UNITED STATES SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
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ANNUAL
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended:
December 31, 2015
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TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period
from [ ] to [ ]
Commission file number
000-55465
Medifirst Solutions,
Inc.
(Name of small business
issuer in its charter)
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NEVADA
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23-3888260
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(State
or other jurisdiction of
incorporation
or organization)
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(IRS
Employer
Identification
Number)
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4400
Route 9 South. Suite 1000, Freehold NJ 07728
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(Address of Principal
Executive Offices)
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Issuer’s telephone
number:
(732) 786-8044
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Securities
registered pursuant to Section 12(b) of the Act:
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None
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Securities registered
pursuant to Section 12(g) of the Act:
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Common Stock, Par Value
$0.0001
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Indicate by check mark if registrant is a
well-known seasoned issuer, as defined under Rule 405 of the Securities Act Yes ☐ No
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Indicate by check mark if registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
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 during the preceding 12 months
(or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes
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No
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Indicate by check mark whether the registrant
has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files). Yes
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No ☐
Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained,
to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K.
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.
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Large accelerated filer.
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Accelerated filer.
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Non-accelerated filer.
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(Do not check if a smaller reporting company)
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Smaller reporting company.
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Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Act). Yes
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No
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The aggregate market value of the voting and
non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or
the average bid and ask price of such common equity, as of the last business day of the registrant’s most recently completed
second fiscal quarter, June 30, 2015: $235,688.
As of April 14 2016, there were 41,588,879
shares of the issuer’s common stock outstanding.
Documents incorporated by reference: None
TABLE OF CONTENTS
In this report, unless the context indicates
otherwise, the terms "Medifirst," "Company," "we," "us," and "our" refer to
Medifirst Solutions, Inc., a Nevada corporation.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, or the "Securities Act," and Section 21E of the Securities
Exchange Act of 1934 or the "Exchange Act." These forward-looking statements are subject to certain risks and uncertainties
that could cause actual results to differ materially from historical results or anticipated results.
In some cases, you can identify forward-looking
statements by terms such as "may," "intend," "might," "will," "should," "could,"
"would," "expect," "believe," "anticipate," "estimate," "predict,"
"potential," or the negative of these terms. These terms and similar expressions are intended to identify forward-looking
statements. The forward-looking statements in this report are based upon management's current expectations and beliefs, which
management believes are reasonable. In addition, we cannot assess the impact of each factor on our business or the extent to which
any factor or combination of factors, or factors we are aware of, may cause actual results to differ materially from those contained
in any forward-looking statements. You are cautioned not to place undue reliance on any forward-looking statements. These statements
represent our estimates and assumptions only as of the date of this report. Except to the extent required by federal securities
laws, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date hereof
or to reflect the occurrence of unanticipated events.
You should be aware that our actual results
could differ materially from those contained in the forward-looking statements due to a number of factors, including:
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new
competitors are likely to emerge and new technologies may further increase competition;
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our operating costs
may increase beyond our current expectations and we may be unable to fully implement our current business plan;
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our ability to obtain future financing or
funds when needed;
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our ability
to successfully obtain and maintain our diverse customer base;
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our ability to protect our intellectual property
through patents, trademarks, copyrights and confidentiality agreements;
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our ability
to attract and retain a qualified employee base;
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our ability to respond
to new developments in technology and new applications of existing technology before our competitors;
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acquisitions, business combinations, strategic
partnerships, divestures, and other significant transactions may involve additional uncertainties; and
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our ability
to maintain and execute a successful business strategy.
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Other risks and uncertainties include such
factors, among others, as market acceptance and market demand for our products and services, pricing, the changing regulatory
environment, the effect of our accounting policies, potential seasonality, industry trends, adequacy of our financial resources
to execute our business plan, our ability to attract, retain and motivate key technical, marketing and management personnel, and
other risks described from time to time in periodic and current reports we file with the United States Securities and Exchange
Commission, or the "SEC." You should consider carefully the statements under "Item 1A. Risk Factors" and other
sections of this report, which address additional factors that could cause our actual results to differ from those set forth in
the forward-looking statements and could materially and adversely affect our business, operating results and financial condition.
All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified
in their entirety by the applicable cautionary statements.
PART I
ITEM 1. BUSINESS
Corporate History
Medifirst Solutions, Inc. (“Medifirst”
and the “Company”) was incorporated in Nevada in November 2010. Our principal executive office is located at 4400
U.S. 9 South, Suite 1000, Freehold NJ, 07726, and our telephone number is (732) 786-8044. Our website address is www.medifirstsolutions.com.
The Company began as a development stage company focused on developing products within the healthcare market for both consumer
and professional applications. In 2013, Medifirst began to developing its own line of disposable electronic cigarettes (“e-cigs”)
but the e-cig industry subsequently encountered significant government push-back to try to heavily regulate their use and production,
including a ban on e-cigs. In order to avoid the uncertainties and costs of the regulated e-cig industry, Medifirst entered into
an agreement with Panacea Photonics Corporation that allowed Medifirst to exclusively market and distribute a series of Botanical
LED Light Therapy Systems, including skin care and pain relief products. Under the terms of the marketing and distribution agreement,
Medifirst became the exclusive distributor of the light therapy products in both New York and New Jersey. In 2014, in addition
to the LED light therapy division, the Company became a dealer for Atmospheric Water Solutions, a Florida based company that sells
water generators that makes drinking water from air. In 2015, the Company made a strategic decision to add laser technology to
its health and wellness division and discontinue its efforts with its light therapy and water generator products. Management believed
that it was in the best interest of the Company and its shareholders to narrow its focus and business on the cosmetic and skincare
industry. In connection with the changed focus, the Company began to develop a product that if successfully cleared by the U.S.
Food and Drug Administration ("FDA"), would be a proprietary medical device for the Company. The Company entered into
an exclusive manufacturing agreement to produce what is now its hand-held mobile laser system known as “The Time Machine
Program” for which the Company purchased the registered trademark. Furthermore, the Company purchased 20 laser units from
the developer of the lasers.
Additionally, Medifirst, through its wholly-owned
subsidiary Medical Laser Manufacturer, Inc., entered into a Product and Know-How License Agreement (the “License Agreement”)
with Laser Lab Corp to license the use of various intellectual property in connection with seeking regulatory approval for and
marketing, distributing and selling The Time Machine Series Lasers (“TTM Series”). The License Agreement grants a
license to the Company to use various technology, trade secrets, invention records, research records, reports and data, test results,
clinical studies, engineering and technical data, designs, production specifications, processes, methods, procedures, facilities
and know-how related to the inventions identified in the License Agreement, which inventions include the infrared laser in the
TTM Series for which the Company previously filed a Premarket Notification 510(k) submission with the FDA. Although the License
is not exclusive, Laser Lab Corp may not license the know-how or inventions to a third party and may only directly, or through
its wholly-owned subsidiary, use the know-how and inventions. In addition to the license granted to the Company, the License Agreement
provides for an option to license other fields of use of the infrared laser in the TTM Series, as well as other wavelengths and
colors, allowing the Company to develop a broader range of product offerings in the future. Furthermore, Laser Lab Corp granted
the Company a right of first refusal to consider matching any bona fide offer to license other technologies of Laser Lab Corp.
The Time Machine Laser Series
FDA 510(k) Submission
During fiscal year 2015, we submitted to the
FDA a Premarket Notification (510(k)) for two of our lasers in the TTM Series, which submission noted the intended use of the
lasers to treat specific skin conditions, including Vascular and Pigmented Lesions, as well as relief of muscle and joint pain,
muscle spasms and inflammation. As of the date of this filings, the Company's submission is still under review. The Company is
in the process of responding to the FDA's a request for more information to supplement its 510(k) submission. The Company has
engaged the services of a well-respected laboratory to perform electrical and safety tests as part of the 510(k) review process
and a consulting firm to spearhead the 510(k) submission with the FDA in order to "clear" our laser device for commercial
distribution.
Applications
We are seeking FDA clearance
on two TTM Series lasers for the following applications: temporary relief of minor muscle and joint pain, muscle spasms,
temporary increase in local blood circulation and temporary relaxation of muscles.
Science
The Time Machine Infrared Laser 810/830nm operates
in continuous wave mode set at a fixed frequency. The Infrared laser operates at a 810/830nm wavelength and, as set forth in our
510(k) submission, is indicated for temporary relief of minor muscle and joint pain, muscle spasm, temporary increase in local
blood circulation and temporary relaxation of muscles. The focus is to help patients with relief of muscle and joint pain, muscle
spasm and inflammation. The laser device is lightweight and not connected to a larger “mother device”. It is fully
mobile and completely hand-held.
Manufacturing Agreement
Medifirst has entered into an exclusive
manufacturing agreement allowing us to exclusively purchase various lasers in the TTM Series having a range of wavelengths and
colors, including Infrared, Green, Red, Violet, Ultra-Violet and Blue. The manufacturer who has decades of experience working with
laser technology will work with Medifirst to revise, alter or upgrade the lasers so as to try to meet all standards required for
FDA 510(k) clearance. We believe that our present manufacturing capacity at these facilities is sufficient to meet foreseeable
demand for our products. We plan to establish a quality control program, including a set of standard manufacturing and documentation
procedures intended to ensure that, where required, our products are manufactured in accordance with applicable FDA regulations
and the comparable requirements of the European community and other countries.
Business Plan
We plan to sell our TTM Series lasers primarily
in the U.S. but intend to have international distribution and marketing channels. We intend to initiate our sales, marketing and
advertising strategy upon getting FDA 510(k) clearance. The approach to rolling out the products will be multifaceted, starting
with direct sales and partnering with medical device distributors. The healthcare professionals that we believe will benefit from
incorporating the TTM Series lasers into their practices include medical doctors, dentists, cosmetic professional, hospitals and
surgical centers. We also believe that our lasers will be useful to chiropractic professional, medi-spas, massage therapists, electrolysis
providers, physical therapists and any professional that treats pain, inflammation and related skin conditions. Because laser regulations
vary from state to state, healthcare professionals will need to research their state-specific compliance requirements regarding
their usage.
The Time Machine Laser Series and Program (“TMP”)
will be very affordable and priced very competitively, as compared to other lasers in the industry which can typically cost tens
of thousands of dollars. Since we expect to allow purchasers to finance the TMP, costing as little as a few hundred dollars a
month, or to purchase the laser outright for approximately $10,000, we believe the benefits to the professionals will make us
highly competitive and in high demand in the medical laser industry. For example, although each practitioner can set the rates
patients pay for laser treatments, we have seen similar treatments cost approximately $1,000 per treatment package. We believe
that the potential revenue generation for treatment centers or healthcare professionals can easily justify the cost to finance
or purchase our laser units. We do not expect to provide financing to our customers. However, we expect to partner with a third
party to provide our customers with financing options.
Benefits of the The Time Machine Program
(TMP):
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Offers practitioners a lucrative opportunity to generate new revenues or enhance existing revenue sources with a low-cost and
compact device that provided what we believe to be a revolutionary medical technology.
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Allows businesses to expand their treatment offerings and increase their clientele using what our studies have shown are effective
outcomes from treatment.
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Allows businesses the possibility of recouping their initial investment within the first months, thereby creating a positive cash
flow stream utilizing the recommended business model.
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Promotes and advertises the doctors locations via The Time Machine Program’s social media updates which continues to bring
in new patients.
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Pinpoint accuracy.
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Decreased expenses compared to other technologies.
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Consistent “results-pleased” patients.
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Increased referrals from patients.
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No incision, no redness, no swelling, no burning, no pain, no downtime and less out-of-pocket expenses.
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Brand Awareness
The Company plans to aggressively develop
a social media, internet and advertising presence and, when we have the regulatory approval to do so, to target medical professionals,
as well as their perspective patients. In addition, upon obtaining FDA 510(k) clearance, the Company plans to add a sales division
by appointing a National Director of Sales to implement and oversee a sales team. A major component of the business roll-out will
be to attend major industry trade shows, where we believe we will be able to reach a high number of professionals and distribution
partners in a short period of time. These shows will include those in the medical industry and the beauty and spa industry, as
well as alternative healthcare industries. On the international front we will initially seek to partner with distributors in the
United Kingdom, Brazil, Australia and Russia.
After Medifirst is able to roll out
it first 510(k) cleared laser, it plans to grow it product base by filing a new or updated 510(k) clearance for other medical lasers
in the TTM Series to which it has a license or option to license. We plan to focus future product rollouts with the indications
specific to pain management and anti-aging treatments which will include non-invasive and minimally-invasive cosmetic procedures
for wrinkles, hyper-pigmentation, skin spots, acne and various skin related concerns. Minimally-invasive and non-invasive treatments
within the cosmetic procedures industry have been, in our belief, a booming area for which our lasers are well-suited and, if we
are successful in getting 510(k) clearance, an immediate source of demand because many of our target clients’ patients are
willing to pay out-of-pocket for what we believe are highly effective, affordable and shorter-recovery-time treatments. Although
we believe some applications of our future lasers may be covered by some health insurance plans, our target market will be those
healthcare professionals that typically charge their patients directly for services rendered.
The Market
Laser Systems
According to Global Industry Analysts
Inc., the global market for medical laser systems is forecast to reach US$10 billion by 2020, driven by the aging population’s
shift towards minimally invasive procedures, and growing awareness over the safety of laser-based procedures. Other factors driving
growth in the market include rise in age related illnesses, increasing consumer spending on non-invasive cosmetic surgeries, developments
in Diode Lasers & Fiber Lasers, and expanding applications in cardiology. The United States represents the largest market worldwide.
Medical laser systems refer to devices
that emit monochromatic light beam in a highly concentrated form for excision of tissues. Lasers are being extensively used for
diagnosis and treatment of a number of diseases that were previously difficult to treat or were known to lead to significant complications
using traditional procedures. Most common applications of medical laser systems include ophthalmology, oncology, cosmetic surgery,
cardiology, dentistry, gynecology, dermatology, gastroenterology, diagnostics and urology. Major factors driving growth in the
market include aging population, increasing focus on aesthetics, and growing awareness over the benefits of laser procedures. Rising
disposable incomes particularly in developing markets and growing adoption of laser-based treatments are also factors driving growth
in the market.
Surgical lasers represent the largest
product market, supported by developments in diode lasers and fiber lasers, and well-established applications in cardiology. Growing
prevalence of cardiovascular diseases is therefore expected to provide sturdy opportunities for growth in the coming years. Growing
focus on aesthetics, rise in obesity, and preference for non-surgical cosmetic procedures are fueling demand for aesthetic lasers.
Advancements in laser technology are resulting in lesser pain and higher surgical accuracy thereby encouraging volume growth in
laser procedures. Dedicated lasers with varying active media have been developed to meet specific needs of each procedure. These
advancements enable physicians to provide more favorable and noticeable results to patients, with the added benefit of quicker
post surgery recovery. Non-invasive methods of body contouring and fat reduction are also gaining popularity, supported by advancements
such as Transdermal Focused Ultrasound, Monopolar RF, Low level laser, High Intensity Focused Ultrasound (HIFU) and Cryolipolysis.
Aesthetic
Market
Medical
Insight, an independent industry research and analysis firm, estimated that in 2015 total sales of products in the global aesthetic
market exceeded $7 billion. Medical Insight believes that total sales of products in the global aesthetic market will increase
11.8% annually through 2019.
Key factors
affecting growth rates in the markets for aesthetic treatment procedures and aesthetic laser equipment include:
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improvements in overall economic conditions and an expanding physician base;
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the aging population of industrialized countries and the amount of discretionary income of the
“baby boomer” demographic segment;
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greater anticipated growth in Asian markets;
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the desire of many individuals to improve their appearance;
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the development of technology that allows for safe and effective aesthetic treatment procedures
as well as advances in treatable conditions;
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the impact of managed care and reimbursement on physician economics, which has motivated physicians
to establish or seek to expand their elective aesthetic practices with procedures that are paid for directly by patients; and
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reductions in cost per procedure, which has attracted a broader base of clients and patients
for aesthetic treatment procedures.
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Non-Traditional
Physician Customers
Aesthetic treatment procedures that
use lasers and other light-based equipment have traditionally been performed by dermatologists and plastic surgeons. Based on published
membership information from professional medical organizations, there are approximately 19,000 dermatologists and plastic surgeons
in the United States. A broader group of physicians in the United States, including primary care physicians, obstetricians and
gynecologists, have incorporated aesthetic treatment procedures into their practices. These non-traditional physician customers
are largely motivated to offer aesthetic procedures by the potential for a reliable revenue stream that is unaffected by managed
care and government-payor reimbursement economics. We believe that there are a significant number of these potential non-traditional
physician customers in the United States, representing a market opportunity to be addressed by laser developers, manufacturers
and suppliers like Medifirst. Medical Insight has even reported that some physicians are electing to open medical spas, often adjacent
to their conventional office space, where they perform aesthetic procedures in an environment designed to feel less like a health
care facility.
Competition
Many laser devices and procedures currently
used are invasive, which results in the potential of side effects and/or down time (redness, puffiness, swelling) after the laser
treatments. Additionally, many of these procedures are very expensive for both the health care professionals that must purchase
the expensive laser technology and for the patients paying for procedure costs of the laser treatments. The purchase price of such
lasers range from $15,000 to $100,000 per unit and the laser units are typically big, bulky machines.
Because we anticipate the price range
of The Time Machine Lasers to be approximately $10,000 or less, each healthcare professional will be paying less than traditionally
spend on laser units and will have the to flexibility to pass along the lower cost of the machinery onto their patients.
We believe, The Time Machine Lasers
will set the standard in the Laser Industry as we are not aware of other handheld laser devices that have the capabilities of our
TTM Series lasers. The Company, at the time of this filing, is waiting for FDA 510(k) clearance before it can market and distribute
its TTM Series lasers in the U.S.
The industry is subject to intense competition
for minimally-invasive and non-invasive aesthetic procedures. We compete against products and procedures using laser, light-based,
RF, ultrasound, and other aesthetic energy modalities for skin resurfacing and rejuvenation, skin tightening, body contouring,
and acne treatment from companies such as Alma Laser, Clarisonic, Cutera, Cynosure, Erchonia, Lumenis, Lutronic, Palomar, PhotoMedex,
MedixSysteme, Real Aesthetics, Sciton, Sybaritic, Syneron, Tria Beauty, Ulthera, Ultrashape, Zeltiq and Zeno.
In addition, we compete against existing
and emerging treatment alternatives such as cosmetic surgery, chemical peels, microdermabrasion, Botox®, dermal fillers, collagen
injections and both prescription and over the counter acne medications. Some of these alternative procedures require a lower initial
capital investment by a practitioner and, in the area of acne, consumers have a wide variety of treatment choices. Some of our
competitors are also publicly-traded companies and others have longer operating histories than we do. Many of them may enjoy several
competitive advantages, including: greater name recognition, more extensive intellectual property protection, established relationships
with practitioners and other health care professionals, established domestic and international distribution networks, broader product
lines and existing treatment systems, and the ability to offer rebates or bundle products to offer higher discounts or incentives,
greater experience in conducting research and development, manufacturing, clinical trials, obtaining regulatory approval for products
and marketing approved products, greater financial resources for product development, sales and marketing and patent litigation.
Competition among providers of laser, light-based, ultrasound, and other energy devices for the aesthetic market is characterized
by intensive sales and marketing activities.
Government Regulation
Our products
are medical devices that are subject to extensive regulation by government authorities in the United States and in other countries
and jurisdictions, including the European Union, or EU. These governmental authorities regulate the marketing and distribution
of medical devices in their respective jurisdictions. The regulations cover the entire life cycle of the product, including the
research, development, testing, manufacture, quality control, packaging, storage, labeling, advertising and promotion of the devices.
In addition, post-approval monitoring and reporting, as well as import and export of medical devices, are subject to various regulatory
requirements. The processes for obtaining regulatory approvals or clearances in the United States and in foreign countries and
jurisdictions, including the EU, along with subsequent compliance with applicable statutes and regulations, require the expenditure
of substantial time and financial resources.
Regulations
Relating to Products and Manufacturing
Our products and research and development
activities are regulated by numerous governmental authorities, principally the FDA and corresponding state and foreign regulatory
agencies. Any medical device or cosmetic we manufacture and/or distribute will be subject to pervasive and continuing regulation
by the FDA. The U.S. Food, Drug and Cosmetics Act, or the FDCA, and other federal and state laws and regulations govern the pre-clinical
and clinical testing, design, manufacture, use, labeling and promotion of medical devices. Product development and approval for
medical devices within this regulatory framework takes a number of years and involves the expenditure of substantial resources.
Failure
to comply with applicable regulatory requirements can result in fines, injunctions, civil penalties, recalls or seizures of products,
total or partial suspensions of production, refusals by the U.S and foreign governments to permit product sales and criminal prosecution.
Review
and Clearance of Medical Devices in the United States
The FDA
strictly regulates medical devices in the United States. Under the Federal Food, Drug and Cosmetic Act, or FDCA, a medical device
is defined as an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related
article, including a component part or accessory, which is, among other things: intended for use in the diagnosis of disease or
other conditions, or in the cure, mitigation, treatment, or prevention of disease, in man or other animals; or intended to affect
the structure or any function of the body of man or other animals, and which does not achieve its primary intended purposes through
chemical action within or on the body of man or other animals and which is not dependent upon being metabolized for the achievement
of any of its primary intended purposes. Unless an exemption applies, a new medical device may not be marketed in the United States
unless it has been cleared by the FDA through filing of a 510(k) premarket notification, or 510(k), or approved by the FDA pursuant
to a premarket approval application, or PMA. Both premarket notifications and premarket approval applications, when submitted
to the FDA, must be accompanied by a user fee, unless exempt.
The information
that must be submitted to the FDA in order to obtain clearance or approval to market a new medical device varies depending on
how the medical device is classified by the FDA. Medical devices are classified into one of three classes depending on the level
of control necessary to assure the safety and effectiveness of the device. Class I devices have the lowest level or risk associated
with them, and are subject to general controls, including labeling, premarket notification and adherence to the QSR. Class II
devices are subject to general controls and special controls, including performance standards. Class III devices, which have the
highest level of risk associated with them, are subject to most of the aforementioned requirements as well as to premarket approval.
Most Class I devices and some Class II devices are exempt from the 510(k) requirement, although manufacturers of these devices
are still subject to registration, listing, labeling and QSR requirements.
510(k)
Premarket Notification
A 510(k)
is a premarket submission made to the FDA to demonstrate that the proposed device to be marketed is at least as safe and effective
(i.e., substantially equivalent) to another legally marketed device, or predicate device, that did not require premarket approval.
