On November 8, 2008, we entered into an Agreement and Plan of Merger and Reorganization, or the Merger Agreement, with our wholly-owned subsidiary Montana Merger Sub, Inc., or the Merger Sub, a Delaware corporation, and MMR, pursuant to which Merger Sub would merge with and into MyMedicalRecords.com, Inc. ("MMR"), a private company formed in January 19, 2005, whose primary purpose was to create a Personal Health Record product with a telecommunications backbone and infrastructure, with MMR continuing as the surviving corporation and a wholly-owned subsidiary of our company. We refer to this transaction, which closed on January 27, 2009 and which became effective on February 9, 2009, as the Merger. Following the Merger, the holders of MMR equity prior to the Merger, on a fully diluted basis, owned or had the right to acquire approximately 60.3% of our equity, the holders of our equity prior to the Merger, on a fully diluted basis, owned approximately 33.2% of our equity, and certain beneficiaries under the Creditor Plan (which consist of our former officers and former directors and their affiliates) had the right to own up to approximately 6.5% of our equity. The Creditor Plan is described in Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" and filed as Exhibit 10.1on our report on Form 8-K filed on November 13, 2008.

As a result of the Merger in January 2009, MMR became our wholly-owned subsidiary and its legal name became MyMedicalRecords, Inc. Although we are the legal acquirer, the Merger is accounted for as a reverse acquisition in accordance with U.S. generally accepted accounting principles, or GAAP. Under this method of accounting, Favrille was treated as the "acquired" company for financial reporting purposes. This determination was primarily based on: the fact that MMR's former shareholders held a majority of the equity of the consolidated company, MMR's operations comprise the ongoing operations of the consolidated entity, and MMR's senior management and director designees assumed control of the consolidated company.

In addition, upon the closing of the Merger on January 27, 2009, MMR became our wholly-owned operating subsidiary and we ceased being a "shell company" as such term is defined in Rule 12b-2 of the Exchange Act.

On February 9, 2009, and in connection with the Merger, the Company changed its legal entity name from Favrille, Inc. to MMRGlobal, Inc. Subsequently, on June 16, 2010, the Company changed its legal entity name to MMRGlobal, Inc., which we believe more accurately reflects the nature of our operations.

On March 8, 2011 we formed a subsidiary, which we named MMR Life Sciences Group, Inc., exclusively to maximize the value of our biotech assets including the company's anti-CD 20 antibodies and related FavID™ vaccine technologies acquired by MyMedicalRecords, Inc. through the merger with Favrille. As of this date the assets have not been transferred to the subsidiary but we are in the process to do so.

As of the closing date of the Merger, we adopted MMR's business of empowering consumers to manage their Personal Health Records and other important documents, whether paper-based or digital, and by doing so, to better control and organize their lives overall. Starting in 2005, MMR filed patents for a universal Personal Health Record ("PHR") that could be used by any person or any healthcare professional anywhere in the world regardless of the technology on the other end. The patents are entitled "Methods and System for Providing Online Medical Records" and `"Methods and System for Providing Online Records." Today, we provide patented secure online storage and document management solutions for Personal Health Records and other important documents such as insurance policies, driver's license, IDs, passports, estate planning documents, advance directives, photos, as well as legal and travel documents among others.

The Company expanded its operations and added a line of document storage and management solutions for healthcare professionals, designed to eliminate paper, allow them to operate without dramatically changing the way a medical office operates and allow them to store and share health records with their patients on a real-time basis.

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We are also in the business of licensing our intellectual property which is comprised of biotech assets including patents, patient samples, anti-CD20 antibodies and others intellectual property as well as a portfolio of patents pertaining to health information technology. As a result of these licensing activities, we have signed Licensing Agreements for more than $40 million to date. More than $15 million of it pertains to biotech and $30 million to the Settlement and Patent License Agreement with Surgery Center Management, LLC, which is discussed in further detail in the "Customers" section.

The following description of our business relates to our current business and operations.

We offer a suite of secure, online products that empower consumers and professionals alike to manage medical records and other important documents in their life and business, whether paper-based or digital. These online products include: (i) Our Patented MyMedicalRecords.com, an on-line Personal Health Record (PHR) secure system for the entire family including pets; (ii) Our Patented MyEsafeDepositBox, an on-line secure document storage system; (iii) Our Patented MMRPro, an integrated scanning and web-based document management solution for medical providers; and (iv) numerous private label PHR and MyEsafeDepositBox storage solutions including MyBlueButton.com for veterans to upload their health information from their HealtheVet account into an MMR account, NRAeSafe, Chartis Insurance, MedicAlert, E-Mail Frequency LLC and others. Through our product offerings, we are part of a growing trend in which people are increasingly trusting on-line services as a way for them to store and manage critical, sensitive information such as medical records, financial records and vital documents.

In late 2009, we released our electronic document storage and management system for healthcare professionals, particularly small to mid-size physician practices that are still largely or entirely paper-based, Our professional solution, which we refer to as MMRPRo, incorporates an integrated patient portal accessible through www.mmrpatientview.com in response to the need to provide patients with timely access to their medical records. In 2010 we added the MMR Stimulus Program to the MMRPro product offerings which helps healthcare professionals recoup some or all of the cost of managing patient's Personal Health Records. Videos on our products can be found at www.mmrtheatre.com. The Company's television commercials can be viewed at www.mmrontv.com.

We also continue efforts to maximize the current and future value, of the intellectual property that we acquired from Favrille when the Merger was completed in January 2009 as well as the various health IT patents the Company has in several stages from applied-for to issued. These assets include, but are not limited to the exploitation and licensing of, patents, data and samples from the Company's pre-Merger clinical vaccine trials, the FavId™/Specifid™ vaccine, the anti-CD20 antibodies, and the licensing of the Company's biotech and Health IT Patents which include more than 186 additional pending claims and which have the potential effect of enabling the Company to control a dominant marketplace position in personal healthcare.

Our suite of secure, web-based products all are built on proprietary, patented and patent-pending technologies that allow users to easily store, organize, retrieve and share information in a timely and secure manner from anywhere in the world.

Our consumer product, "MyMedicalRecords," is an easy-to-use, secure web-based Personal Health Record system, or PHR, which allows documents, images and voice mail messages to be transmitted in and out of our system using a variety of methods, including fax, voice and file upload and doesn't need to rely on any specific electronic medical records (EMR) platform to maintain medical records. Our platform converts documents it receives by fax into PDF files. Using encryption technology, the system receives these files, as well as voice files and any other uploaded files including data exported from Telemedicine systems, which are all stored in the consumer's personal account secured by a unique user ID and multiple password combination. A notification is sent to up to three user e-mail addresses (including text-enabled cell and smartphones) whenever a new record is received. Users can then access their files via the Internet and take advantage of an intuitive, customized filing system that allows them to categorize, annotate and file their records for easy access, organization and retrieval. Users can also print, download, e-mail or fax their records from their account, giving our customers greater control over their own Personal Health Records and other information, which they can share with healthcare providers and others as they move through the continuum of care.

We are currently selling our MyMedicalRecords PHR product direct to consumers, to corporations as an employee benefit, physicians, small hospitals, surgery centers and other healthcare professionals including veterinarians, and to affinity organizations as a "value-added" service for their members or clients. We recently introduced a Prepaid Personal Health Record Card which the Company plans on offering through retailers. We also sell to insurance companies and plan to sell through financial services organizations in the future. The PHR is offered both via the MyMedicalRecords web site and as a private-labeled product. When sold to employers and/or affinity groups the Company counts members as individuals who have received paid access to the MMR system through their employers benefit program or as a member benefit from a respective affinity group. The Company counts users as the individuals in that member group that activate and commence usage of their individual PHR account. In addition, the MyMedicalRecords PHR is an important component of the MMRPro professional document management and imaging system which we are selling to physician offices and other healthcare professionals (See section on "MMRPro").

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Our "MyEsafeDepositBox" service is geared toward small businesses, the financial services, insurance and legal service industries. MyEsafeDepositBox is based on the same technology and architecture as our MyMedicalRecords PHR product. However, rather than focusing on storing medical records, MyEsafeDepositBox is designed to provide secure on-line storage for medical records and vital financial, legal and insurance documents such as wills and advanced directives. MyEsafeDepositBox.com may be used as a virtual on- line "safe" and could serve as an essential part of any household's or business's disaster preparedness plan.

In September 2009, we introduced our MMRPro product which provides physician offices with a powerful and cost-effective solution to the costly and time-consuming challenge of digitizing paper-based medical records, as well as providing doctors the ability to have access to those records through a private portal at MyMedicalRecordsMD.com (go to MMRPro.com for more information). MMRPro also features an integrated e-Prescribe automated drug order entry system. It also automatically deploys records that patients can view and print out through a free patient portal, MMRPatientView.com. MMRPro also includes a "stimulus program" that allows doctors the opportunity to earn administrative reimbursements when their patients upgrade from the free MMRPatientView.com portal to a full-featured, paid MyMedicalRecords PHR.

We recognize the critical nature of managing an individual's health information requires that our products and advances be implemented with the utmost care to protect the privacy and confidentiality of our customers' data. The Health Insurance Portability and Accountability Act of 1996, commonly referred to as HIPAA, requires covered entities to protect the privacy and confidentiality of the protected health information, or PHI, of their patients and customers. Although we are not a covered entity (as that term is defined in HIPAA), we consider it important to take into account the Privacy and Security Standards and other requirements of HIPAA when implementing our products and services and believe that we meet and/or exceed current HIPAA standards.

The Health Information Technology for Economic and Clinical Health Act, commonly referred to as HITECH, enacted on February 17, 2009 as part of the American Recovery and Reinvestment Act, expanded HIPAA's reach beyond that of just covered entities. Now, business associates, defined as an entity that performs a function, activity, or service on behalf of a covered entity and that requires use or access to the PHI of the covered entity, and vendors of Personal Health Records that use or access PHI, must also comply with the HIPAA's Security Standards and many of HIPAA's Privacy Standards.

As a vendor of PHRs, we are implementing policies and procedures, and reviewing our relationships with all necessary parties, to ensure our compliance with HITECH and its associated regulations. MMR is not a business associate under HIPAA's three-prong test. While MMR would not be considered part of a covered entity's workforce (the first prong). Similarly, the Company would not meet the second prong of the test because the Company does not "perform a service on behalf of a covered entity" -since the beneficiary of the PHR is the patient, not the covered entity, and the covered entity has no obligation to maintain PHRs on its patients - only medical records.

Nonetheless, MMR is re-examining its policies and procedures and reviewing its relationships with all necessary parties to ensure compliance with HITECH and its associated regulations, much like MMR's efforts have been with regards to HIPAA and its regulations. One of the primary goals of HITECH is to ensure that individuals are notified when there has been (or there is a strong possibility of) a breach of the individual's PHI - a requirement that MMR recognizes and fully supports.

