MIT Holding, Inc. - FORM 10-Q

Attached files

file	filename
EX-31.2 - CERTIFICATION - MIT Holding, Inc.	mitd_ex312.htm
EX-31.1 - CERTIFICATION - MIT Holding, Inc.	mitd_ex311.htm
EX-32.2 - CERTIFICATION - MIT Holding, Inc.	mitd_ex322.htm
EX-32.1 - CERTIFICATION - MIT Holding, Inc.	mitd_ex321.htm

United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2011

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

Commission File No: 333-13679

MIT HOLDING, INC.

(Exact name of registrant as specified in its charter)

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

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

(Address of principal executive office) (Zip Code)

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

N/A

Former name, former address and former fiscal year,

(if changed since last report)

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

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

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

Large accelerated filer o

Accelerated filer o

Non-accelerated filer o

(Do not check if a smaller

reporting company)

Smaller reporting company þ

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

The number of shares of common stock, no par value per share, outstanding as of August 17, 2011 was 88,260,811

MIT HOLDING, INC.

FORM 10-Q

QUARTERLY PERIOD ENDED JUNE 30, 2010

INDEX

TABLE OF CONTENTS

		Page
PART I – FINANCIAL INFORMATION

Item 1:	Financial Statements		F-1

Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations		1

Item 3:	Quantitative and Qualitative Disclosures About Market Risk		6

Item 4T:	Controls and Procedures		6

PART II – OTHER INFORMATION

Item 1:	Legal Proceedings		7

Item 1A:	Risk Factors		7

Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds		7

Item 3:	Defaults Upon Senior Securities		7

Item 4:	Removed and Reserved		7

Item 5:	Other Information		7

Item 6:	Exhibits		8

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page

Financial Statements (Unaudited)

Consolidated Balance Sheets as of June 30, 2011 and December 31, 2010		F-2

Consolidated Statements of Operations for the three months ended June 30, 2011 and 2010		F-3

Consolidated Statements of Operations for the six months ended June 30, 2011 and 2010		F-4

Consolidated Statement of Stockholders’ Deficiency for the three months ended June 30, 2011		F-5

Consolidated Statements of Cash Flows for the six months ended June 30, 2011 and 2010		F-6

Notes to Consolidated Financial Statements		F-7 - F-25

F- 1

MIT HOLDING, INC.

CONSOLIDATED BALANCE SHEETS

	June 30, 2011			December 31, 2010
	(Unaudited amd Unreviewed)
ASSETS
CURRENT ASSETS
Cash	$	63,419		$	177,620
Amount due from lender received January 24,2011 (Note F)					50,000
Accounts receivable, net of allowance for doubtful accounts of $528,967 and $508,719 respectively		4,091,939			565,777
Inventories		521,057			201,068
Employee advances		1,500			6,100
Prepaid expenses		58,334			65,000

Total current assets		4,736,249			1,065,565

PROPERTY AND EQUIPMENT, net of accumulated depreciation of $157,923 and $123,373, respectively		1,065,228			13,324

OTHER ASSETS
Contract valuation and notes receivable		16,928,799
Non-compete agreement, net of accumulated amortization of $127,926 and $97,929, respectively		42,077			62,075

Total other assets		16,970,876			52,075

TOTAL ASSETS	$	22,772,353		$	1,140,964

LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	6,236,430		$	2,140,246
Current portion of debt		70,032			111,198

Total current liabilities		6,306,462			2,251,444

LONG-TERM DEBT		14,406,679			814,623

Common stock subject to mandatory redemption 5,000,000 shares issued second quarter 2011		250,000			250,000
Estimated liability for equity-based financial instruments with characteristics of liabilities:
Series A Convertible Preferred Stock (1,796.73 and 1,896.73shares issued and outstanding at June 30, 2011 and December 31, 2009, respectively)		143,738			71,869
Warrants		5,718			817

TOTAL LIABILITIES		21,112,597			3,388,753

STOCKHOLDERS' DEFICIENCY
Preferred stock, $0.000001 par value; 5,000,000 shares authorized, 1,796.73 and 1,896.73 shares issued and outstanding at June 30, 2011 and December 31, 2009, respectively (included in liabilities)		-			-
Common stock, $0.000001 par value; 250,000,000 shares authorized, 57,296,571 and 52,254,571 shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively		52			52
Additional paid-in capital		11,200,052			6,279,362
Accumulated deficit		(9,540,347	)		(8,527,203	)

Total stockholders' (deficiency)		1,659,755			(2,247,789	)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY	$	22,772,353		$	1,140,964

The accompanying notes are an integral part of these statements.

