MIT Holding 10-Q 2010 Q1 Quarterly report

United States

Securities and Exchange Commission

Washington, D.C.  20549

FORM 10-Q

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

For the quarterly period ended March 31, 2010

OR

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

Commission File No: 333-13679

MIT HOLDING, INC.

(Exact name of registrant as specified in its charter)

DELAWARE	20-5068091
(State or other jurisdiction of	I.R.S. Employer ID No)
incorporation or organization)

37 West Fairmont Ave., Suite 202, Savannah, GA 31406

 (Address of principal executive office)  (Zip Code)

Registrant's telephone number: (912) 925-1905

N/A 

Former name, former address and former fiscal year,

(if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x     No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.)  Yes o    No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer o Non-accelerated filer o  (Do not check if a smaller
reporting company) Smaller reporting company x

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

The number of shares of common stock, no par value per share, outstanding as of   May 19, 2010 was 52,054,571

MIT HOLDING, INC.

FORM 10-Q

QUARTERLY PERIOD ENDED March 31, 2010

INDEX

TABLE OF CONTENTS

		Page
PART I – FINANCIAL INFORMATION
Item 1:	Financial Statements	F-2
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	7
Item 4T:	Controls and Procedures	7
PART II – OTHER INFORMATION
Item 1:	Legal Proceedings	9
Item 1A:	Risk Factors	9
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	9
Item 3:	Defaults Upon Senior Securities	9
Item 4:	Removed and Reserved	9
Item 5:	Other Information	9
Item 6:	Exhibits	9

2

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Financial Statements (Unaudited)
Consolidated Balance Sheets as of March 31, 2010
and December 31, 2009	F-2
Consolidated Statements of Operations for the three months ended
March 31, 2010and 2009	F-3
Consolidated Statement of Stockholders’ Equity (Deficiency)
for the three months ended March 31, 2010	F-4
Consolidated Statements of Cash Flows for the three months ended
March 31, 2010and 2009	F-5
Notes to Consolidated Financial Statements	F-6 - F-25

F-1

MIT HOLDING, INC.

CONSOLIDATED BALANCE SHEETS

	March 31, 2010			December 31, 2009
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	101,896		$	113,596
Accounts receivable, net of allowance for doubtful
accounts of $937,293 and $1,241,477, respectively		684,158			657,317
Inventories		187,122			181,928
Employee advances		1,977			2,258
Prepaid expenses		47,343			40,000
Total current assets		1,022,496			995,099
PROPERTY AND EQUIPMENT, net of accumulated
depreciation of $126,373 and $123,373, respectively		3,039			6,039
OTHER ASSETS
Non-compete agreement, net of accumulated amortization
of $107,928 and $97,929, respectively		92,072			102,071
Total other assets		92,072			102,071
TOTAL ASSETS	$	1,117,607		$	1,103,209
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	1,994,469		$	2,333,915
Current portion of debt		908,886			939,254
Total current liabilities		2,903,355			3,273,169
LONG-TERM DEBT		241,153			-
Estimated liability for equity-based financial instruments
with characteristics of liabilities:
Series A Convertible Preferred stock (1,896.73 shares
issued and outstanding at March 31, 2010 and December 31, 2009)		379,346			151,738
Warrants		129,884			25,323
TOTAL LIABILITIES		3,653,738			3,450,230
STOCKHOLDERS' EQUITY (DEFICIENCY)
Preferred stock, $0.000001 par value; 5,000,000 shares authorized,
1,896.73 and 1,896.73 shares issued and outstanding at March 31,
2010 and December 31, 2009, respectively (included in liabilities)		-			-
Common stock, $0.000001 par value; 250,000,000 shares authorized,
52,054,571 and 51,734,571 shares issued and outstanding at
March 31, 2010 and December 31, 2009, respectively		52			52
Additional paid-in capital		6,271,362			6,258,962
Retaining Earnings (accumulated deficit)		(8,807,545	)		(8,606,035	)
Total stockholders' equity (deficiency)		(2,536,131	)		(2,347,021	)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,117,607		$	1,103,209

The accompanying notes are an integral part of these statements.

F-2

MIT HOLDING, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009

(UNAUDITED)

	March 31, 2010			March 31, 2009
Revenue
Sales and services rendered	$	1,677,136		$	1,572,401
Cost of medical supplies		708,638			665,903
Gross profit		968,498			906,498
Operating Expenses
Salaries and payroll cost		391,103			427,231
Selling, general and administrative		353,143			359,234
Provision for doubtful accounts		-			-
Depreciation and amortization		12,999			17,415
Total operating expenses		757,245			803,880
Income (loss) from operations		211,253			102,618
Other income (expense):
Income (expense) from revaluation of equity-based
financial instruments with characteristics of
liabilities at fair values (as restated for 2009- note N)		(332,169	)		164,271
Interest expense		(80,594	)		(78,763	)
Income (loss) before provision for income taxes		(201,510	)		188,126
Provision for income taxes		-			-
Net income (loss)		(201,510	)		188,126
Increase in cumulative dividends payable on Series A
Preferred Stock (as restated for 2009- note N)		28,451			28,451
Net income (loss) atributable to common stockholders	$	(229,961	)	$	159,675
Net income (loss) per common share:
Basic and diluted	$	(0.00	)	$	(0.00	)
Weighted average number of common shares outstanding:
Basic and diluted		51,880,349			49,169,634

The accompanying notes are an integral part of these statements.

F-3

MIT HOLDING, INC.

CONSOLIDATED  STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIENCY)

FOR THE THREE MONTHS ENDED MARCH 31, 2010

(UNAUDITED)

	Series A Convertible										Retained			Total
	Preferred Stock, $.000001 par value				Common Stock , $.000001 par value				Additional Paid-in		Earnings (Accumulated			Stockholders’ Equity
	Shares		Amount		Shares		Amount		Capital		Deficit)			(Deficiency)
Balance at December 31, 2009		-	$	-		51,734.571	$	520	$	6,258,962	$	(8,606,035	)	$	(2,347,021	)
Issuance of common stock for services in first quarter 2010		-		-		320,000		-		12,400		-			12,400
Net loss for the three months
Ended March 31, 2010		-		-		-		-		-		(201,510	)		(201,510	)
Balance at March 31, 2010		-	$	-		52,054.571	$	520	$	6,271,362	$	(8,807,545	)	$	(2,536,131	)

The accompanying notes are an integral part of these statements.