We plan to continue to take advantage of the burgeoning consumer health information market and leverage federal legislation, including the HITECH Act. We believe that the healthcare reform legislation passed by Congress and signed by the President into law in March 2010 (Patient Protection and Affordable Care Act) could represent a significant behavioral shift in how consumers will manage their healthcare because of the requirement that most everyone have insurance. The U.S. Supreme Court is scheduled to hear oral arguments challenging the law during the last week of March 2012. Even with the future of the insurance mandate uncertain, we believe health IT, a largely bipartisan issue, will continue to expand to make Personal Health Records an essential part of patients' lives as a result of the ever present need to achieve cost savings and improved health outcomes. Modernizing the healthcare system also has significant implications for physicians and other healthcare providers and we expect that as these physicians and healthcare providers look for cost-efficient ways to digitize their patient records, MMRPro will gain continued awareness and acceptance among the medical provider community. We also believe that as medical costs and insurance costs increase, and benefits decrease, healthcare consumers will require greater control over their personal (and their family's) health and health information.

Our MyMedicalRecords PHR product is designed to enable consumers to store their important medical records and data in one central and secure place where they can manage those records and control how they are accessed and shared. The market for the Company's products is significant. While every healthcare consumer in the U.S., as well as those in other countries, interested in managing their family's health using health information technology, are potential users of our MyMedicalRecords PHR product, we believe that the product has most appeal to these particular market niches:

• The chronically ill and their families who share information among many doctors; this "co-morbid population" represents a disproportionate share of U.S. healthcare costs;
• Physicians who are being required to provide patients with timely electronic access to their personal health information;
• Individuals with Health Savings Accounts who need to carefully manage their eligible expenses over the course of a year;

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• Consumers with "senior" parents who, in their role as caregivers, want to be sure they have current medical information readily available to react quickly in case of parental illness;
• Consumers with newborns who will be able to build a complete medical file for the newborn, which can last the newborn's entire life;
• Employees who are forced to change doctors and other providers when their employer changes health insurance and who therefore need to manage the transfer to medical information to their new providers;
• Consumers who are concerned with having their Personal Health Records and other important documents in a disaster or other emergency;
• Travelers and businesspeople working overseas who want to ensure that they always have access to their medical records in the event of an emergency; Hospitals required to provide patients discharge summary and procedures electronically;
• Home healthcare professionals who want to use technology, particularly PHRs, to maintain and share patient records and support practical daily management issues;
• Wireless providers who are seeing smartphones increasingly used as a hub for remote patient monitoring devices that can export data to PHRs to improve coordination of care in the patient-centered medical home;
• Corporations seeking to offer their employees a valuable benefit, e.g. companies implementing workforce wellness programs and those with expatriate employees would be particularly interested in our product;
• Pharmacists who are unable to spend more time counseling consumers due to time constraints and see PHRs as a way to help bridge the gap; and Government agencies, local, state and federal, who are seeking to provide a quick way to deploy a solution for helping families and businesses preserve their vital documents in the event of a man-made or natural disaster

Because of the similarity in functionality between our MyMedicalRecords PHR product and our MyEsafeDepositBox product, we market these products through some of the same channels. The crossover marketing strategy for our MyMedicalRecords PHR product and MyEsafeDepositBox product(s) focuses primarily on the following channels:

• To corporate accounts, as an added employee benefit for their employees or bundled or co-branded with their product offerings to their customers;
• To insurance companies who are looking for a valuable benefit to provide risk and accident policyholders both in the United States and abroad;
• Through affinity groups (such as alumni organizations and other membership organizations) and discount health benefit membership groups to their members; and
• Direct to consumers as a retail subscription product.

Our MMRPro product is an integrated, end-to-end service that gives physicians and other healthcare providers, an easy and cost-effective way to scan and digitize patient medical files, manage those files through a virtual patient chart and give patients up-to-date access to those records through an integrated patient portal. MMRPro is being marketed to:

• Physicians, particularly small group and sole practitioners who still do not have any way to digitize the paper in their offices and who do not want to invest the hundreds of thousands of dollars necessary to implement an Electronic Medical Record, or EMR, system;
• Community hospitals and other clinics which do not have the funds or technology resources to invest in an EMR system;
• Surgery centers and specialty clinics; and
• EMR and EHR vendors who are looking for a way to bring a Personal Health Record into their systems without having to build their own import modules.

The Company is an Independent Software Vendor of Kodak, which manufactures the scanner and scanning software used in the MMRPro system. As a result, MMR utilizes resources of Kodak distribution channels to sell this product into doctor offices nationwide. The Company has also announced that it is entering into a similar agreement with Fujitsu to provide hardware and software solutions to deploy its professional products and services.

The Company was one of the first Integrated Service Providers on Google Health, which discontinued services effective January 2, 2012 but is allowing existing users to access and migrate their data up until January 1, 2013, however in 2011 we signed an agreement with Microsoft® HealthVault™ and are planning to integrate our services with their platform during 2012.

We continue to work with scientists and experienced venture capitalists and consultants to assist us in generating revenue through licensing agreements as would be usual and customary in the biotech industry and which could include milestone payments as the term is generally used in the industry. We will also explore partnerships with manufacturers and or investors of and in Biotech products and services. These are assets and other intellectual property that we acquired from our reverse merger with Favrille. Those assets include, but are not limited to, data from our pre-Merger clinical vaccine trials, the FavId™/Specifid™ vaccine, the anti-20 antibodies and certain patient samples.

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Beginning in June 2009, we filed various national phase filings from the Patent Cooperation Treaty (PCT) patent application directed to anti-CD20 monoclonal antibody assets. National phase filings are pending in major European, Asian, North American, and South American markets, including in the United States, Australia, Brazil, Canada, China, Hong Kong, Europe, India, Japan, South Korea and Mexico.

The Company has relied upon numerous consultants in its efforts to accelerate bringing to market its anti-CD20 monoclonal antibodies. Anti-CD20 antibodies are useful in treating B-Cell malignancies, including Non-Hodgkin Lymphoma (NHL) and additional B-Cell mediated conditions such as rheumatoid arthritis. The Company understands the anti-CD20 antibody assets are potential candidates for the next generation of a Rituximab-type therapy. Rituximab is marketed under the trade name Rituxan® in the United States by Biogen Idec and Genentech (wholly owned member of the Roche Group) and under the name MabThera® by Roche in the rest of the world except Japan, where it is co-marketed by Chugai and Zenyaku Kogyo Co. Ltd. Rituxan® is one of the world's most successful monoclonal antibodies with US $6.6 billion reported total sales in 2010.

On December 22, 2010, the company entered into a non-exclusive agreement with Celgene to license the use of the Company's clinical and scientific data related to targeted immunotherapies for cancer and other disease treatments to stimulate a patient's immune response and certain other confidential information. In consideration for the rights granted under the Agreement, Celgene agreed to pay the Company certain upfront fees and development milestones. When a milestone is reached it automatically triggers a payment to MMR.

Our MyMedicalRecords PHR product, principally accessible at www.mymedicalrecords.com, delivers an easy-to-use, web-based medical records and health information storage, retrieval and management system for consumers. Our MyMedicalRecords PHR product allows for paper-based medical records such as lab reports, radiology reports, MRI reports and progress notes to be transmitted via fax to a secure mailbox that is created when a user enrolls in the service. Our MyMedicalRecords PHR product is designed to allow a user to fax his or her health records or other vital documents into a personal MyMedicalRecords PHR account via a dedicated telephone number, which we refer to as the user's "Lifeline." This unique telephone number is assigned to the user upon enrollment. A user can also upload digital files, such as x-rays, scans or other medical images, as well as other vital documents into his or her account directly from a personal computer through any Internet browser. In addition, the MyMedicalRecords PHR accepts voice messages.

Our MyMedicalRecords PHR product is bilingual in English and Spanish and allows users to store and segregate information for up to 10 family members in a single account. It is a patient-controlled Personal Health Record that provides portability for the user, which means our MyMedicalRecords PHR can stay with the individual through changes in doctors, jobs and insurers.

The MyMedicalRecords PHR takes advantage of the one piece of equipment found in virtually every doctor's office-a fax machine. Healthcare providers can transmit documents to a patient's MyMedicalRecords PHR mailbox without making any changes to existing patient or practice management software. Our MyMedicalRecords PHR product can be used to provide secure storage for a variety of important confidential records, including:

• Patient charts, notes, and medical histories;
• Vaccination and immunization records;
• Lab reports and test results, including any images (or, if offered by a laboratory, links that the user can use to access the laboratory's stored images);
• Copies of prescription orders;
• X-ray results and images (either the actual images or, if offered by a radiology provider, links that the user can use to access the provider's stored images);
• EKG results and images (either the actual images or, if offered by an imaging provider, links that the user can use to access the provider's stored images);
• Birth certificates, living wills, healthcare powers of attorney and advance directives.
• Lab report and pharmacy records through 4medica; and
• Telemedicine data through ng Connect

In addition, users can store important legal, insurance and financial documents, as well as copies of identification documents such as passports and driver's license in their MyMedicalRecords PHR account.

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Most providers, regardless of size, rely on fax to move medical records. In fact the average physician receives more than 1,000 faxed pages per month even if they have an EMR or other electronic system. We have based our service on the efficient and effective conversion of faxed documents, uploaded documents, voice files and, more recently, telemedicine, pharmacy and laboratory data. We convert fax into encrypted Portable Document Format, or PDF files using proprietary patented technology. Users are then able to annotate and file these records using a simple, intuitive, on-line document management system. At the same time, users can upload records into their account and organize them using the same file management system as is used for faxed documents. Records can be shared by downloading and sending them from the user's e-mail or transmitted using the system's integrated outbound fax capability.

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• Upon enrollment, we send every user a Welcome Kit containing a set of stickers to be placed on their medical files at the doctors' offices that authorizes doctors to fax information into the MyMedicalRecords PHR, as well as a sticker for the back of a driver's license, which contains a special Physician Emergency Log in password that will allow access to user information in the event of a medical emergency.
• When our MyMedicalRecords PHR system receives a document by fax transmission, it converts it into a PDF file and, using secure File Transfer Protocol transmission, or FTP, deposits it in the user's account on a secure server.
• When a faxed record or voice mail is received via the user's personal Lifeline number, our MyMedicalRecords PHR system sends a notification message to up to three e-mail addresses (including smartphones or tablets) provided by the user to inform the user that a new document or voice message has arrived in his or her account.
• The user then accesses the web site, www.mymedicalrecords.com, and logs in using their unique ID (Lifeline number or a User ID that they create) and password. Users are able to view their faxed records using any PDF reader software, which can be downloaded from the Internet free of charge.
• Our MyMedicalRecords PHR product allows users to store, organize, and sort records by doctor, date, type of medical record, and, in the event multiple family members have enrolled in the service, by family member. Users also can annotate their filed records with free-form notes and then use a search feature to find any record containing a specific word or phrase.
• The user can also upload images, such as x-rays or EKG results directly into his or her MyMedicalRecords PHR account and can view these images using an Internet browser or other graphics software. Health information stored in the user's MyMedicalRecords PHR account can also be printed, downloaded and e-mailed from the user's e-mail so the user can easily share it with any provider who may be involved in the treatment of his or her medical condition.
• Users also have the ability to fax records out of their MyMedicalRecords PHR account using an integrated Internet fax service. This feature gives users the ability to easily share information with multiple providers with the privacy of web-based faxing that doesn't require them to print out documents and then place them in a physical fax machine. This feature also transforms the PHR into an integrated fax messaging service, which the Company believes provides a significant competitive advantage over other PHRs.

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We sell our MyMedicalRecords PHR product direct to consumers on a monthly and annual subscription basis. We use the Internet as a distribution channel where consumers can enroll in our service online. We are in the process of establishing a distribution channel through retail where consumers will be able to purchase a Prepaid Personal Health Record card at a retail store and write their emergency password on the back of the card.

