E Med Future, Inc. - Quarter Report: 2008 March (Form 10-Q)

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended March 31, 2008

Commission file number: 33-55254-36

E Med Future, Inc.

(Exact name of registrant as specified in its charter)

34 South Clay Street, Millersburg, Ohio 44654

(Address of principal executive offices)

Indicate by a 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  ¨

Indicate by a check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 42,513,415 shares of common stock, $0.001 par value per share, as of May 15, 2008.

Table of Contents

TABLE OF CONTENTS

Table of Contents

PART I — FINANCIAL INFORMATION

Our March 31, 2008 unaudited consolidated financial statements follow this quarterly report beginning on page F-1.

Headquartered in Millersburg, Ohio, E Med Future, Inc. manufactures and markets products designed to reduce accidental hypodermic needlestick injuries. Our primary product, NeedleZap^®, completely disintegrates the sharp portion of the needle. According to the American Nursing Association, there are an estimated one million accidental needlesticks reported in the United States in the healthcare industry alone. We believe the applications for the product are far reaching, and include healthcare professionals, law enforcement and correctional personnel, veterinarians, military, clinical researchers, hospitality, and sanitation workers. NeedleZap^® is designed to work within the parameters of OSHA needlestick mandates which require employers to take advantage of new technologies to prevent needlesticks in the workplace.

Our Products

Our primary product is NeedleZap^®, a revolutionary safety device intended to help reduce accidental needlestick injuries by disintegrating the sharp portion of a hypodermic needle. When a hypodermic needle is inserted into the unit, the patented electrode system disintegrates the needle in approximately two seconds at 2200° F.

In July 2003, we announced the beginning of clinical testing and market evaluation of the first extensions to the NeedleZap^® product line which include a dental parking station and butterfly needle burner. We are presently in the process of obtaining patent protection for these new products. Because we lack sufficient funds to expedite the development of these products, both products remain in the development phase. We anticipate that both products will involve supplements to our existing FDA pre-market approval; therefore, introduction and timing of these products into the marketplace will be contingent on FDA approval.

The dental parking station is intended to provide a safer, temporary resting place for a hypodermic syringe. During a procedure, dentists often reuse a hypodermic needle on the same patient when additional anesthesia is required. Since the needle is not destroyed immediately after the initial use, dentists generally recap the needle or leave the needle exposed, increasing the risk of an accidental needlestick injury. The NeedleZap^® unit sets directly on the dental parking station enabling the dentist to recap, or disintegrate, the hypodermic needle easily with one hand at the end of the procedure, and significantly reducing the risk of a needlestick injury.

The butterfly needle burner is intended to accommodate needles not secured to a hypodermic syringe. Butterfly needles are used primarily for IV’s and kidney dialysis. Since the original NeedleZap^® unit was intended to disintegrate hypodermic needles held by a syringe, the butterfly needle burner necessitated design modifications, including a change to the housing and repositioning of the electrode system.

1

Table of Contents

On December 30, 2003, we acquired Medical Safety Technologies, Inc. from UTEK Corporation (AMEX:UTK), an innovative technology transfer company dedicated to building bridges between university developed technologies and commercial organizations. Medical Safety Technologies, or MSTI, holds the worldwide exclusive license to a patented invention, known as the “Safe Receptacle for Sharps,” that is designed to aid in the safe transport of sterile and used sharp medical instruments. This Emory University invention was developed to help reduce the possibility of needlestick injuries by maintaining medical instruments in an angled, accessible position while encasing their sharp edges. We believe the Safe Receptacle for Sharps device is complimentary to our NeedleZap^® product. By expanding our future product line, we hope to bring added value to the sales and distribution channel we are building. However, we are not presently pursuing the sharps receptacle as management believes resources should be conserved for marketing the currently approved product.

Receivership

On November 22, 2006, Martin Management Services, Inc. was appointed as receiver for E Med by the Franklin County, Ohio Common Pleas Court in the action filed on August 6, 2006 by Complete Investment Management, Ltd., or CIM, against the Company. CIM has sought the repayment of a loan made by CIM to E Med in the amount of $548,000. E Med is in default in its payments to CIM due to declining revenue and cash flow. The receiver is currently operating the company for the benefit of its creditors. The receiver has received offers to purchase the assets of E Med or to purchase a controlling interest of the shares of the company. The receiver is currently evaluating these offers and expects to have agreements in place to sell each component within the next 90 days. However, there can be no assurances that the receiver will be able to complete a transaction in that time frame or at all.

