MEDL MOBILE HOLDINGS, INC.
Basic net earnings (loss) per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share ("EPS") include additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options and warrants. Common stock equivalents were not included in the computation of diluted earnings per share on the consolidated statement of operations for the period ended March 31, 2012 due to the fact that the Company reported a net loss and to do so would be anti-dilutive for that period presented.
Diluted net loss per share reflects the potential dilution that could occur if the securities or other contracts to issue common stock were exercised or converted into common stock.
When the Company determines that the carrying value of intangibles may not be recoverable based upon the existence of one or more of the above indicators of impairment and the carrying value of the asset cannot be recovered from projected undiscounted cash flows, the Company records an impairment charge. The Company measures any impairment based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with the risk inherent in the current business model. Significant management judgment is required in determining whether an indicator of impairment exists and in projecting cash flows. The Company did not consider it necessary to record any impairment charges during the period ended March 31, 2012.
MEDL MOBILE HOLDINGS, INC.
The Company applies ASC 718-10 and ASC 505-50 (formerly SFAS 123R) in accounting for stock options issued to employees. The amount of compensation cost for share-based payments is measured based upon the fair value on the grant date of the equity instruments issued. For stock options issued to non-employees, the Company applies the same standard.
Fixed assets as of March 31, 2012 (unaudited) and December 31, 2011 were as follows:
There was $7,684 and $0 charged to operations for depreciation expense for the three months ended March 31, 2012 and March 31, 2011, respectively.
MEDL MOBILE HOLDINGS, INC.
The provision (benefit) for income taxes for the three months ended March 31, 2012 differs from the amount which would be expected as a result of applying the statutory tax rates to the income (losses) before income taxes due primarily to changes in the valuation allowance to fully reserve net deferred tax assets and also due to the fact that MEDL was taxed as a S Corporation from January 1, 2011 to June 23, 2011, resulting in no tax benefit or deferred tax asset during this period. Accordingly, all of the losses of MEDL flow through to the shareholders of the S Corporation and the Company has no deferred tax assets or loss carryforwards from this period.
Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carry-forwards are expected to be available to reduce taxable income. As the achievement of required future taxable income is uncertain, the Company recorded a valuation allowance.
| | | As of March 31,2012 | |
| Deferred tax assets: | | | |
| Net Operating Loss | | $ | (1,407,924 | ) |
| Tax Rate | | | 34 | % |
| deferred tax assets 2012 | | $ | 122,702 | |
| deferred tax assets 2011 | | $ | 367,420 | |
| Total deferred tax assets | | $ | 490,122 | |
| Less Valuation allowance | | $ | (490,122 | ) |
| | | | | |
| Net deferred tax assets | | $ | - | |
Reconciliation of the differences between the statutory tax rate and the effective tax rate is:
| | | March 31, 2012 | |
| Federal statutory tax rate | | | 34 | % |
| Effective Tax Rate | | | 34 | % |
| Valuation Allowance | | | (34 | %) |
| Net Effective Tax Rate | | | 0 | % |
As of March 31, 2012, the Company has a net operating loss carry forward of $1,441,533 expiring through 2032. The Company has provided a valuation allowance against the full amount of the deferred tax asset due to management’s uncertainty about its realization. Furthermore, the net operating loss carry forward may be subject to further limitation pursuant to Section 382 of the Internal Revenue Code.
NOTE 5 - RELATED PARTY TRANSACTIONS
The Company has entered into a sub-lease with a company in which the Company’s CEO and his family are shareholders. The sublease is for approximately 4,500 square feet. The term of the sub-lease is from January 1, 2011 and ends at November 30, 2015. (See also Note 6)
MEDL MOBILE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2012
(Unaudited)
NOTE 6 - COMMITMENTS AND CONTINGENCIES
Lease
The Company is party to three non-cancelable lease agreements for office space through 2015. The first agreement is for approximately 4,500 square feet of space located at 18475 Bandilier Circle, unit A, Fountain Valley, CA. The term of the sub-lease is from January 1, 2011 and ends at November 30, 2015. The second lease is for approximately 4,786 square feet and is located at 18350 Mt. Langley Street, Fountain Valley, CA. The term of this lease is from September 1, 2011 and ends at February 28, 2013. The third agreement is for approximately 6,034 square feet of space located at 18475 Bandilier Circle, unit B, Fountain Valley, CA. The term of the sub-lease is from May 1, 2012 and ends at November 30, 2015.
