WITH, INC. - FORM 10-Q - August 20, 2012

Attached files

file	filename
EX-32.1 - WITH, INC.	q1100695_ex32-1.htm
EX-32.2 - WITH, INC.	q1100695_ex32-2.htm
EX-31.1 - WITH, INC.	q1100695_ex31-1.htm
EX-31.2 - WITH, INC.	q1100695_ex31-2.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D. C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2012

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

For the transition period from _______________ to _______________

Commission File Number 333-166343

MEDL MOBILE HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

NEVADA

(State or other jurisdiction of incorporation or organization)

80-0194367

(I.R.S. Employer Identification No.)

18475 Bandilier Circle

Fountain Valley, California 92708

(Address of principal executive offices)

(714) 617-1991

(Issuer's telephone number)

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

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

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

Large accelerated filer o	Accelerated filer o

Non-accelerated filer o	Smaller reporting company x

(Do not check if a smaller reporting company)

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

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 43,514,809 shares of commno stock as of August 17, 2012.

NOTE REGARDING FORWARD-LOOKING STATEMENTS

Our disclosure and analysis in this Report contains forward-looking statements which provide our current expectations or forecasts of future events. Forward-looking statements in this Report include, without limitation:

	•●	information concerning possible or assumed future results of operations, trends in financial results and business plans, including those related to earnings, earnings growth, revenue and revenue growth;
	•●	statements about the level of our costs and operating expenses relative to our revenues, and about the expected composition of our revenues;
	•●	statements about expected future sales trends for our products and services;
	•●	statements about our future capital requirements and the sufficiency of our cash and cash equivalents;
	•●	other statements about our plans, objectives, expectations and intentions; and
	•●	other statements that are not historical fact.

Forward-looking statements generally can be identified by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “intends, “plans,” “should,” “seeks,” “pro forma,” “anticipates,” “estimates,” “continues,” or other variations thereof (including their use in the negative), or by discussions of strategies, plans or intentions. Such statements include but are not limited to statements under Part I, Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Report, and elsewhere in this Report. A number of factors could cause results to differ materially from those anticipated by such forward-looking statements. The absence of these words does not necessarily mean that a statement is not forward-looking. Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons.

You should not unduly rely on these forward-looking statements, which speak only as of the date of this Report. We undertake no obligation to publicly revise any forward-looking statement to reflect circumstances or events after the date of this Report, or to reflect the occurrence of unanticipated events. You should, however, review the factors and risks we describe in the reports we file from time to time with the Securities and Exchange Commission.

Table of Contents

		Page
	PART I
Item 1.	Financial Statements.
	Consolidated Balance Sheets as of June 30, 2012 (unaudited) and December 31, 2011	1
	Consolidated Statements of Operations for the three and six months ended June 30, 2012 and 2011 (unaudited)	2
	Consolidated Statements of Cash Flows for the six months ended June 30, 2012 and 2011 (unaudited)	3
	Notes to Consolidated Financial Statements (unaudited)	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operation.	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	24
Item 4.	Controls and Procedures.	24
	PART II
Item 1.	Legal Proceedings.	25
Item 1A.	Risk Factors.	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	25
Item 3.	Defaults Upon Senior Securities.	25
Item 4.	Mine Safety Disclosures.	25
Item 5.	Other Information.	25
Item 6.	Exhibits.	26
SIGNATURES

ITEM 1. FINANCIAL STATEMENTS.

MEDL MOBILE HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

	June 30, 2012			December 31, 2011
ASSETS	(unaudited)
Current assets:
Cash	$	1,440,385		$	1,075,307
Accounts receivable, less allowance for doubtful accounts of $50,575 and $108,000, respectfully		155,125			479,176
Prepaid expenses		106,667			9,800
Total current assets		1,702,177			1,564,283

Fixed assets, net of depreciation:		112,636			63,997

Other assets:
Security deposits		21,487			19,857
Intangible asset-customer base, net of amortization		132,000			-
Total other assets:		153,487			19,857

Total assets:	$	1,968,300		$	1,648,137


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	240,692		$	219,569
Accrued compensation expenses		119,459			63,360
Total current liabilities:		360,151			282,929

Long term liabilities:
Deferred lease		29,045			10,249
Derivative liability		147,560			-
Total long term liabilities:		176,605			10,249

Total liabilities:		536,756			293,178

Stockholders' equity
Preferred stock, $0.001 par value; 10,000,000 shares authorized; none issued and outstanding.		-			-
Common stock, $0.001 par value, 500,000,000 shares authorized;43,514,809 issued and outstanding at June 30, 2012 and 40,025,000 issued and outstanding at December 31, 2011		43,515			40,025
Additional paid-in capital		4,468,811			3,122,520
Accumulated deficit		(3,080,782	)		(1,807,586	)

Total stockholders' equity		1,431,544			1,354,959

Total liabilities and stockholders' equity	$	1,968,300		$	1,648,137

The accompanying notes are an integral part of these financial statements

MEDL MOBILE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	For the three months ended June 30, 2012			For the three months ended June 30, 2011			For the six months ended June 30, 2012			For the six months ended June 30, 2011
Revenues	$	444,662		$	573,068		$	1,594,660		$	951,723

Cost of goods sold		365,542			228,168			739,873			410,761

Gross profit		79,120			344,900			854,787			540,962

Expenses:
Selling, general and administrative		1,300,619			571,103			2,482,010			746,241
Total expenses		1,300,619			571,103			2,482,010			746,241

Net loss before other income (expense)		(1,221,499	)		(226,203	)		(1,627,223	)		(205,279	)

Other income (expense):
Decrease in fair value of warrants		354,028			-			354,028			-
Interest expense		-			(2,712	)		-			(2,712	)
Total other income (expense)		354,028			(2,712	)		354,028			(2,712	)

Net loss	$	(867,471	)	$	(228,915	)	$	(1,273,195	)	$	(207,991	)


NET LOSS PER COMMON SHARE
Basic and Diluted	$	(0.02	)	$	(0.02	)	$	(0.03	)	$	(0.02	)

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic and Diluted		43,575,328			9,909,077			41,950,460			8,662,215

The accompanying notes are an integral part of these financial statements

MEDL MOBILE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	For the six months ended June 30, 2012			For the six months ended June 30, 2011

Cash flows from operating activities:
Net loss	$	(1,273,195	)	$	(207,991	)
Adjustments to reconcile net loss to net cash (used in) operating activities:

Depreciation and amortization		29,890			3,555
Stock based compensation on options granted		106,197			-
Change in fair value of derivative liability		(354,028	)		-
Common stock issued for services		37,500			-
Decrease in allowance for doubtful accounts		(57,425	)		-
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable		381,476			(64,865	)
(Increase) in prepaid expenses		(14,260	)		(20,000	)
(Increase) in security deposits		(1,631	)		-
(increase) in other assets		(5,336	)		-
Increase in Deferred lease		18,796			-
Increase in accounts payable and accrued expenses		77,223			16,614
Net cash (used in) operating activities		(1,054,793	)		(272,687	)

