Parallax Health Sciences 10Q 2019 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

(Mark One)

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

For the quarterly period endedMarch 31, 2019

or

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

For the transition period from__________ to _________

Commission File Number000-52534

PARALLAX HEALTH SCIENCES, INC.

(Exact name of registrant as specified in its charter)

Nevada	46-4733512
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1327 Ocean Avenue, Suite B, Santa Monica, CA	90401
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code:	(310) 899-4442

Copy of all Communications to:

Peter Hogan, Esq.

Buchalter

1000 Wilshire Blvd., Suite 1500

Los Angeles, CA 90017

(213) 891-0700

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 last 90 days.	Yes☑ No☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files)	Yes☑ No☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	□	Accelerated filer	□
Non-accelerated filer	□	Smaller reporting company	☑
		Emerging growth company	□

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes☐ No☑

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

182,924,546 common shares issued and outstanding as of May 10, 2019

PART 1 – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The Company’s unaudited interim consolidated financial statements for the three months ended March 31, 2019, form part of this quarterly report. They are stated in United States Dollars (US$) and are prepared in accordance with United States generally accepted accounting principles.

These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes for the year ended December 31, 2018, on Form 10-K, as filed with the Securities and Exchange Commission on April 1, 2019.

PARALLAX HEALTH SCIENCES, INC.

CONSOLIDATED BALANCE SHEETS

	March 31, 2019			December 31, 2018
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	1,654		$	262
Accounts receivable, net		25,180			––
Total current assets		26,834			262

Intangible assets, net		548,880			579,035
Goodwill		785,060			785,060

TOTAL ASSETS	$	1,360,774		$	1,364,357

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable and accrued expenses	$	2,774,710		$	2,655,138
Debentures, convertible		572,535			755,627
Debentures, convertible, related party		472,471			428,132
Notes payable		20,000			––
Notes payable, convertible		506,913			296,000
Notes payable, convertible, related party		20,000			––
Related party payables		1,259,858			1,004,720
Total current liabilities		5,626,487			5,139,617

Long-term liabilities
License fees payable		433,000			430,000
Royalties payable		317,700			310,000
Debentures, convertible, net of unamortized discount		228,150			226,050
Notes payable, convertible		720,154			720,154
Notes payable, convertible, related party		491,100			491,100
Notes payable, bank		29,058			28,995
Total long-term liabilities		2,219,162			2,206,299
Total liabilities		7,845,649			7,345,916

Stockholders' deficit
Preferred stock, $.001 par, 10,000,000 shares authorized,		978			1,014
977,352 and 1,013,691 issued and outstanding
at March 31, 2019, and December 31, 2018, respectively
Common stock, $.001 par, 500,000,000 and 250,000,000 shares		170,259			158,113
authorized, 170,259,136 and 158,113,141 issued and outstanding
at March 31, 2019, and December 31, 2018, respectively
Additional paid in capital-preferred		1,315,689			1,415,653
Additional paid in capital-common		10,974,574			9,715,921
Accumulated deficit		(18,946,375	)		(17,272,260	)
Total stockholders' deficit		(6,484,875	)		(5,981,559	)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	1,360,774		$	1,364,357

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

PARALLAX HEALTH SCIENCES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	For the three months ended
	March 31, 2019			March 31, 2018

Revenue	$	50,990		$	4,890
Cost of sales		5,111			5,538
Gross profit (loss)		45,879			(648	)

General and administrative expenses		1,456,288			1,951,161

Operating loss		(1,410,409	)		(1,951,809	)

Other income (expenses)
Loss on settlements		(33,272	)		––
Discount amortization		(130,420	)		(1,335,000	)
Interest expense		(100,014	)		(323,149	)
Total other income (expenses)		(263,706	)		(1,658,149	)

Net loss – continuing operations		(1,674,115	)		(3,609,958	)

Net loss – discontinued operations		––			(246,511	)

Net loss	$	(1,674,115	)	$	(3,856,469	)

Net income (loss) per common share - basic
Continuing operations	$	(0.010	)	$	(0.025	)
Discontinued operations	$	––		$	(0.002	)

Net income (loss) per common share - diluted
Continuing operations	$	(0.007	)	$	(0.017	)
Discontinued operations	$	––		$	(0.002	)

Weighted average common shares outstanding - basic		163,836,976			143,173,863
Weighted average common shares outstanding - diluted		233,000,282			202,447,083

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

PARALLAX HEALTH SCIENCES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the three months ended
	March 31, 2019			March 31, 2018
Cash flows from operating activities:
Net loss	$	(1,674,115	)	$	(3,609,958	)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization		30,155			109,657
Stock compensation/stock option amortization		478,799			1,332,882
Discount amortization		130,420			1,335,000
Allowance for bad debt		––			236
Changes in operating assets and liabilities:
(Increase) decrease in trade and other receivables		(25,180	)		2,859
Increase in accounts payable and accrued expenses		54,135			384,124
Increase in royalties payable		2,700			––
Increase in related party payables		275,138			261,824
Net cash used by operating activities		(727,948	)		(183,376	)

Cash flows from financing activities:
Proceeds from convertible notes payable		229,340			225,000
Proceeds from issuance of common shares		500,000			41,000
Net cash provided by financing activities		729,340			266,000

Net cash provided by continuing operations		1,392			82,624

Cash flows from discontinued operations:
Net cash used by operating activities		––			(80,230	)
Net cash provided by financing activities		––			(3,636	)
Net cash used by discontinued operations		––			(83,866	)

Net increase (decrease) in cash		1,392			(1,242	)

Cash - beginning of period		262			2,604

Cash - end of period	$	1,654		$	1,362

NON-CASH ACTIVITIES
Discounts on long-term liabilities	$	130,420		$	1,335,000
Conversion of short-term related party notes payable to long-term non-related party notes payable	$	––		$	185,000
Conversion of accounts payable to notes payable	$	40,000		$	––
Conversion of convertible notes payable to common stock	$	290,000		$	––
Conversion of related party convertible notes payable to non-related party convertible notes payable	$	––		$	576,154
Conversion of related party payables to non-related party payables	$	––		$	165,353
Subscriptions receivable	$	––		$	(592	)

SUPPLEMENTAL INFORMATION
Interest paid
Continuing operations	$	2,000		$	798
Discontinued operations	$	––		$	106
Income taxes paid	$	––		$	––

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

PARALLAX HEALTH SCIENCES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

NOTE 1. OVERVIEW AND NATURE OF BUSINESS

These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes for the year ended December 31, 2018. Notes to the unaudited interim consolidated financial statements that would substantially duplicate the disclosures contained in the audited consolidated financial statements have been omitted.

Business Overview

The Company’s principal focus is on personalized patient care through remote healthcare services, behavioral health systems, and Point-of-Care diagnostic testing. Parallax’s current family of companies that serve as the foundation for its cross-over business model of operations include:

●Parallax Diagnostics, Inc. (“Parallax Diagnostics” or “PDI”) acquired a proprietary Point-of-Care diagnostic immunoassay testing platform and 25 test cartridges for the areas of infectious diseases, cardiac markers, drugs of abuse and various other medical conditions.

●Parallax Health Management, Inc. (“PHM”) develops RPM and telehealth market products and services, and commercializes them, including the Fotodigm® proprietary platform which allows for systems integration with a number of third-party services and solutions.

●Parallax Behavioral Health, Inc. (“PBH”) acquired the intellectual property known as REBOOT™, the acronym for Reliable Evidence-Based Outcomes Optimization Technologies, as well as the Intrinsic Code™technology, a software platform specifically designed to improve health treatment outcomes through cloud-based and mobile behavioral technology systems that enable its users and user groups to more effectively achieve goals within a prescribed timeline.

Parallax Care™ is the Company’s technology-enabled digital healthcare system, structured with three separate divisions that can operate independently of one another, or integrate services to meet the various needs of the Company’s clientele: Optimized Outcomes, Connected Health and Smart Data. Each of these divisions target a separate vertical market that are synergistic, compliment, and strengthen each other.

Optimized Outcomes

REBOOT™ / COMPASS™

Behavioral modification

Connected Health

Fotodigm® platform

Remote patient monitoring, telehealth, and POC diagnostic testing

Smart Data

Intrinsic Code™technology

Actionable insights to behavior modification

Operating Segments

The Company’s operations include the following operating segments for financial statement presentation: Remote Patient Monitoring (RPM), Behavioral Health Services (BHS), and Diagnostics/Corporate.

●Remote Patient Monitoring

The Company provides a distinctive technology platform that provides for the complete remote patient care delivery system: the patent-pending Fotodigm® platform, which utilizes proprietary software and technology to bridge clinical behavioral science with technology and logistics for payers, providers and clinical professionals across a variety of wellness and clinical devices, including both fitness and clinical applications. Fotodigm® is a secure and scalable platform for collecting, transmitting and analyzing biometric, pharmaceutical, and health data to healthcare providers, primarily hospitals, accredited nursing operations, and physicians.

The RPM segment generates revenues through fees charged for the license and utilization of its proprietary system that provides software integrations of the Fotodigm® platform. Additionally, the RPM segment will generate incremental revenues through the delivery of acute, post-acute and chronic health patient management software systems that enable Parallax customers to bill for and collect payments from patients and third-party payers for telemonitoring and remote services that they deliver.

●Behavioral Health Services

The BHS segment commenced with the acquisition of the REBOOT™ and Intrinsic Code™ technologies in April 2017. The BHS segment will generate revenues primarily through licensing and subscription of software and systems. As of March 31, 2019, the BHS segment had not yet begun full operations, generating limited test market sales.

●Diagnostics/Corporate

The Diagnostics/Corporate Segment supports the costs and operating expenses related to the continued development and exploitation of the Company’s proprietary Target System POS diagnostic platform and processes. In addition, the Diagnostics/Corporate Segment provides management and administrative services to support the Company and consists of certain aspects of the Company’s executive management, corporate relations, legal, compliance, human resources, corporate information technology and finance departments.