Looking Ahead

We have incurred net losses while we obtained FDA approval and patent protection for our NeedleZap^® product and entered into distribution relationships. We have not had significant sales volume to date. We believe we have now obtained significant experience in how to market our products effectively and we had an increase in sales in 2007, which none the less were less than projected. We cannot guarantee that sales will increase or that we will be able to attain profitability. We are currently in receivership and our future is uncertain.

Our History

The Company was formed under the laws of the State of Nevada on March 14, 1990, but until 2003 we were a shell company with no significant operations other than seeking to identify an existing business to acquire. Trading in our stock was dependant on our acquisition of an operating business. On April 4, 2003, we participated in a merger in which we acquired E Med Future, Inc., our operating subsidiary. In connection with the transaction, we issued 19,850,000 unregistered shares of our common stock (95% of our then outstanding shares) to the former stockholders of E Med Future.

Pursuant to the terms of the merger agreement, we changed our corporate name from “Micro-Economics, Inc.” to “E Med Future, Inc.” In addition, our original directors resigned and were replaced by Robert J. Ochsendorf, D. Dane Donohue and Juan J. Perez. Our shares began trading on the OTC Bulletin Board under the symbol “EMDF.OB” on April 17, 2003.

2

Table of Contents

Results of Operations

We are a development stage company and did not have full approval to market and sell our products until March 2003. Initial sales in 2003 caused us to be optimistic that our revenues and profits would increase in subsequent years. However, our results have not met expectations due to lower than anticipated sales. In 2007 we voluntarily suspended shipment of our products due to a Food and Drug Administration investigator that found deficiencies in or operating procedures. We believe that we are now in compliance and resumed shipping product in the second quarter.

Net Sales

We did not have any sales in the quarter ended March 31, 2008, compared with $104,625 for the same period in 2007, a decrease of $104,625, or 100.0%. The lack of sales in the first quarter of 2008 was caused by our voluntary suspension of sales and shipments until we achieved FDA compliance.

Costs and Expenses

Operating costs and expenses decreased $68,399, or 64.6%, in the first quarter of 2008 to $37,509 from $105,908 in 2007. Operating costs and expenses for the first quarter of 2008 were lower due to a reduction in staff and operating activities and no cost of goods sold.

Other expenses increased $1,918, or 14.2%, to $15,455 in 2008 compared to $13,537 in 2007.

Net Loss

In the first quarter of 2008, our net loss increased to $52,964 from a net loss of $14,820 in 2007 primarily as a result of the lack of sales in 2008 as well as costs associated with the receivership.

Financial Condition and Liquidity

We had available cash of $2,191 on March 31, 2008, compared to $3,216 cash available at the end of 2007. The decrease is primarily the result of not having sales in the first quarter of 2008 due to the FDA requirement that we not make any shipments until full compliance with FDA regulations was achieved. We had cash used in operations of $1,025 in the first quarter of 2008 compared to cash provided by operations of $10,987 in 2007. The change was primarily the result of the net loss in 2008.

On November 12, 2002, we entered into a credit facility with Key Bank (NA). The facility provides us with a working capital line-of-credit of up to $150,000 and currently bears interest at 10.75%. The credit facility is secured by all of E Med’s assets and must be paid back in full on demand. We presently have drawn $121,396 on the facility.

On April 1, 2004, we entered into a loan agreement with a private investor in the amount of $750,000. The convertible promissory note bears interest at 7.5% payable quarterly with the principal due in five years and is secured by all of our assets. The note is convertible at the holder’s option into 1.5 million shares of our unregistered common stock, subject to adjustment for dilutive

3

Table of Contents

issuances. In connection with the loan, we also agreed to pay the lender a $3.00 royalty on each of the first 1.0 million and $2.00 on the second 1.0 million NeedleZap^® units sold, with maximum total royalty payments of $5.0 million. The loan agreement was amended effective December 31, 2004 to reduce the loan amount to $548,000. Payment of interest and royalties was deferred until January 1, 2006, provided we provide monthly sales reports to the lender when due. In addition, if we arrange an increase in bank financing, the lender agreed to subordinate its security interests to the secured interests of the banking institution up to a maximum of $500,000. We have not paid royalties to the lender and are currently in default under the loan.