At March 31, 2012, aggregate future minimum payments under these leases, is as follows:
| 2012 | | $ | 124,240 | |
| 2013 | | | 160,084 | |
| 2014 | | | 153,676 | |
| 2015 | | | 150,712 | |
| Total | | $ | 588,712 | |
Litigation
The Company is not presently involved in any litigation.
NOTE 7 – STOCKHOLDERS’ EQUITY (DEFICIT)
Preferred Stock
The authorized preferred stock of the Company consists of 10,000,000 shares of preferred stock at a par value of $0.001. As of March 31, 2012, the Company had no outstanding shares of preferred stock.
Common Stock
The authorized common stock of the Company consists of 500,000,000 shares of common stock with a par value of $0.001.
On April 20, 2011, MEDL sold an aggregate of $300,000 secured 5% bridge notes to certain accredited investors in a private placement transaction. The bridge notes were to mature upon the earlier to occur of a private placement of at least $2,200,000 and simultaneous reverse merger or on October 20, 2011. The principal amount of the bridge notes automatically exchanged into shares of common stock of the Company in the Private Placement (as defined below) at a price per share of $0.25.
On June 3, 2011, the board of directors of the Registrant authorized a 37.39716 for one forward split of its outstanding common stock in the form of a dividend, whereby an additional 36.39716 shares of common stock, par value $0.001 per share, were issued for each one share of common stock held by each shareholder of record on June 23, 2011.
MEDL MOBILE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2012
(Unaudited)
NOTE 7 – STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)
On June 24, 2011, the Company completed a share exchange (the “Share Exchange”) with MEDL, a California corporation, and the shareholders of MEDL (the “MEDL Shareholders”) according to which the MEDL Shareholders transferred all of the issued and outstanding capital stock of MEDL to the Company in exchange for the issuance to the MEDL Shareholders of an aggregate of 20,000,000 shares of common stock of the Company. The Share Exchange caused MEDL to become a wholly-owned subsidiary of the Company.
In connection with the closing of the share exchange, the Company sold 10,000,000 shares of common stock at a purchase price of $0.25 per share in a private placement to accredited investors, resulting in aggregate gross proceeds of $2,500,000 (including the exchange of bridge notes in the aggregate principal amount of $300,000) (the “Private Placement”). Accrued interest of $2,712 in respect of the bridge notes was not paid at the closing and is included in accounts and accrued expenses payable at March 31, 2012 and December 31, 2011, respectively.
Two business days following the closing of the Share Exchange and the Private Placement, under an Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations (the “Conveyance Agreement”), the Company transferred all of its pre-Exchange assets and liabilities to its newly formed wholly-owned subsidiary, Resume in Minutes Holdings, Inc. (“SplitCo”). Thereafter, pursuant to a stock purchase agreement (the “Stock Purchase Agreement”), the Company transferred all of the outstanding capital stock of SplitCo to certain of its former shareholders in exchange for the cancellation of 94,824,263 shares of its common stock that they owned (the “Split-Off”), with 10,000,000 shares of its common stock held by persons who acquired such shares prior to the Share Exchange remaining outstanding. These 10,000,000 shares constitute the Company’s “public float” and are its only shares of registered common stock and accordingly are its only shares available for resale without further registration or under an applicable exemption from registration.
On December 23, 2011, the Company issued 25,000 shares of common stock for investor relations services at a price per share of $.80 for total expense of $20,000.
On January 2, 2012, the Company issued 41,667 shares of common stock for advisory services at a price per share of $.90 for total expense of $37,500.
On February 28, 2012, the Company acquired Inedible Software, LLC, a developer of mobile apps and related mobile app technologies. The purchase consideration paid was 442,542 shares of common stock of the Company to the sellers, half of which are being held in escrow for one year to secure against any claims of indemnification. The Company accounted for the value under ASC 805-50-30-2 “Business Combinations” whereby if the consideration is not in the form of cash, the measurement is based on either the cost which shall be measured based on the fair value of the consideration given or the fair value of the assets (or net assets) acquired, whichever is more clearly evident and thus more reliably measurable. The fair value of the shares issued amounted to $221,272, which was allocated between intangible assets – customer base for $144,000, and $77,272 to prepaid consulting fees.