In evaluating a 510(k), the FDA will determine whether the device has the same intended use as the predicate device, and (a) has
the same technological characteristics as the predicate device, or (b) has different technological characteristics, and (1) the
data supporting substantial equivalence contains information, including appropriate clinical or scientific data, if deemed necessary
by the FDA, that demonstrates that the device is as safe and as effective as a legally marketed device, and (2) does not raise
different questions of safety and effectiveness than the predicate device. Most 510(k)s do not require clinical data for clearance,
but the FDA may request such data.
The FDA
seeks to review and act on a 510(k) within 90 days of submission, but it may take longer if the agency finds that it requires
more information to review the 510(k). If the FDA concludes that a new device is not substantially equivalent to a predicate device,
the new device will be classified in Class III and the manufacturer will be required to submit a PMA to market the product. With
the enactment of the Food and Drug Administration Safety and Innovation Act, or the FDASIA, a de novo pathway is directly available
for certain low to moderate risk devices that do not qualify for the 510(k) pathway due to the absence of a predicate device.
Laser
and Light-Based Aesthetic Treatments
A laser
is a device that creates and amplifies a coherent beam of light generally of one wavelength or a narrow band of wavelengths. Lasers
have been used for medical and aesthetic applications since the 1960s. Intense pulsed light technology was introduced in the 1990s
and uses flash lamps, rather than lasers, to generate incoherent light of multiple wavelengths, often referred to as a broadband
of wavelengths. Both lasers and intense pulsed light devices can emit high energy light over varying pulse durations or time intervals.
By producing
intense bursts of concentrated light, lasers and other light-based technologies selectively target melanin in hair follicles and
pigmented lesions, hemoglobin in blood vessels and vascular lesions, water surrounding collagen in or below the dermis, ink in
tattoos or fat tissue below the dermis. When the target absorbs sufficient energy, it becomes heated and/or mechanically disrupted
to cause a biological reaction useful for treatment. The degree to which energy is absorbed in the skin depends upon the skin
structure targeted—e.g., hair follicle or blood vessel—and the skin type—e.g., light or dark. Different types
of lasers and other light-based technologies are needed to effectively treat the spectrum of skin types and conditions. As a result,
an active aesthetic practice may require multiple laser or other light-based systems in order to offer treatments to its entire
client base.
Different
types of lasers are currently used for a wide range of aesthetic treatments. Each type of laser operates at its own wavelength,
measured in nanometers, which corresponds to a particular emission and color in the light spectrum. The most common lasers used
for non-invasive aesthetic treatments are:
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Pulse dye lasers—may produce light of various wavelengths.
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Alexandrite lasers—produce a near infrared invisible light that functions with high power
at a deep penetration depth.
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CO2 lasers—produce infrared invisible light that creates a deep ablation region.
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Diode lasers—may produce light of various wavelengths.
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Erbium: glass lasers—produce a near infrared invisible light that functions at a deep
penetration depth.
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Er:YAG lasers—produce a near infrared invisible light that creates a shallow ablation
region.
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Nd:YAG lasers—produce a near infrared invisible light that functions over a wide range
of penetration depths or when frequency doubled produce a green light that functions at a shallow penetration depth.
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In addition
to selecting the appropriate wavelength for a particular application, laser and other light-based treatments require an appropriate
balance among three other parameters to optimize safety and effectiveness for aesthetic treatments:
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Energy level—the amount of light emitted to heat the target;
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Pulse duration—the time interval over which the energy is delivered; and
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Spot size—the diameter of the energy beam.
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Healthcare
Law and Regulation
Healthcare
providers, physicians and third-party payors may play a role in the recommendation and selection of medical devices for patients.
Arrangements with providers, consultants, third-party payors and customers are subject to broadly applicable fraud and abuse,
anti-kickback, false claims laws, reporting of payments to physicians and teaching physicians and patient privacy laws and regulations
and other healthcare laws and regulations that may constrain business and/or financial arrangements. Restrictions under applicable
federal and state healthcare laws and regulations, include the following:
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The federal Anti-Kickback Statute, which prohibits, among other things, persons and entities
from knowingly and willfully soliciting, offering, paying, receiving or providing remuneration, directly or indirectly, in cash
or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good
or service, for which payment may be made, in whole or in part, under a federal healthcare program such as Medicare and Medicaid;
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The federal civil and criminal false claims laws, including the civil False Claims Act, and
civil monetary penalties laws, which prohibit individuals or entities from, among other things, knowingly presenting, or causing
to be presented, to the federal government, claims for payment that are false, fictitious or fraudulent or knowingly making, using
or causing to made or used a false record or statement to avoid, decrease or conceal an obligation to pay money to the federal
government.
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The federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created
additional federal criminal laws that prohibit, among other things, knowingly and willfully executing, or attempting to execute,
a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;
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HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act,
and their respective implementing regulations, including the Final Omnibus Rule published in January 2013, which impose obligations,
including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable
health information;
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The federal false statements statute, which prohibits knowingly and willfully falsifying, concealing
·or covering up a material fact or making any materially false statement in connection with the delivery of or payment
for healthcare benefits, items or services;
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The federal transparency requirements known as the federal Physician Payments Sunshine Act,
under the Patient Protection and Affordable Care Act, as amended by the Health Care Education Reconciliation Act, or the Affordable
Care Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies to report annually to the Centers
for Medicare & Medicaid Services, or CMS, within the U.S. Department of Health and Human Services, information related to
payments and other transfers of value made by that entity to physicians and teaching hospitals, as well as ownership and investment
interests held by physicians and their immediate family members; and
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Analogous state and foreign laws and regulations, such as state anti-kickback and false claims
laws, which may apply to healthcare items or services that are reimbursed by non-governmental third-party payors, including private
insurers.
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State and
foreign laws also govern the privacy and security of health information in some circumstances, many of which differ from each
other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
Review
and Approval of Medical Devices in the European Union
The European
Union, or EU, consists of 28 member states and has a coordinated system for the authorization of medical devices. The EU Medical
Devices Directive (Council Directive 93/42/EEC, as amended) sets out the basic regulatory framework for medical devices in the
European Union. In the EU our medical devices must comply with the Essential Requirements in Annex I to the EU Medical Devices
Directive, which we refer to as the Essential Requirements. Compliance with these requirements is a prerequisite to be able to
affix the Certificate of Conformity mark, or CE Mark, to our medical devices, without which they cannot be marketed or sold in
the European Economic Area, or EEA. To demonstrate compliance with the Essential Requirements we must undergo a conformity assessment
procedure, which varies according to the type of medical device and its classification. Except for low risk medical devices (Class
I with no measuring function and which are not sterile), where the manufacturer can issue a CE Declaration of Conformity based
on a self-assessment of the conformity of its products with the Essential Requirements, a conformity assessment procedure requires
the intervention of a third-party organization designated by competent authorities of an EU country to conduct conformity assessments,
which is referred to as a Notified Body. The Notified Body would typically audit and examine products’ technical file and
the quality system for the manufacture, design and final inspection of the devices before issuing a CE Certificate of Conformity
demonstrating compliance with the relevant Essential Requirements.
The method
of assessing conformity varies depending on the type and class of the product, but normally involves a combination of self-assessment
by the manufacturer and a third party assessment by a Notified Body, an independent and neutral institution appointed by a country
to conduct the conformity assessment. This third party assessment may consist of an audit of the manufacturer’s quality
system and specific testing of the manufacturer’s device. An assessment by a Notified Body in one member state of the European
Union or the European Free Trade Association is required in order for a manufacturer to distribute the product commercially throughout
these countries.
On September
26, 2012, the European Commission adopted a package of legislative proposals designed to replace the existing regulatory framework
for medical devices in the EU. These proposals provide for a revision of the current regulatory framework for medical devices
in the EU to strengthen patient safety, transparency and product traceability. The proposals, for instance, include reinforced
rules governing clinical evaluation throughout the life of the device, improved traceability of devices in the supply chain, including
a phased and risk-based introduction of unique device identification, or UDI, improved market surveillance and vigilance, as well
as better co-ordination between national regulators, increased powers for Notified Bodies to undertake unannounced inspections
and strengthened supervision of Notified Bodies by member states. The European Commission’s proposals may undergo significant
amendments as they are reviewed by the European Council and European Parliament as part of the EU legislative process. If and
when adopted, the proposed new legislation may prevent or delay the EU approval or clearance of our products under development
or may impact our ability to modify our currently EU approved or cleared products on a timely basis and impose additional costs
relating to clinical evaluation, vigilance and product traceability.
Intellectual Property
Patents, Proprietary Technology and Trademarks
Our success depends in part on our ability to obtain
and maintain proprietary protection for our products, technology and know-how, to operate without infringing the proprietary rights
of others and to prevent others from infringing our proprietary rights. Our policy is to seek to protect our proprietary position
by, among other methods, filing U.S. and foreign trademark applications, and, when it becomes applicable, patent applications
related to our proprietary technology, inventions and improvements that are important to the development of our business. We also
rely on trademarks, trade secret and copyright laws and contractual restrictions to protect our proprietary technology. These
legal protections afford only limited protection for our technology. We currently own the trademark for “The Time Machine
Program”.
ITEM 1A. RISK FACTORS
In addition to
the other information contained in this Annual Report and the exhibits hereto, the following risk factors should be considered
carefully in evaluating our business. Our business, financial condition, cash flows or results of operations could be materially
adversely affected by any of these risks. Additional risks not presently known to us or that we currently deem immaterial may also
adversely affect our business, financial condition, cash flows or results of operations. The following discussion of risk factors
contains forward-looking statements as discussed in the section entitled “Information Regarding Forward Looking Statements.”
Our business routinely encounters and addresses risks, some of which may cause our future results to be different – sometimes
materially different – than we presently anticipate.
RISKS RELATING TO OUR BUSINESS
We have a limited operating history
and a history of operating losses, and expect to incur significant additional operating losses.
We were organized on November 8, 2010,
and we have had a limited operating history. Therefore, there is limited historical financial information upon which to base an
evaluation of our performance. Our prospects must be considered in light of the uncertainties, risks, expenses, and difficulties
frequently encountered by companies in their early stages of operations. We have generated net losses since we began operations.
We expect to incur substantial additional net expenses in the foreseeable future as our research, development, and commercial activities
increase. The amount of future losses and when, if ever, we will achieve profitability are uncertain. Our ability to generate revenue
and achieve profitability will depend on, among other things, receiving 510(k) clearance from the U.S. Food and Drug Administration
and similar international regulatory agencies; successful manufacturing; sales and marketing arrangements; and raising sufficient
funds to finance our activities. If we are unsuccessful at some or all of these undertakings, our business, prospects, and results
of operations may be materially adversely affected.
We
may
need to secure additional financing.
We anticipate that we will incur operating
losses for the foreseeable future. As of December 31, 2015, we had cash in the amount of $156,958. Based on our current resources,
we will not be able to continue to operate without additional immediate funding. If we are not successful in securing additional
financing, we may be required to delay significantly, reduce the scope of or eliminate one or more of our development programs,
downsize our general and administrative infrastructure, or seek alternative measures to avoid insolvency, including arrangements
with collaborative partners or others that may require us to relinquish rights to certain of our technologies, assets, rights or
products.
Our auditors have expressed substantial
doubt about our ability to continue as a going concern.
Our auditor’s report on our December
31, 2015 financial statements expresses an opinion that substantial doubt exists as to whether we can continue as an ongoing business.
We have not yet begun selling our products and services to generate revenue. If we are unable to develop sufficient additional
customers for our products and services, we will not generate enough revenue to sustain our business, and the
Company may fail.
Our success is dependent on our officer
and director to properly manage the Company and the loss or unavailability of his services could cause the business to fail.
Currently, we have one officer and director,
Bruce Schoengood, who has assumed responsibility for all planning, development and operational duties, and will continue to do
so throughout the beginning stages of the Company. We are heavily dependent on the personal efforts and abilities of Mr. Schoengood.
He has, and expects to continue, to commit full time to the development of our business plan in the next twelve
months. The loss or unavailability of his services would have a materially adverse effect on our business prospects and potential
earning capacity. We do not currently carry any insurance to compensate for any such loss.
Changing and unpredictable market conditions
may impact the demand for our products and services.
There can be no guarantee that there will
be a demand for our products or services. There are several other companies that are currently marketing similar products and
services and if these companies are successful in developing products or services such as ours, our products and services may
become obsolete and undesirable, which will adversely affect our operations.
We may have difficulty managing growth
in our business, which could have a material adverse effect on our business, financial condition and results of operations and
our ability to execute our business plan in a timely fashion.
Because of our small size, growth in accordance
with our business plans, if achieved, will place a significant strain on our financial, technical, operational and management
resources. As we expand our activities, and increase the number of projects we are evaluating or in which we participate, there
will be additional demands on our financial, technical and management resources. The failure to continue to upgrade our technical,
administrative, operating and financial control systems or the occurrence of unexpected expansion difficulties, including the
inability to recruit and retain experienced personnel, could have a material adverse effect on our business, financial condition
and results of operations and our ability to execute our business plan in a timely fashion.
There may be deficiencies with our internal
controls that require improvements, and we will be exposed to potential risks from legislation requiring companies to evaluate
controls under Section 404 of the Sarbanes-Oxley Act of 2002.
As a result of becoming a reporting issuer
under the federal securities laws and the rules and regulations of the SEC thereunder, we will be required to establish and maintain
a system of internal controls and procedures. Because Bruce Schoengood is presently and for the foreseeable future, our sole executive
officer and director, our internal controls and procedures may not be effective to assure timely and adequate disclosures.
There may not be a viable market for our products.
We believe that there will be many different
applications for our products. We also believe that the anticipated market for our products will continue to expand. These assumptions
may prove to be incorrect for a variety of reasons, including competition from other products and the degree of our products’
commercial viability.
We may not be successful in selling
and marketing our new products.
In the event our 510(k) is cleared,
the commercial success of our products and technologies we develop will depend upon the acceptance of these products by physicians
and their patients. It is difficult for us to predict how successful the products we are currently developing will be over the
long term. If the products we develop do not gain market acceptance, our revenues and operating results will suffer. In addition,
we expect to face significant competition, in some cases from companies that are more established, market more widely known products
and have greater resources than we do. We may not be able to differentiate our new products sufficiently from our competitors’
products to achieve significant market penetration. As a result of these factors, we may incur significant sales and marketing
expenses for our new products without achieving commercial success, which could harm our business and our competitive position.
The failure of our systems to meet
patient expectations or the occurrence of unpleasant side effects from the procedures for which our products are used could impair
our financial performance.
In the event our 510(k) is cleared,
our future success depends upon patients having a positive experience with the procedures for which our products are used in order
to increase physician demand for our products, as a result of both individual patients’ repeat business and as a result of
word-of-mouth referrals. We believe that patients may be dissatisfied with these procedures if they find them to be too painful.
Furthermore, patients may experience temporary swelling or reddening of the skin as a procedural side effect. In rare instances,
patients may receive burns, blisters, skin discoloration or skin depressions. Experiencing excessive pain or any of these side
effects or adverse events could discourage a patient from having one of the procedures for which our products are used or discourage
a patient from having additional procedures or referring these procedures to others.
If there is not sufficient consumer
demand for the procedures performed with our products, practitioners may not demand for our products, which would adversely affect
our operating results.
The aesthetic laser and light-based
treatment system industry in which we expect to operate is particularly vulnerable to economic trends. Most procedures we expect
to be performed using our aesthetic treatment systems are elective procedures that are not reimbursable through government or private
health insurance. The cost of these elective procedures must be borne by the patient. As a result, the decision to undergo a procedure
that utilizes our products may be influenced by the cost.
Consumer demand, and therefore our business,
is sensitive to a number of factors that affect consumer spending, including political and macroeconomic conditions, health of
credit markets, disposable consumer income levels, consumer debt levels, interest rates, consumer confidence and other factors.
If there is not sufficient consumer demand for the procedures we expect to be performed with our products, practitioner demand
for our products my not exist and our business would suffer.
We may be exposed to potential
product liability.
Our anticipated business will expose
us to potential product liability risks, which are inherent in the testing, manufacturing, marketing and sale of medical devices.
Medical devices involve an inherent risk of product liability claims and associated adverse publicity. While we will continue to
take precautions we deem appropriate, there can be no assurance that we will be able to avoid significant product liability exposure.
We do not currently maintain liability insurance coverage as such insurance is expensive and difficult to obtain. In the event
our 510(k) is cleared, we plan to obtain liability insurance coverage in the jurisdictions applicable to our sales activity. However,
when we seek such insurance, it may not be available on acceptable terms, if at all. A product liability claim brought against
us in could have a material adverse effect upon us and our financial condition. Should the insurance coverage be insufficient in
amount or scope to address multiple and diverse claims, liabilities not covered by insurance could represent a significant financial
liability for us.
Because we do not expect require
training for users of our prospective products, and we will sell these products to non-physicians, there exists an increased potential
for misuse of these products, which could harm our reputation and our business.
Upon obtaining 510(k) clearance, our
products may be purchased or operated by physicians with varying levels of training and, in many states, by non-physicians, including
nurse practitioners, chiropractors and technicians. Outside the United States, many jurisdictions do not require specific qualifications
or training for purchasers or operators of our prospective products. We will not supervise the procedures performed with our products,
nor will we require that direct medical supervision occur. We may offer product training sessions, but we may not require purchasers
or operators of our non-invasive products to attend training sessions. The lack of required training and the purchase and use of
our non-invasive products by non-physicians may result in product misuse and adverse treatment outcomes, which could harm our reputation
and expose us to costly product liability litigation.
We may be involved in intellectual
property litigation, which could be costly and time consuming, and may impact our future business and financial performance.
Litigation related to infringement and
other intellectual property claims, with or without merit, is unpredictable, can be expensive, time-consuming, could divert management’s
attention from planned business and could be asserted even before we obtain 510(k) clearance or begin our manufacturing or sales
efforts. If we lose this kind of litigation, a court could require us to pay substantial damages, and prohibit us from using technologies
essential to our products, any of which would have a material adverse effect on our business, results of operations and financial
condition. We do not know whether necessary licenses would be available to us on satisfactory terms, or whether we could redesign
our products or processes to avoid infringement. If our products or methods are found to infringe, we could be prevented from marketing
or continuing to market the product series we expect to offer. In addition, we do not know whether our competitors or potential
competitors have applied for, or will apply for or obtain, patents that will prevent, limit or interfere with our ability to make,
use, sell, import or export our products. Competing products may also appear in other countries. If we lose a foreign patent lawsuit,
we could be prevented from marketing our products in one or more countries.
In addition, we may hereafter become
involved in litigation to protect our trademark rights associated with our company name or the names used with our products. Names
used with our products and procedures may be claimed to infringe names held by others or to be ineligible for proprietary protection.
If we have to change the name of our company or products, we may experience a loss in goodwill associated with our brand name,
customer confusion and a loss of sales.
RISKS RELATED TO REGULATORY MATTERS
If we fail to obtain and maintain
necessary FDA clearances for our systems and indications, if clearances for future products and indications are delayed, not issued
or rescinded or if there are federal or state level regulatory changes, our commercial operations would be harmed
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Our systems are medical devices that
are subject to extensive regulation in the United States by the FDA for manufacturing, labeling, sale, promotion, distribution
and shipping. Before a new medical device, or a new use of or claim for an existing product, can be marketed in the United States,
it must first receive either 510(k) clearance or premarket approval from the FDA, unless an exemption applies. Either process can
be expensive and lengthy. The FDA’s 510(k) clearance process usually takes from three to six months from the time the application
is filed with the FDA, but it can take significantly longer. The process of obtaining premarket approval is much more costly and
uncertain than the 510(k) clearance process, and it generally takes from one to three years, or even longer, from the time the
application is filed with the FDA.
Medical devices may be marketed only
for the indications for which they are approved or cleared. We have filed a premarket submission to obtain 510(k) clearance for
various indications for our infrared TTM Series laser. In addition, 510(k) clearance has been applied for but put on hold various
indications of our green TTM Series laser. We are unable to predict if or when we would obtain such clearance and, even if we do
obtain clearance, it can be revoked if safety or effectiveness problems develop. Once we obtain 510(k) clearance, are also subject
to Medical Device Reporting regulations, which require us to report to the FDA if our product causes or contributes to a death
or serious injury, or malfunctions in a way that would likely cause or contribute to a death or serious injury if the malfunction
were to recur. Our products are also subject to state regulations which are, in many instances, in flux. Changes in state regulations
may impede sales. For example, federal regulations allow our systems to be sold to, or on the order of, “licensed practitioners,”
as determined on a state-by-state basis. As a result, in some states, non-physicians may legally purchase and operate our systems.
However, a state could change its regulations at any time, disallowing sales to particular types of end users. We cannot predict
the impact or effect of future legislation or regulations at the federal or state levels.
The FDA and state authorities have broad
enforcement powers. Our failure to comply with applicable regulatory requirements could result in enforcement action by the FDA
or state agencies, which may include any of the following sanctions:
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repair,
replacement, refunds, recall or seizure of our products;
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operating
restrictions or partial suspension or total shutdown of production;
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refusing
our requests for 510(k) clearance or premarket approval of new products, new intended
uses or modifications to our existing products;
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withdrawing
510(k) clearance or premarket approvals that have already been granted; and
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If any of these events were to occur,
our business could be harmed.
After FDA clearance is obtained,
if we modify our FDA-cleared devices, we may need to seek and obtain new clearances, which, if not granted, would prevent us from
selling our modified product or require us to redesign our product.
Although no assurance can be made that
we will be able to obtain 501(k) clearance on any of our TTM Series lasers, if we do obtain clearance and we decide to make any
modification to an FDA-cleared device that would significantly affect its safety or effectiveness or that would constitute a change
in its intended use, we would be required to submit a new 510(k) clearance or possibly a premarket approval. We may not be able
to obtain any 510(k) clearances or premarket approvals for new products or for modifications to, or additional indications for,
our existing products, if any, in a timely fashion, or at all. Delays in obtaining clearances on our current products for which
we have a 510(k) submission and others in the future would adversely affect our planned business and ability to introduce future
products in a timely manner, which in turn would harm our revenue and potential future profitability.
If we or our suppliers and subcontractors
fail to comply with the QSR, our business would suffer.
Although no assurance can be made that
we will be able to obtain 501(k) clearance on any of our TTM Series lasers, if we do obtain clearance and we begin to manufacture
and sell our products, we and our suppliers and subcontractors will be required to demonstrate and maintain compliance with the
QSR. The QSR is a complex regulatory scheme that covers the methods and documentation of the design, testing, control, manufacturing,
labeling, quality assurance, packaging, storage and shipping of our products. The FDA enforces the QSR through periodic inspections.