F-4

MIT HOLDING, INC.

CONSOLIDATED  STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009

(UNAUDITED)

	March 31, 2010			March 31, 2009
OPERATING ACTIVITIES
Net income (loss)	$	(201,510	)	$	188,126
Adjustments to reconcile net income (loss) to cash provided by (used for) operating activities:
Expense(income) from revaluation of equity-based financial instruments with characteristics of liabilities at fair values (as restated for 2009 - note N)		332,169			(164,271	)
Depreciation and amortization		12,999			17,415
Issuance of common stock for services		12,400			25,500
Provision for doubtful accounts		-			-
Changes in operating assets and liabilities:
Receivables		(26,841	)		173,901
Inventories		(5,194	)		2,398
Prepaid expenses		(7,343	)		-
Employee advances		281			-
Accounts payable and accrued expenses		(33,718	)		(183,339	)
Cash provided by (used for) operating activities		83,243			59,730
INVESTING ACTIVITIES
Capital expenditures		-			-
Cash used for investing activities		-			-
FINANCING  ACTIVITIES
Repayment of debt		(94,943	)		(85,930	)
Cash provided by (used for) financing activities		(94,943	)		(85,930	)
NET   INCREASE (DECREASE) IN CASH		(11,700	)		(26,200	)
CASH BALANCE BEGINNING OF PERIOD		113,596			111,337
CASH BALANCE END OF PERIOD	$	101,896		$	85,137
Supplemental Disclosures:
Interest	$	80,593		$	78,763
Taxes	$	-		$	-
Non- cash Financing Activities:
Conversion of Accounts Payable to Fixed Rate Term Note due to Cardinal Health	$	305,728		$	-

The accompanying notes are an integral part of these statements.

F-5

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2010

(UNAUDITED)

NOTE A – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. Nature of Operations/ Basis of Presentation

Nature of Operations

MIT Holding, Inc., a Delaware corporation, is a holding company. Through three wholly-owned subsidiaries, MIT distributes wholesale pharmaceuticals, administers intravenous infusions, operates an ambulatory center where therapies are administered and sells and rents home medical equipment. Medical Infusion Technologies, Inc. was incorporated in November 1991 in the state of Georgia. On July 6, 2006, an agreement and plan of merger was made between MIT Holding, Inc., a Delaware corporation, Medical Infusion Technologies, Inc., and MIT  CVAH Acquisition , Inc. By this agreement, MIT Holding, Inc. became the parent company and Medical Infusion Technologies, Inc. and MIT Ambulatory Care Center, Inc., the wholly-owned subsidiaries.

MIT Holding, Inc. Merger with Convention All Holdings, Inc.

Our company was formerly known as Convention All Holdings, Inc. and, on May 2, 2007, we acquired a 100% ownership interest in MIT Holding, Inc. through a merger of MIT Holding, Inc. with and into MIT CVAH Acquisition Corp, a newly formed Delaware corporation and wholly-owned subsidiary, in exchange for 32,886,779 shares of our common stock. Simultaneously with the Merger, the company formerly known as MIT Holding, Inc. changed its name to Medical Infusion Group, Inc., and we changed our name to MIT Holding, Inc. As a result of the Merger, we now own 100% of Medical Infusion Group, Inc., a Delaware corporation, which, in turn, continues to own 100% of the issued and outstanding shares of capital stock of MIT Ambulatory Care Center, Inc., a Georgia corporation ("Ambulatory"), Medical Infusion Technologies, Inc., a Georgia corporation (“Infusion”) and MIT International Distribution, Inc., a Delaware corporation (“MIT International”).

F-6

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 March 31, 2010

(UNAUDITED)

NOTE A – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Basis of Presentation

 The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. These financial statements have been reformatted to be consistent with reports issued this calendar year.  The changes reflected in these statements have no material effect on net loss.

2.   Cash Equivalents

Investments having an original maturity of 90 days or less that are readily convertible into cash are considered cash equivalents. The Company had no cash equivalents as of March 31, 2010 and December 31, 2009.

3. Fair Value of Financial Instruments

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, net, accounts payable and accrued expenses, and debt.  The fair value of these financial instruments approximate their carrying amounts reported in the balance sheets due to the short term maturity of these instruments or based upon market quotations or quotations of instruments with similar interest rates and similar maturities.

4. Accounts Receivable, Net of Allowance for Doubtful Accounts

The Company derives most of its revenue from contracts with third party payors such as insurance companies and Medicare and Medicaid programs.  Its billing are often settled lower by such payors.  An allowance for doubtful accounts is established and recorded based on historical experience and the aging of the related accounts receivable.

F-7

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2010

(UNAUDITED)

NOTE A – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

5. Inventories

Inventories are stated at the lower of cost (first-in, first-out) or market (net realizable value). They consist mainly of pharmaceutical supplies and medical equipment.

6. Property and Equipment

Property and equipment are stated at cost and are depreciated principally on methods and at rates designed to amortize their costs over their estimated useful lives.

The estimated service lives of property and equipment are principally as follows:

Furniture and fixtures	5- 7 years
Computer equipment	3- 7 years
Vehicles	5- 7 years

Repairs and maintenance are expensed as incurred. Expenditures that increase the value or productive capacity of assets are capitalized.

7. Long-Lived Assets

Property and equipment and other long-lived assets, including non-compete agreements, are evaluated for impairment whenever events or conditions indicate that the carrying value of an asset may not be recoverable, but not less than annually.  If the sum of undiscounted cash flows is less than the carrying value of the related asset or group of assets, a loss is recognized for the difference between the fair value and carrying value of the asset or group of assets.