Going Concern

The Company has incurred losses since inception resulting in an accumulated deficit of $18,946,375, and a working capital deficit of $5,599,653, and further losses are anticipated. The Company’s ability to continue as a going concern is dependent upon its ability to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due, which may not be available at commercially reasonable terms. There can be no assurance that the Company will be able to continue to raise funds, in which case the Company may be unable to meet its obligations and the Company may cease operations. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

The Company will require additional financing in order to proceed with its plan of operations, including approximately $3,000,000 over the next 12 months to pay for its ongoing expenses. These cash requirements include working capital, general and administrative expenses, the development of the Company’s product line, and the pursuit of acquisitions. These cash requirements are in excess of the Company’s current cash and working capital resources. Accordingly, the Company will require additional financing in order to continue operations and to repay its liabilities. There is no assurance that the financing will be completed as planned or at all. If the Company is unable to secure adequate capital to continue the Company’s planned operations, the Company’s shareholders may lose some or all of their investment and the Company’s business may fail.

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”). The preparation of financial statements in conformity with GAAP 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 that effect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The unaudited interim consolidated financial statements reflect all adjustments consisting of normal recurring adjustments, which, in the opinion of management, are necessary for a fair presentation of the results for the periods shown. The unaudited interim consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue as a going concern.

NOTE: The following notes and any further reference made to “the Company”, "we", "us", "our" and "Parallax" shall mean Parallax Health Sciences, Inc., and its wholly-owned subsidiaries, Parallax Diagnostics, Inc., Parallax Health Management, Inc., and Parallax Behavioral Health, Inc. unless otherwise indicated.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

This summary of significant accounting policies is presented to assist in understanding the Company’s financial statements. These accounting policies conform to accounting principles, generally accepted in the United States of America, and have been consistently applied in the preparation of the financial statements.

The Company’s fiscal year-end is December 31.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated.

Changes in the Company’s ownership interests in subsidiaries that do not result in the Company losing control over the subsidiaries are accounted for as equity transactions. When the Company loses control of a subsidiary, a gain or loss is recognized and is calculated as the difference between:

●the aggregate of the fair value of consideration received and the fair value of any retained interest at the date when control is lost;

and

●the carrying amount of the net assets (liabilities) of the subsidiary and any noncontrolling interest.

Upon deconsolidation of a subsidiary, any loans to the former subsidiary made by the Company are measured at fair value at the deconsolidation date. Any difference between the carrying amount of the loan to the subsidiary and its fair value is included as part of the gain or loss calculation upon deconsolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Fair Value Hierarchy

The Company utilizes the three-level valuation hierarchy for the recognition and disclosure of fair value measurements. The categorization of assets and liabilities within this hierarchy is based upon the lowest level of input that is significant to the measurement of fair value. The three levels of the hierarchy consist of the following:

Level 1:Inputs to the valuation methodology are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2:Inputs to the valuation methodology are quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active or inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the instrument.

Level 3:Inputs to the valuation methodology are unobservable inputs based upon management’s best estimate of inputs market participants could use in pricing the asset or liability at the measurement date, including assumptions about risk.

Cash and Cash Equivalents

The Company considers all highly liquid instruments with maturity of nine months or less at the time of issuance to be cash equivalents. As of March 31, 2019, and December 31, 2018, the Company had no cash equivalents.

Fair Value of Financial Instruments

As of March 31, 2019, and December 31, 2018, respectively, the carrying values of Company’s Level 1 financial instruments including cash and cash equivalents, accounts receivable, accounts payable, and short-term debt approximate fair value. The fair value of Level 3 instruments is calculated as the net present value of expected cash flows based on externally provided or obtained inputs. Certain Level 3 instruments may also be based on sales prices of similar assets. The Company’s fair value calculations take into consideration the credit risk of both the Company and its counterparties as of the date of valuation. See Note 6 for additional information about long-term debt.

There were no outstanding derivative financial instruments held by the Company as of March 31, 2019, and December 31, 2018.

Accounts Receivable

Accounts receivable are stated net of an allowance for doubtful accounts. The accounts receivable balance primarily includes amounts due from customers. Charges to bad debt are based on both historical write-offs and specifically identified receivables.

The activity in the allowance for doubtful accounts receivable for the three months ended March 31, 2019, and the year ended December 31, 2018, respectively, is as follows:

	March 31, 2019		December 31, 2018
Beginning balance	$	––	$	4,000
Additions charged to bad debt expense		––		236
Write off of allowance for doubtful collections		––		(4,236	)

Ending balance	$	––	$	––

During the three months ended March 31, 2019, and the year ended December 31, 2018, the allowance for doubtful collections increased by $0 and $236, respectively.

As of March 31, 2019, and December 31, 2018, no allowance for doubtful collections remained.

Intangible Assets

Product processes, patents and customer lists are amortized on a straight-line basis over their estimated useful lives between 4 and 20 years. Costs to extend and maintain patents and trademarks are charged directly to expense as incurred. See Note 4 for additional information about intangible assets.

Goodwill and Other Indefinitely-Lived Assets

Goodwill and other indefinitely-lived assets are not amortized, but are subject to impairment reviews annually, or more frequently if necessary.

Impairment of Long-Lived Assets

The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made.

The Company believes that future projected cash flows are sufficient for the recoverability of its long-lived assets, and no impairment exists. There can be no assurance, however, that market conditions will not change or demand for the Company’s products and products under development will continue. Either of these could result in future impairment losses.

Convertible Debt

The Company recognizes the advantageous value of conversion rights attached to convertible debt. Such rights give the debt holder the ability to convert debt into common stock at a price per share that is less than the trading price to the public on the date of the debt. The beneficial value is calculated as the intrinsic value (the market price of the stock at the commitment date in excess of the conversion rate) of the beneficial conversion feature of the debt, and is recorded as a discount to the related debt and an addition to additional paid in capital. The discount is amortized over the remaining outstanding period of related debt using the interest method.

Net Income (Loss) Per Common Share

Net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock and dilutive common stock equivalents outstanding during the period. Dilutive common stock equivalents consist of shares issuable upon conversion of convertible debt, convertible preferred shares and the exercise of the Company’s stock options and warrants.

Comprehensive Loss

As of March 31, 2019, and December 31, 2018, the Company has no items that represent comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.

Revenue Recognition

Revenue is recognized when: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the seller’s price to the buyer is fixed or determinable, and (iv) collectability is reasonably assured.

Income Taxes

Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. These assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to reverse.

The Company may have net operating loss carryforwards available to reduce future taxable income. Future tax benefits for these net operating loss carryforwards are recognized to the extent that realization of these benefits is considered more likely than not. To the extent that the Company will not realize a future tax benefit, a valuation allowance is established.

As of March 31, 2019, the Company has not yet filed its 2012 through 2017 annual corporate income tax returns. Due to the Company’s recurring losses, it is anticipated that no corporate income taxes are due for these periods.

Stock-Based Compensation

The Company records stock-based compensation using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued.

Recently Adopted Accounting Standards

The Company evaluates the pronouncements of various authoritative accounting organizations, primarily the Financial Accounting Standards Board (“FASB”), the US Securities and Exchange Commission (“SEC”), and the Emerging Issues Task Force (“EITF”), to determine the impact of new pronouncements on US GAAP and the impact on the Company. The Company has recently adopted the following new accounting standards:

Adopted:

In June 2018, the FASB issued ASU No 2018-07 (“ASU 2018-07”), Compensation-Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. ASU 2018-07 will be effective for the Company for annual periods beginning after December 15, 2018, and interim periods. Early adoption is permitted.

Not yet adopted:

In August 2018, the FASB issued ASU No. 2018-13 (“ASU 2018-13”), Fair Value Measurement (Topic 820), Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 modifies the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, based on the concepts in the Concepts Statement, including the consideration of costs and benefits. ASU 2018-13 will be effective for the Company for annual periods beginning after December 15, 2019, and interim periods. Early adoption is permitted. The Company is currently evaluating the impact of the application of this accounting standard update on its financial statements and related disclosures.

In August 2018, the FASB issued ASU No. 2018-15 (“ASU 2018-15”), Intangibles-Goodwill and Other Internal-Use Software (Subtopic 350-40). ASU 2018-15 was issued to help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement (hosting arrangement) by providing guidance for determining when the arrangement includes a software license. ASU 2018-15 will be effective for the Company for annual periods beginning after December 15, 2019, and interim periods. Early adoption is permitted. The Company is currently evaluating the impact of the application of this accounting standard update on its financial statements and related disclosures.

Recently Issued Accounting Standards Updates:

There were other various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries. None of the updates are expected to a have a material impact on the Company's consolidated financial position, results of operations or cash flows.

NOTE 3. ACCOUNTS RECEIVABLE, NET

Accounts receivable, net, consists of the following:

	March 31, 2019		December 31, 2018
Customer receivables	$	25,180	$	––
Less: allowance for doubtful accounts		––		––

Accounts receivable, net	$	25,180	$	––

As of March 31, 2019, and December 31, 2018, respectively, the Company was owed $25,180 and $0 in accounts receivable due from customers.

During the three months and the year ended March 31, 2019, and December 31, 2018, respectively, the allowance for doubtful collections increased by $0 and $236, respectively. As of March 31, 2019, and December 31, 2018, no allowance for doubtful collection remained.

NOTE 4. INTANGIBLE ASSETS

The following are the components of finite-lived intangible assets:

	March 31, 2019			December 31, 2018
Products and processes	$	12,500		$	12,500
Trademarks and patents / technology		150,700			150,700
Customer lists / relationships		30,000			30,000
Non-compete agreement		30,000			30,000
Marketing related		64,000			64,000
Software		510,300			510,300
Sub-total		797,500			797,500
Accumulated amortization		(248,620	)		(218,465	)
Intangible assets, net	$	548,880		$	579,035

Amortization expense from continuing operations for the three months ended March 31, 2019 and 2018, was $30,155 and $120,620, respectively.