We anticipate that we and our suppliers will in the future be, subject to such inspections. Our failure, or the failure of our
suppliers and subcontractors, to take satisfactory corrective action in response to an adverse QSR inspection could result in enforcement
actions, including a public warning letter, a shutdown of our manufacturing operations, a recall of our products, civil or criminal
penalties or other sanctions, which would cause our sales and business to suffer.
RISKS RELATED TO OUR COMMON STOCK
Our sole current officer
and director owns a substantial amount of our common stock, which gives him significant control.
Our current sole officer, sole director
and principal founding stockholder, Bruce Schoengood, beneficially owns approximately 15% of the outstanding shares of our
common stock and 100% of the preferred shares which carry super voting rights, which, when combined with his common stock holdings,
constitutes approximately 75% of the voting rights of the Company. So long as this control is concentrated in the hands of Mr.
Schoengood, he will continue to have the ability to elect our directors and determine the outcome of votes by our stockholders
on corporate matters, including mergers, sales of all or substantially all of our assets, charter amendments and other matters
requiring stockholder approval. This controlling interest may have a negative impact on the market price of our common stock by
discouraging third-party investors. In addition, such control by Mr. Schoengood will allow him to establish his own compensation
and other benefits and perquisites in an amount and manner that would have a negative impact on our net income which in turn
could negatively impact the market price, if any, of our common stock.
We may need to obtain additional capital,
which additional funding may dilute our existing stockholders.
We may need additional funding to carry out
all of our development plans. If we are unable to obtain sufficient capital on a timely basis, the development of our current
or any future product candidates is likely to be delayed, and we could be forced to reduce the scope of our projects or otherwise
limit or terminate our operations altogether.
We have not identified the sources
for the additional financing that we will require, and we do not have commitments from any third parties to provide this financing.
Certain investors may be unwilling to invest in our securities since we are traded on the OTCQB and not on a national securities
exchange, particularly if there is only limited trading in our common stock on the OTCQB at the time we seek financing. The volume
and frequency of such trading has been limited to date. Sufficient funding through a financing may not be available to us at acceptable
terms or at all. Any additional funding that we obtain in a financing is likely to reduce the percentage ownership of us held
by our existing security holders. The amount of this dilution may be substantially increased if the trading price of our common
stock has declined at the time of any financing from its current levels.
Our articles of incorporation
allow for our board to create a new series of preferred stock without further approval by our stockholders, which could adversely
affect the rights of the holders of our Common Stock.
Our Board of Directors has the authority
to fix and determine the relative rights and preferences of preferred stock. Our Board of Directors have the authority to issue
up to 1,000,000 shares of our preferred stock terms of which may be determined by the Board without further stockholder approval.
As a result, our Board of Directors could authorize the issuance of a series of preferred stock that would grant to holders the
preferred right to our assets upon liquidation, the right to receive dividend payments before dividends are distributed to the
holders of Common Stock and the right to the redemption of the shares, together with a premium, prior to the redemption of our
Common Stock. In addition, our Board of Directors could authorize the issuance of a series of preferred stock that has greater
voting power than our Common Stock, as it has with the Company’s Series A Preferred Stock or that is convertible into our
Common Stock, as it has with the Company’s Series B Preferred Stock, which could decrease the relative voting power of our
Common Stock or result in dilution to our existing stockholders.
You may experience dilution of
your ownership interests because of the future issuance of additional shares of common stock.
In the future, we may issue additional
authorized but previously unissued equity securities, resulting in the dilution of the ownership interests of our shareholders.
We may also issue additional shares of our securities that are convertible into or exercisable for Common Stock, as the case may
be, in connection with hiring or retaining employees, future acquisitions, future sales of its securities for capital raising purposes,
or for other business purposes. The future issuance of any such additional shares of Common Stock may create downward pressure
on the value of our securities. There can be no assurance that we will not be required to issue additional shares of Common Stock,
warrants or other convertible securities in the future in conjunction with any capital raising efforts, including at a price (or
exercise prices) below the price at which our shares may be valued or are trading in a public market.
There is currently no market for our
common stock, but if a market for our common stock does develop, our stock price may be volatile.
Our common stock currently trades on a limited
basis on the OTCQB. Trading of our stock through the OTCQB is frequently thin and highly volatile. There is no assurance that
a sufficient market will develop in our stock, in which case it could be difficult for stockholders to sell their stock. The market
price of our common stock could fluctuate substantially due to a variety of factors, including:
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quarterly variations
in the rate of growth of our financial indicators, such as net income per share, net income and cash flows, or those of companies
that are perceived to be similar to us;
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or earnings estimates or publication of reports by equity research analysts;
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public reaction to our press
releases, announcements and filings with the SEC;
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the limited amount of our freely
tradable common stock available in the public marketplace;
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general
financial market conditions;
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the
realization of any of the risk factors presented in this annual report;
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the recruitment or departure
of key personnel;
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changes
in market valuations of companies similar to ours; and
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domestic and international economic,
legal and regulatory factors unrelated to our performance.
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In addition, future sales of our common stock
by our stockholders could cause our stock price to decline and we cannot predict the effect, if any, that market sales of shares
of the our common stock or the availability of shares for sale will have on the market price prevailing from time to time.
We do not expect to pay dividends for
the foreseeable future.
For the foreseeable future, it is anticipated
that earnings, if any, that may be generated from our operations will be used to finance our operations and that cash dividends
will not be paid to holders of our common stock.
We will incur increased costs
as a result of operating as a public company, and our management will be required to devote substantial time to new compliance
initiatives.
As a public company, we are incurring
significant legal, accounting and other expenses. As of July 8, 2015, the date we filed a Form 8-A for registration of our common
stock, we are subject to the filing requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange
Act”), as amended. Accordingly we are required to file reports with the Securities and Exchange Commission, including annual,
quarterly and current reports with respect to our business and financial condition. We are also required to establish and maintain
effective disclosure and financial controls and corporate governance practices. Compliance with the Exchange Act and the rules
and regulations under the Exchange Act have substantially increased our legal and financial compliance costs and made some activities
more time-consuming and costly. Our management and other personnel devote a substantial amount of time to these compliance initiatives.
For example, we expect that these rules and regulations may make it more difficult and more expensive for us to obtain director
and officer liability insurance. We estimate that we will incur significant expenses in response to these requirements and will
require additional funding to cover such costs.
There are legal restrictions on the
resale of our shares of common stock offered, including penny stock regulations under the U.S. federal securities laws. These
restrictions may adversely affect the ability of investors to resell their shares
.
We anticipate that our common stock will continue
to be subject to the penny stock rules under the Securities Exchange Act of 1934, as amended. These rules regulate broker/dealer
practices for transactions in “penny stocks.” Penny stocks are generally equity securities with a price
of less than $5.00. The penny stock rules require broker/dealers to deliver a standardized risk disclosure document that provides
information about penny stocks and the nature and level of risks in the penny stock market. The broker/dealer must also provide
the customer with current bid and offer quotations for the penny stock, the compensation of the broker/dealer and its salesperson
and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer
quotations and the broker/dealer and salesperson compensation information must be given to the customer orally or in writing prior
to completing the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition,
the penny stock rules require that prior to a transaction, the broker and/or dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction.
The transaction costs associated with penny stocks are high, reducing the number of broker-dealers who may be willing to engage
in the trading of our shares. These additional penny stock disclosure requirements are burdensome and may reduce all of the trading
activity in the market for our common stock. As long as the common stock is subject to the penny stock rules, holders of our common
stock may find it more difficult to sell their shares.
Under the JOBS Act, we have elected
to use the extended transition period for complying with new or revised accounting standards.
Pursuant to Section 107(b) of the JOBS Act,
we have elected to use the extended transition period for complying with new or revised accounting standards for an “emerging
growth company.” This election will permit us to delay the adoption of new or revised accounting standards that will have
difference effective dates for public and private companies until such time as those standards apply to private companies. Consequently,
our financial statements may not be comparable to companies that comply with public company effective dates.
Some of our stockholders may have rescission
rights with respect to their original purchases of our common stock.
If one of our stockholders were to allege
that the original offering of our common stock was not made in compliance with applicable federal and/or states securities laws
and regulations, and if a court were to agree with such an allegation, the stockholders may have the right to rescind their purchase
of our common stock. In such an event, we would be required to offer to refund the original purchases made by the stockholders.
Because we have only limited funds, such a refund could have an adverse impact on our financial situation. Furthermore, our involvement
with any claim by a stockholder of revision rights may divert the attention of our management and force us to expend resources
to defend against such claims.
INFORMATION REGARDING FORWARD-LOOKING
STATEMENTS
Statements contained
in this Annual Report on Form 10-K may be “forward-looking statements.” Forward-looking statements include, but are
not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions or any other statements
relating to our future activities or other future events or conditions. These statements are based on current expectations, estimates
and projections about our business based, in part, on assumptions made by management. These statements are not guarantees of future
performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results
may, and are likely to, differ materially from what is expressed or forecasted in the forward-looking statements due to numerous
factors, including those described above and those risks discussed from time to time in this Annual Report on Form 10-K, including
the risks described under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition
and Results of Operation” in this Annual Report on Form 10-K and in other documents which we file with the Securities and
Exchange Commission. In addition, such statements could be affected by risks and uncertainties related to:
☐
our ability to raise funds for general corporate purposes and operations, including our clinical trials;
☐
the commercial feasibility and success of our technology;
☐
our ability to recruit qualified management and technical personnel;
☐
the success of our clinical trials;
☐
our ability to obtain and maintain required regulatory approvals for our products; and
☐
the other factors discussed in the “Risk Factors”
section and elsewhere in this Annual Report on Form 10-K.
Any forward-looking
statements speak only as of the date on which they are made, and except as may be required under applicable securities laws, we
do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this
current report.
ITEM 1B. UNRESOLVED STAFF COMMENTS
There are no unresolved staff comments.
ITEM 2. PROPERTIES
Our corporate office is located at 4400 Route
9 South, Suite, Freehold NJ 07728 and our telephone number is (732) 786-8044. Our administrative office is located at 50
Oxford Road, Manalapan NJ 07726. The office space is leased at a monthly cost of approximately $525.00. There are currently
no proposed programs for the renovation, improvement or development of the facilities currently used. We intend to renew the current
lease prior to its termination. We believe these existing facilities are adequate for the foreseeable future.
ITEM 3. LEGAL PROCEEDINGS
We are not currently a party to any legal
or administrative proceedings. Our current sole officer and director has not been convicted in a criminal proceeding nor has he
been permanently or temporarily enjoined, barred, suspended or otherwise limited from involvement in any type of business, securities
or banking activities.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
PART
II
ITEM
5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is currently
traded under the symbol “MFST” on the OTCQB. Our common stock began trading on the OTC Bulletin Board on September
14, 2012. The following table sets forth the quarterly high and low sales prices of our common stock since we began trading. Such
prices are inter-dealer quotations without retail mark-ups, mark-downs or commissions, and may not represent actual transactions.
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Fiscal
Year Ending December 31, 2016
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Quarter
Ended
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High
$
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Low
$
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March
31, 2016
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0.021
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0.0035
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Fiscal
Year Ending December 31, 2015
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Quarter
Ended
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High
$
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Low
$
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December
31, 2015
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0.015
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0.005
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September
30, 2015
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0.01
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0.0066
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June
30, 2015
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0.02
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0.01
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March
31, 2015
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0.044
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0.011
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Fiscal
Year Ending December 31, 2014
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Quarter
Ended
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High
$
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Low
$
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December
31, 2014
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0.06
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0.022
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September
30, 2014
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0.08
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0.0249
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June
30, 2014
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0.179
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0.051
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March
31, 2014
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0.219
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0.05
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Our
common stock is subject to Rule 15g-9 of the Exchange Act, known as the Penny Stock Rule which imposes requirements on broker/dealers
who sell securities subject to the rule to persons other than established customers and accredited investors. For transactions
covered by the rule, brokers/dealers must make a special suitability determination for purchasers of the securities and receive
the purchaser's written agreement to the transaction prior to sale. The SEC also has rules that regulate broker/dealer practices
in connection with transactions in "penny stocks." Penny stocks generally are equity securities with a price of less
than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided
that current price and volume information with respect to transactions in that security is provided by the exchange or system.
The Penny Stock Rules requires a broker/dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to
deliver a standardized risk disclosure document prepared by the SEC that provides information about penny stocks and the nature
and level of risks in the penny stock market. The broker/dealer also must provide the customer with current bid and offer quotations
for the penny stock, the compensation of the broker/dealer and its salesperson in the transaction, and monthly account statements
showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker/dealer
and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction
and must be given to the customer in writing before or with the customer's confirmation. These disclosure requirements have the
effect of reducing the level of trading activity in the secondary market for our common stock. As a result of these rules, investors
may find it difficult to sell their shares.
As
of April 13, 2016, we had 41,588,879 shares of common stock issued and outstanding held by 38 stockholders of record.
Dividend
Policy
We
have not paid any cash dividends on our common stock. It is anticipated that our future earnings will be retained to finance our
continuing development. The payment of any future dividends will be at the discretion of our board of directors and will depend
upon, among other things, future earnings, any contractual restrictions, success of business activities, regulatory and corporate
law requirements and our general financial condition.
Recent
Sales of Unregistered Securities
During
the period covered by this report, we issued and sold the following securities without registration under the Securities Act.
New
Issuances of Securities
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In
February 2014 the Company issued 1,000,000 shares of common stock at .01 per share
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In
February 2014 the Company issued 450,000 shares of common stock at .06 per share
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In
March 2014 the Company issued 200,000 shares of common stock at .05 per share
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In
March 2014 the Company issued 450,000 shares of common stock at .011 per share
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In
April 2014 the Company issued 50,000 shares of common stock at .013 per share
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In
May 2014 the Company issued 100,000 shares of common stock at .09 per share
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In
May 2014 the Company issued 250,000 shares of common stock at .05 per share
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In May 2014, in consideration for his services, the Company issued Bruce Schoengood, its Chief Executive Officer, 50,000 shares
of its Series A Preferred Stock, which shares provide for a voting right of 2,000 per share, are not convertible and are not
entitled to dividends or liquidation preferences or distributions.
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In
July 2014 the Company issued 300,000 shares of common stock at .05 per share
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In
August 2014 the Company issued 200,000 shares of common stock at .05 per share
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In
October 2014 the Company issued 1,500,000 shares of common stock at .001 per share
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In
December 2015 the Company issued 500,000 shares of common stock at .001 per share
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In February 2016 the Company issued 10,000 shares of its Series B Preferred Stock in satisfaction of the obligation to issue
such shares to the seller of $50,000 of inventory the Company purchased in August 2015.
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In March 2016 the Company issued 50,000 shares of its Series B Preferred Stock in connection with the execution of a Product
and Know-How License Agreement.
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Issuances
of Common Stock upon Exercise of Conversion Rights.
In
March 2014, a noteholder converted $50 of the principal balance of a note into 500,000 shares of the Company's common stock at
a conversion price of $0.0001 per share.
In
April 2014, a noteholder converted $40 of the principal balance of a note into 400,000 shares of the Company's common stock at
a conversion price of $0.0001 per share.
In
June 2014, a noteholder converted $700 of the principal balance of a note into 700,000 shares of the Company's common stock at
a conversion price of $0.001 per share.
In
August 2014, a noteholder converted $1000 of the principal balance of a note into 1,000,000 shares of the Company's common stock
at a conversion price of $0.001 per share.
In
October 2014, a noteholder converted $1100 of the principal balance of a note into 1,100,000 shares of the Company's common stock
at a conversion price of $0.001 per share.
In
October 2014, a noteholder converted $50 of the principal balance of a note into 500,000 shares of the Company's common stock
at a conversion price of $0.0001 per share.
In
October 2014, a noteholder converted $1,500 of the principal balance of a note into 1,500,000 shares of the Company's common stock
at a conversion price of $0.001 per share.
In
March 2015, the Company issued 800,000 shares of common stock at $0.0005 per share as partial conversion of a promissory note
for principal of $400.
In
April 2015, the Company issued 300,000 shares of common stock at $0.0005 per share as partial conversion of a promissory note
for principal of $150.
In
June 2015, the Company issued 2,000,000 shares of common stock at $0.0005 per share as partial conversion of a promissory note
for principal of $1,000.
In
July 2015, the Company issued 1,000,000 shares of common stock at $0.0005 per share as partial conversion of a note for principal
of $500.
In
August 2015, the Company issued 3,000,000 shares of common stock at $0.0005 per share as partial conversion of a promissory note
for principal of $1500.
In
September 2015, the Company issued 800,000 shares of common stock at $0.0005 per share as partial conversion of a promissory note
for principal of $400.
For
a $59,000 note issued June 2015, the Company has issued the following conversions: In January 2016, the Company issued 1,095,036
shares of common stock at $0.00275 per share, in February 2016 the Company issued 1,285,560 shares of common stock at .00275 per
share and in March 2016 the Company issued 906,533 shares of common stock at .003355 per share as partial conversion of a promissory
note for remaining principal of $52,000.
In
January 2016, the Company issued 1,500,000 shares of common stock at $0.0005 per share as partial conversion of a promissory note
for principal of $1,950.
In
February 2016, the Company issued 1,700,000 shares of common stock upon conversion of 3,400 shares of Series B Preferred Stock.
Promissory
Notes:
In March 2011, the Company issued a promissory
note to a stockholder in the amount of $300. On July 2013, the note was amended to provide the noteholder with the right to convert
the note into the Company's common stock at $0.0006 per share. The Company issued 400,000 shares of Common Stock upon the conversion
of $240 of the existing balance owing on the note. The current unconverted balance on the note is $60.
In January 2012, the Company issued a promissory
note to a stockholder in the amount of $5,000 with interest at 20% per annum. Principal and interest were due and payable on July
2, 2012. March 5, 2015, the note was amended to provide the noteholder with the right to convert the note into the Company's common
stock at $0.0005 per share. The current unconverted balance of the note is $1200.
In December 2012, the Company issued a promissory
note to a stockholder in the amount of $5,000 with interest at 10% per annum. Principal and interest were due and payable on July
3, 2013. April 2014, the note was amended to provide the note holder with the right to convert the note into the Company's common
stock at $0.001 per share. The Company issued 2,500,000 shares of Common Stock upon the conversion of $2,500 of the existing balance
owing on the note. The current unconverted balance of the note is $500.
In May 2012, the Company issued a promissory
note to a stockholder in the amount of $25,000 with interest at 10% per annum. Principal and interest were due and payable on November,
2012. On December 2014, the note was amended to provide the note holder with the privilege to convert the note to the Company's
common stock at $0.0001 per share. Effective April 2013, the Company and Note Holder entered into a second amendment of the Note
which reduced the principal balance of the Note to $9,900 by crediting $14,000 to consulting services provide by Note Holder to
the Company. On June 2013 the note was sold to two parties. A $5,000 and $4,900 portion of the note was sold to two new note holders.
The Company issued 4,110,000 shares of Common Stock upon the conversion of $4110 of the balances owing on the notes. The $5000
Note has a current unconverted balance of $3,715 and the $4,900 Note has a current unconverted balance of $2,075.
In July 2013, the Company issued a promissory
note to a stockholder in the amount of $1,500. Principal and interest were due and payable on January 2014. January 2015, the note
was amended to provide the note holder with the right to convert the note into the Company's common stock at $0.0004 per share.
The current unconverted balance is $1500.
In January 2015, the Company issued a
promissory note to a stockholder in the amount of $1,000. Principal and interest were due and payable on July 2015. On
January 2015, the note was amended to provide the note holder with the right to convert the note into the Company's common
stock at $0.0001 per share. The current unconverted note balance is $1000.
In April 2015, the Company issued a promissory
note to a stockholder in the amount of $3,000. Principal and interest were due and payable on October 2015. The current balance
of the note is $3,000.
Effective June 12, 2015, the Company closed on a private funding transaction and issued its Convertible
Promissory Note in the principal amount of $100,000.00 dated June 12, 2015 to a private institutional investor. The maturity
date was December 12, 2015. The note was amended on April 1, 2016 to extend the maturity date to July 31, 2016 at which time the
outstanding principal and interest will be due and payable. The promissory note provides, among other things, that the holder
cannot exercise the right of conversion prior the expiration of six (6) months and the conversion price will be equal to 50% of
the lowest trading price of the Company’s common stock for the three (3) days prior to the date of conversion.
Effective October 12, 2015, the Company closed
on a private funding transaction and issued its Convertible Promissory Note in the principal amount of $31,000.00 dated October
8, 2015 to a private institutional investor. The maturity date is October 8, 2016, at which time the outstanding principal and
interest balance is due and payable. The promissory note provides, among other things, that the holder cannot exercise the right
of conversion prior the expiration of six (6) months and the conversion price will be equal to 58% of the lowest trading price
of the Company’s common stock for the twenty (20) days prior to the date of conversion.
Effective October 27, 2015, the Company closed on a private funding transaction and issued its 5% Convertible Promissory Note in
the principal amount of $35,000.00 dated October 12 2015 to a private institutional investor. The maturity date is October 12,
2016, at which time the outstanding principal and interest balance is due and payable. The promissory note provides, among other
things, that the holder cannot exercise the right of conversion prior the expiration of six (6) months and the conversion price
will be equal to 55% of the lowest trading price of the Company’s common stock for the ten (10) trading days prior to the
date of conversion.
Effective
July 8, 2015, the Company closed on a private funding transaction and issued its 8% Convertible Promissory Note in the principal
amount of $59,000.00 dated June 25 2015 to a private institutional investor. The maturity date is March 30, 2016, at which time
the outstanding principal and interest balance is due and payable. The promissory note provides, among other things, that the
holder cannot exercise the right of conversion prior the expiration of six (6) months and the conversion price will be equal to
45% of the average of the three lowest trading price of the Company’s common stock for the ten (10) trading days prior to
the date of conversion. On January 2016, this note was assigned to a new holder.
Effective
September 8, 2015, the Company closed on a private funding transaction and issued its 8% Convertible Promissory Note in the
principal amount of $38,000.00 dated August 31, 2015 to a private institutional investor. The maturity date is June 3, 2016, at
which time the outstanding principal and interest balance is due and payable. The promissory note provides, among other things,
that the holder cannot exercise the right of conversion prior the expiration of six (6) months and the conversion price will be
equal to 45% of the average of the three lowest trading price of the Company’s common stock for the ten (10) trading days
prior to the date of conversion. On January 2016, this note was assigned to a new holder.
