal product development team on all aspects of application development, design, integration and support of our products. This vendor is also a stockholder. For the nine months ended September 30, 2015 and 2014, the total expenses relating to this stockholder amounted to $90,000 and $90,000, respectively. In addition, we capitalized $0 of software development costs for the quarter ended September 30, 2015. As of September 30, 2015 and December 31, 2014, the total amounts due to the stockholder and included in related party payables amounted to $100,000 and $10,000, respectively. On September 15, 2009, we entered into a five year agreement with E-Mail Frequency, LLC and David Loftus, Managing Partner of E-Mail Frequency, LLC, a significant stockholder of the Company, which was amended during 2011 to increase the term for an additional five years and provide licensor a non- exclusive right to target, market and exploit the Employee Benefits market. We licensed an existing 80 million person direct marketing database (the "Database") of street addresses, cellular phone numbers, e-mail addresses and other comprehensive data with E-Mail Frequency. The agreement allows us to market, through the use of the Database, our MyMedicalRecords PHR, MyEsafeDepositBox virtual vault, and MMRPro document management system to physicians and their patients. Under the terms of the Agreement, we paid $250,000 to David Loftus as a one-time consulting fee in the form of 2,777,778 shares of our common stock. We recorded the $250,000 one-time licensee fee as a prepaid consulting fee. Amortization expense for each of the quarters ended September 30, 2015 and 2014 was $0 and $37,500. Included in related party payables at September 30, 2015 and December 31, 2014 of $64,615 and $64,615, respectively, in respect to these services. |
SUBSEQUENT EVENTS - Note 12
SUBSEQUENT EVENTS - Note 12 | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
SUBSEQUENT EVENTS - Note 12 | NOTE 12 - SUBSEQUENT EVENTS We have evaluated subsequent events of our condensed consolidated financial statements. On October 8, 2015, we received written consent from our company's board of directors to amend the Corporation's Articles of Incorporation to effect a reverse stock split, such that each five (5) shares of the issued and outstanding Common Stock of the Corporation shall be reversed split into one (1) share of Common Stock of the Corporation (the "Stock Split"). This Stock Split shall effect only issued and outstanding shares. Each record and beneficial holder who would receive a fractional share as a result of the reverse split shall receive, in lieu thereof, a whole share. On November 4, 2015, the Corporation received the written consent of holders of more than 50% of our voting securities to effect the Stock Split. The Stock Split will not be effective until after filing by the Corporation of its Schedule 14C Information with the Securities and Exchange Commission and amendment of the Corporation's Articles of Incorporation. In addition, the Corporation will file a corporation action notification with FINRA to effect the Stock Split on the market, and must receive approval thereof prior to filing amended Articles of Incorporation. The number of shares presented in this quarterly report do not reflect the reverse stock split expected to become effective in the 4 th On October 16, 2015, we granted a total of 10,000,000 shares of restricted common stock to an unrelated third party, at a price of $0.0032 per share. On October 19, 2015, we granted a total of 7,894,000 shares of restricted stock to an unrelated third party at a price of $0.0038 in consideration of a reduction in payables. On October 19, 2015, we granted a total of 30,000,000 shares of restricted stock to Spanky LLC owned by David Loftus, an affiliate of the Company, at a price of $0.0038 in consideration of a reduction in payables. On October 22, 2015, we granted a total of 6,842,105 shares of restricted stock to an unrelated third party at a price of $0.0038 in consideration of a reduction in payables. On October 22, 2015, The RHL Group, Inc., an entity affiliated with our Chairman & CEO Robert H. Lorsch elected to purchase 46,000,000 shares of common stock at market price in consideration for a reduction in amounts due of $174,800.00. On October 29, 2015, we granted a total of 10,000,000 shares of restricted stock to Spanky LLC owned by David Loftus, an affiliate of the Company, at a price of $0.005 in consideration of a reduction in payables. |
Summary of Significant Accoun18
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of MMRGlobal, and its wholly-owned subsidiaries MMR and MMR Life Sciences Group, Inc. All intercompany transactions and balances are eliminated upon consolidation. |
Basis of Presentation | Basis of Presentation We have prepared the accompanying consolidated unaudited financial statements in accordance with accounting principles generally accepted in the United States of America, or GAAP, for interim financial statements and with instructions to Form 10-Q pursuant to the rules and regulations of Securities and Exchange Act of 1934, as amended, or the Exchange Act and Article 8-03 of Regulation S-X promulgated under the Exchange Act. Accordingly, these financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of our management, we have included all adjustments considered necessary (consisting of normal recurring adjustments) for a fair presentation. Operating results for the nine months ended September 30, 2015 are not indicative of the results that may be expected for the fiscal year ending December 31, 2015. You should read these unaudited condensed consolidated financial statements in conjunction with the audited financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2014. |