The prepaid retail card will be manufactured as a high quality credit-card style. The package surrounding it will provide information on the PHR service to encourage both initial purchase and then active use. Because the prepaid card is high quality, emergency personnel will be able to find it in a user's wallet in the event of a medical emergency, thus reinforcing the special Emergency Log in feature of the MMR product. The Company plans to have a magnetic stripe on the back of the card as well, which will allow us to offer the prepaid product in conjunction with pharmacy or store loyalty programs.

Current direct to consumer pricing for our MyMedicalRecords PHR product for a family that permits storing information for up to 10 people is $99.95 for an annual subscription or $9.95 for a monthly subscription when purchased over the Internet. We also occasionally offer free trials and discounted pricing as a way to incentivize consumer acceptance of our MyMedicalRecords PHR product. The retail price point may be different than what the product is being sold for on the Internet.

For special key account programs, such as healthcare providers that would like to make the service available to patients, corporations who want to offer the service as a benefit to employees, insurance companies who offer this to policyholders, or affinity groups and other organizations who want to offer the service to their members, we provide different access-based pricing plans, which vary based on the number of people in the organization and the expected use of the product across the organization's members. For large corporate or key accounts, we co-brand or private label our site. Some examples of private label sites include:

• MedicAlert Gold, www.medicalert.org. MedicAlert licenses our technology to create a product that they sell to their subscribers who want to be able to manage their medical records. For more information go to http://www.medicalert.org/medicalert-membership/additional-services/online-medical-record-repository.htm?selected=Membership+Services_Add+On+Services_Document+Storage
• Chartis Insurance, www.chartisinsurance.com/mmr. The worldwide insurance company offers our MyMedicalRecords PHR service to its Global, Marine & Energy casualty policyholders.
• The National Rifle Association, www.nraesafe.com. The NRA private labels our MyEsafeDepositBox product as a value- added member benefit, consistent with their theme of security and preparedness.

In the first quarter of 2012, during the Consumer Electronics Show ("CES") and the Healthcare Information and Management Systems Society Conference ("HIMSS") in Las Vegas, we unveiled a Prepaid Personal Health Record card which will be offered at retail stores such as supermarkets and drug stores throughout the United States and will be redeemable for a Personal Health Record account on the MyMedicalRecords.com platform. In addition, we will begin offering personalized Prepaid Personal Health Record cards for physicians and hospitals. Instead of leaving the doctor's office with an appointment reminder card, healthcare professionals can hand out a Personal Health Record access card which gives their patients the ability to create and manage a comprehensive online Personal Health Record. The system also includes a document management system, a MyEsafeDepositBox, the ability to send records by outbound fax, prescription drug database and the ability to generate appointment and prescription reminders. Additionally, the cards can be custom designed so that hospitals and medical offices can use them as a cost-effective incentive to patients and outpatients to better manage their health and reinforce where they receive their care. The prepaid PHR card is actually a physician's business card with a purpose. By placing access to a full-featured PHR at the point of care, the cards call attention to the importance of having a Personal Health Record which can improve care, reduce costs and even make the difference in saving a patient's life.

Our MyMedicalRecords PHR product offers users multiple ways to enter their personal medical information, including by fax, voice or digital file upload as well as through customized web service links. We believe this integrated capability makes our MyMedicalRecords PHR product easier to use and more accessible to potential customers and healthcare professionals. This gives us a unique competitive advantage in the marketplace and creates a barrier to competitive entry. In addition to the core document conversion, storage and retrieval capabilities, our MyMedicalRecords PHR product provides a layer of useful, value-added interactive tools to help users better manage their personal and/or their families' medical records. These tools include:

• Ability to Attach Received Faxes to e-mail Notifications. Users can elect to have records attached to the notification e-mail they receive when a new medical record is received into their account. This capability is intended to save users the extra step of logging into their account to view new records, which we believe creates a higher level of convenience and usability.
• Health History. Users can enter their personal health history, including information about doctors (such as a doctor's name, address and specialty), vaccinations and immunizations, hospitalizations/surgeries, allergies and other medical conditions that may affect ongoing healthcare.

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• Appointment Calendar Feature. Users are able to take advantage of a calendar feature to schedule and generate reminders about upcoming doctor and other health-related appointments. These reminders appear when a user logs into his or her MyMedicalRecords PHR account and also can be sent to the user's e-mail address (or e-mail enabled cell phone) and imported into Microsoft Outlook.
• Prescription History and Refill Reminder Feature. Users are able to enter their prescriptions, pharmacies and refill dates into their MyMedicalRecords PHR accounts. The system generates reminders about refills, which are visible to users when they log into their accounts and are sent to their e-mail addresses (or e-mail enabled cell phone).
• Drug Information and Interaction Database. Users can check for potential interactions across multiple prescriptions and over the counter drugs with this comprehensive database, licensed from Multum. When each user adds a new drug to their MMR PHR prescription history, they can quickly determine if that medication has any kind of negative interaction with other prescriptions they take. This tool is especially vital because drug interactions kill as many as 100,000 Americans each year and consumers who see multiple providers are especially at risk.
• Voice Reminders and Messaging. We have created our MyMedicalRecords PHR product to promote more efficient communication between doctors and patients. In addition to using a patient's personal MyMedicalRecords PHR telephone number to fax health information to a patient's secure on-line account, people can use the telephone number to leave a voice message, such as an appointment reminder, in a secure voice mailbox that is only accessible by the MyMedicalRecords PHR user. Users can also take advantage of this feature to leave themselves a reminder message such as for a doctor appointment or prescription refill reminder. Our MyMedicalRecords PHR product is designed to send a user a notification via e-mail when he or she receives a voice message. This gives users a helpful tool that they can access remotely.
• Secondary Passwords on Selected File Folders. Users can assign a second password to four of the file folders in their MyMedicalRecords PHR account. This feature creates an additional layer of security for personal vital or medical documents that a MyMedicalRecords PHR user does not want a doctor to have access to in the event that the user has given the doctor access to the account, or if the user does not want other family members to be able to see selected information.
• Emergency Log in For Physicians and Other Emergency Response Personnel. Users can create a special password, one for each family member, which doctors and other emergency response personnel can use to gain access to the particular family member's medical records in the event of a medical emergency. This password grants access to an account but does not allow any additions, changes or deletions to be made to the account. In addition, users can decide which records a doctor will be able to see in an emergency situation. Users can write this password on an emergency sticker they receive when they enroll in our MyMedicalRecords PHR service, which can be affixed to a driver's license or personal ID. Users can even include a photograph in their emergency profile.
• Health Information Library. Users have access to an interactive audio and visual encyclopedia, licensed from a third-party, of over 2,000 health information topics presented in both English and Spanish.
• Telemedicine. We are integrating our PHR with the Alcatel Lucent ng Connect telemedicine suite. This will take data directly from wireless Bluetooth monitoring devices, such as blood pressure monitors, and deposit readings directly into the MyMedicalRecords PHR.
• Laboratory Reporting Services. We are integrating our PHR with laboratory reporting services, beginning with 4medica, which is used by tens of thousands of doctors nationwide. Information will be put directly into user accounts and users will be able to view their laboratory reports results in binary format, meaning they will be able chart and graph this data.

The Company believes that these enhancements will increase usability and make it easier for consumers to view their important medical records.

The Company is working with UST Global to create a mobile application for its MyMedicalRecords.com Personal Health Record. This mobile application has already been deployed in beta mode for Android tablets and smartphones. A mobile version for iOS (iPhones and iPads) is currently under development.

We believe our MyMedicalRecords PHR product technology presents potential market opportunities beyond its core "Personal Health Records" storage and management purpose. In the wake of recent hurricanes, tsunamis, earthquakes, fires and other disasters, a great deal of emphasis has been placed on families having a secure place to store their records and vital documents where they cannot be lost or damaged. Our MyMedicalRecords PHR product addresses this need because it allows for the fax transmission, upload and storage of insurance, financial and other personal documents, as well as a place to store digital files such as photographs. We believe this recent emphasis provides us with an opportunity to expand our core market and use our MyMedicalRecords PHR product technology to create the essential "safe deposit" box for all important documents and records of a family or small business. The MyEsafeDepositBox virtual storage product extends the MyMedicalRecords technology into these additional markets.

Currently, the MyMedicalRecords PHR platform is the backbone of the MyBlueButton.com initiative where veterans and Department of Defense personnel can upload their health information from their MyHealtheVet account to a MyMedicalRecords Personal Health Record, where they can easily manage all their medical data and other important information in one secure location. In addition to safely storing their Blue Button data file, each MyMedicalRecords account comes with a password-protected voice mailbox, inbound and outbound fax, a drug interaction tool and many other features to manage and track their health. MyMedicalRecords also allows them to store medical records for their family members, including pets, in one account.

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MyEsafeDepositBox - An On-line Secure Document Storage System

Our MyEsafeDepositBox product is based on the same technology and architecture as the MyMedicalRecords PHR, however, rather than focusing on medical records, it is designed to meet the needs of businesses and individuals who are looking for a simple, efficient and economical way to securely store important legal, insurance and financial documents that they cannot afford to lose. Such documents may include copies of insurance policies, deeds of trust, passport, birth certificate, photos of property and other vital documents in addition to medical records that are critical to retrieve in the event of a natural disaster such as an earthquake, hurricane, flood or fire.

We believe that the MyEsafeDepositBox product offers distinctive value in the online storage market due to our telecommunications platform enabling users to fax vital records directly into their MyEsafeDepositBox account without having to first scan paper-based records and have access to a computer to upload information, though the system can receive and store uploaded documents as well. It also permits service providers, such as insurance agents or lenders, to fax documents directly into a user's secure online account. Users also benefit from the ability to sort, store and manage their vital records, while also using a free form text search to find records stored in their account with specific annotations. Our ability to provide private label branding of this product affords banks, insurance companies, escrow services and other financial and legal businesses to provide not only a useful product but also a product that reinforces that business's identity.

In addition, we believe our MyEsafeDepositBox product may also serve as a valuable tool for younger consumers who would not otherwise utilize a Personal Health Record storage system, but are looking for a secure way to organize their personal information to take better control over their financial affairs

Pricing for MyEsafeDepositBox is similar to the MyMedicalRecords Personal Health Record. Suggested retail price is $9.95 per month or $99.95 annually, and is also made available to corporations and membership groups on an access-fee basis.

MyMedicalRecords Pro, or MMRPro was launched in late 2009. This product provides physician practices, particularly smaller practices that are still largely or entirely paper based and are resistant to making the significant investment required to convert to an Electronic Medical Records, or EMR system, a powerful, integrated solution that enables them to scan, digitize, store, manage, retrieve and share records with patients through a managed "Software As Service" web application created and managed by the Company.

A typical EMR implementation costs well in excess of $100,000 and can take several weeks or months to integrate into a doctor's practice. Even worse, during this implementation, a doctor's office is asked to significantly reduce their patient load by as much as 50% which means that the practice loses one-half of its revenue during the implementation period and possibly longer. In a healthcare economy where patient load is critical to a doctor's financial success, this can be very problematic. MMRPro is sold on a three-year license, which includes all hardware, software and system management; a typical four doctor practice would pay $21,600 for the system, which could be financed over the life of the license.