Cash flows from investing activities:
Purchase of office equipment		(66,529	)		(40,297	)
Net cash (used in) investing activities		(66,529	)		(40,297	)

Cash flows from financing activities:
Proceeds from exercise of stock options		1,400			-
Repayment of shareholder loans		-			(40,534	)
Proceeds from convertible bridge notes		-			300,000
Proceeds from issuance of common stock		1,485,000			2,200,000
Net cash provided by financing activities		1,486,400			2,459,466

Net increase in cash		365,078			2,146,482

Cash at beginning of period		1,075,307			40,682

Cash at end of period	$	1,440,385		$	2,187,164

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during year for interest
Interest
Income taxes	$	800		$	800

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Issuance of common stack for payment of bridge notes	$	-		$	300,000
Value of shares issued for Acquisition	$	221,272		$	-
Acquisition of a software company-intangible asset- customer base	$	(144,000	)	$	-
Prepaid consulting fees related to Acqusition	$	(77,272	)	$	-
Derivative Liability	$	147,560		$	-

The accompanying notes are an integral part of these financial statements

MEDL MOBILE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2012

(Unaudited)

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION

The unaudited financial statements included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The financial statements and notes are presented as permitted on Form 10-Q and do not contain information included in the Company’s annual statements and notes. Certain information and footnote disclosure normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these financial statements be read in conjunction with the audited financial statements and accompanying notes thereto for the year ended December 31, 2011 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 30, 2012. While management believes the procedures followed in preparing these financial statements are reasonable, the accuracy of the amounts are in some respects dependent upon the facts that will exist, and procedures that will be accomplished by the Company later in the year.

These unaudited financial statements reflect all adjustments, including normal recurring adjustments which, in the opinion of management, are necessary to present fairly the operations and cash flows for the periods presented.

MEDL Mobile Holdings, Inc. (the “Registrant”) is a developer, incubator, marketer and aggregator of mobile application software, or “Apps”.

The Registrant, formerly known as Resume in Minutes, Inc. was incorporated in Nevada on May 22, 2008. On June 24, 2011, the Registrant completed a share exchange with MEDL Mobile, Inc. (“MEDL” and together with the Registrant, “we,” “our,” “us,” or the “Company”), a California corporation, and the shareholders of MEDL (the “MEDL Shareholders”) according to which the MEDL Shareholders transferred all of the issued and outstanding capital stock of MEDL to the Registrant in exchange for the issuance to the MEDL Shareholders of an aggregate of 20,000,000 shares of common stock of the Registrant. As a result of the share exchange, MEDL became a wholly owned subsidiary of the Registrant and the business of MEDL became the sole line of business of the Registrant.

The share exchange was accounted for as a reverse-merger and recapitalization. MEDL is the acquirer for financial reporting purposes and MEDL Mobile Holdings, Inc. is the acquired company. Consequently, the assets and liabilities and the operations reflected in the historical financial statements prior to the share exchange are those of MEDL and recorded at the historical cost basis of MEDL, and the consolidated financial statements after completion of the share exchange include the assets and liabilities of the Registrant and MEDL, historical operations of MEDL and operations of Registrant from the closing date of the share exchange.

On February 28, 2012, the Registrant acquired Inedible Software, LLC (“Inedible”), a developer of mobile apps and related mobile app technologies whose principal asset was a customer list. While the acquisition of Inedible was structured as a purchase of an entity, the Registrant did not acquire any ongoing business operations and the purpose of the transaction was to acquire Inedible’s customer list as a conduit to Apple for future potential. As a result, Inedible became a wholly owned subsidiary of the Registrant. The results of operations of Inedible are included on a going forward basis from the date of acquisition although Inedible is no longer actively engaged in any business activities.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of all of the entities that make up the Company. All significant inter-company balances and transactions have been eliminated.

Reclassification

The Company has made certain reclassifications to conform to prior periods’ data to the current presentation. These reclassifications had no effect on reported assets, liabilities or results of operations.

Basis of Accounting

The accompanying unaudited interim financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the United States Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, stockholders’ equity or cash flows. It is management's opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation.

The results of operations for the three and six months ended June 30, 2012 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2012. The accompanying statements should be read in conjunction with the more detailed financial statements, and the related footnotes thereto, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 30, 2012.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, the Company evaluates its estimates, including, but not limited to, those related to investment tax credits, bad debts, income taxes and contingencies. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments and other short-term investments with maturity of three months or less, when purchased, to be cash equivalents. The Company maintains cash and cash equivalent balances at one financial institution that is insured by the Federal Deposit Insurance Corporation. Any amounts of cash in financial institutions over FDIC insured limits, exposes the Company to cash concentration risk.

Revenue Recognition

The Company’s main source of revenue is from the development of custom applications or “Apps” for customers. The Company uses a hybrid method for recognizing revenue that includes elements from both ASC 985-605, Software Revenue Recognition and ASC 605-35, Construction-Type and Production-Type Contracts.

The Company recognizes revenues in accordance with ASC 985-605 when persuasive evidence of an agreement exists, delivery of the software has occurred, the fee is fixed or determinable, and collectability is probable. Nonrecurring revenues related to perpetual license sale with multiple elements are recognized in accordance with the guidance on software revenue recognition.

When the arrangement with a customer includes significant production, modification, or customization of the software, the Company recognizes the related revenue using the percentage-of-completion method in accordance with the accounting guidance and certain production-type contracts contained in ASC 605-35. The Company uses the percentage of completion method provided all of the following conditions exist:

	•	the contract includes provisions that clearly specify the enforceable rights regarding goods or services to be provided and received by the parties, the consideration to be exchanged and the manner and terms of settlement;
	•	the customer can be expected to satisfy its obligations under the contract;
	•	the Company can be expected to perform its contractual obligations; and
	•	reliable estimates of progress towards completion can be made.

The Company measures completion based on achieving milestones detailed in the agreements with the customers. Costs of providing services, including services accounted for in accordance with ASC 605-35, are expensed as incurred.

The following is an example of how revenue is recognized involving an arrangement with a customer that includes significant production, modification, or customization of the software: a typical project will require between 50-100 working days from beginning to end. On average 25-50 cumulative working days are expended prior to the start of development and this work typically includes, design, storyboards, and architecture. Prior to developing the App, hard costs are incurred as a number of variables are taken into account for preparation. Those often include the following:

	•	understanding the client's business situation and environment, including their competitive landscape;
	•	researching and establishing the goals of the App;
	•	understanding and researching the target and potential App use cases;
	•	developing a monetization strategy;
	•	determining functionality and articulating the functionality through a storyboard and functional specification document; and
	•	determining the resources and timeline needed to complete the final work product.

Therefore, since significant work has been undertaken by the Company, the Company typically receives a non-refundable payment of up to fifty (50%) percent of the proposed project contract at the time that the contract is signed or soon thereafter. The revenue is recognized at this point in time. Another twenty five (25%) percent of the contract is typically billable per stated terms of the contract and revenue is recognized at that time, typically upon release of beta version of the App. Upon completion of the App to the client typically the remaining twenty five (25%) percent is billed to the client and recognized as revenue to the Company.