Going Concern and Management's Plan | Going Concern and Management's Plan As of September 30, 2015, our current liabilities exceeded our current assets by $9.97 million. Furthermore, during the nine months ended September 30, 2015, we incurred losses of $1,923,286, as further explained in Management's Discussion and Analysis of Financial Condition and Results of Operations appearing in Item 2 of Part I of this Quarterly Report on Form 10-Q. At September 30, 2015 and December 31, 2014, we had $0 and $303,393, respectively, in cash and cash equivalents. Historically, we issued capital stock, sold convertible debt and equity securities and received funds from The RHL Group, Inc. (a significant stockholder that is wholly-owned by our Chairman and Chief Executive Officer, Robert H. Lorsch) to operate our business. Although we received additional funding from The RHL Group pursuant to the Tenth Amended and Restated Note effective May 20, 2015 (the "Line of Credit"), we will still be required to obtain additional financing in order to meet installment payment obligations and the previously existing obligations under the Line of Credit, which had a balance of $1.81 million at September 30, 2015 and a total Unpaid Balance (as defined in the Line of Credit) of $2.06 million, which includes amounts borrowed under the Line of Credit, unpaid interest fees, any amounts guaranteed by The RHL Group, and other obligations due the RHL Group pursuant to the terms of the Tenth Amended and Restated Note and the Second Amended Security Agreement dated May 20, 2015 (the "Security Agreement"). As a result of the above, we express uncertainty about our ability to continue as a going concern. The components of the RHL Group Note payable and the related balance sheet presentation as of September 30, 2015 are as follows: $0.99 million, which is included in the line of credit, related party; and $0.82 million related to other obligations due to The RHL Group which are included in related party payables. Management's plan regarding our going concern is to continue utilizing the Line of Credit. According to the terms of the agreement, at September 30, 2015, there was approximately $2.37 million available under the Line of Credit at the discretion of the lender. Finally, we plan to sell additional convertible debt and equity securities, settle our existing liabilities through the issuance of equity securities, explore other debt financing arrangements, increase our existing subscriber and affiliate customer base, sell our products and services, and collect licensing fees from parties utilizing our intellectual property to obtain additional cash flow over the next twelve months. There can be no assurance that funds from these sources will be available when needed or, if available, will be on terms favorable to us or to our stockholders. If additional funds are raised by issuing equity securities, the percentage of ownership of our stockholders will be reduced, stockholders will experience additional dilution and/or such equity securities may provide for rights, preferences or privileges senior to those of the holders of our common stock. If we are unable to utilize our Line of Credit, obtain suitable alternative debt or equity financing, or increase sales of our products of increase licensing fees from the use of our intellectual property, our ability to execute our business plan and continue as a going concern may be adversely affected. These matters raise substantial doubt about our ability to continue as a going concern. These financial statements were prepared under the assumption that we will continue as a going concern and do not include any adjustments that might result from the outcome of that uncertainty. |
Management's Use of Estimates | (a) MANAGEMENT'S USE OF ESTIMATES The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net revenue and expenses during each reporting period. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, allowances for doubtful accounts, the valuation of deferred income taxes, tax contingencies, long-lived and intangible assets, valuation of derivative liabilities and stock-based compensation. These estimates are based on historical experience and on various other factors that management believes to be reasonable under the circumstances, although actual results could differ from those estimates. |
Cash and Cash Equivalents | (b) CASH AND CASH EQUIVALENTS We consider cash equivalents to be only those investments that are highly liquid, readily convertible to cash and with maturities of 90 days or less at the purchase date. We maintain our cash in bank deposit accounts that, at times, may exceed federally insured limits. We have not experienced any losses in such accounts and believe that we are not exposed to any significant credit or deposit risk on our cash. We had cash and cash equivalents of $0 and $303,393 as of September 30, 2015 and December 31, 2014, respectively. |
Trade and Other Receivables | (c) TRADE AND OTHER RECEIVABLES Receivables represent claims against third parties that will be settled in cash. The carrying value of receivables, net of an allowance for doubtful accounts, if any, represents their estimated net realizable value. We estimate the allowance for doubtful accounts, if any, based on historical collection trends, type of customer, the age of outstanding receivables and existing economic conditions. If events or changes in circumstances indicate that specific receivable balances may be impaired, we give further consideration to the collectability of those balances and the allowance is adjusted accordingly. We write off past due receivable balances when collection efforts have been unsuccessful in collecting the amount due. |
Inventory | (d) INVENTORY Inventory is stated at the actual cost, using the first-in-first-out method. On an on-going basis, we evaluate our inventory for obsolescence. This evaluation includes analysis of sales levels, sales projections, and purchases by item. If future demand or market conditions are different than our current estimates, an inventory adjustment may be required, and would be reflected in cost of goods sold in the period the revision is made. |
Fair Value of Financial Instruments | (e) FAIR VALUE OF FINANCIAL INSTRUMENTS ASC 820-10, Fair Value Measurements and Disclosures, We utilize ASC 820-10 for valuing financial assets and liabilities measured on a recurring basis. ASC 820-10 defines fair value, establishes a framework for measuring fair value and generally accepted accounting principles, and expands disclosures about fair value measurements. This standard applies in situations where other accounting pronouncements either permit or require fair value measurements. ASC 820-10 does not require any new fair value measurements. Accounting guidance also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: Level 1: Quoted prices in active markets for identical or similar assets and liabilities. Level 2: Quoted prices for identical or similar assets and liabilities in markets that are not active or observable inputs other than quoted prices in active markets for identical or similar assets and liabilities. Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
