Coro Global Inc. - Quarter Report: 2014 March (Form 10-Q)

form10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2014
	OR
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 033-25126-D

MedeFile International, Inc.

(Exact name of registrant as specified in its charter)

Nevada		85-0368333
State or other jurisdiction of		(I.R.S. Employer
incorporation or organization		Identification No.)

301 Yamato Rd, Suite 1200

Boca Raton, FL 33431

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code (561) 912-3393

Copies to:

Richard A. Friedman, Esq.

Jeff Cahlon, Esq.

Sichenzia Ross Friedman Ference LLP

61 Broadway, 32nd Floor

New York, New York 10006

Phone: (212) 930-9700

Fax: (212) 930-9725

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition 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

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

Number of shares outstanding of registrant’s common stock, par value $0.0001: 190,836,554 as of May15, 2014.

Table of Content

	Page
PART I

FINANCIAL INFORMATION
ITEM 1. Financial Statements	3
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk	17
ITEM 4. Controls and Procedures	17

PART II

OTHER INFORMATION
ITEM 1. Legal Proceedings	17
ITEM 1A. Risk Factors	17
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds	17
ITEM 3. Defaults Upon Senior Securities	17
ITEM 4. Mine Safety Disclosures	17
ITEM 5. Other Information	17
ITEM 6. Exhibits	17
Signatures	18

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Item 1.Financial Statements.

Medefile International, Inc.

Condensed Consolidated Balance Sheets

(unaudited)


	March 31,			December 31,
	2014			2013
Assets
Current assets
Cash	$	97,702		$	266,843
Accounts receivable		5,004			2,914
Inventory		54,228			54,507
Merchant services reserve		14,818			14,818
Prepaid insurance		-			1,057
Total current assets		171,752			340,139
Website development, net of accumulated amortization		261,340			261,340
Furniture and equipment, net of accumulated depreciation		307			413
Intangibles		1,339			1,339
Total assets	$	434,738		$	603,231

Liabilities and Stockholders' (Deficit)
Current Liabilities
Accounts payable and accrued liabilities	$	43,259		$	52,915
Coverible debenture - net of discount		39,039			9,177.00
Deferred revenues		1,303			2,075
Derivative liability		113,284			1,062,141
Total Current Liabilities		196,885			1,126,308

Stockholders' (Deficit)
Preferred stock, $.0001 par value: 10,000,000 authorized,
no shares issued and outstanding		-			-
Common stock, $.0001 par value: 500,000,000 authorized;
40,706,899 and 40,706,899 shares issued and outstanding on
March 31, 2014 and December 31, 2013, respectively		4,070			4,070
Additional paid in capital		27,099,030			27,099,030
Common stock to be issued		69,920			69,920
Accumulated deficit		(26,935,167	)		(27,696,097	)
Total stockholders' (deficit)		237,853			(523,077	)
Total liability and stockholders'(deficit)	$	434,738		$	603,231

The accompanying notes are an integral part of these consolidated financial statements

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Medefile International, Inc.

Condensed Consolidated Statements of Operations


	For the Three Months Ended
	March 31,
	2014			2013
Revenue		15,926			7,653
Cost of goods sold		279			286

Gross profit		15,647			7,367

Operating expenses
Selling, general and administrative expenses		173,607			247,885
Depreciation and amortization expenses		106			5,873
Total operating expenses		173,713			253,758

Loss from operations		(158,066	)		(246,391	)

Other income (expenses)
Interest expense - convertible note		(2,737	)		-
Interest expense - discount on convertible note		(27,124	)		-
Gain (loss) on changes in fair value
of derivative liabilities		948,857			1,819,500
Total other income (expense)		918,996			1,819,500

Gain (loss) before income tax		760,930			1,573,109
Provision for income tax
Net income (loss)	$	760,930		$	1,573,109

Net loss per share: basic and diluted	$	0.02		$	0.13

Weighted average share outstanding		40,706,899			11,754,762
basic and diluted

The accompanying notes are an integral part of these consolidated financial statements

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Medefile International, Inc.

