Medifirst Solutions, Inc.
Medifirst Solutions, Inc. (A Development Stage Company)
Notes to Financial Statements
September 30, 2012
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Medifirst Solutions, Inc. ("MSI" or the "Company") was incorporated in Nevada in November 2010. The Company is in the development stage and has a diverse product line including both consumer products and digital media. The Company intends to launch "Florida Health Community" as an on-line healthcare directory and social media site geared towards both professionals and consumers. MSI also intends to produce a tabloid size newsletter with healthcare industry related news and events. MSI holds the trademark to, and will sell on-line, the Miracle-cigTM, an electronic cigarette that is tobacco free and that emits a fine water mist in place of smoke. Additionally, MSI will offer print and digital marketing and advertising services to its client base of medical professionals as well as solicit new business in other business sectors.
Basis of Presentation
The accompanying unaudited financial statements of MSI have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such principles and regulations of the Securities and Exchange Commission for Form 10-Q. All adjustments, consisting of normal recurring adjustments, have been made which, in the opinion of management, are necessary for a fair presentation of the results of interim periods. The results of operations for such interim periods are not necessarily indicative of the results that may be expected for a full year because of, among other things, seasonality factors in the retail business. The unaudited financial statements contained herein should be read in conjunction with the audited financial statements and notes thereto for the fiscal year ended December 31, 2011.
Revenue Recognition
In general, the Company records revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. The following policies reflect specific criteria for the various revenues streams of the Company:
Revenue is recognized at the time the product is delivered or services are performed. Provision for sales returns are estimated based on the Company's historical return experience. Revenue is presented net of returns.
Medifirst Solutions, Inc.
(A Development Stage Company)
Notes to Financial Statements
September 30, 2012
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Net Income (Loss) Per Common Share
The Company calculates net income (loss) per share based on the authoritative guidance. Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares and dilutive common stock equivalents outstanding. During periods in which the Company incurs losses common stock equivalents, if any, are not considered, as their effect would be anti-dilutive.
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 amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Segment Information
The Company follows Accounting Standards Codification ("ASC") 280, "Segment Reporting". The Company currently operates in a single segment and will evaluate additional segment disclosure requirements as it expands its operations.
Income Taxes
Deferred income taxes are recognized for the tax consequences related to temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for tax purposes at each year end, based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is recognized when, based on the weight of all available evidence, it is considered more likely than not that all, or some portion, of the deferred tax assets will not be realized. Income tax expense is the sum of current income tax plus the change in deferred tax assets and liabilities.
ASC 740, Income Taxes, requires a company to first determine whether it is more likely than not (which is defined as a likelihood of more than fifty percent) that a tax position will be sustained based on its technical merits as of the reporting date, assuming that taxing authorities will examine the position and have full knowledge of all relevant information. A tax position that meets this more likely than not threshold is then measured and recognized at the largest amount of benefit that is greater than fifty percent likely to be realized upon effective settlement with a taxing authority.
Medifirst Solutions, Inc.
(A Development Stage Company)
Notes to Financial Statements
September 30, 2012
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Stock-Based Compensation
The Company accounts for equity instruments issued to employees in accordance with ASC 718, Compensation - Stock Compensation. ASC 718 requires all share-based compensation payments to be recognized in the financial statements based on the fair value using an option pricing model. ASC 718 requires forfeitures to be estimated at the time of grant and revised in subsequent periods if actual forfeitures differ from initial estimates.
Equity instruments granted to non-employees are accounted for in accordance with ASC 505, Equity. The final measurement date for the fair value of equity instruments with performance criteria is the date that each performance commitment for such equity instrument is satisfied or there is a significant disincentive for non-performance.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.
Recent Pronouncements
In May 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards (IFRS).” This pronouncement was issued to provide a consistent definition of fair value and ensure that the fair value measurement and disclosure requirements are similar between U.S. GAAP and IFRS. ASU 2011-04 changes certain fair value measurement principles and enhances the disclosure requirements particularly for level three fair value measurements. This pronouncement is effective for reporting periods beginning on or after December 15, 2011. The adoption of ASU 2011-04 is not expected to have a significant impact on the Company’s consolidated financial position or results of operations.
In June 2011, the FASB issued guidance regarding the presentation of comprehensive income. The new standard requires the presentation of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The new standard also requires presentation of adjustments for items that are reclassified from other comprehensive income to net income in the statement where the components of net income and the components of other comprehensive income are presented. The updated guidance is effective on a retrospective basis for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2011. The Company adopted this standard effective January 1, 2012 and it did not affect our results of operations, financial condition or liquidity.
Medifirst Solutions, Inc.
(A Development Stage Company)
Notes to Financial Statements
September 30, 2012
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Recent Pronouncements (continued)
In August 2011, the FASB approved a revised accounting standard update intended to simplify how an entity tests goodwill for impairment. The amendment will allow an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. An entity no longer will be required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. This accounting standard update will be effective for the Company beginning in the first quarter of fiscal 2013 and early adoption is permitted.
Property, Plant and Equipment, net
Property, plant and equipment are stated at cost. Maintenance, repairs and minor renewals are expensed as incurred. Property, plant or equipment that is retired or sold, and the related gain or loss, if any, is taken into income currently. Depreciation is computed using the straight-line method over the estimated useful lives of the assets.
The estimated useful lives for computing depreciation are:
| Computer equipment | 5 years |
The Company reviews long-lived assets, such as equipment, for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds the estimated future cash flows, an impairment loss will be recorded by the amount the carrying value exceeds the fair value of the asset.