The Company also generates revenue from the sale of Apps through the Apple store and other App marketplaces. This revenue is recognized in the period the App is sold to the end user on an accrual basis.

Accounts Receivable

Accounts receivable are stated at the amounts management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a charge to earnings and a credit to a valuation allowance based on its assessment of the current status of individual accounts. Balances outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to trade accounts receivable. Management has determined that the allowance for doubtful accounts at June 30, 2012 and December 31, 2011 is $50,575, and $108,000, respectively.

Accounts receivable will generally be due within 30 to 90 days and collateral is not required.

Income Taxes

The Company follows ASC 740 rules governing uncertain tax positions, which provides guidance for recognition and measurement. This prescribes a threshold condition that a tax position must meet for any of the benefits of the uncertain tax position to be recognized in the financial statements. It also provides accounting guidance on derecognization, classification and disclosure of these uncertain tax positions.

Uncertainty in Income Taxes

Under ASC 740-10-25 recognition and measurement of uncertain income tax positions is required using a “more-likely-than-not" approach. Management evaluates its tax positions on an annual basis and has determined that as of June 30, 2012 no additional accrual for income taxes is necessary.

Research and Development

The Company incurs costs on activities that relate to research and development of new technology and products. Research and development costs are expensed as incurred.

Property and equipment

Property and equipment are stated at cost. Expenditures that materially increase the life of the assets are capitalized. Ordinary maintenance and repairs are charged to expense as incurred. When assets are sold or otherwise disposed of, the cost and the related accumulated depreciation and amortization are removed from the accounts and any realized gain or loss is recognized at that time.

Depreciation is computed primarily on the straight line method for financial statement purposes over the following estimated useful lives:

Computer equipment 3-5 years

Furniture and fixtures 3-5 years

Intangible Assets

Intangible assets are stated at cost. Expenditures of costs incurred to renew or extend the term of a recognized intangible asset and materially extend the useful life are capitalized. When assets are sold or otherwise written off due to asset impairment, the cost and the related accumulated amortization are removed from the accounts and any realized gain or loss is recognized at that time.

Amortization is computed primarily on the straight line method for financial statement purposes over the estimated useful life. Estimated useful lives will vary based on the nature of the intangible asset.

Fair Value of Financial Instruments

The Company adopted ASC 820, Fair Value Measurements and Disclosures, for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing US GAAP that requires the use of fair value measurements which establishes a framework for measuring fair value and expands disclosure about such fair value measurements.

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

	Level 1:	Observable inputs such as quoted market prices in active markets for identical assets or liabilities
	Level 2:	Observable market-based inputs or unobservable inputs that are corroborated by market data
	Level 3:	Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.

The carrying amounts reported in the balance sheet for cash, accounts payable, and accrued liabilities approximate their estimated fair market value based on the short-term maturity of this instrument.

In addition, FASB ASC 825-10-25, Fair Value Option was effective for January 1, 2008. ASC 825-10-25 expands opportunities to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value.

The following table presents a reconciliation of the derivative liability measured at fair value on a recurring basis using significant unobservable input (Level 3) from January 1, 2012 to June 30, 2012:

	Conversion feature derivative liability

Balance at January 1, 2012	$	-
Recognition of derivative liability		501,588
Balance at March 31, 2012		501,588
Change in fair value		354,028
Balance at June 30, 2012	$	147,560

Earnings (Loss) Per Share of Common Stock

Basic net earnings (loss) per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share ("EPS") include additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options and warrants. Common stock equivalents were not included in the computation of diluted earnings per share on the consolidated statement of operations for the three and six month periods ended June 30, 2012 due to the fact that the Company reported a net loss and to do so would be anti-dilutive for that period presented.

The following is a reconciliation of the computation for basic and diluted EPS:

Loss Per Share of Common Stock

	For the three months ended June 30, 2012			For the three months ended June 30, 2011			For the six months ended June 30, 2012			For the six months ended June 30, 2011
Net loss	$	(867,471	)	$	(228,915	)	$	(1,273,195	)	$	(207,991	)
Weighted-average common shares
Outstanding (Basic)		43,575,328			9,909,077			41,950,460			8,662,215

Weighted-average common stock
Equivalents
Stock options		0			0			0			0

Weighted-average commons shares
Outstanding (Diluted)		43,575,328			9,909,077			41,950,460			8,662,215

NET LOSS PER COMMON SHARE
Basic and Diluted	$	(0.02	)	$	(0.02	)	$	(0.03	)	$	(0.02	)

Diluted net loss per share reflects the potential dilution that could occur if the securities or other contracts to issue common stock were exercised or converted into common stock.

Goodwill and Other Intangible Assets

In accordance with ASC 350-30-65 (formerly SFAS 142, Goodwill and Other Intangible Assets), the Company assesses the impairment of identifiable intangibles whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Intangible assets were comprised of website assets. Factors the Company considers to be important which could trigger an impairment review include the following:

Significant underperformance relative to expected historical or projected future operating results;

Significant changes in the manner of use of the acquired assets or the strategy for the overall business; and

Significant negative industry or economic trends.

When the Company determines that the carrying value of intangibles may not be recoverable based upon the existence of one or more of the above indicators of impairment and the carrying value of the asset cannot be recovered from projected undiscounted cash flows, the Company records an impairment charge. The Company measures any impairment based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with the risk inherent in the current business model. Significant management judgment is required in determining whether an indicator of impairment exists and in projecting cash flows. The Company did not consider it necessary to record any impairment charges during the period ended June 30, 2012.

Stock Based Compensation

The Company applies ASC 718-10 and ASC 505-50 (formerly SFAS 123R) in accounting for stock options issued to employees. The amount of compensation cost for share-based payments is measured based upon the fair value on the grant date of the equity instruments issued. For stock options issued to non-employees, the Company applies the same standard.

Recent Accounting Pronouncements

Accounting standards that have been issued or proposed by the FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption.

NOTE 3 – PROPERTY AND EQUIPMENT

Fixed assets as of June 30, 2012 (unaudited) and December 31, 2011 were as follows:

PROPERTY AND EQUIPMENT

	Estimated Useful Lives (Years)		June 30, 2012			Dcember 31, 2011
Computer Equipment		3-5	$	117,867		$	72,124
Furniture and fixtures		3-5		15,144			8,453
Leasehold Improvements		3-5		14,095			-
				147,106			80,577

Less: accumulated depreciation				(34,470	)		(16,580	)
Fixed assets, net			$	112,636		$	63,997

There was $17,890 and $3,555 charged to operations for depreciation expense for the six months ended June 30, 2012 and June 30, 2011, respectively.

NOTE 4 – INTANGIBLE ASSETS

Intangible assets as of June 30, 2012 (unaudited) and December 31, 2011 were as follows:

INTANGIBLE ASSETS

	Estimated Useful Life (Years)		June 30, 2012			December 31, 2011
Intangible asset - customer base		4	$	144,000		$	-

Less: accumulated amortization				(12,000	)		-
Intangible asset - customer base, net of amortization			$	132,000		$	-

There was $12,000 and $0 charged to operations for amortization expense for the six months ended June 30, 2012 and June 30, 2011, respectively.