F- 2

MIT HOLDING, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED JUNE 30, 2011 AND 2010

(UNAUDITED AND UNREVIEWED)

	June 30, 2011			June 30, 2010

Revenue

Sales and services rendered	$	6,494,094		$	1,734,579

Cost of medical supplies		4,641,895			687,026

Gross profit		1,852,199			1,047,553

Operating Expenses
Salaries and payroll cost		1.015,130			517,634
Selling, general and administrative		1,079,145			478,074
Provision for doubtful accounts		66,000			-
Depreciation and amortization		22,249			9,999

Total operating expenses		2,182,524			1,005,707

Income (loss) from operations		(330,325	)		41,486

Other income (expense):
Income (expense) from revaluation of equity-based
financial instruments with characteristics of
liabilities at fair values (as restated for 2009- note O)		(41,375	)		295,050
Interest expense		(73,174	)		(81,105	)
Total other income (expense)		(114,549	)		213,945

Income (loss) before provision for income taxes		(444,874	)		255,791

Provision for income taxes		-			-

Net income (loss)		(444,874	)		255,791

Increase in cumulative dividends payable on Series A
Preferred Stock (as restated for 2009- Note O)		(25,655	)		(28,451	)

Net income (loss) attributable to common stockholders	$	(470,529	)	$	227,340	)

Net income (loss) per common share:
Basic and diluted	$	(0.01	)	$	(0.00	)

Weighted average number of common shares outstanding:
Basic and diluted		54,215,349			51,880,349

The accompanying notes are an integral part of these statements.

F- 3

MIT HOLDING, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE SIX MONTHS ENDED JUNE 30, 2011 AND 2010

(UNAUDITED AND UNREVIEWED)

	June 30, 2011			June 30, 2010

Revenue

Sales and services rendered	$	11,578,146		$	3,411,715

Cost of medical supplies		8,419,338			1,395,664

Gross profit		3,158,808			2,016,051

Operating Expenses
Salaries and payroll cost		1,990,850			908,737
Selling, general and administrative		1,853,233			831,217
Provision for doubtful accounts		66,000			-
Depreciation and amortization		44,498			22,998

Total operating expenses		3,954,581			1,762,952

Income (loss) from operations		795,774			253,099

Other income (expense):
Income (expense) from revaluation of equity-based
financial instruments with characteristics of
liabilities at fair values (as restated for 2009- note O)		(76,770	)		(37,119	)
Interest expense		(140,601	)		(161,699	)
Total other income (expense)		(217,371	)		(198,818	)

Income (loss) before provision for income taxes		1,013,144			54,281

Provision for income taxes		-			-

Net income (loss)		(1,013,144	)		54,281

Increase in cumulative dividends payable on Series A
Preferred Stock (as restated for 2009- Note O)		51,310			56,902

Net income (loss) attributable to common stockholders	$	(1,064,454	)	$	(2,621	)

Net income (loss) per common share:
Basic and diluted	$	(0.02	)	$	(0.00	)

Weighted average number of common shares outstanding:
Basic and diluted		54,215,349			51,880,349

The accompanying notes are an integral part of these statements.

F- 4

MIT HOLDING, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIENCY

FOR THE SIX MONTHS ENDED JUNE, 2010

(UNAUDITED AND UNREVIEWED)


	Common Stock, $.000001 par value				Additional Paid-in		Accumulated			Total Stockholders’
	Shares		Amount		Capital		Deficit			(Deficiency)

Balance at December 31, 2010		52,254,571		52	$	6,279,362	$	(8,527,203	)	$	(2,247,789	)

Issuance of common stock for related to Globank Loan		5,000,000		-		-		-			-

Purchase accounting adjustment for acquisition of MITRX				-		4,919,221		-			4,919,221

Issuance of stock for compensation		42,000		-		1,470		-			1,470
Net Income for the nine months
Ended June 30, 2011		-		- -		-		(1,013,,145	)		(1,013,,145	)

Balance at June 30, 2011		57,296.571	$	52	$	11,200,053	$	(9,540,347	)	$	(1,659,755	)

The accompanying notes are an integral part of these statements.

F- 5

MIT HOLDING, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2011 AND 2010

(UNAUDITED AND UNREVIEWED)

	June 30, 2011			June 30, 2010
OPERATING ACTIVITIES
Net income (loss)	$	(1,013,844	)	$	54,281
Adjustments to reconcile net income (loss) to cash provided by (used for) operating activities:
Expense(income) from revaluation of equity-based financial instruments with characteristics of liabilities at fair values (as restated for 2009 - note O)		76,770			37,119
Depreciation and amortization		44,998			22,998
Issuance of common stock for services		-			12,400
Issuance of stock for acquisition		1,470
Provision for doubtful accounts		66,000			-
Amount due from lender		50,000			-
Changes in operating assets and liabilities:
Receivables		(954,258)			114,737
Inventories		179,637			15,179
Prepaid expenses		(3,095	)		(11,014	)
Employee advances		4,600			872
Accounts payable and accrued expenses		1,995,938			92,682

Cash provided by operating activities		88,842			339,254

INVESTING ACTIVITIES
Capital expenditures		(21,037	)	-

Cash used for investing activities		(21,037	)		-

FINANCING ACTIVITIES
Repayment of debt		(202,693	)		(322,004	)

Cash used for financing activities		(202,693	)		(332,004	)

NET INCREASE (DECREASE) IN CASH		(114,251	)		17,250

CASH BALANCE BEGINNING OF PERIOD		177,670			113,596

CASH BALANCE END OF PERIOD	$	63,419		$	130,846

Supplemental Disclosures:
Interest paid	$	252,229		$	161,699
Taxes paid	$	-		$	-

Non- cash Financing Activities:
Conversion of Accounts Payable to Fixed Rate Term Note due to Cardinal Health	$			$	305,728
Conversion of Convertible Preferred Stock to Common Stock	$			$	-

The accompanying notes are an integral part of these statements.