At the core of the MMRPro system is a Kodak Scan Station scanner with a special version of Kodak's Capture Pro document imaging software already installed. The system featuring MMRPro is not sold as a stand-alone product by Kodak and must be purchased through MMR. The Company is in the process of adding other scanner manufacturers to the MMRPro system.

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As part of the installation of MMRPro in a medical office, a library of the forms most used in that office on a daily basis is created. When a patient arrives at the office, the demographic information about the patient is ported to the MMRPro system. That information is then converted to a multi-dimensional encrypted bar code which is printed on all forms used in the office that will follow the patients. The bar code is unique to every patient. Each section of a patient's chart is also identified in the barcode.

All records generated from an appointment carry the patient's unique bar code. If the patient brings any third party records or health history records, the bar code is printed on a cover sheet to go in front of these records. At the end of an appointment, all paper records for the patients, including progress notes, lab reports, radiology reports and previous medical history after reviewed and approved by the doctor, are scanned into MMRPro and automatically sorted and filed into the correct tabs of a virtual patient chart that has been created online by the system. The files are securely stored Doctors can annotate these scanned records with free-form text notes and search those notes later on making it easy to retrieve specific records.

Once documents have been scanned, doctors or their staff can access them from any Internet-connected computer through the MMRPro doctor portal. In addition, when records are scanned the MMRPro system instantly deploys a copy of the record that the patient can view through a free patient portal, MMRPatientView.com. The Company believes that the ability to instantly share records with patients gives doctors the ability to more efficiently manage and operate their practices because they and their staff are not continually being asked to retrieve patient records. MMRPro also allows for secure messaging between doctor's office and patients, as well as provides both inbound and outbound Internet fax capability, making it easier for a practice to share information with other health providers.

• Integrated e-Prescribe Module. MMRPro also includes an integrated e-Prescribe module that gives doctors the ability to do automated prescription ordering and refills. The e-Prescribe software gives doctors a choice of all formulations for a given medication, as well as available generic alternatives and shows what patient benefit coverage will be for the prescription. Any special instructions for the patient can also be entered into the module so they are automatically printed on the prescription label. A prescription order can be faxed or automatically transmitted to the pharmacy. In addition, the e-Prescribe module also makes it possible for doctors to keep a drug history on all their patients, as well as check for any interactions and allergies in real-time.

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• Integrated Fax Messaging. MMRPro supports both inbound and outbound Internet fax. While fax continues to be the primary way doctors send and receive information such as lab reports, doctors are increasingly concerned about the privacy issues associated with a fax machine in an open area. MMRPro solves the problem by allowing faxes to be initiated from or delivered directly to admin or doctor computer desktops through its integrated fax messaging. Faxes, which are viewable as PDFs, can be assigned to different doctors in the practice and then filed as part of the patient record. Each practice receives one main fax number for the office, and then individual numbers can be assigned to each doctor in the practice.
• Voice Messaging. MMRPro also accepts voice messages into its system so doctor can hear voice messages from labs or other providers and keep messages as part of the patient record.
• Practice-specific Branding and Content. MMRPro allows providers to create custom content for their practices that patients see when they access records through the MMR Patient View portal. For example, a practice could use this feature to include a message to remind patients to get flu shots or give a wellness tip.
• Practice-specific forms management. A practice can maintain its own library of forms that it uses most often, such as admissions, insurance and treatment forms and print these, with the bar code, on demand when patients come in for an appointment.
• Dynamic Communication with Doctor's Practice Management System. Through a user designated hot-key, MMRPro seamlessly integrates, on a real-time basis, the patient data contained in the physician's practice management system saving the need of having to reenter data.
• Patient View. The MMRPro system incorporates an integrated patient portal, www.mmrpatientview.com, so doctors can give their patients timely electronic access to their medical records after a visit. Patients can sign up at the Reception Desk or they can opt to receive an e-mail after their first visit giving them the opportunity to sign up for the free service. To activate, patients log into their MMRPatientView account with their secure User ID and password combination, after which they can view, download and printout records from their visit, including lab reports, radiology reports and copies of X-ray images. Patients receive alerts any time their doctor places a new record in their account. The Company believes the Patient View portal satisfies the meaningful use requirement for doctors to share electronic copies of records with patients by January 1, 2014.
• Integration with EMR systems. In 2011, MMRGlobal signed an Agreement with Interbit Data (Natick, MA). The two companies have created a joint software solution that will allow hospitals and other clinical facilities to instantly make health information available to patients securely over the Internet using the MMRPatientView portal from any EMR system without first having to scan, fax or print any documents. The Interbit Data-MMR module is already being installed in hospitals and is certified for meaningful use with MEDITECH systems. MEDITECH is being used by more than 650 hospitals nationwide. Although the solution is only deployed for MEDITECH at this time, MMR believes that it can work with virtually any EMR platform, which opens up a significant new market opportunity for MMRGlobal.

In addition to its product functionality, MMRPro includes a "Stimulus Program" that creates cost-savings and revenue opportunity for its users; in fact, the Company believes its Stimulus Program can generate at least as much money for a doctor practice over a three-year term as the $44,000 that is possible through the HITECH Act over a five-year period. Visit www.mmrpro.com for more information or go to www.mmrtheatre.com and click on MMRPro to see a video about MMRPRo and the Stimulus Program.

The Company believes that MMRPro can ultimately eliminate the need for doctor office staff to go into patient charts to retrieve their records. The Company estimates that this can cost a doctor office as much as $50 per occurrence, when you take into account all of the labor and copying costs associated with retrieving a patient record. If MMRPro makes it possible for a doctor office to eliminate having to manually retrieve just one record per day, it would translate to a savings of more than $10,000 in a single year.

Doctors have the opportunity to earn administrative reimbursements when their patients upgrade from the free MMRPatientView portal to a full-featured, paid MyMedicalRecords Personal Health Record. The Company shares 30% of the subscription revenue from those upgrades with doctors on a monthly basis and believes that patient acceptance for the MyMedicalRecords PHR will be driven by the benefit of being able to store and manage medical records from all doctors for up to 10 family members, not just the one doctor and one family member capability of the free MMR-Patient-View Portal.

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The Health Information Technology for Economic and Clinical Health Act, commonly referred to as HITECH, enacted on February 17, 2009 as part of the American Recovery and Reinvestment Act, expanded HIPAA's reach beyond that of just covered entities. Now, business associates, defined as an entity that performs a function, activity, or service on behalf of a covered entity and that requires use or access to the PHI of the covered entity, and vendors of Personal Health Records (PHRs) that use or access PHI, must also comply with the HIPAA's Security Standards and many of HIPAA's Privacy Standards. One of the key obligations under HITECH is the requirement to notify individuals when there has been (or there is a strong possibility of) a breach of the individual's PHI.

MMR is not a business associate under HIPAA's three-prong test. MMR would not be considered part of a covered entity's workforce (the first prong), nor does MMR perform a function or activity on behalf of the covered entity (the second prong of the business associate test) as the covered entity must maintain medical records, not PHRs, on its patients. Finally, MMR does not "perform a service on behalf of a covered entity" (the third prong of the business associate test) since the beneficiary of the PHR is the patient, not the covered entity. Thus, while MMR is not a business associate, it is a "vendor of PHRs" - although MMR does not fit squarely into that category as that term is defined in HITECH either.

Nonetheless, MMR is re-examining its policies and procedures and reviewing its relationships with all necessary parties to ensure compliance with HITECH and its associated regulations, much like MMR's efforts have been with regards to HIPAA and its regulations. One of the primary goals of HITECH is to ensure that individuals are notified when there has been (or there is a strong possibility of) a breach of the individual's PHI - a requirement that MMR recognizes and fully supports.

Demand for both our consumer and professional medical records products is driven primarily by the U.S. healthcare market and the health information technology market. We are expanding our consumer market through strategic partnerships with nurse advocates, local pharmacies, and home healthcare specialists, all of whom have significant one-on-one relationships with patients who can benefit immediately from the use of our PHR. Likewise, we are creating a retail consumer model through the use of prepaid Personal Health Record cards, which will be sold through retail brick and mortar outlets. On the professional side, demand is increasing in the field of ambulatory surgical centers as well as other clinics looking for an elegant and cost effective scanning and document management solution. Management also sees specialty practice areas such as pediatrics, chronic care illnesses and geriatrics as fertile grounds for expanding the MMRPro solution with the integrated patient portal, MMRPatientView. In addition, as the use of teleconsulting and telemedicine becomes more prevalent, the MMRPro solution should provide a perfect platform to facilitate collaboration between doctors and other healthcare providers with the ease of use and access the solution provides.

It should also be noted that demand is not solely U.S. centric. As health IT spreads around the globe, and other countries intensify their focus on controlling healthcare costs through the improved use of information technology, we are seeing increased demand internationally. This expansion and increased demand is evidenced by the Company's agreements in China, Australia and other countries in development to offer Personal Health Record and electronic document management and imaging services. Moreover, in a global economy, companies are increasingly sending employees overseas, a practice which is expected to increase demand for our MyMedicalRecords PHR among ex-pats, particularly in Europe and the Middle East. Additionally, the growth of health IT at home and abroad is further impetus for ensuring the protection and enforcement of our patents worldwide, which have been valued at $300 to $800 million.

In light of the continued occurrence of natural and man-made disasters, demand for our MyEsafeDepositBox product will be driven by relief and educational organizations, as well as by consumers, small businesses, with international focus based on tools that help in disaster preparedness.

Health information technology (HIT) is the linchpin of efforts to reform the U.S. healthcare system and adoption of electronic and Personal Health Records continues to be at the center of the national healthcare agenda. Recognized as essential to controlling costs, improving care and saving lives, health IT was included in the American Recovery and Reinvestment Act of 2009 (stimulus bill) within which the Health Information Technology for Economic and Clinical Health Act (HITECH) provisions allocated more than $27 billion to modernize healthcare operations through "meaningful use" of health IT. The effects of this were seen in just under three years after the passage of HITECH, with physicians adopting a basic EHR system having doubled from 17% in 2008 to 34% in 2011 (CDC/NCHS, November 2011).

Even with lingering economic weakness, health IT is expected to continue opening widespread market opportunities in the healthcare industry, which is poised to grow at CAGR of approximately 13% during 2010-2015. The stakes are high: with healthcare spending having reached $2.6 trillion, or 17.5 percent of GDP, in 2010 and expected to soar to $6.5 trillion by 2016, the demand for solutions that control healthcare spending and deliver more efficient care will continue to drive health IT adoption (US e-health Market Analysis, July 2011 / Deltek, Inc. December 2011).