8. Revenue Recognition

Sales and services are recorded when products are delivered to the customers. Provision for discounts, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. In instances where products are configured to customer requirements, revenue is recorded upon the successful completion of the Company’s final test procedures.

9. Stock-Based Compensation

Stock-based compensation is accounted for at fair value in accordance with Accounting Standards Codification (“ASC”) 718, “Compensation- Stock Compensation”.  

F-8

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2010

(UNAUDITED)

NOTE A – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

In addition to requiring supplemental disclosures, ASC 718, Compensation – Stock Compensation, addresses the accounting for share-based payment transactions in which a company receives goods in exchange for (a) equity instruments of the company or (b) liabilities that are based on the fair value of the company’s equity instruments or that may be settled by the issuance of such equity instruments.  FASB ASC 718 focuses primarily on accounting for transactions in which a company obtains employee services in share-based payment transactions.

References to the issuances of restricted stock refer to stock of a public company issued in private placement transactions to individuals who are eligible to sell all or some of their shares of restricted Common Stock pursuant to Rule 144 promulgated under the Securities Act of 1933 (“Rule 144”), subject to certain limitations.  In general, pursuant to Rule 144, a stockholder who is not an affiliate and has satisfied a six-month holding period may sell all of his restricted stock without restriction, provided that the Company has current information publicly available.  Rule 144 also permits, under certain circumstances, the sale of restricted stock, without any limitations, by a non-affiliate of the Company that has satisfied a one-year holding period.

10. Advertising Costs

Advertising costs are expensed as incurred. Advertising expense totaled $ 8,828 for the three months ended March 31, 2010 and $ 8,031 for the three months ended  March 31, 2009.

11. Income Taxes

Deferred income taxes are recognized for temporary differences between the tax bases of assets and liabilities and their reported amounts in the financial statements by applying enacted statutory tax rates expected to apply in the years in which these temporary differences are expected to be recovered or settled.  Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is not more likely than not that some portion or all of the deferred tax assets will be realized.  Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.

12. Net Income (Loss) per Common Share

Basic net income (loss) per common share is computed on the basis of the weighted average number of common shares outstanding during the period. Diluted net income (loss) per common share is computed on the basis of the weighted average number of common shares and dilutive securities (such as warrants and convertible securities) outstanding.  Dilutive securities having an anti-dilutive effect on diluted net income (loss) per share are excluded from the calculation.

F-9

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2010

(UNAUDITED)

NOTE A – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

For the three months ended March 31, 2010 and 2009, diluted weighted average number of common shares outstanding exclude 3,793,460 shares issuable on conversion of Series A Preferred Stock, 600,000 shares issuable on exercise of outstanding stock options and 8,418,780 shares issuable on exercise of outstanding warrants.

13. Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation.

14. Recent Accounting Pronouncements

Certain accounting pronouncements have been issued by FASB and other standard setting organizations which are not yet effective and have not yet been adopted by the Company.  The impact on the Company’s consolidated financial position and results of operations from adoption of these standards is not expected to be material.

F-10

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2010

(UNAUDITED)

NOTE B—GOING CONCERN

At March 31, 2010, the Company had negative working capital of $1,880,859.  From inception, the Company has incurred a net loss of $8,807,545.  These factors raise substantial doubt about the Company’s ability to continue as a going concern.

There can be no assurance that sufficient funds required during the next year or thereafter will be generated from operations or that funds will be available from external sources such as debt or equity financings or other potential sources.  The lack of additional capital resulting from the inability to generate cash flow from operations or to raise capital from external sources would force the Company to substantially curtail or cease operations and would, therefore, have a material adverse effect on its business. Furthermore, there can be no assurance that any such required funds, if available, will be available on attractive terms or that they will not have a significant dilutive effect on the Company’s existing stockholders.

The accompanying financial statements do not include any adjustments related to the recoverability of classification of asset-carrying amounts or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.

F-11

 

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2010

(UNAUDITED)

NOTE C – ACCOUNTS RECEIVABLE

Accounts receivable consist of:

	March 31, 2010			December 31, 2009
Ambulatory care	$	644,394		$	526,744
Infusions		514,937			797,502
Durable medical equipment		418,480			523,078
Wholesale		43,640			51,470
Total		1,621,451			1,898,794
Allowance for doubtful accounts		(937,293	)		(1,241,477	)
Net	$	684,158		$	657,317

The allowance for doubtful accounts changed as follows:

	Three months ended March 31, 2010			Year ended December 31,2009
Balance, beginning of year	$	1,241,477		$	998,149
Provision for doubtful accounts		-			986,993
Writeoffs		(304,184	)		(743,665	)
Ending Balance	$	937,293		$	1,241,477

F-12

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2010

(UNAUDITED)

NOTE D – INVENTORIES

Inventories consist of:

	March 31, 2010		December 31, 2009
Ambulatory care	$	69,235	$	81,868
Infusions		87,947		63,675
Durable medical equipment		29,940		36,385
Wholesale		-		-
Total	$	187,122	$	181,928

NOTE E – NON-COMPETE AGREEMENT

 Non-compete agreement consists of:

	March 31,2010			December 31,2009
Consideration to seller of Infusion and Ambulatory (and
Company's chief operating officer) attributable to
non-compete agreement executed May 10, 2005	$	200,000		$	200,000
Accumulated amortization		(107,928	)		(97,929	)
Total	$	92,072		$	102,071

The non-compete agreement is being amortized over the estimated remaining period of the agreement (see Note M).

