HealthWarehouse.com (HEWA) 10-Q 8 Aug 16 2016 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Aug. 05, 2016
Document And Entity Information
Entity Registrant Name	HealthWarehouse.com, Inc.
Entity Central Index Key	754,813
Document Type	10-Q
Document Period End Date	Jun. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		42,160,786
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2,016

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Current assets:
Cash	$ 2,199	$ 11,217
Restricted cash	144,929	145,088
Accounts receivable, net of allowance of $47,143 as of June 30, 2016 and December 31, 2015	47,473	51,627
Inventories - finished goods, net	250,081	182,647
Prepaid expenses and other current assets	69,020	81,718
Total current assets	513,702	472,297
Property and equipment, net of accumulated depreciation of $853,270 and $801,270 as of June 30, 2016 and December 31, 2015	357,248	409,248
Web development costs, net of accumulated amortization of $182,825 and $146,448 as of June 30, 2016 and December 31, 2015	48,185	84,562
Total assets	919,135	966,107
Current liabilities:
Accounts payable - trade	2,321,519	2,189,649
Accounts payable - related parties		862
Accrued expenses and other current liabilities	428,120	597,665
Equipment lease payable	11,951	46,143
Notes payable and other advances, net of debt discount of $6,889 as of June 30, 2016	1,093,111	991,089
Note payable and other advances - related parties	4,065	23,889
Redeemable preferred stock - Series C; par value $0.001 per share; 10,000 designated Series C: 10,000 issued and outstanding as of June 30, 2016 and December 31, 2015 (aggregate liquidation preference of $1,000,000)	1,000,000	1,000,000
Total current liabilities	4,858,766	4,849,297
Total liabilities	4,858,766	4,849,297
Commitments and contingencies
Stockholders' deficiency:
Preferred stock - par value $0.001 per share; authorized 1,000,000 shares; 527,359 and 493,512 shares issued and outstanding as of June 30, 2016 and December 31, 2015 as follows:
Convertible preferred stock - Series A - 200,000 shares designated Series A; 44,443 shares available to be issued; no shares issued and outstanding
Convertible preferred stock - Series B - 625,000 shares designated Series B; 517,359 and 483,512 shares issued and outstanding as of June 30, 2016 and December 31, 2015, respectively (aggregate liquidation preference of $5,060,159 and $4,889,043 as of June 30, 2016 and December 31, 2015, respectively)	517	484
Common stock - par value $0.001 per share; authorized 100,000,000 shares; 38,872,616 and 38,844,374 shares issued and 37,693,404 and 37,665,162 shares outstanding as of June 30, 2016 and December 31, 2015, respectively	38,872	38,844
Additional paid-in capital	31,104,329	30,656,598
Treasury stock, at cost, 1,179,212 shares as of June 30, 2016 and December 31, 2015	(3,419,715)	(3,419,715)
Accumulated deficit	(31,663,634)	(31,159,401)
Total stockholders' deficiency	(3,939,631)	(3,883,190)
Total liabilities and stockholders' deficiency	$ 919,135	$ 966,107

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Current liabilities:
Accounts receivable, net of allowance	$ 47,143	$ 47,143
Property and equipment, net of accumulated depreciation	853,270	801,270
Web development costs, net of accumulated amortization	182,825	146,448
Current portion of notes payable, net of debt discount	$ 6,889	$ 0
Redeemable preferred stock Series C, par value	0.001	0.001
Redeemable preferred stock Series C, shares designated	10,000	10,000
Redeemable preferred stock Series C, shares issued	10,000	10,000
Redeemable preferred stock Series C, shares outstanding	10,000	10,000
Redeemable preferred stock Series C, aggregate liquidation preference	$ 1,000,000	$ 1,000,000
Stockholders' deficiency:
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, authorized	1,000,000	1,000,000
Preferred stock, shares issued	527,359	493,512
Preferred stock, shares outstanding	527,359	493,512
Series A Convertible preferred stock, shares designated	200,000	200,000
Series A Convertible preferred stock, shares available to be issued	44,443	44,443
Series A Convertible preferred stock, shares issued	0	0
Series A Convertible preferred stock, shares outstanding	0	0
Series B Convertible preferred stock, shares designated	625,000	625,000
Series B Convertible preferred stock, shares issued	517,359	483,512
Series B Convertible preferred stock, shares outstanding	517,359	483,512
Series B Convertible preferred stock, aggregate liquidation preference	$ 5,060,159	$ 4,889,043
Common stock, par value	$ 0.001	$ 0.001
Common stock, authorized	100,000,000	100,000,000
Common stock, shares issued	38,872,616	38,844,374
Common stock, shares outstanding	37,693,404	37,665,162
Treasury stock, shares	1,179,212	1,179,212

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Consolidated Statements Of Operations
Net sales	$ 2,403,974	$ 1,870,840	$ 4,751,772	$ 3,483,517
Cost of sales	858,836	618,391	1,750,656	1,249,554
Gross profit	1,545,138	1,252,449	3,001,116	2,233,963
Operating expenses:
Selling, general and administrative expenses	1,599,515	1,286,925	3,283,231	2,394,475
Net loss from operations	(54,377)	(34,476)	(282,115)	(160,512)
Other expense:
Gain on settlement of accounts payable	2,445		2,445
Interest expense	(27,529)	(45,205)	(53,448)	(119,957)
Total other expense	(25,084)	(45,205)	(51,003)	(119,957)
Net loss	(79,461)	(79,681)	(333,118)	(280,469)
Preferred stock:
Series B convertible contractual dividends	(85,558)	(79,961)	(171,116)	(159,922)
Loss attributable to common stockholders	$ (165,019)	$ (159,642)	$ (504,234)	$ (440,391)
Per share data:
Net loss - basic and diluted	$ 0	$ 0	$ (0.01)	$ (0.01)
Series B convertible contractual dividends	0	0	0	0
Net loss attributable to common stockholders - basic and diluted	$ 0	$ 0	$ (0.01)	$ (0.01)
Weighted average number of common shares outstanding - basic and diluted	37,684,714	37,570,383	37,674,938	37,570,383