Impairment of Long-Lived Assets and Intangibles | (f) IMPAIRMENT OF LONG-LIVED ASSETS AND INTANGIBLES We account for long-lived assets, which include property and equipment and identifiable intangible assets with finite useful lives (subject to amortization), in accordance with ASC 350-30. ASC 350-30 requires that we review long-lived assets for impairment whenever events or changes in circumstances indicate that we may not recover the carrying amount of an asset. We measure recoverability by comparing the carrying amount of an asset to the expected future undiscounted net cash flows generated by the asset. If we determine that the asset may not be recoverable, or if the carrying amount of an asset exceeds its estimated future undiscounted cash flows, we recognize an impairment charge to the extent of the difference between the fair value and the asset's carrying amount. We had no impairment charges during the nine months ended September 30, 2015 and 2014. |
Revenue Recognition | (g) REVENUE RECOGNITION We generate our revenues from services, which are comprised of providing electronic access to consumer medical records and other vital documents, and from the licensing of our intellectual property and services. We recognize revenue only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed, and we are reasonably assured of collectability of the resulting receivable. Our subscriber revenues consist of annual and monthly recurring retail subscriptions and usage-based fees, which are primarily paid in advance by credit card, and corporate accounts that are based on either an access-fee or actual number of users, and in each case billed in advance at the beginning of each month of service. We defer the portions of annual recurring subscription fees collected in advance and recognize them on a straight line basis over the subscription period. We license the rights to use portions of our intellectual property portfolio, which includes certain patent rights essential to the sale of certain PHR products. Licensees typically pay a license fee in one or more installments and ongoing royalties based on their sales of products incorporating or using the Company's licensed intellectual property. License fees are recognized over the estimated period of benefit to the licensee, typically five to fifteen years. The Company earns royalties on such licensed products sold by its licensees at the time that the licensees' sales occur. The Company recognizes royalty revenues based on royalties reported by licensees during the quarter and when other revenue recognition criteria are met. We grant exclusive and non-exclusive licenses for the sale and marketing of our services in international territories in consideration of license fees and ongoing royalties. The royalty fee is usually a percentage of revenue earned by the licensee and there are usually certain minimum guarantees. We defer the recognition of license fee revenues received in advance from international licensees for the grant of the license and recognize them over the period covered by the agreement. We defer the recognition of minimum guaranteed royalty payments received in advance and recognize them over the period to which the royalty relates. We include all such revenues under "License Fees." In those cases where a license agreement contains multiple deliverables, we account for the agreement in accordance with ASC 605-25 Revenue Recognition - Multiple-Element Arrangements We recognize revenue on sales of our MMRPro system in accordance with ASC 605-25, Revenue Recognition, Multiple-Element Arrangements Our multiple-deliverable arrangements consist solely of our MMRPro product. Significant deliverables within these arrangements include scanning equipment, various licenses to use third party software, a license to use our proprietary MMRPro application software, installation and training, dedicated telephone lines, secure online storage and warranties. We determined all elements to be separate units of accounting as they have standalone value to the customers and/or they are sold by other vendors on a standalone basis. Delivery of the hardware and certain software elements of these arrangements occur at the inception of the agreement. We deliver installation and training at the inception of the agreement. We provide other software licenses, telephone lines and online secure storage over the three year term of the agreement. We include warranties in the arrangements, however the third party product manufacturer, and not us, is obligated to fulfill such warranties. The third-party warranty contracts are paid in advance and are not refundable. We allocate the revenue derived from these arrangements among all the deliverables. We base such allocation on the relative selling price of each deliverable. With the exception of our proprietary MMRPro application software, we use third party evidence to set the selling prices used for this allocation. In all such cases, third parties sell the same or very similar products. For the MMRPro application software, we estimate the selling price. We recognize the allocated revenue for each deliverable in accordance with SEC Staff Accounting Bulletin ("SAB") No. 104, Topic 13: Revenue Recognition Revenue from the licensing of our biotech assets may include non-refundable license and up-front fees, non-refundable milestone payments that are triggered upon achievement of a specific event, and future royalties or lump-sum payments on sales of related products. For agreements that provide for milestone payments, we adopted ASC 605-28-25, Revenue Recognition Milestone Method. |