NOTE 5 - PROVISION FOR INCOME TAXES

The provision (benefit) for income taxes for the six months ended June 30, 2012 differs from the amount which would be expected as a result of applying the statutory tax rates to the income (losses) before income taxes due primarily to changes in the valuation allowance to fully reserve net deferred tax assets and also due to the fact that MEDL was taxed as a S Corporation from January 1, 2011 to June 23, 2011, resulting in no tax benefit or deferred tax asset during this period. Accordingly, all of the losses of MEDL flow through to the shareholders of the S Corporation and the Company has no deferred tax assets or loss carryforwards from this period.

Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carry-forwards are expected to be available to reduce taxable income. As the achievement of required future taxable income is uncertain, the Company recorded a valuation allowance.

	As of June 30, 2012
Deferred tax assets:
Net Operating Loss	$	(1,273,195	)
Tax Rate		34	%
deferred tax assets 2012	$	396,779
deferred tax assets 2011	$	367,420
Total deferred tax assets	$	764,199
Less Valuation allowance	$	(764,199	)

Net deferred tax assets	$	-

Reconciliation of the differences between the statutory tax rate and the effective tax rate is:

	June 30, 2012
Federal statutory tax rate		34	%
Effective Tax Rate		34	%
Valuation Allowance		(34	%)
Net Effective Tax Rate		0	%

As of June 30, 2012, the Company has a net operating loss carry forward of $2,247,643 expiring through 2032. The Company has provided a valuation allowance against the full amount of the deferred tax asset due to management’s uncertainty about its realization. Furthermore, the net operating loss carry forward may be subject to further limitation pursuant to Section 382 of the Internal Revenue Code.

NOTE 6 - RELATED PARTY TRANSACTIONS

The Company has entered into a sub-lease with a company in which the Company’s CEO and his family are shareholders. The sublease is for approximately 4,500 square feet. The term of the sub-lease is from January 1, 2011 and ends at November 30, 2015. (See also Note 7)

NOTE 7 - COMMITMENTS AND CONTINGENCIES

Lease

The Company is party to three non-cancelable lease agreements for office space through 2015. The first agreement is for approximately 4,500 square feet of space located at 18475 Bandilier Circle, unit A, Fountain Valley, CA. The term of the sub-lease is from January 1, 2011 and ends at November 30, 2015. The second lease is for approximately 4,786 square feet and is located at 18350 Mt. Langley Street, Fountain Valley, CA. The term of this lease is from September 1, 2011 and ends at February 28, 2013. The third agreement is for approximately 6,034 square feet of space located at 18475 Bandilier Circle, unit B, Fountain Valley, CA. The term of the sub-lease is from May 1, 2012 and ends at November 30, 2015.

At June 30, 2012, aggregate future minimum payments under these leases, is as follows:

2012	$	180,480
2013		150,820
2014		155,302
2015		72,490
Total	$	559,092

Litigation

The Company is not presently involved in any litigation.

NOTE 8 – STOCKHOLDERS’ EQUITY (DEFICIT)

Preferred Stock

The authorized preferred stock of the Company consists of 10,000,000 shares of preferred stock at a par value of $0.001. As of June 30, 2012, the Company had no outstanding shares of preferred stock.

Common Stock

The authorized common stock of the Company consists of 500,000,000 shares of common stock with a par value of $0.001.

On April 20, 2011, MEDL sold an aggregate of $300,000 secured 5% bridge notes to certain accredited investors in a private placement transaction. The bridge notes were to mature upon the earlier to occur of a private placement of at least $2,200,000 and simultaneous reverse merger or on October 20, 2011. The principal amount of the bridge notes automatically exchanged into shares of common stock of the Company in the Private Placement (as defined below) at a price per share of $0.25.

On June 3, 2011, the board of directors of the Registrant authorized a 37.39716 for one forward split of its outstanding common stock in the form of a dividend, whereby an additional 36.39716 shares of common stock, par value $0.001 per share, were issued for each one share of common stock held by each shareholder of record on June 23, 2011.

On June 24, 2011, the Company completed a share exchange (the “Share Exchange”) with MEDL, a California corporation, and the shareholders of MEDL (the “MEDL Shareholders”) according to which the MEDL Shareholders transferred all of the issued and outstanding capital stock of MEDL to the Company in exchange for the issuance to the MEDL Shareholders of an aggregate of 20,000,000 shares of common stock of the Company. The Share Exchange caused MEDL to become a wholly-owned subsidiary of the Company.

In connection with the closing of the share exchange, the Company sold 10,000,000 shares of common stock at a purchase price of $0.25 per share in a private placement to accredited investors, resulting in aggregate gross proceeds of $2,500,000 (including the exchange of bridge notes in the aggregate principal amount of $300,000) (the “Private Placement”). Accrued interest of $2,712 in respect of the bridge notes was not paid at the closing and is included in accounts and accrued expenses payable at June 30, 2012 and December 31, 2011, respectively.

Two business days following the closing of the Share Exchange and the Private Placement, under an Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations (the “Conveyance Agreement”), the Company transferred all of its pre-Exchange assets and liabilities to its newly formed wholly-owned subsidiary, Resume in Minutes Holdings, Inc. (“SplitCo”). Thereafter, pursuant to a stock purchase agreement (the “Stock Purchase Agreement”), the Company transferred all of the outstanding capital stock of SplitCo to certain of its former shareholders in exchange for the cancellation of 94,824,263 shares of its common stock that they owned (the “Split-Off”), with 10,000,000 shares of its common stock held by persons who acquired such shares prior to the Share Exchange remaining outstanding. These 10,000,000 shares constitute the Company’s “public float” and are its only shares of registered common stock and accordingly are its only shares available for resale without further registration or under an applicable exemption from registration.

On December 23, 2011, the Company issued 25,000 shares of common stock for investor relations services at a price per share of $.80 for total expense of $20,000.

On January 2, 2012, the Company issued 41,667 shares of common stock for advisory services at a price per share of $.90 for total expense of $37,500.

On February 28, 2012, the Registrant acquired Inedible, a developer of mobile apps and related mobile app technologies whose principal asset was a customer list. While the acquisition of Inedible was structured as a purchase of an entity, the Registrant did not acquire any ongoing business operations and the purpose of the transaction was to acquire Inedible’s customer list as a conduit to Apple for future potential. As a result, Inedible became a wholly owned subsidiary of the Registrant. The purchase consideration paid was 442,542 shares of common stock of the Company to the sellers, half of which are being held in escrow for one year to secure against any claims of indemnification. The Company accounted for the value under ASC 805-50-30-2, Business Combinations whereby if the consideration is not in the form of cash, the measurement is based on either the cost which shall be measured based on the fair value of the consideration given or the fair value of the assets (or net assets) acquired, whichever is more clearly evident and thus more reliably measurable. The fair value of the shares issued amounted to $221,272, which was allocated between intangible assets – customer base for $144,000, and $77,272 to prepaid consulting fees.