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Cash flows from operating activities
Net loss	$ (79,461)	$ (79,681)	$ (333,118)	$ (280,469)	$ (626,682)
Adjustments to reconcile net loss to net cash used in operating activities:
Provision for employee advance reserve				2,143
Depreciation and amortization			88,377	91,974
Stock-based compensation			112,439	198,568
Gain on settlement of accounts payable			(2,445)	(87,969)
Amortization of debt discount	5,167	25,250	8,611	79,767
Changes in operating assets and liabilities:
Accounts receivable			4,154	(9,821)
Inventories - finished goods			(67,434)	(32,864)
Prepaid expenses and other current assets			12,698	13,571
Accounts payable - trade			134,315	(181,835)
Accounts payable - related parties			(862)	(20,000)
Accrued expenses and other current liabilities			(20,807)	(59,113)
Deferred revenue				(1,995)
Net cash used in operating activities			(64,072)	(288,043)	(548,281)
Cash flows from investing activities
Change in restricted cash			159	75,000
Capital expenditures				(5,539)
Website development costs				(17,937)
Net cash provided by investing activities			159	51,524
Cash flows from financing activities
Principal payments on equipment leases payable			(34,192)	(31,261)
Proceeds from issuance of notes payable			108,911
Repayment of notes payable			(19,824)	(15,000)
Net cash provided by (used in) financing activities			54,895	(46,261)
Net decrease in cash			(9,018)	(282,780)
Cash - beginning of period			11,217	506,019	506,019
Cash - end of period	$ 2,199	$ 223,239	2,199	223,239	$ 11,217
Cash paid for:
Interest			44,836	38,900
Non-cash investing and financing activities:
Issuance of Series B preferred stock for settlement of accrued dividends			319,854	298,918
Warrants issued as debt discount in connection with notes payable			15,500	41,300
Accrual of contractual dividends on Series B convertible preferred stock			$ 171,116	$ 159,922

Organization and Basis of Prese

Organization and Basis of Presentation	6 Months Ended
	Jun. 30, 2016
Notes to Financial Statements
1. Organization and Basis of Presentation	HealthWarehouse.com, Inc. ("HEWA" or the "Company"), a Delaware company incorporated in 1998, is an online mail order pharmacy, licensed in 50 states and the District of Columbia to focus on the out-of-pocket prescription drug market. The Company is Verified Internet Pharmacy Practice Site ("VIPPS") accredited by the National Association of Boards of Pharmacy ("NABP"). The Company markets a complete range of generic, brand name, and pet prescription medications as well as over-the-counter ("OTC") medications and products. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for annual financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the condensed consolidated financial statements of the Company as of June 30, 2016 and for the six months ended June 30, 2016 and 2015. The results of operations for the three and six months ended June 30, 2016 are not necessarily indicative of the operating results for the full year ending December 31, 2016 or any other period. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related disclosures of the Company as of December 31, 2015 and for the year then ended, which were filed with the Securities and Exchange Commission on Form 10-K on March 25, 2016.

Going Concern and Management's

Going Concern and Management's Liquidity Plans	6 Months Ended
	Jun. 30, 2016
Notes to Financial Statements
2. Going Concern and Management's Liquidity Plans	Since inception, the Company has financed its operations primarily through debt and equity financings and advances from related parties. As of June 30, 2016, the Company had a working capital deficiency of $4,345,064 and an accumulated deficit of $31,663,634. During the six months ended June 30, 2016 and the year ended December 31, 2015, the Company incurred net losses of $333,118 and $626,682, respectively, and used cash in operating activities of $64,072 and $548,281, respectively. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Subsequent to June 30, 2016, the Company The Company is subject to a 2013 Notice of Redemption related to its Series C Redeemable Preferred Stock aggregating $1,000,000, whereby the Company must now apply all of its assets to redemption of the Series C Preferred Stock and to no other corporate purpose, except to the extent prohibited by Delaware law governing distributions to stockholders (the Company is not permitted to utilize toward the redemption those assets required to pay its debts as they come due and those assets required to continue as a going concern). The Company recognizes it will need to raise additional capital in order to fund operations, meet its payment obligations, including its obligations under a loan and security agreement (see Note 5), and execute its business plan. There is no assurance that additional financing will be available when needed or that management will be able to obtain financing on terms acceptable to the Company and whether the Company will become profitable and generate positive operating cash flow. If the Company is unable to raise sufficient additional funds, it will have to develop and implement a plan to further extend payables, attempt to extend note repayments, attempt to negotiate the preferred stock redemption and reduce overhead until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successful. If the Company is unable to obtain financing on a timely basis, the Company could be forced to sell its assets, discontinue its operation and /or seek reorganization under the U.S. bankruptcy code. Accordingly, the accompanying condensed consolidated financial statements have been prepared in conformity with U.S. GAAP, which contemplates continuation of the Company as a going concern and the realization of assets and the satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the condensed consolidated financial statements do not necessarily represent realizable or settlement values. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Summary of Significant Accounti