On January 7, 2016, the Company entered
into a Securities Purchase Agreement (the “Purchase Agreement”) with an accredited investor (the “Investor”)
for the sale of convertible redeemable notes in aggregate principal amount of $251,803. On January 7, 2016, the Company and the
Investor conducted the first closing under the Purchase Agreement, pursuant to which the Company issued to the Investor (i) a convertible
redeemable note in principal amount of $105,000 containing an original issue discount of $20,000 (the “$105K Note”);
and (ii) a convertible redeemable note in principal amount of $50,000 (the “$50K Note” and together with the $105K
Note, the “Notes”). In consideration for the issuance of the $105K Note, on January 13, 2016, the Company received
net proceeds (after deducting the original issue discount and legal fees) in the amount of $75,696.69. In consideration for the
issuance of the $50K Note, the Investor issued to the Company a $50,000 fully-collateralized secured promissory note (the “Investor
Note”), pursuant to which the Investor agreed to pay the Company $50,000 on or before April 30, 2016. Under the Purchase
Agreement, on March 15, 2016, the Company and the Investor conducted an additional closing for the sale and purchase of additional
notes having the same terms as the Notes in principal amounts equal to $50,000 and $46,803, respectively. In consideration for
the issuance of the $46,803 note, the Investor issued to the Company a $46,803 fully-collateralized secured promissory note, pursuant
to which the Investor agreed to pay the Company $46,803 on or before June 15, 2016. All notes issued pursuant to the Purchase Agreement
bear interest at the rate of 8% per annum. Subject to a beneficial ownership limitation equal to 9.99%, principal and interest
on all the notes issued pursuant to the Purchase Agreement convertible into shares of the Company’s common stock at a conversion
price equal to 55% of the lowest trading price of Common Stock during the 20 trading day period prior to conversion.
On January 7, 2016, the Company issued
to the Investor a convertible redeemable replacement note in principal amount of $61,508.71 (the “$61K Replacement Note”).
The issuance of the $61K Replacement Note was made in connection with the Investor’s purchase of a convertible promissory
note in principal amount of $59,000 that was originally issued by the Company on June 25, 2015 (the “$61K Original Note”).
The $61,508.71 principal amount of the $61K Replacement Note reflected the principal and accrued interest under the $61K Original
Note. The $61K Replacement Note, which is due on January 7, 2017, may not be prepaid but otherwise contains identical provisions
to that of the Notes.
On February 29, 2016, the Company issued
to the Investor a convertible redeemable replacement note in principal amount of $39,557.48 (the “Replacement Note”).
The issuance of the Replacement Note was made in connection with the Investor’s purchase of a convertible promissory note
in principal amount of $38,000 that was originally issued by the Company on August 31, 2015 (the “Original Note”).
The $39,557.48 principal amount of the Replacement Note reflected the principal and accrued interest under the Original Note. The
Replacement Note, which is due on February 28, 2017, may not be prepaid but otherwise contains identical provisions to that of
the Notes.
On March 8, 2016, the Company, through
its wholly-owned subsidiary, Medical Laser Manufacturer, Inc., memorialized in a Product and Know-How License Agreement (the “License
Agreement”) with Medical Lasers Manufacturer, Inc., a Florida corporation doing business as Laser Lab Corp. (“Laser
Lab”), an agreement to license the use of various intellectual property in connection with seeking regulatory approval for
and marketing, distributing and selling The Time Machine Series Lasers (the “TTM Series”). In connection with the Company’s
agreement with Laser Lab, which agreement was memorialized in the License Agreement, on September 24, 2015, the Company filed with
the Secretary of State of the State of Nevada a Certificate of Designation of Rights, Preferences and Privileges (the “Certificate
of Designation”), of the Company’s Series B Convertible Preferred Stock (“Series B Preferred”). Pursuant
to the Certificate of Designation, the Company designated 50,000 shares of Series B Preferred. The Series B Preferred do not hold
any rights to receive dividends or any rights to vote. The Company, at its sole discretion, may redeem at any time, in whole or
in part, outstanding shares of Series B Preferred for a price per share equal to the consideration paid or deemed to have been
paid for such shares. The Series B Preferred may be converted, sixty days after their respective issuance, each share into the
Company’s common stock (“Common Stock”) at a conversion ratio equal to one (1) share of Series B Preferred for
five hundred (500) shares of Common Stock.
Pursuant
to the License Agreement, the Company agreed to issue to Laser Lab 25,000 shares of Series B Preferred and a promissory note (the
“Promissory Note”) in principal amount of $150,000 and bearing interest at 10% per annum. The principal and interest
due under the Promissory Note is payable 18-months from the date of issuance. In the event, the Company does not receive, by December
31, 2016, a decision letter from the Food and Drug Administration informing the Company of the “cleared” 510(k), then
the amount of 10,000 shares of Series B Preferred will be clawed back and forfeited by Laser Lab and the principal amount of the
Promissory Note will automatically reduce to $75,000, as if originally issued in such denomination.
All
of the previously described issuances of securities were made pursuant to the exemption from registration at Section 4(a)(2) and/or
Rule 506 of Regulation D and/or Section 4(6) under the Securities Act for either transactions not involving a public offering
or for transactions with an “accredited investor” as defined under the Securities Act. Common Stock issued upon the
exercise of conversion rights were made pursuant to Section 3(a)(9) of the Securities Act for securities exchanged by an issuer
with its existing security holders exclusively.
Equity
Compensation Plan Information
We
do not have any equity incentive plans as of the date of this annual report.
Purchases
of Equity Securities by the Issuer and Affiliated Purchasers
We did not purchase any of our
shares of common stock or other securities during our fiscal year ended December 31, 2014 and 2015.
ITEM
6. SELECTED FINANCIAL DATA
We
are a smaller reporting company, as defined by Rule 229.10(f)(1) and are not required to provide the information required by this
Item.
ITEM
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This
section must be read in conjunction with the Audited Financial Statements included in this Prospectus.
Plan
of Operation
Medifirst
Solutions, Inc. was incorporated in Nevada in November 2010. The Company began as a development stage company focused on developing
products within the healthcare market for both consumer and professional applications. In 2013, Medifirst began to developing
its own line of disposable electronic cigarettes (“e-cigs”) but the e-cig industry subsequently encountered significant
government push-back to try to heavily regulate their use and production, including a ban on e-cigs. In order to avoid the uncertainties
and costs of the regulated e-cig industry, Medifirst entered into an agreement with Panacea Photonics Corporation that allowed
Medifirst to exclusively market and distribute a series of Botanical LED Light Therapy Systems, including skin care and pain relief
products. Under the terms of the marketing and distribution agreement, Medifirst became the exclusive distributor of the light
therapy products in both New York and New Jersey. In 2014, in addition to the LED light therapy division, the Company became a
dealer for Atmospheric Water Solutions, a Florida based company that sells water generators that makes drinking water from air.
In 2015, the Company made a strategic decision to add laser technology to its health and wellness division and discontinue its
efforts with its light therapy and water generator products. The Company entered into an exclusive manufacturing agreement to
produce what is now its hand-held mobile laser system known as “The Time Machine Program” for which the Company purchased
the registered trademark. Furthermore, the Company purchased 20 TTM Series laser units from the developer of the lasers.
Additionally,
Medifirst, through its wholly-owned subsidiary Medical Laser Manufacturer, Inc., entered into a Product and Know-How License Agreement
with Laser Lab Corp to license the use of various intellectual property in connection with seeking regulatory approval for and
marketing, distributing and selling The Time Machine Series Lasers (“TTM Series”). The License Agreement grants a
license to the Company to use various intellectual property for the development, manufacture and sale of lasers in the TTM Series
for which the Company previously filed a Premarket Notification 510(k) submission with the FDA. In addition to the license granted
to the Company, the License Agreement provides for an option to license other fields of use of the infrared laser in the TTM Series,
as well as other wavelengths and colors, allowing the Company to develop a broader range of product offerings in the future. Although
the Company has not generated any revenues from it medical laser division, we believe that revenues can be generated shortly after
receiving 510(k) clearance from the FDA.
Our
auditors have issued a going concern opinion. This means that our auditors believe there is substantial doubt that we can continue
as an on-going business for the next twelve (12) months. Our auditors’ opinion is based on the uncertainty of our ability
to establish profitable operations. The opinion results from the fact that we have not generated significant revenues. Accordingly,
we must raise cash from operations or from investments by others in the Company to continue our operations.
Our
sole officer and director is responsible for our managerial and organizational structure, which will include preparation of disclosure
and accounting controls under the Sarbanes Oxley Act of 2002. When these controls are implemented, he will be responsible for
the administration of the controls. Should he not have sufficient experience, he may be incapable of creating and implementing
the controls which may cause us to be subject to sanctions and fines by the SEC which ultimately could cause you to lose your
investment.
Subject
to obtaining 510(k) clearance, our intended plan of operations is to generate revenue from the sale of our TTM Series lasers.
Results of Operations
Fiscal Year Ended December 31, 2015
Revenues
During the year ended December 31, 2015
and 2014, we generated $1,858 and $85,627 in revenues, respectively.
We no longer are a dealer for Atmospheric Waters
Solutions and sell water generators.
Expenses
For the year ended December 31, 2015 and
2014, expenses were $246,228 and $328,107, respectively.
The company spent substantially less in hiring
outside consultants.
Legal and Accounting
For the year ended December 31, 2015 and
2014, professional fees were $59,086 and $11,249, respectively.
We had increased costs in these professional
services due to hiring new audit firm as well as FDA filing concerns.
Other Income/(Expense)
For the year ended December 31, 2015 and
2014, other expenses were $89,495 and $1,654, respectively consisting of interest expense. In addition, for the year ended December
31, 2015 there was Other Expense in the amount of $4,055 for Change in the Fair Value of Derivatives.
Net Income/(Loss)
For the year ended December 31, 2015 and 2014
the company had a net loss of $344,124 and $295,229.
Liquidity and Capital Resources
Since incorporation, we have financed our operations
through the private placement of our common stock to selected investors and periodic borrowings from investors. At December 31,
2015 and 2014, our principal sources of liquidity included cash and cash equivalents of $156,958 and $551, respectively.
As of December 31, 2015, we did not have any
significant commitments for capital expenditures.
If we do not generate sufficient cash flow to support our operations over the next twelve (12) months,
in order to continue as a going concern we may need to raise additional capital by issuing capital stock in exchange for cash. There
are no formal or informal agreements to attain such financing. The Company’s ability to obtain additional capital
on acceptable terms is subject to a variety of uncertainties, including: investors’ perception of, and demand for, securities
of companies in our industry; conditions of the U.S. and other capital markets in which we may seek to raise funds; future results
of operations, financial condition and cash flow. Therefore, the Company’s management cannot assure that financing will
be available in amounts or on terms acceptable to the Company, or if at all. Any failure by the Company’s management to
raise additional funds on terms favorable to the Company could have a material adverse effect on the Company’s liquidity
and financial condition.
Critical
Accounting Policies
Our
significant accounting policies are summarized in Note 1 of our consolidated financial statements. While all these significant
accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies
determined to be critical are those policies that have the most significant impact on our financial statements and require management
to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that
given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would
cause an effect on our consolidated results of operations, financial position or liquidity for the periods presented in this report.
Off
Balance Sheet Arrangements
The
Company has no off-balance sheet arrangements.
Recently
Adopted Accounting Pronouncements
Please
see Note 2 of our consolidated financial statements that describe the impact, if any, from the adoption of Recent Accounting Pronouncements.
ITEM
7A. QUANTITATIVE AND QUALITIATIVE DISCLOSURES ABOUT MARKET RISK
We
are a smaller reporting company, as defined by Rule 229.10(f)(1) and are not required to provide the information required by this
Item.
ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The
Company’s consolidated financial statements are stated in United States dollars and are prepared in accordance with United
States generally accepted accounting principles.
It
is the opinion of management that the audited consolidated financial statements for the calendar year ended December 31, 2015
include all adjustments necessary in order to ensure that the audited consolidated financial statements are not misleading.
The
following financial statements are filed as part of this annual report:
INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Medifirst Solutions, Inc.
We have audited the accompanying consolidated balance
sheets of Medifirst Solutions, Inc. as of December 31, 2015 and 2014, and the related statements of operations,
stockholders’ equity (deficit), and cash flows for the two years ended December 31, 2015. Medifirst Solutions,
Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with the
standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The
company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of Medifirst Solutions, Inc. as of December 31, 2015 and 2014,
and the results of its operations and its cash flows for the two years ended December 31, 2015, in conformity with accounting
principles generally accepted in the United States of America.
The accompanying consolidated financial statements
have been prepared assuming the Company will continue as a going concern. As discussed in Note 13 to the consolidated
financial statements, the Company incurred a net loss during the period and has no history of profitability, currently
generates little revenue, and its viability is dependent upon its ability to meet future financing requirements, all of which
raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial
statements do not include any adjustment that might result from the outcome of this uncertainty.
Fruci & Associates II, PLLC
(f/k/a MartinelliMick PLLC)
Spokane, WA
April 14, 2016
Medifirst
Solutions, Inc.
Consolidated
Balance Sheets
December
31, 2015 and 2014
|
|
|
December 31, 2015
|
|
|
December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
Current Assets:
|
|
|
|
|
|
|
|
Cash
|
|
$
|
156,958
|
|
|
$
|
551
|
|
|
Accounts receivable, net of allowance of $0 and $500, respectively
|
|
|
-
|
|
|
|
2,255
|
|
|
Prepaid expenses
|
|
|
-
|
|
|
|
1,125
|
|
|
Inventory
|
|
|
50,000
|
|
|
|
5,000
|
|
|
Total current assets
|
|
|
206,958
|
|
|
|
8,931
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, Plant and Equipment, net
|
|
|
2,159
|
|
|
|
3,822
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Assets
|
|
|
|
|
|
|
|
|
|
Security deposit
|
|
|
-
|
|
|
|
1,065
|
|
|
Total other assets
|
|
|
-
|
|
|
|
1,065
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
209,117
|
|
|
$
|
13,818
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
Bank overdraft
|
|
$
|
-
|
|
|
$
|
4,748
|
|
|
Accounts payable and accrued expenses
|
|
|
123,648
|
|
|
|
19,425
|
|
|
Accrued expenses - officer's compensation
|
|
|
370,000
|
|
|
|
300,000
|
|
|
Due to related party
|
|
|
8,921
|
|
|
|
5,937
|
|
|
Loans payable - stockholders
|
|
|
24,449
|
|
|
|
42,210
|
|
|
Convertible notes payable
|
|
|
180,393
|
|
|
|
5,975
|
|
|
Derivative Liabilities
|
|
|
157,617
|
|
|
|
-
|
|
|
Total current liabilities
|
|
|
865,028
|
|
|
|
378,295
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments & Contingencies (Note 10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity (Deficit):
|
|
|
|
|
|
|
|
|
|
Series A preferred stock, $0.0001 par value; 1,000,000 shares authorized, 50,000 and 50,000 shares issued and outstanding
|
|
|
5
|
|
|
|
5
|
|
|
Series B convertible preferred stock, $0.0001 par value; 50,000 shares authorized, -0- and -0- shares issued and outstanding, respectively
|
|
|
-
|
|
|
|
-
|
|
|
Common stock, $0.0001 par value; 1,500,000,000 shares authorized, 35,101,750 and 22,481,750 shares issued and outstanding, respectively
|
|
|
3,510
|
|
|
|
2,248
|
|
|
Additional paid in capital
|
|
|
310,183
|
|
|
|
258,755
|
|
|
Accumulated deficit
|
|
|
(969,609
|
)
|
|
|
(625,485
|
)
|
|
|
|
|
(655,911
|
)
|
|
|
(364,477
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
209,117
|
|
|
$
|
13,818
|
|
The
accompanying notes are an integral part of these financial statements.
Medifirst
Solutions, Inc.
Consolidated
Statements of Operations
Years
Ended December 31, 2015 and 2014
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
Consulting fee revenue
|
|
$
|
1,858
|
|
|
$
|
-
|
|
|
Product sales,
net
|
|
|
-
|
|
|
|
85,627
|
|
|
|
|
|
1,858
|
|
|
|
85,627
|
|
|
Cost of goods
sold
|
|
|
5,150
|
|
|
|
50,295
|
|
|
Gross
income
|
|
|
(3,292
|
)
|
|
|
35,332
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
Officer's compensation
|
|
|
100,000
|
|
|
|
100,000
|
|
|
Impairment of Trademark
|
|
|
20,000
|
|
|
|
-
|
|
|
Advertising and
promotion
|
|
|
4,990
|
|
|
|
4,354
|
|
|
Computer and internet
|
|
|
2,085
|
|
|
|
1,680
|
|
|
Consulting fees
|
|
|
30,175
|
|
|
|
151,225
|
|
|
Professional fees
|
|
|
59,086
|
|
|
|
17,531
|
|
|
Provision for bad
debts
|
|
|
2,255
|
|
|
|
28,500
|
|
|
Rent
|
|
|
6,483
|
|
|
|
5,274
|
|
|
Repairs and maintenance
|
|
|
-
|
|
|
|
526
|
|
|
Travel
|
|
|
-
|
|
|
|
3,924
|
|
|
Other
|
|
|
19,188
|
|
|
|
15,893
|
|
|
|
|
|
244,262
|
|
|
|
328,907
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss from Operations
before other income, expenses
|
|
|
(247,554
|
)
|
|
|
(293,575
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Other income and (expenses)
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(92,515
|
)
|
|
|
(1,654
|
)
|
|
Change
in Fair Value -Derivatives
|
|
|
(4,055
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(344,124
|
)
|
|
$
|
(295,229
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Loss
per common share - Basic and fully diluted
|
|
$
|
(0.01
|
)
|
|
($
|
0.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares outstanding - Basic and fully diluted
|
|
|
28,596,216
|
|
|
|
18,691,886
|
|
The
accompanying notes are an integral part of these financial statements.
Medifirst
Solutions, Inc.
Consolidated
Statement of Stockholders' Equity
For
the Period from January 1, 2014 to December 31, 2015
|
|
|
Common
Stock
|
|
|
Preferred
Series A
|
|
|
Additional
Paid in
|
|
|
Accumulated
|
|
|
Total
Stockholders'
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Equity
|
|
|
Balance
- January 1, 2014
|
|
|
13,781,750
|
|
|
|
1,378
|
|
|
|
-
|
|
|
|
-
|
|
|
|
64,740
|
|
|
|
(330,256
|
)
|
|
|
(264,138
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common shares for services $0.05 per share
|
|
|
1,000,000
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
49,900
|
|
|
|
-
|
|
|
|
50,000
|
|
|
Issuance
of common shares for services $0.05 per share
|
|
|
500,000
|
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
24,950
|
|
|
|
-
|
|
|
|
25,000
|
|
|
Issuance
of common shares to repay debt at $0.0555
|
|
|
450,000
|
|
|
|
45
|
|
|
|
|
|
|
|
|
|
|
|
24,955
|
|
|
|
-
|
|
|
|
25,000
|
|
|
Issuance
of common shares for cash at $0.05 per share
|
|
|
200,000
|
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
9,980
|
|
|
|
-
|
|
|
|
10,000
|
|
|
Issuance
of common shares for cash at $0.05 per share
|
|
|
300,000
|
|
|
|
30
|
|
|
|
|
|
|
|
|
|
|
|
14,970
|
|
|
|
-
|
|
|
|
15,000
|
|
|
Issuance
of common shares for cash at $0.05 per share
|
|
|
200,000
|
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
9,980
|
|
|
|
-
|
|
|
|
10,000
|
|
|
Issuance
of common shares upon partial conversion of note at $0.0001 per share
|
|
|
500,000
|
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
50
|
|
|
Issuance
of common shares for services $0.05 per share
|
|
|
450,000
|
|
|
|
45
|
|
|
|
|
|
|
|
|
|
|
|
22,455
|
|
|
|
-
|
|
|
|
22,500
|
|
|
Issuance
of common shares for services $0.13 per share
|
|
|
50,000
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
6,495
|
|
|
|
-
|
|
|
|
6,500
|
|
|
Issuance
of common shares upon partial conversion of note at $0.0001 per share
|
|
|
400,000
|
|
|
|
40
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
40
|
|
|
Issuance
of preferred shares for services $0.10 per share
|
|
|
-
|
|
|
|
-
|
|
|
|
50,000
|
|
|
|
5
|
|
|
|
4,995
|
|
|
|
-
|
|
|
|
5,000
|
|
|
Issuance
of common shares for services $0.09 per share
|
|
|
100,000
|
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
8,990
|
|
|
|
-
|
|
|
|
9,000
|
|
|
Issuance
of common shares for services $0.05 per share
|
|
|
250,000
|
|
|
|
25
|
|
|
|
|
|
|
|
|
|
|
|
12,475
|
|
|
|
-
|
|
|
|
12,500
|
|
|
Issuance
of common shares upon partial conversion of note at $0.0001 per share
|
|
|
700,000
|
|
|
|
70
|
|
|
|
|
|
|
|
|
|
|
|
630
|
|
|
|
-
|
|
|
|
700
|
|
|
Issuance
of common shares upon partial conversion of note at $0.0001 per share
|
|
|
1,000,000
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
|
|
900
|
|
|
|
-
|
|
|
|
1,000
|
|
|
Issuance
of common shares upon partial conversion of note at $0.0001 per share
|
|
|
1,100,000
|
|
|
|
110
|
|
|
|
|
|
|
|
|
|
|
|
990
|
|
|
|
-
|
|
|
|
1,100
|
|
|
Issuance
of common shares upon partial conversion of note at $0.0001 per share
|
|
|
1,500,000
|
|
|
|
150
|
|
|
|
|
|
|
|
|
|
|
|
1,350
|
|
|
|
-
|
|
|
|
1,500
|
|
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(295,229
|
)
|
|
|
(295,229
|
)
|
|
Balance
- December 31, 2014
|
|
|
22,481,750
|
|
|
|
2,248
|
|
|
|
50,000
|
|
|
|
5
|
|
|
|
258,755
|
|
|
|
(625,485
|
)
|
|
|
(364,477
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common shares upon partial conversion of note at $0.0001 per share
|
|
|
2,000,000
|
|
|
|
200
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,800
|
|
|
|
-
|
|
|
|
2,000
|
|
|
Cancellation
of common shares
|
|
|
(500,000
|
)
|
|
|
(50
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
50
|
|
|
|
-
|
|
|
|
-
|
|
|
Issuance
of common shares upon partial conversion of note at $0.0005 per share
|
|
|
800,000
|
|
|
|
80
|
|
|
|
-
|
|
|
|
-
|
|
|
|
320
|
|
|
|
-
|
|
|
|
400
|
|
|
Contribution
to additional paid in capital
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,050
|
|
|
|
-
|
|
|
|
1,050
|
|
|
Issuance
of common shares upon partial conversion of note at $0.0005 per share
|
|
|
300,000
|
|
|
|
30
|
|
|
|
-
|
|
|
|
-
|
|
|
|
120
|
|
|
|
-
|
|
|
|
150
|
|
|
Issuance
of common shares upon partial conversion of note at $0.0005 per share
|
|
|
1,000,000
|
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
|
|
400
|
|
|
|
-
|
|
|
|
500
|
|
|
Issuance
of common shares upon partial conversion of note at $0.0005 per share
|
|
|
1,000,000
|
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
|
|
400
|
|
|
|
-
|
|
|
|
500
|
|
|
Contribution
to additional paid in capital
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,575
|
|
|
|
-
|
|
|
|
1,575
|
|
|
Issuance
of common shares upon partial conversion of note at $0.0005 per share
|
|
|
3,800,000
|
|
|
|
380
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,520
|
|
|
|
-
|
|
|
|
1,900
|
|
|
Issuance
of common shares to acquire subsidiary at $0.015 per share
|
|
|
20,000
|
|
|
|
2
|
|
|
|
-
|
|
|
|
-
|
|
|
|
18
|
|
|
|
-
|
|
|
|
20
|
|
|
Issuance
of common shares for services $0.01 per share
|
|
|
3,500,000
|
|
|
|
350
|
|
|
|
|
|
|
|
|
|
|
|
34,650
|
|
|
|
-
|
|
|
|
35,000
|
|
|
Contribution
to additional paid in capital
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,575
|
|
|
|
-
|
|
|
|
1,575
|
|
Issuance of common shares to investor $.01 per share
|
|
|
200,000
|
|
|
|
20
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20
|
|
|
Issuance of common shares for services $0.01 per share
|
|
|
500,000
|
|
|
|
50
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,950
|
|
|
|
|
|
|
|
5,000
|
|
|
Additional paid in capital on debt discount related to intrinsic beneficial conversion feature
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,000
|
|
|
|
-
|
|
|
|
3,000
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(344,124
|
)
|
|
|
(344,124
|
)
|
|
Balance - December 31, 2015
|
|
|
35,101,750
|
|
|
$
|
3,510
|
|
|
|
50,000
|
|
|
$
|
5
|
|
|
$
|
310,183
|
|
|
$
|
(969,609
|
)
|
|
$
|
(655,911
|
)
|
The
accompanying notes are an integral part of these financial statements.