On March 28, 2012, the Company issued to an accredited investor 3,000,000 shares of common stock and a warrant to purchase 1,000,000 shares of common stock for an aggregate purchase price of $1,500,000. The warrant has a three year term and may be exercised at an exercise price of $0.90 per share, subject to adjustment in the case of stock splits, distributions, reorganizations, recapitalizations and the like, and may be exercised on a cashless basis under certain circumstances. The warrant contains full ratchet anti-dilution protection in the case of a share issuance for consideration less than the then exercise price of the warrant, subject to customary exceptions.

On May 22, 2012 the Company entered into a consulting agreement for advisory services and agreed to issue up to 200,000 restricted shares of common stock in two tranches of 100,000 shares each. The issuance of these shares is being made under the Company’s 2011 Equity Incentive Plan. The first tranche of 100,000 shares vests on November 30, 2012, and were valued at the market price on the date of the agreement. The expense for these shares is being amortized over a six month period with a total expense of $30,000. The Company has the option to terminate the agreement after six months and if the agreement is not terminated, the second tranche of 100,000 shares shall become issuable in December 2012, vests over a six month period, and shall be valued at the market price upon issuance.

As of June 30, 2012, the Company has 43,514,809 shares of common stock issued and outstanding.

Warrants

The Company has warrants outstanding to purchase 1,000,000 shares of common stock at $0.90 per share as of June 30, 2012, and no warrants were outstanding at December 31, 2011. The warrants are subject to full ratchet anti-dilution protection if the Company sells shares or share equivalents at less than the $0.90 exercise price. The warrants issued in this financing arrangement did not meet conditions for equity classification and are required to be carried as a derivative liability, at fair value. Management estimates the fair value of the warrants on the inception date, and subsequently at each reporting period, using the Lattice option-pricing model, adjusted for dilution, because that technique embodies all assumptions (including volatility, expected terms, dilution and risk free rates) that are necessary to determine the fair value of freestanding warrants. This valuation resulted in a derivative liability on the balance sheet in the amount of $147,560 at June 30, 2012. Significant inputs in calculating this valuation using the Lattice option-pricing model are as follows:

	June 30, 2012

Expected volatility	84%
Expected term	2.75 Years
Risk-free interest rate	0.51%
Expected dividend yield	0%

Share-Based Compensation and Options Issued to Consultants

2011 Equity Incentive Plan

The board of directors adopted the 2011 Equity Incentive Plan, as amended, (the “Plan”) of MEDL Mobile Holdings, Inc. (Nevada) that provided for the issuance of a maximum of 10,000,000 shares of common stock. As of June 30, 2012, there were options to purchase 5,663,900 shares outstanding under the plan. Of this amount, there are vested options exercisable into 3,702,561 shares of common stock of which options exercisable for 2,325,561 shares of common stock have been issued to employees and options exercisable for 1,377,000 shares of common stock have been issued to non-employees. As of June 30, 2012, the Company had approximately 4,330,500 shares reserved for future grant under its Plan and there were 5,600 shares exercised during the six months ended June 30, 2012.

The Company generally grants stock options to employees and directors at exercise prices equal to the fair market value of the Company's stock at the dates of grant. Stock options are typically granted throughout the year and generally vest over five years of service thereafter and expire ten years from the date of the award, unless otherwise specified. The Company recognizes compensation expense for the fair value of the stock options over the requisite service period for each stock option award.

Total share-based compensation expense included in the consolidated statements of operations for the six months ended June 30, 2012 and June 30, 2011 was $106,197, and $0, respectively. For the six months ended June 30, 2012, compensation expense included in selling, general and administration is $77,415. Compensation expense included in cost of goods sold is $28,782.

There was no capitalized share-based compensation cost as of June 30, 2012 and there were no recognized tax benefits during the six months ended June 30, 2012 or June 30, 2011.

Share-Based Compensation and Options Issued to Consultants

Option activity for the six months ended June 30, 2012 was as follows:

						Weighted Average
				Weighted		Remaining		Aggregate
				Average		Contractual		Intrinsic
	Options			Exercise Price ($)		Life (Yrs.)		Value ($)

Options outstanding at December 31, 2011		4,892,000			0.28		9.49		3,477,380
Granted		1,360,000			0.52		9.9		13,635
Exercised		(5,600	)		0.25				840
Forfeited or cancelled		(582,500	)		0.25				4,200
Expired
Options outstanding at June 30, 2012		5,663,900			0.31		9.14		367,595
Options expected to vest in the future at June 30, 2012		2,091,939			0.39		9.37		112,510
Options exercisable at June 30, 2012		3,571,961			0.40		8.98		255,085
Options vested, exercisable and options expected
to vest at June 30, 2012		5,663,900			0.40		9.14		367,595

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of our common stock for those awards that have an exercise price currently below the closing price.

Unvested share activity for the six months ended June 30, 2012 was as follows:

	Unvested	Weighted
	Number of	Average Grant
	Options	Fair Value ($)
Unvested balance at December 31, 2011	1,980,416
Granted	1,360,000	0.52
Vested	(805,977)	0.15
Forfeited or cancelled	(442,500)	0.25
Unvested balance at June 30, 2012	2,091,939	0.34

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company's common stock for those awards that have an exercise price currently below the closing price.

At June 30, 2012, there was $766,211 of unrecognized share-based compensation expense related to unvested employee share options with a weighted average remaining recognition period of 2.75 years.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Forward Looking Statements

Some of the statements contained in this Form 10-Q that are not historical facts are "forward-looking statements" which can be identified by the use of terminology such as "estimates," "projects," "plans," "believes," "expects," "anticipates," "intends," or the negative or other variations, or by discussions of strategy that involve risks and uncertainties. We urge you to be cautious of the forward-looking statements, that such statements, which are contained in this Form 10-Q, reflect our current beliefs with respect to future events and involve known and unknown risks, uncertainties and other factors affecting our operations, market growth, services, products and licenses. No assurances can be given regarding the achievement of future results, as actual results may differ materially as a result of the risks we face, and actual events may differ from the assumptions underlying the statements that have been made regarding anticipated events.

All written forward-looking statements made in connection with this Form 10-Q that are attributable to us or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements. Given the uncertainties that surround such statements, you are cautioned not to place undue reliance on such forward-looking statements.

Overview

We are primarily engaged in the monetization of mobile application software or “Apps” through four revenue generating platforms: (i) development of customized Apps for third parties to monetize their particular intellectual property, persona or brand, (ii) incubation of Apps in partnership with third parties and from a library of more than 75,000 original Apps concept submissions, (iii) sale of advertising and sponsorship opportunities directly to brands via mobile advertising networks, and (iv) acquisition of Apps from other developers and use of a proprietary application programming interface, or API, to make Apps recommendations for our user base.

Share Exchange

On June 24, 2011, we completed a share exchange pursuant to which we acquired all of the capital stock of MEDL Mobile, Inc., a California corporation (“MEDL”), which became our wholly owned subsidiary. In connection with this share exchange, we discontinued our former business and succeeded to the business of MEDL as our sole line of business. The share exchange is accounted for as a recapitalization. MEDL is the acquirer for accounting purposes and we are the acquired company. Accordingly, MEDL’s historical financial statements for periods prior to the acquisition have become those of the Registrant retroactively restated for, and giving effect to, the number of shares received in the share exchange. The accumulated earnings of MEDL were also carried forward after the acquisition. Operations reported for periods prior to the share exchange are those of MEDL.