Summary of Significant Accounting Policies	6 Months Ended
	Jun. 30, 2016
Notes to Financial Statements
3. Summary of Significant Accounting Policies	Principles of Consolidation The condensed consolidated financial statements include the accounts of HealthWarehouse.com, Inc., Hwareh.com, Inc., Hocks.com, Inc., ION Holding NV and ION Belgium NV, its wholly-owned subsidiaries. ION Holding NV and ION Belgium NV are inactive subsidiaries. All material inter-company balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company's significant estimates include reserves related to accounts receivable and inventory, the recoverability and useful lives of long-lived assets, the valuation allowance related to deferred tax assets, the valuation of equity instruments and debt discounts. Reclassifications Certain accounts in the prior period condensed consolidated financial statements have been reclassified for comparison purposes to conform to the presentation of the current period condensed consolidated financial statements. These reclassifications had no effect on the previously reported net loss. Net Earnings (Loss) Per Share of Common Stock Basic net earnings (loss) per share is computed by dividing net earnings (loss) attributable to Common Stockholders by the weighted average number of common shares outstanding during the period. Diluted net earnings (loss) per share reflects the potential dilution that could occur if securities or other instruments to issue Common Stock were exercised or converted into Common Stock. Potentially dilutive securities are excluded from the computation of diluted net earnings (loss) per share if their inclusion would be anti-dilutive and consist of the following: June 30, 2016 2015 Options 5,109,386 5,008,830 Warrants 10,046,198 9,976,474 Series B Convertible Preferred Stock 5,892,720 5,507,202 Total potentially dilutive shares 21,048,304 20,492,506

Accrued Expenses and Other Curr

Accrued Expenses and Other Current Liabilities	6 Months Ended
	Jun. 30, 2016
Notes to Financial Statements
4. Accrued Expenses and Other Current Liabilities	Accrued expenses and other current liabilities consisted of the following: June 30, December 31, 2016 2015 Deferred Rent $ 12,926 $ 25,852 Advertising 76,639 76,639 Salaries and Benefits 57,437 64,007 Dividend Payable 171,116 319,854 Accrued Interest 44,249 44,249 Accrued Rent 50,495 49,614 Other 15,258 17,450 Total $ 428,120 $ 597,665

Notes Payable

Notes Payable	6 Months Ended
	Jun. 30, 2016
Notes to Financial Statements
5. Notes Payable	The Company is a party to a Loan and Security Agreement (the "Loan Agreement") with a lender (the "Lender"). Under the terms of the Loan Agreement, the Company borrowed an aggregate of $1,000,000 from the Lender (the "Loan"). The Loan is evidenced by a promissory note (the "Senior Note") in the face amount of $1,000,000 (as amended). The Senior Note bears interest on the unpaid principal balance of the Note until the full amount of principal has been paid at a floating rate equal to the Prime Rate plus 4.25% per annum (7.75% as of June 30, 2016). Under the terms of the Loan Agreement, the Company has agreed to make monthly payments of accrued interest on the first day of every month. The principal amount and all unpaid accrued interest on the Note is payable on August 31, 2016, or earlier in the event of default or a sale or liquidation of the Company. The Loan may be prepaid in whole or in part at any time by the Company without penalty. The Senior Note contains financial covenants which require the Company to meet certain minimum targets for earnings before interest, taxes and non-cash expenses, including depreciation, amortization and stock-based compensation ("EBITDAS"). The Company granted the Lender a first, priority security interest in all of the Company's assets, in order to secure the Company's obligation to repay the Loan, including a Deposit Account Control Agreement, which grants the Lender a security interest in certain bank accounts. In addition, the Company is required to direct the proceeds of its credit card receipts to a cash collateral account controlled by the Lender. On January 11, 2016, the Company entered into an Amendment to Promissory Note in the face amount of $100,000 with a different lender, effective October 31, 2015, which extended the maturity date of the note payable from November 1, 2015 to October 31, 2016. In consideration of the extension of the maturity date of the note payable, the Company issued to the lender a five-year warrant to purchase 75,000 shares of Common Stock at an exercise price of $0.25 per share. The warrants had a fair value of $15,500 using the Black-Scholes model (see note 6) which was established as debt discount during the six months ended June 30, 2016 and is being amortized using the effective interest method over the remaining term of the Promissory Note. Including the value of the warrants issued in connection with the extension of the maturity date of the Promissory Note, the Promissory Note has an effective interest rate of 23% per annum during the extension period. The Company recorded amortization of debt discount associated with notes payable of $5,167 and $8,611 for the three and six months ended June 30, 2016, respectively, and $25,250 and $79,767 for the three and six months ended June 30, 2015, respectively.