F-13

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2010

(UNAUDITED)

NOTE F – DEBT

The Company’s debt is as follows:

	March 31,		December 31,
	2010		2009
Globank, Inc., interest at 60% payable monthly, due in full on
July 29, 2010, secured by guaranties of the Company’s chief
executive officer and the Company’s three subsidiaries	$	500,000	$	500,000
The Coastal Bank - installment loan, interest at 10%, initially
due September 28, 2008, now informally due in monthly
installments of principal and interest of $10,000 through
April 20, 2011, secured by Company assets and guaranty
of the Company’s Chief Executive Officer		119,516		146,038
The Coastal Bank – vehicle loans, interest at rates ranging from
6.5% to 8.22%, due in monthly installments of principal and
interest through November 21, 2010		4,795		8,151
CuraScript (former supplier) pursuant to Settlement Agreement,
interest at 0%, due in monthly installments of $15,000 through
July 15, 2010		82,500		142,565
Cardinal Health (supplier) Fixed Rate Term Note, interest at
10%, due in monthly installments of principal and interest of $7,798
through April 10, 2014, secured by guaranty of the Company’s
Chief Executive Officer		305,728		-
Note for legal fees, interest at 0%, past due		137,500		142,500
Total		1,150,039		939,254
Current portion of debt		908,886		939,254
Long – term debt	$	241,153	$	-

F-14

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2010

(UNAUDITED)

NOTE G – ESTIMATED LIABILITY FOR EQUITY-BASED FINANCIAL INSTRUMENTS WITH CHARACTERISTICS OF LIABILITIES

Effective January 1, 2009, in accordance with EITF Issue No. 07-05, “Determining Whether an Instrument (or Embedded Feature) is indexed to an Entity’s Own Stock”, the Company reclassified the fair values at January 1, 2009 of the outstanding Series A Convertible Preferred Stock and warrants from the private placement of the units which closed May 31, 2007 from stockholders’ equity to liabilities, as follows:

	Common
	Shares		Fair
	Equivalent		Value
Series A Convertible Preferred Stock		3,793,460	$	379,346
Warrants		8,168,780		129,884
Total financial instruments		11,962,240	$	509,230

Since at January 1, 2009 the carrying value of the outstanding financial instruments was $2,871,316, the Company recognized a cumulative effect adjustmentresulting from a change in accounting principle of $2,537,514.  Accordingly, the accumulated deficit balance at December 31, 2008 was decreased from $9,899,884 to $7,362,370, as adjusted, on January 1, 2009.

The characteristics which require classification of the Series A Preferred Stock and warrants as liabilities are the Company’s obligations to reduce the conversion price of the Series A Preferred Stock and the exercise price of the warrants in the event that the Company sells, grants, or issues any nonexcluded shares, options, warrants, or any convertible instrument at a price below the $0.50 current conversion price of the Series A Preferred Stock.  As a result, the Company remeasures the fair values of these financial instruments each quarter, adjusts the liability balances, and reflects changes in operations as “income (expense) from revaluation of equity-based financial instruments with characteristics of liabilities at fair values”.

F-15

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2010

(UNAUDITED)

NOTE G – ESTIMATED LIABILITY FOR EQUITY-BASED FINANCIAL INSTRUMENTS WITH CHARACTERISTICS OF LIABILITIES (continued)

At March 31, 2010, the fair values of the financial instruments consisted of:

	Common
	Shares		Fair
	Equivalent		Value
Series A Convertible Preferred Stock		3,793,460	$	379,346
Warrants		8,168,780		129,884
Total financial instruments		11,962,240	$	509,230

Below is a reconciliation of the change in the fair values of the financial instruments from January 1, 2009 through March 31, 2010:

	Common
	Shares		Fair
	Equivalent		Value
Balance, January 1, 2009		11,962,240	$	333,802
Revaluation credited to operations		-		(164,271	)
Balance, March 31, 2009		11,962,240		169,531
Revaluation charged to operations		-		789,139
Balance, June 30, 2009		11,962,240		958,670
Revaluation credited to operations		-		(403,695	)
Balance, September 30, 2009		11,962,240		554,975
Revaluation credited to operations		-		(377,914	)
Balance, December 31, 2009		11,962,240		177,061
Revaluation charged to operations		-		332,169
Balance, March 31, 2010		11,962,240	$	509,230

F-16

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2010

(UNAUDITED)

NOTE H – PREFERRED STOCK

The Company is authorized to issue 5,000,000 shares of Preferred Stock, of which 5,000 shares have been designated Series A Preferred Stock, par value $ 0.000001. As of March 31, 2010 and December 31, 2009, there are 1,896.73 shares of Series A Preferred Stock issued and outstanding. Holders of Series A Preferred Stock are entitled at any time to convert their shares of Series A Preferred Stock into Common Stock, without any further payment therefore. Each share of Series A Preferred Stock is initially convertible into 2,000 shares of Common Stock, equivalent to a Conversion Price of $0.50 per share. The number of shares of Common Stock issuable upon conversion of the Series A Preferred Stock is subject to adjustment upon the occurrence of certain events, including, among others, a stock split, reverse stock split or combination of MIT's Common Stock; an issuance of Common Stock or other securities of MIT as a dividend or distribution on the Common Stock; a reclassification, exchange or substitution of the Common Stock; or a capital reorganization of MIT. In the event that MIT issues any additional shares of its Common Stock following the Offering, the Conversion rate will be that number of shares of Common Stock equal to $1,000 divided by the price per share at which MIT issues Common Stock in such offering. At our option, following the effectiveness of a registration statement registering the shares of Common Stock issuable upon the conversion of the Series A Preferred Stock and the exercise of the Warrants, if the price of the Common Stock trades above 300% of the Conversion Price per share during any period of 30 consecutive trading days and the average trading volume is at least 50,000 shares per day, for such 30 day period, each share of Series A Preferred Stock can be automatically converted into Common Stock at the Conversion Rate then in effect.

The liquidation preference amount of each share of Series A Preferred Stock is $1,000, or a total of  $1,896,730 for the 1,896.73 shares issued and outstanding as of March 31, 2010 and December 31, 2009.