Shared-Based Compensation | (h) SHARE-BASED COMPENSATION We account for share-based compensation in accordance with ASC 718-20, Awards Classified as Equity We account for options and warrants issued to non-employees in accordance with ASC 505-50, Equity-Based Payments to Non- Employees We estimate the fair value of each stock option on the date of grant using the Black-Scholes option pricing model. We determine assumptions relative to volatility and anticipated forfeitures at the time of grant. We valued grants of stock options and warrants during the nine months ended September 30, 2015 and 2014 using the following assumptions. September 30, 2015 September 30, 2014 Expected life in years 2 - 5 Years 0 - 5 Years Stock price volatility 120.51% - 122.72% 123.47% - 124.21% Risk free interest rate 0.04% - 1.38% 0.35% - 0.46% Expected dividends None None Forfeiture rate 0% 0% We base the assumptions used in the Black-Scholes models upon the following data: (1) our use of the contractual life of the underlying non-employee warrants as the expected life; the expected life of the employee options used in this calculation is the period of time the options are expected to be outstanding and has been determined based on historical exercise experience; (2) in the absence of an extensive public market for our shares, the expected stock price volatility of the underlying shares over the expected term of the option or warrant was taken at approximately the mid-point of the range for similar companies at the various grant dates; (3) we base the risk free interest rate on published U.S. Treasury Department interest rates for the expected terms of the underlying options or warrants; (4) we base expected dividends on historical dividend data and expected future dividend activity; and (5) we base the expected forfeiture rate on historical forfeiture activity and assumptions regarding future forfeitures based on the composition of current grantees. |
Net Income/Loss Per Share | (i) NET INCOME/LOSS PER SHARE We apply the guidance of ASC 260-10, Earnings Per Share We excluded all potential anti-dilutive common shares from the computation of diluted net loss per common share for the nine months ended September 30, 2015 and 2014 because they were anti-dilutive due to our net loss position. |
Recent Accounting Pronouncements | (j) RECENT ACCOUNTING PRONOUNCEMENTS In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. This new guidance is effective for the Company in the first quarter of 2018, with no early adoption permitted. The standard permits the use of either the retrospective or cumulative effect transition method. At this time we have not selected a transition method. We are currently evaluating the effect that ASU 2014-09 will have on our consolidated financial statements and related disclosures. In August 2014, the FABS issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern ("ASU 2014-15"). ASU 2014-15 will explicitly require management to assess an entity's ability to continue as a going concern, and to provide related footnote disclosure in certain circumstances. The new standard will be effective for all entities in the first annual period ending after December 15, 2016. Earlier adoption is permitted. We are currently evaluating the impact of the adoption of ASU 2014-15. The adoption of this standard is not expected to have a material impact on the Company's consolidated financial statements. |
Income Taxes | Under ASC 740-270, Income Taxes - Interim Reporting Pursuant to ASC 740, Income MMR Inc., in its capacity as the operating company taking over our income tax positions in addition to its own positions after January 27, 2009 (see Note 1), has estimated its annual effective tax rate to be zero. MMRGlobal has based this on an expectation that the combined entity will generate net operating losses in 2015, and it is not likely that those losses will be recovered using future taxable income. Therefore, no provision for income tax has been recorded as of and for the nine months ended September 30, 2015. |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Share-based Compensation Tables | |
Schedule of Valuation Assumptions to Determine the Fair Value of Stock Options | The inputs used for the Black-Scholes option and warrant valuation model were as follows: September 30, 2015 September 30, 2014 Expected life in years 2 - 5 Years 0 - 5 Years Stock price volatility 120.51% - 122.72% 123.47% - 124.21% Risk free interest rate 0.04% - 1.38% 0.35% - 0.46% Expected dividends None None Forfeiture rate 0% 0% |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Commitments And Contingencies Tables | |
Schedule of Future Minimum Rental Payments for Operating and Capital Leases | Future minimum lease payments as of September 30, 2015, under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) are as follows: Year Ending Operating Capital December 31, Leases Leases 2015 (Remainder of) $ 26,445 $ 13,221 2016 187,550 - 2017 206,305 - 2018 and there after 146,410 - 566,710 13,221 Less current portion - (13,221) Total minimum lease payments $ 566,710 $ - |
EQUITY ISSUANCES (Tables)
EQUITY ISSUANCES (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of Outstanding Option Awards | A summary of option activity for the nine months ended September 30, 2015 is presented below. Options granted by MMR Inc. prior to the date of the Merger have been retroactively restated to reflect the conversion ratio of MMR Inc. to MMR shares. Weighted-Average Weighted- Remaining Average Contractual Aggregate Exercise Life Intrinsic Options Price (Years) Value Outstanding at December 31, 2014 37,541,722 $ 0.10 4.29 $ - Granted - $ - - $ - Exercised - $ - - $ - Cancelled - $ - - $ - Outstanding at September 30, 2015 (Unaudited) 37,541,722 $ 0.10 3.54 $ - Vested and expected to vest at September 30, 2015 (Unaudited) 37,541,722 $ 0.10 3.54 $ - Exercisable at September 30, 2015 (Unaudited) 37,541,722 $ 0.10 3.54 $ - |
Summary of Stock Options Outstanding and Exercisable | The following table summarizes information about stock options outstanding and exercisable at September 30, 2015. Options Outstanding Options Exercisable Weighted Weighted Weighted Weighted Average Average Average Average Exercise Number Remaining Exercise Number Remaining Exercise Price of Shares Life (Years) Price of Shares Life (Years) Price $ 0.05 - 0.09 12,900,000 6.66 $ 0.07 12,900,000 6.66 $ 0.07 $ 0.10 - 0.15 23,011,461 3.44 $ 0.11 23,011,461 3.44 $ 0.11 $ > 0.15 1,630,261 4.45 $ 0.19 1,630,261 4.45 $ 0.19 37,541,722 37,541,722 |
Summary of Outstanding Warrant Awards | A summary of the activity of our warrants for the nine months ended September 30, 2015 is presented below: Weighted Avg. Shares Exercise Price Outstanding at December 31, 2014 70,028,410 $ 0.07 Granted 1,764,642 $ 0.003 Exercised - $ - Cancelled (14,650,000) $ 0.08 Outstanding at September 30, 2015 (Unaudited) 57,143,052 $ 0.06 Exercisable at September 30, 2015 (Unaudited) 55,719,441 $ 0.06 |