F- 6

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(UNAUDITED AND UNREVIEWED)

NOTE A – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION POLICIES

1. Nature of Operations

MIT Holding, Inc., a Delaware corporation, is a holding company. Through three wholly-owned subsidiaries, MIT distributes wholesale pharmaceuticals, administers intravenous infusions, operates an ambulatory center where therapies are administered and sells and rents home medical equipment.

Medical Infusion Technologies, Inc. was incorporated in November 1991 in the state of Georgia. On July 6, 2006, an agreement and plan of merger was made between MIT Holding, Inc., a Delaware corporation, Medical Infusion Technologies, Inc., and MIT Acquisition A, Inc. By this agreement, MIT Holding, Inc. became the parent company and Medical Infusion Technologies, Inc. and MIT Ambulatory Care Center, Inc., wholly-owned subsidiaries.

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

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

2. Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America.

3. Going Concern

At June 30, 2011, the Company had negative working capital of $1,570,183. From inception, the Company has incurred an accumulated deficit of $9,540,347. These factors raise substantial doubt as to the Company’s ability to continue as a going concern.

F- 7

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(UNAUDITED AND UNREVIEWED)

NOTE A – DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION POLICIES (continued)

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

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

F- 8

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(UNAUDITED AND UNREVIEWED)

NOTE B – INTERIM FINANCIAL STATEMENTS

The unaudited condensed consolidated financial statements as of June 30, 2011 and for the three months and six months ended June 30, 2011 and 2010 have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with instructions to Form 10 - Q. In the opinion of management, the unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position as of June 30, 2011 and the results of operations and cash flows for the three months and six months ended June 30, 2011 and 2010. The financial data and other information disclosed in these notes to the interim financial statements related to these periods are unaudited. The results for the three month period ended June 30, 2011 is not necessarily indicative of the results to be expected for any subsequent quarter of the entire year ending December 31, 2011. The balance sheet at December 31, 2010 has been derived from the audited consolidated financial statements at that date.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the Securities and Exchange Commission’s rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto for the year ended December 31, 2010 included in our Form 10–K filed April 19, 2011.

NOTE C – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. Principles of Consolidation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The accompanying consolidated financial statements include the accounts of MIT Holding, Inc. and Medical Infusion Technologies, Inc. and MIT Ambulatory Care Center, Inc., wholly-owned subsidiaries. All significant inter-company transactions and balances have been eliminated in consolidation.

2. Use of Estimates

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

F- 9

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(UNAUDITED AND UNREVIEWED)

NOTE C – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3. Cash Equivalents

Investments having an original maturity of 90 days or less that are readily convertible into cash are considered cash equivalents. The Company had no cash equivalents as of June 30, 2011.

4. Fair Value of Financial Instruments

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

5. Accounts Receivable, Net of Allowance for Doubtful Accounts

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

6. Inventories

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

7. Property and Equipment

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

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

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

F- 10

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(UNAUDITED AND UNREVIEWED)

NOTE C – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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

8. Long-Lived Assets

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

9. Revenue Recognition

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

10. Stock-Based Compensation

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

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

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

F- 11

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(UNAUDITED AND UNREVIEWED)

NOTE C – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

11. Advertising Costs

Advertising costs are expensed as incurred. Advertising expense totaled $ xxxx for the six months ended June 30, 2011 and $ xxxxx for the six months ended June 30, 2010.

12. Income Taxes

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

13. Net Income (Loss) per Common Share

Basic net income (loss) per common share is computed on the basis of the weighted average number of common shares outstanding during the period.

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

For the six months ended June 30, 2011 and 2009, diluted weighted average number of common shares outstanding exclude 3,593,460 (2009 : 3,793,460) shares issuable on conversion of Series A Preferred Stock, 600,000 shares issuable on exercise of outstanding stock options and 8,418,780 shares issuable on exercise of outstanding warrants.

F- 12

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(UNAUDITED AND UNREVIEWED)

NOTE C – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

14. Reclassifications

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

15. Recent Accounting Pronouncements

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

NOTE D – ACCOUNTS RECEIVABLE

Accounts receivable consist of:

	June 30, 2011			December 31, 2010
Ambulatory care	$	621,396		$	470,545
Infusions		528,032			451,756
Durable medical equipment		147,495			152,198
MITRX		3,323,983
Wholesale		-			-

Total		4,620,906			1,074,496

Allowance for doubtful accounts		(528,967	)		(508,719	)

Net	$	4,091,939		$	565,777

The allowance for doubtful accounts changed as follows:

	Six months ended June 30, 2011			Six months ended June 30,2010
Balance, beginning of year	$	508,719		$	998,149
Provision for doubtful accounts resulting frorm acquisition of MITRX		250,000			-
Provision for doubtful accounts		66,000			1,086,993
Writeoffs		(295,752	)		(495,861	)

Balance, end of period	$	528,968		$	1,589,281

F- 13

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(UNAUDITED AND UNREVIEWED)

NOTE E – INVENTORIES

Inventories consist of:

	June 30, 2011		December 31, 2010
Ambulatory care	$	73,667	$	81,868
Infusions		67,398		63,675
Durable medical equipment		15,674		36,385
MITRX		364,318
Total	$	521,057	$	181,928