NOTE 5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of:

	March 31, 2019		December 31, 2018
Accounts payable-vendors	$	858,218	$	830,590
Credit cards payable		42,552		42,552
Payroll taxes payable		79,362		78,608
Accrued interest		547,383		450,187
Accrued payroll and payroll taxes		482,047		402,053
Other liabilities		605,148		601,148
		2,614,710		2,405,138
Reserve-legal fees		160,000		250,000

Total accounts payable and accrued expenses	$	2,774,710	$	2,655,138

Payroll taxes payable includes $17,476 and $17,476 in penalties, and $4,957 and $4,202 in interest, related to unpaid payroll taxes as of March 31, 2019, andDecember 31, 2018, respectively.

Other liabilities consists of certain payroll tax liabilities in the amount of $501,148 and $601,148 owed as of March 31, 2019, and December 31, 2018, respectively, by the bankrupt entity, RoxSan Pharmacy, Inc., that were not discharged under California bankruptcy laws. The Company has retained a tax resolution specialist to aid the Company in resolving the liability with the taxing agencies on behalf of RoxSan. In addition, other liabilities includes $104,000 and $0 in costs related to certain legal settlements as of March 31, 2019, and December 31, 2018, respectively.

During the year ended December 31, 2018, accounts payable and accrued expenses was reduced by $341,606, resulting from the extinguishment of debt consisting of accounts payable-vendors in the amount of $284,714 and accrued interest in the amount of $56,892.

In 2018, the Company established a reserve for future legal fees to be incurred in connection with pending legal actions (Note 16). During the three months and the year ended March 31, 2019 and December 31, 2018, respectively, the reserve for legal fees was reduced by $90,000 and $0 for expenses incurred during the period. As of March 31, 2019, and December 31, 2018, respectively, the reserve balance is $160,000 and $250,000.

NOTE 6. NOTES AND LOANS PAYABLE

Notes and loans payable consists of the following:

	March 31, 2019		December 31, 2018
Short-term:
Debentures, convertible	$	572,535	$	755,627
Notes payable		20,000		––
Notes payable, convertible , net of unamortized discount		506,913		296,000
Total short-term		1,099,448		1,051,627

Long-term:
Debentures, convertible, net of unamortized discount		228,150		226,050
Note payable, convertible		720,154		720,154
Note payable-bank		29,058		28,995
Total long-term		977,362		975,199

Total notes and loans payable	$	2,076,810	$	2,026,826

Non-related party convertible debt consist of the following:

Holder	Principal			APR	Accrued Interest		Conversion Price	Term/Due

Convertible promissory notes:
Short-term:
Lender Group A	$	120,000		12% to 20%	$	203,460	$0.10	05/2018
Lender Group B		230,913		12%		––	$0.10 to $0.12	09/2019 to 11/2019
Investor Group A		156,000		10%		23,527	$0.10	09/2018
		506,913				226,987
Long-term:
The Kasper Group, Ltd.		144,000		7%		73,073	$0.10	10/2019
Joseph M. Redmond		576,154		5%		126,653	$0.10	07/2017
		720,154				199,726
		1,227,067				426,713

Convertible debentures:
Short-term		572,535		10%		22,131	$0.12	02/2019
Long-term		250,000		10%		––	$0.12	11/2021
Unamortized discount		(21,850	)	10%		––
		800,685				22,131

Total convertible debt	$	2,027,752			$	448,844

As of March 31, 2019, and December 31, 2018, respectively, short-term non-related party debt in the amount of $1,099,448 and $1,051,627 consists of $572,155 and $755,627 in convertible debentures; $20,000 and $0 in notes payable; and $506,913 and $296,000 in convertible notes payable. During the three months and the year ended March 31, 2019, and December 31, 2018, respectively, principal in the amount of $0 and $50,000 was repaid in cash; principal in the amount of $20,000 and $620,000, along with interest in the amount of $2,000 and $55,613, was converted to common stock; and interest in the amount of $65,377 and $370,650 was expensed. As of March 31, 2019, and December 31, 2018, respectively, a total of $249,118 and $185,741 in accrued interest remains, and is included as an accrued expense on the accompanying consolidated balance sheet.

As of March 31, 2019, and December 31, 2018, respectively, long-term non-related party debt in the amount of $977,362 and $975,199 consists of $250,000 and $250,000 in convertible debentures, less unamortized discount of $21,850 and $23,950; $720,154 and $720,154 in convertible notes payable; and $29,058 and $28,995 in notes payable to banks. During the three months and the year ended March 31, 2019, and December 31, 2018, respectively, $2,100 and $1,050 in discount amortization, and $10,139 and $40,956 in interest was expensed. As of March 31, 2019, and December 31, 2018, respectively, a total of $200,462 and $40,956 in accrued interest remains, and is included as an accrued expense on the accompanying consolidated balance sheet.

The future maturities of notes payable are summarized as follows:

Year	2019	2020	2021	Total

Principal	$720,154	$29,058	$250,000	$999,212

During the three months and the year ended March 31, 2019, and December 31, 2018, respectively, interest on non-related party notes and loans payable in the amount of $75,516 and $40,956 has been expensed. As of March 31, 2019, and December 31, 2018, respectively, a total of $449,580 and $376,127 in interest has been accrued and is included as part of accrued expenses on the accompanying consolidated balance sheets.

NOTE 7. RELATED PARTY TRANSACTIONS

	March 31, 2019		December 31, 2018
Related party payables:
Accrued compensation	$	950,325	$	869,859
Cash advances		309,533		134,861
Total related party payables		1,259,858		1,004,720

Debentures, convertible		472,470		428,132

Notes payable, convertible, related party		511,100		491,100

Total related party transactions	$	2,243,428	$	1,923,952

Related party convertible debt consist of the following:

Note Holder	Principal		APR	Accrued Interest		Conversion Price	Term/Due

Convertible promissory notes:
Huntington Chase, Beneficial Owner	$	491,100	7%	$	82,537	$0.10	12/2023
John Ogden, Director		20,000	10%		––	$0.10	12/2019
	$	511,100		$	82,537

Convertible debentures:
AvantGarde, LLC, Beneficial Owner		393,989	12%		12,729	$0.10	02/2019
Hamburg Investment Co., Beneficial Owner		78,482	12%		2,536	$0.10	02/2019
		472,470			15,265
Total convertible debt-related parties	$	983,570		$	97,802

As of March 31, 2019, and December 31, 2018, respectively, related parties are due a total of $2,243,428 and $1,923,952, consisting of $950,325 and $869,859 in accrued compensation owed to officers; $309,533 and $134,861 in accrued benefits and cash advances from officers and beneficial owners to the Company for operating expenses; $472,470 and $428,132 in convertible debentures; and $511,100 and $491,100 in convertible promissory notes.

During the three months and the year ended March 31, 2019, and December 31, 2018, respectively, interest on related party notes payable in the amount of $23,742 and $123,133 was expensed,of which $0 and $798 was paid to the note holders in cash; and $0 and $128,132 was converted to principal. As of March 31, 2019, and December 31, 2018, respectively, a total of $97,802 and $74,060 in accrued interest remains and is included as part of accrued expenses on the accompanying consolidated balance sheets.

NOTE 8. COMMITMENTS AND CONTINGENCIES

On August 13, 2015, the Company issued a secured promissory note in the amount of $20,500,000 (the “Promissory Note”) in connection with the acquisition of RoxSan Pharmacy, Inc. (“RoxSan”). The Promissory Note bore interest at a rate of 6% per annum, and matured August 13, 2018 ("Maturity"). As part of the deconsolidation of RoxSan resulting from its Chapter 7 petition filed on May 14, 2018 (Note 16), management reevaluated the characteristics of the Promissory Note. Included in the evaluation were the following considerations: 1) the related asset is no longer a part of the parent financial statements due to a loss of financial control; 2) the Company is currently in litigation as a result of material breaches by the note holder; 3) the Company has claims against the note holder for losses and damages directly related to the Promissory Note and its underlying assets; 4) there is a high likelihood that no obligation exists. After careful consideration, management has determined that the current characteristics of the liability are contingent in nature, and the debt $20,500,000 and related $2,278,281 in accrued interest was extinguished in 2018, resulting in a gain of $22,778,281.

On August 31, 2016, as part of the Company’s acquisition of 100% of the issued and outstanding shares of Qolpom®’s common stock and its assets, inventory and intellectual property, the agreement provides for, among other things, the seller to receive up to $2,000,000 through a percentage of revenue generated from RPM business segment (“Revenue Share”), as well as a royalty of 3% (“Royalties”) of certain revenues generated from the Qolpom® intellectual property, as defined in the agreement. As of March 31, 2019, and December 31, 2018, respectively, the present value of future Revenue Share was $433,000 and $430,000; and the present value of future Royalties was $315,000 and $310,000.

On April 26, 2017, as part of the Company’s acquisition of certain intellectual property (“Intellectual Property”) from ProEventa, Inc (“ProEventa”), the agreement provides for, among other things, ProEventa to receive a revenue sharing cash earn-out of up to $3,000,000 to be derived from certain net revenue generated by the Company; as well as Royalties of 3% of certain revenues generated from the Intellectual Property, ending at such time as the Company has paid ProEventa $25,000,000, as defined in the agreement. As ofMarch 31, 2019, and December 31, 2018, respectively, the present value of future Revenue Share was $1,042,000 and $1,040,000; the present value of future Royalties was $693,000 and $690,000, and $2,700 and $0 in Royalties payable on earned revenues was accrued.

NOTE 9. CONVERTIBLE PREFERRED STOCK

The total number of authorized shares of preferred stock that may be issued by the Company is 10,000,000 with a par value of $0.001 per share.

On March 31, 2019, in connection with the settlement agreement with Mr. Dave Engert (Note 16), 36,339 shares of the Company’s Series A preferred stock held by Mr. Engert , with a book value of $100,000, were canceled and returned to treasury. As a result, preferred paid in capital was reduced by $99,964.

As of March 31, 2019, and December 31, 2018, respectively, the Company had 977,352 and 1,013,691 shares of preferred stock issued and outstanding.