Black-Scholes option and valuation model assumptions | The inputs used for the Black-Scholes option and warrant valuation model were as follows: September 30, 2015 September 30, 2014 Expected life in years 2 - 5 Years 0 - 5 Years Stock price volatility 120.51% - 122.72% 123.47% - 124.21% Risk free interest rate 0.04% - 1.38% 0.35% - 0.46% Expected dividends None None Forfeiture rate 0% 0% |
Shares Issued for Services or Reduction to Liabilities | During the nine months ended September 30, 2015, we issued 120,100,000 shares of common stock with a value of $413,220 to various third parties and related parties and charged the proceeds to the appropriate accounts for the following reasons: Nine Months Ended September 30, 2015 Purpose Shares Value Reduction of payables and notes 112,100,000 $ 375,021 Services provided 8,000,000 38,199 Totals 120,100,000 $ 413,220 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Notes Payable Tables | |
Notes Payable | Notes payable consisted of the following: September 30, December 31, 2015 2014 Promissory notes payable due to the former officers of MMRGlobal as part of severance packages, due in full on August 31, 2009, with no stated interest $ 76,783 $ 76,783 Promissory notes payable due to the former officers of MMRGlobal pursuant to the Resignation and Post-Merger Employment Arrangement, due in full on August 31, 2009, with no stated interest 25,444 25,444 Promissory notes payable due to vendors relating to settlement of certain outstanding accounts payable, payable in 18 equal monthly installments commencing on July 27, 2009 and ending on January 27, 2011, with no stated interest 223,116 223,116 Short term loan due to a third-party with 6% interest 44,067 35,000 369,410 360,343 Less: current portion (369,410) (360,343) Notes payable, less current portion $ - $ - Short term loan due to a related-party, payable in full on January 2, 2014 with 12% interest $ 203,664 $ 203,664 Short term loan due to a related-party, payable in full on May 31, 2014 with 12% interest 50,000 50,000 Notes payable related party, current portion 253,664 253,664 Less: current portion (253,664) (253,664) Notes payable related party, less current portion $ - $ - |
Accounting Policies (Cash and C
Accounting Policies (Cash and Cash Equivalents) (Narrative) (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Dec. 31, 2013 |
Accounting Policies Cash And Cash Equivalents Narrative Details | ||||
Cash and cash equivalents | $ 0 | $ 309,393 | $ 1,491,510 | $ 10,359 |
Accounting Policies (Intangible
Accounting Policies (Intangible Assets and Impairments) (Narrative) (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Accounting Policies Intangible Assets And Impairments Narrative Details | ||
Impairment charges | $ 0 | $ 0 |
Accounting Policies (Share-Base
Accounting Policies (Share-Based Compensation Schedule Of Assumptions Used In Black-Scholes Model) (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Accounting Policies Share-based Compensation Schedule Of Assumptions Used In Black-scholes Model Details | ||
Expected life, in years, maximum | 5 years | 5 years |
Stock price volatility, minimum | 120.51% | 123.47% |
Stock price volatility, maximum | 122.72% | 124.71% |
Risk-free interest rate, mimimum | 0.40% | 0.35% |
Risk-free interest rate, maximum | 1.38% | 0.46% |
Expected dividends | $ 0 | $ 0 |
Forfeiture rate | 0.00% | 0.00% |
Related Party Note Payable (Nar
Related Party Note Payable (Narrative) (Details) - Tenth Amended and Restated Secured Promissory Note - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Date of note | Apr. 29, 2014 | ||||
Maximum line of credit under note | On May 20, 2015, we and The RHL Group entered into a Tenth Amended and Restated Promissory Note (the " Amended Note Existing Note Credit Facility Historically, the predecessor notes have increased over time the maximum amount of credit available under the Credit Facility from $100,000 to $1,000,000 to $3,000,000 to $4,500,000. The maximum amount of the Amended Note is $4,500,000. The Amended Note continues to bear interest at the lesser of 10% or the highest rate then permitted by law, and is secured (similar to the Existing Note) by a Security Agreement, which has been in effect since July 31, 2007, as renewed and amended to date (the "Security Agreement"). The Tenth Amended Note had a current balance of $1.81 million at September 30, 2015. The components of the Tenth Amended Note and the related balance sheet presentation as of September 30, 2015 are as follows: $0.99 million, which is included in the line of credit, related party; and $0.82 million for other obligations due to The RHL Group, which is included in related party payables. Total interest expense for the three months ended September 30, 2015 and September 30, 2014 was $36,699 and $36,952, respectively. Total interest expense on the Line of Credit for the nine months ended September 30, 2015 and 2014 amounted to $102,433 and $98,985, respectively. The unpaid interest balances as of September 30, 2015 and December 31, 2014 were $36,757 and $30,160, respectively. In conjunction with the Tenth Amended Note, we were required to maintain certain financial covenants, including the requirement that we have at least $200,000 of cash in our bank accounts or such other amount as necessary to maintain operations through the subsequent thirty (30) days and timely pay any obligations due respecting payroll and all associated payroll taxes on and after September 30, 2015. Since we did not meet these covenants as of September 30, 2015, we received a waiver from The RHL Group until November 30, 2015. | ||||
Maturity date | Apr. 29, 2016 | ||||
Warrants granted for shares | 1,764,642 | ||||
Warrant price per share | $ 0.003 | ||||
Debt component classification: | |||||
Line of credit, related party | $ 850,000 | $ 850,000 | |||
Related party payables | 690,000 | 690,000 | |||
Total note payable balance | 1,540,000 | 1,540,000 | |||
Interest expense on line of credit | 36,699 | $ 36,952 | 102,433 | $ 98,985 | |
Related party accrued interest | $ 36,757 | $ 36,757 | $ 30,160 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Income Taxes Narrative Details | |
Unrecognized tax benefits | $ 0 |
Income tax rate | 0.00% |