NOTE F – NON-COMPETE AGREEMENT

Non-compete agreement consists of:

	June 30, 2011			December 31, 2010
Consideration to seller of Infusion and Ambulatory (and Company's chief operating officer) attributable to non-compete agreement executed May 10, 2005	$	200,000		$	200,000

Accumulated amortization		(157,923	)		(137,925	)

Total	$	42,077		$	62,075

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

F- 14

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(UNAUDITED AND UNREVIEWED)

NOTE G – DEBT

The Company’s debt is as follows:	June 30,		December 31,
	2011		2010
Globank Corp., interest at 14.9% payable monthly commencing January 1, 2001(interest at 60% in 2009 and 2010), due in monthly installments of $1,000 from February 1, 2011 to December 1, 2013 and a balloon payment of $1,002,727 on January 1, 2014, secured by Company assets and guaranties of the Company’s chief executive officer and the Company’s three subsidiaries (less unamortized debt discounts of $410,000 and $0, respectively) MIT’s newly elected Co-Chairman and Co-President, Walter H.C. Drakeford (“Drakeford”) whom is also the Company’s new Chief Financial Officer, Secretary and Director has had a professional relationship with a financing entity in which the president of Globank is involved in.	$	602,727	$	500,000

The Coastal Bank - installment loan, interest at 10%, initially due September 28, 2008, now informally due in monthly installments of principal and interest of $10,000 through April 20, 2011, secured by Company assets and guaranty of the Company’s Chief Executive Officer.		-		35,824

Long term payables due to Smith Drug and Amerisource. These obligations were incurred by the former companies that combined to create MITRX in January of 2011.		16,928,799



Suntrust Bank Fixed Rate Term Note, interest at 10%, due in monthly installments of principal and interest of $7,798 through April 10, 2014, secured by guaranty of the Company’s Chief Executive Officer		226,097		262,097

Note for legal fees,
Total		17,757,623		939,254
Current portion of debt		111,198		939,254
Long – term debt	$	17,646,425	$	-

Maturities of debt at June 30, 2011 are as follows:

Years ending June 30,	Amount
2012	$	73,500
2013		81,197
2014		603,096
2015		16,999,830
	$	17,757,623

F- 15

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(UNAUDITED AND UNREVIEWED)

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

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

	Common
	Shares		Fair
	Equivalent		Value
Series A Convertible Preferred Stock		3,793,460	$	227,608
Warrants		8,168,780		106,194

Total financial instruments		11,962,240	$	333,802

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

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

F- 16

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(UNAUDITED AND UNREVIEWED)

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

The fair values of the financial instruments consisted of:

	June 30, 2011				December 31, 2010
	Common				Common
	Shares		Fair		Shares		Fair
	Equivalent		Value		Equivalent		Value
Series A Convertible Preferred Stock		3,593,460	$	143,738		3,793,460	$	151,738
Warrants		8,168,780		9,803		8,168,780		25,323

Total financial instruments		11,762,240		153,541		11,962,240	$	177,061

Below is a reconciliation of the change in the fair values of the financial instruments from January 1, 2009 through June 30, 2011:

	Common
	Shares			Fair
	Equivalent			Value
Balance, January 1, 2009		11,962,240		$	333,802
Revaluation credited to operations		-			(164,271	)
Balance, March 31, 2009		11,962,240			169,531
Revaluation charged to operations		-			789,139
Balance, June 30, 2009		11,962,240			958,670
Revaluation credited to operations		-			(403,695	)
Balance, September 30, 2009		11,962,240			554,975
Revaluation credited to operations		-			(377,914	)
Balance December 31, 2009		11,962,240			177,061
Revaluation charged to operations					332,169
Balance March 31, 2010		11,962,240			509,230
Revaluation credited to operations		-			(295,050	)
Balance June 30, 2010		11,962,240			214,180
Conversion of Series A Convertible Preferred Stock		(200,000	)		(8,000)
Revaluation credited to operations		-			(52,639	)
Balance September 30, 2010		11,762,240			153,541
Revaluation credited to operations		-			(80,855)
Balance, December 31,2010		11,762,240,			72,686,
Revaluation credited to operations					35,395
Balance, March 31, 2011		11,762,240,			108,081
Revaluation credited to operations Revaluation credited to operations					41,375
Balance, June 30, 2011		11,762,240		$	149,459

F- 17

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(UNAUDITED AND UNREVIEWED)

NOTE I – PREFERRED STOCK

The Company is authorized to issue 5,000,000 shares of Preferred Stock, of which 5,000 shares have been designated Series A Preferred Stock, par value $ 0.000001. As of June 30, 2011, there are 1,796.73 shares of Series A Preferred Stock issued and outstanding. Holders of Series A Preferred Stock are entitled at any time to convert their shares of Series A Preferred Stock into Common Stock, without any further payment Each share of Series A Preferred Stock is initially convertible into 2,000 shares of Common Stock, equivalent to a Conversion Price of $0.50 per share. The number of shares of Common Stock issuable upon conversion of the Series A Preferred Stock is subject to adjustment upon the occurrence of certain events, including, among others, a stock split, reverse stock split or combination of MIT's Common Stock; an issuance of Common Stock or other securities of MIT as a dividend or distribution on the Common Stock; a reclassification, exchange or substitution of the Common Stock; or a capital reorganization of MIT. In the event that MIT issues any additional shares of its Common Stock following the Offering, the Conversion rate will be that number of shares of Common Stock equal to $1,000 divided by the price per share at which MIT issues Common Stock in such offering. At our option, following the effectiveness of a registration statement registering the shares of Common Stock issuable upon the conversion of the Series A Preferred Stock and the exercise of the Warrants, if the price of the Common Stock trades above 300% of the Conversion Price per share during any period of 30 consecutive trading days and the average trading volume is at least 50,000 shares per day, for such 30 day period, each share of Series A Preferred Stock can be automatically converted into Common Stock at the Conversion Rate then in effect.