As part of its private placement of the Units (including the Series A Preferred Stock) which closed May 31, 2007, the Company granted a financial advisor a five-year option to purchase up to 635 units (comprised of 635 shares of Series A Preferred Stock and warrants to purchase up to 1,270,000 shares of common stock at an exercise price of $0.75 per share to August 13, 2012) at a price of $1,000 per Unit.

Dividends accrue on the Series A Preferred Stock at the rate of 6% per annum and are cumulative.  If and when declared, the Company may pay such dividends in cash or common stock.   The cumulative undeclared and unpaid dividends are $324,282 and $295,831 at March 31, 2010 and December 31, 2009, respectively.

NOTE I – ISSUANCE OF COMMON STOCK

In the first quarter of 2009, the Board of Directors authorized the issuance of a total of 850,000 shares of common stock to Board Members and key employees valued at a price of $0.03 per share, or $25,500 total. In the fourth quarter of 2009, the Board of Directors authorized the issuance of 2,139,937 shares of common stock to Board Members valued at prices ranging from $0.04 per share to $0.76 per share, or $148,352 total.  The Company included the $173,582 estimated fair value of the shares in selling, general and administrative expenses in the accompanying statement of operations for the year ended December 31, 2009 and increased common stock and additional paid-in capital by the same amount.

F-17

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2010

(UNAUDITED)

NOTE I – ISSUANCE OF COMMON STOCK (continued)

In the first quarter of 2010, the Board of Directors authorized the issuance of a total of 320,000 shares of common stock to Board Members and key employees valued at a price of $0.04 per share, or $12,400 total.  The Company included the $12,400 in selling, general and administrative expenses in the accompanying statement of operations for the three months ended March 31, 2010 and increased common stock and additional paid-in capital by the same amount.

NOTE J – STOCK OPTIONS AND COMMON STOCK PURCHASE WARRANTS

A summary of stock options and warrants activity for the three months ended March 31, 2010 and the year ended December 31, 2009 follows:

	Common Shares Equivalent
	Stock Options		Warrants
Outstanding at December 31, 2008		600,000		8,418,780
Granted and issued		-		-
Exercised		-		-
Forfeited/expired/cancelled		-		-
Outstanding at December 31, 2009		600,000		8,418,780
Granted and issued		-		-
Exercised		-		-
Forfeited/expired/cancelled		-		-
Outstanding at March 31, 2010		600,000		8,418,780

F-18

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2010

(UNAUDITED)

NOTE J – STOCK OPTIONS AND COMMON STOCK PURCHASE WARRANTS (continued)

Stock options outstanding at March 31, 2010 and December 31, 2009 are:

Date Granted	Number Outstanding		Number Exercisable		Exercise  Price		Expiration  Date
May 2, 2007		600,000		600,000	$	0.50	May 2, 2012
Totals		600,000		600,000

Common stock purchase warrants outstanding at March 31, 2010 and December 31, 2009 are:

Date Granted	Number Outstanding		Exercise Price		Expiration Date
May 31, 2007		8,168,780	$	0.75	August 13, 2012
July 30, 2007		250,000	$	2.20	July 30, 2012
Total:		8,418,780

NOTE K – INCOME TAXES

Expected income tax expense (benefit) computed by applying the United States statutory income tax rate of 34% to pretax income (loss) differs from the Company’s provision for (benefit from) income taxes, as follows:

	Three Months ended March 31,
	2010			2009
Expected income tax expense (benefit) at 34%	$	(68,513	)	$	63,963
Non-deductible stock-based compensation		4,216			8,670
Non-deductible expense (non-taxable income)
from revaluation of equity-based financial instruments
with characteristics of liabilities at fair values		112,937			(55,852	)
Change in valuation allowance		(48,640	)		(16,781	)
Provision for income taxes	$	-		$	-

F-19

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2010

(UNAUDITED)

NOTE K – INCOME TAXES (continued)

The components of net deferred income tax assets are as follows:

	March 31, 2010			December 31, 2009
Allowance for doubtful accounts	$	318,680		$	422,102
Net operating loss carryforward		981,934			927,152
Total		1,300,614			1,349,254
Less valuation allowance		(1,300,614	)		(1,349,254	)
Net deferred income tax assets	$	-		$	-

Based on management’s present assessment, the Company has not yet determined it to be more likely than not a deferred income tax asset of up to approximately $1,300,614 attributable to the future utilization of the net operating loss carryforwards and other timing differences of approximately $3,825,335 as of March 31, 2010 will be realized.  Accordingly, the Company has maintained its 100% allowance against the deferred tax asset in the financial statements at March 31, 2010.  The Company will continue to review this valuation allowance and make adjustments as appropriate.  The approximately $2,888,044 net operating loss carryforward expires $1,743,693 in year 2028, $983,226 in year 2029 and $161,125 in year 2030.

NOTE L – OPERATING SEGMENTS

The Company has four principal operating segments, which are as follows:

· Medical Infusion Technologies-“MIT”

· MIT Wholesale -“Wholesale”

· Durable Medical Equipment - “DME”

· MIT Ambulatory Care Center -“Ambulatory Care”

“MIT” is a provider of intravenous therapies to patients at their home, at a designated facility. MIT’s primary product lines are centered upon infusion therapy.

“Wholesale” primarily aims at a network of hard to find pharmaceuticals. It concentrates in sales on rare products in the pharmaceutical industry.

F-20

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2010

(UNAUDITED)

NOTE L – OPERATING SEGMENTS (continued)

“DME” carries a variety of durable medical equipment and supplies.

“Ambulatory Care” administers the intravenous therapies to patients in the Company’s facility.