Stockholders' Deficiency

Stockholders' Deficiency	6 Months Ended
	Jun. 30, 2016
Notes to Financial Statements
6. Stockholders' Deficiency	Preferred Stock As of June 30, 2016 and December 31, 2015, the Company had accrued contractual dividends of $171,116 and $319,853, respectively, related to the Series B Preferred Stock. On January 1, 2016 and 2015, the Company issued 33,847 and 31,633 shares of Series B convertible preferred stock valued at approximately $320,000 and $299,000, respectively, representing approximately $0.66 in value per share of Series B Preferred Stock outstanding on each date, to the Series B convertible preferred stock holders as payment in kind for dividends. Stock Options Valuation In applying the Black-Scholes option pricing model to stock options, the Company used the following weighted average assumptions: For The Three Months Ended For The Six Months Ended June 30, June 30, 2016 2015 2016 2015 Risk free interest rate 1.25% 1.35% to 1.85% 1.25% to 2.12% 1.35% to 1.85% Dividend yield 0.00% 0.00% 0.00% 0.00% Expected volatility 200.0% 195.0% 199.0% to 200.0% 195.0% Expected life in years 5.5 5.5 to 10.0 5.5 to 10.0 5.5 to 10.0 The Company estimated forfeitures at a weighted average annual rate of 3% to 4% for the three and six months ended June 30, 2016 and 2015. Grants The weighted average fair value of the stock options granted during the three and six months ended June 30, 2016 was $0.29 and $0.26 per share, respectively. The weighted average fair value of the stock options granted during the three and six months ended June 30, 2015 was $0.09 per share. During the six months ended June 30, 2016, the Company granted options to consultants and directors of the Company to purchase an aggregate of 267,102 shares of common stock under a previously approved plan at exercise price ranging between $0.24 and $0.29 per share for an aggregate grant date value of $68,380. The options vested on the grant date and have a term of ten years. Stock-based compensation expense related to stock options was recorded in the condensed consolidated statements of operations as a component of selling, general and administrative expenses and totaled $37,301 and $112,439 for the three and six months ended June 30, 2016, respectively, and $107,500 and $186,289 for the three and six months ended June 30, 2015, respectively. As of June 30, 2016, stock-based compensation expense related to stock options of $969,620 remains unamortized, including $77,751 which is being amortized over the weighted average remaining period of 1.9 years. The remaining $891,569 is related to a performance based option where vesting is currently deemed to be improbable and no amount is being amortized. Summary A summary of the stock option activity during the six months ended June 30, 2016 is presented below: Weighted Weighted Average Average Remaining Aggregate Number of Exercise Life Intrinsic Options Price In Years Value Outstanding, January 1, 2016 5,341,284 $ 0.70 Granted 267,102 0.26 Exercised - - Forfeited (499,000 ) 1.62 Outstanding, June 30, 2016 5,109,386 $ 0.58 7.5 $ 699,666 Exercisable, June 30, 2016 3,931,053 $ 0.49 7.6 $ 516,200 The following table presents information related to stock options at June 30, 2016: Options Outstanding Options Exercisable Weighted Weighted Weighted Range of Average Outstanding Average Average Exercisable Exercise Exercise Number of Exercise Remaining Life Number of Price Price Options Price In Years Options $ 0.09 - $2.20 $ 0.21 4,577,386 $ 0.23 7.8 3,649,053 $ 2.21 - $3.80 3.31 400,000 2.50 3.4 150,000 $ 3.81 - $6.99 5.49 132,000 5.49 5.3 132,000 $ 0.58 5,109,386 $ 0.49 7.6 3,931,053 Warrants Valuation In applying the Black-Scholes option pricing model to stock warrants, the Company used the following weighted average assumptions: For The Three Months Ended For The Six Months Ended June 30, June 30, 2016 2015 2016 2015 Risk free interest rate n/a 1.26% to 1.68% 1.58% 1.26% to 1.75% Dividend yield n/a 0.00% 0.00% 0.00% Expected volatility n/a 195.0% to 197.0% 200.0% 195.0% to 197.0% Contractual term in years n/a 5.0 to 7.3 5.0 5.0 to 7.5 Grants The weighted average fair value of the stock warrants granted during the six months ended June 30, 2016 was $0.24 per share. There were no stock warrants granted during the three months ended June 30, 2016. The weighted average fair value of the stock warrants granted during the three and six months ended June 30, 2015, was $0.09 and $0.08 per share, respectively. Exercise During the three and six months ended June 30, 2016, the Company issued an aggregate of 28,242 shares of Common Stock to a holder of warrants who elected to exercise warrants to purchase 75,000 shares of Common Stock on a "cashless" basis under the terms of the warrants. The warrants had an exercise price of $0.25 per share. The aggregate intrinsic value of the warrants exercised was $11,325 for the three and six months ended June 30, 2016. There was no stock-based compensation expense related to warrants recorded in the three and six months ended June 30, 2016. Stock-based compensation expense related to warrants for the three and six months ended June 30, 2015 was recorded in the condensed consolidated statements of operations as a component of selling, general and administrative expenses totaled $12,063 and $12,279, respectively. As of June 30, 2016, stock-based compensation expense related to warrants of $576,840 remains unamortized. The remaining $576,840 is related to a performance based warrant where vesting is currently deemed to be improbable and no amount is being amortized. A summary of the stock warrant activity during the six months ended June 30, 2016 is presented below: Weighted Average Average Remaining Aggregate Number of Exercise Life Intrinsic Warrants Price In Years Value Outstanding, January 1, 2016 10,046,198 $ 0.41 Granted 75,000 0.25 Exercised (75,000 ) 0.25 Forfeited - - Outstanding, June 30, 2016 10,046,198 $ 0.40 2.9 $ 512,142 Exercisable, June 30, 2016 9,796,198 $ 0.34 2.9 $ 512,142 The following table presents information related to stock warrants at June 30, 2016: Warrants Outstanding Warrants Exercisable Weighted Weighted Weighted Range of Average Outstanding Average Average Exercisable Exercise Exercise Number of Exercise Remaining Life Number of Price Price Warrants Price In Years Warrants $ 0.10 - $0.35 $ 0.25 9,496,198 $ 0.25 3.0 9,496,198 $ 0.36 - $3.00 2.90 520,000 2.90 0.3 270,000 $ 3.01 - $4.95 4.95 30,000 4.95 1.3 30,000 $ 0.10 - $4.95 $ 0.40 10,046,198 $ 0.34 2.9 9,796,198