Medifirst
Solutions, Inc.
Consolidated
Statement of Cash Flows
Years
Ended December 31, 2015 and 2014
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(344,124
|
)
|
|
$
|
(295,229
|
)
|
|
Adjustments to reconcile net loss to net cash used by operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation expense
|
|
|
1,663
|
|
|
|
3,933
|
|
|
Provision for doubtful accounts
|
|
|
2,255
|
|
|
|
500
|
|
|
Accounts receivable
|
|
|
-
|
|
|
|
(2,755
|
)
|
|
Prepaid expenses
|
|
|
1,125
|
|
|
|
1,375
|
|
|
Inventory
|
|
|
(45,000
|
)
|
|
|
2,500
|
|
|
Security deposit
|
|
|
1,065
|
|
|
|
(800
|
)
|
|
Accounts payable and accrued expenses
|
|
|
174,243
|
|
|
|
87,467
|
|
|
Interest/excess of fair value of shares issued to repay loans
|
|
|
5,450
|
|
|
|
30,290
|
|
|
Notes payable derivatives
|
|
|
157,617
|
|
|
|
|
|
|
Due to related party
|
|
|
2,984
|
|
|
|
5,937
|
|
|
Stockholder's loan
|
|
|
(17,761
|
)
|
|
|
355
|
|
|
Common stock issued for services
|
|
|
40,000
|
|
|
|
125,500
|
|
|
Preferred stock issued for services
|
|
|
-
|
|
|
|
5,000
|
|
|
Net cash used by operating activities
|
|
|
(20,483
|
)
|
|
|
(35,927
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Purchase of equipment
|
|
|
-
|
|
|
|
(2,556
|
)
|
|
Net cash used by investing activities
|
|
|
-
|
|
|
|
(2,556
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Bank overdraft
|
|
|
(4,748
|
)
|
|
|
3,104
|
|
|
Proceeds from issuance of common stock
|
|
|
20
|
|
|
|
35,000
|
|
|
Contribution of additional paid in capital
|
|
|
7,200
|
|
|
|
-
|
|
|
Proceeds from issuance of convertible debt
|
|
|
174,418
|
|
|
|
-
|
|
|
Payments and settlements on convertible debt
|
|
|
-
|
|
|
|
(2,790
|
)
|
|
Net cash provided by financing activities
|
|
|
176,890
|
|
|
|
35,314
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash
|
|
|
156,407
|
|
|
|
(3,169
|
)
|
|
Cash at beginning of period
|
|
|
551
|
|
|
|
3,720
|
|
|
Cash at end of period
|
|
$
|
156,958
|
|
|
$
|
551
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|
|
|
|
Cash paid during the period for:
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
759
|
|
|
$
|
805
|
|
|
Income taxes
|
|
$
|
550
|
|
|
$
|
800
|
|
The
accompanying notes are an integral part of these financial statements.
Note 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Medifirst Solutions, Inc. ("MSI" or the "Company")
was incorporated in Nevada in November 2010. The Company has not generated significant sales to date. The Company intends to have
a diverse product line of consumer products. Since inception, the Company has been engaged in business planning activities, including
researching the industry, identifying target markets for the Company's products, developing the Company's models and financial
forecasts, performing due diligence regarding potential geographic locations most suitable for establishing the Company's offices
and identifying future sources of capital. At the present time, the Company is building products and affiliations in and related
to the cosmetic healthcare industry.
Pursuant to a sale and purchase agreement dated
August 19, 2015 between the Company and the Company's president, the Company acquired 100% of the equity interests in Medical Lasers
Manufacturer, Inc. ("MLM") with the total purchase price of 20,000 shares of the Company's common stock at $0.001 per
share (or $20). The fair value of the acquired entity was $20.
The transaction was considered as a business
acquisition and accordingly the acquisition method of accounting has been applied. MLM had no assets at the date of the business
combination.
The Consolidated financial statements include
the accounts of MSI and its only wholly owned subsidiary, MLM. All material intercompany balances and transactions have been eliminated
in consolidation.
The Company’s activities are subject to significant risks
and uncertainties, including failing to secure additional funding to operationalize the Company’s current technology.
Basis of Presentation
The accompanying condensed consolidated financial
statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").
In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments
are of a normal recurring nature.
The Company has adopted Accounting Standards Update 2014-10, Development
Stage Entities (Topic 915), Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest
Entities Guidance in Topic 810, Consolidation.
Revenue Recognition
In general, the Company records revenue when
persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to
the customer is fixed or determinable, and collectability is reasonably assured. The following policies reflect specific criteria
for the various revenues streams of the Company:
Revenue is recognized at the time the product is delivered or services
are performed. Provision for sales returns are estimated based on the Company's historical return experience. Revenue is presented
net of returns.
Accounts Receivable
The Company extends credit to its customers
in the normal course of business and performs ongoing credit evaluations of its customers, maintaining an allowance for potential
credit losses. Accounts receivable is reported net of the allowance for doubtful accounts. The allowance is based on management's
estimate of the amount of receivables that will actually be collected.
Inventory
Inventory consists of finished goods and is stated at
the lower of cost (first-in, first-out) or market value.
Note 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Equipment
Equipment, consisting of computer equipment, is stated
at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives
of the assets, of five years.
Long-Lived Assets
The Company reviews long-lived assets, such as
equipment, for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. Recoverability
of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash
flows expected to be generated by the asset. If the carrying amount of an asset exceeds the estimated future cash flows, an impairment
loss will be recorded by the amount the carrying value exceeds the fair value of the asset.
In August 2015, the Company's wholly-owned subsidiary MLM, acquired
a trademark for $20,000. Due to the uncertainty of future cash flows from the trademark, management has deemed it to be impaired
and recorded an impairment expense of $20,000 in September 2015.
Debt Issues Costs and Debt Discount
The Company may pay debt issue costs,
and record debt discounts in connection with raising funds through the issuance of convertible debt. These costs are amortized
over the life of the debt to interest expense. If a conversion of the underlying debt occurs, a proportionate share of the unamortized
amounts is immediately expensed. For December 31, 2015 and retroactively, the Company has early-adopted ASU 2015-03: Simplifying
the Presentation of Debt Issuance Costs and has reflected the deferred financing costs as a direct reduction of the related debt
(See Note 7 to Consolidated Financial Statements).
Original Issue Discount
For certain convertible debt issued, the
Company provides the debt holder with an original issue discount. The original issue discount is recorded to debt discount, reducing
the face amount of the note and is amortized to interest expense over the life of the debt.
Derivative Liabilities
Fair value accounting requires bifurcation
of embedded derivative instruments such as conversion features in convertible debt or equity instruments, and measurement of their
fair value for accounting purposes. The Company assessed its securities for purposes of determining the proper accounting treatment
and valuation as set forth in the Statement of Financial Accounting Standard ASC 820–10–35–37 Fair Value in Financial
Instruments; Statement of Financial Accounting Standard ASC 815 Accounting for Derivative Instruments and Hedging Activities; and
Emerging Issues Task Force (“EITF”) Issue No. 00–19 and EITF 07–05.
In assessing the convertible debt instruments,
management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial
conversion feature requiring measurement. If the instrument is not considered conventional convertible debt, the Company will continue
its evaluation process of these instruments as derivative financial instruments.
Note 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (continued)
Once the derivative liabilities are determined, they are adjusted
to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of
operations as an adjustment to fair value of derivatives.
Use of Estimates
The preparation of condensed consolidated financial
statements in conformity with accounting principles generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities
at the dates of the condensed consolidated balance sheets and the reported amounts of revenues and expenses during the reporting
periods. Actual results could differ from those estimates.
Financial Instruments
The carrying amounts reported in the balance
sheets for cash, accounts receivable, accounts payable, and other accrued liabilities approximate their fair values.
Segment Information
The Company follows Accounting Standards Codification
("ASC") 280, "Segment Reporting". The Company currently operates in a single segment and will evaluate additional
segment disclosure requirements as it expands its operations.
Net Income (Loss) Per Common Share
The Company calculates net income
(loss) per share based on the authoritative guidance. Basic earnings (loss) per share is calculated by dividing net income (loss)
by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is calculated by
dividing net income (loss) by the weighted average number of common shares and dilutive common stock equivalents outstanding. During
periods in which the Company incurs losses, common stock equivalents, if any, are not considered, as their effect would be anti-dilutive.
Income Taxes
The Company utilizes the accrual method of accounting
for income taxes. Under the accrual method, deferred tax assets and liabilities are determined based on the differences between
the financial reporting basis and the tax basis of the assets and liabilities, and are measured using enacted tax rates and laws
that will be in effect when the differences are expected to reverse. An allowance against deferred tax assets is recognized, when
it is more likely than not, that such tax benefits will not be realized.
Note 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
The Company recognizes the financial statement
benefit of an uncertain tax position only after considering the probability that a tax authority would sustain the position in
an examination. For tax positions meeting a “more-likely-than-not” threshold, the amount recognized in the financial
statements is the benefit expected to be realized upon settlement with the tax authority. For tax positions not meeting the threshold,
no financial statement benefit is recognized. The Company recognizes interest and penalties, if any, related to uncertain tax
positions in income tax expense. The Company did not have any unrecognized tax benefits as of December 31, 2015, and does not
expect this to change significantly over the next 12 months.
Stock-Based Compensation
The Company accounts for equity instruments
issued to employees in accordance with ASC 718, Compensation - Stock Compensation. ASC 718 requires all share-based compensation
payments to be recognized in the financial statements based on the fair value on the issuance date.
Equity instruments granted to non-employees are accounted for in
accordance with ASC 505, Equity. The final measurement date for the fair value of equity instruments with performance criteria
is the date that each performance commitment for such equity instrument is satisfied or there is a significant disincentive for
non-performance.
Cash and Cash Equivalents
The Company considers all highly liquid
investments with an original maturity of three months or less to be cash equivalents. At December 31, 2015, the Company had $156,959
in cash equivalents.
Note 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
Recent Pronouncements
In May 2014, FASB and IASB issued a
new joint revenue recognition standard that supersedes nearly all GAAP guidance on revenue recognition. The core principle of the
standard is that revenue recognition should depict the transfer of goods and services to customers in an amount that reflects the
consideration to which the entity expects to be entitled in exchange for those goods and services. The new standard is effective
for the Company for the fiscal year beginning June 1, 2017. The Company is currently evaluating the impact of this ASU on the consolidated
financial statements.
On January 05, 2016, the FASB completed its Classification
and Measurement of Financial Instruments project by issuing ASU No. 2016-01, Financial Instruments—Overall (Subtopic
825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The new guidance improves certain aspects of
recognition, measurement, presentation and disclosure of financial instruments. For public business entities, the new guidance
is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company
does not believe the impact of its pending adoption of this ASU on the Company’s consolidated financial statements will be
material. " In November 2015, FASB issued ASU 2015-17 - Income Taxes (Topic 740) Balance Sheet Classification of Deferred
Taxes which simplifies the presentation of deferred income taxes. For public business entities, the amendments in this Update are
effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those
annual periods. The Company does not believe the impact of its pending adoption of this ASU on the Company’s consolidated
financial statements will be material.
In February 2015, FASB issued ASU 2015-02 Consolidation (Topic 810)
Amendments to the Consolidation Analysis. The amendments in this Update affect reporting entities that are required to evaluate
whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation
model. The amendments in this Update are effective for public business entities for fiscal years, and for interim periods within
those fiscal years, beginning after December 15, 2015. The Company does not believe the impact of its pending adoption of this
ASU on the Company’s consolidated financial statements will be material.
Note 2. PROPERTY, PLANT AND EQUIPMENT (NET)
Equipment is recorded at cost and consisted of the following at
December 31, 2015 and 2014:
|
|
|
December 31,
|
|
|
|
|
2015
|
|
|
2014
|
|
|
Computer equipment
|
|
$
|
8,314
|
|
|
$
|
8,314
|
|
|
Less: accumulated depreciation
|
|
|
(6,155
|
)
|
|
|
(4,492
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,159
|
|
|
$
|
3,822
|
|
Depreciation expense was $1,663 and $3,933 for the years ended
December 31, 2015 and 2014, respectively.
Note 3. DUE TO RELATED PARTY
The Company was indebted to a related
party through common management in the amount of $8,921 at December 31, 2015 and December 31, 2014, respectively. The loan
bears no interest and is payable on demand.
Note 4. LOANS PAYABLE - STOCKHOLDERS
During the periods ended December 31, 2015 and 2014 a stockholder
of the Company advanced the Company $39,355 and $31,665 respectively. The loan had a balance of $20,899 and $42,210 at December
31, 2015 and December 31, 2014, respectively. The loan bears no interest and is payable on demand.
At December 31, 2015 and December 31, 2014, the Company was indebted
to a stockholder in the amount of $1,950 and $5,000, respectively. The loan has an interest rate of 20%. Principal and accrued
interest were due and payable on July 2, 2012.
In December 2012, the Company issued a promissory note to a stockholder
in the amount of $5,000 with interest at 10% per annum. Principal and interest were due and payable on June 2, 2013. In April 2014,
the note was amended to provide the note holder with the option to convert the note to the Company's common stock at $0.0001 per
share. Subsequently, in 2014, in a private transactions, the note holder transferred $2,500 of note principal to third parties
and the new holders converted their holdings into 2,500,000 shares of the Company's common stock. During 2015, the original note
holder transferred an additional $2,400 of note principal to third parties who converted their holdings into 2,400,000 shares of
the Company's common stock. At December 31, 2015 and December 31, 2014, the loan had balance was $100 and $4,000, respectively.
At December 31, 2015 and December 31, 2014, the Company was indebted
to a stockholder in the amount of $1,500 and $1,500, respectively. The loan has an interest rate of 26.7%. Principal and accrued
interest were due and payable on January 1, 2014.
Note 5. 6% CONVERTIBLE NOTES PAYABLE
In March 2011, the Company issued $800 aggregate principal amount
of 6% convertible notes due in January 2012. Interest on the notes accrue at the rate of 6% per annum and are payable when the
notes mature. The notes matured prior to conversion but have not been repaid. Interest continues to accrue at the rate of 6% per
annum.
The holder of one of the notes converted $110 of note principal
into 1,100,000 shares of common stock as follows:
|
|
|
Principal Amount
|
|
|
Conversion
|
|
|
Shares
|
|
|
Date of Conversion
|
|
Converted
|
|
|
Rate
|
|
|
Received
|
|
|
June 2013
|
|
$
|
70
|
|
|
$
|
0.0001
|
|
|
|
700,000
|
|
|
August 2013
|
|
$
|
40
|
|
|
$
|
0.0001
|
|
|
|
400,000
|
|
In August 2013, in a private transaction, the same note holder transferred
$330 of the remaining note principal plus $55 in accrued interest to a third party.
In August 2013, in a private transaction, the new note holder transferred
$5 of the remaining note principal to a third party who then converted the note into 50,000 shares of common stock.
Note 5. 6% CONVERTIBLE NOTES PAYABLE (continued)
In September 2013, the new note holder converted $100 of note principal
into 1,000,000 shares of common stock.
In September 2013, in a private transaction, the new note holder
transferred $35 of the remaining note principal to a third party who then converted the note into 350,000 shares of common stock.
In November and December 2013, the new note holder converted an
additional $90 of note principal into 900,000 shares of common stock as follows:
|
Date of Conversion
|
|
Principal Amount Converted
|
|
|
Conversion Rate
|
|
|
Shares Received
|
|
|
November 2013
|
|
$
|
40
|
|
|
$
|
0.0001
|
|
|
|
400,000
|
|
|
December 2013
|
|
$
|
50
|
|
|
$
|
0.0001
|
|
|
|
500,000
|
|
In March and April 2014, the new note holder converted an additional
$90 of note principal into 900,000 shares of common stock as follows:
|
Date of Conversion
|
|
Principal Amount Converted
|
|
|
Conversion Rate
|
|
|
Shares Received
|
|
|
March 2014
|
|
$
|
50
|
|
|
$
|
0.0001
|
|
|
|
500,000
|
|
|
April 2014
|
|
$
|
40
|
|
|
$
|
0.0001
|
|
|
|
400,000
|
|
Subsequent to these conversions there remains $125 in note principal.
In July 2013, the holder of the second note converted $240 of note
principal into 400,000 shares of the Company's common stock at $0.0006 per share. At December 31, 2015 and 2014, the note had a
remaining principal balance of $60 and $60, respectively.
At any time on or after the maturity date, the holders of the notes,
have the option of converting any of the unpaid principal and interest into the Company's common stock. The notes plus any accrued
but unpaid interest are convertible at the rate of $0.0001 per share at the time of conversion up to a maximum of 9.99% of the
then issued and outstanding common stock, or 3,506,665 shares at December 31, 2015.
In May 2012, the Company issued a $25,000 6% per annum note that
matured in November 2012. In December 2012 the note was amended to be a convertible note. Interest on the note accrues interest
at 6% per annum and is payable when the note matures.
Note 5. 6% CONVERTIBLE NOTES PAYABLE (continued)
The holder of the $25,000 note had the option of converting it at
any time prior to maturity. The note plus any accrued but unpaid interest were convertible at the rate of $0.001 per share at the
time of conversion up to a maximum of 9.99% of the then issued and outstanding common stock. The holder of the note converted $1,010
of note principal into 1,010,000 shares of common stock as follows:
The holder of the note converted $1,010 of note principal into 1,010,000
shares of common stock as follows:
|
Date of Conversion
|
|
Principal Amount Converted
|
|
|
Conversion Rate
|
|
|
Shares Received
|
|
|
December 2012
|
|
$
|
150
|
|
|
$
|
0.001
|
|
|
$
|
150,000
|
|
|
January 2013
|
|
$
|
660
|
|
|
$
|
0.001
|
|
|
$
|
660,000
|
|
|
March 2013
|
|
$
|
200
|
|
|
$
|
0.001
|
|
|
$
|
200,000
|
|
In July 2013, the Company retired $14,000 of note principal in payment
for consulting services provided to the note holder.
In July 2013, the note holder converted $300 of note principal into
300,000 shares of the Company's common stock.
In July 2013, in a private transaction, the note holder transferred
the remaining note principal balance of $9,690 to a third party.
In August 2013, in a private transaction, the new note holder transferred
$4,475 of principal to a stockholder of the company.
In October 2013, the note holder converted $400 of note principal
into 400,000 shares of the Company's common stock at $0.001 per share.
In October 2014, the note holder converted $1,100 of note principal
into 1,100,000 of the Company's common stock. At December 31, 2015, the remaining principal on this portion of the note is $3,715.
The note holder has the option of converting the balance at any time with the approval of the Board of Directors. The note plus
any accrued but unpaid interest are convertible at the rate of $0.001 per share at the time of conversion up to a maximum of 9.99%
of the then issued and outstanding common stock, or 3,506,665 shares at December 31, 2015.
In August 2013, the note holder/stockholder converted $700 of note
principal into 700,000 shares of the Company's common stock at $0.001 per share. In October 2013, in a private transaction, this
note holder transferred $1,000 of note principal to a third party of which $700 was converted into 700,000 shares in June 2014.
The remaining principal balance on this portion of the note at September 30, 2015 is $2,075. The note holder has the option of
converting the balance at any time with the approval of the Board of Directors. The note plus any accrued but unpaid interest are
convertible at the rate of $0.001 per share at the time of conversion up to a maximum of 9.99% of the then issued and outstanding
common stock, or 3,506,665 shares at December 31, 2015.
In April 2015, the Company issued a $3,000 8% per annum note that
matures in October 2015. The holder of the note has the right to convert the principal into shares of the Company's common stock
at any time 180 days after the closing date at $0.0001 per share. Interest on the note accrues interest at 8% per annum and is
payable when the note matures.
Note 6. 8% CONVERTIBLE NOTES PAYABLE
In July 2015, the Company issued a convertible note payable in the
principal amount of $59,000. The note matures in March 2016 and bears interest at 8%. Beginning 180 days following the closing
date the note holder shall have the right to convert any or all of the outranking principal balance into shares of the Company's
common stock at the discounted rate of 55% of the average of the three lowest market trading prices during the 10 days immediately
preceding the conversion date.
In August 2015, the Company issued a convertible note payable in
the principal amount of $38,000. The note matures in March 2016 and bears interest at 8%. Beginning 180 days following the closing
date the note holder shall have the right to convert any or all of the outranking principal balance into shares of the Company's
common stock at the discounted rate of 55% of the average of the three lowest market trading prices during the 10 days immediately
preceding the conversion date.