Commitments and Contingencies28
Commitments and Contingencies (Operating Leases) (Details) | Sep. 30, 2015USD ($) |
Year ending December 31: | |
2015 (Remainder of) | $ 26,445 |
2,016 | 187,550 |
2,017 | 206,305 |
2018 and there after | 146,410 |
Total minimum lease payments | $ 566,710 |
Commitments and Contingencies29
Commitments and Contingencies (Capital Leases) (Details) | Sep. 30, 2015USD ($) |
Year ending December31: | |
2015 (Remainder of) | $ 13,221 |
Total minimum lease payments | $ 13,221 |
Commitments and Contingencies30
Commitments and Contingencies (Leases Narrative) (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Rent expense | $ 86,854 | $ 129,276 |
September 2013 Lease | ||
Operating lease description | Effective September 1, 2013, we renewed our lease for office space in Los Angeles, California with a term through August 31, 2018. The lease currently requires a monthly payment of $8,250. |
Equity Issuances (Stock Option
Equity Issuances (Stock Option Activity Summary Of Option Activity) (Details) | 9 Months Ended |
Sep. 30, 2015USD ($)$ / sharesshares | |
Equity Issuances Stock Option Activity Summary Of Option Activity Details | |
Outstanding at December 31, 2014 | 37,541,722 |
Granted | 0 |
Exercised | 0 |
Cancelled | 0 |
Outstanding at September 30, 2015 (Unaudited) | 37,541,722 |
Vested and expected to vest at September 30, 2015 (Unaudited) | 37,541,722 |
Exercisable at June 30, 2015 (Unaudited) | 37,541,722 |
Weighted-Average Exercise Prices, Outstanding at December 31, 2014 | $ / shares | $ 0.10 |
Weighted-Average Exercise Prices, Granted | $ / shares | 0 |
Weighted-Average Exercise Prices, Exercised | $ / shares | 0 |
Weighted-Average Exercise Prices, Forfeited, cancelled or expired | $ / shares | 0 |
Weighted-Average Exercise Prices, Outstanding at September 30, 2015 | $ / shares | 0.10 |
Weighted-Average Exercise Prices, Vested and expected to vest | $ / shares | $ 0.10 |
Weighted-Average Remaining Contractual Life (in years), Outstanding at December 31, 2014 | 4 years 106 days |
Weighted-Average Remaining Contractual Life (in years), Outstanding at September 30, 2015 | 3 years 194 days |
Weighted-Average Remaining Contractual Life (in years), Vested and expected to vest | 3 years 194 days |
Weighted-Average Remaining Contractual Life (in years), Exercisable | 3 years 194 days |
Aggregate Intrinsic Value, Outstanding at December 31, 2014 | $ | $ 0 |
Aggregate Intrinsic Value, Outstanding at September 30, 2015 | $ | 0 |
Aggregate Intrinsic Value, Vested and expected to vest | $ | 0 |
Aggregate Intrinsic Value, Exercisable | $ | $ 0 |
Equity Issuances (Stock Optio32
Equity Issuances (Stock Option Activity Summary Of Stock Options Outstanding and Exercisable) (Details) - $ / shares | 9 Months Ended | |
Sep. 30, 2015 | Dec. 31, 2014 | |
Options Outstanding, Number of Shares | 37,541,722 | 37,541,722 |
Options Outstanding, Weighted-Average Exercise Price Per Share | $ 0.10 | $ 0.10 |
Options Exercisable, Number of Shares | 37,541,722 | |
$0.05 - $0.09 | ||
Range of Exercise Price, Minimum | $ 0.05 | |
Range of Exercise Price, Maximum | $ 0.09 | |
Options Outstanding, Number of Shares | 12,900,000 | |
Options Outstanding, Weighted-Average Remaining Life (in years) | 6 years 238 days | |
Options Outstanding, Weighted-Average Exercise Price Per Share | $ 0.07 | |
Options Exercisable, Number of Shares | 12,900,000 | |
Options Exercisable, Weighted-Average Remaining Life (in years) | 6 years 238 days | |
Options Exercisable, Weighted-Average Exercise Price Per Share | $ 0.07 | |
$0.10 - $0.15 | ||
Range of Exercise Price, Minimum | 0.10 | |
Range of Exercise Price, Maximum | $ 0.15 | |
Options Outstanding, Number of Shares | 23,011,461 | |
Options Outstanding, Weighted-Average Remaining Life (in years) | 3 years 158 days | |
Options Outstanding, Weighted-Average Exercise Price Per Share | $ 0.11 | |
Options Exercisable, Number of Shares | 23,011,461 | |
Options Exercisable, Weighted-Average Remaining Life (in years) | 3 years 158 days | |
Options Exercisable, Weighted-Average Exercise Price Per Share | $ .11 | |
> $0.15 | ||
Range of Exercise Price, Minimum | $ 0.15 | |
Options Outstanding, Number of Shares | 1,630,261 | |
Options Outstanding, Weighted-Average Remaining Life (in years) | 4 years 162 days | |
Options Outstanding, Weighted-Average Exercise Price Per Share | $ 0.19 | |
Options Exercisable, Number of Shares | 1,630,261 | |
Options Exercisable, Weighted-Average Remaining Life (in years) | 4 years 162 days | |
Options Exercisable, Weighted-Average Exercise Price Per Share | $ 0.19 |
Equity Issuances (Stock Optio33
Equity Issuances (Stock Option and Warrant Expense Narrative) (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Equity Issuances Stock Option And Warrant Expense Narrative Details | ||
Stock option expense | $ 11,111 | $ 327,920 |
Warrant expense | $ 8,818 | $ 63,035 |
Equity Issuances (Summary Of Wa
Equity Issuances (Summary Of Warrant Activity) (Details) | 9 Months Ended |
Sep. 30, 2015$ / sharesshares | |
Equity Issuances Summary Of Warrant Activity Details | |
Warrants outstanding at December 31, 2014 | shares | 70,028,410 |
Granted | shares | 1,764,642 |
Exercised | shares | 0 |
Cancelled | shares | (14,650,000) |
Warrants exercisable at September 30, 2015 | shares | 55,719,441 |
Weighted-average exercise price, beginning balance | $ 0.07 |
Weighted-average exercise price, granted | 0.003 |
Weighted-average exercise price, exercised during period | 0 |
Weighted-average exercise price, cancelled during period | 0.08 |
Weighted-average exercise price, ending balance | 0.08 |
Warrants exercisable, weighted average exercise price | $ 0.06 |
Equity Issuances (Inputs Used I
Equity Issuances (Inputs Used In Black-Scholesl) (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Equity Issuances Inputs Used In Black-scholesl Details | ||
Expected life, in years, maximum | 5 years | 5 years |
Stock price volatility, minimum | 120.51% | 123.47% |
Stock price volatility, maximum | 122.72% | 124.71% |
Risk-free interest rate, minimum | 0.40% | 0.35% |
Risk-free interest rate, maximum | 1.38% | 0.46% |
Expected dividends | $ 0 | $ 0 |
Forfeiture rate | 0.00% | 0.00% |
Equity Issuances (Shares Issued
Equity Issuances (Shares Issued for Services or Reduction to Liabilities) (Details) | 9 Months Ended |
Sep. 30, 2015USD ($)shares | |