Condensed Consolidated Statements of Cash Flows


	For the Three Months Ended
	March 31,
	2014			2013
Cash flows from operating activities
Net loss	$	760,930		$	1,573,109
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization		106			5,873
Interest expense - covertible debenture		2,737			-
Interest expense - discount on convetible debenture		27,124			-
(Gain)loss in fair value of derivitave liabilities		(948,857	)		(1,819,500	)
Changes in operating assets and liabilities
Accounts receivable		(2,089	)		194
Inventory		279			289
Prepaid insurance		1,057			998
Accounts payable and accrued liabilities		(9,656	)		(6,964	)
Deferred revenue		(772	)		(1,540	)
Net Cash used in operating activities		(169,141	)		(247,541	)

Cash flows from investing activities
Website development		-			(38,000	)
Net cash used in investing activities		-			(38,000	)

Cash flow from financing activities
Proceeds from common stock sale		-			200,000
Net cash provided by financing activities		-			200,000

Net increase (decrease) in cash and cash equivalents		(169,141	)		(85,541	)
Cash and cash equivalents at beginning of period		266,843			234,356
Cash and cash equivalents at end of period	$	97,702		$	148,815

Supplemental disclosure of cash flow information
Cash paid for interest	$	-		$	-
Cash paid for income taxes	$	-		$	-
Common stock issued for consulting service	$	-		$	102,859

The accompanying notes are an integral part of these consolidated financial statements

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Medefile International, Inc.

Notes to Condensed Consolidated Financial Statements

1. BASIS OF PRESENTATION AND NATURE OF BUSINESS OPERATIONS

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of MedeFile International Inc., a Nevada corporation (the "Company"), have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete consolidated financial statements. These unaudited condensed consolidated financial statements and related notes should be read in conjunction with the Company's Form 10-K for the fiscal year ended December 31, 2013. In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments that are of a normal recurring nature and which are necessary to present fairly the financial position of the Company as of March 31, 2014, and the results of operations and cash flows for the three months ended March 31, 2014 and 2013. The results of operations for the three months ended March 31, 2014 are not necessarily indicative of the results that may be expected for the entire fiscal year.

Nature of Business Operations

Medefile International, Inc., has developed and globally markets a proprietary, patient-centric, Internet-enabled Personal Health Record (iPHR) system for gathering, digitizing, maintaining, accessing and sharing an individual’s actual medical records. Medefile's goal is to revolutionize the medical industry by bringing patient-centric digital technology to the business of medicine. Medefile intends to accomplish its objective by providing individuals with a simple and secure way to access their lifetime of actual medical records in an efficient and cost-effective manner. Medefile's products and services are designed to provide healthcare providers with the ability to reference their patients’ actual past medical records, thereby ensuring the most accurate treatment and services possible while simultaneously reducing redundant procedures.

Interoperable with most electronic medical record systems utilized by physician practices, clinics, hospitals and other care providers, the highly secure, feature-rich MedeFile iPHR solution has been designed to gather all of its members’ actual medical records on behalf of each member, and create a single, comprehensive Electronic Health Record (EHR). The member can access his/her records 24-hours a day, seven days a week – or authorize a third party user – on any web-enabled device (PC, cell phone, PDA, e-reader, et al), as well as the portable MedeFile flash drive/keychain or branded UBS-bracelet.

By subscribing to the MedeFile system, members empower themselves to take control of their own health and well-being, and empower their healthcare providers to make sound and lifesaving decisions with the most accurate, up-to-date medical information available. In addition, with MedeFile, members enjoy the peace of mind that comes from knowing that their medical records are protected from fire, natural disaster, document misplacement or the closing of a medical or dental practice.

MedeFile believes it enjoys a number of competitive advantages over other firms within the medical records marketplace, including that:

·	MedeFile has developed products and services geared to the patient, while containing the depth and breadth of information required by treating physicians and medical personnel.
·	MedeFile does all the work of collecting and updating medical information on an ongoing basis; our products’ dependence on the patient taking action is minimal – particularly when compared to patient action required to support competing solutions.

·	MedeFile provides a complete medical record. Other companies claim complete longitudinal records, but in reality only provide histories (usually completed by the member/patient), which are by no means complete or necessarily accurate records.
·	MedeFile provides a coherent mix of services and products that are intended to improve the quality of healthcare by enabling the patient to manage and access the information normally retained by doctors and other care providers.

Going Concern

The accompanying financial statements have been prepared contemplating a continuation of the Company as a going concern. The Company has reported a net income of $760,930 for the three months ended March 31, 2014 as a direct result of the change in valuation of the Company’s warrant derivative. During the comparable three month period of 2013, the Company had a net income of $1,573,109, also attributed to the change in fair value of its derivative liability. The Company incurred operating losses of $155,066 and $246,391 for the three months ended March 31, 2014 and 2013, respectively. The Company had an accumulated deficit of $26,935,167 and negative working capital of $25,133 as of March 31, 2014.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The operating losses raise substantial doubt about the Company's ability to continue as a going concern. The Company's ability to obtain additional financing depends on the the success of its growth strategy and its future performance, each of which is subject to general economic, financial, competitive, legislative, regulatory, and other factors beyond the Company's control.