On October 8, 2015,
the Company issued a convertible note payable in the principal amount of $31,000 with an Original Issue Discount of $1,500. The
note matures on October 8, 2016 and bears interest at 8%. The note holder has has the right at any time to convert any part or
all of the outstanding unpaid principal balance into shares of the Company's common stock at the discounted rate of 58% of the
lowest market trading price during the 20 days prior to and including the conversion date.
Note 7. 5% CONVERTIBLE NOTES PAYABLE
In June 2015, the Company issued a convertible note payable in the
principal amount of $100,000. The note matures in December 2015 and bears interest at 5%. Beginning 180 days following the closing
date the note holder shall have the right to convert any or all of the outranking principal balance into shares of the Company's
common stock at the discounted rate of 50% of the average of the three lowest market trading prices during the 3 days immediately
preceding the conversion date.
On October 15, 2015 the Company issued a convertible note payable
in the principal amount of $35,000 with an Original Issue Discount of $5,000. The note matures on October 15, 2016 and bears interest
at 5%. The note holder has has the right at any time on or after the day that is six months from October 15, 2015 to convert any
part or all of the outstanding unpaid principal balance into shares of the Company's common stock at the discounted rate of 55%
of the lowest market trading prices during the 20 days prior to the conversion date.
Note 7. 5% CONVERTIBLE NOTES PAYABLE (continued)
The Company’s convertible notes payable and the related derivative
liabilities, derivative discount, deferred financing costs and original-issue discount are presented in the financial statements
at December 31, 2015 as follows:
Schedule of all Convertible Notes Payable at December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
Original
|
|
|
|
|
|
Deferred
|
|
|
Convertible
|
|
|
|
|
|
|
|
Face
|
|
|
Issue
|
|
|
Derivative
|
|
|
Financing
|
|
|
Notes
|
|
|
Derivative
|
|
|
Debt
|
|
Amount
|
|
|
Discount
|
|
|
Discount
|
|
|
Costs
|
|
|
Payable
|
|
|
Liability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note Payable - BS
|
|
$
|
125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
125
|
|
|
|
|
|
|
Note Payable - SF
|
|
|
60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60
|
|
|
|
|
|
|
Note Payable - MC #1
|
|
|
2,075
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,075
|
|
|
|
|
|
|
Note Payable - NW
|
|
|
3,715
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,715
|
|
|
|
|
|
|
Note Payable - MC #2
|
|
|
3,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,000
|
|
|
|
|
|
|
Debenture Payable (5%) - B
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
35,176
|
|
|
Convertible Note Payable - CB (5%)
|
|
|
35,000
|
|
|
|
(3,945
|
)
|
|
|
|
|
|
|
(789
|
)
|
|
|
30,266
|
|
|
|
|
|
|
Convertible Note Payable - LGC (8%)
|
|
|
31,000
|
|
|
|
(1,155
|
)
|
|
|
(26,314
|
)
|
|
|
(3,657
|
)
|
|
|
(126
|
)
|
|
|
56,366
|
|
|
Convertible Notes Payable- VV (8%) #1
|
|
|
59,000
|
|
|
|
|
|
|
|
(52,321
|
)
|
|
|
(1,729
|
)
|
|
|
4,950
|
|
|
|
66,075
|
|
|
Convertible Notes Payable- VV (8%) #2
|
|
|
38,000
|
|
|
|
|
|
|
|
|
|
|
|
(1,673
|
)
|
|
|
36,327
|
|
|
|
|
|
|
|
|
$
|
271,975
|
|
|
$
|
(5,100
|
)
|
|
$
|
(78,635
|
)
|
|
$
|
(7,847
|
)
|
|
$
|
180,393
|
|
|
$
|
157,617
|
|
As of December 31, 2015, the convertible notes payable can be converted
into approximately 86,385,000 shares of common stock.
Note 8. DERIVATIVES AND FAIR VALUE INSTRUMENTS
The Company applied paragraph 815-10-05-4 of the FASB Accounting
Standards Codification to the 5% Convertible Notes Payable issued June 12th 2015 and the 8% Convertible Note payable issued June
25th 2015. Based on the guidance in paragraph 815-10-05-4 of the FASB Accounting Standards Codification the Company concluded these
instruments were required to be accounted for as derivatives on issuance date. The Company records the fair value of the Convertible
Notes Payable and certain warrants that are classified as derivatives on issuance date and the fair value changes on each reporting
date reflected in the consolidated statements of operations as “Gain (loss) on derivative liabilities.” These derivative
instruments are not designated as hedging instruments under paragraph 815-10-05-4 of the FASB Accounting Standards Codification
and are disclosed on the balance sheet under Derivative Liabilities.
The Company follows paragraph 820-10-35-37 of the FASB Accounting
Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments and paragraph
825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its fin+A390ancial instruments.
Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United
States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability
in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes
the inputs to valuation techniques used to measure fair value into three (3) broad levels. The three (3) levels of fair value hierarchy
defined by Paragraph 820-10-35-37 are described below:
Level 1 Quoted market prices available in active markets for identical
assets or liabilities as of the reporting date.
Level 2 Pricing inputs other than quoted prices in active markets
included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3 Pricing inputs that are generally observable inputs and
not corroborated by market data.
Note 8. DERIVATIVES AND FAIR VALUE
INSTRUMENTS (continued)
Financial assets are considered Level 3 when their fair values are
determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption
or input is unobservable.
The fair value hierarchy gives the highest priority to quoted prices
(unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs
used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based
on the lowest level input that is significant to the fair value measurement of the instrument.
The carrying amounts of the Company’s financial assets and
liabilities, such as cash, prepayments and other current assets, accounts payable, and accrued expenses, approximate their fair
values because of the short maturity of these instruments.
The Company’s Level 3 financial liabilities consist of the
5% Convertible Notes Payable issued June 12th 2015 and the 8% Convertible Note payable issued June 25th 2015, for which there is
no current market for these securities such that the determination of fair value requires significant judgment or estimation. We
have valued the automatic conditional conversion, re-pricing/down-round, change of control; default and follow-on offering provisions
using a lattice model, with the assistance of a valuation consultant, for which management understands the methodologies. These
models incorporate transaction details such as Company stock price, contractual terms, maturity, risk free rates, as well as assumptions
about future financings, volatility, and holder behavior as of issuance and December 31, 2015. The primary assumptions include:
projected annual volatility of 151.4%-153.3%; the follow-on securities purchase option; the conversion feature as a percentage
of Market; automatic/conditional conversions; market price trigger events.
As of December 31, 2015 the Company’s derivative financial
instruments included:
1) Embedded derivatives associated with certain of the Company’s
unsecured convertible notes payable. The Company’s 5 % convertible notes payable and 8% convertible notes payable issued
to two unrelated investors is a hybrid instrument, which warrants separate accounting as a derivative instrument. The embedded
derivative feature has been bifurcated from the debt host contract, referred to as the Derivative Liability, which resulted in
a reduction of the initial carrying amount (as unamortized discount) of the Convertible Notes Payable. The unamortized discount
is amortized to interest expense using the effective interest method over the life of the Notes. The embedded derivative feature
includes the conversion feature within the notes and an early redemption option. The compound embedded derivatives within the convertible
notes have been recorded at fair value at the date of issuance; and are marked-to-market each reporting period with changes in
fair value recorded to the Company’s statement of operations as Change in fair value of derivative liabilities.
Note 8. DERIVATIVES AND FAIR VALUE
INSTRUMENTS (continued)
The 5% Convertible Note Payable and the 8% Convertible Notes Payable
are valued at 12/31/15. The following assumptions were used for the valuation of the embedded derivative:
- The stock price of $0.010 to $0.0073 in this period (variable
conversion price) would fluctuate with the Company projected volatility;
- An event of default for the Convertible Note would occur 0% of
the time, increasing 1.00% per month to a maximum of 5.0%;
- Alternative financing for the Convertible Note would be initially
available to redeem the note 0% of the time and increase monthly by 1% to a maximum of 10%;
- Capital raising events (a single financing at 1 months from the
valuation date) are a factor for the 5% Convertible Note. The full reset events projected to occur based on future stock issuance
(single event) resulting in a reset exercise price.
- The monthly trading volume would average $258,000 and would increase
at 1% per month
- The variable conversion price of 50% to 55% over 3 to 10 trading
days would have effective rates of 44.12% to 51.14%;
- The Note Holders would automatically convert the notes with variable
conversion prices and full ratchet resets if the registration was effective and not in default;
- The projected annual volatility for each valuation period was
based on the historical volatility of 17 comparable companies:
|
10/8/2015
|
|
|
154
|
%
|
|
12/9/2015
|
|
|
153
|
%
|
|
12/22/2015
|
|
|
152
|
%
|
|
12/31/2015
|
|
|
151
|
%
|
The foregoing assumptions are reviewed quarterly and are
subject to change based primarily on management’s assessment of the probability of the events described occurring.
Accordingly, changes to these assessments could materially affect the valuation.
Note 8. DERIVATIVES AND FAIR VALUE
INSTRUMENTS (continued)
The Company’s convertible notes
payable and the related derivative liabilities, derivative discount and original-issue discount are presented in the
financial statements at December 31, 2015 as follows:
|
Convertible Note
|
|
Derivitive Treatment Date
|
|
Maturity Date
|
|
Principal Note Amount
|
|
|
Original
Derivitive
Valuation
|
|
|
Mark to Market
|
|
|
Derivative Value at December 31, 2015
|
|
|
8 % Convertible Note Payable-issued 10/8/2015
|
|
10/8/15
|
|
10/8/16
|
|
$
|
31,000
|
|
|
$
|
58,779
|
|
|
$
|
(2,413
|
)
|
|
$
|
56,366
|
|
|
5 % Convertible Note Payable-issued 6/12/15
|
|
12/9/15
|
|
12/12/15
|
|
|
100,000
|
|
|
|
37,827
|
|
|
|
(2,651
|
)
|
|
|
35,176
|
|
|
8 % Convertible Note Payable-issued 6/25/15
|
|
12/22/15
|
|
3/30/16
|
|
|
59,000
|
|
|
|
56,956
|
|
|
|
9,119
|
|
|
|
66,075
|
|
|
|
|
|
|
|
|
$
|
190,000
|
|
|
$
|
153,562
|
|
|
$
|
4,055
|
|
|
$
|
157,617
|
|
Note 9. STOCKHOLDERS' EQUITY
The Company has authorized 1,500,000,000 shares of common stock
with a par value of $0.0001 per share. There were 35,101,750 and 22,481,750 shares of common stock issued and outstanding at December
31, 2015 and December 31, 2014, respectively.
The Company has authorized 1,000,000 shares
of Series A preferred stock with a par value of $0.0001 per share. At December 31, 2015 and December 31, 2014, 50,000 shares of
Series A preferred stock were issued and outstanding. The preferred stock has preferential voting rights of 2,000 votes per outstanding
share.
The Company has authorized 50,000 shares of Series B convertible preferred stock with a par value of $0.0001
per share. At December 31, 2015 and December 31, 2014, none of the shares of Series B preferred stock were issued and outstanding.
The Series B preferred stock has no voting rights. The holders of the Series B convertible preferred stock have the right to convert
the same into Common Stock of the Corporation at the ratio of one (1) share of Series B Convertible Preferred for five hundred
(500) shares of Common Stock.
During the quarter ended March 31, 2015, the Company issued 2,000,000
shares of common stock at $0.001 per share as partial conversion of notes.
During the quarter ended March 31, 2015, the Company issued 800,000
shares of common stock at $0.0005 per share as partial conversion of notes.
During the quarter ended March 31, 2015, a stockholder of the Company
returned 500,000 shares of common stock to the Company.
During the quarter ended June 30, 2015, the Company issued 2,300,000
shares of common stock at $0.0005 per share as partial conversion of notes.
During the quarter ended September 30, 2015, the Company issued
3,800,000 shares of common stock at $0.0005 per share as partial conversion of notes.
During the quarter ended September 30, 2015, the Company issued
20,000 shares of common stock at $0.015 per share as to acquire 100% of the outstanding shares of the Company's subsidiary.
Note 9. STOCKHOLDERS' EQUITY (continued)
During the quarter ended September 30, 2015, the Company issued
3,000,000 shares of common stock at $0.01 per share as Officer's compensation.
During the quarter ended September 30, 2015, the Company issued
500,000 shares of common stock at $0.01 per share for services provided to the Company.
During the quarter ended December 31, 2015, the Company issued 500,000
shares of common stock at $0.01 per share for services provided to the Company.
During the quarter ended December 31,
2015, the Company issued 200,000 shares of common stock at $0.01 per share to an investor.
Note 10. COMMITMENTS AND CONTINGENCIES
The Company currently rents its offices on
a month to month basis from the Company's President and stockholder for $525 per month.
Rent expense for the year ended December 31,
2015 and 2014, totaled $6,500 and $5,274, respectively and was respectively, a portion of which was forgiven and converted to
additional paid-in capital.
Note 11. INCOME TAXES
The Company's deferred tax asset consists primarily of carryforward
net operating losses (NOLs). The Company believes that, at this time, it is more likely than not that the benefit of the NOLs will
not be realized and has therefore recorded a full valuation allowance as follows:
|
|
|
December 31, 2015
|
|
|
December 31, 2014
|
|
|
Net operating loss carryforward
|
|
$
|
413,000
|
|
|
$
|
268,000
|
|
|
Valuation allowance
|
|
|
(413,000
|
)
|
|
|
(268,000
|
)
|
|
Deferred tax asset, net
|
|
$
|
-
|
|
|
$
|
-
|
|
The income tax benefit differs from the amount computed by applying
the statutory federal and state income tax rates to the loss before income taxes. The sources and tax effects of the differences
are as follows:
|
|
|
December 31, 2015
|
|
|
December 31, 2014
|
|
|
Statutory federal income tax rate
|
|
|
34
|
%
|
|
|
34
|
%
|
|
State income taxes, net of federal taxes
|
|
|
9
|
%
|
|
|
9
|
%
|
|
Valuation allowance
|
|
|
(43
|
)%
|
|
|
(43
|
)%
|
|
Effective income tax rate
|
|
|
0
|
%
|
|
|
0
|
%
|
As of December 31, 2015, the Company has a net operating loss carryforward
of approximately $961,000 to reduce future federal and state taxable income through 2035.
The Company paid $550 and $800 for state taxes for the year ended
December 31, 2015 and 2014 respectively. These amounts are included in "Other" Expenses in the Consolidated Statement
of Operations.
The Company currently has no federal
or state tax examinations in progress, nor has it had any federal or state examinations since its inception. All of the Company's
open tax years beginning in tax year 2013 are subject to federal and state tax examinations.
Note 12. RELATED PARTY TRANSACTIONS
In August 2015, the Company acquired 100% of the issued and outstanding
common stock of Medical Lasers Manufacturer, Inc. ("MLM") from a stockholder and officer of the Company for 20,000 common
shares which were valued at $0.015 per share. All intercompany transactions were eliminated during consolidation.
As more fully described in Note 4 to the Consolidated Financial
Statements, the Company owed the following amounts to related parties as of December 31:
|
|
|
2015
|
|
|
2014
|
|
|
Due to Related Party
|
|
$
|
8,921
|
|
|
$
|
5,937
|
|
|
Due to Officer/Stockholder
|
|
|
20,898
|
|
|
|
33,210
|
|
|
Due to other Stockholders
|
|
|
3,550
|
|
|
|
9,000
|
|
|
Total Related Party Obligations
|
|
$
|
33,369
|
|
|
$
|
48,147
|
|
The company has entered into an employment
agreement with its Chief Executive Officer (CEO) for the five year period beginning January 1, 2012. The agreement provides for
base compensation, annual bonus, benefits, vacation and reimbursements. Under this agreement, the base compensation of the Company's
CEO is $100,000 per annum and has been accrued for the years ended December 13, 2015 and 2014. Accrued compensation in the amount
of $30,000 was converted to shares of common stock during 2015.
In May 2014, in consideration for his services, the Company issued Bruce Schoengood, its Chief Executive Officer,
50,000 shares of its Series A Preferred Stock, which shares provide for a voting right of 2,000 per share, are not convertible
and are not entitled to dividends or liquidation preferences or distributions.
In August 2015, MLM acquired a trademark
from the son of the Company’s President for $20,000 due 90 days from the date of acquisition. As of December 31, 2015, no
payment has been made on this liability. Due to the uncertainty of future cash flows from the trademark management has deemed it
to be impaired and has recorded an impairment expense of $20,000 at September 30, 2015.
In August 2015, subsequent to the date
the Company acquired MLM, MLM purchased $50,000 in inventory from the son of the Company's President. The inventory consisted
of 20 hand-held laser devices. As of December 31, 2015, no payment has been made on this liability.
Note 13. BASIS OF REPORTING – GOING CONCERN
The accompanying financial statements have been prepared assuming
the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities
in the normal course of business.
The Company has incurred losses from inception of approximately
$964,000, which, among other factors, raises substantial doubt about the Company's ability to continue as a going concern. The
ability of the Company to continue as a going concern is dependent upon management's plans to raise additional capital from the
sale of stock and receive additional loans from related parties. The accompanying financial statements do not include any adjustments
that might be required should the Company be unable to continue as a going concern.
Note 14. SUBSEQUENT EVENTS
On January 7, 2016, the Company entered
into a Securities Purchase Agreement (the “Purchase Agreement”) with an accredited investor (the “Investor”)
for the sale of convertible redeemable notes in aggregate principal amount of $251,803. On January 7, 2016, the Company and the
Investor conducted the first closing under the Purchase Agreement, pursuant to which the Company issued to the Investor (i) a convertible
redeemable note in principal amount of $105,000 containing an original issue discount of $20,000 (the “$105K Note”);
and (ii) a convertible redeemable note in principal amount of $50,000 (the “$50K Note” and together with the $105K
Note, the “Notes”). In consideration for the issuance of the $105K Note, on January 13, 2016, the Company received
net proceeds (after deducting the original issue discount and legal fees) in the amount of $75,696.69. In consideration for the
issuance of the $50K Note, the Investor issued to the Company a $50,000 fully-collateralized secured promissory note (the “Investor
Note”), pursuant to which the Investor agreed to pay the Company $50,000 on or before April 30, 2016. Under the Purchase
Agreement, on March 15, 2016, the Company and the Investor conducted an additional closing for the sale and purchase of additional
notes having the same terms as the Notes in principal amounts equal to $50,000 and $46,803, respectively. In consideration for
the issuance of the $50,000 Note, on March 15, 2016, the Company received gross proceeds of $50,000. In consideration for the issuance
of the $46,803 note, the Investor issued to the Company a $46,803 fully-collateralized secured promissory note, pursuant to which
the Investor agreed to pay the Company $46,803 on or before June 15, 2016. All notes issued pursuant to the Purchase Agreement
bear interest at the rate of 8% per annum. Subject to a beneficial ownership limitation equal to 9.99%, principal and interest
on all the notes issued pursuant to the Purchase Agreement convertible into shares of the Company’s common stock at a conversion
price equal to 55% of the lowest trading price of Common Stock during the 20 trading day period prior to conversion.
On January 7, 2016, the Company issued to the
Investor a convertible redeemable replacement note in principal amount of $61,508.71 (the “$61K Replacement Note”).
The issuance of the $61K Replacement Note was made in connection with the Investor’s purchase of a convertible promissory
note in principal amount of $59,000 that was originally issued by the Company on June 25, 2015 (the “$61K Original Note”).
The $61,508.71 principal amount of the $61K Replacement Note reflected the principal and accrued interest under the $61K Original
Note. The $61K Replacement Note, which is due on January 7, 2017, may not be prepaid but otherwise contains identical provisions
to that of the Notes.
On February 29, 2016, the Company issued to
the Investor a convertible redeemable replacement note in principal amount of $39,557.48 (the “Replacement Note”).
The issuance of the Replacement Note was made in connection with the Investor’s purchase of a convertible promissory note
in principal amount of $38,000 that was originally issued by the Company on August 31, 2015 (the “Original Note”).
The $39,557.48 principal amount of the Replacement Note reflected the principal and accrued interest under the Original Note. The
Replacement Note, which is due on February 28, 2017, may not be prepaid but otherwise contains identical provisions to that of
the Notes.
In February 2016, one shareholder converted
3,400 shares of Series B Preferred Stock into 1,700,000 shares of common stock. The conversion of 3,400 shares of Series B Preferred
Stock was a partial conversion of the 10,000 shares of the Series B Preferred Stock it issued in satisfaction of the obligation
to issue such shares to the seller of $50,000 of inventory the Company purchased in August 2015. Each share of Series B Preferred
Stock is convertible into five hundred (500) shares of common stock.
On March 8, 2016, the Company, through its wholly-owned
subsidiary, Medical Laser Manufacturer, Inc., memorialized in a Product and Know-How License Agreement (the “License Agreement”)
with Medical Lasers Manufacturer, Inc., a Florida corporation doing business as Laser Lab Corp. (“Laser Lab”), an agreement
to license the use of various intellectual property in connection with seeking regulatory approval for and marketing, distributing
and selling The Time Machine Series Lasers (the “TTM Series”). In connection with the Company’s agreement with
Laser Lab, which agreement was memorialized in the License Agreement, on September 24, 2015, the Company filed with the Secretary
of State of the State of Nevada a Certificate of Designation of Rights, Preferences and Privileges (the “Certificate of Designation”),
of the Company’s Series B Convertible Preferred Stock (“Series B Preferred”). Pursuant to the Certificate of
Designation, the Company designated 50,000 shares of Series B Preferred. The Series B Preferred do not hold any rights to receive
dividends or any rights to vote. The Company, at its sole discretion, may redeem at any time, in whole or in part, outstanding
shares of Series B Preferred for a price per share equal to the consideration paid or deemed to have been paid for such shares.
The Series B Preferred may be converted, sixty days after their respective issuance, each share into the Company’s common
stock at a conversion ratio equal to one (1) share of Series B Preferred for five hundred (500) shares of Common Stock.
Pursuant to the License Agreement, the Company
agreed to issue to Laser Lab 25,000 shares of Series B Preferred and a promissory note (the “Promissory Note”) in principal
amount of $150,000 and bearing interest at 10% per annum. The principal and interest due under the Promissory Note is payable 18-months
from the date of issuance. In the event, the Company does not receive, by December 31, 2016, a decision letter from the Food and
Drug Administration informing the Company of the “cleared” 510(k), then the amount of 10,000 shares of Series B Preferred
will be clawed back and forfeited by Laser Lab and the principal amount of the Promissory Note will automatically reduce to $75,000,
as if originally issued in such denomination.
Subsequent to December 31, 2015, the Company
issued 4,787,129 shares of common stock upon conversion of an aggregate of $10,258 of promissory notes of the Company.
ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM
9A. CONTROLS AND PROCEDURES
Evaluation
of Disclosure Controls and Procedures.
Our
principal executive and principal financial officer, Bruce Schoengood, evaluated the effectiveness of our disclosure controls
and procedures pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934 (“Exchange Act”) as of the end of
the period covered by this report. Based on that evaluation, our principal executive and principal financial officer
concluded that our disclosure controls and procedures as of the end of the period covered by this report were 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
management, including our principal executive and principal financial officer, as appropriate to allow timely decisions regarding
required disclosure.
Disclosure
controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be
disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s
management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate
to allow timely decisions regarding required disclosure. The design of any system of controls is based in part upon certain assumptions
about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals
under all potential future conditions, regardless of how remote.
Internal
Control over Financial Reporting
.
Management’s
Annual Report on Internal Control over Financial Reporting
. Our management is responsible for establishing and
maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) for
the Company. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting
principles generally accepted in the United States. Because of its inherent limitations, internal control over financial
reporting may not prevent nor detect misstatements. Therefore, even those systems determined to be effective can provide
only reasonable assurance of achieving their control objectives.
Management
has assessed the effectiveness of our internal control over financial reporting as of December 31, 2015. In making its assessment
of internal control over financial reporting, management used the criteria established in Internal Control - Integrated Framework,
issued by the Committee of Sponsoring Organizations of the Treadway Commission. This assessment included an evaluation of the
design of our internal control over financial reporting and testing of the operational effectiveness of those controls. Based
on the results of this assessment, management has concluded that our internal controls over financial reporting were not effective
as of December 31, 2015 due to a material weakness. A material weakness is a deficiency, or combination of deficiencies, in internal
controls over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim
financial statements will not be prevented or detected on a timely basis. Due to the Company’s limited resources, the Company
does not have accounting personnel with extensive experience in maintaining books and records and preparing financial statements
in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). Additionally, the Company does not have
a formal audit committee and is not currently required to have one, and the Board of Directors does not have a financial expert,
thus the Company lacks the board oversight role within the financial reporting process.
Management's
assessment was not subject to attestation by the Company's independent registered public accounting firm and as such, no attestation
was performed pursuant to SEC Final Rule Release Nos. 33-8934; 34-58028 that permit the Company to provide only management's assessment
report for the year ended December 31, 2015.
Remediation
of Material Weaknesses.
Management
is in the process of determining how best to change the Company’s current system and implement a more effective system of
controls and procedures. However, given limitations in financial and manpower resources, we may not have the resources to address
fully the weaknesses in controls. No assurance can be made at this point that the implementation of such controls and procedures
will be completed in a timely manner or that they will be adequate once implemented.
Inherent
Limitations of Control Systems.
The
Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.
Management
does not expect that the Company’s internal controls will prevent or detect all errors and all fraud. A control system,
no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control
system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits
of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation
of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.
Also, any evaluation of the effectiveness of controls in future periods are subject to the risk that those internal controls may
become inadequate because of changes in business conditions, or that the degree of compliance with the policies or procedures
may deteriorate.
Changes
in Internal Control Over Financial Reporting.
There
have not been any changes in the Company’s internal control over financial reporting during the fiscal year ended December
31, 2015 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over
financial reporting.
ITEM
9B. OTHER INFORMATION
None.
PART
III
ITEM
10. DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Our
executive officer and director and his age are as follows:
Executive
Officers and Directors
|
Name
|
|
Age
|
|
Office
|
|
Since
|
|
Bruce
Schoengood
|
|
57
|
|
Chief
Executive Officer and Director
|
|
March
16, 2011
|
The
term of office for each director is one year, or until the next annual meeting of the stockholders.
Bruce
Schoengood
. Mr. Schoengood joined the Company as an officer and director in March 2011. Mr. Schoengood began his diverse publishing
career as a New York City art director and editor in 1981 and went on to launch dozens of national magazines as publisher and
contract publisher. Titles include: Country Accents, Victorian Accents, New Body, New Jersey Home & Style, Successful Child,
Party Poker.com, GameDay USA, STUN!, Spectrum, Dale Earnhardt, Bill Mazeroski’s Baseball, Gemma’s Old Style Italian
Cooking, Kid Planet, Beach Style, Trump Magazine and Blackout Comics. He was honored by Mental Health America in 2008 and given
their Golden Bell Media Award. Mr. Schoengood has worked as a creative design and marketing consultant in the medical education
industry to companies such as Haymarket Medical, Physican’s Weekly, Genecom, and Science & Medicine. From 2004 to
2008, Mr. Schoengood was a magazine packager with King Media. From 2008 until he began with the Company, he was self-employed
as a freelance creative design and editorial content consultant.
Over
the course of 30 years, Mr. Schoengood has developed and executed national media campaigns, advertising programs and strategies
and worked, hired and instructed media professionals in all creative genres: writers, photographers, artists, internet programmers,
PR firms, Media specialists, distributors
and printers. Mr. Schoengood’s extensive experience in
various capacities for diverse media platforms gives our board of directors valuable guidance on the marketing and promotional
activities that will be a keystone of the Company’s success.
Family
Relationships
As we only have one officer
and director, there are no family relationships between any director and executive officer.
Involvement
in Certain Legal Proceedings
Our
directors, executive officers and control persons have not been involved in any of the following events during the past five years:
|
|
●
|
any
bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either
at the time of the bankruptcy or within two years prior to that time;
|
|
|
|
|
|
|
●
|
any
conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other
minor offenses);
|
|
|
|
|
|
|
●
|
being
subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities
or banking activities; or
|
|
|
|
|
|
|
●
|
being
found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have
violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated
|
Section
16(a) Beneficial Ownership Compliance
Section 16(a) of the Exchange
Act requires our directors and executive officers and persons who own more than 10% of the issued and outstanding shares of our
common stock to file reports of initial ownership of common stock and other equity securities and subsequent changes in that ownership
with the SEC. Officers, directors and greater than ten percent stockholders are required by SEC regulation to furnish us with
copies of all Section 16(a) forms they file. To our knowledge, during the fiscal year ended December 31, 2015, all Section 16(a)
filing requirements applicable to our officers, directors and greater than 10% beneficial owners were complied with, except that
a Form 3 for Bruce Schoengood was filed late.
Code
of Ethics
We
do not currently have a Code of Ethics, as defined under the rules and regulations of the Exchange Act. The Company does not believe
a Code of Ethics is necessary because the Company only has only one person serving as the sole officer, director and employee.
Nomination
Process
As
of December 31, 2015, we did not affect any material changes to the procedures by which stockholders may recommend nominees to
the board of directors. We do not have any defined policy or procedure requirements for stockholders to submit recommendations
or nominations for directors. The board of directors believes that, given the current stage of our development, a specific nominating
policy would be premature and of little assistance until our operations develop to a more advanced level. We do not currently
have any specific or minimum criteria for the election of nominees to the board of directors and there is no specific process
or procedure for evaluating such nominees. The board of directors assesses all candidates, whether submitted by management or
stockholders, and makes recommendations for election or appointment.
A stockholder who wishes to
communicate with the board of directors may do so by directing a written request addressed to our Chief Executive Officer at the
address appearing on the face page of this annual report.
Committees
of the Board
We
currently do not have nominating, compensation or audit committee, or committees performing similar functions, nor do we have
a written nominating, compensation or audit committee charter. The board of directors does not believe that it is necessary to
have such committees at this time because it believes that the functions of such committees can be adequately performed by the
board of directors.
ITEM
11. EXECUTIVE COMPENSATION
Executive
Compensation
The
table below sets forth all cash compensation paid or proposed to be paid by us to our chief executive officer, or only executive
officer, for services rendered in all capacities to the Company during fiscal year 2012, 2013, 2014 and 2015
Summary
Compensation Table
|
Name
and Principal Position
|
|
Fiscal year
Ended
December 31
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Other Annual Compensation ($)
|
|
|
TOTAL
|
|
|
Bruce Schoengood, CEO
|
|
2012
|
|
$
|
100,000
|
|
|
$
|
0
|
|
|
$
|
0.00
|
|
|
$
|
100,000
|
|
|
|
|
2013
|
|
$
|
100,000
|
|
|
|
0
|
|
|
$
|
0.00
|
|
|
$
|
100,000
|
|
|
|
|
2014
|
|
$
|
100,000
|
|
|
|
0
|
|
|
$
|
0.00
|
|
|
$
|
100,000
|
|
|
|
|
2015
|
|
$
|
100,000
|
|
|
|
0
|
|
|
$
|
0.00
|
|
|
$
|
100,000
|
|
Compensation
Policy
Because
we are still in the early stages of development, our sole director and officer is not currently receiving any compensation.
Stock
Grants or Awards
In May 2014, in consideration
for his services, the Company issued Bruce Schoengood, its Chief Executive Officer, 50,000 shares of its Series A Preferred Stock,
which shares provide for a voting right of 2,000 per share, are not convertible and are not entitled to dividends or liquidation
preferences or distributions.
Bonuses
Any
bonuses granted in the future will relate to meeting certain performance criteria that are directly related to areas within the
named executive’s responsibilities with the Company. As we continue to grow, more defined bonus programs may be established
to attract and retain our employees at all levels.
Equity
Compensation Plans
We do not have any equity compensation
plans as of the date of this report.
Compensation
of Directors
Because
we are still in the development stage, our sole director is not receiving any compensation other than reimbursement for expenses
incurred during the performance of his duties.
Employment
Contracts; Termination of Employment and Change-in-Control Arrangements
On March 18, 2016, the Company
and Bruce Schoengood entered into an Employment Agreement which was made retroactive to January 1, 2012. Mr. Schoengood’s
initial term, of employment is sixty (60) months commencing January 1, 2012 with an annual base salary of $100,000.
ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The
following table provides the names and addresses of each person known to us who own more than 5% of the outstanding common
stock as of the date of this annual report, and by our sole officer and director. Except as otherwise indicated, all shares are
owned directly. Unless otherwise indicated, the address of each of the persons shown is c/o Medifirst Solutions, Inc., 4400 Route
9 South, Suite 1000, Freehold NJ 07728.
|
Name
of beneficial owner
|
|
Amount
of
Beneficial
ownership
|
|
|
Percent
of
class
(2)
|
|
|
Bruce
Schoengood
(1)
|
|
|
6,195,000
|
|
|
14.9
|
%
|
(1) Does not include 50,000 shares of
Series A Preferred stock held by Mr. Schoengood. Although the Series A Preferred shares are not convertible they provide for a
voting right of 2,000 per share, which voting privilege, along with common stock owned by Mr. Schoengood, constitutes approximately
75% of the voting rights of the Company.
(2) The percent of class is based on
41,588,879 shares of common stock issued and outstanding as of the date of this annual report.
Change
in Control
We
are not aware of any arrangement that might result in a change in control of the Company.
ITEM
13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Transactions
with related persons, promoters and certain control persons
Bruce
Schoengood, currently our sole officer and director, is currently not involved in other business activities, but may,
in the future, become involved in other business opportunities. If a specific business opportunity becomes available,
Mr. Schoengood may face a conflict of interest in selecting between our business interest and his other business interests. It
is our policy that any personal business or corporate opportunity available an officer or director must be examined
by our board of directors and rejected by the directors before an officer or director can engage or take advantage
of the business opportunity. However, this policy may be ineffective given that we currently have only one officer and director.
In May 2014, in consideration for his services, the Company issued Bruce Schoengood, its Chief Executive Officer,
50,000 shares of its Series A Preferred Stock, which shares provide for a voting right of 2,000 per share, are not convertible
and are not entitled to dividends or liquidation preferences or distributions.
Pursuant
to a sale and purchase agreement dated August 19, 2015 between the Company and the Company's chief executive officer, the Company
acquired 100% of the equity interests in Medical Lasers Manufacturer, Inc. ("MLM") with the total purchase price of
20,000 shares of the Company's common stock at $0.001 per share (or $20). The result of the transaction was that MLM became a
wholly-owned subsidiary of the Company.
On
August 21, 2015, MLM acquired a trademark from the son of the Company’s President for $20,000.
In August 2015, subsequent to the date the Company
acquired MLM, MLM purchased $50,000 in inventory from the son of the Company's President. The Company issued the seller 10,000
shares of Series B Convertible Preferred as the purchase price for the inventory. Series B Convertible Preferred has no dividend
or voting rights, is convertible into 500 shares of the Company’ common stock and is subject to a redemption provision allowing
the Company to redeem the shares for its stated value at any time with 30 days’ notice.
On March 8, 2016, the Company, through its
wholly-owned subsidiary, Medical Laser Manufacturer, Inc., memorialized in a Product and Know-How License Agreement with Medical
Lasers Manufacturer, Inc., a Florida corporation doing business as Laser Lab Corp., a company operated and partially owned by
the son of the Company’s chief executive officer, Bruce Schoengood. The agreement licensed the use of various intellectual
property in connection with seeking regulatory approval for and marketing, distributing and selling The Time Machine Series Lasers.
Pursuant to the License Agreement, the Company agreed to issue to Laser Lab 25,000 shares of Series B Preferred and a promissory
note in principal amount of $150,000 and bearing interest at 10% per annum. The principal and interest due under the Promissory
Note is payable 18-months from the date of issuance. In the event, the Company does not receive, by December 31, 2016, a decision
letter from the Food and Drug Administration informing the Company of the “cleared” 510(k), then the amount of 10,000
shares of Series B Preferred will be clawed back and forfeited by Laser Lab and the principal amount of the Promissory Note will
automatically reduce to $75,000, as if originally issued in such denomination.
No director, executive officer,
principal stockholder holding at least 5% of our common shares, or any family member living with such persons, had any material
interest, direct or indirect, in any transaction, or proposed transaction, during the years ended December 31, 2015 or December
31, 2014 or December 31, 2013, in which the amount involved in the transaction exceeded or exceeds the lesser of $120,000 or one
percent of the average of our total assets at the year-end for the last three completed fiscal years.
Director
Independence
Currently
our sole director is also our sole officer, and as such, we have no directors that would qualify as independent as defined under
NASDAQ Marketplace Rules. Our director believes that retaining one or more additional directors who would qualify as independent
as defined in the NASDAQ Marketplace Rules would be overly costly and burdensome and not warranted in the circumstances given
the current stage of the Company’s development.
ITEM
14. PRINCIPAL ACCOUNTING FEES AND SERVICES
On December 10, 2015, Fruci & Associates II, PLLC was engaged to
serve as our independent registered public accounting firm and audit our financial statements for the year ended December 31,
2105. Prior to Fruci & Associates II, PLLC, David Aronson, CPA served as our independent registered public accounting firm
for the year ended December 31, 2014 and through the quarterly period ended June 30, 2015. In 2015, the Company was informed that
the PCAOB revoked the registration of David Aronson, CPA. Accordingly, as reflected in the Report of Independent Registered Public
Accounting Firm on our financial statements included herein, Fruci & Associates II, PLLC also re-audited our financial statements
for the year ended December 31, 2014. Anton & Chia, LLP served as our independent registered public accounting firm for the
quarterly period ended September 30, 2015. The following table represents a summary of fees billed to the Company from its principal
independent accounts for professional services rendered for the years ended December 31, 2015 and 2014.
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
Audit fee
|
|
$
|
9,850
|
|
|
$
|
4,000
|
|
|
Audit related fees
|
|
|
|
|
|
|
|
|
|
Tax fees
|
|
|
1,325
|
|
|
|
|
|
|
All other fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
$
|
11,175
|
|
|
$
|
4,000
|
|
Audit
Fees
“Audit Fees” consist
of fees billed for professional services rendered by the principal accountant for the audit of the registrant’s annual financial
statements and review of financial statements included in the registrant’s quarterly reports, or services that are normally
provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years. Audit fees
expenses for professional services rendered in respect to the audit of our annual financial statements included in our Annual
Report on Form 10-K for the fiscal year ended December 31, 2014 and 2015, were $13,850.
Audit
Related Fees
“Audit Related Fees” consist of
fees billed for assurance and related services by the principal accountant that are reasonably related to the performance of the
audit or review of the registrant’s financial statements and are not reported as “Audit Fees.” For the years
ended December 31, 2015 and December 2014 the aggregate “Audit Related Fees” were $ -0- and $-0- and $-0-, respectively.
Tax Fees
“Tax Fees” consist of fees billed
for professional services for tax compliance, tax advice, and tax planning. Tax preparation fees expenses for professional services
in respect to the filing of the Company’s income taxes for the years ended December 31, 2015, 2014 were $-0- and $1,325
respectively.
All
Other Fees
Fees
billed by the Company internal CPA firm., not related to audit or other services as described above, during the years ended December
31, 2015, 2014 and 2013, were $-2,000- and $-0- and $-0 respectively, and such fees were related to
Bookkeeping Services.
Pre-Approval
Policies
Our
board of directors, who acts as our audit committee, has adopted a policy governing the pre-approval by the board of directors
of all services, audit and non-audit, to be provided to our Company by our independent auditors. Under the policy, the board or
directors has pre-approved the provision by our independent auditors of specific audit, audit related, tax and other non-audit
services as being consistent with auditor independence. Requests or applications to provide services that require the specific
pre-approval of the board of directors must be submitted to the board of directors by the independent auditors, and the independent
auditors must advise the board of directors as to whether, in the independent auditor’s view, the request or application
is consistent with the SEC’s rules on auditor independence.
The
board of directors has considered the nature and amount of the fees billed by Fruci & Associates II, PLLC and believes that
the provision of the services for activities unrelated to the audit is compatible with maintaining the independence of Fruci
& Associates II, PLLC.
PART
IV
ITEM
15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
|
Exhibit No.
|
|
Description
|
|
3.1
|
|
Articles of Incorporation filed on November 8, 2010
(1)
|
|
3.2
|
|
Certificate
of Amendment to Articles of Incorporation filed on March 28, 2011
(1)
|
|
3.3
|
|
By-laws adopted on November 15, 2010
(1)
|
|
3.4
|
|
Certificate
of Amendment to Articles of Incorporation filed on December 19, 2011
(1)
|
|
3.5*
|
|
Certificate
of Amendment to Articles of Incorporation filed on November 19, 2015
|
|
3.6
|
|
Certificate of Designation of Series B Convertible Preferred Stock filed on September 24, 2015
(3)
|
|
3.7*
|
|
Amended Certificate of Designation of Series A Preferred Stock filed on October 15, 2015
|
|
4.1
|
|
Specimen Common Stock Certificate
(1)
|
|
4.2*
|
|
Convertible Debenture, dated June 12, 2015
|
|
4.3*
|
|
8% Convertible Redeemable Note due October 8, 2016
|
|
4.4*
|
|
5% Convertible Promissory Note due October 12, 2016
|
|
4.5
|
|
Promissory Note, dated March 8, 2016
(3)
|
|
10.1
|
|
Asset Purchase Agreement, dated October 31, 2014, between Dr. Park Avenue Inc. and Dr. Park Ave.
(2)
|
|
10.2
|
|
Agreement and Plan of Reorganization, dated August 19, 2015
(4)
|
|
10.3*
|
|
Sale and Purchase Agreement for Goods, dated August 25, 2015
|
|
10.4*
|
|
Trademark Purchase Agreement, dated August 21, 2015
|
|
10.5
|
|
Securities Purchase Agreement, dated January 7, 2016
(5)
|
|
10.6
|
|
8% Convertible Redeemable Note due January 7, 2017
(5)
|
|
10.7
|
|
8% Convertible Redeemable Back End Note due January 7, 2017
(5)
|
|
10.8
|
|
8% Convertible Redeemable Replacement Note due January 7, 2017
(5)
|
|
10.9*
|
|
8% Convertible Redeemable Note due March 7, 2017
|
|
10.10*
|
|
8% Convertible Redeemable Back End Note due March 7, 2017
|
|
10.11*
|
|
8% Convertible Redeemable Replacement Note due February 28, 2017
|
|
10.12
|
|
Product and Know-How License Agreement
(3)
|
|
10.13*
|
|
Employment Agreement between the Company and Bruce Schoengood
|
|
16.1
|
|
Letter from David A. Aronson, CPA, P.A.
(6)
|
|
16.2
|
|
Letter from Anton & Chia LLP.
(7)
|
|
31.1
|
|
Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
31.2
|
|
Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
32.1
|
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
* Filed herewith.
|
(1)
|
Incorporated by reference to the Company’s Registration Statement on Form S-1 filed on December 30, 2011.
|
|
(2)
|
Incorporated by reference to the Company’s report on Form 8-K filed November 6, 2014.
|
|
|
(3)
|
Incorporated by reference to the Company’s report on Form 8-K filed March 14, 2016.
|
|
|
(4)
|
Incorporated by reference to the Company’s report on Form 8-K filed August 21, 2015.
|
|
|
(5)
|
Incorporated by reference to the Company’s report on Form 8-K Filed January 14, 2016.
|
|
|
(6)
|
Incorporated by reference to the Company’s report on Form 8-K filed June 25, 2016.
|
|
|
(7)
|
Incorporated by reference to the Company’s report on Form 8-K filed December 31, 2016.
|
|
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) 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.
|
April
14, 2016
|
MEDIFIRST
SOLUTIONS, INC.
|
|
|
|
|
|
By:
|
/s/
Bruce
Schoengood
|
|
|
|
President
and Chief Executive Officer
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
|
|
By:
|
/s/
Bruce Schoengood
|
|
President,
Chief Executive Officer,
|
|
April
14, 2016
|
|
|
|
|
Principal
Financial Officer, Director
|
|
|
32
Exhibit 3.5
From: 503 227 2980 Received
by: NV Secretary of State
|
BARBARA K. CEGAVSKE
Secretary of State
2
02 North Carson Street
Carson City, Nevada 89701-4201
(775) 684-5708
Website: www.nvsos.gov
|
|
|
|
Filed in the office of
|
Document Number
|
|
|
/s/ Barbara K. Cegavske
|
20150506371-30
|
|
|
Barbara K. Cegavske
|
Filing Date and Time
|
|
|
Secretary of State
|
11/19/2015
12:02 PM
|
|
|
State of Nevada
|
Entity Number
|
|
|
|
E0536112010-6
|
|
|
|
|
Certificate
of Amendment
|
|
|
(PURSUANT TO NRS 78.385 AND
78.390)
|
|
|
|
|
|
USE BLACK INK ONLY ● DO NOT HIGHLIGHT
|
ABOVE SPACE IS FOR OFFICE USE ONLY
|
Certificate
of Amendment to Articles of Incorporation
For Nevada Profit Corporations
(Pursuant
to NRS 78.385 and 78.390 - After issuance of Stock)
1. Name
of corporation:
Medifirsi Solutions, Inc.