Equity Issuances Shares Issued For Services Or Reduction To Liabilities Details | |
Reduction of payables, shares | shares | 112,100,000 |
Reduction of payables, amount | $ 375,021 |
Services provided, shares | shares | 8,000,000 |
Services provided, amount | $ 38,199 |
Total payment of services provided through issuance of common stock, shares | shares | 120,100,000 |
Total payment of accounts payable through issuance of common stock, amount | $ 413,220 |
Equity Issuances (Stock Bonus A
Equity Issuances (Stock Bonus Agreements) (Narrative) (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Stock Bonus Agreement expense | $ 0 | $ 245,375 |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Dec. 31, 2014 | |
Notes payable consisted of the following: | ||
Short-term debt | $ 369,410 | $ 360,343 |
Related party short-term debt | $ 253,664 | 253,664 |
Severance Package Notes | ||
Notes payable consisted of the following: | ||
Short-term Debt, Terms | Promissory notes payable due to the former officers of MMRGlobal as part of severance packages, due in full on August 31, 2009 with no stated interest | |
Short-term debt | $ 76,783 | 76,783 |
Resignation and Post-Merger Employment Arrangement Notes | ||
Notes payable consisted of the following: | ||
Short-term Debt, Terms | Promissory notes payable due to the former officers of | |
Short-term debt | $ 25,444 | 25,444 |
Notes Payable - Vendors | ||
Notes payable consisted of the following: | ||
Short-term Debt, Terms | Promissory notes payable due to vendors relating to settlement of certain | |
Short-term debt | $ 223,116 | 223,116 |
Short Term Loan Two | ||
Notes payable consisted of the following: | ||
Short-term Debt, Terms | Short term loan due to a third-party with no stated interest | |
Short-term debt | $ 44,067 | 35,000 |
Related Party One | ||
Notes payable consisted of the following: | ||
Short-term Debt, Terms | Short term loan due to a related-party, payable in full on | |
Related party short-term debt | $ 50,000 | 50,000 |
Related Party Two | ||
Notes payable consisted of the following: | ||
Short-term Debt, Terms | Short term loan due to a related-party, payable in full on | |
Related party short-term debt | $ 203,664 | $ 203,664 |
Convertible Promissory Notes (N
Convertible Promissory Notes (Narrative) (Details) | 9 Months Ended | |
Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | |
Convertible Promissory Notes Narrative Details | ||
Debt instrument, description | From time to time, we issue Convertible Promissory Notes. As of September 30, 2015, a total of $887,027 in convertible notes remained outstanding. As of September 30, 2015, all of these Notes have matured, however, the Company and the Holders have agreed to keep the balance as a Note Payable and the note holders have elected not to convert their note balances into shares of our common stock as of September 30, 2015. Each Note contains the following general terms and provisions: The principal amount owed under each note becomes due and payable one year or less from the investment date provided that, upon ten (10) days' prior written notice to the holder, we may, in our sole discretion, extend the maturity date for an additional six month term. The Notes can be further extended upon mutual agreement. These notes bear interest at a rate of 6% per annum payable in cash or shares of common stock or a combination of cash and shares of common stock at our option. | |
Debt Instrument, Convertible, Number of Equity Instruments | 41,679,061 | |
Interest expense | $ 55,780 | $ 124,120 |
Restructuring Activities (Narra
Restructuring Activities (Narrative) (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Dec. 31, 2014 | |
Total remaining severance liability | $ 620,613 | $ 620,613 |
Favrille | ||
Restructuring and Related Activities, Description | In connection with the merger with Favrille, Inc. in 2009, we signed promissory notes with certain former executives totaling $76,783. As of June 30, 2015, the total remaining severance liabilities amounted to $620,613, which is reflected as severance liability on the accompanying consolidated balance sheets. This consists of $571,362 payable to former non-executive employees. | |
Promissory notes with certain former executives | $ 76,783 | |
Severance liabilty payable to former non-executive employees in 18 monthly installments starting on July 27, 2009 | 571,362 | |
Estimated payroll tax on severance liabilty | 49,251 | |
Total remaining severance liability | $ 620,613 |
Related Party Transactions (Nar
Related Party Transactions (Narrative) (Details) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2009 | Dec. 31, 2014 | |
Related party payables | $ 1,472,150 | $ 952,835 | ||
The RHL Group, Inc. | ||||
Nature of Common Ownership or Management Control Relationships | Our Chairman and Chief Executive Officer, Robert H. Lorsch, is also the Chief Executive Officer of The RHL Group, Inc. and has full voting power over all of the capital stock of The RHL Group, Inc. Mr. Lorsch directly and indirectly through The RHL Group, Inc., beneficially owns approximately 16.4% our total outstanding voting stock. The RHL Group, Inc. has loaned us money pursuant to the Tenth Amended Note and all predecessor notes. See Note 3 - Related Party Note Payable above. The RHL Group is an investment holding company which provides consulting, operational and technical services to us, which we refer to as the RHL Services. As part of the RHL Services, The RHL Group provides us with unrestricted access to its internal business and relationship contact database of more than 10,000 persons and entities, which includes clients of The RHL Group and other individuals which may hold value to us. The RHL Group also provides infrastructure support to us, including allowing us unlimited access to its facilities, equipment, and data, information management and server systems. In addition to allowing us the use of its office support personnel, The RHL Group has also consented to allow us to utilize the full-time services of Mr. Lorsch as our President, Chairman and Chief Executive Officer, which requires substantial time and energy away from his required duties as The RHL Group's Chairman and Chief Executive Officer. In addition, The RHL Group has made its President, Kira Reed, available as our spokesperson. Ms. Reed, who is Mr. Lorsch's spouse, also manages our social networking activities. In consideration for the above, The RHL Group, Inc. has a consulting arrangement with MMR. A copy of the consulting agreement is filed as an exhibit in our Form 8-K, as filed with the SEC on May 4, 2009 and is hereby incorporated by reference. | |||