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We will need additional investments in order to continue operations to cash flow break even. Additional investments are being sought, but we cannot guarantee that we will be able to obtain such investments. 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 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, we may 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. Further, 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. If additional financing is not available or is not available on acceptable terms, we will have to curtail our operations.

Cash and Cash Equivalents

For purposes of these financial statements, cash and cash equivalents includes highly liquid debt instruments with maturity of less than three months.

Concentrations of Credit Risk

Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents. The Company places its cash and temporary cash investments with high credit quality institutions. At times, such investments may be in excess of the FDIC insurance limit. Currently our operating account is not above the FDIC limit.

Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. A valuation allowance is established against deferred tax assets that do not meet the criteria for recognition. In the event the Company were to determine that it would be able to realize deferred income tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the valuation allowance which would reduce the provision for income taxes.

The Company follows the accounting guidance which provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized initially and in subsequent periods. Also included is guidance on measurement, recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

Property and Equipment

Property and equipment are stated at cost. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings. Minor additions and renewals are expensed in the year incurred. Major additions and renewals are capitalized and depreciated over their estimated useful lives being 3 years up to 10 years.

Trademark Costs

Trademark costs incurred in the registration and acquisition of trademarks and trademark rights are capitalized. These costs will be amortized over the legal life of the related trademark once the trademark is awarded. The Company performs an annual review of its identified intangible assets to determine if facts and circumstances exist which indicate that the useful life is shorter than originally estimated or that the carrying amount of the assets may not be recoverable.

The Company expenses all software costs associated with the conceptual formulation and evaluation of alternatives until the application development stage has been reached. Costs to improve or support the technology are expensed as these costs are incurred.

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Website Development

The Company's policy is to capitalize website development costs at original cost and amortize the balance over the life of the product. The life of website is determined at completion of the project. The Company reviews the amounts capitalized for impairment whenever events or circumstances indicate that the carrying amounts of the assets may not be recoverable.

The Company expenses all development costs associated with the conceptual formulation and evaluation of alternatives until the application development stage has been reached. Costs to improve or support the technology are expensed as these costs are incurred.

Revenue Recognition

The Company generates revenue from licensing the right to utilize its proprietary software for the storage and distribution of healthcare information to individuals and affinity groups. For revenue from product sales, the Company recognizes revenue on four basic criteria which must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded.

Deferred Revenue

The Company generally receives subscription fees for its services. From time to time, the Company will receive quarterly or annual subscriptions paid in advance and deferred revenue is recorded at that time. The deferred revenue is amortized into revenue on a pro- rata basis each month. Customers with quarterly or annual subscriptions may cancel their subscriptions and request a refund for future months' revenues at any time. Therefore, a liability is recorded to reflect the amounts that are potentially refundable at March 31, 2014 and December 31, 2013, deferred revenue totaled $1,303 and$2,075 respectively.

Reclassifications

Certain reclassifications have been made in prior periods financial statements to conform to classifications used in the current period.

Recent Accounting Pronouncements

There are no recent accounting pronouncements that are expected to have a material effect on the Company’s financial statements.

Fair Value of Financial Instruments

Cash and Equivalents, Deposits In-Transit, Receivables, Prepaid and Other Current Assets, Accounts Payable, Accrued Salaries and Wages and Other Current Liabilities. The carrying amounts of these items approximated fair value.

Fair value is defined 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. To increase the comparability of fair value measures, Financial Accounting Standards Board (“FASB”) ASC Topic 820-10-35 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurements).

Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets.

Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3—Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

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The application of the three levels of the fair value hierarchy under Topic 820-10-35 to our assets and liabilities are described below:

	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Assets
Website development	$	-	$	-	$	261,340	$	261,340
Intangible assets		-		-		1,339		1,339
Total	$	-	$	-	$	262,679	$	262,679
Liabilities
Deferred Revenues	$	1,303	$	-	$	-	$	1,303
Derivative Liability		-		-		113,284		113.284
Total	$	1,303	$	-	$	113,284	$	114,587

Impairment of Long Lived Assets

In accordance with Accounting Standards Codification (“ASC”) 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets, long-lived assets to be held and used are analyzed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. ASC 360-10 relates to assets that can be amortized and the life can be determinable. The Company reviews property and equipment and other long-lived assets for impairment annually, or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparison of the asset’s carrying amount to future undiscounted net cash flows the assets are expected to generate. Cash flow forecasts are based on trends of historical performance and management's estimate of future performance, giving consideration to existing and anticipated competitive and economic conditions. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted future cash flows arising from the assets or their fair values, whichever is more determinable.

Inventory

Inventories are stated at the lower of cost or market value. Cost is determined by the first-in, first-out basis and market being determined as the lower of replacement cost or net realizable value. The Company records inventory write-downs for estimated obsolescence of unmarketable inventory based upon assumptions about future demand and market conditions. For the three months ended March 31, 2014 and 2013, the Company did not recognize inventory write downs.

Net Loss per Share

Basic and diluted loss per share amounts are computed based on net loss divided by the weighted average number of common shares outstanding. Warrants to purchase 3,037,546 common shares were not included in the computation of diluted loss per share because the assumed conversion and exercise would be anti-dilutive for the three months ending March 31, 2014.

Management Estimates

The presentation of financial statements in conformity with generally accepted accounting principles 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 reported period. Actual results could differ from those estimates.

Stock Based Compensation

The Company accounts for all compensation related to stock, options or warrants using a fair value based method whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. The Company uses the Black-Scholes pricing model to calculate the fair value of options and warrants issued to both employees and non-employees. Stock issued for compensation is valued using the market price of the stock on the date of the related agreement.

2. ACCOUNTS RECEIVABLE

Due to the collection history of the Company, the Company does not maintain an allowance for doubtful accounts. Recognition of a specific uncollectible account is written directly against the invoice in accounts receivable and expensed in the period identified. Management believes there would not be a material difference in the amounts compared to the allowance method.

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3. WEBSITE DEVELOPMENT

Website development consists of the following:

	March 31, 2014			December 31, 2013
Website development	$	224,946		$	224,946
Additional development		99,340			99,340
Accumulated amortization		(62,946	)		62,946
Net website development	$	261,340		$	261,340

During May 2012 the Company began redesigning its website. The Company anticipates that the redesign will be completed by June 2014.

Amortization is calculated over a three-year period. Amortization expense for the three months ending March 31, 2014 and 2013 is $0 and $5,245, respectively.

4. FURNITURE AND EQUIPMENT

Furniture and equipment consists of the following:

	March 31, 2014			December 31, 2013
Computers and equipment	$	169,286		$	169,286
Furniture and fixtures		38,618			38,618
Subtotal		207,904			207,904
Less: accumulated depreciation		(207,597	)		(207,491	)
Net furniture and equipment	$	307		$	413

Depreciation is calculated by using the straight-line method over the estimated useful life. Depreciation expense totaled $106 and $628 for the three months ended March 31, 2014 and 2013, respectively.

5. CONVERTIBLE DEBEBTURE – RELATED PARTY

The Company entered into two 10% Secured Convertible Debentures with a significant shareholder. The debentures carry a one year term. The debentures were issued in the amount of $50,000 on November 4, 2013 and $60,000 on December 17, 2013. Both debentures have a conversion feature at a share price of $0.10. The Company recognized a beneficial conversion feature (BCF) due to the intrinsic value of the conversion rate compared to the market price of the common stock as of the grant date. A discount is computed based on the share value at the time of issuance and amortized over the period of the debenture.

	March 31, 2014			December 31, 2013
Convertible debenture – related party	$	113,751		$	111,013
Beneficial conversion feature		(74,712	)		(101,836)
Convertible debenture, net of BCF	$	39,039		$	9,177

6. WARRANT LIABILITY

In connection with certain securities purchase agreements entered into during the third quarter of 2011 and the second quarter of 2012 , the Company issued warrants with ratchet provisions. The warrants contain an expiration date of four years from the date of issuance. During the first two years following the date issuance, if the Company issues any additional shares of common stock at a price per share less than the exercise price in effect, the exercise price will be adjusted to equal the average price per share received by the Company for the additional shares issued. After the first two years following the date issuance, if the Company issues any additional shares of common stock at a price per share less than the exercise price in effect, the exercise price will be adjusted using a formula based on the existing exercise price, the outstanding shares before and after the issuance of such shares, and the average price during the issuance of such shares. In addition to the exercise price adjustment, the number of shares upon exercise of the warrants is also subject to adjustment.