Commitments and Contingent Liab

Commitments and Contingent Liabilities	6 Months Ended
	Jun. 30, 2016
Notes to Financial Statements
7. Commitments and Contingent Liabilities	Operating Leases The Company is a party to a lease agreement for approximately 28,500 square feet of office and storage space with an entity. On March 15, 2016, the Company entered into an amendment of the lease agreement which extended the lease for an additional three years. The amended monthly lease rate will be $5,462 in 2016, $6,649 in 2017, $6,886 in 2018 and $7,124 in 2019. The lease expires on December 31, 2019. The Company accounts for rent expense using the straight line method of accounting, deferring the difference between actual rent due and the straight line amount. Deferred rent payable of $12,926 and $25,852 as of June 30, 2016 and December 31, 2015, respectively, has been included in accrued expenses and other current liabilities on the condensed consolidated balance sheets. On June 7, 2013, Pagosa signed a three year lease for $1,000 per month to house an office, pharmacy as well as inventory and is located in Lawrenceburg, IN. On July 8, 2013, the parties agreed to extend the lease for two additional years, such that the new termination date is now June 7, 2018. On January 14, 2014, the Company closed Pagosa Health and vacated the Lawrenceburg facility. The Company is currently in discussions with the Landlord regarding termination of the lease related to the building. The present value of the remaining lease payments of $50,495 is reflected as a component of accrued expenses and other liabilities on the condensed consolidated financial statements as of June 30, 2016. Future minimum payments, by year and in the aggregate, under operating leases as of June 30, 2016 are as follows: For years ending December 31 Amount 2016 $ 38,768 2017 91,783 2018 87,633 2019 85,482 Total future minimum lease payments $ 303,666 During the three and six months ended June 30, 2016, the Company recorded aggregate rent expense of $18,564 and $38,838, respectively, and $43,273 and $61,615 (net of sub-lease) during the three and six months ended June 30, 2015, respectively. Employment Agreement On May 9, 2016, the Company entered into an employment agreement (the "Employment Agreement") with Mr. Lalit Dhadphale. The terms of the Employment Agreement include a term of two years beginning on January 1, 2016 with an extension provision, the titles and positions of Chief Executive Officer and President, an initial base salary of $175,000 per year, subject to certain bonus and severance provisions. Mr. Dhadphale's agreement is bound by restrictive covenants regarding disclosure of confidential information, non-solicitation and employee non-competition. Litigation In the ordinary course of business, we may become subject to lawsuits and other claims and proceedings that might arise from litigation matters or regulatory audits. Such matters are subject to uncertainty and outcomes are often not predictable with assurance. Our management does not presently expect that any such matters will have a material adverse effect on the Company's condensed consolidated financial condition or condensed consolidated results of operations. On June 7, 2016, Shipping & Transit LLC filed suit against the Company for infringing on certain claims of patents held by Shipping & Transit. On July 20, 2016, the Company entered into a Settlement, Release and License Agreement whereby the Company paid $11,000 for any past violations and future licensing of the patents. On May 13, 2016, Taft Stettinius & Hollister, LLP (the "Plaintiff") filed a complaint in the Court of Common Pleas for Hamilton County, Ohio against Healthwarehouse.com, Inc. (the "Company"). The complaint alleges that the Plaintiff provided legal services to the Company beginning in April 2011 until January 2015 and billed the Company in the amount of $936,777, and for which the Company has not made payment. The complaint seeks damages against the Company in the amount of $936,777 plus interest. The Company is in the process of investigating such claims and intends to defend the action vigorously. The Company has accounted for this matter in accordance with ASC 450 ("Contingencies").

Concentrations

Concentrations	6 Months Ended
	Jun. 30, 2016
Notes to Financial Statements
8. Concentrations	During the three months ended June 30, 2016, three vendors represented 45%, 19% and 18% of total inventory purchases and 47%, 17% and 16% of total inventory purchases for the six months ended June 30, 2016. During the three months ended June 30, 2015, two vendors represented 69% and 11% of total inventory purchases and of total inventory purchases for the six months ended June 30, 2015. Two vendors represented 41% and 31% of the accounts payable balance as of June 30, 2016. Two vendors represented 43% and 13% of the accounts payable balance as of December 31, 2015.

Subsequent Events

Subsequent Events	6 Months Ended
	Jun. 30, 2016
Notes to Financial Statements
9. Subsequent Events	The Company evaluates events that have occurred after the balance sheet date but before the financial statements are issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the condensed consolidated financial statements, except as disclosed. Stock Option Grants On July 6, 2016, the Company granted options to non-employee directors of the Company to purchase an aggregate of 161,804 shares of common stock under the Company's stock equity plan at an exercise price of $0.35 per share for an aggregate grant date value of $55,550. The options vested on the grant date and have a term of ten years. The options were granted as part of director compensation approved by the Compensation Committee. Stock Options Exercised On July 27, 2016, the Company issued an aggregate of 1,492,078 shares of Common Stock to an officer and the directors of the Company who elected to exercise options to purchase 3,091,475 shares of Common Stock on a cashless basis under the terms of the options. The options had exercise prices ranging from $0.09 to $0.30 per share. Stock Warrants Exercised On July 27, 2016, the Company issued an aggregate of 721,776 shares of Common Stock to an officer of the Company who elected to exercise warrants to purchase 1,125,000 shares of Common Stock on a cashless basis under the terms of the warrants. The warrants had exercise prices ranging from $0.10 to $0.12 per share. Common Stock Issuance On July 28, 2016, the Company entered an Exchange Agreement with Dellave Holdings LLC ("Dellave") whereby the Company issued an aggregate of 2,253,528 shares of Common Stock in exchange for the extinguishment of accounts payable balances totaling $698,594 held by Dellave. The exchange was based on the prior day's closing price of $0.31. Mr. Timothy Reilly is the managing member of Dellave. Mr. Reilly is also the managing member of Melrose Capital Advisors, LLC, the Company's senior lender.