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A year after the passage of ARRA and HITECH, President Obama signed into law the Patient Protection and Affordable Care Act, or PPACA, a major overhaul of the United States healthcare and health insurance industries that at its core would require some 32 million Americans to purchase health insurance. Oral arguments challenging the healthcare reform law are scheduled to be heard by the U.S. Supreme Court at the end of March 2012. Should the legislation be upheld, we anticipate increased demand for the cost savings inherent in the use of electronic medical records, particularly the benefits to patients by having a Personal Health Record. However, we believe repeal will not adversely affect our products and services, since from a legislative stand point, health IT has remained largely bipartisan. Moreover, a key driver for increased investment in health IT is a projected near-doubling of the federal healthcare expenditures from $766 billion in 2011 to $1.4 trillion in 2020, due largely to an expected 123% increase in the population of those aged 65 and older by 2050 and dominated by the Internet-savvy baby boom generation. (Miliard, HealthCareIITNews, December 2011)

Taken together, the forces between the need to control healthcare spending and HIT mandates to help achieve this create positive market conditions for the Company's MMRPro and MyMedicalRecords PHR solutions. Furthermore, factors driving demand for our products and services bring into focus additional market opportunities. For instance, the doubling of basic EHR/EMR adoption by physicians since 2008 is a positive trend and additional results show that EMR implementation is now on the radar of a majority of healthcare practitioners. Significantly for the Company, over half the nation's physicians are still practicing in a paper-based world yet increasingly evaluating the need to implement electronic medical records systems if they can mitigate traditional barriers such as cost, unachievable and unusable meaningful use requirements, workflow interruptions and privacy concerns. Given about 50% of U.S. practices consist of one to five doctors where about 65% of all physician visits occur and that the majority of these practices are still using paper-based systems to manage patient charts, there is tremendous opportunity for niche market share for our MMRPro, MMRPatientView and MyMedicalRecords products.

We believe that MMR's strategic partnership with Kodak to distribute MMRPro as an end-to-end solution throughout Kodak's sales channels continues to position the Company to penetrate small-to mid-size physician practices with a cost-effective entry-level EMR system that offers an integrated patient portal and an e-Prescribe module. Further, value propositions for MMRPro in today's constantly evolving healthcare market is its SaaS platform that can work with any EMR system, its cost effectiveness and ease-of-use in light of the fact that doctors remain concerned about the cost of installing expensive, complex systems that interfere with office workflow, and the Company's response to ensure privacy protections for patients covered under HIPAA's Privacy and Security Rules within HITECH.

Additional drivers of health IT which are expected to become more prevalent are multi-platform, multi-channel models of healthcare delivery. According to health economist Jane Sarasohn-Kahn, mobile apps, home-based monitors, Wi-Fi scales, text messaging and e-mail communication will gain traction in the coming years to ensure patients stay well. (iHealthBeat, December 2011). MMR is well-positioned to benefit from multiple technology integrations, demonstrated by our partnership with the Alcatel-Lucent ng Connect Program announced in 2011. We anticipate more strategic partnerships with wireless providers as a result of our integrated telecommunications platform which delivers a PHR that allows medical records to be shared among all healthcare professionals involved in a patient's care using TeleHealth platforms.

In summary, given healthcare's prominence in the national debate, the role of health IT in cost containment and improved patient outcomes, the driving force of HITECH stimulus, America's changing demographics underscored by the first wave of baby boomers entering Medicare in 2011, and the PHR requirement for meaningful use of an EHR, we believe our products, which are cost-effective and highly usable, will benefit from the HIT value propositions in the marketplace. Even with the challenges and uncertainties healthcare providers face in their day-to-day practice, we anticipate they will continue to move away from outdated paper-based systems and focus on spending strategic dollars on health IT as ROI given economic stimulus, the transition of healthcare to more of an outcomes-based reimbursement model, increasing peer pressure and the fact that that increasing numbers of patients are becoming informed healthcare consumers who demand it.

Meaningful use criteria require physicians to provide 50% of their patients' electronic copies of their personal health information in Stages 1 and 2 and at least 90% of patients in Stage 3 by 2014 and this is starting to spur eligible healthcare professionals to seriously focus on how they will offer Personal Health Records driven by the HITECH provisions. As a result, the Company entered into such strategic partnerships in the last year as we have with UST Global and Interbit Data, the latter to provide our MMRPatientView portal to users of the MEDITECH EMR system.

Fueling the need for digitized personal medical records and the key challenge to cost containment in the healthcare industry is treating those with chronic conditions. About 10% of the population accounts for 63% of spending on health services, and 21% of health spending is for only 1% of the population. (Department of Health and Human Services, AHRQ). What is needed is a Personal Health Record that can be the main source of information between the primary care physician, specialists and the other health entities involved in the individual's care. With coordinated access to a patient's health information, there is continuity of care that can lead to cost reductions by eliminating unnecessary repeat tests and avoiding preventable medical injuries. According to the much cited Rand Corporation study published in 2005, in addition to the estimated $346 billion that could be saved annually through the use of health IT, the study projected that $82 billion to $100 billion in savings could be realized in coordination across the continuum of care.

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With government stimulus creating both awareness and momentum, others not directly affected by meaningful use incentives are driving healthcare technology to control healthcare spending, such as employers incorporating Personal Health Records into workforce wellness programs to increase productivity, health plans offering PHRs to patients to maintain data that monitors health progress in addition to claims data, pharmacies who can offer patients drug interaction tools within a PHR and prescription refill reminders, the patient-centered medical home where caregivers placed PHRs at the top of their list of technology that can best support their practice issues, retailers who can use this as a tool to create stickiness and build loyalty programs at the point-of-sale, and the world of telemedicine where data from remote patient monitoring devices is transmitted by smartphones into a patient's PHR for sharing by the entire medical team.

Also helping to create momentum for PHRs while bridging the public and private sectors are initiatives spearheaded by Department of Human Health Services Secretary Kathleen Sebelius, U.S. Surgeon General Regina Benjamin, M.D., and National Coordinator for health IT Farzad Mostashari that are being used to build awareness and stimulate involvement. One of these, "Take the Pledge," engages both data and non-data holders such as employers and health IT vendors to pledge their support in enabling patients/consumers/employees to have instant access to their personal health information through Personal Health Records. Social media and video contests are also being increasingly used to build PHR communities. MMR joined with over 250 other companies to "Take the Pledge" and we are expanding our presence across the Internet using social media to engage consumers on the value of having a Personal Health Record for themselves and their family. In summary, with increasing use of EHRs requiring patients be provided their personal health information in the form of a Personal Health Record, the development of mobile health apps (an estimate 500 million individuals are expected to be using mobile healthcare applications within the next five years), the rise of the patient-centered medical home, and the use of social media to engage consumers in their healthcare, we believe PHRs have a strong future as part of an overall health IT strategy. Moreover, the MyMedicalRecords PHR - Internet-based for 24/7 access, personally-controlled, easy to use, portable, affordable, and private and secure, fulfills what surveys reveal consumers are most looking for in a PHR, which is access to information online, privacy, the ability to track immunizations and monitor lab reports, communicate with doctors, and correct mistakes in their records.

Doctors are under increasing pressure to make their offices "digital" as mandated by the Federal Government in order to qualify for incentive payments of $44,000 per physician through Medicare and $63,750 per physician through Medicaid under the HITECH Act. Stimulus funds from HITECH are paid out in three stages of "meaningful use" over a five-year period; for example, a doctor under Medicare who qualifies for funds in 2010 will receive payments beginning in 2011 through 2015. Doctors who wait until 2013 or 2014 to have EHRs in place will be eligible for smaller bonuses. Because of the short time horizons and high costs involved, many eligible professionals, despite the stimulus funds, were until recently resistant to using full-blown Electronic Medical Record systems. Studies cited in a Congressional Budget Office Report show that a three-doctor practice could spend as much as $162,000 in the first year to install and maintain a system. This doesn't include the "hidden" costs of lost revenue from having to reduce patient load and also delays in billing while a new system is being implemented.

Regardless of the early resistance by practitioners, increasing numbers of doctors are moving forward and embracing health information technology. A stunning example of this is that while only a small amount of physicians have met Stage 1 meaningful use criteria (an estimated 3,880 providers) there has been a two-fold increase since 2008 in those who have adopted an EMR/EHR system. This is positive for the Company's MMRPro system because of how it functions as a cost-effective bridge to a full blown Electronic Health Records system while at the same time providing an integrated Patient Portal/Personal Health Record whose attachment is even greater in Stage 3 of meaningful use. And because the fax machine is currently the predominant means physicians use to share information with other doctors, and we believe this number is a great deal higher between doctors and patients, MMRPro's electronic fax capability enables them to run their practice like they always have while digitizing their office. Additionally, with the MMR Stimulus Program, incentives are offered either in place of or in addition to meaningful use payments, where it has been acknowledged that the perks offered by the government may not be enough by themselves to get doctors on board. And when meaningful use incentives are removed from the equation altogether, as is the case with non-eligible professionals such as long-term acute care, rehabilitation and psychiatric hospitals, our end-to-end, user-friendly solutions enable clinical data to be digitized and available across all sites of care.

As a result, the Company sees a significant niche opportunity to provide an efficient, cost-effective system that helps healthcare professionals take the required first step to any form of digital office - scanning and digitizing patient records. The Company believes that the simplicity and elegance of MMRPro makes it attractive to the many thousands of medical offices, community hospitals and other healthcare providers who are still paper-bound and searching for a way to start their digital conversion. As David Blumenthal, former National Coordinator for Health Information Technology, wrote in a perspective piece published in the "New England Journal of Medicine, "It is inconceivable that the health system in the U.S. will indefinitely resist a force that is transforming modern civilization and that offers almost infinite promise for improved and more efficient care." He added that the next generation of healthcare providers, "those weaned on the Internet, Twitter, Facebook, the iPad, and the iPhone" will insist on an electronic system. (Walker, "MedPage Today", 12/22/2011)

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Drivers for MyEsafeDepositBox Market

The primary market driver for our MyEsafeDepositBox product is the need for individuals and businesses to be able to easily, efficiently and securely maintain backup copies of paper-based financial, insurance, legal and other vital business and personal documents that can be retrieved at anytime from anywhere over an Internet-connected device, This is especially true during a disaster, where records can be inaccessible or permanently destroyed. Eventually, as consumers continue to grow less reliant on paper, MyEsafeDepositBox can also be marketed as helping them in reduce their carbon footprint.

Online storage is a growth industry that can be viewed as rebounding from the economic recession. According to International Data Corporation's, or IDC's, Worldwide Storage Software Qview, 2011 sales of storage software increased 11.6% over 2010 to $14.16 billion led by data protection and recovery. (StorageNewsletter.com). In-Stat reported the previous year that with home networking adoption passing 50% of households in North America and 13% worldwide, the consumer network storage market is seeing continued growth and is expected to grow at a compound annual growth rate of nearly 40% between 2009 and 2014.

Both companies and individuals are continuing to seek solutions that will allow them to safely backup - and quickly restore - any lost data. We believe that our MyEsafeDepositBox product meets the need of a sub-set of this vast data storage market, and we target individuals and businesses that want to find a secure, web-based solution for storing their most critical personal, financial, legal and insurance records, rather than those looking to back up the entire contents of their computer hard drive or corporate network.

In addition, the need for individuals to augment their personal plans for disaster preparedness is reflected in a Red Cross poll that showed seven of 10 respondents were only somewhat prepared for a disaster, with 59% to 73% having no specific evacuation plan. For businesses, the need to implement a disaster recovery plan can be the key to their survival. In the publication, "The Definitive Handbook for Business Management," cited by Hewlett-Packard, it states that between 60% and 90% of companies that don't have a disaster plan find themselves out of business within 24 months of experiencing a major disaster. As natural and man-made disasters continue to grow - from hurricanes, earthquakes, and floods to computer viruses and even terrorist attacks - a common denominator for recovery is access to information and documentation, and we believe our MyEsafeDepositBox product meets this need by offering users a safe and easy way to store, access and recover all of their important documents and vital records online.