The liquidation preference amount of each share of Series A Preferred Stock is $1,000, or a total of $1,796,730 for the 1,796.73 shares

issued and outstanding as of June 30, 2011 (December 31, 2009: $1,896,730 for the $1,896.73 shares issued and outstanding).

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

Dividends accrue on the Series A Preferred Stock at the rate of 6% per annum and are cumulative. If and when declared, the Company may pay such dividends in cash or common stock. The cumulative undeclared and unpaid dividends are $361,184 and $295,831 at June 30, 2011 and December 31, 2009, respectively.

NOTE J – ISSUANCE OF COMMON STOCK

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

F- 18

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(UNAUDITED AND UNREVIEWED)

NOTE J – ISSUANCE OF COMMON STOCK (continued)

In the first quarter of 2010, the Board of Directors authorized the issuance of a total of 320,000 shares of common stock to Board Members and key employees valued at a price of $0.04 per share, or $12,400 total. The Company included the $12,400 in selling, general and administrative expenses in the accompanying statement of operations for the six months ended June 30, 2011 and increased common stock and additional paid-in capital by the same amount.

In the third quarter of 2010, a holder of Series A Convertible Preferred Stock elected to convert 100 shares owned into 200,000

Shares of Common Stock.

NOTE K – STOCK OPTIONS AND COMMON STOCK PURCHASE WARRANTS

A summary of stock options and warrants activity for the year ended December 31, 2009 and for the six months ended June 30, 2010 follows:

	Common Shares Equivalent

	Stock Options		Warrants
Outstanding at December 31, 2008		600,000		8,418,780
Granted and issued		-		-
Exercised		-		-
Forfeited/expired/cancelled		-		-

Outstanding at December 31, 2009		600,000		8,418,780
Granted and issued		-		-
Exercised		-		-
Forfeited/expired/cancelled		-		-

Outstanding at June 30, 2011		600,000		8,418,780

F- 19

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(UNAUDITED AND UNREVIEWED)

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

Stock options outstanding at June 30, 2011 and December 31, 2010 are:

Date Granted	Number Outstanding		Number Exercisable		Exercise Price		Expiration Date

May 2, 2007		600,000		600,000	$	0.50	May 2, 2012

Totals		600,000		600,000

Common stock purchase warrants outstanding at June 30, 2011 and December 31, 2010 are:

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

Total:		8,418,780

NOTE L – INCOME TAXES

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

	Six months ended June 30,
	2011			2010
Expected income tax expense (benefit) at 34%	$	(344,099	)	$	18,455
Non-deductible stock-based compensation		-			4,216
Non-deductible expense (non-taxable income)
from revaluation of equity-based financial instruments
with characteristics of liabilities at fair values		(26,102	)		7,373
Change in valuation allowance		3174997			(32,044	)

Provision for income taxes	$	-		$	-

F- 20

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(UNAUDITED AND UNREVIEWED)

NOTE L – INCOME TAXES (continued)

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

	June 30, 2011			December 31, 2010

Allowance for doubtful accounts	$	196,980		$	172,964
Net operating loss carryforward		1,688,159			1,128,039
Total		1,885,139			1,351,003
Less valuation allowance		(1,885,139	)		(1,351,003	)
Net deferred income tax assets	$	-		$	-

Based on management’s present assessment, the Company has not yet determined it to be more likely than not that a deferred income tax asset of up to $1,308,074 attributable to the future utilization of the net operating loss carryforwards and other timing differences of approximately $3,847,276 as of June 30, 2011 will be realized. Accordingly, the Company has maintained its 100% allowance against the deferred tax asset in the financial statements at June 30, 2011. The Company will continue to review this valuation allowance and make adjustments as appropriate. The $3,394,382 net operating loss carryforward expires $1,743,693 in year 2028, $983,226 in year 2029 and $667,463 in year 2030.

NOTE M – OPERATING SEGMENTS

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

	·	Medical Infusion Technologies-“MIT”
	·	MIT International / Provector
	·	Durable Medical Equipment - “DME”
	·	MIT Ambulatory Care Center -“Ambulatory Care”

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

“International / Provector” is the division responsible for the marketing and distribution of Provector on a worldwide basis for international sales only.

F- 21

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(UNAUDITED AND UNREVIEWED)

NOTE M – OPERATING SEGMENTS (continued)

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

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

“MITRX” provides pharmacy services to Long Term Care facilities throughout South Carolina as well as “mail order Prescriptions” to mail order customer.