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Upon issuance, the Company assesses the fair value of the warrants using the Black Scholes pricing model and records a warrant liability for the value. The Company then assesses the fair value of the warrants quarterly based on the Black Scholes Model and increases or decreases the warrant liability to the new value, and records a corresponding gain or loss (see below for variables used in assessing the fair value). The Company uses expected volatility based primarily on historical volatility using weekly pricing observations for recent periods that correspond to the expected life of the warrants. The risk-free interest rate is based on U.S. Treasury securities rates.

Due to the ratchet provisions, the Company treats the warrants as a derivative liability in accordance with the provisions of ASC 815 “Derivatives and Hedging” (ASC 815). ASC 815 applies to any freestanding financial instruments or embedded features that have the characteristics of a derivative and to any freestanding financial instruments that potentially settle in an entity’s own common stock.

As of March 31, 2014, these warrants include the following:

Warrants granted during July 2011 in connection with the sale of 35,461 shares of common stock with the right to originally purchase up to 35,461 shares of the Company’s common stock with an original exercise price of $2.50. Due to the issuance of the Company’s common stock in April 2012, the exercise price was adjusted to $0.50 and the number of shares to 1,808,511. Fair value was determined using the following variables:

	Grant Date			March 31, 2014			December 31, 2013
Risk-free interest rate at grant date		1.21	%		1.32	%		1.27	%
Expected stock price volatility		194.9	%		155.2	%		189.65	%
Expected dividend payout		-			-			-
Expected option in life-years		4			1.27			1.5

Warrants granted during April 2012 in connection with the sale of 100,000 shares of the Company’s preferred stock to a significant shareholder and brother of the then-Chief Executive Officer with the right to purchase up to 200,000 shares of the Company’s common stock with an exercise price of $0.50. Fair value was determined using the following variables:

	Grant Date			March 31, 2014
Risk-free interest rate at grant date		0.47	%		1.32	%
Expected stock price volatility		137.8	%		155.2	%
Expected dividend payout		-			-
Expected option in life-years		3.75			2.

Warrants granted during April 2012 in connection with the sale of 1,000,000 shares of the Company’s common stock with an exercise price of $0.50.

	Grant Date			March 31, 2014
Risk-free interest rate at grant date		0.47	%		1.32	%
Expected stock price volatility		137.8	%		155.2	%
Expected dividend payout		-			-
Expected option in life-years		3.75			2.

Transactions involving warrants with ratchet provisions are as follows:

	Number of Warrants		Weighted-Average Price Per Share
Outstanding at December 31, 2012		3,008,511	$	0.50
Granted		-		-
Exercised		-		-
Canceled or expired		-		-
Additional due to ratchet trigger		-		-
Outstanding at December 31, 2013		3,008,511		0.50
Granted		-		-
Exercised		-		-
Canceled or expired		-		-
Addition due to ratchet trigger		-		-
Outstanding at March 31, 2014		3,008,511	$	0.50

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As of March 31, 2014 and December 31, 2012, the warrant liability consisted of the following:

	March 31, 2014		December 31, 2013
Warrant liability (beginning balance)	$	1,062,141	$	5,618,819
Additional liability due to new grants
Loss(gain) on changes in fair market value of warrant liability		(948,857)		(4,556,678)
Net warrant liability	$	113,284	$	1,062,141

Change in fair market value of warrant liability resulted in a gain of$948,857 and $1,819,500 for the three months ended March 31, 2014 and 2013, respectively.

7. EQUITY

Common Stock

On October 8, 2012, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Secretary of State of Nevada, pursuant to which (i) the Company effected a 5,000-to-1 reverse split of its common stock and (ii) the number of authorized shares of the Company’s common stock decreased from 75,000,000,000 to 100,000,000. The market effective date of the reverse split was October 9, 2012. The effect of the stock split has been applied retroactively. On December 19, 2013 the Company increased its authorized shares of common stock from 100,000,000 to 500,000,000

2013

On January 17, 2013 the Company entered into a Securities Purchase Agreement pursuant to which, the Company sold 400,000 shares of common stock for an aggregate purchase price of $200,000

On April 15, 2013, the Company entered into a Securities Purchase Agreement with accredited investors pursuant to which the Company sold 2,000,000 shares of common stock for an aggregate purchase price of $400,000.