Summary of Significant Accoun15

Summary of Significant Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 2016
Summary Of Significant Accounting Policies Policies
Principles of Consolidation	The condensed consolidated financial statements include the accounts of HealthWarehouse.com, Inc., Hwareh.com, Inc., Hocks.com, Inc., ION Holding NV and ION Belgium NV, its wholly-owned subsidiaries. ION Holding NV and ION Belgium NV are inactive subsidiaries. All material inter-company balances and transactions have been eliminated in consolidation.
Use of Estimates	The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company's significant estimates include reserves related to accounts receivable and inventory, the recoverability and useful lives of long-lived assets, the valuation allowance related to deferred tax assets, the valuation of equity instruments and debt discounts.
Reclassifications	Certain accounts in the prior period condensed consolidated financial statements have been reclassified for comparison purposes to conform to the presentation of the current period condensed consolidated financial statements. These reclassifications had no effect on the previously reported net loss.
Net Earnings (Loss) Per Share of Common Stock	Basic net earnings (loss) per share is computed by dividing net earnings (loss) attributable to Common Stockholders by the weighted average number of common shares outstanding during the period. Diluted net earnings (loss) per share reflects the potential dilution that could occur if securities or other instruments to issue Common Stock were exercised or converted into Common Stock. Potentially dilutive securities are excluded from the computation of diluted net earnings (loss) per share if their inclusion would be anti-dilutive and consist of the following: June 30, 2016 2015 Options 5,109,386 5,008,830 Warrants 10,046,198 9,976,474 Series B Convertible Preferred Stock 5,892,720 5,507,202 Total potentially dilutive shares 21,048,304 20,492,506

Summary of Significant Accoun16

Summary of Significant Accounting Policies (Tables)	6 Months Ended
	Jun. 30, 2016
Summary Of Significant Accounting Policies Tables
Schedule of Potentially Dilutive Securities	June 30, 2016 2015 Options 5,109,386 5,008,830 Warrants 10,046,198 9,976,474 Series B Convertible Preferred Stock 5,892,720 5,507,202 Total potentially dilutive shares 21,048,304 20,492,506

Accrued Expenses and Other Cu17

Accrued Expenses and Other Current Liabilities (Tables)	6 Months Ended
	Jun. 30, 2016
Accrued Expenses And Other Current Liabilities Tables
Accrued expenses and other current liabilities	June 30, December 31, 2016 2015 Deferred Rent $ 12,926 $ 25,852 Advertising 76,639 76,639 Salaries and Benefits 57,437 64,007 Dividend Payable 171,116 319,854 Accrued Interest 44,249 44,249 Accrued Rent 50,495 49,614 Other 15,258 17,450 Total $ 428,120 $ 597,665

Stockholders' Deficiency (Table

Stockholders' Deficiency (Tables)	6 Months Ended
	Jun. 30, 2016
Stock Option [Member]
Schedule of Stock Granted	For The Three Months Ended For The Six Months Ended June 30, June 30, 2016 2015 2016 2015 Risk free interest rate 1.25% 1.35% to 1.85% 1.25% to 2.12% 1.35% to 1.85% Dividend yield 0.00% 0.00% 0.00% 0.00% Expected volatility 200.0% 195.0% 199.0% to 200.0% 195.0% Expected life in years 5.5 5.5 to 10.0 5.5 to 10.0 5.5 to 10.0
Summary of Stock Activity	Weighted Weighted Average Average Remaining Aggregate Number of Exercise Life Intrinsic Options Price In Years Value Outstanding, January 1, 2016 5,341,284 $ 0.70 Granted 267,102 0.26 Exercised - - Forfeited (499,000 ) 1.62 Outstanding, June 30, 2016 5,109,386 $ 0.58 7.5 $ 699,666 Exercisable, June 30, 2016 3,931,053 $ 0.49 7.6 $ 516,200
Summary of Stock Outstanding and Exercisable	Options Outstanding Options Exercisable Weighted Weighted Weighted Range of Average Outstanding Average Average Exercisable Exercise Exercise Number of Exercise Remaining Life Number of Price Price Options Price In Years Options $ 0.09 - $2.20 $ 0.21 4,577,386 $ 0.23 7.8 3,649,053 $ 2.21 - $3.80 3.31 400,000 2.50 3.4 150,000 $ 3.81 - $6.99 5.49 132,000 5.49 5.3 132,000 $ 0.58 5,109,386 $ 0.49 7.6 3,931,053
Warrant [Member]
Schedule of Stock Granted	For The Three Months Ended For The Six Months Ended June 30, June 30, 2016 2015 2016 2015 Risk free interest rate n/a 1.26% to 1.68% 1.58% 1.26% to 1.75% Dividend yield n/a 0.00% 0.00% 0.00% Expected volatility n/a 195.0% to 197.0% 200.0% 195.0% to 197.0% Contractual term in years n/a 5.0 to 7.3 5.0 5.0 to 7.5
Summary of Stock Activity	Weighted Average Average Remaining Aggregate Number of Exercise Life Intrinsic Warrants Price In Years Value Outstanding, January 1, 2016 10,046,198 $ 0.41 Granted 75,000 0.25 Exercised (75,000 ) 0.25 Forfeited - - Outstanding, June 30, 2016 10,046,198 $ 0.40 2.9 $ 512,142 Exercisable, June 30, 2016 9,796,198 $ 0.34 2.9 $ 512,142
Summary of Stock Outstanding and Exercisable	Warrants Outstanding Warrants Exercisable Weighted Weighted Weighted Range of Average Outstanding Average Average Exercisable Exercise Exercise Number of Exercise Remaining Life Number of Price Price Warrants Price In Years Warrants $ 0.10 - $0.35 $ 0.25 9,496,198 $ 0.25 3.0 9,496,198 $ 0.36 - $3.00 2.90 520,000 2.90 0.3 270,000 $ 3.01 - $4.95 4.95 30,000 4.95 1.3 30,000 $ 0.10 - $4.95 $ 0.40 10,046,198 $ 0.34 2.9 9,796,198