The following tables show the summarized financial information of the Company’s reportable segments at June 30, 2011 and 2010 and for the six months then ended:

	Medical
	Infusion - MIT		International/ Provector			Ambulatory Care		DME		MITRX			Combined
2011
Revenue	$	1,223,792	$	-		$	1,793,878,	$	187,180	$	8,373,116		$	11,578,146
Income (loss) from operations		71,315		(235,903	)		104,943		9,306		(745,436	)		(795,774	)
Depreciation and amortization		19,999		-			-		-		24,500			44,998
Assets	$	576,977		-		$	532,369	$	132,013		21,548,684		$	22,772,353

2010
Revenue	$	2,162,912	$	-		$	1,046,645	$	202,157		-		$	3,411,714
Income (loss) from operations		142,940		(293,485	)		366,007		37,637		-			253,099
Depreciation and amortization		22,998		-			-		-		-			22,998
Assets	$	646,904	$	-		$	291,255	$	39,527		-		$	997,686

F- 22

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(UNAUDITED AND UNREVIEWED)

NOTE N - COMMITMENTS AND CONTINGENCIES

Employment Agreements

Pursuant to an Employment Agreement with the Company’s chief executive officer effective June 30, 2006 and expiring June 30, 2011, the Company is obligated to pay its chief executive officer a salary of $250,000 per year.

Pursuant to an Employment Agreement with the Company’s chief operating officer effective May 10, 2005, as amended March 14, 2006, April 1, 2006, December 20, 2006, and June 7, 2007, the Company was obligated to pay its chief operating officer a salary of approximately $117,000 per year through May 10, 2010 and on May 10, 2010, cash or common stock, at the option of the Company, equal to the amount (if any) by which $625,000 exceeds the sum of ( i ) the market value of the remainder of the 312,500 unsold shares issued to her on June 7, 2007 and ( ii) the proceeds, if any, received by her from the sale of any of the 312,500 shares. As part of the agreement, the Company’s chief operating officer has agreed not to compete with the Company for a period of three years after the sales of any shares of the Company. This agreement has been verbally extended and amended to defer the $625,000 common stock market value contingent liability of the Company until 2012

Pursuant to an Employment Agreement with the Company’s pharmacist in charge effective May 10, 2005, as amended March 14, 2006, April 1, 2006, December 20, 2006, and June 7, 2007, the Company was obligated to pay its pharmacist in charge a salary of approximately $40,000 per year through May 10, 2010 and, on May 10, 2010, cash or common stock, at the option of the Company, equal to the amount (if any) by which $500,000 exceeds the sum of ( i ) the market value of the remainder of the 250,000 unsold shares issued to him on June 7, 2007 and ( ii) the proceeds, if any, received by him from the sale of any of the 250,000 shares. As part of the agreement, the pharmacist in charge agreed not to compete with the Company for a period of three years after the sales of any shares of the Company. This agreement has been verbally extended and amended to defer the $500,000 common stock market value contingent liability of the Company until 2012.

Lease Agreements

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

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

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

F- 23

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

30, 2011

(UNAUDITED AND UNREVIEWED)

NOTE N - COMMITMENTS AND CONTINGENCIES (continued)

Rent expense incurred under the aforementioned leases totaled $23,694 and $23,465 for the three months ended and $47,182 and $39,490 for the six months ended June 30, 2011 and 2010, respectively.

Stock-Based Compensation Plan

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

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

F- 24

MIT HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(UNAUDITED AND UNREVIEWED)

NOTE O – SUBSEQUENT EVENTS

On August 17, 2011, 30,964,240 common shares were issued by the company that relate to the following items. 26,860,000 shares were issued relating to the acquisition of Palmetto Long Term Care Pharmacy, Inc. and National Direct Home Pharmacy, LLC on February 4, 2011. 700,000 shares were issued to directors of the company as compensation for services provided. 3,404.240 shares were issued to the President of the company as compensation for services provided to the company.

F- 25

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS

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

Overview

Through its subsidiaries, MIT prepares intravenous medication for home infusion by the patient, operates an ambulatory center where intravenous infusions are administered and sells and rents home medical equipment. MIT is based in Savannah, Georgia and operates an ambulatory care center in that area. Although all of the Company’s revenues in 2010 have been derived from providing intravenous therapies and renting home medical equipment in the Savannah area, the Company is developing ProVector© BTi , to kill mosquitoes in the fight to reduce malaria, dengue fever and other infectious diseases transmitted by them. The Company is seeking a grant to fund the production and distribution of the product. In connection with its attempt to obtain this grant, the Company is in discussions with a not-for-profit organization to obtain the grants necessary to be able to deliver Provector to countries in need. However, there is no assurance that funding will be received. If sufficient funding is received, the Company will pursue world wide sales of this malaria fighting product The Company is also providing technical information to foreign governments which are interested in pursuing the Provector as well.

Critical Accounting Policies

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

Our significant accounting policies are summarized in Note A to our financial statements for the six months ended June 30, 2011. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements:

Inventories

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

Revenue Recognition

Sales and services are recorded when products are delivered to the customers. Provision for discounts, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. In instances where products are configured to customer requirements, revenue is recorded upon the successful completion of the Company’s final test procedures. Beginning in the fourth quarter of 2008, the Company began using “mail order drugs” for some expensive drugs to reduce the need for cash in providing certain therapies. In this plan, drugs are shipped to MIT prepaid by the respective insurance companies. The company recognizes revenue for the efforts of pharmacy personnel in formulation and for nurses in the administration of the drugs to our patients as well as supplies used and no revenue or costs associated with the drugs is recorded. This has caused a reduction in revenue and cost of sales and creating an increase in margins.