Bernard Stolar | ||||
Nature of Common Ownership or Management Control Relationships | We incurred $12,500 during the nine months ended September 30, 2015 and 2014, toward marketing consulting services from Bernard Stolar, a director. We included $198,514 and $174,273 in related party payables as of September 30, 2015 and December 31, 2014, respectively, in connection with these services and board fees. | |||
Related Party Transaction, Expenses from Transactions with Related Party | $ 12,500 | $ 12,500 | ||
Related party payables | $ 198,514 | 174,273 | ||
Significant Vendor | ||||
Nature of Common Ownership or Management Control Relationships | We contract with a significant vendor for the development and maintenance of the software applications necessary to run our MyMedicalRecords PHR, MyEsafeDepositBox and MyMedicalRecords Pro products. Our outside developer supports our software development needs through a team of software engineers, programmers, quality control personnel and testers, who work with our internal product development team on all aspects of application development, design, integration and support of our products. This vendor is also a stockholder. For the nine months ended September 30, 2015 and 2014, the total expenses relating to this stockholder amounted to $90,000 and $90,000, respectively. In addition, we capitalized $0 of software development costs for the quarter ended September 30, 2015. As of September 30, 2015 and December 31, 2014, the total amounts due to the stockholder and included in related party payables amounted to $100,000 and $10,000, respectively. | |||
Related Party Transaction, Expenses from Transactions with Related Party | $ 90,000 | 90,000 | ||
Related party payables | $ 100,000 | 10,000 | ||
E-Mail Frequency, LLC | ||||
Nature of Common Ownership or Management Control Relationships | On September 15, 2009, we entered into a five year agreement with E-Mail Frequency, LLC and David Loftus, Managing Partner of E-Mail Frequency, LLC, a significant stockholder of the Company, which was amended during 2011 to increase the term for an additional five years and provide licensor a non- exclusive right to target, market and exploit the Employee Benefits market. We licensed an existing 80 million person direct marketing database (the "Database") of street addresses, cellular phone numbers, e-mail addresses and other comprehensive data with E-Mail Frequency. The agreement allows us to market, through the use of the Database, our MyMedicalRecords PHR, MyEsafeDepositBox virtual vault, and MMRPro document management system to physicians and their patients. Under the terms of the Agreement, we paid $250,000 to David Loftus as a one-time consulting fee in the form of 2,777,778 shares of our common stock. We recorded the $250,000 one-time licensee fee as a prepaid consulting fee. Amortization expense for each of the quarters ended September 30, 2015 and 2014 was $0 and $37,500. Included in related party payables at September 30, 2015 and December 31, 2014 of $64,615 and $64,615, respectively, in respect to these services. | |||
Related Party Transaction, Expenses from Transactions with Related Party | $ 0 | 0 | ||
Amortization of licensee fee | 0 | 37,500 | ||
David Loftus | ||||
Related party payables | 64,615 | $ 64,615 | ||
Shares issued for services, related party, shares | 2,777,778 | |||
Shares issued for services, related party, amount | $ 250,000 | |||
Interest expense with related party | $ 0 | $ 0 |
Subsequent Events (Narrative) (
Subsequent Events (Narrative) (Details) | 9 Months Ended |
Sep. 30, 2015 | |
Subsequent Events Narrative Details | |
Subsequent Event, Description | On October 8, 2015, we received written consent from our company's board of directors to amend the Corporation's Articles of Incorporation to effect a reverse stock split, such that each five (5) shares of the issued and outstanding Common Stock of the Corporation shall be reversed split into one (1) share of Common Stock of the Corporation (the "Stock Split"). This Stock Split shall effect only issued and outstanding shares. Each record and beneficial holder who would receive a fractional share as a result of the reverse split shall receive, in lieu thereof, a whole share. On November 4, 2015, the Corporation received the written consent of holders of more than 50% of our voting securities to effect the Stock Split. The Stock Split will not be effective until after filing by the Corporation of its Schedule 14C Information with the Securities and Exchange Commission and amendment of the Corporation's Articles of Incorporation. In addition, the Corporation will file a corporation action notification with FINRA to effect the Stock Split on the market, and must receive approval thereof prior to filing amended Articles of Incorporation. The number of shares presented in this quarterly report do not reflect the reverse stock split expected to become effective in the 4 th On October 16, 2015, we granted a total of 10,000,000 shares of restricted common stock to an unrelated third party, at a price of $0.0032 per share. On October 19, 2015, we granted a total of 7,894,000 shares of restricted stock to an unrelated third party at a price of $0.0038 in consideration of a reduction in payables. On October 19, 2015, we granted a total of 30,000,000 shares of restricted stock to Spanky LLC owned by David Loftus, an affiliate of the Company, at a price of $0.0038 in consideration of a reduction in payables. On October 22, 2015, we granted a total of 6,842,105 shares of restricted stock to an unrelated third party at a price of $0.0038 in consideration of a reduction in payables. On October 22, 2015, The RHL Group, Inc., an entity affiliated with our Chairman & CEO Robert H. Lorsch elected to purchase 46,000,000 shares of common stock at market price in consideration for a reduction in amounts due of $174,800.00. On October 29, 2015, we granted a total of 10,000,000 shares of restricted stock to Spanky LLC owned by David Loftus, an affiliate of the Company, at a price of $0.005 in consideration of a reduction in payables. |