Inedible Acquisition

On February 28, 2012, we acquired Inedible Software, LLC (“Inedible”), a developer of mobile apps and related mobile app technologies whose principal asset was a customer list. While the acquisition of Inedible was structured as a purchase of an entity, we did not acquire any ongoing business operations and the purpose of the transaction was to acquire Inedible’s customer list as a conduit to Apple for future potential. As a result, Inedible became a wholly owned subsidiary of the Company. The results of operations of Inedible are included on a going forward basis from the date of acquisition, although Inedible is no longer actively engaged in any business activities.

Critical Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, we evaluate our estimates, including, but not limited to, those related to investment tax credits, bad debts, income taxes and contingencies. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.

Cash and Cash Equivalents

We consider all highly liquid debt instruments and other short-term investments with maturity of three months or less, when purchased, to be cash equivalents. We maintain cash and cash equivalent balances at one financial institution that is insured by the Federal Deposit Insurance Corporation. Any amounts of cash in financial institutions over FDIC insured limits, expose us to cash concentration risk.

Revenue Recognition

Our main source of revenue is from the development of custom applications or “Apps” for customers. We use a hybrid method for recognizing revenue that includes elements from both ASC 985-605, Software Revenue Recognition and ASC 605-35, Construction-Type and Production-Type Contracts.

We recognize revenues in accordance with ASC 985-605 when persuasive evidence of an agreement exists, delivery of the software has occurred, the fee is fixed or determinable, and collectability is probable. Nonrecurring revenues related to perpetual license sale with multiple elements are recognized in accordance with the guidance on software revenue recognition.

When the arrangement with a customer includes significant production, modification, or customization of the software, we recognize the related revenue using the percentage-of-completion method in accordance with the accounting guidance and certain production-type contracts contained in ASC 605-35. We use the percentage of completion method provided all of the following conditions exist:

	•	the contract includes provisions that clearly specify the enforceable rights regarding goods or services to be provided and received by the parties, the consideration to be exchanged and the manner and terms of settlement;
	•	the customer can be expected to satisfy its obligations under the contract;
	•	the Company can be expected to perform its contractual obligations; and
	•	reliable estimates of progress towards completion can be made.

We measure completion based on achieving milestones detailed in the agreements with the customers. Costs of providing services, including services accounted for in accordance with ASC 605-35, are expensed as incurred.

	•	understanding the client's business situation and environment, including their competitive landscape;
	•	researching and establishing the goals of the App;
	•	understanding and researching the target and potential App use cases;
	•	developing a monetization strategy;
	•	determining functionality and articulating the functionality through a storyboard and functional specification document; and
	•	determining the resources and timeline needed to complete the final work product.

Therefore, since significant work has been undertaken by us, we typically receive a non-refundable payment of up to fifty (50%) percent of the proposed project contract at the time that the contract is signed or soon thereafter. The revenue is recognized at this point in time. Another twenty five (25%) percent of the contract is typically billable per stated terms of the contract and revenue is recognized at that time, typically upon release of beta version of the App. Upon completion of the App to the client typically the remaining twenty five (25%) percent is billed to the client and recognized as revenue to us.

We also generate revenue from the sale of Apps through the Apple store and other App marketplaces. This revenue is recognized in the period the App is sold to the end user on an accrual basis.

Accounts Receivable

Income Taxes

Income taxes are accounted for under the asset and liability method in accordance with ASC 740, Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial carrying amounts of existing assets and liabilities and their respective tax bases as well as operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance to the extent that the recoverability of the asset is unlikely to be recognized. We follow ASC 740 rules governing uncertain tax positions, which provides guidance for recognition and measurement. This prescribes a threshold condition that a tax position must meet for any of the benefits of the uncertain tax position to be recognized in the financial statements. It also provides accounting guidance on derecognition, classification and disclosure of these uncertain tax positions.

Uncertainty in Income Taxes

Under ASC 740-10-25 recognition and measurement of uncertain income tax positions is required using a “more-likely-than-not" approach. Management evaluates their tax positions on an annual basis.

Research and Development

We incur costs on activities that relate to research and development of new technology and products. Research and development costs are expensed as incurred.

Fair Value of Financial Instruments

We adopted ASC 820, Fair Value Measurements and Disclosure, for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing US GAAP that require the use of fair value measurements which establishes a framework for measuring fair value and expands disclosure about such fair value measurements.

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC-820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

	Level 1:	Observable inputs such as quoted market prices in active markets for identical assets or liabilities
	Level 2:	Observable market-based inputs or unobservable inputs that are corroborated by market data
	Level 3:	Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.

In addition, FASB ASC 825-10-25 Fair Value Option was effective for January 1, 2008. ASC 825-10-25 expands opportunities to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value.

Goodwill and Other Intangible Assets

In accordance with ASC 350-30-65 (formerly SFAS 142, Goodwill and Other Intangible Assets), we assess the impairment of identifiable intangibles whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Intangible assets were comprised of website assets. Factors we consider to be important which could trigger an impairment review include the following:

1. Significant underperformance relative to expected historical or projected future operating results;

2. Significant changes in the manner of use of the acquired assets or the strategy for the overall business; and

3. Significant negative industry or economic trends.

When we determine that the carrying value of intangibles may not be recoverable based upon the existence of one or more of the above indicators of impairment and the carrying value of the asset cannot be recovered from projected undiscounted cash flows, we record an impairment charge. We measure any impairment based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with the risk inherent in the current business model. Significant management judgment is required in determining whether an indicator of impairment exists and in projecting cash flows.

Stock Based Compensation

We apply ASC 718-10 and ASC 505-50 (formerly SFAS 123R) in accounting for stock options issued to employees. The amount of compensation cost for share-based payments is measured based upon the fair value on the grant date of the equity instruments issued. For stock options issued to non-employees, we apply the same standard.

Results of Operations

Three Months Ended June 30, 2012 Compared to Three Months Ended June 30, 2011 (unaudited)

The following table presents our results of operations for the three months ended June 30, 2012 compared to the three months ended June 30, 2011.

	Three Months Ended June 30, 2012			Three Months Ended June 30, 2011			$ Change			% Change

Revenue	$	444,662		$	573,068		$	(128,406	)		(22	)%

Cost of Goods Sold		365,542			228,168			137,374			60	%

Gross Profit		79,120			344,900			(265,780	)		(77	)%

Expenses:
Selling, Gen'l & Admin		1,300,619			571,103			729,516			128	%


Loss from Operations		(1,221,499	)		(226,203	)		(995,296	)		440	%

Other Income (Expense)
Decrease in fair value of warrants		354,028			-			354,028			100	%
Interest expense		-			(2,712	)		2,712			(100	)%
Total Other Income (Expense)		354,028			(2,712	)		356,740

Net (loss) Profit	$	(867,471	)	$	(228,915	)	$	(638,556	)		279	%

Revenues

Revenues for the three months ended June 30, 2012 decreased to $444,662 as compared to $573,068 for the three months ended June 30, 2011, a decrease of $128,406 or 22%. The decrease is primarily attributable to the lack of completed projects and related uncompleted milestones required to recognize the revenue.