Commitments and Contingent Li19

Commitments and Contingent Liabilities (Tables)	6 Months Ended
	Jun. 30, 2016
Commitments And Contingent Liabilities Tables
Summary of future minimum payments under operating leases	For years ending December 31 Amount 2016 $ 38,768 2017 91,783 2018 87,633 2019 85,482 Total future minimum lease payments $ 303,666

Going Concern and Management'20

Going Concern and Management's Liquidity Plans (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Going Concern And Managements Liquidity Plans Details Narrative
Working Capital Deficiency	$ (4,345,064)		$ (4,345,064)
Accumulated deficit	(31,663,634)		(31,663,634)		$ (31,159,401)
Net losses	$ (79,461)	$ (79,681)	(333,118)	$ (280,469)	(626,682)
Net Cash Used in Operating Activities			$ (64,072)	$ (288,043)	$ (548,281)

Summary of Significant Accoun21

Summary of Significant Accounting Policies (Details) - USD ($)	Jun. 30, 2016	Jun. 30, 2015
Summary Of Significant Accounting Policies Details
Options	$ 5,109,386	$ 5,008,830
Warrants	10,046,198	9,976,474
Series B Convertible Preferred Stock	5,892,720	5,507,202
Total potentially dilutive shares	$ 21,048,304	$ 20,492,506

Accrued Expenses and Other Cu22

Accrued Expenses and Other Current Liabilities (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Accrued Expenses And Other Current Liabilities Details
Deferred rent	$ 12,926	$ 25,852
Advertising	76,639	76,639
Salaries and benefits	57,437	64,007
Dividends payable	171,116	319,854
Accrued interest	44,249	44,249
Accrued Rent	50,495	49,614
Other	15,258	17,450
Total	$ 428,120	$ 597,665

Notes Payable (Details Narrativ

Notes Payable (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Interest rate on Senior Note	7.75%		7.75%
Fair value related to warrants	$ 15,500		$ 15,500
Amortization of debt discount	$ 5,167	$ 25,250	8,611	$ 79,767
Lender [Member]
Borrowed loan			$ 1,000,000

Stockholders' Deficiency (Detai

Stockholders' Deficiency (Details) - Stock Option [Member]	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Risk free interest rate	1.25%
Dividend yield	0.00%	0.00%	0.00%	0.00%
Expected volatility	200.00%	195.00%		195.00%
Expected life in years	5 years 6 months
Minimum [Member]
Risk free interest rate		1.35%	1.25%	1.35%
Expected volatility			199.00%
Expected life in years		5 years 6 months	5 years 6 months	5 years 6 months
Maximum [Member]
Risk free interest rate		1.85%	2.12%	1.85%
Expected volatility			200.00%
Expected life in years		10 years	10 years	10 years

Stockholders' Deficiency (Det25

Stockholders' Deficiency (Details 1) - Stock Option [Member]	6 Months Ended
	Jun. 30, 2016USD ($)$ / sharesshares
Number of Options, outstanding
Outstanding, beginning of period (in shares) | shares	5,341,284
Granted | shares	267,102
Exercised | shares
Forfeited | shares	(499,000)
Outstanding, end of period (in shares) | shares	5,109,386
Exercisable, June 30, 2016 | shares	3,931,053
Weighted average exercise price
Outstanding, beginning of period (in dollars per share) | $ / shares	$ 0.70
Granted | $ / shares	0.26
Exercised | $ / shares
Forfeited | $ / shares	1.62
Outstanding, end of period (in dollars per share) | $ / shares	0.58
Exercisable, June 30, 2016 | $ / shares	$ 0.49
Weighted Average Remaining Life In Years
Weighted Average Remaining Life (in years) Outstanding	7 years 6 months
Weighted Average Remaining Life (in years) Exercisable	7 years 7 months 6 days
Aggregate Intrinsic Value
Aggregate Intrinsic Value Outstanding | $	$ 699,666
Aggregate Intrinsic Value Exercisable, June 30, 2016 | $	$ 516,200

Stockholders' Deficiency (Det26

Stockholders' Deficiency (Details 2) - Stock Option [Member] - $ / shares	6 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Weighted Average Exercise Price Outstanding	$ 0.58	$ 0.70
Number Outstanding	5,109,386	5,341,284
Weighted Average Exercise Price Exercisable	$ 0.49
Weighted Average Remaining Years of Contractual Life	7 years 7 months 6 days
Number Exercisable	3,931,053
$0.09 - $2.20
Weighted Average Exercise Price Outstanding	$ 0.21
Number Outstanding	4,577,386
Weighted Average Exercise Price Exercisable	$ 0.23
Weighted Average Remaining Years of Contractual Life	7 years 9 months 18 days
Number Exercisable	3,649,053
$2.21 - $3.80
Weighted Average Exercise Price Outstanding	$ 3.31
Number Outstanding	400,000
Weighted Average Exercise Price Exercisable	$ 2.5
Weighted Average Remaining Years of Contractual Life	3 years 4 months 24 days
Number Exercisable	150,000
$3.81 - $6.99
Weighted Average Exercise Price Outstanding	$ 5.49
Number Outstanding	132,000
Weighted Average Exercise Price Exercisable	$ 5.49
Weighted Average Remaining Years of Contractual Life	5 years 3 months 18 days
Number Exercisable	132,000

Stockholders' Deficiency (Det27

Stockholders' Deficiency (Details 3) - Warrant [Member]	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Risk free interest rate			1.58%
Dividend yield		0.00%	0.00%	0.00%
Expected volatility			200.00%
Contractual term in years			5 years
Minimum [Member]
Risk free interest rate		1.26%		1.26%
Expected volatility		195.00%		195.00%
Contractual term in years		5 years		5 years
Maximum [Member]
Risk free interest rate		1.68%		1.75%
Expected volatility		197.00%		197.00%
Contractual term in years		7 years 3 months 18 days		7 years 6 months