Advertising Cost

Advertising costs are expensed as incurred.

Estimates

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

Recent Accounting Pronouncements

The impact on the Company’s financial position and results of operations from accounting pronouncements which went effective and were adopted by the Company in the periods presented was not material. The future impact of accounting pronouncements issued by the FASB and other standard setting organizations which are not yet effective and have not yet been adopted by the Company are not expected to be material.

Results of Operations

Comparison of six months ended June 30, 2011 to six months ended June 30, 2010.

Revenues

Consolidated revenues for the six months ended June 30, 2011 were $11,578,146 as compared $3,411,714 for the six months ended June 30, 2010, representing an increase of $8,166,431 representing new revenue from MITRX and a decrease in revenues of $206,684 to $3,205,030 from the prior period. Consolidated cost of sales for the six months ended June 30, 2011 were $8,419,338 or 72.7% of sales as compared to cost of sales for the previous period ended June 30, 2010 of $1,395,664 or 40.9% of sales. This resulted in a gross profit for the period of $3,158,808 or 27.3% as compared to gross profit for the same period in 2010 of $2,016,051 or 59.1%. The increase in gross profit of $1,142,757 for the six months ended June 30, 2011 is due to gross profit of $1,524,722 for MITRX offset by a decrease in gross profit of $381,965 from prior operations. The difference in gross margin as a % of Sales is a result of profit margins in MITRX being substantially lower than that for the prior operations.

Consolidated revenues for the three months ended June 30, 2011 were $6,494,094 as compared to $1,734,579 for the three months ended June 30, 2010, representing an increase of $4,759,515 consisting of $4,788,465 in revenues attributable to MITRX and a decrease in revenues of $28,949 from $1,077,134 in 2010 to $1,016,570 for the same period in 2011. Consolidated cost of sales for the three months ended June 30, 2011 were $4,641,895 or 71.5% of sales as compared to cost of sales for the previous period ended June 30, 2010 of $687,026 or 39.6% of sales. This resulted in a gross profit for the three month period of $1,852,199 or 28.5% as compared to gross profit for the same period in 2010 of $1,047,553 or 60.4%. The gross profit for MITRX operations $895,311 or 18.7% while profit from prior operations was $956,887 of 56.1%

The increase in consolidated revenues for the period reflects the addition of MITRX revenues of $4,788,465 and $8,373,116 of new revenue for the company in 2011 for the three months and six months ended June 30, 2011, respectively.

Continued use of mail order drugs led to little change in sales volume with a continued decrease in cost of sales. The company has not participated in the Wholesale market in recent periods. The company does not anticipate any significant activity in Wholesale in future periods until such times as sufficient operating funds are realized. The lack of operating funds and reduced profit margins in the sale of IVIG has caused the Company to cease its efforts in wholesale sales of pharmaceutical products, both domestically and internationally, and focus more on the medical infusion and ambulatory care operations at its remaining location in Savannah, Georgia. The Company anticipates that it will reenter the wholesale distribution business if it obtains sufficient operating funds and believes that satisfactory profit margins can be achieved, of which there can be no assurance.

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

	·	Medical Infusion Technologies-“MIT”
	·	MIT International-International / Provector
	·	Medical Infusion Tech,DME-“DME”
	·	MIT Ambulatory Care Center-“Ambulatory Care”

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

“International / Provector” is the division responsible for the marketing and distribution of Provector on a worldwide basis for international sales only

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

“Ambulatory Care” administers the intravenous therapies to patients in the Savannah Clinic.

“MITRX” provides pharmacy services to Long Term Care facilities throughout South Carolina as well as “mail order

prescriptions” to mail order customers.

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

For the Six months ended June 30,

	Medical
	Infusion - MIT		International/ Provector			Ambulatory Care		DME		MITRX			Combined
2011
Revenue	$	1,223,792	$	-		$	1,793,878,	$	187,180	$	8,373,116		$	11,578,146
Income (loss) from operations		71,315		(235,903	)		104,943		9,306		(745,436	)		(795,774	)
Depreciation and amortization		19,999		-			-		-		24,500			44,998
Assets	$	576,977		-		$	532,369	$	132,013		15,220,103		$	16,741,371

2010
Revenue	$	2,162,912	$	-		$	1,046,645	$	202,157				$	3,411,714
Income (loss) from operations		142,940		(293,485	)		366,007		37,637					253,099
Depreciation and amortization		22,998		-			-		-					22,998
Assets	$	646,904	$	-		$	291,255	$	39,527				$	997,686

Operating Expenses

●	Operating expenses increased $2,190,541 or 124.3% to $3,953,493 for the six months ended June 30, 2011 from $1,762,952 for the same period in 2010 and income (loss) from operations decreased by $1,047,784 from $253,099 to ($794,685) from 2010. The increase in operating expense is attributable to $ 2,269,069 in Operating expenses from MITRX and a decrease in operating expenses from $1,762,952 in 2010 to $1,684,424 for prior operations.