On March 28, 2012, the Company issued to an accredited investor 3,000,000 shares of common stock and a warrant to purchase 1,000,000 shares of common stock for an aggregate purchase price of $1,500,000. The warrant has a three year term and may be exercised at an exercise price of $0.90 per share, subject to adjustment in the case of stock splits, distributions, reorganizations, recapitalizations and the like, and may be exercised on a cashless basis under certain circumstances. The warrant contains full ratchet anti-dilution protection in the case of a share issuance for consideration less than the then exercise price of the warrant, subject to customary exceptions.
As of March 31, 2012, the Company has 43,509,209 shares of common stock issued and outstanding.
Warrants
The Company has warrants outstanding to purchase 1,000,000 shares of common stock at $0.90 per share as of March 31, 2012, and no warrants were outstanding at December 31, 2011. There was warrant expense of $1,002,200 related to the issuance of the warrants for the three months ended March 31, 2012.
MEDL MOBILE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2012
(Unaudited)
NOTE 7 – STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)
Share-Based Compensation and Options Issued to Consultants
2011 Equity Incentive Plan
The board of directors adopted the 2011 Equity Incentive Plan, as amended, (the “Plan”) of Medl Mobile Holdings, Inc. (Nevada) that provided for the issuance of a maximum of 6,000,000 shares of common stock. As of March 31, 2012, there were options issued to purchase 5,222,000 shares under the plan. Of this amount, there are vested options exercisable into 3,495,000 shares of common stock of which options exercisable for 2,118,500 shares of common stock have been issued to employees and options exercisable for 1,376,500 shares of common stock have been issued to non-employees. As of March 31, 2012, the Company had approximately 778,000 shares reserved for future grant under its Plan and there were no shares exercised during the three months ended March 31, 2012.
The Company generally grants stock options to employees and directors at exercise prices equal to the fair market value of the Company's stock at the dates of grant. Stock options are typically granted throughout the year and generally vest over five years of service thereafter and expire ten years from the date of the award, unless otherwise specified. The Company recognizes compensation expense for the fair value of the stock options over the requisite service period for each stock option award.
Total share-based compensation expense included in the consolidated statements of operations for the three months ended March 31, 2012 and March 31, 2011 was $44,837 and $0 respectively. At March 31, 2012, compensation expense included in selling, general and administration is $33,898. Compensation expense included in cost of goods sold is $10,939.
There was no capitalized share-based compensation cost as of March, 31, 2012 and there were no recognized tax benefits during the three months ended March 31, 2012 or March 31, 2011.
Share-Based Compensation and Options Issued to Consultants
Employee share option activity for the three months ended March 31, 2012 was as follows:
| | | | | | | | | Weighted Average | | | | |
| | | | | | Weighted | | | Remaining | | | Aggregate | |
| | | | | | Average | | | Contractual | | | Intrinsic | |
| | | Options | | | Exercise Price | | | Life (Yrs.) | | | Value | |
| | | | | | | | | | | | | |
| Options outstanding at December 31, 2011 | | | 4,892,000 | | | | 0.28 | | | | 9.49 | | | | 3,239,330 | |
| Granted | | | 410,000 | | | | 0.28 | | | | 9.49 | | | | 270,600 | |
| Exercised | | | | | | | | | | | | | | | | |
| Forfeited or cancelled | | | (80,000 | ) | | | 0.25 | | | | | | | | (60,000 | ) |
| Expired | | | | | | | | | | | | | | | | |
| Options outstanding at March 31, 2012 | | | 5,222,000 | | | | 0.28 | | | | 9.24 | | | | 3,780,050 | |
| Options expected to vest in the future at March 31, 2012 | | | 1,726,458 | | | | 0.31 | | | | 9.25 | | | | 1,199,644 | |
| Options exercisable at March 31, 2012 | | | 3,495,542 | | | | 0.26 | | | | 9.23 | | | | 2,580,406 | |
| Options vested, exercisable and options expected | | | | | | | | | | | | | | | | |
| to vest at March 31 ,2012 | | | 5,222,000 | | | | 0.28 | | | | 9.24 | | | | 3,780,050 | |
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company's common stock for those awards that have an exercise price currently below the closing price.