From September 2004 to June 2006, Ronald L. Alexander, one of our directors, loaned E Med a total of $136,120. On June 15, 2006, we issued Mr. Alexander 3.5 million unregistered shares in partial satisfaction of this loan. On June 28, 2006, a private investor purchased 1.5 million shares of our unregistered shares for $45,000, or $0.03 a share. On June 15, 2006, we issued 3.5 million unregistered shares to Donald Sullivan, our CFO, interim CEO and a director, for payment of accrued wages from January 1, 2005 through May 31, 2006.

Our primary need for capital is to fund operations and the development of new products. More recently we have been forced to expend significant funds to defend the company from various legal actions. Historically, our capital requirements have been met by a combination of loans from stockholders and other investors, our line of credit with Key Bank, and funds from operations. Although sales continue to be disappointing, we believe increased sales may eventually meet our capital needs in the long-term. However, current sales are not adequate to meet our cash needs, and without additional loans or equity infusions we will not be able to continue our operations.

Off-Balance Sheet Arrangements

We do not have any material off-balance sheet arrangements.

Forward Looking Statements

Some of the statements that we make in this report, including statements about our confidence in E Med’s prospects and strategies and our expectations about E Med’s sales expansion, are forward-looking statements within the meaning of § 21E of the Securities Exchange Act. Some of these forward-looking statements can be identified by words like “believe,” “expect,” “will,” “should,” “intend,” “plan,” or similar terms; others can be determined by context. Statements contained in this report that are not historical facts are forward-looking statements. These statements are necessarily estimates reflecting our best judgment based upon current information, and involve a number of risks and uncertainties. Many factors could affect the accuracy of these forward-looking statements, causing our actual results to differ significantly from those anticipated in these statements. While it is impossible to identify all applicable risks and uncertainties, they include:

4

Table of Contents

You should not place undue reliance on our forward-looking statements, which reflect our analysis only as of the date of this report. The risks and uncertainties listed above and elsewhere in this report and other documents that we file with the Securities and Exchange Commission, including our annual report on Form 10-KSB, quarterly reports on Form 10-Q, and any current reports on Form 8-K, must be carefully considered by any investor or potential investor in E Med.

How to Learn More About E Med

We file annual, quarterly and special reports and other information with the SEC. Our SEC filings are available to the public over the internet at the SEC’s web site at SEC.gov. You may also read and copy any document we file at the SEC’s public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on the operation of the SEC’s public reference room in Washington, D.C. by calling the SEC at 1-800-SEC-0330. To learn more about E Med you can also visit our website at NeedleZap.com or contact us directly at the address or phone number listed below.

E Med Future, Inc.

34 Clay Street

Millersburg, Ohio 44654

Phone: 330-674-1363

Email: info@NeedleZap.com

Donald Sullivan, our chief financial officer and interim president and chief executive officer, has evaluated the effectiveness of E Med’s disclosure controls and procedures as of March 31, 2008. Based upon his review, he concluded that our disclosure controls and procedures are effective in ensuring that material information related to E Med is communicated to him by others within the

5

Table of Contents

company responsible for reporting this information. There were no changes in our internal controls over financial reporting during the fiscal quarter ended March 31, 2008 that have materially affected, or are reasonably likely to affect, our internal controls over financial reporting.

6

Table of Contents

PART II — OTHER INFORMATION

We are currently involved in several actions that we have disclosed in our previously filings with the SEC. For additional information about these suits, please reference Item 3 of our December 31, 2007 Form 10-KSB that we filed with the SEC on April 22, 2008 and our 2006 10-KSB filed on April 17, 2007.

Not applicable.

Complete Investment Management (“CIM”) has loaned E Med a total of $548,000. E Med is in default of its payment obligations and CIM has instituted suit in connection with this loan. We hope to arrive at a mutually agreeable settlement with CIM. In connection with this suit, Martin Management Services, Inc. was appointed as receiver for the Company on November 22, 2006. Martin Management is currently operating E Med for the benefit of its creditors.

Not applicable.

Not applicable.