Note 2. PROPERTY, PLANT AND EQUIPMENT (NET)
Equipment is recorded at cost and consisted of the following at September 30, 2012:
| Computer equipment | | $ | 5,758 | |
| Less: accumulated depreciation | | | (271 | ) |
| | | | | |
| | | $ | 5,487 | |
Depreciation expense was $119 and $95 for the nine months ended September 30, 2012 and 2011, respectively.
Medifirst Solutions, Inc.
(A Development Stage Company)
Notes to Financial Statements
September 30, 2012
Note 3. LOANS PAYABLE - STOCKHOLDERS
During the period ended September 30, 2012 a stockholder of the Company advanced the Company $597 to pay for certain expenses. The loan has a balance of $15,370 at September 30, 2012, bears no interest and is payable on demand.
During the period ended September 30, 2012 a stockholder of the Company loaned the Company $5,000. The loan has an interest of 20%. Principal and accrued interest were due and payable on July 2, 2012.
During the period ended September 30, 2012 a stockholder of the Company loaned the Company $25,000. The loan has an interest of 6%. Principal and accrued interest are due and payable on November 11, 2012.
Note 4. 6% CONVERTIBLE NOTES
In March 2011, the Company issued $800 aggregate principal amount of 6% convertible notes due in January 2012. Interest on the notes accrued at the rate of 6% per annum for the term of the notes and was payable upon maturity.
At any time on or after the maturity date, the holders of the notes, have the option of converting any of the unpaid principal and interest into the Company's common stock. The notes plus any accrued but unpaid interest are convertible at the rate of $0.0001 per share at the time of conversion up to a maximum of 9.99% of the then issued and outstanding common stock, or 661,523 shares at September 30, 2012.
Note 5. STOCKHOLDERS' EQUITY
In November 2010, the Company issued 752.000 shares of common stock at par value for services provided to the Company.
In November 2010, the Company issued 81,250 shares of common stock at $0.08 per share.
In November 2010, the Company issued 37,500 shares of common stock at $0.08 per share.
In December 2010, the Company issued 125,000 shares of common stock at $0.08 per share.
In December 2010, the Company issued 187,500 shares of common stock at $0.00133 per share.
In December 2010, the Company issued 12,500 shares of common stock at $0.02 per share.
Medifirst Solutions, Inc.
(A Development Stage Company)
Notes to Financial Statements
September 30, 2012
Note 5. STOCKHOLDERS' EQUITY (continued)
In December 2010, the Company issued 125,000 shares of common stock at $.08 per share for services provided to the Company.
In December 2010, the Company issued 25,000 shares of common stock at $0.01 per share.
In December 2010, the Company issued 315,000 shares of common stock at $0.002 per share.
In January 2011, the Company issued 250,000 shares of common shares at $0.0034 per share.
In January 2011, the Company issued 25,000 shares of common shares at $0.01 per share.
In January 2011, the Company issued 12,500 shares of common shares at $0.016 per share.
In March 2011 the Company issued 75,000 shares of common stock at $0.0019 per share.
In March 2011 the Company issued 250,000 shares of common stock at $0.0014 per share.
In March 2011, the Company issued 3,750,000 shares of common stock to an officer of the Company for services provided to the Company at $0.002 per share.
In April 2011, the Company issued 300,000 shares of common stock at $0.0167 per share..
In October 2011, the Company issued 20,000 shares of common stock at $0.08 per share for services provided to the company.
In October 2011, the Company issued 6,250 shares of common stock at $0.08 per share.
In November 2011, the Company issued 53,500 shares of common stock at $0.08 per share.
In November 2011, the Company issued 12,500 shares of common stock at $0.08 per share.
Medifirst Solutions, Inc.
(A Development Stage Company)
Notes to Financial Statements
September 30, 2012
Note 5. STOCKHOLDERS' EQUITY (continued)
In December 2011, the Company issued 100,000 shares of common stock at $0.04 per share.
In December 2011, the Company issued 6,250 shares of common stock at $0.08 per share.
Note 6. COMMITMENTS AND CONTINGENCIES
The Company leases its office pursuant to an agreement entered into in May 2011. The lease currently expires in April 2013 and calls for minimum monthly lease payments of $300.
Rent expense for the nine months ended September 30, 2012 and 2011 totaled $2,375 and $1,751, respectively.
Note 7. INCOME TAXES
The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before provision for income taxes. The sources and tax effects of the differences are as follows:
| Income tax provision at the federal | | | |
| statutory rate | | | 25 | % |
| Effect of operating losses | | | (25 | ) % |
| | | | 0 | % |
As of September 30, 2012, the Company has a net operating loss carryforward of approximately $89,000. This loss will be available to offset future taxable income. If not used, this carryforward will begin to expire in 2030. The deferred tax asset relating to the operating loss carryforward has been fully reserved at September 30, 2012. The principal difference between the operating loss for income tax purposes and reporting purposes results from the issuance of common shares for services.
Note 8. BASIS OF REPORTING
The Company's financial statements are presented on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.
Medifirst Solutions, Inc.
(A Development Stage Company)
Notes to Financial Statements
September 30, 2012
Note 8. BASIS OF REPORTING (continued)
The Company has experienced a loss from operations during its development stage as a result of its investment necessary to achieve its operating plan, which is long-range in nature. For the period from inception to September 30, 2012, the Company incurred a net loss of approximately $101,000. In addition, the Company has no significant assets or revenue generating operations.
The Company currently does not have sufficient cash to sustain itself for the next 12 months, and will require additional funding in order to execute its plan of operations and to continue as a going concern. To meet its cash needs, management expects to raise capital through a private placement offering. In the event that this funding does not materialize, certain stockholders have agreed, orally, to loan, on a non-interest bearing demand basis, sufficient funds to maintain the Company's operations for the next 12 months.
The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.