To date, we have signed agreements for our MyMedicalRecords PHR product, our MyEsafeDepositBox product, corporate employee benefits and affinity and membership group markets, MMRPRo, and licensing agreements to license our Biotech and Healthcare intellectual property ("IP"). Our core products are sold directly to retail consumers, physicians and corporations while our Biotech and Healthcare IP is being licensed to pharmaceutical and other health IT companies. We have provided the patients of participating hospitals with the use of our MyMedicalRecords PHR product free of charge when they are discharged from inpatient facilities.

We also offer a private label of our MyMedicalRecords PHR product for Medic-Alert, who we believe to be the largest provider of Personal Health Records in the world, which offers it as an enhancement to their existing PHR service; Chartis Insurance (formerly AIG) which offers it to their policy holders beginning with their Global, Marine & Energy worker's compensation policies, and the National Rifle Association. We also have corporate clients who provide our MyMedicalRecords PHR product to their employees as a free benefit, and affinity group and membership clients who bundle the product as a "value added" service to their constituents. We receive compensation under these agreements either on a per enrolled account basis or on an access basis in which we are paid based on the number of persons who are eligible to sign up for our service, regardless of the number that actually enrolls. In 2011 we signed an agreement with Microsoft® HealthVault™ and are planning on integrating our products with their platform in 2012.

We are continuing to expand these relationships and identify additional private label opportunities.

In the affinity and membership group area, we continue to see increased opportunities and believe this to be the lowest hanging fruit in as organizations want to give their members access to the MyMedicalRecords Personal Health Record or MyEsafeDepositBox; the Company expects that these groups will continue to create new programs that bundle the MyMedicalRecords PHR and MyEsafeDepositBox virtual storage vault with their services. On December 21, 2010, MMRGlobal, Inc., entered into a Non-Exclusive License Agreement with Celgene Corporation ("Celgene"). Pursuant to the terms of the Agreement, the Company licensed to Celgene, on a non-exclusive basis, the use of the Company's clinical and scientific data relating to targeted immunotherapies for cancer and other disease treatments to stimulate a patient's immune response and certain other confidential information.

In consideration for the rights granted under the Agreement, Celgene agreed to pay the Company certain upfront fees and, upon achievement of development milestones, milestone payments plus any expenses. The Agreement contains customary provisions, as to the term of the Agreement, representations, warranties, and indemnities by each of the Company and Celgene and was filed in the 2009 10-K as an Exhibit to the filing.

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On December 9, 2011, we entered into a Non-Exclusive Settlement and Patent License Agreement with Surgery Center Management, LLC whereby the Company agreed to release SCM from prior patent infringement claims and granted SCM, on a non-exclusive basis, a license covering the Licensed Patents, which amongst other things, covers certain Licensed Products and/or Licensed Services to develop, make, have made, use, sell, lease, license, demonstrate, market and distribute the Licensed Products and/or Licensed Services under SCM's brand or private label for channel or distribution partners who purchase the SCM branded or Licensed Products and/or Licensed Services for resale to end customers.

In consideration for the rights granted under the Agreement, SCM agreed to pay the Company $30 million dollars (the "Initial License Fee") with a minimum of $5 million dollars in upfront fees with the explicit understanding and requirement that the Settlement and Release portions of the Agreement become effective solely upon SCM's payment in full of the Initial License Fee. SCM also agreed to pay MMR additional royalties of ten percent (10%) of gross revenue at such time as an initial Two Hundred Million U.S. Dollars ($200,000,000 USD) of gross revenues are accrued on any Units sold, used or otherwise transferred pursuant to the terms of the Agreement.

The initial $5 million dollar payment became payable to MMR on December 23, 2011, with five additional $5 million payments to be made on November 15th each year for the next five years. The Agreement contains customary provisions, as to the term of the Agreement, representations, warranties, and indemnities by each of the Company and SCM and was filed with the Securities and Exchange Commission as Exhibit 10-1 on Form 8-K on January 17, 2012.

The Company is currently seeking payment on the initial $5 million. As of December 31, 2011, three of the four revenue recognition criteria of Staff Accounting Bulletin No. 104 had been met (persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed and determinable). The Company will not recognize revenue until such time as collection is reasonably assured. The Company is currently in litigation against SCM and we believe SCM has accounts receivable in excess of $200 million and other assets sufficient to pay the amounts due upon a successful outcome

During 2011, our three largest customers (Celgene $500,000, E-Mail Frequency $140,000, and Chartis $100,000) accounted for approximately 55% of our total revenue. Due to the contributions of these customers to our consolidated revenue, the Company is somewhat dependent upon its relationships with these customers.

Our marketing strategy for our MyMedicalRecords PHR product calls for continued focus on four main sales channels:

• Corporate Sales - Employee Benefit Offering. We are pursuing the human resources and benefits market to secure agreements or strategic arrangements providing for companies to offer our product to their employees and members. We believe the user-friendly nature of our MyMedicalRecords PHR product makes it readily acceptable to employees and gives companies a low cost way to demonstrate their employee-friendliness.
• Affinity Groups and Membership Organizations. Our MyMedicalRecords PHR product can be bundled with other health or travel-related services. For example, a travel accident insurance company can include our MyMedicalRecords PHR product in its suite of emergency medical and repatriation services for travelers going abroad. We believe giving users the ability to access their medical records in an emergency situation overseas may add considerable value to an insurance company's travel insurance policies. Additionally, an affinity group, such as an alumni association, may offer our MyMedicalRecords PHR product as a recruitment or renewal tool. We plan on continuing to utilize outside sales representatives who specialize in selling services to these market segments.
• Private Label Branding. Our MyMedicalRecords PHR product is designed to allow site pages to be customized with a corporate, affinity group or membership organization logo and content that is specific to that entity. The technology built into our MyMedicalRecords PHR product also is designed to allow companies, groups or organization to instantly communicate with hundreds or even thousands of employees in the event of an announcement or emergency situation at no additional cost to MMR or in many cases, the client.
• Direct to Consumer Marketing. We intend to continue to focus on marketing our MyMedicalRecords PHR product directly to consumers via both on-line and off-line advertising vehicles. We have produced a series of television ads that are shown on syndicated television shows. The ads can be seen at www.mmrontv.com. We continue to test pay-per-click advertising using booth Google Adwords and the targeted platforms provided by Facebook. In addition, we will continue to exploit our relationship with E-Mail Frequency LLC continuing to test different e-mail creative, both text and HTML, as well as campaigns to target direct to consumer sales. Our MyMedicalRecords PHR product is currently available to individuals on a monthly or annual subscription basis as well as to those patients who upgrade from a free MMRPatientView account provided by their doctors.
• Healthcare Professionals. The Company plans on continuing to offer its MyMedicalRecords PHR to patients at physician offices, hospitals, surgery centers, x-ray facilities and other facilities. In addition, the company is planning to increase its marketing efforts in connection with sales to home caregivers and visiting nurses.

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• Retail. The Company is in the process of establishing a distribution channel through retail where consumers will be able to purchase a Prepaid Personal Health Record card at a retail stores including pharmacies, hospital gift shops, mass merchandisers and supermarkets amongst other specialty retailers. The prepaid retail card will be manufactured as a high quality credit-card style card. The package surrounding it will provide information on the PHR service to encourage both initial purchase and then active use. Because the prepaid card is not flimsy, emergency personnel will be able to find it in a user's wallet in the event of a medical emergency, thus reinforcing the special Emergency Log in feature of the MMR product. The Company plans to have a magnetic stripe on the back of the card as well, which will allow us to offer the prepaid product in conjunction with pharmacy or store loyalty programs.
• Other Markets. The Company plans to focus a portion of their marketing efforts in selling to Nursing and Convalescent Homes.

Because of the similarity in functionality between our MyEsafeDepositBox product and our MyMedicalRecords PHR product, we market these products through many of the same channels. Both products are designed to offer users the ability to fax, upload and store important and private records or documents in a secure electronic environment, safe from fire or flood, and secure from the threat of identity theft. Thus, for example, we market our MyMedicalRecords PHR product to insurance companies as an additional benefit for health insurance policy holders, while at the same time marketing our MyEsafeDepositBox product to insurance companies that may offer it to their risk and casualty policy customers. In addition, we market our MyEsafeDepositBox to financial institutions and legal service providers as a safe and secure way for their customers to store important and private documents provided by these companies.

The Company is in the process of enhancing the MMRPro platform as well as broadening its distribution and sales channels. The Company believes that, as the calendar draws closer to the January 1, 2014 mandate for doctors to share an electronic copy of a health record with patients, MMRPro will gain accelerated acceptance with clinicians because of the fact that the product automatically creates a patient facing copy of scanned records through its MMRPatientView portal. The Company also believes that the successful adoption of the MMRPro product by its existing customer base will help simplify and possibly shorten the sales process as it acquires new customers.

In addition to working with document imaging sales and distribution channels, MMRGlobal is utilizing distribution networks of companies who already sell other products into doctor offices. These distribution partners also help increase the Company's integration and support network.

The Company also plans to utilize lead generation and telemarketing/appointment setting tools as a way to build a pipeline of customer opportunities that can be sold direct by MMR or through its distribution partners.

In 2011, MMRGlobal signed an Agreement with Interbit Data (Natick, MA). The two companies have created a joint software solution that will allow hospitals and other clinical facilities to use a meaningful use certified solution to instantly make health information available to patients securely over the Internet using the MMRPatientView portal from any EMR system without first having to scan, fax or print any documents. The Interbit Data-MMR module is already being installed in hospitals and is certified for meaningful use with MEDITECH systems. MEDITECH is being used by more than 650 hospitals nationwide. Although the solution is only deployed for MEDITECH at this time, MMR believes that it can work with virtually any EMR platform, which opens up a significant new market opportunity for MMRGlobal.

The Company owns intellectual property rights to patents related to the Method and System for Providing Online Medical Records both in the US and in other international territories, and is actively working with consultants on ways to monetize these assets to identify products that infringe upon our patents as well as licensing opportunities with other health IT companies regarding the use of the assets. The Company has already reached one such agreement with Surgery Center Management as specified above under the Customers section.

Although the Company's primary business is personal and professional health records and document imaging systems, pursuant to the Merger, the Company acquired intellectual property rights to certain biotech assets, including the FavId™/Specifid idiotype vaccine and our proprietary anti-CD20 antibody panels to treat B-cell lymphoma. On April 14, 2010, the Company also announced the existence of intellectual property in the form of approximately 140 patient samples collected during the Company's pre-merger FavId/Specifid vaccine trials.

Based on information discovered in 2010 the Company believes that these assets could have significant value which is not reflected on the Company's balance sheet at this time. Through May of 2008 pre-merger Favrille had spent more than $100 million on the creation and development of intellectual property, which includes clinical trials, related data, patient samples, patents, and other forms of intellectual property and the possible use of more than $200 million dollars in related tax loss carry forwards.

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The Company is actively working with consultants on ways to monetize these assets to identify licensing and or manufacturing opportunities with biopharmaceutical companies, academic institutions, research organizations and others regarding the use of the assets. The Company has already reached one such agreement with Celgene.

The Company has filed patents for the design of an Electronic Health Record monitoring feature that uses the company's patented technologies to monitor patients in clinical trials. The Company believes that such a product offering can reduce the cost of managing clinical trial results and generate long term users of the Company's product. The Company will target biotech companies and pharmaceutical manufactures to purchase this product to obtain better monitoring of patient results and patient involvement.