The following tables show the summarized financial information of the Company’s reportable segments at March 31, 2010 and 2009 and for the three months then ended:

	Medical
	Infusion			Wholesale/		Ambulatory			DME			Combined
	- MIT			International		Care
2010
Revenue	$	589,644		$	-	$	959,724		$	127,769		$	1,677,136
Income (loss) from operations		(97,104	)		-		263,826			44,531			211,253
Depreciation and amortization		12,999			-		-			-			12,999
Assets		557,557			-		348,652			211,398			1,117,607
2009
Revenue	$	799,864		$	-	$	665,140		$	107,397		$	1,572,401
Income (loss) from operations		133,412			-		(14,730	)		(16,064	)		102,618
Depreciation and amortization		17,415			-		-			-			17,415
Assets		1,395,069			-		692,980			567,516			2,655,565

F-21

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2010

(UNAUDITED)

NOTE M - COMMITMENTS AND CONTINGENCIES

Employment Agreements

Pursuant to an Employment Agreement with the Company’s chief executive officer effective June 30, 2006 and expiring June 30, 2011, the Company is obligated to pay its chief executive officer a salary of $250,000 per year. Pursuant to an Employment Agreement with the Company’s chief operating officer effective May 10, 2005, as amended March 14, 2006, April 1, 2006, December 20, 2006, and June 7, 2007, the Company is obligated to pay its chief operating officer a salary of approximately  $117,000 per year through May 10, 2010 and, on May 10, 2010, cash or common stock, at the option of the Company, equal to the amount (if any) by which $625,000 exceeds the sum of ( i ) the market value of the remainder of the 312,500 unsold shares issued to her on June 7, 2007 and ( ii) the proceeds, if any, received by her from the sale of any of the 312,500 shares.  As part of the agreement, the Company’s chief operating officer has agreed not to compete with the Company for a period of three years after the sales of any shares of the Company.

Pursuant to an Employment Agreement with the  Company’s pharmacist in charge effective May 10, 2005, as amended March 14, 2006, April 1, 2006, December 20, 2006, and June 7, 2007, the Company is obligated to pay its pharmacist in charge a salary of approximately  $40,000 per year through May 10, 2010 and, on May 10, 2010, cash or common stock, at the option of the Company, equal to the amount (if any) by which $500,000 exceeds the sum of ( i ) the market value of the remainder of the 250,000 unsold shares issued to him on June 7, 2007 and ( ii) the proceeds, if any, received by him from the sale of any of the 250,000 shares.  As part of the agreement, the pharmacist in charge has agreed not to compete with the Company for a period of three years after the sales of any shares of the Company.

Lease Agreements

The following are the key terms of MIT’s lease agreements:

The lease on the facility located at 115B Echols St., Savannah, GA was entered into January 1, 2007 and expired January 1, 2009.  It is now on a month to month lease basis. The rent is $4,180 per month. This lease is personally guaranteed by William C. Parker, Chairman of the Board.

     MIT leases two suites in the facility located at 37 W. Fairmont Avenue, Savannah, GA.  The leases for Suites 202 and 204 each commenced November 1, 2004, for a term of 36 months.They are now on a month to month lease basis. The monthly rent on Suite 202 is $1,360, and the monthly rent on Suite204 is $1,123. This lease was amended on September 6, 2008 to include Suite 206 at a monthly rent of $1,158 per month ending on November 30, 2009.  This lease is personally guaranteed by William C. Parker.

F-22

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2010

(UNAUDITED)

NOTE M - COMMITMENTS AND CONTINGENCIES (continued)

Stock-Based Compensation Plan

On June 7, 2007 the Board of Directors approved the 2007 Stock Incentive Plan (the "Plan") covering 5,000,000 shares. The shareholders subsequently approved the Plan. The shares underlying the Plan are restricted. The Plan is identical to MIT’s 2006 Stock Incentive Plan (which was adopted by Medical Infusion Group, Inc. (the former MIT Holding, Inc.) prior to the Merger) in all material respects, other than that the 2006 Stock Incentive Plan covers 7,000,000 shares. All awards under the 2006 Stock Incentive Plan were exchanged for awards under the Plan effective upon the Company’s May 2, 2007 merger with Medical Infusion Group, Inc.

The Plan is intended to benefit the stockholders of the Company by providing a means to attract, retain and reward individuals who can and do contribute to the longer-term financial success of the Company.  Further, the recipients of stock-based awards under the Plan should identify their success with that of the Company's shareholders and therefore will be encouraged to increase their proprietary interest in the Company. The Compensation Committee administers the Plan.

F-23

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2010

(UNAUDITED)

NOTE N – RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL INFORMATION

In the accompanying consolidated financial statements, the Company has restated the consolidated statement of operations for the three months ended March 31, 2009 in order to correct errors relating to (1) the failure to account for the Series A Convertible Preferred Stock and warrants as liabilities and reflect changes in fair values in operations in accordance with EITF Issue No. 07-05 (see note G) and (2) the failure to reflect the $28,451 increase in cumulative dividends payable on Series A Preferred as a reduction of net income to arrive at net income attributable to common stockholders.

The effect of the restated adjustments on the Consolidated Statement of Operations for the three months ended March 31, 2009 follows:

	As Previously						As
	Reported			Adjustments			Restated
Income from operations	$	102,619		$	-		$	102,619
Income from revaluation of equity-based Financial instruments with characteristics of liabilities at fair values		-			164,271			164,271
Interest Expense		(78,763	)		-			(78,763	)
Income before provision for Income Taxes		23,856			164,271			188,127
Provision for Income taxes		-			-			-
Net Income		23,856			164,271			188,127
Increase in cumulative dividends payable on Series A Preferred Stock		-			(28,451	)		(28,451	)
Net income attributable to common stockholders	$	23,856		$	135,820		$	159,676
Net income per common share	$	0.00		$	0.00		$	0.00

F-24

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2010

(UNAUDITED)

NOTE O – SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the filing date of this Form 10-Q and has determined that there were no subsequent events to recognize or disclose in these financial statements.

F-25

Item 2. Management's Discussion and Analysis

The statements contained in this 10Q, are not purely historical statements, but rather include what we believe are forward-looking statements. The forward-looking statements are based on factors set forth in the following discussion. Our actual results could differ materially from results anticipated in these forward-looking statements. All forward-looking statements included in this document are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements.