●	For the six months ended June 30, 2011, payroll expenses were $1,990,850 as compared to $908,737 in 2010, an increase of $1,082,113 or 119.1%, $1,178,439 are attributable to newly acquired MITRX while prior operations showed a decrease of $45,202 from $831,217 in 2010 to $786,015 in 2011. Selling, general and administrative expenses were $1,853,233 as compared to $831,217 in 2010, an increase of $1,02,016 or 123.0% that is attributable to increased consulting expenses, lease costs, postage costs, computer costs. For the six months ended June 30, 2011, we had the following expenses: consulting expenses of $489,985, payroll related costs of $319,516, lease expenses of $199,460, Postage expense of $97,367, telephone xpense of $85,293, travel expense of 73,958 accounting and legal expense of $68,658.

●	For the three months ended June 30, 2011, selling, general and administrative expenses were $1,015,130 as compared to $517,634 in 2010, an increase of $497,496 or 6.1% that is attributable to increases in salaries and wages, consulting costs, lease epense, legal and accounting fees, marketing costs, and postage expense. For the three months ended June 30, 2011, we had the following consulting costs of $244,156, payroll taxes of $220,416, lease costs of $106,174, postage and delivery expense of $79,985, telephone expense of $51,429, travel expense of $44,002, and computer expense of $42,029.

●	Depreciation and amortization increased $21,500 or 93.5% to $44,498 for the six months ended June 30, 2011 as compared to $22,997 for the same period in 2010 and increased $12,250 or 122.5% to $222499 for the three months ended June 30, 2011 as compared to 9,999 for the same period in 2010. The increase was mainly attributable to the newly acquired assets of MITRX..

Operating Income (loss)

Operating income (loss) decreased $1,048,872 or 414.4% to ($795,441) for the six months ended June 30, 2011 from $253,099 for the same period ended June 30, 2010 and decreased $372,1741, or 889%, to ($330,325) from $41,846 for the three months ended June 30, 2010. This is primarily attributable to lower gross margins and higher operating expenses for MITRX as well as lower margins for prior operations in 2010 offset by higher professional fees and payroll costs.

Net income (loss)

Pretax income (loss) decreased $1,067,425 to ($1,013,145) for the six months ended June 30, 2011 from ($54,281) for the same period ended June 30, 2010 and decreased $700,665 to ($444,874) from $255,791 for the three months ended June 30, 2010. This is primarily lower gross margins at MITRX and a minor increase in operating expenses for prior operations.

Liquidity and Capital Resources

As of June 30, 2011, the company had cash of $63,419 as compared to 177,260 at December 31, 2010. For the six months ended June 30, 2011, net cash provided by operating activities aggregated $75,232 as compared to cash provided by operating activities for the six months ended June 30, 2010 of $339,254. As of June 30, 2011, we were funded primarily through operations. The principal financing activities for the six months ended June 30, 2011 consisted of repayment of debt of $135,2748 as compared to $322,004 for the six months ended June 30, 2010.

On August 1, 2008, the Company borrowed $500,000 from Globank, Inc. The loan had interest at the rate of 60% per year, with monthly payments of interest only of $25,000 beginning on September 1, 2008. The loan matured on September 1, 2010 and is secured by all of the assets of the Company. The Globank note was renewed on December 31,2010 with interest at 14.9% payable in three years. The loan is guaranteed by the Company’s chief executive officer and each of the Company’s subsidiaries.

At December 31, 2010, the Company received a going concern opinion from our outside auditors. The Company has no additional lines of credit available at this time. The grant of the security interest in the company’s assets and any failure to pay the loan to Globank when due may adversely our ability to secure additional financing. Globank could declare the loan in default and pursue its remedies, which would adversely affect our operations. The collection of accounts receivable continues to be slower than management would prefer. Our inability to achieve sufficient collections on our receivables has created a liquidity challenge that raises doubt about our ability to continue as a going concern. The development of ProVector TM has produced interest from outside parties to provide funds and enable the Company to make the product available to the market in late 2010 should adequate financing be obtained. The Company is actively promoting the viability of the ProVector TM .to entities that could provide working capital and provide means to distribute the ProVector TM; however, there are no assurances that such third parties will provide the funding or that alternate funding can be obtained on acceptable terms.

Litigation

We are subject from time to time to litigation relating to the activities of our business and in the marketplace which it serves. As of June 30, 2011, we were not engaged in any litigation.

Off-Balance Sheet Arrangements

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4T. CONTROLS AND PROCEDURES

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

Changes in Internal Control Over Financial Reporting. During the most recent quarter ended June 30, 2011, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

INFLATION

Inflation has not had a material impact on our business.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 1A. RISK FACTORS

NOT APPLICABLE.

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

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. REMOVED AND RESERVED.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

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

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

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

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

SIGNATURE

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

	MIT HOLDING, INC.

DATE: August 22, 2011	By:	/s/ William C Parker
		William C. Parker,Chief Executive Officer
		(principal executive officer)



		/s/ Walter H. C. Drakeford
		Walter H. C. Drakeford, the Principal Financial Officer
		(principal financial officer)

MIT Holding, Inc. - FORM 10-Q - August 22, 2011

Attached files

MIT Holding, Inc. Reports