MEDL MOBILE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2012
(Unaudited)
NOTE 7 – STOCKHOLDERS’ EQUITY (DEFICIT) (CONTINUED)
Unvested share activity for the three months ended March 31, 2012 was as follows:
| | | Unvested | | | Weighted | |
| | | Number of | | | Average Grant | |
| | | Options | | | Fair Value | |
| Unvested balance at December 31, 2011 | | | 1,980,416 | | | | |
| Granted | | | | | | | |
| Vested | | | (238,958 | ) | | | 0.15 | |
| Forfeited | | | (15,000 | ) | | | 0.15 | |
| Unvested balance at March 31, 2012 | | | 1,726,458 | | | | 0.22 | |
At March 31, 2012, there was $326,327 of unrecognized share-based compensation expense related to unvested employee share options with a weighted average remaining recognition period of 2.3 years.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Forward Looking Statements
Some of the statements contained in this Form 10-Q that are not historical facts are "forward-looking statements" which can be identified by the use of terminology such as "estimates," "projects," "plans," "believes," "expects," "anticipates," "intends," or the negative or other variations, or by discussions of strategy that involve risks and uncertainties. We urge you to be cautious of the forward-looking statements, that such statements, which are contained in this Form 10-Q, reflect our current beliefs with respect to future events and involve known and unknown risks, uncertainties and other factors affecting our operations, market growth, services, products and licenses. No assurances can be given regarding the achievement of future results, as actual results may differ materially as a result of the risks we face, and actual events may differ from the assumptions underlying the statements that have been made regarding anticipated events.
All written forward-looking statements made in connection with this Form 10-Q that are attributable to us or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements. Given the uncertainties that surround such statements, you are cautioned not to place undue reliance on such forward-looking statements.
Overview
We are primarily engaged in the monetization of mobile application software or “Apps” through four revenue generating platforms: (i) development of customized Apps for third parties to monetize their particular intellectual property, persona or brand, (ii) incubation of Apps in partnership with third parties and from a library of more than 75,000 original Apps concept submissions, (iii) sale of advertising and sponsorship opportunities directly to brands via mobile advertising networks, and (iv) acquisition of Apps from other developers and use of a proprietary application programming interface, or API, to make Apps recommendations for our user base.
Share Exchange
On June 24, 2011, we completed a share exchange pursuant to which we acquired all of the capital stock of MEDL Mobile, Inc., a California corporation (“MEDL”), which became our wholly owned subsidiary. In connection with this share exchange, we discontinued our former business and succeeded to the business of MEDL as our sole line of business. The share exchange is accounted for as a recapitalization. MEDL is the acquirer for accounting purposes and we are the acquired company. Accordingly, MEDL’s historical financial statements for periods prior to the acquisition have become those of the Registrant retroactively restated for, and giving effect to, the number of shares received in the share exchange. The accumulated earnings of MEDL were also carried forward after the acquisition. Operations reported for periods prior to the share exchange are those of MEDL.
Critical Accounting Policies
We do not believe that the adoption of any recently issued, but not yet effective, accounting standards will have a material effect on our financial position and results of operations.
Results of Operations
Three Months Ended March 31, 2012 Compared to Three Months Ended March 31, 2011 (unaudited)
The following table presents our results of operations for the three months ended March 31, 2012 compared to the three months ended March 31, 2011.
| | | Three Months Ended March 31, 2012 | | | Three Months Ended March 31, 2011 | | | $ Change | | | % Change | |
| | | | | | | | | | | | | |
| Revenue | | $ | 1,149,998 | | | $ | 378,655 | | | $ | 771,343 | | | | 204 | % |
| | | | | | | | | | | | | | | | | |
| Cost of Goods Sold | | | 374,331 | | | | 182,593 | | | | 191,738 | | | | 105 | % |
| | | | | | | | | | | | | | | | | |
| Gross Profit | | | 775,667 | | | | 196,062 | | | | 579,605 | | | | 296 | % |
| | | | | | | | | | | | | | | | | |
| Expenses: | | | | | | | | | | | | | | | | |
| Selling, General & Administration | | | 2,183,591 | | | | 175,138 | | | | 2,008,453 | | | | 1147 | % |
| | | | | | | | | | | | | | | | | |
| Net (Loss) Profit | | $ | (1,407,924 | ) | | $ | 20,924 | | | $ | (1,428,848 | ) | | | -6829 | % |
Revenues
Revenues for the three months ended March 31, 2012 increased to $1,149,998 as compared to $378,655 for the three months ended March 31, 2011, an increase of $771,343 or 204%. The increase is primarily attributable to growth of our customer base through our expanded sales force and referrals from existing customers. The revenue increase was driven by the demand for the development of customized mobile applications for third parties to monetize their particular intellectual property, persona or brand.