Overview

Through its subsidiaries, MIT distributes wholesale drugs, prepares intravenous medication for home infusion by the patient, operates ambulatory centers where intravenous infusions are administered and sells and rents home medical equipment. MIT is based in Savannah, Georgia and operates an ambulatory care center in Savannah. Our distribution of wholesale drugs has historically accounted for the majority of our revenues, although this was not the case in the quarter ended March 31, 2009, and is not anticipated to be a significant area of growth on the immediate future

MIT in 2008 expended substantial effort to obtain approvals and certification for ProVector™, a proprietary product developed by Dr. Thomas M. Kollars, Jr. (“Dr. Kollars”) in connection with Georgia Southern University Research & Services Foundation, Inc (“GSURSF”).  This product could potentially eradicate the spread of certain mosquito-borne infectious diseases including malaria, dengue fever and West Nile virus. MIT intends to market ProVector™ through international distribution channels to developing nations.

Critical Accounting Policies

Management's discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, impairment of long-lived assets, including finite lived intangible assets, accrued liabilities and certain expenses. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions.

Our significant accounting policies are summarized in Note 1 to our audited financial statements for the year ended December 31, 2009. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements:

Inventories

Inventories are stated at the lower of cost (first-in, first-out) or market (net realizable value). They consist mainly of pharmaceutical supplies and medical equipment.

Revenue Recognition

Sales and services are recorded when products are delivered to the customers. Provision for discounts, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. In instances where products are configured to customer requirements, revenue is recorded upon the successful completion of the Company’s final test procedures.

Advertising Cost

Advertising cost is expensed as incurred.

3

Estimates

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

New Accounting Pronouncements

New accounting statements issued, and adopted by the Company, include the following:

In September 2006, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“SFAS 157”). This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. We are currently evaluating the impact on our consolidated financial statements of SFAS 157, which will become effective for us on January 1, 2008 for financial assets and January 1, 2009 for non-financial assets.

In February 2007, the Financial Accounting Standards Board issued SFAS 159, “The Fair Value Option for Financial Assets and Financial Liabilities”. SFAS No. 159 amends SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities”. SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The objective of SFAS No. 159 is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS No. 159 is expected to expand the use of fair value measurement, which is consistent with the Board’s long-term measurement objectives for accounting for financial instruments. SFAS No. 159 applies to all entities, including not-for-profit organizations. Most of the provisions of SFAS No. 159 apply only to entities that elect the fair value option. However, the amendment to SFAS No. 115 applies to all entities with available-for-sale and trading securities. Some requirements apply differently to entities that do not report net income. This statement is effective as of the beginning of each reporting entity’s first fiscal year that begins after November 15, 2007. The Company has not yet determined the effect of SFAS No. 159 on its financial position, operations or cash flows.

In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations.” It will require an acquirer to recognize, at the acquisition date, the assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree at their full fair values as of that date. In a business combination achieved in stages (step acquisitions), the acquirer will be required to remeasure its previously held equity interest in the acquiree at its acquisition-date fair value and recognize the resulting gain or loss in earnings. The acquisition-related transaction and restructuring costs will no longer be included as part of the capitalized cost of the acquired entity but will be required to be accounted for separately in accordance with applicable generally accepted accounting principles in the U.S. SFAS No. 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008.

In December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements.” The statement clarifies the definition of a non-controlling (or minority) interest and requires that non-controlling interests in subsidiaries be reported as a component of equity in the consolidated statement of financial position and requires that earnings attributed to the non-controlling interests be reported as part of consolidated earnings and not as a separate component of income or expense. However, it will also require expanded disclosures of the attribution of consolidated earnings to the controlling and non-controlling interests on the face of the consolidated income statement. SFAS No. 160 will require that changes in a parent’s controlling ownership interest, that do not result in a loss of control of the subsidiary, are accounted for as equity transactions among shareholders in the consolidated entity therefore resulting in no gain or loss recognition in the income statement. Only when a subsidiary is deconsolidated will a parent recognize a gain or loss in net income. SFAS No. 160 is effective for fiscal years beginning on or after December 15, 2008, and will be applied prospectively except for the presentation and disclosure requirements that will be applied retrospectively for all periods presented. The Company is currently evaluating the impact of SFAS No. 160 to its financial position and results of operations.

4

Results of Operations

Comparison of three months ended March 31, 2010 to three months ended March 31, 2009 ..

Revenues

Consolidated revenues for the quarter ended March 31, 2010 were $1,677,136 as compared to  $1,572,401 for the quarter ended March 31, 2009 , representing an increase of $104,735 or 6.6%. Consolidated cost of sales for the quarter ended March 31, 2010 were $708,638 or 42.3% of sales as compared to cost of sales for the quarter ended March 31, 2009  of $665,903, or 42.3% of sales. This resulted in a gross profit for this quarter of $968,498 or 57.7% as compared to gross profit for the same quarter in 2009 of $906,498 or 57.7%. The 6.6% increase in our consolidated revenues for this quarter resulted from a steady rate of referrals from our customer base.  Decreases in Home Infusion revenue was offset by increases in revenue in the Ambulatory and Durable Medical Equipment divisions. The increase in the costs of good sold for the quarter were due to increased sales with profit margins remaining virtually unchanged. Utilization of mail order drugs on some higher priced therapies whereby medicines are sent to MIT but billed directly to the payor continue to keep our overall costs low.

The Company has four principal operating segments, which are as follows:

· Medical Infusion Technologies-“MIT”

· MIT Wholesale-“Wholesale”

· Medical Infusion Tech,DME-“DME”

· MIT Ambulatory Care Center-“Ambulatory Care”

“MIT” is a provider of intravenous therapies to patients at their home, at a designated facility, or at the Company’s office facilities. MIT’s primary product lines are centered upon infusion therapy.

“Wholesale” primarily aims at a network of hard to find pharmaceuticals. It concentrates in sales on rare products in the pharmaceutical industry.  Due to working capital constraints, opportunities in this product line are not available to MIT at this time.

“DME” carries the gamut of durable medical equipment and supplies.