NOTE 10. COMMON STOCK

On January 28, 2019, pursuant to a majority shareholder consent, the Company increased its authorized common stock from 250,000,000 shares to 500,000,000 shares, with a par value of $0.001 per share.

During the three months ended March 31, 2019, 3,689,328 shares of the Company’s common stock were issued in connection with the conversion of non-related party debt in the amount of $292,000. As a result, $288,311 was recorded to paid in capital.

During the three months ended March 31, 2019, 2,716,667 shares of the Company’s common stock were issued in connection with stock awards to non-related parties, valued at $325,000. As a result, $322,283 was recorded to paid in capital.

During the three months ended March 31, 2019, 5,000,000 shares of the Company’s common stock were issued in connection with a SimpleAgreement Future Equity (“SAFE”) offering for cash in the amount of $500,000. As a result, $495,000 was recorded to paid in capital.

During the three months ended March 31, 2019, 740,000 shares of the Company’s common stock were issued in connection with debt and debt service in the amount of $74,000. As a result, $73,260 was recorded to paid in capital.

During the three months and the year ended March 31, 2019, and December 31, 2018, respectively, a total of 12,145,995 and 21,358,611 shares of the Company’s common stock were issued. A total of $74,000 and $434,000 in deferred stock compensation was recorded, and $124,357 and $1,095,193 was expensed. As of December 31, 2018 and 2017, respectively, there remains $1,098,452 and $1,148,809 in deferred stock compensation to be expensed over the next nineteen (19) months.

As of March 31, 2019 and December 31, 2018, respectively, the Company had 170,259,136 and 158,113,141 common shares issued and outstanding.

NOTE 11. WARRANTS AND OPTIONS

As of March 31, 2019, and December 31, 2018, respectively, the Company had 20,968,750 and 19,668,750 warrants, and 19,060,000 and 18,060,000 options, issued and outstanding.

During the three months and the year ended March 31, 2019 and December 31, 2018, respectively, 1,600,000 and 12,513,750 warrants were granted, and 300,000 and 100,000 expired. The warrants carry an exercise price of between $0.001 to $0.600 per share, and expire between 2019 to 2023.

Warrants Outstanding
	Number of	Remaining	Exercise Price		Weighted
	Common	Contractual Life	Times Number		Average
Exercise Price	Shares	(in years)	Of Shares		Exercise Price

$0.001	300,000	4.25	$	300	$0.17
$0.01	75,000	1.75		750	$0.19
$0.10	62,500	4.00		6,250	$0.27
$0.10	3,000,000	2.25		300,000	$0.19
$0.10	4,688,750	2.00		468,875	$0.21
$0.10	250,000	1.50		25,000	$0.29
$0.15	300,000	5.00		45,000	$0.17
$0.15	600,000	4.75		90,000	$0.19
$0.15	1,000,000	1.75		150,000	$0.26
$0.17	62,500	4.00		10,625	$0.27
$0.18	62,500	4.00		11,250	$0.27
$0.20	1,300,000	5.00		260,000	$0.18
$0.21	62,500	4.00		13,125	$0.27
$0.21	100,000	1.50		21,000	$0.31
$0.25	3,375,000	2.50		843,750	$0.18
$0.25	475,000	1.75		118,750	$0.25
$0.25	3,255,000	1.50		813,750	$0.29
$0.25	1,500,000	1.25		375,000	$0.34
$0.35	250,000	1.50		87,500	$0.29
$0.60	250,000	1.50		150,000	$0.31
	20,968,750			3,790,925	$0.18

Warrant Activity				Weighted
	Number of			Average
	Shares			Exercise Price
Outstanding at December 31, 2018		19,668,750		$0.18
Issued		1,600,000		$0.18
Exercised		––		––
Expired / Forfeited		(300,000	)	$0.18
Outstanding at March 31, 2019		20,968,750		$0.18

During the three months and the year ended March 31, 2019, and December 31, 2018, respectively, 1,000,000 and 6,000,000 stock options were granted, which vest periodically over a two (2) year period, are exercisable for a period of between 3 to 5 years at an exercise price of between $0.05 to $0.50 per share, and were valued at $96,100 and $833,700 using the Black-Scholes method. The assumptions used in valuing the options were: expected term between 3.00 to 3.75 years; expected volatility between 1.82 to 2.29; risk free interest rate of between 2.25% to 2.78%; and a dividend yield of 0%.

Options Outstanding
	Number of	Remaining	Exercise Price		Weighted
	Common	Contractual Life	Times Number		Average
Exercise Price	Shares	(in years)	Of Shares		Exercise Price

$0.05	90,000	3.25	$	4,500	$0.14
$0.05	1,140,000	3.00		57,000	$0.09
$0.05	100,000	2.50		5,000	$0.08
$0.05	60,000	1.75		3,000	$0.06
$0.05	170,000	1.50		8,500	$0.12
$0.10	500,000	1.50		50,000	$0.14
$0.10	250,000	0.50		25,000	$0.06
$0.15	1,000,000	1.50		150,000	$0.14
$0.25	1,000,000	4.75		250,000	$0.23
$0.25	5,000,000	4.00		1,250,000	$0.16
$0.25	7,000,000	3.25		1,750,000	$0.16
$0.25	1,000,000	1.50		250,000	$0.15
$0.25	1,000,000	1.00		250,000	$0.10
$0.25	250,000	0.50		62,500	$0.06
$0.35	250,000	0.50		87,500	$0.07
$0.60	250,000	0.50		150,000	$0.08
	19,060,000		$	4,353,000	$0.23

Options Activity			Weighted
	Number of		Average
	Shares		Exercise Price
Outstanding at December 31, 2018		18,060,000	$0.23
Issued		1,000,000	$0.23
Exercised		––	––
Expired / Forfeited		––	––
Outstanding at March 31, 2019		19,060,000	$0.23

During the three months and the year ended March 31, 2019, and December 31, 2018, respectively, 1,000,000 and 6,000,000 options were issued, 0 and 1,973,189 options were exercised,0 and 1,000,000 options expired, and 0 and 5,641,811 options were forfeited. A total of $96,100 and $649,327 in deferred stock option compensation was recorded, net of forfeitures, and $29,442 and $572,870 was expensed during the three months and the year ended March 31, 2019, and December 31, 2018, respectively. There remains $1,462,124 and $1,395,466 in deferred compensation as of March 31, 2019, and December 31, 2018, respectively, to be expensed over the next 21 months.

NOTE 12. LEASES

The Company sub-leases office space for its headquarters in Santa Monica, California, for $5,600 per month, on a month-to-month basis.

Rent expense for the three months ended March 31, 2019 and 2018, was $17,360 and $19,397, respectively.

NOTE 13. INCOME TAXES

A reconciliation of the expected statutory federal and state taxes and the total income tax expense (benefit) at March 31, 2019, and December 31, 2018, was as follows:

	March 31 2019			December 31, 2018

Income (loss) before taxes	$	(1,674,115	)	$	17,113,718
Statutory rate (Fed & State(s))		30%			30%

Computed expected tax payable (recovery)		(422,200	)		5,230,900

Effect of release of net operating loss carryforwards		(927,100	)		(2,738,100	)

Tax effect of non-deductible expenses:
Gain on extinguishment of debt-principal		––			(6,230,700	)
Stock compensation/amortization of stock options		142,900			1,026,600
Discount amortization		38,900			837,300
Other		800			1,500
Total tax effect of non-deductible expenses		182,600			(4,365,300	)

Change in valuation allowance		1,166,700			(1,872,500	)

Income tax expense	$	––		$	––

Reported income taxes:
Federal	$	––		$	––
State		––			––
Total	$	––		$	––

The significant components of deferred income tax assets and liabilities at March 31, 2019, and December 31, 2018, are as follows:

	March 31, 2019			December 31, 2018

Net operating loss carried forward	$	1,137,500		$	––
Bad debt allowance		––			––
Officers’ accrued compensation		265,900			243,400
Accrued related party interest		27,400			20,700
Valuation allowance		(1,430,800	)		(264,100	)

Net deferred income tax asset	$	––		$	––

During the year ended December 31, 2018, the company realized extinguishment of debt principal in the amount of $20,880,688. Per Internal Revenue Code (“IRC”) Section 108(a) (1) (A) the extinguishment of debt principal is excluded from taxable income for the Company. However, any available tax attributes must be released up and to the amount of the extinguishment. Therefore, net operating loss carryforwards were released for the amount of income excluded from taxable income. The remaining net operating losses available to use toward future taxable income are as follows:

Tax Year	Net Operating Loss		Expires

2016		442,900	2036
2017		2,115,400	2037
2018		548,900	No Expiration
2019 to date		957,900	No Expiration

Total	$	4,065,100

As at March 31, 2019, the Company had approximately $4,065,100 of federal net operating losses,of which $1,506,800 have no expiration date. The Company is open to examinations for the tax year 2011 through the current tax year.

NOTE 14. DISCONTINUED OPERATIONS

In December 2017, the Company discontinued all operations related to the Retail Pharmacy Segment (RPS) involving the Company’s wholly-owned subsidiary, RoxSan Pharmacy, Inc. (“RoxSan”). On May 14, 2018, pursuant to a unanimous resolution of the Boards of Directors of RoxSan and Parallax Health Sciences, Inc., RoxSan filed a Chapter 7 petition in the United States Bankruptcy Court for the Central District of California. Mr. Timothy Yoo was appointed trustee on May 15, 2018. In connection with the filing, RoxSan sought to discharge approximately $5 million of liabilities owed to various parties, and intercompany loans in excess of $1 million owed to the Company. The Chapter 7 bankruptcy proceeding by was fully discharged and the case was closed on March 13, 2019.