Cost of Goods Sold
Cost of goods sold for the three months ended March 31, 2012 increased to $374,331 as compared to $182,593 for the three months ended March 31, 2011, an increase of $191,738 or 105%. The increase is primarily due to the addition of additional employees and outside contractors to fulfill customer orders for new mobile applications. The additional employees included developers, project managers, visual architects, and graphic designers.
Gross Profit
Gross profit for the three months ended March 31, 2012 increased to $775,667 as compared to $196,062 for the three months ended March 31, 2011, an increase of $579,605 or 296%. The gross profit increased due to the additional business and related revenue generated which utilized both existing employees and new employees in producing the mobile applications finished product for our customers.
Operating Expenses
Operating expenses for the three months ended March 31, 2012 increased to $2,183,591 as compared to $175,138 for the three months ended March 31, 2011, an increase of $2,008,453 or 1,147%. The increase is primarily attributable to salaries paid to our officers, who had previously not been paid in the prior year, the increase in support staff, sales and marketing staff, costs of moving into new corporate offices as well as costs associated with being a public company which include legal and accounting costs, stock option expense, investor relations and public relations expense, and $1,002,200 of warrant expense incurred during the quarter.
Net Loss
Net loss for the three months ended March 31, 2012 was ($1,407,924), as compared to a net income of $20,924 for the three months ended March 31, 2011, a decrease of $1,428,848. The loss was a result of the increase in costs at a faster rate than the revenue growth of the company could support these increased costs as discussed above.
Liquidity and Capital Resources
Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures.
Our business is still in the early stages, having commenced operations on March 4, 2009. At March 31, 2012 and December 31, 2011, we had cash of $2,395,053 and $1,075,307, respectively and working capital of $2,505,009 and $1,281,354, respectively.
Net cash used in operating activities for the three months ended March 31, 2012 was $145,978 compared to net cash provided in operating activities of $45,225 for the three months ended March 31, 2011. The increase in net cash used in operating activities was primarily attributable to the $1,407,924 net loss for the period, offset by noncash options and warrant share based expense of $1,047,037. Net cash used in investing activities for the three months ended March 31, 2012 was $19,276 as compared to net cash used in investing activities of $14,209 for the three months ended March 31, 2011. Net cash provided by financing activities for the three months ended March 31, 2012 was $1,485,000 as compared to net cash used in financing activities $40,534 for the three months ended March 31, 2011. Net cash provided by financing activities was the result of $1,485,000 of net proceeds from a private placement described below that closed on March 28, 2012.
To date we have financed our operations through internally generated revenue from operations, the sale of our equity, the issuance of notes and loans from a shareholder.
In connection with the closing of the share exchange on June 24, 2011, we sold 10,000,000 shares of our common stock at a purchase price of $0.25 per share in a private placement to accredited investors, resulting in aggregate gross proceeds of $2,500,000 (including the exchange of bridge notes in the aggregate principal amount of $300,000).
On March 28, 2012, we entered into a securities purchase agreement with an accredited investor whereby we sold an aggregate of 1,000,000 units (the “Units”), each Unit comprised of three shares of our common stock and a warrant to purchase one share of our common stock at a price per Unit of $1.50. As a result of the sale, which closed on the same day as entering into the securities purchase agreement, we issued to the investor 3,000,000 shares of our common stock and a warrant to purchase 1,000,000 shares of our common stock for an aggregate purchase price of $1,500,000. The warrant has a three year term and may be exercised at an exercise price of $0.90 per share, subject to adjustment in the case of stock splits, distributions, reorganizations, recapitalizations and the like, and may be exercised on a cashless basis under certain circumstances. The warrant contains full ratchet anti-dilution protection in the case of a share issuance for consideration less than then exercise price of the warrant, subject to customary exceptions. The securities purchase agreement also grants the investor demand registration rights, piggyback registration rights and a right of participation in certain future offerings.
We do not have any material commitments for capital expenditures during the next twelve months. Although our net revenues and proceeds from the above described private placement are currently sufficient to fund our operating expenses, we may be required to raise additional funds in the future particularly if we are unable to generate positive cash flow as a result of our operations or require additional capital to expand our operations. Therefore our future operations may be dependent on our ability to secure additional financing. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the trading price of our common stock and a downturn in the U.S. equity and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. The inability to obtain additional capital may restrict our ability to grow and may reduce our ability to continue to conduct business operations. If we are unable to obtain additional financing, we may have to curtail our marketing and development plans and possibly cease our operations.
Off Balance Sheet Arrangements
We do not engage in any activities involving variable interest entities or off-balance sheet arrangements.