“Ambulatory Care” administers the intravenous therapies to patients.

The following tables show the operations of the Company’s reportable segments:

For the three months ended March 31,

	Medical
	Infusion			Wholesale/		Ambulatory			DME			Combined
	- MIT			International		Care
2010
Revenue	$	589,644		$	-	$	959,724		$	127,769		$	1,677,136
Income (loss) from operations		(97,104	)		-		263,826			44,531			211,253
Depreciation and amortization		12,999			-		-			-			12,999
Assets	$	557,557			-	$	348,652		$	211,398		$	1,117,607
2009
Revenue	$	799,864		$	-	$	665,140		$	107,397		$	1,572,401
Income (loss) from operations		133,412			-		(14,730	)		(16,064	)		102,618
Depreciation and amortization		17,415			-		-			-			17,415
Assets	$	1,395,069			-	$	692,980		$	567,516		$	2,655,565

5

Operating Expenses

Total operating expenses decreased $46,635, or 5.8% to $757,245 for the quarter ended March 31, 2010, from $803,880 for the same period in 2009. The decrease in operating expense is attributable to the decrease in personnel costs. The major components of operating expense include:

• Salaries and payroll related costs decreased from $427,231 to $391,103. for the first quarter of 2010 or a reduction of 8.5% over the quarter ended March 31, 2009 . The decrease was due primarily to changes in personnel in various departments that reduced costs while maintaining the quality of services performed.  .

• Selling, general and administrative expenses decreased $6,090 or 1.7% to $353,143 for the quarter ended March 31, 2010 as compared to $359,234 for the same period in 2009. The company has been able  to maintain spending levels at a modest rate while increasing revenues and margins. [discuss deleting the previous sentence, gross profit margins are unchanged as per above]  The decrease was due primarily to decreased spending in virtually all overhead items in all areas of operating expenses including advertising and marketing efforts and legal expenses. We anticipate these expenditures to remain flat over the next quarter and any increases that occur will be based on new spending to support an increase in sales from new opportunities in subsequent quarters. Other payroll and benefits costs were $60,598; consulting fees for the quarter were $64,314; insurance expense was $36,779; rent expense was $30,739; office expense was $28,490; legal and professional expenses were $23,805. Additional expenses included travel expense of $9,642; advertising of $8,828; auto expense of $9,917 and telephone expense of $9,256.

• Depreciation and amortization decreased $4,416 or 25 % to $12,999for the quarter ended March 31, 2010 as compared to $17,415 for the same period in 2009. The increase was mainly attributable to lower depreciation in 2010.

Income from Operations

Income from operations increased $108,635, or 5.9%, from $102,618 in 2009 to $211,253 in 2010.  The increase was attributable to the $62,000 increase in gross profit resulting from higher revenues and the $ 46,635 decrease in operating expenses discussed above.

Net income (Loss)

Net income (loss) decreased $389,636 from net income of $188,126 in 2009 to a net loss of $201,510 in 2010.  The decrease is attributable  to the $496,440 increase in the non cash charge from revaluation of equity based financial instruments with characteristics of liabilities  ($332,169 expense in 2010, $164,27 income in 2009) and a $1,831 increase in interest expense, offset partially by the $108,635 increase in income from operations.

Liquidity and Capital Resources

As of March 31, 2010, we had cash of $101,896 as compared to $85,137 at March 31, 2009. As of March 31, 2010 we had a working capital deficit of  $(1,880,859). For the three months ended March 31, 2010, net cash provided  by operating activities aggregated $83,243 as compared to cash provided by operating activities  of $59,730 for the three months ended March 31, 2009.  Cash used by financing activities was $94,743 which was used to reduce creditor balances.  As of December 31, 2009, we had cash of $113,596 as compared to a cash balance of $111,337 as of December 31, 2008.

 

6

As of March 31, 2010 , we were funded primarily through operations and a term loan with Globank. On August 1, 2008, we received a term loan from Globank, Inc. in the amount of $500,000 which bears interest at the rate of 60% per annum.  The term loan from Globank, Inc. matures on July 31, 2010.

We are subject from time to time to litigation relating to the activities of our business and in the marketplace which it serves. As of March 31, 2010, we were not engaged in any litigation.

Unless we generate sufficient collections on our receivables, otherwise increase revenues or obtain financing through other means, our operations may be difficult to sustain.

Off-Balance Sheet Arrangements

We are not a party to any off-balance sheet arrangements

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not applicable.

Item 4T. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. Under the supervision and with the participation of our management, including our Chief Executive Officer, William C. Parker, and Principal Financial Officer, John Sabia, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")) as of the end of the period covered by this report.  Based upon that evaluation, our Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective such that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and (ii) accumulated and communicated to our management to allow timely decisions regarding disclosure.  A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

Changes in Internal Control Over Financial Reporting.  During the most recent quarter ended March 31, 2010, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

INFLATION

Inflation has not had a material impact on our business.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this quarterly report on Form 10-Q contain or may contain forward-looking statements that are subject to known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause its actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors. Most of these factors are difficult to predict accurately and are generally beyond its control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Readers should carefully review this quarterly report in its entirety, including but not limited to its financial statements and the notes thereto. Except for its ongoing obligations to disclose material information under the Federal securities laws, the Company undertakes no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. For any forward-looking statements contained in any document, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we are party to litigation that we consider to be a part of the ordinary course of our business. At present, we are not involved in any pending claims that we believe could reasonably be expected to have a material adverse effect on our business, financial condition, or results of operations.

Item 1A.  Risk Factors

Not applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Removed and Reserved .

Item 5. Other Information

None.

Item 6. Exhibits

31.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

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SIGNATURE

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

MIT HOLDING, INC.

DATE:  May 19, 2010	By:	/s/ William C Parker
		William C. Parker, Chief Executive Officer
		(principal executive officer)
	By:	/s/ John Sabia
		John Sabia, the Principal Financial Officer
		(principal financial officer)

 

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