Stockholders' Deficiency (Det28

Stockholders' Deficiency (Details 4) - Warrant [Member]	6 Months Ended
	Jun. 30, 2016USD ($)$ / sharesshares
Number of Warrants, outstanding
Outstanding, beginning of period (in shares) | shares	10,046,198
Granted | shares	75,000
Exercised | shares	(75,000)
Forfeited | shares
Outstanding, end of period (in shares) | shares	10,046,198
Exercisable, June 30, 2016 | shares	9,796,198
Weighted average exercise price
Outstanding, beginning of period (in dollars per share) | $ / shares	$ 0.41
Granted | $ / shares	0.25
Exercised | $ / shares	0.25
Forfeited | $ / shares
Outstanding, end of period (in dollars per share) | $ / shares	0.40
Exercisable, June 30, 2016 | $ / shares	$ 0.34
Weighted Average Remaining Life In Years
Weighted Average Remaining Life (in years) Outstanding	2 years 10 months 24 days
Weighted Average Remaining Life (in years) Exercisable	2 years 10 months 24 days
Aggregate Intrinsic Value
Aggregate Intrinsic Value Outstanding | $	$ 512,142
Aggregate Intrinsic Value Exercisable, June 30, 2016 | $	$ 512,142

Stockholders' Deficiency (Det29

Stockholders' Deficiency (Details 5) - Warrant [Member] - $ / shares	6 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Weighted Average Exercise Price Outstanding	$ 0.40	$ 0.41
Number Outstanding	10,046,198	10,046,198
Weighted Average Exercise Price Exercisable	$ 0.34
Weighted Average Remaining Years of Contractual Life	2 years 10 months 24 days
Number Exercisable	9,796,198
$0.10 - $0.35
Weighted Average Exercise Price Outstanding	$ 0.25
Number Outstanding	9,496,198
Weighted Average Exercise Price Exercisable	$ 0.25
Weighted Average Remaining Years of Contractual Life	3 years
Number Exercisable	9,496,198
$0.36 - $3.00
Weighted Average Exercise Price Outstanding	$ 2.90
Number Outstanding	520,000
Weighted Average Exercise Price Exercisable	$ 2.90
Weighted Average Remaining Years of Contractual Life	3 months 18 days
Number Exercisable	270,000
$3.01 - $4.95
Weighted Average Exercise Price Outstanding	$ 4.95
Number Outstanding	30,000
Weighted Average Exercise Price Exercisable	$ 4.95
Weighted Average Remaining Years of Contractual Life	1 year 3 months 18 days
Number Exercisable	30,000
$0.10 - $4.95
Weighted Average Exercise Price Outstanding	$ 0.40
Number Outstanding	10,046,198
Weighted Average Exercise Price Exercisable	$ 0.34
Weighted Average Remaining Years of Contractual Life	2 years 10 months 24 days
Number Exercisable	9,796,198

Stockholders' Deficiency (Det30

Stockholders' Deficiency (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Stock Option [Member]
Weighted Average Fair Value	$ 0.29	$ 0.09	$ 0.26	$ 0.09
Selling, General And Administrative Expenses	$ 37,301	$ 107,500	$ 112,439	$ 186,289
Stock-based compensation expense, unamortized			969,620
Stock-based compensation expense, amortized			$ 77,751
Weighted Average Remaining Period			1 year 10 months 24 days
Performance based option vesting			$ 891,569
Stock Option [Member] | Minimum [Member]
Weighted average forfeited shares	3.00%	3.00%	3.00%	3.00%
Stock Option [Member] | Maximum [Member]
Weighted average forfeited shares	4.00%	4.00%	4.00%	4.00%
Warrant [Member]
Weighted Average Fair Value		$ 0.09	$ 0.24	$ 0.08
Intrinsic value of the warrants exercised	$ 11,325		$ 11,325
Selling, General And Administrative Expenses		$ 12,063	0	$ 12,279
Stock-based compensation expense, unamortized			576,840
Stock-based compensation expense, amortized			0
Performance based option vesting			$ 576,840
Series B Preferred Stock [Member]
Preferred Stock Contractual Dividends			171,116		319,853
Consultants [Member] | Stock Option [Member]
Common stock purchased			267,102
Aggregate grant date value			$ 68,380
Consultants [Member] | Stock Option [Member] | Minimum [Member]
Weighted Average Fair Value			$ 0.24
Consultants [Member] | Stock Option [Member] | Maximum [Member]
Weighted Average Fair Value			$ 0.29

Commitments and Contingent Li31

Commitments and Contingent Liabilities (Details)	Jun. 30, 2016USD ($)
Commitments And Contingent Liabilities Details
2,016	$ 38,768
2,017	91,783
2,018	87,633
2,019	85,482
Total future minimum lease payments	$ 303,666

Commitments and Contingent Li32

Commitments and Contingent Liabilities (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Commitments And Contingent Liabilities Details Narrative
Deferred rent payable	$ 12,926		$ 12,926		$ 25,852
Accrued expenses and other liabilities	50,495		50,495
Rent Expense	$ 18,564	$ 43,273	$ 38,838	$ 61,615

Concentrations (Details Narrati

Concentrations (Details Narrative)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Dec. 31, 2015
Vendor 1 [Member]
Concentration Inventory Purchases Percentage	45.00%	69.00%	47.00%
Concentration Accounts Payable Percentage	41.00%		41.00%	43.00%
Vendor 2 [Member]
Concentration Inventory Purchases Percentage	19.00%	11.00%	17.00%
Concentration Accounts Payable Percentage	31.00%		31.00%	13.00%
Vendor 3 [Member]
Concentration Inventory Purchases Percentage	18.00%		16.00%