Based on the unpredictability of market and customer demand, we cannot accurately predict revenue trends on a quarter to quarter basis.

Cost of Goods Sold

Cost of goods sold for the three months ended June 30, 2012 increased to $365,542 as compared to $228,168 for the three months ended June 30, 2011, an increase of $137,374 or 60%. The increase is primarily due to the addition of additional employees and outside contractors to fulfill customer orders for new mobile applications. The additional employees included developers, project managers, visual architects, and graphic designers. This trend of hiring will be dependent on the growth of future revenue and the related commitments to complete development projects on a timely basis.

Gross Profit

Gross profit for the three months ended June 30, 2012 decreased to $79,120 as compared to $344,900 for the three months ended June 30, 2011, a decrease of $265,780 or 77%. The gross profit decreased due to the decreased revenue and increased cost of goods sold as discussed above.

Operating Expenses

Operating expenses for the three months ended June 30, 2012 increased to $1,300,619 as compared to $571,103 for the three months ended June 30, 2011, an increase of $729,516 or 128%. The increase is primarily attributable to salaries paid to our officers, who had previously not been paid in the prior year period, the increase in support staff, sales and marketing staff, costs of moving into new corporate offices as well as costs associated with being a public company which include legal and accounting costs, stock option expense, investor relations and public relations expense. In addition, increased expenses include the expansion of the MEDL advertising and acquisition teams in which new employees were hired to develop an advertising business and to acquire new apps for the MEDL platform. These expenses are all recurring in nature, and the rate of increase in these expenses are expected to slow substantially as we complete the expansion of our internal infrastructure over the next few months.

Other Income/Expenses

Other income for the three months ended June 30, 2012 increased to $354,028 as compared to $0 for the three months ended June 30, 2011, an increase of $354,028 or 100%. The increase is attributable to the decrease in the fair value of warrants issued in a private placement in March 2012. Other expenses for the three months ended June 30, 2012 decreased to $0 as compared to $2,712 for the three months ended June 30, 2011, a decrease of $2,712 or 100%. The decrease is attributable to there being no interest expense in 2012.

Net Loss

Net loss for the three months ended June 30, 2012 increased to $867,471 as compared to $228,915 for the three months ended June 30, 2011, an increase of $638,556 or 279%. The loss was a result of the increase in costs at a faster rate than the revenue growth of the company as discussed above.

Results of Operations

Six Months Ended June 30, 2012 Compared to Six Months Ended June 30, 2011 (unaudited)

The following table presents our results of operations for the six months ended June 30, 2012 compared to the six months ended June 30, 2011.

	Six Months Ended June 30, 2012			Six Months Ended June 30, 2011			$ Change			% Change

Revenue	$	1,594,660		$	951,723		$	642,937			68	%

Cost of Goods Sold		739,873			410,761			329,112			80	%

Gross Profit		854,787			540,962			313,825			58	%

Expenses:
Selling, Gen'l & Admin		2,482,010			746,241			1,735,769			233	%

Loss from Operations		(1,627,223	)		(205,279	)		(1,421,944	)		693	%

Other Income (Expense)
Decrease in fair value of warrants		354,028			-			354,028			100	%
Interest expense		-			(2,712	)		2,712			(100	)%
Total Other Income (Expense)		354,028			(2,712	)		356,740

Net loss	$	(1,273,195	)	$	(207,991	)	$	(1,065,204	)		512	%

Revenues

Revenues for the six months ended June 30, 2012 increased to $1,594,660 as compared to $951,723 for the six months ended June 30, 2011, an increase of $642,937 or 68%. The increase is primarily attributable to growth of our customer base through our expanded sales force and referrals from existing customers. The revenue increase was driven by the demand for the development of customized mobile applications for third parties to monetize their particular intellectual property, persona or brand. Specifically, there has been significant growth in the demand for mobile applications with a limited supply of qualified developers available to meet the demand. Based upon our success with past clients, we have become a preferred vendor in long-term relationships with some of our larger customers, yielding organic revenue growth.

In addition, our services have expanded resulting in increased project fees. Historically, we have been tasked to develop mobile front-end applications. However, more recently we have worked on more expansive projects including back-end development and website development, as well as marketing and monetization strategies.

Based on the unpredictability of market and customer demand, we cannot accurately predict revenue trends on a quarter to quarter basis.

Cost of Goods Sold

Cost of goods sold for the six months ended June 30, 2012 increased to $739,873 as compared to $410,761 for the six months ended June 30, 2011, an increase of $329,112 or 80%. The increase is primarily due to the addition of additional employees and outside contractors to fulfill customer orders for new mobile applications. The additional employees included developers, project managers, visual architects, and graphic designers. This trend of hiring will be dependent on the growth of future revenue and the related commitments to complete development projects on a timely basis.

Gross Profit

Gross profit for the six months ended June 30, 2012 increased to $854,787 as compared to $540,962 for the six months ended June 30, 2011, an increase of $313,825 or 58%. The gross profit increased due to the additional business and related revenue generated which utilized both existing employees and new employees in producing the mobile applications finished product for our customers.

Operating Expenses

Operating expenses for the six months ended June 30, 2012 increased to $2,482,010 as compared to $746,241 for the six months ended June 30, 2011, an increase of $1,735,769 or 233%. The increase is primarily attributable to salaries paid to our officers, who had previously not been paid in the prior year period, the increase in support staff, sales and marketing staff, costs of moving into new corporate offices as well as costs associated with being a public company which include legal and accounting costs, stock option expense, investor relations and public relations expense. In addition, increased expenses include the expansion of the MEDL advertising and acquisition teams in which new employees were hired to develop an advertising business and to acquire new apps for the MEDL platform. These expenses are all recurring in nature, and the rate of increase in these expenses are expected to slow substantially as we complete the expansion of our internal infrastructure over the next few months.

Other Income/Expenses

Other income for the six months ended June 30, 2012 increased to $354,028 as compared to $0 for the six months ended June 30, 2011, an increase of 100%. The increase is attributable to the decrease in the fair value of warrants issued in a private placement in March 2012. Other expenses for the six months ended June 30, 2012 decreased to $0 as compared to $2,712 for the six months ended June 30, 2011, a decrease of $2,712 or 100%. The decrease is attributable to no interest expense in 2012.

Net Loss

Net loss for the six months ended June 30, 2012 increased to $1,273,195 as compared to $207,991 for the six months ended June 30, 2011, an increase of $1,065,204 or 512%. The loss was a result of the increase in costs at a faster rate than the revenue growth of the company as discussed above.

Liquidity and Capital Resources

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures.

Our business is still in the early stages, having commenced operations on March 4, 2009. At June 30, 2012 and December 31, 2011, we had cash of $1,440,385 and $1,075,307, respectively and working capital of $1,342,026 and $1,281,354, respectively.