The Company has filed patents for the Method and System for Managing Personal Health Records with Telemedicine and Health Monitoring Device Features that incorporate the company's patented technologies. The Company believes that such a product offering can reduce the cost of long term, acute or extended healthcare and generate long term users of the Company's product. The Company is working with companies such as Alcatel-Lucent and their ng Connect division to more fully develop this offering.

In addition to the main marketing channels discussed above, we have also identified other potential markets for increasing sales of our products:

• Small Businesses. We believe our products could serve as an affordable and easy-to-implement tool for small companies that have not, or do not want to, invest in expensive IT data backup infrastructure.
• Government Agencies. We believe that federal, state and local governments would be interested in our products as they provide a powerful, yet easy to use addition to any family's disaster preparedness plan and we plan on approaching agencies at all levels to explore the possibility of setting up pilot programs.
• Travel Companies and the Travel Industry. We believe that travelers can represent a strong market for our products because these products are designed to enable travelers to access to their medical records, or other important documents (copies of passports, credit cards, etc.), in the event of an emergency when they are away from home. We plan to market our products to airlines, hotels, automobile clubs and other-travel related companies and organizations as well as to advertise on travel-related websites to reach this market.
• Finance and Insurance Companies. We believe insurance companies are interested in offering a MyEsafeDepositBox type of service offering for their risk and accident policyholders. We are actively working with at least one large financial institution to utilize MyEsafeDepositBox to handle paperless loan processing and delivery solutions as well as replace uses for traditional safe deposit boxes.
• Other health IT Providers. We believe that there is a market for our health IT products through strategic relationships with other health information technology providers who see MMR's services as being complementary to their own offerings.
• Consumer Product Companies. We believe we can better target health-conscious consumers who may have a greater interest in our products by developing strategic partnerships with consumer products companies, including wireless phone service providers.
• Retailers. The Company is in the process of bringing its MyMedicalRecords.com Personal Health Record to retailers in the form of a prepaid card that consumers will be able to purchase at point of sale. To do this, we are creating a national independent sales representative network that already has relationships with retail chains. In addition to direct sale to consumer at retail, the Company sees an opportunity to make the PHR part of store and pharmacy loyalty programs as well as to offer it as a premium when consumers purchase health care related products, switch their prescriptions to that store or refill existing prescriptions.
• Home Healthcare. We believe that distribution through visiting nurses, caregivers, home medical supply companies and patient advocates represents a significant new channel for our Personal Health Record. We are actively pursuing creating specialized programs where home healthcare works can offer cards to their clients and then populate the PHR with information from their home visits.

We exploit our intellectual property, technology and our MyMedicalRecords brand internationally. On January 4, 2010, we announced the completion of a definitive Joint Venture Agreement ("the "Unis JV") with Unis-Tonghe Technology (Zhengzhou) Co., Ltd., or Unis, to form a joint venture to build a customized version of MMR's proprietary PHR services (www.mymedicalrecords.com) and professional document imaging and management solutions in China.

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Unis is a subsidiary of Unisplendour Corporation Limited (SHE: 00938) (www.Unis.cn), one of China's leading IT firms. Our technology will support a Unis medical records development project for sale to China's public and private hospitals. China has an initiative to create health information systems to electronically acquire, store and transport individual health records. Our senior management and technology executives have met with counterparts from Unis-Tonghe and Nihilent, MMR's technology partner in India, together for a collaborative session on requirements to integrate the MyMedicalRecords Personal Health Record and the MMRPro system (www.mmrpro.com) into a health IT platform that could be deployed throughout China's healthcare market.

Pursuant to requests from the Chinese Government, the Company has continued to respond to requests for changes in the Unis JV including changes as recent as March 27, 2012. As a result, the Company is responding to requests to amend the Cooperation Agreement and required amendments with Unis-Tonghe Technology Co, or UNIS.

Further, under the joint venture Cooperation Agreement, Unis and MMR agreed to form a joint venture in China for the purpose of deploying our Personal Health Record services and document imaging and management solutions as part of a total Electronic Medical Record, or EMR, solution in China. Ultimately, upon approval of the venture by the Chinese government, we will own 40 % of the joint venture and Unis will own 60%.

Despite the delays in approvals by the government, the Unis JV has already installed early stage EMR systems in three hospitals in China and we are working to add our PHR to these existing systems by the third quarter 2012. The Unis-Tonghe MMR International Health Management Service Co., LTD. Joint Venture has also begun participating in formal government bids to commence numerous medical records projects in China, which include continuing to offer MMR's Personal Health Record services and other related products. Meanwhile, the JV partners continue to actively be involved in supporting each other on Chinese government projects utilizing our patented and patent-pending technologies and platforms and features and have recently deployed full-time technical support in China. In November 2010, Unis-Tonghe submitted the Unis/MMR Joint Venture bid for the right to offer our products in Henan Province, whose population is nearly 100 million people or one third of the population of the United States. In February 2012, Unis and MMR spent a week in the United States around the HIMSS Conference and Exhibition collaborating on installing services in existing Joint Venture hospital systems in China.

As a result of lead times to develop customized EMR solutions in response to government specifications, this effort could take several years. In the meantime, we have begun to leverage our resources in China with other U.S. partners on the ground in there including Kodak and Alcatel-Lucent to help manage our relationships in China locally. As a result, we could begin selling MMRPro in conjunction with Alcatel-Lucent in China and Kodak resellers throughout the Asia Pacific region.

In June of this year, MMRGlobal and Australian company VisiInc PLC entered into an agreement to sell MMRGlobal' s patented consumer and professional health IT products and services on the Visi™ platform utilizing the Vistime product in the health technology market in Australia, which is projected to be as much as $2.4 billion (USD$2.6 billion). The License Agreement calls for minimum performance guarantees to be paid to MMR starting in 2012. VISI PLS markets and sells Vistime, a multi-file format, real-time 3D viewer for retrieval and viewing of large files, including medical imaging systems such as MRIs, scans and sonograms, over any Internet connection, including dial-up. The system allows physicians and patients to view and discuss medical records including radiology images in an online meeting format. Vistime integrated with MMR's MyMedicalRecords PHR and will allow collaboration of multiple specialists in real time. This feature is not currently part of any PHR.

The Company is also working on installations in Europe under an agreement with a Kodak reseller. We have been invited to visit and present our products in Qatar and are working with consultants in that region. The Company is also working with VisiInc on licensing our products to their partners in Russia. Because of our patents in countries like Singapore, we are seeking similar license deals with companies like VisiInc to leverage our global patent portfolio.

We currently contract with various third-party telecommunications carriers, data centers and other information technology service providers and developers to develop and maintain our products.

In 2010, we terminated our agreement with an outside vendor, which previously hosted one of our product websites and provided fax and voice messaging services and the toll-free numbers used by the Company's customers to access their accounts. We paid this outside vendor a monthly website hosting fee and additional usage fees for fax, voice messaging and toll-free number services. Our contract was effective until September 2009, but automatically renewed, and continued to renew until we terminated it about November 2010. We replaced that vendor with our own health information call processing platform and communications exchange network which the Company calls the Asteria system. Asteria significantly reduces the Companies reliance on outside vendors and recurring costs. At the same time the Company entered into direct contracts with our carriers for Direct Inward Dial or "DID" and toll-free numbers terminating at our new telecommunications platform.

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We contract collocation and hosting services from several certified data centers who monitor, manage and maintain our systems and storage facilities that service our production websites. Scheduled, non-escalatory, monthly payments are made for all collocation and hosting services. The data center Agreements are renewed automatically each year and a termination option is available to either party upon a six month prior written notice. On March 14, 2011 we renewed the agreement for another year and the agreement automatically renews on a month-to-month basis.

We contract with an outside vendor to house, manage and maintain the production servers that host our MyMedicalRecords PHR and MyEsafeDepositBox and MMRPro applications and store user related data. We pay a monthly fee for the management and technical support services required to maintain and operate its servers, which are housed in two separate data centers. Our agreement with this vendor is effective until terminated by either party. In 2011, we renewed a revised and amended agreement for another year with this vendor which automatically renews after one year on a month-to-month basis.

We contract with a third-party for the development and maintenance of the software applications necessary to run our MyMedicalRecords PHR, MyEsafeDepositBox and MyMedicalRecords Pro products. Our outside developer supports our software development needs through a team of software engineers, programmers, quality control personnel and testers, who work with our internal product development team on all aspects of application development, design, integration and support of our products. Under our development contract, we own the intellectual property rights over all software applications developed pursuant to the contract. We pay our developer a per-project fee for the development services provided and a monthly fee for support and maintenance services. Our agreement with this developer renews automatically for one year periods subject to the right of either party to terminate the Agreement by giving six months written notice.

On September 16, 2009, we entered into a Licensing and Sales Commission Agreement, or the Licensing Agreement with E-Mail Frequency, LLC, which we refer to as the Licensor, and David T. Loftus, which we refer to as the Consultant. The License Agreement was filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q for the Quarter Ended September 30, 2009. Pursuant to the Licensing Agreement, we agreed to exclusively license from the Licensor the usage of the Licensor's direct marketing database of street addresses, cellular phone numbers, e-mail addresses and other comprehensive data, or the Database. In addition, we engaged the services of the Consultant to assist in the use of the Database. Under the terms of the Licensing Agreement, we paid a $250,000 one-time consulting fee to the Consultant in the form of 2,777,778 shares of restricted common stock, which we refer to as the Consulting Fee. In addition to the Consulting Fee, we will pay the Licensor a percentage of actual revenue received by us from successful sales made pursuant to use of the Database. The Licensing Agreement has a five-year term, but may be terminated by us after the Licensing Agreement has been in effect for one year after the effective date of the Licensing Agreement. Upon such termination, we will be obligated to pay the Licensor its fees owed under the Licensing Agreement for the remainder of the term in addition to eight times the total fees paid to the Licensor over the last three months of use of the Licensing Agreement. Effective September 1, 2011, we signed and Amendment to the Agreement dated September 16, 2009 to provide licensor a non-exclusive right to target, market and exploit the Employee Benefits market.

In the event that we are unable to continue to obtain supply, development or maintenance services from any of our suppliers or developers, we believe that we would be able to utilize other suppliers, developers, or maintenance services to continue the development and operation of our products. In selecting our current supply, development and maintenance vendors with which we have agreements, we received competitive bids from other vendors who would have been able to provide equivalent services. Thus, we believe that the marketplace for such services is broad enough that we would be able to reach commercially reasonable terms for the continued development of our products within the termination periods provided in each agreement.

We have a disaster recovery plan in place that is designed to ensure the safekeeping of records stored in a user's MyMedicalRecords PHR, MyEsafeDepositBox, MyMedicalRecordsMD and MMRPatientView accounts, while maintaining continuity of our services should our main server site be affected by a natural or man-made disaster. We have two standby disaster recovery sites, one site is in Omaha and the other site is 150 miles from Kansas City where our main production servers are located. We backup and encrypt the database holding our customers' records to servers housed in this "hot" standby disaster recovery site so that both systems contain identical information on a near-real-time basis. In addition, our main production site has redundancy measures built-in at all levels of the infrastructure and is designed to facilitate maximum availability of our product websites. Our backup and recovery encryption and processes are FIPS 140-2 compliant.