7

Table of Contents

SIGNATURES

In accordance with the requirements of the Exchange Act, E Med Future, Inc. caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

8

Table of Contents

E MED FUTURE, INC. AND SUBSIDIARY

(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS

See accompanying notes to consolidated financial statements

F-1

Table of Contents

E MED FUTURE, INC. AND SUBSIDIARY

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

See accompanying notes to consolidated financial statements

F-2

Table of Contents

E MED FUTURE, INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

See accompanying notes to consolidated financial statements

F-3

Table of Contents

E MED FUTURE, INC. AND SUBSIDIARY

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(UNAUDITED)

See accompanying notes to consolidated financial statements

F-4

Table of Contents

E MED FUTURE, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

NOTE A - BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary in order to make the financial statements not misleading have been included. Results for the three months ended March 31, 2008 are not necessarily indicative of the results that may be expected for the year ending December 31, 2008. For further information, refer to the financial statements and footnotes thereto included in the E Med Future, Inc. annual report on Form 10-KSB for the year ended December 31, 2007.

NOTE B - GOING CONCERN

As indicated in the accompanying financial statements, the Company incurred a net loss of $52,964 for the three months ended March 31, 2008, and has a negative working capital of $1,000,553 and Deficit Accumulated During Development Stage of $5,062,159 at March 31, 2008, and is considered a company in the development stage. Management’s plans include the raising of capital through short term financing to fund future operations and the generating of revenue through its business. Failure to raise capital, keep its products and manufacturing facilities in FDA compliance, and generate sales revenues could result in the Company having to curtail or cease operations. Additionally, even if the Company does raise sufficient capital to support its operating expenses and generate revenues, there can be no assurances that the revenue will be sufficient to enable it to develop business to a level where it will generate profits and cash flows from operations. These matters raise substantial doubt about the Company’s ability to continue as a going concern. However, the accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

NOTE C - CONCENTRATION

Approximately 75% of the Company’s sales for the three months ended March 31, 2007 were with one customer. The Company did not have any sales in the three months ended March 31, 2008.

NOTE D - CONVERTIBLE PROMISSORY NOTE PAYABLE

On November 22, 2006, Martin Management Services, Inc. (“Martin Management”) was appointed as receiver for the Company by the Franklin County, Ohio Common Pleas Court in the action filed on August 6, 2006 by Complete Investment Management, Ltd. (“CIM”). CIM has sought the repayment of a loan made by CIM to the Company in the amount of $548,000. The Company is in default in its payments to CIM due to declining revenue and cash flow. Martin Management has been operating the Company for the benefit of its creditors.

F-5

Table of Contents

E MED FUTURE, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

NOTE E - COMMITMENTS AND CONTINGENCIES

From July 9 through July 25, 2007, a Food and Drug Administration investigator conducted an inspection of the Company’s operations. At the conclusion of the inspection an FDA Form 483 was issued to the company listing observations of the inspector, which the Company responded to on August 7, 2007. The observations included deficiencies in the Company’s operating procedures, which will require correction. The Company voluntarily suspended shipment of our products to assure that the Company is compliant. The Company has completed the corrections and requested a re-inspection by the FDA. The Company has received verbal approval from the FDA to resume shipments if the Company believes it is in compliance. The Company believes it is now in compliance and has accepted two orders which we expect to ship before the end of May.

On or about January 20, 2008, the Receiver entered into a settlement agreement with Kenneth Jackson and Safe Medical Solutions, LLC, which was filed of record in Complete Investment Management, Inc. v. E Med Future, Inc., Case No. 06 CVH 10019 (Franklin County, Ohio Court of Common Pleas, J. Frye) on January 25, 2008. On January 31, 2008, an Agreed Order for Permanent Injunctive Relief was filed in the same case. Pursuant to the agreement, the parties agree to dismiss and release all claims within Safe Medical Solutions, LLC v. Sullivan, et al., Case No. 06 CV 9757 (Franklin County Court of Common Pleas, J. Brown). Jackson and Safe Medical agree to dismiss the Cancellation Action No. 92045999, pending before the U.S. Trademark Trial Appeal Board, with regard to the Needlezap trademark. The Receiver agrees to release all cross-claims as against Jackson and Safe Medical in the Safe Medical case. Jackson and Safe Medical surrender and waive any claim of ownership or license with regard to any intellectual property, including trademarks and patents, related to the Needlezap product, but retain the right to receive royalties on the future sale of Needlezap units. Jackson and Safe Medical also retain the right to sell any Needlezap units they currently own. The Receiver agreed with Jackson to either contract for the sale of, or offer up for public sale, all assets of E Med within 120 days of the agreement. Jackson and Safe Medical retain a limited “right of first refusal” with regard to any sale of the E Med assets. While IMET Corporation remains a third-party defendant in the Complete Investment case, the Receiver anticipates that all claims will shortly be resolved and IMET dismissed from the action.

F-6