Net cash used in operating activities for the six months ended June 30, 2012 was $1,054,793 compared to net cash used in operating activities of $272,687 for the six months ended June 30, 2011. The increase in net cash used in operating activities was primarily attributable to the $1,273,195 net loss for the period. Net cash used in investing activities for the six months ended June 30, 2012 was $66,529 as compared to net cash used in investing activities of $40,297 for the six months ended June 30, 2011. Net cash provided by financing activities for the six months ended June 30, 2012 was $1,486,400 as compared to net cash provided by financing activities of $2,459,466 for the six months ended June 30, 2011. Net cash provided by financing activities was primarily the result of $1,485,000 of net proceeds from a private placement described below that closed on March 28, 2012.

To date we have financed our operations through internally generated revenue from operations, the sale of our equity, the issuance of notes and loans from a shareholder.

In connection with the closing of the share exchange on June 24, 2011, we sold 10,000,000 shares of our common stock at a purchase price of $0.25 per share in a private placement to accredited investors, resulting in aggregate gross proceeds of $2,500,000 (including the exchange of bridge notes in the aggregate principal amount of $300,000).

On March 28, 2012, we entered into a securities purchase agreement with an accredited investor whereby we sold an aggregate of 1,000,000 units (the “Units”), each Unit comprised of three shares of our common stock and a warrant to purchase one share of our common stock at a price per Unit of $1.50. As a result of the sale, which closed on the same day as entering into the securities purchase agreement, we issued to the investor 3,000,000 shares of our common stock and a warrant to purchase 1,000,000 shares of our common stock for an aggregate purchase price of $1,500,000. The warrant has a three year term and may be exercised at an exercise price of $0.90 per share, subject to adjustment in the case of stock splits, distributions, reorganizations, recapitalizations and the like, and may be exercised on a cashless basis under certain circumstances. The warrant contains full ratchet anti-dilution protection in the case of a share issuance for consideration less than the then exercise price of the warrant, subject to customary exceptions. The securities purchase agreement also grants the investor demand registration rights, piggyback registration rights and a right of participation in certain future offerings.

We do not have any material commitments for capital expenditures during the next twelve months, other than leasehold improvements planned for new space leased at the corporate headquarters location. Although our net revenues and proceeds from the above described private placement are currently sufficient to fund our operating expenses for the next twelve months, we may be required to raise additional funds in the future particularly if we are unable to generate positive cash flow as a result of our operations or require additional capital to expand our operations. Therefore our future operations may be dependent on our ability to secure additional financing. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the trading price of our common stock and a downturn in the U.S. equity and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. The inability to obtain additional capital may restrict our ability to grow and may reduce our ability to continue to conduct business operations. If we are unable to obtain additional financing, we may have to curtail our marketing and development plans and possibly cease our operations.

Off Balance Sheet Arrangements

We do not engage in any activities involving variable interest entities or off-balance sheet arrangements.

Recent Accounting Pronouncements

We do not believe that the adoption of any recently issued accounting standards will have a material effect on our financial position and results of operations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 4. CONTROLS AND PROCEDURES.

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e)) under the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time specified in the Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Pursuant to Rule 13a-15(b) under the Exchange Act, the Company carried out an evaluation with the participation of the Company's management, including the Company's Chief Executive Officer ("CEO") and the Company's Chief Financial Officer ("CFO"), of the effectiveness of the Company's disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the quarter ended June 30, 2012. Based upon that evaluation, the Company's CEO and CFO concluded that the Company's disclosure controls and procedures were not effective as of June 30, 2012 due to the Company’s limited internal resources and lack of ability to have multiple levels of transaction review.

Management is in the process of determining how best to change our current system and implement a more effective system to insure that information required to be disclosed in this quarterly report on Form 10-Q has been recorded, processed, summarized and reported accurately. Our management acknowledges the existence of this issue, and intends to developed procedures to address them to the extent possible given limitations in financial and manpower resources. While management is working on a plan, no assurance can be made at this point that the implementation of such controls and procedures will be completed in a timely manner or that they will be adequate once implemented.

CHANGES IN INTERNAL CONTROLS

Our management, with the participation our CEO and CFO, performed an evaluation to determine whether any change in our internal controls over financial reporting occurred during the three month period ended June 30, 2012. Based on that evaluation, our CEO and our CFO concluded that no change occurred in the Company's internal controls over financial reporting during the quarter ended June 30, 2012, that has materially affected, or is reasonably likely to materially affect, the Company's internal controls over financial reporting.

PART II--OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business. Litigation is, however, subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe would or could have, individually or in the aggregate, a material adverse effect on us.

ITEM 1A. RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

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

On May 15, 2012, options to purchase 5,600 shares of our common stock were exercised for a total exercise price of $1,400. The options were issued under our 2011 Equity Incentive Plan.

On May 22, 2012, we agreed to issue to a consultant up to 200,000 restricted shares of our common stock, half of which vest on November 30, 2012 and the other half of which vest on June 15, 2013.

On June 28, 2012, we granted a ten-year option to purchase 500 shares of common stock to a consultant at an exercise price of $0.30 per share under our 2011 Equity Incentive Plan.

The securities were offered and sold pursuant to an exemption from the registration requirements under Section 4(2) of the Securities Act of 1933, as amended since, among other things, the transactions did not involve a public offering and the securities were acquired for investment purposes only and not with a view to or for sale in connection with any distribution thereof.

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4- MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5 - OTHER INFORMATION

(a) Form 8-K Information

None.

(b) Director Nomination Procedures

We do not have a standing nominating committee nor are we required to have one. We do not have any established procedures by which security holders may recommend nominees to our Board of Directors, however, any suggestions on directors, and discussions of board nominees in general, is handled by the entire Board of Directors.

ITEM 6 - EXHIBITS.

31.1		Section 302 Certification of Principal Executive Officer
31.2		Section 302 Certification of Principal Financial Officer
32.1*		Section 906 Certification of Principal Executive Officer
32.2*		Section 906 Certification of Principal Financial Officer

In accordance with Item 601of Regulation S-K, this Exhibit is hereby furnished to the SEC as an accompanying document and is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933.

Pursuant to Rule 405(a)(2) of Regulation S-T, the Company will furnish the XBRL Interactive Data Files with detailed footnote tagging as Exhibit 101 in an amendment to this Form 10-Q within the permitted 30-day grace period granted for the first quarterly period in which detailed footnote tagging is required.

SIGNATURES

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

	MEDL Mobile Holdings, Inc.


August 20, 2012	By:	/s/ Andrew Maltin
		Andrew Maltin Chief Executive Officer (Principal Executive Officer)


August 20, 2012	By:	/s/ Paul Caceres
		Paul Caceres Chief Financial Officer (Principal Financial and Accounting Officer)

EXHIBIT INDEX

Exhibit No.	Description

31.1	Section 302 Certification of Principal Executive Officer
31.2	Section 302 Certification of Principal Financial Officer
32.1	Section 906 Certification of Principal Executive Officer
32.2	Section 906 Certification of Principal Financial Officer

WITH, INC. - FORM 10-Q - August 20, 2012

Attached files

WITH, INC. Reports