Due to, among other things, the reduction in RoxSan’s cash flows during 2016 and 2017, RoxSan became delinquent in its payroll tax depository obligations, resulting in a liability owed to federal and state taxing agencies in the aggregate of $1,148,811, which includes $601,148 in taxes withheld from employees (“Trust Fund Taxes”), employer taxes of $183,172, and penalties and interest of $364,491 through December 31, 2018. The liability was included as part of the Chapter 7 bankruptcy petition, and certain portions of the liability may be discharged. However, in accordance with California bankruptcy laws, federal and state Trust Fund Taxes are not dischargeable. The Company has retained a tax resolution specialist and is in communications with the taxing agencies in order to resolve RoxSan’s liability (Note 5).

As a result of the loss of financial control of RoxSan, the Company derecognized the subsidiary effective May 14, 2018.The derecognition resulted in a gain of $4,478,268. The Company also extinguished $22,778,281 in debt and accrued interest related to the acquisition of RoxSan.

The results of the discontinued operations of RoxSan Pharmacy, Inc. for the three months ending Mach 31, 2018, are summarized as follows:

	March 31, 2018

Revenue	$	––
Cost of sales		––
Gross profit		––
General and administrative expenses		224,919
Operating loss		(224,919	)
Interest expense		(21,592	)
Net loss from discontinued operations	$	(246,511	)

NOTE 15. SEGMENT REPORTING

The Company has the following business segments: Remote Care Services (RCS), Behavioral Health Services (BHS), and Diagnostics/Corporate (DCS). See Note 1 and 2 for a description of each segment and related significant accounting policies.

The following table is a reconciliation of the Company’s business segments to the consolidated financial statements:

	Remote Care Segment			Behavioral Health Segment			Diagnostics/ Corporate Segment			Discontinued Operations		Consolidated Totals

March 31, 2019
Revenue	$	540		$	50,450		$	––			––	$	50,990
Gross profit (loss)		(4,571	)		50,450			––			––		45,879
Operating loss		(86,483	)		(271	)		(1,323,655	)		––		(1,410,409	)
Depreciation and amortization		2,299			27,440			416			––		30,155
Interest expense		755			––			99,259			––		100,014
Loss on settlements		––			––			(33,272	)		––		(33,272	)
Discount amortization		8,000			––			122,420			––		130,420
Total assets		911,240			437,127			12,407			––		1,360,774
Goodwill		785,060			––			––			––		785,060
Additions to property and equipment		––			––			––			––		––


March 31, 2018
Revenue	4,440		450		––		––		4,890
Gross profit (loss)	(1,098	)	450		––		––		(648	)
Operating loss	(72,258	)	(126,387	)	(1,753,165	)	––		(1,951,810	)
Depreciation and amortization	2,466		106,775		416		––		109,657
Interest expense	708		––		322,442		––		323,150
Discount amortization	10,000		50,000		1,275,000		––		1,335,000
Discontinued operations	––		––		––		(246,511	)	(246,511	)
Total assets	931,060		2,030,841		13,133		242,454	[1]	3,217,488
Goodwill	785,060		––		––		––		785,060
Additions to property and equipment	––		––		––		––		––

[1]Assets held for sale

NOTE 16. LEGAL MATTERS

The Company knows of no material developments to its legal matters other than those disclosed below:

Dispute with Former Owner of RoxSan

Action No. SC125702:

In the Matter, action No. SC125702, in the Superior Court of the State of California, County of Los Angeles, West District, the former owner of RoxSan Pharmacy, Inc., Shahla Melamed (“Melamed”), alleges that the Company is in default under the terms of the Purchase Agreement and Secured Note, and the Company’s termination of Melamed’s employment agreement. The Company firmly believes that it had adequate grounds to justify the termination of the employment, that it acted within its rights, and shall prevail in these proceedings. A trial date, previously set for December 2018, is currently set for January 2020.

Action No. SC 124898:

The Company initiated legal action against Melamed and filed a complaint, action number SC 124898, in the Superior Court of the State of California, County of Los Angeles, West District, Parallax Health Sciences, et al. v. Shahla Melamed, et al. The Complaint in that action alleges that Melamed has breached several obligations under the PurchaseAgreement, and the Company is seeking to reduce the Secured Note due to undisclosed material changes in the business. A trial date,previously set for December 2018, is currently set for January 2020.

Disputes with Former Executives

Action No. CV2017-052804

On March 9, 2017, Dave Engert former Executive Chairman and director of the Company filed a lawsuit in Arizona and then on or about May 5, 2017, Mr. Engert, changed the venue and filed suit against the Company and RoxSan Pharmacy, Inc. in the United States District Court, Central District of California for an amount exceeding $75,000. On October 23, 2017, the Company filed an answer and counterclaims against Mr. Engert for an amount exceeding $100,000. The counterclaims include possible fraud and negligence committed by Mr. Engert and Mr. J. Michael Redmond, former successor Chairman of Mr. Engert, director, President and Chief Executive Officer of the Company and former President, Chief Executive Officer, Chairman and director of RoxSan Pharmacy, Inc.

On October 8, 2018, a settlement was reached between Mr. Engert and the Company (the “Settlement”). The Settlement includes, among other things, a cash payment to Mr. Engert in the amount of $139,000, and the cancellation of all of Mr. Engert’s equity holdings in the Company. The Settlement resulted in a net loss to the Company of $33,272. On April 10, 2019, a stipulation for dismissal was filed, and the matter has been fully resolved.

NOTE 17. SUBSEQUENT EVENTS

The Company has evaluated the events and transactions for recognition or disclosure subsequent to March 31, 2019, through the date of the issuance of the financial statements, and has determined that there have been no events that would require disclosure, except for the following:

In April 2019, the Company issued 12% convertible promissory notes in the aggregate principal sum of $214,000. The notes matures by April 2, 2020, and contain repayment provisions for the holders of the notes to convert the principal sum and any accrued interest into shares of the Company’s common stock at a conversion rate of the lesser of (i) $0.12 per share, or (ii) 65% of the average lowest trading prices during the trading days immediately preceding the conversion date. In addition, the Company issued warrants to purchase 300,000 shares of the Company’s common stock at an exercise price of $0.15 per share for a period of five (5) years.

In April 2019, in connection with a certain convertible debenture, the holder elected to convert $105,000 into 2,340,410 shares of the Company’s restricted common stock. As a result, $102,660 was recorded to paid in capital.

In April 2019, the Company issued 825,000 shares of its restricted common stock for various services valued at $80,500. As a result, $79,675 was recorded to paid in capital.

In April 2019, the Company entered into an employment agreement with Mr. David Appell to serve as the Company’s Chief Operating Officer. The agreement commences May 15, 2019, is for an initial term of two (2) years, and provides a base compensation of $250,000 year one, and $275,000 in year two, as well as various performance bonuses, and customary employee benefits. In addition, the agreement includes a grant to purchase 3,000,000 restricted common shares at $0.001 per share, of which 25% vest immediately, and the remainder vest when certain earnings goals are met, as well as options granted to purchase 3,000,000 shares of the Company's Common Stock at an exercise price of $0.25 per share. The options are for a period of five (5) years, and vest annually over the term of the agreement, with an initial vesting of 25%.

In addition, the Company entered into an employment agreement with Ms. Amanda L. Perry to serve as the Company’s Chief Legal Officer. The agreement commences May 15, 2019, is for an initial term of two (2) years, and provides a base compensation of $130,000 year one, and $140,000 in year two, as well as various performance bonuses, and customary employee benefits. In addition, the agreement includes a grant to purchase 500,000 restricted common shares at $0.001 per share, of which 25% vest immediately, and the remainder vest when certain earnings goals are met, as well as options granted to purchase 500,000 shares of the Company's Common Stock at an exercise price of $0.25 per share. The options are for a period of five (5) years, and vest annually over the term of the agreement, with an initial vesting of 25%.

On May 1, 2019, the Company entered into a sub-lease for office space located at 28 West 36th Street, 8th Floor, New York, NY 10018. The lease is for a term of thirteen (13) months, with a monthly rent payment of $8,900.

In May 2019, the Company amended the private placement equity offering (the “Offering”) previously established in March 2019. The revised Offering is for the purchase of the 50,000,000 shares, or a maximum of $6,000,000, in Common Stock, plus equal Warrants at an exercise price of $0.25 per share for a term of three (3) years (the Common Stock and the Warrants together, the “Units”). The Offering provides for, among other thing, the purchase of the Units at a price of $0.125 per share, with a minimum total Offering of $1,000,000, and a minimum investment of 200,000 shares, or $25,000. Prior to the Offering, the Company is selling $1,000,000 in Units through a Simple Agreement Future Equity (“SAFE”) offering. The SAFE Units are sold at a 20% discount of the offering Unit price of $0.125, and are not a part of, nor reduce, the $1,000,000 minimum. The initial closing will occur on or before June 15, 2019, unless extended by the Company in its discretion. The Company may sell Units in one or more closings.

In connection with the SAFE offering, the Company issued 2,500,000 shares of its restricted common stock at $0.10 per share, for cash in the amount of $250,000. As a result, $247,500 was recorded to paid in capital.

The Company retained Maxim Group, LLC (“Maxim”) to serve as its placement agent for the Offering. The Company has agreed to pay the placement agent a placement fee equal to 7% of the aggregate gross proceeds raised in the Offering and warrants exercisable for a term of five years to purchase 7% of the number of shares of common stock included in the Units sold in the Offering at an exercise price of $0.125 per share.

In connection with the Company’s agreement with Maxim, the Company issued Maxim 1,000,000 shares of its restricted common stock, valued at $71,000. As a result, $70,000 was recorded to paid in capital.

On May 6, 2019, in connection with an equity funding, the Company issued 6,000,000 shares of its restricted common stock for cash in the amount of $500,000. As a result, $494,000 was recorded to paid in capital

* * * * *

ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This quarterly report contains forward-looking statements. These statements relate to future events or the Company’s future financial performance. In some cases, forward-looking statements can be identified by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause the Company’s or the Company’s industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

The Company’s unaudited interim consolidated financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. All references to "common shares" refer to the common shares in the Company’s capital stock. The following discussion should be read in conjunction with the Company’s financial statements and the related notes that appear elsewhere in this quarterly report.