Recent Accounting Pronouncements
We do not believe that the adoption of any recently issued accounting standards will have a material effect on our financial position and results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 4. CONTROLS AND PROCEDURES.
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e)) under the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time specified in the Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Pursuant to Rule 13a-15(b) under the Exchange Act, the Company carried out an evaluation with the participation of the Company's management, including the Company's Chief Executive Officer ("CEO") and the Company's Chief Financial Officer ("CFO"), of the effectiveness of the Company's disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the quarter ended March 31, 2012. Based upon that evaluation, the Company's CEO and CFO concluded that the Company's disclosure controls and procedures were not effective as of March 31, 2012 due to the Company’s limited internal resources and lack of ability to have multiple levels of transaction review.
Management is in the process of determining how best to change our current system and implement a more effective system to insure that information required to be disclosed in this quarterly report on Form 10-Q has been recorded, processed, summarized and reported accurately. Our management acknowledges the existence of this issue, and intends to developed procedures to address them to the extent possible given limitations in financial and manpower resources. While management is working on a plan, no assurance can be made at this point that the implementation of such controls and procedures will be completed in a timely manner or that they will be adequate once implemented.
CHANGES IN INTERNAL CONTROLS
Our management, with the participation our CEO and CFO, performed an evaluation to determine whether any change in our internal controls over financial reporting occurred during the three month period ended March 31, 2012. Based on that evaluation, our CEO and our CFO concluded that no change occurred in the Company's internal controls over financial reporting during the quarter ended March 31, 2012, that has materially affected, or is reasonably likely to materially affect, the Company's internal controls over financial reporting.
PART II--OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business. Litigation is, however, subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe would or could have, individually or in the aggregate, a material adverse effect on us.
ITEM 1A. RISK FACTORS
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On February 28, 2012, we acquired Inedible Software, LLC, a developer of mobile apps and related mobile app technologies. In consideration, we issued 442,542 shares of our common stock to the sellers, half of which are being held in escrow for one year to secure against any claims of indemnification.
The shares were offered and sold pursuant to an exemption from the registration requirements under Section 4(2) of the Securities Act of 1933, as amended since, among other things, the transactions did not involve a public offering and the securities were acquired for investment purposes only and not with a view to or for sale in connection with any distribution thereof.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4- MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5 - OTHER INFORMATION
(a) Form 8-K Information
None.
(b) Director Nomination Procedures
We do not have a standing nominating committee nor are we required to have one. We do not have any established procedures by which security holders may recommend nominees to our Board of Directors, however, any suggestions on directors, and discussions of board nominees in general, is handled by the entire Board of Directors.
ITEM 6 - EXHIBITS.
| 31.1 | | Section 302 Certification of Principal Executive Officer |
| 31.2 | | Section 302 Certification of Principal Financial Officer |
| 32.1* | | Section 906 Certification of Principal Executive Officer |
| 32.2* | | Section 906 Certification of Principal Financial Officer |
| 101** | | The following materials from MEDL Mobile Holdings, Inc.’s Quarterly Report on Form 10-Q/A for the quarter ended March 31, 2012 are formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Cash Flow, and (iv) Notes to Consolidated Financial Statements tagged as blocks of text. |
| * | In accordance with Item 601of Regulation S-K, this Exhibit is hereby furnished to the SEC as an accompanying document and is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933. |
| ** | In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | MEDL Mobile Holdings, Inc. | |
| | | | |
| | | | |
| May 21, 2012 | By: | /s/ Andrew Maltin | |
| | | Andrew Maltin Chief Executive Officer (Principal Executive Officer) | |
| | | | |
| | | | |
| May 21, 2012 | By: | /s/ Paul Caceres | |
| | | Paul Caceres Chief Financial Officer (Principal Financial and Accounting Officer) | |
EXHIBIT INDEX
| Exhibit No. | | Description |
| | | |
| 31.1 | | Section 302 Certification of Principal Executive Officer |
| 31.2 | | Section 302 Certification of Principal Financial Officer |
| 32.1 | | Section 906 Certification of Principal Executive Officer |
| 32.2 | | Section 906 Certification of Principal Financial Officer |
| 101 | | The following materials from MEDL Mobile Holdings, Inc.’s Quarterly Report on Form 10-Q/A for the quarter ended March 31, 2012 are formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Cash Flow, and (iv) Notes to Consolidated Financial Statements tagged as blocks of text. |