On May 1, 2013 the Company issued an aggregate of 11,872,281shares of common stock to purchasers under the securities purchase agreements entered into by the Company in July 2011 and April 2012 pursuant to anti-dilution rights held by such purchasers.

On August 27, 2013, the Company entered into a Securities Purchase Agreement with accredited investors pursuant to which, the Company sold 42,743 shares of common stock for an aggregate purchase price of $29,920.

On September 23, 2013, the Company entered into a Securities Purchase Agreement with accredited investors pursuant to which, the Company sold 21,429 shares of common stock for an aggregate purchase price of $15,000.

On December 17, 2013, the Company entered into a Securities Purchase Agreement with accredited investors pursuant to which, the Company sold 2,000,000 shares of common stock for an aggregate purchase price of $40,000. In connection with this sale, the Company issued, in April 2014, an aggregate of 150,129,655 shares of common stock to existing stockholders for no additional consideration pursuant to anti-dilution rights held by such stockholders.

On December 20, 2013, the Company entered into a Securities Purchase Agreement with accredited investors pursuant to which, the Company sold 15,000,000 shares of common stock for an aggregate purchase price of $300,000.

Preferred Stock

On April 10, 2012, the Company filed a certificate of designation of Series B Preferred Stock (the “Series B Certificate of Designation”) with the Secretary of State of Nevada, pursuant to which 100,000 shares of the Company’s preferred stock were designated as Series B Convertible Preferred Stock (the “Series B Preferred Stock”). Pursuant to the Series B Certificate of Designation, the Series B Preferred Stock:

●	Has a liquidation preference over the common stock equal to the stated value of $1.00 per share.

●	Votes as a single class with the common stock and entitles its holders, for each share of Series B Preferred Stock, to cast such number of votes equal to 0.00051% of the total number of votes entitled to be cast. Accordingly, a holder of all 100,000 shares of Series B Preferred Stock will have the right to cast 51% of the total number of votes entitled to be cast.

●	Will automatically convert into common stock at a ratio of 2 shares of common stock for each share of Series B Preferred Stock, effective upon the Company’s filing of a certificate of amendment to its articles of incorporation.

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On April 12, 2012, the Company entered into a securities purchase agreement with Lyle Hauser (the “Preferred Stock Investor”). Lyle Hauser is the Company’s largest shareholder and the brother of Kevin Hauser, the Company’s chief executive officer. Pursuant to the purchase agreement, on April 12, 2012, the Company sold 100,000 shares of Series B Preferred Stock to the Preferred Stock Investor for an aggregate purchase price of $100,000, and the Company issued four-year warrants to purchase 200,000 shares of common stock to the Preferred Stock Investor with an exercise price of $0.50. On April 23, 2012, 100,000 Series B Preferred shares were converted to 200,000 shares of common stock

Stock Options

2010 Incentive Stock Plan

In December 2009, our Board of Directors adopted the 2010 Equity Incentive Plan (the “2010 Plan”). The purpose of the 2010 Plan was to provide an incentive to attract and retain directors, officers, consultants, advisors and employees whose services are considered valuable, to encourage a sense of proprietorship and to stimulate an active interest of such persons into our development and financial success. Under the 2010 Plan, we are authorized to issue incentive stock options intended to qualify under Section 422 of the Code, non-qualified stock options, stock appreciation rights, performance shares, restricted stock and long term incentive awards. The 2010 Plan will be administered by our Board of Directors until such time as such authority has been delegated to a committee of the Board of Directors.

Other Warrants

On June 22, 2011, the Company awarded 2,000 Common Stock warrants, at an exercise price of $50 per share, to consultants for services at the quoted stock price on the effective date of the awards. The warrants have an expiration date of four years from the issue date and contain provisions for a cash exercise. The estimated value of the compensatory warrants granted to non-employees in exchange for services and financing expenses was determined using the Black-Scholes pricing model and the following assumptions listed below:

On July 28, 2011, the Company awarded 27,000 Common Stock Warrants, at an exercise price of $25 per share to consultants for services at the quoted stock price on the effective date of the awards. The warrants have an expiration date of three years from the issue date and contain provisions for a cash exercise. The estimated value of the compensatory warrants granted to non-employees in exchange for services was determined using the Black-Scholes pricing model and the assumptions listed below.

Risk-free interest rate at grant date	0.39	%
Expected stock price volatility	172.1	%
Expected dividend payout	--
Expected option in life-years	4

Transactions involving warrants are summarized as follows:

	Number of Warrants		Weighted-Average Price Per Share
Outstanding at December 31, 2013		29,000	$	48.27
Granted		-		-
Exercised		-		-
Canceled or expired		-		-
Outstanding at March 31, 2014		29,000	$	30.07

Warrants Outstanding
					Weighted
					Average
					Remaining
Exercise			Number		Contractual
Prices			Outstanding		Life (years)
	$	25		2,000	.75
		50		27,000	2.0
				29,000	1.91

8. SUBSEQUENT EVENTS

The Company’s management has reviewed all material events through the date of this report in accordance with ASC 855-10, and believes there are no material subsequent events to report.

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

This Management’s Discussion and Analysis of Financial Condition and Results of Operations may contain "forward-looking statements." The terms "believe," "anticipate," "intend," "goal," "expect," and similar expressions may identify forward-looking statements. These forward-looking statements represent the Company's current expectations or beliefs concerning future events. The matters covered by these statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements, including customer acceptance of new products, the impact of competition and price erosion, as well as other risks and uncertainties. In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation that the strategy, objectives or other plans of the Company will be achieved. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Except as may be required under applicable securities laws, we undertake no duty to update this information.

OVERVIEW

Organizational History

On November 1, 2005, Bio-Solutions International, Inc. ("Bio-Solutions") entered into an Agreement and Plan of Merger (the "Agreement") with OmniMed Acquisition Corp., (the "Acquirer), a Nevada corporation and a wholly owned subsidiary of Bio-Solutions, OmniMed International, Inc., a Nevada corporation ("OmniMed"), and the shareholders of OmniMed (the "OmniMed Shareholders"). Pursuant to the Agreement, Bio-Solutions acquired all of the outstanding equity stock of OmniMed from the OmniMed Shareholders. As consideration for the acquisition of OmniMed, Bio-Solutions agreed to issue 1,979 shares of Bio-Solutions' common stock to the OmniMed Shareholders.

As a result of the Agreement, the OmniMed Shareholders assumed control of Bio-Solutions. Effective November 21, 2005, Bio-Solutions changed its name to OmniMed International, Inc. Effective January 17, 2006, OmniMed changed its name to MedeFile International, Inc. ("MedeFile" or the "Company").

Overview of Business

MedeFile International, Inc., through its MedeFile, Inc. subsidiary, has developed and globally markets a proprietary, patient-centric, Internet-enabled Personal Health Record (iPHR) system for gathering, digitizing, maintaining, accessing and sharing an individual’s actual medical records. Our goal is to revolutionize the medical industry by bringing patient-centric digital technology to the business of medicine. We intend to accomplish our objective by providing individuals with a simple and secure way to access their lifetime of actual medical records in an efficient and cost-effective manner. Our products and services are designed to provide healthcare providers with the ability to reference their patient's actual past medical records, thereby ensuring the most accurate treatment and services possible while simultaneously reducing redundant procedures.

By subscribing to the MedeFile system, members can empower themselves to take control of their own health and well-being, as well as empower their healthcare providers to make sound and lifesaving decisions with the most accurate, up-to-date medical information available. In addition, with MedeFile, members enjoy the peace of mind that comes from knowing that their medical records are protected from fire, natural disaster, document misplacement or the closing of a medical or dental practice.

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We believe we enjoy a number of direct, competitive advantages over others in the medical records marketplace, including that:

·	We have developed products and services geared to the patient, while containing the depth and breadth of information required by treating physicians and medical personnel

·	We do all the work of collecting and updating medical information on an ongoing basis; our products’ dependence on the patient taking action is minimal – particularly when compared to patient action required to support competing solutions.

·	We provide a complete medical record. Other companies claim complete longitudinal records, but in reality only provide histories (usually completed by the member/patient), which are by no means complete or necessarily accurate records

·	We provide a coherent mix of services and products that are intended to affect the quality of healthcare by enabling the patient to manage and access the information normally retained by doctors and other care providers.

RESULTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2014 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2013

Revenues

Revenues for the three months ended March 31, 2014 totaled $15,926 compared to revenues of $7,633 during the three months ended March 31, 2013. The increase in membership revenue is primarily related to amount of members and medical record reimbursement revenue received from members. Medical record reimbursement revenue is a dollar for dollar reimbursement for charges from members’ doctors for sending updated medical records to MedeFile. The off-setting expense is charged to selling general and administrative expense. Revenues received from memberships are recognized through the period of the membership, and, therefore, revenue recognized represents a fraction of the membership in the quarter being reported.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended March 31, 2014 totaled $173,607, a decrease of $74,278 or approximately 29.9% compared to selling, general and administrative expenses of $247,885 for the three months ended March 31, 2013. Overall there was a decrease in the total selling, general and administrative which is primarily due to decreased costs associated with a previously used telemarketing campaign and business development expenses.