NOTE: The following sections of this quarterly report and any further reference made to “the Company”, "we", "us", "our" and "Parallax " shall mean Parallax Health Sciences, Inc., and its wholly-owned subsidiaries, Parallax Diagnostics, Inc.,Parallax Health Management, Inc., and Parallax Behavioral Health, Inc., unless otherwise indicated.

Description of Business

Parallax Health Sciences, Inc. (“Parallax”), incorporated in the State of Nevada on July 6, 2005, is an innovative digital healthcare company headquartered in Santa Monica, California. The Company’s principal focus is to build and expand an integrated digital healthcare network with products and services that can provide remote communication, diagnosis, treatment, and monitoring of patients on a single proprietary platform. The Parallax Care™ system being developed provides scalable connected products, services and actionable data integrated on a single interoperable platform. The Company’s principal mission is to deliver solutions that empower patients, reduce costs and improve the quality of care through patented leading-edge technologies.

The Parallax Care™ technology-enabled digital healthcare system is structured with three separate divisions that can operate independently of one another, or integrate services to meet the various needs of the Company’s clientele: Optimized Outcomes, Connected Health and Smart Data. Each of these divisions target a separate vertical market that are synergistic, compliment, and strengthen each other and the Company value proposition as a whole.

Optimized Outcomes

REBOOT™ / COMPASS™

Behavioral modification

Connected Health

Fotodigm® platform

Remote patient monitoring, telehealth, and POC diagnostic testing

Smart Data

Intrinsic Code™technology

Actionable insights to behavior modification

Operating Segments

The Company’s current operations include the following business segments for financial statement presentation: Remote Patient Monitoring (RPM), Behavioral Health Services (BHS), and Corporate.

●Remote Patient Monitoring

The RPM segment generates revenues through fees charged for the license and utilization of its proprietary system that provides software integrations of the Fotodigm® platform. Additionally, the RPM segment generates incremental revenues through the delivery of acute, post-acute and chronic health patient management software systems that enable Parallax customers to bill for and collect payments from patients and third-party payers for telemonitoring and remote services that they deliver.

●Behavioral Health Services

The BHS segment commenced with the acquisition of the REBOOT™ and Intrinsic Code™ technologies. The BHS segment will generate revenues primarily through licensing and subscription of software and systems. As of March 31, 2019, the BHS segment had not yet begun full operations, generating limited test market sales.

●Diagnostics/Corporate

The Diagnostics/Corporate Segment supports the costs and operating expenses related to the continued development and exploitation of the Company’s proprietary Target System POS medical diagnostic and monitoring platform and processes. In addition, the Diagnostics/Corporate Segment provides management and administrative services to support the Company and consists of certain aspects of the Company’s executive management, corporate relations, legal, compliance, human resources, and corporate information technology and finance departments.

Recent Developments

On January 28, 2019, pursuant to a majority shareholder consent, the Company increased its authorized common stock from 250,000,000 shares to 500,000,000 shares, with a par value of $0.001 per share.

In April 2019, the Company entered into an employment agreement with Mr. David Appell to serve as the Company’s Chief Operating Officer.The agreement commences May 15, 2019, is for an initial term of two (2) years, and provides a base compensation of $250,000 year one, and $275,000 in year two, as well as various performance bonuses, and customary employee benefits. In addition, the agreement includes a grant to purchase 3,000,000 restricted common shares at $0.001 per share, of which 25% vest immediately, and the remainder vest when certain earnings goals are met, as well as options granted to purchase 3,000,000 shares of the Company's Common Stock at an exercise price of $0.25 per share. The options are for a period of five (5) years, and vest annually over the term of the agreement, with an initial vesting of 25%.

In May 2019, the Company amended the private placement equity offering (the “Offering”) previously established in March 2019. The revised Offering is for the purchase of the 50,000,000 shares, or a maximum of $6,000,000, in Common Stock, plus equal Warrants at an exercise price of $0.25 per share for a term of three (3) years (the Common Stock and the Warrants together, the “Units”). The Offering provides for, among other thing, the purchase of the Units at a price of $0.125 per share, with a minimum total Offering of $1,000,000, and a minimum investment of 200,000 shares, or $25,000. Prior to the Offering, the Company sold $1,000,000 in Units through a Simple Agreement Future Equity (“SAFE”) offering. The SAFE Units were sold at a 20% discount of the offering Unit price of $0.125, and are not a part of, nor reduce, the $1,000,000 minimum. The initial closing will occur on or before June 15, 2019, on a date chosen by the Company, unless extended by the Company in its discretion. The Company may sell Units in one or more closings.

In May 2019, the Company established a second location at 28 West 36th Street, 8th Floor, New York, NY 10018.

NOTE: The financial information of Parallax Health Sciences, Inc., and its wholly-owned subsidiaries, Parallax Diagnostics, Inc.,Parallax Health Management, Inc., and Parallax Behavioral Health, Inc., is provided below on aconsolidated basis, unless otherwise indicated. All significant intercompany accounts and transactions have been eliminated.

Balance Sheet

As of March 31, 2019, the Company had total assets of $1,360,774 compared with total assets of $1,364,357 at December 31, 2018. The decrease in total assets of $3,583 is attributable to an increase in cash of $1,392, an increase in accounts receivable of $25,180, and $30,155 of amortization related to intangible assets.

As of March 31, 2019, the Company had total liabilities of $7,845,649 compared with total liabilities of $7,345,916 at December 31, 2018. The increase in total liabilities of $499,766 is attributable to an increase in accounts payable and accrued expenses of $119,572, a decrease in short-term debentures of $183,092, an increase in related party short-term debentures of $44,339, an increase in notes payable of $20,000, an increase in convertible notes payable of $210,913, an increase in related party convertible notes payable of $20,000, an increase in related party payables of $255,138, an increase in license fees payable of $3,000, an increase in royalties payable of $7,700, an increase in long-term debentures, net of unamortized discount, of $2,100, and an increase in secured notes payable of $63.

Results of Operations

The three months ended March 31, 2019, compared to the three months ended March 31, 2018.

	For the three months ended
	March 31, 2019			March 31, 2018
Revenue	$	50,990		$	4,890
Cost of sales	$	5,111		$	5,538
Gross profit (loss)	$	45,879		$	(648	)
General and administrative expenses	$	1,456,288		$	1,951,161
Operating loss	$	(1,410,409	)	$	(1,951,809	)
Loss on settlements	$	(33,272	)	$	––
Discount amortization	$	(130,420	)	$	(1,335,000	)
Interest expense	$	(100,014	)	$	(323,149	)
Net loss – continuing operations	$	(1,674,115	)	$	(3,609,958	)
Net loss – discontinued operations	$	––		$	(246.511	)
Net loss	$	(1,674,115	)	$	(3,856,469	)

Revenue

Revenue in the amount of $50,990 for the three months ended March 31, 2019, consists of license fees of $50,000 related to behavioral health software, contract fees related to the Company’s remote health care systems in the amount of $540, and subscription fees related to its behavioral health services in the amount of $450.

Revenue in the amount of $4,890 for the three months ended March 31, 2018, consists contract fees and equipment sales related to the Company’s remote health care systems in the amount of $4,440, and subscription fees related to its behavioral health services in the amount of $450

The Company has not yet fully launched the medical diagnostics and testing activities of the Company’s Connected Health division.

Cost of sales

Costs of sales in the amount of $5,111 for the three months ended March 31, 2019, consists of equipment and other costs related to the Company’s remote health care systems.

Costs of sales in the amount of $5,538 for three months ended March 31, 2018, consists of equipment and other costs related to the Company’s remote health care systems.

The Company has not yet fully launched the medical diagnostics and testing activities of the Company’s Connected Health division.

General and Administrative Expenses

	For the three months ended
	March 31, 2019		March 31, 2018		Variances
Legal, accounting, and management services	$	597,413	$	401,866	$	195,547
Stock compensation/stock option amortization		478,799		1,332,882		(854,083	)
Salaries, fees, taxes and benefits		152,424		69,648		82,776
Depreciation and amortization		30,155		109,657		(79,502	)
Rent expense-office		17,360		19,397		(2,037	)
Travel, meals and entertainment		11,126		1,440		9,686
Office supplies and miscellaneous expenses		169,011		16,271		152,740
Total general and administrative expenses	$	1,456,288	$	1,951,161	$	(494,873	)

General and administrative expenses in the amount of $1,456,288 for the three months ended March 31, 2019, were comprised of $597,413 in legal, accounting and management fees, $478,799 in stock compensation/stock option amortization, $152,424 in salaries, fees and related taxes and benefits, $30,155 in depreciation and amortization, $17,360 in rent expense, $11,126 in travel, meals and entertainment, and $169,011 in office overhead and other general and administrative expenses.

General and administrative expenses in the amount of $1,951,161 for the three months ended March 31, 2018, were comprised of $401,866 in legal, accounting and management fees, $1,332,882 in stock compensation/stock option amortization, $69,648 in salaries, fees and related taxes and benefits, $109,657 in depreciation and amortization, $19,397 in rent expense, $1,440 in travel, meals and entertainment, and $16,271 in office overhead and other general and administrative expenses.