Though the Company believes that no other product in the marketplace compares to what we have to offer, especially given our patents as a barrier to entry, there are other Personal Health Record providers in the consumer health information management marketplace today that compete for our services. These include myMediConnect, NoMoreClipboard.com, AccessMyRecords, Dossia, WebMD Health Manager, and HealthVault®, although the last is more of a personal health platform that offers multiple solutions, for which MMR is currently developing based on an agreement with Microsoft® HealthVault® this year. In addition, we compete with Internet-portals offered by insurance companies, hospitals and HMOs for their policyholders and patients.

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Each of our competitors offers varying PHR products and services for on-line storage and access to medical records at varying price points (at the basic "free" level, with minimal recordkeeping capability and usually includes advertising). However, we believe our MyMedicalRecords PHR product offers unique features that distinguish it from those of our competitors. In particular, we believe our MyMedicalRecords PHR product offers greater ease of use and accuracy than our competitors' products because copies of the actual medical records, such as laboratory test results and radiology reports can be faxed or uploaded directly into the user's MyMedicalRecords PHR account, rather than requiring users to input the data themselves, which may result in transcription errors, or go through a third party, which could result in more time, additional costs and can raise the issue of privacy. Our MyMedicalRecords PHR is designed to allow a user or provider to send a medical record directly into a MyMedicalRecords PHR account from any fax machine, anywhere in the world, and once received, the user can then store and manage those records in a personalized filing system with 16 file folders.

Competitors may offer limited document management capability for Personal Health Records; they have to be scanned and uploaded by the user and they do not allow users to easily manage stored information with the same sophistication as the MMR PHR. In addition, these services do not offer integrated outbound fax directly from the user account, which means that users of competitive products have to print out and manually handle paper or go through third party intermediaries in order to share information with other providers along the continuum of care. Moreover, we believe our integrated fax offering alone can save members as much as $300 a year as compared to using similar electronic fax services.

In addition, while hospital patient, HMO patient. insurance policyholder and employer-based Internet-portals allow users to see certain information regarding test results, prescriptions or claims data, and may even give patients the ability to set appointments and communicate with doctors, these portals only allow users to view data from that specific provider, and if a user changes his or her healthcare provider, insurance carrier or employer, the information may not be available in the future. Our MyMedicalRecords PHR product is designed to offer our customers a single secure on-line repository for all of their health information and records, from every provider, so that this information is available any time a MyMedicalRecords PHR user needs to access and share it, and our service is completely portable, meaning it stays with the member though changes in health plans, healthcare providers and employers. Moreover, the MyMedicalRecords account covers an entire family of up to 10 members, whereas other services typically only cover an individual or charge for additional family members.

We also believe the enhanced features offered at the same price point with our MyMedicalRecords PHR product, such as outbound fax, document management, emergency login, appointment and prescription reminders and voice messaging features, offer consumers unique and attractive advantages that separate our MyMedicalRecords PHR product from the competition. All of the competing services, raise consumer awareness about the need for access to personal health information and while this increased awareness may increase the marketability of our MyMedicalRecords PHR product, growth in the consumer health information management marketplace may also attract new entrants. However, we believe that greater ease of use and array of enhanced features distinguish our MyMedicalRecords PHR product from those of our competitors, many of our competitors may have greater resources and more experience in this market, and can modify their product offerings to make them more competitive, including attempting to replicate some features of our MyMedicalRecords PHR product. We have also sought to protect our proprietary technology through patents in both the U.S. and overseas. See "Intellectual Property - Patents" below.

Our MyEsafeDepositBox product competes with a number of on-line backup and electronic data storage services. The increasing use of external hard drives and flash drives to backup data also has the potential to compete with on-line data storage services such as our MyEsafeDepositBox product.

We believe that MyEsafeDepositBox is a superior product when compared with products such as My Vault Storage or Allianz Protect in that it permits multiple service providers, such as insurance agents or lenders, to fax documents directly into a user's account. In addition, much like the MyMedicalRecords PHR, the MyEsafeDepositBox service also offers outbound fax and emergency login features which further differentiate us in the marketplace. We also believe the portability of MyEsafeDepositBox creates a product advantage in the marketplace because users are not required to do business with any particular bank. Users also benefit from not having restrictions placed on the amount of storage capability in their account unless they upgrade to more costly subscriptions. Our ability to provide private label branding affords banks, insurance companies, escrow services and other financial and legal businesses to provide not only a useful product but also reinforces that business's identity.

MMRPro competes with scanning services that market their services to doctors seeking to convert their historical paper records into electronic files, as well as Electronic Medical Record systems. Scanning services typically do not provide the doctor with an integrated end- to-end system that not only scans the record, but automatically sorts it by patient and by patient chart tab. Most scanners merely digitize patient records and store them either on a local drive or a Local Area Network drive, which requires the doctors to have an IT consultant manage their on-line records. Since MMRPro is a "Software As Service" model, the scanner records are sent to a web-hosted application with redundant data storage facilities and MMR handles the physical storage and management of patient data in compliance with HIPAA privacy and security guidelines. This not only relieves doctors of having to worry about their in-house records management, it also allows them to access patient records from any Internet-connected computer as well as to deploy a copy of a record for the patient.

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MMRPro also competes with EMR systems that offer doctors the opportunity to make their entire office paperless. However, many doctors, particularly solo and small group practitioners, are resisting EMRs with a high cost of conversion and the difficulty and expense associated with maintaining an EMR system. MMRPro provides an efficient alternative and or transition to a full-blown EMR for many thousands of dollars less cost. MMRPro also features a patient portal, MMRPatientView, which is a requirement of meaningful use and is both integrated with our end-to-end system or can be incorporated as a separate module within any EMR system, as is being done in partnership with Interbit Data for the MEDITECH EMR platform.

In September 2005, we filed a utility patent application on key elements of our proprietary process with the United States Patent and Trademark Office. This patent application and two related patent applications were allowed in December 2011 and issued in February 2012 as U.S. Patent No. 8,121,855, U.S. Patent No. 8,117,045, and U.S. Patent No. 8,117,646. Together these patents have a total of 81 claims. The full term of these patents will not expire until October 2027.

In 2012, we filed additional continuation patent applications in the U.S. for this technology, requesting prioritized examination. In March 2007, we filed a separate application for our Emergency "Read Only" Password service (see discussion above under "- Our Products- MyMedicalRecords - An On-line Personal Health Record (PHR) - Additional Product Features - Emergency Log in For Physicians and Other Emergency Response Personnel"). In May 2006, we filed a patent application with Australian authorities pursuant to the Patent Cooperation Treaty, which was awarded on May 29, 2008. A second patent application with Australian authorities was awarded on December 24, 2009. A patent application filed pursuant to the Patent Cooperation Treaty was awarded in Singapore on January 30, 2009. A patent application filed pursuant to the Patent Cooperation Treaty was awarded in New Zealand on December 7, 2010. In March 2012 we received notice that Mexico has allowed our pending patent application. Currently other foreign patent applications and related U.S. applications are pending. In April 2011, a U.S. patent application and Patent Cooperation Treaty patent application were filed which were based on a provisional patent application filed April 2010 and are directed toward the use of electronic health records in clinical trials. In September 2011, a U.S. patent application and Patent Cooperation Treaty patent application were filed which were based on a provisional patent application filed September 2010 and directed toward a universal patient record conversion tool. In January 2012 and February 2012 we filed provisional patent applications directed toward a mobile platform for Personal Health Records. In January and February 2012 we filed provisional patent applications directed toward prepaid cards for services related to Personal Health Records. In January and February 2012 we filed provisional patent applications directed toward a method and system for managing Personal Health Records with telemedicine and personal health monitoring device features. We intend to pursue patent protection in other countries where we may offer our products in the future. We consider patent protection an important element of a sound intellectual property portfolio, although we do not anticipate being able to prevent our competition from using other methods to achieve similar ends.

Currently, the Company also has 186 patent claims still pending across nine other pending U.S. utility patent applications related to health information technology. In addition, the Company has a total of two PCT applications pending and seven U.S. provisional patent applications pending.

The Company acquired significant intellectual property assets from the merger with Favrille and is in the process of exploiting and monetizing those assets, which include, but are not limited to, data from the Company's pre-merger clinical vaccine trials, the Specifid vaccine, and the anti-CD20 antibodies.

The Company has been working to perfect the patent condition of these biotech assets obtained from the reverse merger with Favrille for more than two and a half years. As a result, MMRGlobal now has biotech patents and patent applications pending in 13 foreign countries of commercial interest that provide competitive advantages for this biotechnology. Currently, the Company's biotech patent portfolio includes patents with expiration dates of August 2021. Additional patent applications once granted may obtain additional term of biotech patent protection.

We successfully revived Favrille's original U.S. Patent No. 6,911,204 directed to treating B-cell pathologies on May 27, 2010. Additional U.S. B-cell pathologies patent applications were also successfully revived and as recently as February 14, 2012 a second U.S. Patent 8,114,404 has been awarded to protect certain embodiments of the vaccine. Additional U.S. applications are pending and under examination before the U.S. Patent and Trademark Office. We are taking further actions to perfect the condition of the patent applications in various other countries offering a potential competitive advantage for this B-cell technology. Although we make no guarantees as to the status of certain patents and patent applications, we are acting to pursue and maintain available patent protection relating to our patents and filings including but not limited to the FavID™ vaccine intellectual property portfolio in the United States and major foreign markets of interest. Three foreign patents have also been awarded in Singapore and Mexico.

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Beginning in June 2009, we filed various national phase filings from the Patent Cooperation Treaty (PCT) patent application directed to anti-CD20 monoclonal antibody assets. National phase filings are pending in major European, Asian, North American, and South American markets, including in the United States, Australia, Brazil, Canada, China, Hong Kong, Europe, India, Japan, South Korea and Mexico.

The Company has relied upon numerous consultants in its efforts to accelerate bringing to market its anti-CD20 monoclonal antibodies. Anti-CD20 antibodies are useful in treating B-cell malignancies, including Non-Hodgkin Lymphoma (NHL) and additional B-cell mediated conditions such as rheumatoid arthritis. The Company understands the anti-CD20 antibody assets are potential candidates for the next generation of a Rituximab-type therapy. Rituximab is marketed under the trade name Rituxan® in the United States by Biogen Idec and Genentech (wholly owned member of the Roche Group) and under the name MabThera® by Roche in the rest of the world except Japan, where it is co-marketed by Chugai and Zenyaku Kogyo Co. Ltd. Rituxan® is one of the world's most successful monoclonal antibodies with reported total sales in 2008 in excess of US $5.4 billion.

On December 22, 2010, the company entered into a non-exclusive agreement with Celgene to license the use of the Company's clinical and scientific data (originated by Favrille) related to targeted immunotherapies for cancer and other disease treatments to stimulate a patient's immune response and certain other confidential information. In consideration for the rights granted under the Agreement, Celgene agreed to pay the Company certain upfront fees and development milestones. When a milestone is reached it automatically triggers a payment to MMR.

We own the URL and domain name for the web address www.MyMedicalRecords.com. We also own the domain names www.MyMedicalRecordsMD.com, www.MMRPro.com and www.MMRPatientView.com for use with MyMedicalRecords Pro and own the domain name www.MyEsafeDepositBox.com for use with our MyEsafeDepositBox product. We also own the source code for our products.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS