UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

þ

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the quarterly period ended March 31, 2015

 

Or

 

¨

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the transition period from __________ to __________

 

Millennium Healthcare Inc.

(Exact name of registrant as specified in its charter)

 

Delaware	000-55009	11-3229358
(State of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

 

400 Garden City Plaza, Suite 440, Garden City, New York 11530

 

(Address of principal executive offices) (Zip code)

 

516-628-5500

(Registrant's telephone number, including area code)

 

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 requirement for the past 90 days.  Yes ¨   No þ

 

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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes þ   No ¨

 

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          ¨	Accelerated filer                     ¨
Non-accelerated filer            ¨  (Do not check if a smaller reporting company)	Smaller reporting company    þ

 

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

 

The number of shares of common stock, par value $0.0001 per share of Millennium Healthcare Inc. outstanding as of the close of business on May 19, 2015 were 189,890,566.

 

 

MILLENNIUM HEALTHCARE INC.

 

TABLE OF CONTENTS

 

	Page
PART I - FINANCIAL INFORMATION	3
Item 1.    Consolidated Financial Statements	3
Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.    Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.    Controls and Procedures	33
PART II - OTHER INFORMATION	34
Item 1.    Legal Proceedings	34
Item 1A. Risk Factors	34
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3.    Defaults Upon Senior Securities	34
Item 4.    Mine Safety Disclosures	34
Item 5.    Other Information	34
Item 6.    Exhibits and Reports on Form 8-K	34
	35
SIGNATURES	36

 

 

PART I FINANCIAL INFORMATION

 

ITEM 1 FINANCIAL STATEMENTS

 

MILLENNIUM HEALTHCARE INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

		MARCH 31,				DECEMBER 31,
		2015				2014
ASSETS
CURRENT ASSETS
Cash		$	21,811			$	112,725
Accounts receivable, net of allowance for doubtful accounts of $3,450,000 and $3,000,000 at March 31, 2105 and December 31, 2014, respectively			5,289,280				5,193,634
Inventory			100,000				100,000
Prepaid expenses			392,640				617,355
Total current assets			5,803,732				6,023,714
Fixed assets, net			790,210				789,950
OTHER ASSETS
Security deposits			378,024				375,595
Intangible assets, net			47,979				54,833
Total other assets			426,003				430,428
TOTAL ASSETS		$	7,019,944			$	7,244,092
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses		$	1,440,494			$	1,278,748
Current portion of notes payable, net of debt discounts of $130,957 and $220,878, and original issue discounts  of $63,291 and $106,504, respectively			3,271,001				2,862,836
Derivative liability			454,964				1,061,476
Liability for common stock to be issued			1,596,560				640,100
Liability for preferred stock to be issued			3,006,050				3,103,800
Total current liabilities			9,769,069				8,946,960
Preferred stock			337,445				337,500
Notes payable, net of current portion			792,000				350,000
			10,898,514				9,634,460
TOTAL LIABILITIES
STOCKHOLDERS' DEFICIT
Preferred stock, $0.0001 par value, 15,000,000 shares authorized
Series A Preferred stock, $0.0001 par value, 1,000,000 shares authorized, 1,000,000 and 600,000 shares issued and outstanding, respectively			100				60
Series B Preferred stock, $0.0001 par value, 0 shares issued and outstanding, respectively			-				-
Series D Preferred stock, $0.0001 par value, 0 shares issued and outstanding, respectively			-				-
Series E Preferred stock, $0.0001 par value, 0 shares issued and outstanding, respectively			-				-
Series F Preferred stock, $0.0001 par value, 3,000,000 shares authorized, 0 and 550,000 shares issued and outstanding, respectively			-				-
Series G Preferred stock, $0.0001 par value, 100,000 shares authorized, 0 shares issued and outstanding respectively			-				-
Common stock, $0.0001 par value, 200,000,000 shares authorized, 134,638,942 and 128,828,942 shares issued and outstanding, respectively			13,464				12,883
Additional paid in capital			78,189,456				77,427,977
Deferred compensation			(3,375,467	)			(3,453,027	)
Accumulated deficit			(78,706,123	)			(76,378,261	)
Total stockholders' deficit			(3,878,570	)			(2,390,368	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT		$	7,019,944			$	7,244,092

 

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

 

 

MILLENNIUM HEALTHCARE INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

		THREE MONTS				THREE MONTS
		ENDED				ENDED
		MARCH 31, 2015				MARCH 31, 2014
REVENUE		$	677,996			$	538,446
OPERATING EXPENSES
Payroll, consulting and professional fees			1,945,518				3,517,507
Rent			226,738				78,058
General and administrative			350,038				296,002
Depreciation and amortization			47,188				16,801
Bad debt expense			455,115				-
Total operating expenses			3,024,597				3,908,368
NET LOSS BEFORE OTHER INCOME (EXPENSE) AND PREFERRED STOCK DIVIDENDS			(2,346,600	)			(3,369,922	)
OTHER INCOME (EXPENSE)
Interest expense			(587,774	)			(459,983	)
Gain (loss) on change in fair value of derivative liability			606,512				(4,069,054	)
Total other income (expense)			18,738				(4,529,037	)
NET (LOSS)			(2,327,862	)			(7,898,959	)
Preferred stock dividends			-				(26,452	)
NET (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS		$	(2,327,862	)		$	(7,925,411	)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC & DILUTED			132,106,021				68,295,318
NET INCOME (LOSS) PER SHARE - BASIC & DILUTED		$	(0.02	)		$	(0.12	)

 

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

 

 

MILLENNIUM HEALTHCARE INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

		THREE MONTHS				THREE MONTHS
		ENDED				ENDED
		MARCH 31, 2015				MARCH 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss)		$	(2,327,862	)		$	(7,925,411	)
Adjustments to reconcile net (loss) to net cash (used in) operating activities:
Depreciation and amortization			47,188				16,801
Non-cash interest			443,385				384,563
(Gain) loss on change in fair value of derivative			(606,512	)			4,069,054
Preferred stock dividend			-				26,452
Amortization of deferred compensation			77,560				426,686
Shares issued and liability for common shares to be issued for services rendered			1,310,560				1,862,185
Allowance for doubtful accounts			455,115				-
Change in assets and liabilities
Decrease (increase) in prepaid expenses			224,715				329,402
(Increase) decrease in accounts receivable			(550,761	)			(327,930	)
(Increase) decrease in inventory			-				(600,000	)
Increase in security deposits			(2,429	)			-
Increase in accounts payable and accrued expenses			161,747				246,928
Increase in preferred stock dividends payable			-				751
Total adjustments			1,560,568				6,434,892
Net cash (used in) operating activities			(767,294	)			(1,490,519	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of fixed assets			(40,650	)			-
Net cash (used in) investing activities			(40,650	)			-
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of preferred and common stock for cash (including liability for shares to be issued)							1,675,000
Proceeds received from notes payable			831,030				378,000
Repayments of notes payable			(114,000	)			(659,108	)
Net cash provided by financing activities			717,030				1,393,892
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			(90,914	)			(96,627	)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD			112,725				115,645
CASH AND CASH EQUIVALENTS - END OF PERIOD		$	21,811			$	19,018
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Interest		$	-			$	-
Taxes		$	-			$	-
NON-CASH SUPPLEMENTAL INFORMATION:
Issuance of common stock for liability of stock to be issued		$	-			$	1,811,450
Issuance of preferred stock for liability of stock to be issued		$	-			$	1,473,250
Valuation of warrants for prepaid services		$	-			$	91,934

 

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

 

 

MILLENNIUM HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2015 AND 2014 (UNAUDITED)

  

NOTE 1-

BASIS OF PRESENTATION AND BUSINESS DESCRIPTION

 

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of March 31, 2015 and the results of operations and cash flows for the periods presented. The results of operations for the three months ended March 31, 2015 are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC on April 15, 2015.

 

Millennium Healthcare Inc. (the “Company”), was formed in the State of Delaware on July 28, 1994 as Kirlin Holding Corp., changed its name to Zen Holding Corp. in July, 2008 and to Millennium Healthcare, Inc. on June 16, 2011.

  

The Company currently launched its medical equipment and device business. In connection therewith the Company has entered into various agreements to become the nationwide distributor for various medical devices mainly focused on preventative and diagnostic testing and care including an oral diagnostic biopsy test, a heart health test and assessment device, and a medical testing device in the area of breast cancer.

 

The Company also provides physician practice administration and support with a current focus on physician practices specializing in cardiovascular and vascular procedures and provides support and services specializing in medical procedure billing and collections, medical procedure coding, call and message management, and emergency dispatch.

 

Going Concern

 

These consolidated financial statements are presented on the basis that the Company will continue as a going concern which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has incurred operating losses for the past several years, has a working capital deficiency of $3,965,337 and a stockholders’ deficit of $3,878,570 as of March 31, 2015. These conditions, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.  

 

 

MILLENNIUM HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2015 AND 2014 (UNAUDITED)

 

Segment Information

 

The Company follows the provisions of ASC 280-10, “Disclosures about Segments of an Enterprise and Related Information”. This standard requires that companies disclose operating segments based on the manner in which management disaggregates the Company in making internal operating decisions. As of March 31, 2015 and for the three months ended March 31, 2015 and 2014, the Company operated in three segments as well as separately identifying the corporate overhead costs. The segments are as follows: Coding – this includes the coding, billing and telecommunications services of the Company; Vascular – this includes all vascular physician practice administration and support services; and Devices – this includes all services related to the medical device and equipment segment.

 

The Company’s chief financial officer reviews financial information presented on an entity level basis accompanied by disaggregated information about revenues by product type and certain information about geographic regions where appropriate for purposes of making operating decisions and assessing financial performance.

 

March 31, 2015		Coding				Device				Vascular				Corporate				Total
Segmented Operating Revenues		$	-			$	168,015			$	509,981			$	-			$	677,996
Total Operating Expenses excluding Depreciation and Amortization, and Other (Income) Expense			5,17 2				272,658				192,241				2,507,338				2,977,409
Depreciation and Amortization			-				31,856				8,990				6,342				47,188
Other (Income) Expense			-				-				-				(18,738	)			(18,738	)
Assets
Fixed Assets		$	-			$	712,898			$	12,850			$	64,462			$	790,210
Intangible Assets			-				-				47,979				-				47,979

 

 

MILLENNIUM HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2015 AND 2014 (UNAUDITED)

 

March 31, 2014		Coding				Device				Vascular				Corporate				Total
Segmented Operating Revenues		$	2,298			$	34,323			$	501,825			$	-			$	538,446
Total Operating Expenses excluding Depreciation and Amortization, and Other (Income) Expense			1,857				31,776				289,813				3,568,121				3,891,567
Depreciation and Amortization			-				-				8,990				7,811				16,801
Other (Income) Expense			-								-				4,529,037				4,529,037
Assets
Fixed Assets		$	-			$	-			$	33,557			$	55,157			$	88,714
Intangible Assets			-				-				75,396				-				75,396

 

Generally, any item not related to one of our other segments would generally be included in the Corporate Column. This includes corporate overhead costs such as consulting fees, legal fees, and other professional fees including all common stock issued for services; and interest expenses, including all fair value measurements of warrants and fair value adjustments related to our derivative liability that have been charged to interest. The Company has determined it would be more appropriate to include a corporate column rather than develop an allocation to our other divisions as the Company has not determined allocation percentages.

 

Recently Issued Accounting Standards

 

The Financial Accounting Standards Board and the Securities Exchange commission have issued certain accounting standards updates and regulations that will become effective in subsequent periods. Management does not believe that any of those updates would have significantly affected the Company’s financial accounting measures or disclosures had they been in effect in 2015 and 2014, and it does not believe that any of those pronouncements will have a significant impact on the Company’s consolidated financial statements at the time they become effective. 

 

NOTE 2-

PREFERRED STOCK - SERIES F AND SERIES G

 .

During 2015, the Company entered into Satisfaction Agreements and Releases with various Series F holders in which 700,000 shares in the aggregate of Series F preferred stock were surrendered and exchanged for 2,840,000 shares in the aggregate of the Company’s common stock. Further, 240,000 of these common shares were issued and 2,600,000 shares valued at $390,000 were recorded as a liability for common stock to be issued.

 

 

MILLENNIUM HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2015 AND 2014 (UNAUDITED)

 

During 2015, the Company entered into a Satisfaction Agreement and Release with a Series G holder in which 75 shares of Series G preferred stock were surrendered and exchanged for 300,000 shares of the Company’s common stock. These common shares have all been issued.

 

NOTE 3-

NOTES PAYABLE, PREFERRED AND COMMON STOCK, AND WARRANTS

  

Promissory Notes

 

The Company entered into a short term $200,000 Promissory Note on September 18, 2014. The note is scheduled to mature with the completion of the Company’s next round of financing under certain terms. Interest on the note is fixed and stated at 20,000 shares of the Company’s restricted common stock.

 

In October 2014, the Company entered into a short term $250,000 Promissory Note with an individual. The note has a maturity of 30 days and interest on the note is fixed at 175,000 shares of common stock. During October 2014, the Company made a $40,000 payment on the note for an extension of the note’s maturity.

 

In October 2014, the Company entered into a short term $450,000 Promissory Note with an individual. The note has a maturity of 60 days and interest on the note is fixed at 300,000 shares of common stock. In December 2014 the Company made a $250,000 payment on the note.

 

In October 2014, the Company entered into a short term $40,000 Promissory Note with an individual. The note has a maturity of one year and interest on the note is fixed at 10% per annum.

 

In October 2014, the Company negotiated and completed a settlement and full satisfaction of certain promissory and demand notes. The settlements included the issuance of 4,600,000 shares of common stock during September 2014 and payments of $450,000 during October 2014.

 

In December 2014, the Company entered into a short term $205,000 Promissory Note with an entity. The note has a maturity of one year and interest on the note is fixed at 10% per annum.

 

 

MILLENNIUM HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2015 AND 2014 (UNAUDITED)

 

In December 2014, the Company issued a promissory note with a principal amount of $350,000 with 350,000 shares of Common Stock pursuant to a private placement.  The note matures in 36 months and interest on the note is fixed at 12% and provides for regularly scheduled interest payments which shall be made quarterly in arrears.  In addition, the Company agreed to pay to the placement agent a fee of 10% of the aggregate purchase price received by the Company and a warrant equal to 10% of the aggregate number of shares issued in the offering. The Company accrued fees of $35,000 and 35,000 warrants to the placement agent during 2014. The Company paid the accrued fees of $35,000 to the placement agent during February 2015.

 

In January 2015, the Company issued a promissory note with a principal amount of $300,000 with 300,000 shares of Common Stock to be issued pursuant to a private placement. The note mature in 36 months and interest on the note is fixed at 12% and provides for regularly scheduled interest payments which shall be made quarterly in arrears.  In addition, the Company agreed to pay to the placement agent a fee of 10% of the aggregate purchase price received by the Company. The Company paid $30,000 to the placement agent during February 2015.

 

In January 2015, the Company entered into a $220,000 Promissory Note with an individual. The note has a maturity of one year and interest on the note is fixed at 10% per annum.

 

In February and March 2015, the Company entered into a $119,030 Promissory Note and a $50,000 Promissory Note, respectively, with an individual. The notes have a maturity of one year and interest on the notes is fixed at 10% per annum.

 

In February 2015, the Company entered into Promissory Notes totaling $142,000 as a result of private placements. These notes mature in 36 months and interest on the note is fixed at 12% and provides for regularly scheduled interest payments which shall be made quarterly in arrears.  In addition, the Company agreed to pay to the placement agent a fee of 10% of the aggregate purchase price received by the Company and a warrant equal to 10% of the aggregate number of shares issued in the offering. The Company paid fees of $14,200 in cash and 14,200 warrants to the placement agent during 2015.

 

Promissory Notes - Convertible

 

The Company and an entity entered into a convertible promissory note on November 10, 2014 for $440,000. The note has a term of six months and accrues interest at 18% per annum. At any time during the term, the holder may convert the outstanding balance into common shares at a fixed conversion price of $1.00 per share.

 

The Company and an entity entered into a convertible promissory note on November 10, 2014 for $660,000. The note has a term of six months and accrues interest at 18% per annum. At any time during the term, the holder may convert the outstanding balance into common shares at a fixed conversion price of $1.00 per share.

 

 

MILLENNIUM HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2015 AND 2014 (UNAUDITED)

 

Promissory Notes – Original Issue Discount Convertible

 

During 2014, The Company issued original issue discount convertible notes (the “OID Notes”) with an aggregate principal amount of $1,235,218 with warrants to acquire up to 823,530 shares of Common Stock at $1.00 per share as described below.  The OID Notes mature in 13 months and were issued at an original issue discount of $185,283.  No regularly scheduled interest payments shall be made on the OID Notes.  The OID Notes may be converted by the investors into the Company’s common stock at the lower of (i) $0.75 or (ii) 80% of the per share price of the Company’s equity securities sold in a future public offering.  The warrants give each investor, for five years from the date of issuance, the right to purchase the Company’s common stock at (i) $1.00 or (ii) 80% the lowest per share price of the Company’s common stock sold by the Company in any future public offering, during the period that the investor’s OID Note is outstanding. The OID Notes and related warrants contain anti-dilution provisions. In addition, the Company agreed to pay to the placement agent a fee of 10% of the gross proceeds received by the Company and a warrant equal to 10% of the aggregate number of shares issuable upon conversion of the Notes at an exercise price equal to 110% of the warrant exercise price. The Company paid fees of $104,935 in cash and 164,706 warrants to the placement agent during 2014.

 

Preferred Stock

 

The Company has amended their certificates of designation to authorize the issuance of 6 separate series of preferred stock.

 

March 31, 2015

 

Preferred Stock

Authorized Date

Issue Date

Number of Shares Issued/Outstanding

Par Value

Conversion to Common Stock

Series “A" (1)

June 14, 2011

June 2011

1,000,000

$

.0001

N/A

Series “B" (2)

October 2011

October 2011

0

$

.0001

1.50:1

Series “D” (3)

March 30, 2012

April 2012

0

$

.0001

30:1

Series “E” (4)

June 1, 2013

June 2013

0

$

.0001

65:1

Series “F” (5)

December 2, 2013

December 2013

0

$

.0001

N/A

Series “G” (6)

March 7, 2014

March 2014

0

$

.0001

N/A

 

 

MILLENNIUM HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2015 AND 2014 (UNAUDITED)

 

(1) Issued 100,000 shares to the principal owners of Millennium Healthcare Solutions Inc. upon acquisition of the net assets of that company; and issued 900,000 to the officers of Millennium Healthcare Inc. 

(2) Issued to an unrelated third party in conversion of the Line of Credit. There are no shares issued and outstanding as of March 31, 2015.

(3) Issued to an unrelated third party in conversion of the Series B Preferred Stock and additional funds provided. There are no shares issued and outstanding as of March 31, 2015.

(4) Issued to an unrelated third party in conversion of the Series D Preferred Stock. Settlement and conversion completed with all shareholders. There are no shares issued and outstanding as of March 31, 2015.

(5) Issued to investors as part of a private offering. There are no shares issued and outstanding as of March 31, 2015.

(6) Issued to investors as part of a private offering. There are no shares issued and outstanding as of March 31, 2015.

 

On December 19, 2013, the Company increased their authorized preferred stock from 5,000,000 shares to 15,000,000 shares.

 

Series A Preferred Stock. These shares are non-convertible, and have super voting rights of 200 to 1 versus the Common Stock. In June 2011, 100,000 shares of Series A Preferred Stock were issued to the principal owners of Millennium Healthcare Solutions Inc. upon the acquisition of the net assets of that company. In January 2012, the Company issued 100,000 shares, in December 2013, the Company issued 300,000 shares, in July 2014 the Company issued 100,000 shares and in March 2015 the Company issued 400,000 shares of Series A Preferred Stock to senior management of the Company. Each share of this preferred has 200 votes in matters where shareholder votes are required. These shares are not convertible and are not transferable and, accordingly, management has attributed a nominal value to these shares.

 

In March 2015, the Company filed an amendment to its Designation, Number, Voting Powers, Preferences and Rights of Series A Preferred Stock. With this amendment, the holders of Series A Preferred Stock vote together as a single class with common stock holders and any other class or series of shares entitled to vote with the common stock, with the holders of the Series A Preferred Stock being entitled to fifty-one percent (51%) of the total votes on all such matters regardless of the actual number of shares of Series A Preferred Stock then outstanding, and the holders of common stock and any other shares entitled to vote being entitled to their proportional share of the remaining 49% of the total votes based on their respective voting power.

    

 

MILLENNIUM HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2015 AND 2014 (UNAUDITED)

 

On June 1, 2013, the Company amended the certificate of designation to authorize a Series E Preferred Stock. The Series E Preferred Stock is convertible into 65 shares of common stock for each preferred share at any time after June 1, 2014 and convert automatically on May 31, 2018, as well as providing for an annual dividend of $0.80 per share per year. Concurrent with the designation of the Series E Preferred Stock, the Company exchanged the 126,280 shares of Series D Preferred Stock into Series E Preferred Stock. The Company issued 3,384 additional shares of Series E Preferred Stock to holders as payment of $33,843 in accrued dividends during the year. Accrued dividends through December 31, 2013 were $25,936. In February 2014, the Company issued 2,594 shares of Series E Preferred Stock to holders as payment of the $25,936 in accrued dividends through December 31, 2013. Accrued dividends for the Series E Preferred Stock through September 30, 2014 were $26,452.

 

During November 2014, the Company entered into a series of settlement agreements with all holders of the Series E Preferred Stock. As a result, a final dividend payment of $75,000 was made, 8,596,770 common shares were issued in conversion and 5,000,000 common shares were issued in settlement. There are no Series E Preferred shares issued or outstanding nor any dividends accrued or payable at March 31, 2015.

 

The Company amended its certificate of designation in December 2013 to authorize a Series F Preferred Stock (“Series F”) which provides for a quarterly dividend of 10% of the Company's earnings before interest, taxes, depreciation and amortization ("EBITDA") and is payable on a quarterly basis, beginning after two quarters following the issue date. Holders are not entitled to receive any dividend from the Company after they have received an aggregate of $1.20 per share. Once holders receive an aggregate of $1.20 for each share held, all Series F shall expire and/or be redeemable for $1.

 

Series F is: (i) junior to any class or series of capital stock of the Company specifically ranking by its terms senior to any Series F Preferred Stock of whatever subdivision; (ii) prior to any class or series of capital stock of the Company hereafter created not specifically ranking by its terms senior to or on parity with any Series F of whatever subdivision; and (iii) on parity with any class or series of capital stock of the Company hereafter created specifically ranking by its terms on parity with the Series F Preferred Stock in each case as to distributions of assets upon liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary.

 

 

MILLENNIUM HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2015 AND 2014 (UNAUDITED)

 

The Company sold 1,950,000 units and raised $1,950,000 under a private placement during 2013. The Company sold 1,050,000 units and raised $1,050,000 through March 31, 2014 for a total of 3,000,000 units sold and $3,000,000 raised for this private placement. Each unit consisted of one share of common stock and one share of Series F. As a result, 3,000,000 shares of Series F were to be issued, in which 550,000 shares were issued during 2013 and 2,450,000 shares valued at $1,356,500 were recorded as a liability for stock to be issued. Due to the redeemable nature of the Series F, the unit price was allocated between the Common stock and Series F and the Series F is recorded as a preferred stock liability in the accompanying consolidated financial statements for the Series F shares that have been issued. This private placement is closed and will have no future participation.

 

During 2015, the Company entered into Satisfaction Agreements and Releases with various Series F holders in which 700,000 shares in the aggregate of Series F preferred stock were surrendered and exchanged for 2,840,000 shares in the aggregate of the Company’s common stock. Further, 240,000 of these common shares were issued and 2,600,000 shares valued at $390,000 were recorded as a liability for common stock to be issued.

 

In March 2014, the Company amended the certificate of designation to authorize a Series G Preferred Stock. During the six months ended June 30, 2014, the Company sold 1,175 units for $1,000 per unit. Each unit consisted of 1,000 shares of common stock and 1 share of Series G preferred stock. Holders of Series G Preferred Stock shall be entitled to receive, along with the Series F Holders, an aggregate quarterly dividend of 10% of the Corporation’s earnings before interest, taxes depreciation and amortization (“EBITDA”) computed under the generally accepted accounting principles (“GAAP”). For purposes of allocating the 10% dividend proportionally to the Series F and G Preferred Holders, G Preferred Shares will be weighted and valued at 1,000 times that of Series F. Dividends on Series G Preferred Stock shall be payable on a quarterly basis, beginning after two quarters following the original issue date (“Issuance Date”). Holders Series G Preferred Stock shall not be entitled to receive any dividend from the Corporation once they have received an aggregate of $1,200 for every share of Series G Preferred Stock they hold.

 

Series G Preferred Stock shall rank: (i) junior to any class or series of capital stock of the Corporation specifically ranking by its terms senior to any Series G Preferred Stock of whatever subdivision (collectively, “Senior Securities”); (ii) prior to any class or series of capital stock of the Corporation hereafter created not specifically ranking by its terms senior to or on parity with any Series G Preferred Stock of whatever subdivision (collectively, “Junior Securities”); and (iii) on parity with any class or series of capital stock of the Corporation hereafter created specifically ranking by its terms on parity with the Series G Preferred Stock (“Parity Securities”) in each case as to distributions of assets upon liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary (all such distributions being referred to collectively as “Distributions”).

 

 

MILLENNIUM HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2015 AND 2014 (UNAUDITED)

 

The Company sold 4,920 units and raised $4,920,000 under a private placement through December 31, 2014. Each unit for this private placement consisted of one thousand shares of common stock and one share of Series G. As a result, 4,920 shares of Series G were to be issued, were valued at $1,747.300 and recorded as a liability for stock to be issued.

 

During 2015, the Company entered into a Satisfaction Agreement and Release with a Series G holder in which 75 shares of Series G preferred stock were surrendered and exchanged for 300,000 shares of the Company’s common stock. These common shares have all been issued.

 

Common Stock

 

The Company issued 5,500,000 shares of common stock for consulting and other services during the three months ended March 31, 2015.

 

The Company issued 70,000 shares of common stock as a result of a prior private placement. These shares were previously recorded as a liability for common stock to be issued.

 

The Company entered into satisfaction, exchange and release agreements with certain Preferred Stock holders, in which the holders exchanged respective shares held of the Company’s Preferred Stock for shares of the Company’s common stock totaling 240,000 shares during the three months ended March 31, 2015.

 

The has Company committed to certain actions to amend its Certificate of Incorporation to increase the number of authorized shares of common stock of the Company, par value $0.0001 per share from 200,000,000 shares to 350,000,000 shares.

 

Warrants

 

During the years ended December 31, 2012 and 2013, the Company issued 9,760,000 warrants at exercise prices ranging from $.50 to $1.00 per share. During the twelve months ending December 31, 2014, the Company settled and cancelled 5,800,000 warrants at exercise prices ranging from $.50 to $1.00 per share. During the twelve months ending December 31, 2014, the Company issued 17,723,236 warrants at exercise prices ranging from $.13 to $3.00 per share. All of the warrants are vested and remain outstanding. The warrants have a weighted average price of $.58.

 

 

MILLENNIUM HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2015 AND 2014 (UNAUDITED)

 

Consultant warrants provided for services to be rendered over a one-year period of time. The Company issued 200,000 consultant warrants during 2013 and 1,700,000 consultant warrants during 2014. Such warrants vest evenly over a one-year period by month. The Company has recorded this as a prepaid expense and will amortize through the conclusion of the contract.

 

The Company issued 823,530 warrants at an exercise price of $1.00 per share to certain convertible note holders. The Company agreed to pay the placement agent a commission of warrants equal to 10% of the aggregate number of shares issuable upon conversion of these convertible notes at an exercise price equal to 110% of the warrant exercise price. The Company issued 164,706 warrants to the placement agent during 2014.

 

The Company authorized and approved 12,000,000 warrants, with an exercise price of $0.25, for its executive officers.

 

The Company agreed to pay the placement agent of a private placement a fee of warrants equal to 10% of the aggregate number of shares issued in the offering. The Company issued 35,000 warrants to the placement agent during 2014.

 

The Company entered into a warrant settlement and exchange agreement with an existing warrant holder. As a result, the Company issued 3,000,000 warrants with an exercise price of $.16 and cancelled 2,000,000 warrants with exercise prices ranging from $.50 to $1.00 during 2014.

 

The Company entered into a release agreement with a note and warrant holder. As a result, the Company cancelled 500,000 warrants with exercise prices ranging from $.50 to $1.00 during 2014.

 

The Company entered into a settlement agreement with a warrant holder. As a result, the Company cancelled 3,300,000 warrants with exercise price of $.50 during 2014.

 

The Company agreed to pay the placement agent of a private placement a fee of warrants equal to 10% of the aggregate number of shares issued in the offering. The Company issued 14,200 warrants to the placement agent during 2015.

 

As of March 31, 2015 there were 21,697,436 warrants outstanding.

 

The Company used the black-scholes method to value the warrants, with the following inputs: volatility 367.58%; quarterly dividend percentage 0%; and discount rate of 0.95%.

 

 

MILLENNIUM HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2015 AND 2014 (UNAUDITED)

 

NOTE 4-

INCOME TAXES

 

The reconciliation of income tax benefit at the U.S. statutory rate of 34% for the three months ended March 31, 2015 and 2014 to the Company’s effective tax rate is as follows:

 

		Three Months  Ended
		March 31, 2015				March 31, 2014
U.S. federal statutory rate			-34.0	%			-34.0	%
State income tax, net of federal benefit			-6.0	%			-6.0	%
Permanent differences			-0.8	%			-0.8	%
Change in valuation allowance			40.8	%			40.8	%
Income Tax provision (benefit)			0.0	%			0.0	%

 

The benefit for income tax is summarized as follows:

 

		Three Months Ended
		March 31, 2015				March 31, 2014
Federal:
Current		$	-			$	-
Deferred			(791,000	)			(2,685,000	)
State:
Current
Deferred			(140,000	)			(474,000	)
Change in valuation allowance			931,000				3,159,000
Income Tax provision (benefit)		$	-			$	-

 

As of March 31, 2015, the Company had approximately $50,000,000 of federal and state net operating loss carryovers (“NOLs”) which begin to expire in 2030. Utilization of the NOLs may be subject to limitation under the Internal Revenue Code Section 382 should there be a greater than 50% ownership change as determined under regulations.

 

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the assessment, management has established a full valuation allowance against the entire deferred tax asset relating to NOLs for every period because it is more likely than not that all of the deferred tax asset will not be realized.

 

 

MILLENNIUM HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2015 AND 2014 (UNAUDITED)

 

The Company files U.S. federal and state of New York tax returns that are subject to audit by tax authorities beginning with the year ended December 31, 2010. The Company’s policy is to classify assessments, if any, for tax and related interest and penalties as tax expense.

 

NOTE 5-

FAIR VALUE MEASUREMENTS

 

The Company adopted certain provisions of ASC Topic 820. ASC 820 defines fair value, provides a consistent framework for measuring fair value under generally accepted accounting principles and expands fair value financial statement disclosure requirements. ASC 820’s valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. ASC 820 classifies these inputs into the following hierarchy:

 

Level 1 inputs: Quoted prices for identical instruments in active markets.

 

Level 2 inputs: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

 

Level 3 inputs: Instruments with primarily unobservable value drivers.

 

The following table represents the fair value hierarchy for those financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2015:

 

		Level 1				Level 2				Level 3				Total
Cash		$	21,811			$	-			$	-			$	21,811
Total assets		$	21,811			$	-			$	-			$	21,811
Notes payable, net of debt discount and OID		$	-			$	-			$	4,063,001			$	4,063,001
Embedded conversion feature and derivative liability		$	-			$	-			$	454,964			$	454,964
Total liabilities		$	-			$	-			$	4,517,965			$	4,517,965

 

 

MILLENNIUM HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2015 AND 2014 (UNAUDITED)

 

The following table represents the fair value hierarchy for those financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2014:

 

		Level 1				Level 2				Level 3				Total
Cash		$	19,018			$	-			$	-			$	19,018
Total assets		$	19,018			$	-			$	-			$	19,018
Notes payable, net of debt discount and OID		$	-			$	-			$	1,946,627			$	1,946,627
Embedded conversion feature and derivative liability		$	-			$	-			$	5,946,601			$	5,946,601
Total liabilities		$	-			$	-			$	7,893,228			$	7,893,228

 

		For the Three Months Ending				For the Three Months Ending
		2015				2014
Total gain/(loss) from revaluation of derivatives included in earnings:		$	606,512			$	(4,069,054	)

 

The carrying amounts of our short and long term credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest rates taken together with other features such as concurrent issuances of warrants and/or embedded conversion options, are comparable to rates of returns for instruments of similar credit risk.

 

We calculated the fair value of the embedded conversion feature and derivative liability using the Black-Scholes option-pricing model with the following assumptions: Fair value of stock $0.06; exercise price $0.16 to $1.00; risk free interest rate 0.95%, term of 5 years; volatility rate of 367.58%; dividend yield of 0%.

 

 

MILLENNIUM HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2015 AND 2014 (UNAUDITED)

 

The following tables provide reconciliations of beginning and ending balances at March 31, 2015:  

 

		Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
		Notes Payable				Embedded conversion feature and derivative liability				Total
March 31, 2015
Beginning balance			3,212,836				1,061,476				4,274,312
Transfers into Level 3			-				-				-
Transfers out of Level 3			-				-				-
Total gains or losses			-				-				-
included in earnings (or changes in net assets)			-				(606,512	)			(606,512	)
included in other comprehensive income			-				-				-
Purchases, issuances, sales, and settlements			-				-				-
Purchases			-				-				-
Issuances			964,165				-				964,165
Sales			-				-				-
Settlements			(114,000	)			-				(114,000	)
Ending balance			4,063,001				454,964				4,517,965

  

NOTE 6-

COMMITMENTS

 

In April 2014, the Company entered into a five year two month lease agreement in New York City, New York for executive offices of the Company, which requires an annual payment of approximately $283,000 for the first year and increases 3% per year subsequent thereto. In addition, the Company must pay any increases in real estate taxes over the base year, as defined. Rent commenced July 1, 2014 and the Company paid a security deposit of $259,402. The Company is currently engaged in legal proceedings with the landlord in New York regarding certain leased space the Company had previously occupied. The company is currently in ongoing negotiations to settle such legal actions.

 

 

MILLENNIUM HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2015 AND 2014 (UNAUDITED)

 

In April 2014, the Company entered into a five year lease agreement in Boynton Beach, Florida for the development of a new 30,000 square foot facility which will be used to manage inventory and distribution for the Company’s regional operations and house local management and training facilities. The lease provides for first year rent of approximately $103,000 plus operating expenses of approximately $98,000 plus annual increases. Rent commenced May 13, 2014 and the Company paid a security deposit of $36,099. The Company is currently engaged in legal proceedings with the landlord in Florida regarding certain leased space the Company had previously occupied. The company is currently in ongoing negotiations to settle such legal actions.

 

In March 2015, the Company has vacated its Boynton Beach, Florida warehouse and storage facility and relocated to a state of the art, third party warehousing, inventory and logistics facility located in Miami, Florida. This new location will be used to provide and manage complete inventory, logistics and distribution for the Company’s regional operations. The lease is a month to month operating agreement and provides for the following logistics and warehousing fees: $15 per incoming new pallet handling, $17 per pallet monthly storage and $1.67 logistics fee per unit sold. The Company is responsible for all shipping costs.

 

The Company is obligated under non-cancelable operating leases which expire through December 31, 2023. The aggregate future obligations under these leases are as follows:

 

2016		$	873,000
2017		$	852,000
2018		$	806,000
2019		$	461,000
2020		$	214,000
Thereafter		$	428,000

 

Rental expense charged to operations aggregated $226,738 and $78,058 for the three months ended March 31, 2015 and 2014, respectively.

 

Rental expense is accounted for on the straight-line method.

 

The excess of recognized rent expense over scheduled lease payments is included in accounts payable and accrued expenses.

 

 

MILLENNIUM HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2015 AND 2014 (UNAUDITED)

 

Employment Agreements

 

The Company has entered into employment agreements and has amended employment agreements with additional and existing key management individuals in 2014. The Company has issued stock bonuses which vest over a one to three-year period to certain individuals. The unvested portion is reflected as deferred compensation, with the vested portion expensed as stock based compensation.

 

In January 2015 the Company entered into an employment agreement with a key management individual. The Company is to issue a stock bonus which vests over a three-year period. The unvested portion will be reflected as deferred compensation, with the vested portion expensed as stock based compensation.

 

NOTE 7-

CREDIT RISK AND OTHER CONCENTRATIONS

 

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents and trade receivables. The Company places its cash with high credit quality financial institutions. At times, such cash and cash equivalents may exceed the FDIC insured limit of $250,000.

 

Accounts receivable, net of allowance, from two customers were $4,815,796, which accounted for approximately 92% of the total receivables at March 31, 2015 and from two customers were $4,775,507, which accounted for approximately 92% of the total receivables at December 31, 2014.

 

Revenue from one customer was $64,290 and from another was $450,000, which accounted for approximately 10% and 66% of the total revenues respectively for the three months ended March 31, 2015 and revenue from one customer was $450,000, which accounted for approximately 84% of the total revenues for the three months ended March 31, 2014.

 

NOTE 8-

CONTINGENCIES

 

On August 11, 2014, as previously disclosed, LMARK Holding LLC (“LMARK”) and Cypress Drive Partners LLC (“Cypress”) (“Cypress and LMARK are collectively referred to as the “Members”) filed a summons’s and complaint in the United States District Court Eastern District of New York against the Company (the “Federal Action”). The complaint (among other allegations) alleges that the Members sought to convert their respective Series E Preferred Shares and the Company refused to honor their requests. The complaint asks that the court order the Company to issue 1,950,000 unrestricted shares of its common stock to the Members. The Complaint asserts claims for breach of contract and alleges that the Members were injured in an amount to be determined at trial but not less than $1,000,000. The Company denies these allegations.

 

 

MILLENNIUM HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2015 AND 2014 (UNAUDITED)

 

On November 13, 2014, the Company, Cypress and LMARK entered into a Settlement Agreement. Pursuant to the Settlement Agreement, on or before November 20, 2014, the Company shall issue: 812,500 shares of unrestricted common stock to Cypress in full conversion of their 12,500 Series E Preferred Shares, (ii) 1,137,500 unrestricted shares of common stock to LMARK in full conversion of their 17,500 Series E Preferred Shares, (iii) 416,000 restricted shares of common stock to LMARK and (iv) 584,000 restricted shares of common stock to Cypress. The parties agreed to promptly file a Stipulation of Voluntary Dismissal with Prejudice of the Federal Action. The Company received a release (subject to the terms of the Settlement Agreement) from Cypress and LMARK including with respect to the claims in the Federal Action and the Company gave Cypress and LMARK a release (subject to the terms of the Settlement Agreement).

 

On August 12, 2014, as previously disclosed, Aquafina Design LLC whose purported members are Cypress and LMARK, filed a summons and complaint with the Supreme Court of the State of New York, county of Nassau (the “Aquafina Action”) asserting that it provided the Company with certain loans, and was issued (among other securities) 110,000 detachable warrants, with each warrant giving it the right to purchase 30 common shares, for a total of 3,300,000 common shares.  The complaint further asserts that Aquafina exercised all of its warrants on a cashless basis on March 5, 2014 and was entitled to receive 1,312,048 unrestricted common shares and that the Company has not issued such shares.  The complaint seeks compensatory damages for breach of contract in favor of Aquafina in an amount to be determined at trial, but not less than $1,088,990.  The Company denies these allegations.

 

On November 13, 2014, the Company and Aquafina entered into a Settlement Agreement. Pursuant to the Settlement Agreement, the Company agreed to issue 2,000,000 restricted shares of common stock on or before November 20, 2014, in full satisfaction of any and all issues set forth in the Settlement Agreement, including but not limited to any claims for cashless warrants or a preferred offering. The Company also received a release from Aquafina pursuant to which Aquafina released all claims set forth in the Aquafina Action (subject to the terms of the Settlement Agreement) and the parties agreed to promptly file a Stipulation of Discontinuance with Prejudice of the Aquafina Action. Pursuant to the Settlement Agreement the Company also gave Aquafina a release (subject to the terms of the Settlement Agreement).

 

The Company is currently engaged in several ongoing legal proceedings with certain landlords in New York, New Jersey and Florida regarding certain leased space the Company had previously occupied. The Company has made the decision to move to a virtual model for its Florida inventory warehousing and fulfillment, and has relocated its New York corporate offices. The company is currently in ongoing negotiations to settle such legal actions.

 

 

MILLENNIUM HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2015 AND 2014 (UNAUDITED)

 

The Company is currently in ongoing litigation to settle certain claims regarding compensation with one of its suppliers. The Company is currently in ongoing negotiations to settle such legal actions.

 

NOTE 9-

SUBSEQUENT EVENTS

 

Common Stock

 

In April and May 2015, the Company is to issue 378,000 shares of common stock as a result of private placements. These shares have been valued at $19,620 and were recorded as a liability for common stock to be issued.

 

In April 2015, the Company authorized and approved the return and cancellation of an aggregate of 24,000,000 shares of common stock held by certain officers and directors of the Company and the issuance of three-year warrants to purchase in the aggregate 30,000,000 shares of common stock to these certain officers and directors.

 

In April 2015, the Company issued 1,000,000 shares of common stock for consulting services.

 

In April 2015, the Company issued 650,000 shares of common stock as a result of private placements. These shares were previously recorded as a liability for common stock to be issued.

 

In April 2015, the Company issued 300,000 shares of common stock as a result of a promissory note.

 

In April 2015, the Company issued 2,000,000 shares of common stock as a result of entering into settlement agreements.

 

During April and May 2015, the Company issued 53,151,624 shares of common stock as a result of a series of satisfaction agreements and releases with various holders of the Company’s warrants.

 

In May 2015, the Company filed a certificate of amendment with the Secretary of State of Delaware to increase the authorized amount of common stock to 350,000,000 shares. This increase in authorized common shares has been approved the holders of a majority of the voting power of the Company’s common stock.

 

 

MILLENNIUM HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2015 AND 2014 (UNAUDITED)

 

Preferred Stock

 

In April and May 2015, the Company is to issue 378 shares of Series G preferred stock as a result of private placements. These shares have been valued at $358,380 and were recorded as a liability for preferred stock to be issued.

 

Warrants

 

In April 2015, the Company entered into a series of satisfaction agreements and releases with various holders of the Company’s warrants, pursuant to which holders exchanged warrants to purchase an aggregate of 3,560,000 shares of the Company’s common stock for an aggregate of 237,200,000 shares of the Company’s common stock. Upon exchange, such warrants will be void and of no further force or effect. In addition, certain holders are subject to a blocker that limits them, at all times, to 4.99% ownership of the outstanding common stock of the Company upon conversion. According to the terms of these agreements, the Company will issue the shares of common stock in excess of this ownership limitation upon receipt of notice from the holder that such shares may be issued without causing the holder to exceed the ownership limitation.

 

In April 2015, the Company authorized and approved 60,000,000 warrants at an exercise price of $0.025 for its executive officers and employees.

 

In April 2015, the Company authorized and approved the return and cancellation of an aggregate of 24,000,000 shares of common stock held by certain officers and directors of the Company and the issuance of three-year warrants to purchase in the aggregate 30,000,000 shares of common stock to these certain officers and directors. The warrants may be exercised on a cashless basis and contain other customary terms.

 

Promissory Notes

 

In May 2015, the Company entered into a $160,000 Promissory Note with an entity. The note has a maturity date of January 29, 2016 and interest on the note is fixed at 10% per annum.

 

 

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. Factors that may cause actual results, our performance or achievements, or industry results, to differ materially from those contemplated by such forward-looking statements include, without limitation:

 

·

Our ability to raise capital when needed and on acceptable terms and conditions;

 

·

our future operating results;

·

our business prospects;

·

any contractual arrangements and relationships with third parties;

·

the dependence of our future success on the general economy; and

·

the adequacy of our cash resources and working capital.

 

All written and oral forward-looking statements made in connection with this Form 10-Q 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. Except as may be required under applicable securities laws, we undertake no obligation to publicly update or revise any forward-looking statements whether as a result more information, future events or occurrences.

  

Management’s Discussion and Analysis of Financial Condition and Results of Operations

  

Company Overview

 

The Company is a medical device and healthcare support and services company. The Company purchases, supplies and distributes revolutionary medical devices and equipment focused primarily on preventative care through early detection. The Company also provides physician practice administration with a current focus on physician practices specializing in cardiovascular procedures. In addition, the Company provides support and services specializing in medical procedure billing and collections, medical procedure coding, call and message management, and emergency dispatch. The marketplace for the Company’s products and services continues to be high quality physician offices, practices and facility locations with competent and caring doctors and staff.

 

Current Operations and Recent Developments

 

The Company is currently rolling out its medical equipment and device business. This business focuses on strategic alliances and partnerships with medical device companies that provide innovative medical devices that utilize cutting edge technology, are cost effective, and FDA cleared. Devices the Company elects to distribute are focused on preventative and diagnostic testing and care with the anticipation of detecting potential medical issues in their early stages yielding positive medical outcomes for patients. All of the products that the Company distributes have obtained necessary approvals and certifications and are reimbursable under current medical procedure billing codes. As the Company continues to rollout and grow this business, it continues to capitalize on secured network selling agreements with US based healthcare organization for the use of its medical devices within these organizations’ managed locations. The Company continues to work to fulfill these secured agreements during rollout, focusing on delivering the best possible customer service and support to its valued partners.

 

The Company anticipates meeting challenges and continued growth through fiscal 2015.  The Company intends to support its established distribution channels as well as introduce new sales partnerships throughout the coming year.  In addition to increasing sales of existing product offerings, the Company intends to research, develop and introduce new products, technologies and services to its customers.

 

The Company is at the very beginning of its growth cycle and like many emerging growth companies, it faces challenges.  These challenges range from the need for additional growth capital and qualified personnel, to managing market expectations, and supporting product inventory as demand increases.  The Company believes that as it meets and overcomes these various challenges, increased opportunities for growth can be realized.

 

During the first half of 2015 the Company, in executing a more virtual model, has vacated its Boynton Beach, Florida warehouse and storage facility and relocated to a state of the art, third party warehousing, inventory and logistics facility located in Miami, Florida. This new location will be used to provide and manage complete inventory, logistics and distribution for the Company’s regional operations. In continuing the model, the Company has also vacated its Garden City, New York and New York City, New York offices and has relocated to a state of the art, true virtual office environment in Melville, New York. This new location will be used to provide executive, management and administrative offices for the Company’s regional operations.

 

The Company will continue with the placement and support of product through existing networks and channels during the first half of 2015, establishing a core foundation and penetration for existing products, with the anticipation of building upon that foundation during the second half of 2015, focusing on the evaluation, implementation and placement of new products through new distribution channels, partners and strategic alliances.

 

The Company is re-focusing and streamlining its physician practice administration and support business. This business offers physician practice development, support and administration services for physician facilities and practices with a focus on vascular disorders. This group assists the physician and his practice in creating environments in which essential vascular access care is provided effectively and efficiently, with optimal outcomes for both the physician and the patient.

 

  

Critical Accounting Policies and Estimates: Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses. On an ongoing basis, we evaluate these estimates and judgments, including those described below. We base our estimates on our historical experience and on various other assumptions that we believe to be reasonable under the circumstances. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results and experiences may differ materially from these estimates.

 

While our significant accounting policies are more fully described in our financial statements, we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating our reported financial results and affect the more significant judgments and estimates that we use in the preparation of our financial statements.

 

Convertible Instruments: The Company reviews the terms of convertible debt and equity securities for indications requiring bifurcation, and separate accounting, for the embedded conversion feature. Generally, embedded conversion features where the ability to physical or net-share settle the conversion option is not within the control of the Company are bifurcated and accounted for as a derivative financial instrument. (See Derivative Financial Instruments below). Bifurcation of the embedded derivative instrument requires allocation of the proceeds first to the fair value of the embedded derivative instrument with the residual allocated to the debt instrument. The resulting discount to the face value of the debt instrument is amortized through periodic charges to interest expense using the Effective Interest Method.

 

Derivative Financial Instruments: The Company generally does not use derivative financial instruments to hedge exposures to cash-flow or market risks. However, certain other financial instruments, such as warrants or options to acquire common stock and the embedded conversion features of debt and preferred instruments that are indexed to the Company’s common stock, are classified as liabilities when either (a) the holder possesses rights to net-cash settlement or (b) physical or net share settlement is not within the control of the Company. In such instances, net-cash settlement is assumed for financial accounting and reporting, even when the terms of the underlying contracts do not provide for net-cash settlement. Such financial instruments are initially recorded at fair value and subsequently adjusted to fair value at the close of each reporting period.

 

Revenue Recognition: The Company recognizes revenues from the following sources:

 

Sales of medical devices are recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the buyer is fixed or determinable, and collectability is reasonable assured.

 

Healthcare support, management and administration services rendered to healthcare centers and physician practices are recognized when the services have been rendered.

 

Impairment of Long-Lived Assets: Long-lived assets, primarily fixed assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. The Company performs a periodic assessment of assets for impairment in the absence of such information or indicators. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable. For long-lived assets to be held and used, the Company recognizes an impairment loss only if its carrying amount is not recoverable through its undiscounted cash flows and measures the impairment loss based on the difference between the carrying amount and estimated fair value.

 

In December, 2013 management decided to initiate a strategic change in the business operations of the Company. In connection therewith, management decided to focus its future efforts on the development of its medical device distribution business and to phase out its existing businesses.

 

  

As a result, the Company has impaired its goodwill and other net intangible assets aggregating $4,046,826 which were acquired in acquisitions consummated in 2011.

 

Stock-Based Compensation:

 

The Company measures compensation expense for its non-employee stock-based compensation under ASC 505-50, “Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring or in Conjunction with Selling, Goods or Services”. The fair value of the option issued is used to measure the transaction, as this is more reliable than the fair value of the services received. The fair value is measured at the value of the Company’s common stock on the date that the commitment for performance by the counterparty has been reached or the counterparty’s performance is complete. The fair value of the equity instrument is charged directly to expense and additional paid-in capital.

 

Results of Operations

 

Three Months Ended March 31, 2015 Compared to Three Months Ended March 31, 2014

 

Revenue

 

For the three months ended March 31, 2015, the Company had total revenue of $677,996 as compared to revenue of $538,446 for the three months ended March 31, 2014. Revenue increased by $139,550 or 25.9% over prior period due to the distribution and placement of medical devices within contracted networks. 2015 revenue consisted of $450,000 in revenue from physician practice administration and support, $-0- in revenue from medical coding and billing, $59,981 in call answering and emergency dispatch services performed and $168,015 in revenues from the distribution and placement of medical devices.

 

For the three months ended March 31, 2014, the Company had total revenue of $538,446. 2014 revenue consisted of $450,000 in revenue from physician practice administration and support, $2,298 in revenue from medical coding and billing, $51,825 in revenue from call answering and emergency dispatch services performed and $34,323 in revenues from the distribution and placement of medical devices. The changes in our operating expenses from March 31, 2015 to March 31, 2014 are as follows:

 

Payroll, consulting, and professional fees

 

Payroll, consulting, and professional fees aggregated $1,945,518 for the three months ended March 31, 2015 compared to $3,517,507 for the three months ended March 31, 2014, a decrease of $1,571,989 or 44.7%. The decrease is primarily attributed to a decrease in the value of common stock issued for professional services of $1,155,193 from $2,697,170 to $1,541,977, due to the reduced issuance of shares to consultants and professionals for services rendered for investor and public relations, marketing and capital raising efforts and the reduced issuance of shares through employment agreements. Additionally, professional fees decreased $377,647 to $227,602 from $605,249 in 2014 resulting from reduced and one-time consulting fees related to the launching of the medical device business, investor and public relations initiatives and capital raising efforts. Payroll and related tax expenses for the three months ended March 31, 2015 remained relatively the same period to period at $143,439 compared to $145,325 for the three months ended March 31, 2014. Legal and accounting fees combined for the three months ended March 31, 2015 decreased $37,263 to $32,500 compared to $69,763 for the three months ended March 31, 2014 due to the Company utilizing additional legal and accounting services in 2014 for support required with the launch of the device business and for SEC compliance for certain reporting requirements.

 

  

Rent

 

Rent expense for the three months ended March 31, 2015 was $226,738 compared to $78,058 for the three months ended March 31, 2014, an increase of $148,680 or 190.5%. The increase was the result of the expenses related to the corporate headquarters in Garden City, New York and related escalations, expenses related to new executive office space obtained in New York, New York, expenses related to new office/warehouse space in Boynton Beach, Florida and additional usage days for physician practice management services. The Company, in executing a more virtual model, has vacated its Boynton Beach, Florida warehouse and storage facility and relocated to a state of the art, third party warehousing, inventory and logistics facility located in Miami, Florida. This new location will be used to provide and manage complete inventory, logistics and distribution for the Company’s regional operations. Additionally, in continuing this virtual model, the Company has also vacated its Garden City, New York and New York City, New York offices and has relocated to a state of the art, true virtual office environment in Melville, New York. This new location will be used to provide executive, management and administrative offices for the Company’s regional operations. Although the Company is currently engaged in ongoing negotiations to settle certain legal proceedings with certain landlords, the Company anticipates a material reduction in rent through 2015.

 

General and administrative

 

General and administrative expenses aggregated $350,038 for the three months ended March 31, 2015 compared to $296,002 for the three months ended March 31, 2014, an increase of $54,037 or 18.3%. The increase is primarily attributable to $58,310 in insurance expense for the three months ended March 31, 2015 compared to $36,630 for the three months ended March 31, 2014, an increase of $21,680 or 59.2%. The increase was primarily due to expanding coverages for our device division as well as physician practice management division for vascular services, increased overall business policy coverage and rate increases; $72,626 in telephone and telecommunication expense for the three months ended March 31, 2015 compared to $19,133 for the three months ended March 31, 2014, an increase of $53,493 or 279.6%. These costs increased primarily due to expenses for voice, data, software and hosting usage along with related cloud, dashboard, portal access, datacenter and polling development/maintenance and expansion of infrastructure for device business; $29,397 in travel, entertainment, meals and related expenses for the three months ended March 31, 2015 compared to $26,262 for the three months ended March 31, 2014, an increase of $3,135 or 11.9%, The increase is due to the further development of the medical device business and an increase in the Company’s capital raise and investor and public relations efforts; and $189,709 in medical supplies, office and information technology expense for the three months ended March 31, 2015 compared to $213,977 for the three months ended March 31, 2014, a decrease of $24,268 or 11.3%. These costs remained relatively the same period to period as the Company maintained its physician practice management division and the purchase of medical supplies for that business and maintained levels of office and related technology expenses for its offices.

 

Cost of devices

 

Cost of devices for the three months ended March 31, 2015 aggregated $-0- and had no change from $-0- or 0.0% from the three months ended March 31, 2014. This is primarily due to the Company focusing on customer and product service, support and logistics for previously placed devices with existing secured networks during the first half of fiscal 2015. Additionally, the Company has received an executed purchase order to purchase certain products and as a direct result of limited capitalization and funds availability for the procurement of sufficient inventory, this purchase order commitment has not been recorded nor reflected in revenues or related receivables for that period.

 

Depreciation and amortization

 

Depreciation and amortization expenses for the three months ended March 31, 2015 aggregated $47,188 and increased $30,387 from $16,801 or 180.9% from the three months ended March 31, 2014 primarily due to the acquisition of certain fixed assets and the re-class of certain devices for distribution formerly recorded in inventory.

 

Other income (expense)

 

Net other income (expense) was $18,738 for the three months ended March 31, 2015 compared to ($4,529,037) for the three months ended March 31, 2014, an increase of $4,547,775. This decrease in expense is primarily attributable to the fair value adjustment related to the derivative liability of $4,675,566 offset by an increase in interest expense of $127,791 for the three months ended March 31, 2015.

 

  

Income taxes

 

No provision for income taxes has been recorded as the Company has provided a full valuation allowance.

 

Net Loss

 

The net loss of the three months ended March 31, 2015 was ($2,327,862) compared to the net loss of ($7,925,411) for the three months ended March 31, 2014. The Company had a loss per weighted common share outstanding of ($0.02) for the three months ended March 31, 2015 compared to ($0.12) for the three months ended March 31, 2014.

 

Liquidity and Capital Resources

 

We have a history of operating losses as we have focused our efforts on raising capital and maintaining our physician practice administration business and the rollout and of our medical device business. The report of our independent auditors issued on our consolidated financial statements as of and for the year ending December 31, 2014 expresses substantial doubt about our ability to continue as a going concern. In 2012, we were successful in raising net proceeds of $693,500 through private placements and $1,270,000 through debt financing in order to fund the development and growth of our operations. During 2013, we were successful in raising net proceeds of $1,950,000 through private placements and $1,805,200 through debt financing in order to fund the development and growth of our operations. During 2014 we were successful in raising net proceeds of $5,970,000 through private placements and $3,893,218 through debt financing in order to fund the development and growth of our operations as well as the extinguishing of certain existing demand, promissory and original issue discount notes as they became due. During 2015, we were successful in raising net proceeds of $831,030 through debt financing in order to fund the development and growth of our operations. Our ability to continue as a going concern is dependent on our obtaining additional adequate capital to fund additional operating losses until we become profitable. If we are unable to obtain adequate capital, we could be forced to cease operations.

 

The following table presents a summary of our net cash provided by (used in) operating, investing and financing activities for March 31, 2015 and 2014: 

 

		Three Months Ended March 31
		2015				2014
Net cash used in operating activities			(767,294	)		$	(1,490,519	)
Net cash used in investing activities			(40,650	)			-
Net cash provided by financing activities			717,030				1,393,892
Net (decrease) in cash			(90,914	)		$	(96,627	)

  

Cash flows for the three months ended March 31, 2015 compared to March 31, 2014: For the three months ended March 31, 2015, we incurred a net loss of $2,327,862. Net cash used in operating activities was $767,294, net cash used in investing activities was $40,650 and net cash provided by financing activities was $717,030. For the three months ended March 31, 2014, we incurred a net loss of $7,925,411. Net cash used in operating activities was $1,490,519, net cash used in investing activities was $-0- and net cash provided by financing activities was $1,393,892.

 

 

  

Working Capital Deficit Information - The following table presents a summary of our working capital deficit: 

 

Category		March 31, 2015				March 31, 2014
Current assets			5,803,732				2,727,049
Current liabilities			9,769,069				12,199,376
Working capital (deficit)		$	(3,965,337	)		$	(9,472,347	)

  

As of March 31, 2015, the Company had a working capital deficit of $3,965,337, compared to $9,472,347 at March 31, 2014, or a decrease in working capital deficit of $5,507,010. For 2015, current assets increased by $3,076,683 primarily due to an increase of $2,793 in cash, an increase of $4,099,936 in accounts receivable related to our practice management services and the launch of our medical device business, a decrease in inventory of $1,320,963 related to the purchase and placement of medical devices as well as a re-class of certain devices to fixed assets previously recorded as inventory and a net increase in prepaid expenses of $294,916 primarily related to compensation as a result of certain consulting agreements and deposits for new locations. Current liabilities decreased $2,430,307 primarily related to an increase of $1,317,910 in liability for stock to be issued, decrease in the change of fair value of the derivative liability related to the warrants issued with notes payable in 2014 of $5,491,637 and an increase of $445,498 in accounts payable and accrued expense, along with an increase in current portion of notes payable of $1,324,374. In addition, non-current portion of notes payable increased $792,000 and a decrease of $55 in Series F preferred shares, which have been classified as a liability, as a result of being settled and exchanged for common shares and further retired.

 

Funding Requirements: We expect to incur substantial expenses and generate ongoing operating losses for the foreseeable future as we prepare for the scale-up of inventory and commencement and ongoing development of our medical equipment and device business as well as maintaining the existing base of our physician practice administration and support business. If we are unable to raise an adequate amount of capital, however, we could be forced to curtail or cease operations. Our future capital uses and requirements depend on numerous forward-looking factors. These factors include the following:

 

-the time and expense needed to complete the procurement of inventory and successful launch of the medical equipment and device business;

 

-the expense associated with building a network of independent sales representatives to market the devices selected for distribution;

 

-the degree and speed of patient and physician acceptance of these devices and products and the degree to which third-party payors approve and pay for reimbursement; and

 

-the time and expense needed to complete the securing of additional days at existing location under contract and/or the securing of additional new physician practice facilities and locations under contract for our practice administration and support business.

 

Our revenue generating activities during 2015 continue to improve as the physician practice management services business is re-focused and continues to progress along with the rollout of our medical device distribution business, as we strategically continue to place our medical devices for distribution into the marketplace and begin a focus on product support and customer service for our valued partners. The Company has secured several network selling agreements with US based healthcare organizations for the use of certain medical devices we are distributing. Strategic rollout and placement of these devices continues, with fulfillment and support for these initial networks under contract a primary focus. The Company will continue with the placement and support of product through existing networks and channels during the first half of 2015, establishing a core foundation and penetration for existing products, with the anticipation of building upon that foundation during the second half of 2015, focusing on the evaluation, implementation and placement of new products through new distribution channels, partners and strategic alliances.

 

  

The Company also continues its capital raising efforts during 2015 with increased exposure and awareness through more formalized investor and public relations, roadshows and the engaging of professional firms.

 

In view of these matters, realization of certain of the assets in the accompanying balance sheet is dependent upon our continued operations, which in turn is dependent upon our ability to meet our financial requirements, raise additional financing, and the success of our future operations.

 

Additional funding may not be available to us on acceptable terms or at all. In addition, the terms of any financing may adversely affect the holdings or the rights of our stockholders. For example, if we raise additional funds by issuing equity securities or by selling debt securities, if convertible, further dilution to our existing stockholders would result. To the extent our capital resources are insufficient to meet our future capital requirements, we will need to finance our future cash needs through public or private equity offerings, collaboration agreements, debt financings or licensing arrangements.

 

If adequate funds are not available, we may be required to terminate, significantly modify or delay the development and launch of our businesses, reduce our planned commercialization efforts, or obtain funds through means that may require us to relinquish certain rights that we might otherwise seek to protect and retain. Further, we may elect to raise additional funds even before we need them if we believe the conditions for raising capital are favorable.

 

  

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not required for smaller reporting companies.

 

ITEM 4.

CONTROLS AND PROCEDURES

 

Our independent accounting firm has not, nor is required, to perform any procedures to assess the effectiveness of management remediation efforts.

 

Evaluation of Disclosure Controls and Procedures.

 

Our Principal Executive Officer and Principal Financial Officer evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were not effective such that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding disclosure. The Company is growing and currently lacks documented procedures including documentation related to testing of processes, data validation procedures from the systems into the general ledger, testing of systems, validation of results, disclosure review, and other analytics. Furthermore, the Company lacked sufficient personnel to properly segregate duties. A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

 

Changes in Internal Controls.

 

There were no changes in our internal controls over financial reporting during the fiscal quarter ended March 31, 2015, that have materially affected, or are reasonably likely to materially affect, our internal control 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, which arise in the ordinary course of business.  However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm its business. We are not currently party to any material legal proceedings.

 

ITEM 1A.

RISK FACTORS

 

There have been no material changes from the risk factors disclosed in the “Risk Factors” section of our Form 10 as filed with the SEC on July 25, 2013, as amended.

 

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

During January 2015, the Company issued 2,000,000 shares of common stock to certain consultants for services rendered. The above referenced securities were offered and sold in reliance on the exemption from registration afforded by Section 4(2) and Regulation D (Rule 506) under the Securities Act and corresponding provisions of state securities laws.

 

During February 2015, the Company issued 3,500,000 shares of common stock to certain consultants for services rendered. The above referenced securities were offered and sold in reliance on the exemption from registration afforded by Section 4(2) and Regulation D (Rule 506) under the Securities Act and corresponding provisions of state securities laws.

 

During February 2015, the Company issued 70,000 shares of common stock through a previous private placement. The above referenced securities were offered and sold in reliance on the exemption from registration afforded by Section 4(2) and Regulation D (Rule 506) under the Securities Act and corresponding provisions of state securities laws.

 

During March 2015, the Company issued 240,000 shares of common stock as a result of entering into a satisfaction, exchange and release agreement with a certain Preferred Stock holder, in which the holder exchanged shares held of the Company’s Preferred Stock for shares of the Company’s common stock. The above referenced securities were offered and sold in reliance on the exemption from registration afforded by Section 4(2) and Regulation D (Rule 506) under the Securities Act and corresponding provisions of state securities laws.

 

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

 

Not applicable.

 

ITEM 4.

MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5.

OTHER INFORMATION

 

Not applicable.

 

 

ITEM 6.

EXHIBITS

 

Exhibit Number		Description of Exhibit
31.1		Certification of the Principal Executive Officer pursuant to Exchange Act Rule 13a-14(a)
31.2		Certification of the Principal Financial Officer pursuant to Exchange Act Rule 13a-14(a)
32.1		Certification of the Principal Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002
32.2		Certification of the Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002

 

EX-101.INS *	XBRL INSTANCE DOCUMENT
EX-101.SCH *	XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT
EX-101.CAL *	XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
EX-101.DEF *	XBRL TAXONOMY EXTENSION DEFINITION LINKBASE
EX-101.LAB *	XBRL TAXONOMY EXTENSION LABELS LINKBASE
EX-101.PRE *	XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE

 

* To be filed by amendment.

 

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.

 

		MILLENNIUM HEALTHCARE INC.
DATE: May 20, 2015	By:	/s/ Dominick Sartorio
		Dominick Sartorio
		Chief Executive Officer

 

DATE: May 20, 2015	By:	/s/ Anthony Urbano
		Anthony Urbano
		Chief Financial Officer