Depreciation Expense

Depreciation expense totaled $106 for the three months ended March 31, 2014, compared to depreciation expense of $628 during the three months ended March 31, 2013. The decrease in depreciation was due to some assets being fully depreciated.

Amortization Expense

Amortization expense for the three months ended March 31, 2014 was $0, compared to $5,245 for the three months ended March 31, 2013. Amortization expense is the expensing of the website development.

Interest Expense

Interest expense on convertible debentures for the three months ended March 31, 2014 and 2013, was $2,737 and $0 respectively. The Company entered into two secured convertible debentures during the third quarter 2013. The notes have a one year term at a 10% interest rate.

Interest expense on the discount for convertible notes for the three months ended March 31, 2014 and 2013 was $27,124 and $0 respectively. The conversion feature of the debentures allows the note to be converted at a share price of $0.10.

Net Income

Our net income for the three months ended March 31, 2014 was $760,930, or $.02 per share, a decrease of $812,179 compared to a net income of $1,573,109, or $.13 per share, during the three months ended March 31, 2013. The significant change is directly related to adjustments in the fair value of our derivative liability. Our operating loss for the three months ended March 31, 2014 was $158,066 compared to an operating loss of $246,391 for the three months ended March 31, 2013.The decrease in operating loss of $246,391 is primarily the result of a decrease in our general and administrative and compensation expenses as detailed above

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Liquidity and Capital Resources

As of March 31, 2014, we had cash and cash equivalents of $97,702, inventory of $54,228, merchant services reserve of $14,818, and accounts receivable of $5,004. Net cash used in operating activities for the three months ended March 31, 2014 was approximately $169,141. Current liabilities of $196,885 consisted of: $43,259 for accounts payable and accrued liabilities, deferred revenues of $1,303, convertible debenture of $39,039 and derivative liabilities of $113,284. As of March 31, 2014, we have a net negative working capital of $25,133.

The Company currently estimates that it will require approximately $420,000 to continue its operations for the next twelve months. Additional investments are being sought, but we cannot guarantee that we will be able to obtain such investments. 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 conditions in the U.S. stock 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. Further, 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. If additional financing is not available or is not available on acceptable terms, we will have to curtail our operations

Off-Balance Sheet Arrangements

We do not have any off balance sheet arrangements as of March 31, 2014 or as of the date of this report.

Critical Accounting Policies

The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect our reported assets, liabilities, revenues, and expenses, and the disclosure of contingent assets and liabilities.

We base our estimates and judgments on historical experience and on various other assumptions we believe to be reasonable under the circumstances. Future events, however, may differ markedly from our current expectations and assumptions. While there are a number of significant accounting policies affecting our consolidated financial statements, we believe the following critical accounting policy involves the most complex, difficult and subjective estimates and judgments:

Revenue Recognition

Stock-based Compensation

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a Smaller Reporting Company as defined Rule 12b-2 of the Exchange Act and in item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item 3.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange 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 us in the reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosure.

As of the end of the period covered by this Quarterly Report, we conducted an evaluation, under the supervision and with the participation of our Chief Executive Officer (Principal Executive and Financial Officer) of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation, our Chief Executive Officer (Principal Executive and Financial Officer) concluded that the Company’s disclosure controls and procedures are effective 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 periods specified in the SEC’s rules and forms and also are effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer (Principal Executive and Financial Officer), to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

During the quarter ended March 31, 2014, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, the Company may become involved in litigation relating to claims arising out of its operations in the normal course of business. We are not involved in any pending legal proceeding or litigation and, to the best of our knowledge, no governmental authority is contemplating any proceeding to which we are a party or to which any of our properties is subject, which would reasonably be likely to have a material adverse effect on the Company.

Item 1A. Risk Factors

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

31.1	Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended.

32.1	Certification pursuant to 18 U.S.C. Section 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

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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.

	MEDEFILE INTERNATIONAL, INC.

May 14, 2014	By:	/s/ Niquana Noel
		Niquana Noel
		Chief Executive Officer (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)