General and administrative expenses of $1,456,288 for the three months ended March 31, 2019 as compared to $1,951,161 for the three months ended March 31, 2018, resulted in a decrease in general and administrative expenses for the current period of $494,873. The decrease in in general and administrative expenses of $494,873 were attributable to the following items:

●an increase in legal, accounting and management fees of $195,547, due to an increase in legal fees of $10,724; an increase in accounting and audit fees of $11,483; and an increase in management fees of $35,150 primarily resulting from the addition of director compensation effective January 2019; and an increase in professional fees of $138,190 related to investor relations and private placement due diligence; and

●a decrease in stock compensation/stock option amortization of $854,083 primarily due to amortization expense of $24,025 resulting from stock options granted in the current period; a decrease in amortization expense of $188,067 resulting from stock options granted in prior years; stock compensation of $325,000 for stock awards granted in the current period; and decreases in deferred stock compensation amortization of $25,791 and stock compensation expense of $989,250 resulting from stock awards granted in the prior year; and

●an increase in salaries and fees, and related taxes and benefits of $82,776, primarily due to a decrease in staff salaries of $12,679, an increase in related payroll taxes of $21,525; an increase in benefits of $2,930 resulting from changes in benefits; and an increase in miscellaneous fees for outside services in the amount of $71,000 resulting from additional contracted services; and

●a decrease in depreciation and amortization of $79,502, primarily due to fully depreciated/amortized assets; and

●a decrease in rent expense of $2,037 due to miscellaneous fees charged by lessor in the prior period not charged in the current period; and

●an increase in travel, meals and entertainment of $9,686, primarily due to an increase in travel costs of $6,913; and an increase meals and entertainment of $2,773; and

●an increase in office supplies and miscellaneous expenses of $152,740, due to an increase in automobile expenses and allowances of $39,077, computer and internet expenses of $3,724, transfer agent costs of $6,240, insurance expense of $4,592, marketing and publicity of $58,070, product development and patent costs of $19,643, repairs and maintenance of $8,750, taxes, licenses and permits of $8,509, telephone expense of $2,166, and other general office expenses of $1,969.

Net Loss

During the three months ended March 31, 2019, the Company generated a net loss from continuing operations of $1,674,115, compared with a net lossfrom continuing operations of $3,609,958 for the three months ended March 31, 2018. The decrease in net loss from continuing operations of $1,935,843 is primarily attributable to an increase in revenue of $46,100, a decrease in cost of goods sold of $427, a decrease in general and administrative expenses of $494,873, a loss on settlement of $33,272, a decrease in discount amortization of $1,204,580, and a decrease in interest expense of $223,135.

Liquidity and Capital Resources

Working Capital							Increase
	At March 31, 2019			At December 31, 2018			(Decrease)
Current Assets	$	26,834		$	262		$	26,572
Current Liabilities		5,626,487			5,139,617			486,870
Working Capital (Deficit)	$	(5,599,653	)	$	(5,139,355	)	$	(460,298	)

As of March 31, 2019, the Company had cash in the amount of $1,654 compared to $262 as of December 31, 2018.

The Company had a working capital deficit of $5,599,653 as of March 31, 2019, compared to a working capital deficit of $5,139,355 as of December 31, 2018. The increase in working capital deficit of $460,298 is primarily attributable to an increase in cash of $1,392, an increase in accounts receivable of $25,180, an increase in accounts payable and accrued expenses of $119,572, a decrease in convertible debentures of $183,092, an increase in related party convertible debentures of $44,339, an increase in notes payable of $20,000, an increase in convertible notes payable of $210,913, an increase in related party convertible notes payable of $20,000, and an increase in related party payables of $255,138.

Cash Flows	For the three months ended						Increase
	March 31, 2019			March 31, 2018			(Decrease)
Net cash used by operating activities	$	(727,948	)	$	(183,376	)	$	(544,572	)
Net cash used by investing activities		––			––			––
Net cash used by financing activities		729,340			266,000			463,340
Net cash provided by continuing operations		1,392			82,624			(81,232	)
Net cash used by discontinued operations		––			(83,866	)		83,866
Increase (decrease) in cash	$	1,392		$	(1,242	)	$	2,634

Cash Flows from Operating Activities

During the three months ended March 31, 2019, the Company used $727,948 of cash flow for operating activities compared with $183,376 for the three months ended March 31, 2018. The increase in cash used by operating activities of $544,572 is primarily attributable to a decrease in the net loss of $1,935,843; decreases in depreciation and amortization of $79,502, stock compensation/stock option amortization of $854,083, discount amortization of $1,204,580, and allowance for bad debt of $236; increases in the changes in accounts receivable of $28,039, royalties payable of $2,700, and related party payables of $13,314; and a decrease in the change in accounts payable and accrued expenses of $329,989.

Cash Flows from Investing Activities

During the three months ended March 31, 2019 and 2018, the Company used no cash flow for investing activities.

Cash Flows from Financing Activities

During the three months ended March 31, 2019, the Company was provided with $729,340 of cash flow from financing activities, compared with $266,000 for the three months ended March 31, 2018. The increase in cash flows provided by financing activities of $463,340 is attributable to an increase in proceeds from convertible notes payable of $4,340, and an increase in proceeds from the issuance of common stock of $459,000.

The Company’s principal sources of funds have been from the Company’s sales of its preferred and common stock, loans from related parties and third-party lenders, net revenues generated from the sale and licensing of its remote healthcare products and services.

During the three months ended March 31, 2019, the Company received $500,000 in funds from the issuance common shares, compared to $41,000 during the three months ended March 31, 2018.

As of March 31, 2019, related parties are due a total of $2,243,428, consisting of $950,325 in accrued compensation owed to officers; $309,533 in accrued benefits and cash advances from officers and beneficial owners to the Company for operating expenses; $472,470 in convertible debentures; and $511,100 in convertible promissory notes.

During the three months ended March 31, 2019, interest on related party notes payable in the amount of $23,742 was expensed. As of March 31, 2019, a total of $23,742 in accrued interest remains.

Future Financings

The Company has suffered recurring losses from operations. The continuation of the Company’s operations is dependent upon the Company’s attaining and maintaining profitable operations and raising additional capital as needed. The Company anticipates that it will have to raise additional funds through private placements of the Company’s equity securities and/or debt financing to complete its business plan.

The Company will require additional financing in order to proceed with its plan of operations, including approximately $3,000,000 over the next 12 months to pay for its ongoing expenses. These cash requirements include working capital, general and administrative expenses, the development of the Company’s product line, and the pursuit of acquisitions. These cash requirements are in excess of the Company’s current cash and working capital resources. Accordingly, the Company will require additional financing in order to continue operations and to repay its liabilities.There is no assurance that the financing will be completed as planned or at all. If the Company is unable to secure adequate capital to continue the Company’s planned operations, the Company’s shareholders may lose some or all of their investment and the Company’s business may fail.

In May 2019, the Company amended the private placement equity offering (the “Offering”) previously established in March 2019. The revised Offering is for the purchase of the 50,000,000 shares, or a maximum of $6,000,000, in Common Stock, plus equal Warrants at an exercise price of $0.25 per share for a term of three (3) years (the Common Stock and the Warrants together, the “Units”). The Offering provides for, among other thing, the purchase of the Units at a price of $0.125 per share, with a minimum total Offering of $1,000,000, and a minimum investment of 200,000 shares, or $25,000. Prior to the Offering, the Company is selling $1,000,000 in Units through a Simple Agreement Future Equity (“SAFE”) offering. The SAFE Units are sold at a 20% discount of the offering Unit price of $0.125, and are not a part of, nor reduce, the $1,000,000 minimum. The initial closing will occur on or before June 15, 2019, on a date chosen by the Company, unless extended by the Company in its discretion. The Company may sell Units in one or more closings.

The Company retained Maxim Group, LLC to serve as its placement agent for the Offering. The Company has agreed to pay the placement agent a placement fee equal to 7% of the aggregate gross proceeds raised in the Offering and warrants exercisable for a term of five years to purchase 7% of the number of shares of common stock included in the Units sold in the Offering at an exercise price of $0.125 per share.

The Company anticipates continuing to rely on equity sales of its common stock and preferred stock in order to continue to fund its business operations. Issuances of additional shares will result in dilution to the Company’s existing stockholders. There is no assurance that the Company will achieve any additional sales of its equity securities or arrange for debt or other financing to fund its planned business activities.

Contractual Obligations

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

Going Concern

The Company has incurred losses since inception resulting in an accumulated deficit of $18,946,375, and further losses are anticipated. The Company’s ability to continue as a going concern is dependent upon its ability to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due, which may not be available at commercially reasonable terms There can be no assurance that the Company will be able to continue to raise funds, in which case the Company may be unable to meet its obligations and the Company may cease operations. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

The unaudited interim consolidated financial statements included with this quarterly report have been prepared on the going concern basis which assumes that adequate sources of financing will be obtained as required and that the Company’s assets will be realized and liabilities settled in the ordinary course of business. Accordingly, the unaudited interim consolidated financial statements do not include any adjustments related to the recoverability of assets and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

Off-Balance Sheet Arrangements

The Company has no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

Critical Accounting Policies

The discussion and analysis of the Company’s financial condition and results of operations are based upon the Company’s unaudited interim consolidated financial statements, which have been prepared in accordance with the accounting principles generally accepted in the United States of America. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. The Company believes that understanding the basis and nature of the estimates and assumptions provided within the notes to the Company’s financial statements are sufficient to an understanding of its consolidated financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 4. CONTROLS AND PROCEDURES

Management’s Report on Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports filed under theSecurities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s president, chief executive officer and chief financial officer to allow for timely decisions regarding required disclosure. In designing and evaluating the Company’s disclosure controls and procedures, the Company’s management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and the Company’s management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As of March 31, 2019, the end of the period covered by this quarterly report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s president, chief executive officer and chief financial officer of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on the foregoing, the Company’s president, chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.

Changes in Internal Control over Financial Reporting

There have been no changes in the Company’s internal controls over financial reporting that occurred during the three-month period ended March 31, 2019, that have materially or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

Audit Committee

The Company established an audit committee of the board of directors comprised of John L. Ogden and E. William “Bill” Withrow Jr. The audit committee’s duties are to recommend to the Company’s board of directors the engagement of an independent registered public accounting firm to audit the Company’s financial statements and to review the Company’s accounting and auditing principles. The audit committee will review the scope, timing and fees for the annual audit and the results of audit examinations performed by the internal auditors and independent registered public accounting firm, including their recommendations to improve the system of accounting and internal controls. The audit committee will at all times be composed exclusively of directors who are, in the opinion of the Company’s board of directors, free from any relationship which would interfere with the exercise of independent judgment as a committee member and who possess an understanding of financial statements and generally accepted accounting principles.

PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, the Company may be involved in litigation relating to claims arising out of its operations in the normal course of business. The Company knows of no material, existing or pending legal proceedings against it, nor is the Company involved as a plaintiff in any material proceeding or pending litigation, beyond those defined in the Company’s Annual Report on Form 10-K filed April 1, 2019, with the exception of those updates disclosed below:

Dispute with Former Owner of RoxSan

Action No. SC125702:

Action No. SC 124898:

The Company has initiated legal action against Melamed and filed a complaint, action number SC 124898, in the Superior Court of the State of California, County of Los Angeles, West District, Parallax Health Sciences, et al. v. Shahla Melamed, et al. The Complaint in that action alleges that Melamed has breached several obligations under the Purchase Agreement, and the Company is seeking to reduce the Secured Note due to undisclosed material changes in the business. A trial date,previously set for December 2018, is currently set for January 2020.

Disputes with Former Executives

Action No. CV2017-052804

The Company knows of no other material existing or pending legal proceedings against it, nor is the Company involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of the Company’s directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to the Company.

ITEM 1A. RISK FACTORS

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

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On January 24, 2019, in connection with a certain senior secured promissory note, the Company issued 150,000 shares of its restricted common stock to the note holders as a form of interest. The shares were valued at $15,000.

On January 30, 2019, in connection with a certain convertible debenture, the holder elected to convert $175,000 into 1,750,000 shares of its restricted common stock at a conversion rate of $0.10 per share.

On January 31, 2019, in connection with a certain senior secured promissory note, the Company issued 250,000 shares of its restricted common stock to the note holders as a form of interest. The shares were valued at $25,000.

On January 31, 2019, in connection with a certain consulting agreement, the Company issued 1,666,667 shares of its restricted common stock to the consultant for services valued at $200,000.

On January 31, 2019, in connection with a Simple Agreement Future Equity (“SAFE”) offering, the Company issued 500,000 shares of its restricted common stock at $0.10 per share for $50,000 cash.

On February 6, 2019, in connection with certain convertible debt in the amount of $20,000 and accrued interest in the amount of $2,000, the Company issued 220,000 shares of its restricted common stock at a conversion rate of $0.10 per share.

On February 12, 2019, in connection with a certain senior secured promissory note, the Company issued 40,000 shares of its restricted common stock to the note holders as a form of interest. The shares were valued at $4,000.

On February 23, 2019, in connection with a certain senior secured promissory note, the Company issued 150,000 shares of its restricted common stock to the note holders as a form of interest. The shares were valued at $15,000.

On February 25, 2019, in connection with a SAFE offering, the Company issued 3,750,000 shares of its restricted common stock at $0.10 per share for $375,000 cash.

On February 25, 2019, in connection with a certain consulting agreement, the Company issued 25,000 shares of its restricted common stock to the consultant for services valued at $2,500.

On February 27, 2019, in connection with a certain consulting agreement, the Company issued 1,000,000 shares of its restricted common stock to the consultant for services valued at $120,000.

In March 2019, in connection with a certain convertible debenture, the holder elected to convert $95,000 into 1,719,328 shares of the Company’s restricted common stock.

On March 25, 2019, in connection with a certain senior secured promissory note, the Company issued 150,000 shares of its restricted common stock to the note holders as a form of interest. The shares were valued at $15,000.

On March 25, 2019, in connection with a certain consulting agreement, the Company issued 25,000 shares of its restricted common stock to the consultant for services valued at $2,500.

On March 25, 2019, in connection with a SAFE offering, the Company issued 750,000 shares of its restricted common stock at $0.10 per share for $75,000 cash.

In April 2019, in connection with a certain convertible debenture, the holder elected to convert $105,000 into 2,340,410 shares of the Company’s restricted common stock.

On April 15, 2019, the Company issued 400,000 shares of its restricted common stock for services valued at $50,000. As a result, $49,600 was recorded to paid in capital.

On April 25, 2019, in connection with a certain consulting agreement, the Company issued 25,000 shares of its restricted common stock to the consultant for services valued at $2,500.

On April 25, 2019, in connection with a SAFE offering, the Company issued 2,000,000 shares of its restricted common stock at $0.10 per share for $200,000 cash.

On April 26, 2019, in connection with a certain stock purchase agreement, the Company issued 400,000 shares of its restricted common stock, valued at $28,000, for cash in the amount of $400.

On May 2, 2019, in connection with a SAFE offering, the Company issued 500,000 shares of its restricted common stock at $0.10 per share for $50,000 cash.

Exemption From Registration. The shares of Common Stock referenced herein were issued in reliance upon an exemption from registration afforded either under Section 4(2) of the Securities Act for transactions by an issuer not involving a public offering, or Regulation D promulgated thereunder, or Regulation S for offers and sales of securities outside the U.S.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY STANDARDS

Not Applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibits required by Item 601 of Regulation S-B

Exhibit Number	Description of Exhibit	Filing Reference
(3)	Articles of Incorporation and Bylaws
3.1	Articles of Incorporation	Filed with the SEC on March 5, 2007 as part of the Company’s Registration Statement on Form SB-2.
3.1(a)	Amended and Restated Articles of Incorporation	Filed with the SEC on May 17, 2010 as part of the Company’s Annual Report on Form 10-K.
3.1(b)	Amended and Restated Articles of Incorporation	Filed with the SEC on April 1, 2019 as part of the Company’s Annual Report on Form 10-K.
3.2	Bylaws	Filed with the SEC on March 5, 2007 as part of the Company’s Registration Statement on Form SB-2.
3.2(a)	Amended Bylaws	Filed with the SEC on May 17, 2010 as part of the Company’s Annual Report on Form 10-K.
3.3	Articles of Merger between Endeavor Power Corporation and Parallax Diagnostics, Inc. filed with Secretary of State of Nevada on November 6, 2012	Filed with the SEC on November 15, 2012 as part of the Company’s Current Report on Form 8-K.
3.4	Certificate of Amendment filed with the Secretary of State of Nevada on January 9, 2014	Filed with the SEC on April 14, 2014 as part of the Company’s Annual Report on Form 10-K.
3.5	Certificate of Designation effective June 17, 2011-Series A Preferred Stock	Filed with the SEC on March 19, 2019 as part of the Company's Current Report on Form 8-K
3.6	Certificate of Designation effective December 2, 2016-Series B Preferred Stock	Filed with the SEC on March 19, 2019 as part of the Company's Current Report on Form 8-K
3.7	Certificate of Designation effective August 10, 2018-Series C Preferred Stock	Filed with the SEC on March 19, 2019 as part of the Company's Current Report on Form 8-K
(4)	Instruments Defining the Rights of Security Holders, Including Indentures
4.1	Form of 12% Senior Secured Convertible Debenture dated December 31, 2018	Filed with the SEC on January 7, 2019 as part of the Company's Current Report on Form 8-K
4.2	Form of 12% Convertible Promissory Note dated February 27, 2019	Filed with the SEC on March 15, 2019 as part of the Company's Current Report on Form 8-K
4.3	Form of Warrant dated February 27, 2019	Filed with the SEC on March 15, 2019 as part of the Company's Current Report on Form 8-K
4.4	Form of 12% Fixed Convertible Promissory Note dated March 18, 2019	Filed with the SEC on March 22, 2019 as part of the Company's Current Report on Form 8-K
4.5	Form of Warrant dated March 18, 2019	Filed with the SEC on March 22, 2019 as part of the Company's Current Report on Form 8-K
4.6	12% Convertible Promissory Note dated April 8, 2019	Filed with the SEC on April 19, 2019 as part of the Company's Current Report on Form 8-K
4.7	Form of Warrant dated April 8, 2019	Filed with the SEC on April 19, 2019 as part of the Company's Current Report on Form 8-K
4.8	Securities Purchase Agreement dated May 6, 2019	Filed with the SEC on May 7, 2019 as part of the Company's Current Report on Form 8-K
4.9	Registration Rights Agreement dated May 6, 2019	Filed with the SEC on May 7, 2019 as part of the Company's Current Report on Form 8-K
4.10	Warrant dated May 6, 2019	Filed with the SEC on May 7, 2019 as part of the Company's Current Report on Form 8-K
(10)	Material Contracts
10.1	Form of Letter Agreement dated December 31, 2018	Filed with the SEC on January 7, 2019 as part of the Company's Current Report on Form 8-K
10.2	Form of Exchange Agreement dated December 31, 2018	Filed with the SEC on January 7, 2019 as part of the Company's Current Report on Form 8-K
10.3	Form of Securities Purchase Agreement dated February 27, 2019	Filed with the SEC on March 15, 2019 as part of the Company's Current Report on Form 8-K
(31)	Section 302 Certifications
31.1*	Section 302 Certification of Paul R. Arena	Filed herewith.
31.2*	Section 302 Certification of Calli R. Bucci	Filed herewith.
(32)	Section 906 Certifications
32.1*	Section 906 Certification of Paul R. Arena	Filed herewith.
32.2*	Section 906 Certification of Calli R. Bucci	Filed herewith.
(99)	Additional Exhibits
99.1	Parallax Health Sciences, Inc. Investor Presentation dated March 29, 2019		Filed with the SEC on April 1, 2019 as part of the Company's Current Report on Form 8-K
(100)	XBRL Related Documents
101.INS**	XBRL Instance Document	Filed herewith.
101.SCH**	XBRL Taxonomy Extension Schema Document	Filed herewith.
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase Document	Filed herewith.
101.LAB**	XBRL Taxonomy Extension Labels Linkbase Document	Filed herewith.
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase Document	Filed herewith.
101.DEF**	XBRL Taxonomy Extension Definition Linkbase Document	Filed herewith.

*Filed herewith.

**Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

		PARALLAX HEALTH SCIENCES, INC.


	Dated: May 10, 2019	/s/ Paul R. Arena
		Paul R. Arena
		Chief Executive Officer



	Dated: May 10, 2019	/s/ Calli R. Bucci
		Calli R. Bucci
		Chief Financial Officer

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Parallax Health Sciences 10-Q2019 Q1 Quarterly report

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