2. The
articles have been amended as follows: (provide article numbers, if available)
Article 3 is amended, in part, to read as follows:
"The
authorized capital stock of the Corporation shall consist of 1,500,000,000 shares of Common Stock, par value $0.001 per
share and 1,000,000 shares of Preferred Stock, par value $0.001".
All
other provisions of Article 3 in effect prior to this amendment shall remain unchanged.
3. The
vote by which the stockholders holding shares in the corporation entitling them to exercise at least a majority of the voting
power, or such greater proportion of the voting power as may be required in the case of a vote by classes or series, or as may
be required by
the provisions of the articles of incorporation* have voted in favor of the amendment is:
|
|
written consent by majority
|
|
|
|
|
4. Effective date and time of filing: (optional)
|
Date:
|
Time:
|
|
|
(must not be later than 90 days after the certificate is filed)
|
5. Signature: (required)
Signature of Officer
*If
any proposed amendment would alter or change any preference or any relative or other right given to any class or series of outstanding
shares, than the amendment must be approved by the vote. In addition to the affirmative vote otherwise required, of the holders
of shares representing a majority of the voting power of each class or series affected by the amendment regardless to limitations
or restrictions on the voting power thereof.
IMPORTANT
:
Failure to include any of
the above information and submit with the proper fees may cause this filing to be rejected.
|
This
form must be accompanied by appropriate fees
.
|
Nevada
Secretary of State Amend Profit - After
|
|
|
Revised:
1-5-15
|
Exhibit 3.7
|
BARBARA K. CEGAVSKE
Secretary of State
202 North Carson Street
Carson City, Nevada 89701-4201
(775) 684-5708
Website: www.nvsos.gov
|
|
|
|
Filed in the office of
|
Document Number
|
|
|
/s/ Barbara K. Cegavske
|
20150456146-34
|
|
|
Barbara K. Cegavske
|
Filing Date and Time
|
|
|
Secretary of State
|
10/15/2015
2:12 PM
|
|
|
State of Nevada
|
Entity Number
|
|
|
|
E0536112010-6
|
|
Amendment to
|
|
|
Certificate of Designation
|
|
|
After Issuance of Class or Series
|
|
|
(PURSUANT TO NRS 78.1955)
|
|
|
USE BLACK INK ONLY ● DO NOT HIGHLIGHT
|
ABOVE SPACE IS FOR OFFICE USE ONLY
|
Certificate
of Amendment to Certificate of Designation
For Nevada Profit Corporations
(Pursuant
to NRS 78.1955 - After Issuance of Class or Series)
1. Name
of corporation:
Medifirst
Solutions, Inc.
2. Stockholder
approval pursuant to statute has been obtained.
3. The
class or series of stock being amended:
Series A Preferred Stock
|
4. By a resolution adopted by the board of directors, the certificate of designation is being amended as follows or the new class or series is:
|
|
|
|
|
500,000 shares are hereby designated as Series A Preferred Stock with the rights, preferences and privileges as set forth in the attached Exhibit A which is incorporated herein.
|
|
5. Effective date of filing: (optional)
|
|
|
|
(must not be later than 90 days after the certificate is filed)
|
6. Signature: (required)
Signature of Officer
Filing Fee: $175.00
IMPORTANT
:
Failure to include any of the above information and submit with the proper fees may cause this filing to be rejected.
|
This
form must be accompanied by appropriate fees
.
|
Nevada
Secretary of State NRS Amend Designation - After
|
|
|
Revised:
1-5-15
|
EXHIBIT
A
AMENDED CERTIFICATE OF DESIGNATION
OF
RIGHTS, PREFERENCES AND PRIVILEGES OF
SERIES A PREFERRED STOCK
MEDIFIRST SOLUTIONS, INC.
WHEREAS,
the Articles of Incorporation of the Corporation provide for a class of shares known as Preferred Stock, issuable from time to
time;
WHEREAS,
the Board of Directors of the Corporation is authorized to determine or alter the rights, preferences, privileges and restrictions
granted to or imposed upon any wholly unissued series of Preferred Stock, to fix the number of shares constituting any such Series
and to determine the designation thereof, or any of them;
WHEREAS,
the Board of Directors of the Corporation desires, pursuant to its authority, to determine and fix the rights, preferences, privileges
and restrictions relating to the Series B Convertible Preferred Stock and the number of shares constituting and the designation
of the series;
NOW,
THEREFORE, BE IT RESOLVED, the Board of Directors hereby fixes and determines the designation of, the number of shares constituting,
and the rights, preferences, privileges, and restrictions of the Preferred Stock as follows:
1.
Designation
of Series.
This series of Preferred Stock will be designated "Series A Preferred Stock."
2.
Number
of Shares.
The number of shares constituting the Series A Preferred Stock is 500,000 shares.
3.
Voting Rights
.
Except
as otherwise required by law, the holders of the Series A Preferred Stock will have 2,000 vote for each share of Series A
Preferred Stock issued and outstanding and shall vote as single class with the holders of Common Stock on all matters for
which the holders of Common Stock are entitled to vote.
4.
Dividend
Preference.
The holders of shares of Series A Preferred Stock will not be entitled to receive dividends.
5.
Liquidation
Preference.
In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary,
subject to the rights of series of Preferred Stock that may from time to time come into existence, the holders of Series A Preferred
Stock will not be entitled to receive, prior and in preference to any distribution of any of the assets of the Company to the
holders of Common Stock by reason of their ownership thereof, an amount equal to the consideration paid or deemed to have been
paid for such share. If upon the occurrence of such event, the assets and funds so distributed among the holders of the Series
A Preferred Stock is insufficient to permit the payment to such holders of the full above-described preferential amounts, then,
subject to the rights of series of Preferred Stock that may from time to time come -into existence, the entire assets and funds
of the Company legally available for distribution shall be distributed ratably among the holders of the Series A Preferred Stock
in proportion to the amount of such stock owned by each such holder.
|
|
STATE OF NEVADA
|
|
|
|
|
|
|
BARBARA K. CEGAVSKE
Secretary of State
JEFFERY LANDERFELT
Deputy Secretary
for Commercial Recordings
|
|
Commercial Recordings Division
202 N. Carson Street
Carson City, NV 89701-4201
Telephone (775) 684-5708
Fax (775) 684-7138
|
|
|
OFFICE OF THE
|
|
|
|
SECRETARY OF STATE
|
|
|
|
|
|
|
ROBERT C LASKOWSKI
|
|
Job: C20151015-1559
|
|
|
|
October 15, 2015
|
|
NV
|
|
|
Special
Handling Instructions:
AMENDED DESIGNATION FILED AND EMAILED 10/15/15 AJW
Charges
|
Description
|
|
Document Number
|
|
Filing Date/Time
|
|
Qty
|
|
|
Price
|
|
|
Amount
|
|
|
Amended Designation
|
|
20150456146-34
|
|
10/15/2015 2:12:29 PM
|
|
|
1
|
|
|
$
|
175.00
|
|
|
$
|
175.00
|
|
|
24 Hour Expedite
|
|
20150456146-34
|
|
10/15/2015 2:12:29 PM
|
|
|
1
|
|
|
$
|
125.00
|
|
|
$
|
125.00
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
300.00
|
|
Payments
|
Type
|
|
Description
|
|
Amount
|
|
|
Credit
|
|
269811|15101596905917
|
|
$
|
300.00
|
|
|
Total
|
|
|
|
$
|
300.00
|
|
|
|
|
Credit
Balance
:
|
|
$
|
0.00
|
|
Job
Contents:
File
Stamped Copy(s): 1
ROBERT
C LASKOWSKI
NV
Exhibit
4.2
MEDIFIRST
SOLUTIONS
CONVERTIBLE
DEBENTURE
THE
SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS
AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS. THE SECURITIES ARE SUBJECT
TO RESTRICTIONS OF TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SUCH LAWS PURSUANT
TO REGISTRATION OR AN EXEMPTION THEREFROM. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF
THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE OFFERING MATERIALS. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL
.
|
AMOUNT:
|
$100,000
|
|
|
|
|
DEBENTURE NUMBER:
|
001
|
|
|
|
|
ISSUANCE DATE:
|
June 12, 2015
|
|
|
|
|
MATURITY DATE:
|
December 12 2015
|
FOR
VALUE RECEIVED,
MEDIFIRST SOLUTIONS, INC..
, a Nevada corporation (Company”), hereby promises to pay
MARK W. BALDWIN
(Holder”) on
December 12, 2015
, ( “Maturity Date”), the principal amount of
ONE HUNDRED THOUSAND
Dollars ($100,000
) U.S.,
Article
1.
Interest.
The Company shall pay interest on the unpaid principal amount of the Debenture (“Debenture”)
at the time of each conversion until the principal amount hereof is paid in full or has been converted. The Debenture shall pay
five percent (5% APR) cumulative interest, in cash or in shares of common stock, par value $.0001 per share, of the Company (“Common
Stock”), at the Holder’s option, at the current conversion price, at the time of each conversion. The closing shall
be deemed to have occurred on the date the funds (less escrow fees and attorney fees) are received by the Company ( “Closing
Date”). If the interest is to be paid in cash, the Company shall make such payment within five (5) business days of the
date of conversion. If the interest is to be paid in Common Stock, said Common Stock shall be delivered to the Holder, or per
Holder’s instructions, within five (5) business days of the date of conversion. The Debenture is subject to automatic conversion
on the Maturity Date at which time this Debenture shall be automatically converted based upon the formula set forth in Section
3.2 herein.
Article
2.
Method of Payment.
The Debenture must be surrendered to the Company in order for the Holder to receive payment
of the principal amount hereof. The Company shall have the option of paying the interest on the Debenture in United States dollars
or in Common Stock upon conversion pursuant to Article 1 hereof. The Company may draw a check for the payment of interest to the
order of the Holder of the Debenture and mail it to the Holder’s address as set forth in Section 6 herein.
Article
3.
Conversion
Section
3.1.
Conversion Privilege
(a)
The Holder shall have the right to convert it into shares of Common Stock at any time One Hundred Eighty (180) days following
the Closing Date. The number of shares of Common Stock issuable upon the conversion of the Debenture is determined pursuant to
Section 3.2 and rounding the result to the nearest whole share.
Section
3.2.
Conversion Procedure.
(a)
Debenture
Upon receipt by the Company or its designated attorney of a facsimile or original of Holder’s
signed Notice of Conversion (See Exhibit A attached hereto) preceded by, together with or followed by receipt of the original
Debenture to be converted in whole or in part in the manner set forth in 3.2(b) below, the Company shall instruct its transfer
agent to issue one or more certificates representing that number of shares of Common Stock into which the Debenture is convertible.
Conversion calculations pursuant shall be rounded up to the nearest whole share, and no fractional shares shall be issuable by
the Company upon conversion of the Debenture. All shares issuable upon a conversion of the Debenture, including fractions thereof,
shall be aggregated for purposes of determining whether such conversion would result in the issuance of a fractional share.(b)
Conversion Rate.
Holder is entitled to convert the face amount of the Debenture, at a 50% discount to the average of the
previous three (3) trading days closing price, on any date prior to the Conversion Date, each being referred to as the “Conversion
Price”, as quoted by OTC Markets Group Inc.
(b)
Legend.
The Holder acknowledges that each certificate representing the Debenture and the Common Stock shall
be stamped or otherwise imprinted with a legend substantially in the following form:
THE
SECURITIES EVIDENCED BY THIS CERTIFICATE MAY NOT BE OFFERED OR SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED
OF EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“1933 Act”),
(ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES),
OR (iii) IF AN EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT IS AVAILABLE.
(c)
Conversion Limitaitons
. Notwithstanding anything to the contrary contained herein, the number of shares of Common Stock
that may be acquired by the Holder upon conversion of the Debenture shall be limited to the extent necessary to ensure that, following
such conversion (or other issuance), the total number of shares of Common Stock then beneficially owned by Holder and his affiliates
and any other persons whose beneficial ownership of Common Stock would be aggregated with the Subscriber's for purposes of Section
13(d) of the Securities Exchange Act of 1934, as amended
(“1934”)
, does not exceed 4.999% of the total number
of issued and outstanding shares of Common Stock (including for such purpose the shares of Common Stock issuable upon such conversion).
For such purposes, beneficial ownership shall be determined in accordance with Section 13(d) of the 1934 Act and the rules and
regulations promulgated thereunder. The foregoing conversion limitation is enforceable, unconditional and non-waivable.
Section
3.3.
Taxes on Conversion
.
The Company shall pay any documentary, stamp or similar issue or transfer tax due
on the issue of shares of Common Stock upon the conversion of the Debenture. However, the Holder shall pay any such tax which
is due because the shares are issued in a name other than its name.
Section
3.4.
Company to Reserve Stock
.
The Company shall reserve the number of shares of Common Stock required pursuant
to and upon the terms set forth in the Subscription Agreement to permit the conversion of the Debenture
.
All shares of Common Stock which may be issued upon the conversion hereof shall upon issuance be validly issued, fully
paid and non- assessable and free from all taxes, liens and charges with respect to the issuance thereof.
Section
3.5.
Restrictions on Sale
.
The Debenture has not been registered under the Securities Act of 1933, as amended,
(the “1933 Act”) and is being issued under Section 4(a)(2) of the 1933 Act and Rule 506 of Regulation D promulgated
thereunder. The Debenture and the Common Stock issuable upon the conversion thereof may only be sold pursuant to registration
under or an exemption from the 1933 Act.
Article
4.
Mergers
The Company shall not consolidate or merge into, or transfer all or substantially all of its assets to,
any person, unless such person assumes in writing the obligations of the Company under the Debenture and immediately after such
transaction no Event of Default exists. Any reference herein to the Company shall refer to such surviving or transferee corporation
and the obligations of the Company shall terminate upon such written assumption.
Article
5.
Defaults and Remedies
Section
5.1.
Events of Default
.
An “Event of Default” occurs if (a) the Company does not make the payment
of the principal of the Debenture by conversion into Common Stock within ten (10) business days of the Maturity Date, upon redemption
or otherwise, (b) the Company does not make a payment, other than a payment of principal, for a period of five (5) business days
thereafter, (c) any of the Company’s representations or warranties contained in the Subscription Agreement or the Debenture
were false when made or the Company fails to comply with any of its other agreements in the Subscription Agreement or the Debenture
and such failure continues for the period and after the notice specified below, (d) the Company pursuant to or within the meaning
of any Bankruptcy Law (as hereinafter defined): (i) commences a voluntary case; (ii) consents to the entry of an order for relief
against it in an involuntary case; (iii) consents to the appointment of a Custodian (as hereinafter defined) of it or for all
or substantially all of its property or (iv) makes a general assignment for the benefit of its creditors or (v) a court of competent
jurisdiction enters an order or decree under any Bankruptcy Law that: (A) is for relief against the Company in an involuntary
case; (B) appoints a Custodian of the Company or for all or substantially all of its property or (C) orders the liquidation of
the Company, and the order or decree remains un-stayed and in effect for sixty (60) calendar days, (e) the Company’s Common
Stock is suspended or no longer listed on any recognized exchange including electronic over-the-counter bulletin board for in
excess of five (5) consecutive trading days. As used in this Section 6.1, the term “Bankruptcy Law” means Title 11
of the United States Code or any similar federal or state law for the relief of debtors. The term “Custodian” means
any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law. A default under clause (c) above is
not an Event of Default until the holders of at least 25% of the aggregate principal amount of the Debentures outstanding notify
the Company of such default and the Company does not cure it within thirty (30) business days after the receipt of such notice,
unless the Company commences to cure such default within such period, which must specify the default, demand that it be remedied
and state that it is a “Notice of Default”.
Section
5.2.
Acceleration.
If an Event of Default occurs and is continuing, the Holder , by notice to the Company, may
declare the remaining principal amount of the Debenture, together with all accrued interest and any liquidated damages, to be
due and payable. Upon such declaration, the remaining principal amount shall be due and payable immediately.
Section 5.3
Liquidation Value
.
The liquidation value of the Debenture shall be equal to 100% of the outstanding balance remaining
on the Debenture plus accrued but unpaid interest and liquidated damages.
Article
6.
Notice
.
Any notices, consents, waivers or other communications required or permitted to be given under
the terms of the Debenture must be in writing and will be deemed to have been delivered (i) upon receipt, when delivered personally;
(ii) upon receipt, when sent by facsimile (provided a confirmation of transmission is mechanically or electronically generated
and kept on file by the sending party); or (iii) one (1) day after deposit with a nationally recognized overnight delivery service,
in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications
shall be:
If
to the Company:
Medifirst
Solutions, Inc.
4400
Hwy 9 South, Suite 1000, Freehold NJ 07728
Attention:
Bruce Schoengood
Email:
bruce@medifirstsolutions.com
If
to the Holder:
Mark
W. Baldwin
3821
Beaver Ridge Circle
Cedar
Falls, IA 50613-9440
Email:
__________________
Each
party shall provide five (5) business days prior notice to the other party of any change in address, email address
Article
7.
No Assignment.
The Debenture is non-negotiable and shall not be assigned or hypothecated in whole
or in part by the Holder.
Article
8.
Governing Law
The validity, terms, performance and enforcement of the Debenture shall be governed and construed
by the provisions hereof and in accordance with the laws of the State of New Jersey applicable to
agreements that are negotiated,
executed, delivered and performed solely in the State of New Jersey.
Article
9.
Miscellaneous
(a)
Forum Selection and Consent to Jurisdiction
.
Any litigation arising out of, under, or in connection with, the
Debenture or any course of conduct, course of dealing, statements (whether oral or written) or actions of the Company or Holder
shall be brought and maintained exclusively in the courts of the State of New Jersey in the Courts of Monmouth County. The Company
hereby expressly and irrevocably submits to the jurisdiction of the state and federal courts of the State of New Jersey for the
purpose of any such litigation as set forth above and irrevocably agrees to be bound by any final judgment rendered thereby in
connection with such litigation. The Company further irrevocably consents to the service of process by registered mail, postage
prepaid, or by personal service within or without the State of New Jersey. The Company hereby expressly and irrevocably waives,
to the fullest extent permitted by law, any objection which it may have or hereafter may have to the laying of venue of any such
litigation brought in any such court referred to above and any claim that any such litigation has been brought in any inconvenient
forum. To the extent that the Company has or hereafter may acquire any immunity from jurisdiction of any court or from any legal
process (whether through service or notice, attachment prior to judgment, attachment in aid of execution or otherwise) with respect
to itself or its property, the Company hereby irrevocably waives such immunity in respect of its obligations under the Debenture.
(b)
Waiver of Jury Trial
.
The Holder and the Company hereby knowingly, voluntarily and intentionally waive any rights they
may have to a trial by jury in respect of any litigation based hereon, or arising out of, under, or in connection with, the Debenture,
or any course of conduct, course of dealing, statements (whether oral or written) or actions of the Holder or the Company. The
Company acknowledges and agrees that it has received full and sufficient consideration for this provision and that this provision
is a material inducement for the Holder purchasing the Debenture.
(c)
Governing Law
.
The terms of the Debenture shall be governed by and construed and enforced in accordance with
the laws of the State of New Jersey without regard to the conflicts of laws principles.
(d)
Amendments and Waivers; Remedies
. No failure or delay on the part of either the Company or Holder in exercising any
right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies
provided for herein are cumulative and are not exclusive of any remedies that may be available at law, in equity or otherwise.
Any amendment, supplement or modification of or to any provision of the Debenture, any waiver of any provision of the Debenture,
and any consent to any departure from the terms of any provision of the Debenture, shall be effective (i) only if it is made or
given in writing and signed by the Company and the Holder and (ii) only in the specific instance and for the specific purpose
for which made or given.
(e)
Entire Agreement
.
The Debenture contains the complete understanding and agreement of the Company and the Holder and
supersedes all prior representations, warranties, agreements, arrangements, understandings, and negotiations. THE DEBENTURE REPRESENTS
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY ALLEGED PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN
WITNESS WHEREOF, the Company has duly executed the Debenture as of the date first written above.
MEDIFIRST
SOLUTIONS, INC.
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By
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Name:
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Bruce Schoengood
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Title:
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President and Chief Executive Officer
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Date
:
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June 12, 2015
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EXHIBIT
A
NOTICE
OF CONVERSION
(To
be Executed by the Registered Holder in order to Convert the Debenture.)
The
undersigned (“Holder”) hereby irrevocably elects, as of ________ to convert ______of Debentureinto Common Stock of
MEDIFIRST SOLUTIONS,INC.. (“Company”) according to the conditions set forth in the Debenture dated June 12,2015d issued
by the Company.
This
conversion is being made for an immediate sale.
Date
of Conversion ______________________________________
Applicable Conversion Price_______________________________
Number of Shares Issuable upon this conversion_____________________
Name (Print) ____ __________________________________________________ Address__________________________________________________
_______________ ______________________________________ Phone_________________ Fax__________________________
Mark
W Baldwin
Exhibit 4.3
THE SECURITIES OFFERED
HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION
OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT)
US $31,000.00
MEDIFIRST SOLUTIONS, INC.
8% CONVERTIBLE REDEEMABLE NOTE
DUE OCTOBER 8, 2016
FOR VALUE RECEIVED,
MEDIFIRST SOLUTIONS, Inc. (the “Company”) promises to pay to the order of LG CAPITAL FUNDING, LLC and its authorized
successors and permitted assigns ("
Holder
"), the aggregate principal face amount of Thirty One Thousand Dollars
(U.S. $31,000.00) on October 8, 2016 ("
Maturity Date
") and to pay interest on the principal amount outstanding
hereunder at the rate of 8% per annum commencing on October 8, 2015. This Note contains a 6% OID such that the purchase price shall
be $29,500. The interest will be paid to the Holder in whose name this Note is registered on the records of the Company regarding
registration and transfers of this Note. The principal of, and interest on, this Note are payable at 1218 Union Street, Suite #2,
Brooklyn, NY 11225, initially, and if changed, last appearing on the records of the Company as designated in writing by the Holder
hereof from time to time. The Company will pay each interest payment and the outstanding principal due upon this Note on the Maturity
Date, less any amounts required by law to be deducted or withheld, to the Holder of this Note by check or wire transfer addressed
to such Holder at the last address appearing on the records of the Company. The forwarding of such check or wire transfer shall
constitute a payment of outstanding principal hereunder and shall satisfy and discharge the liability for principal on this Note
to the extent of the sum represented by such check or wire transfer. Interest shall be payable in Common Stock (as defined below)
pursuant to paragraph 4(b) herein.
This Note is subject
to the following additional provisions:
1. This Note is exchangeable for
an equal aggregate principal amount of Notes of different authorized denominations, as requested by the Holder surrendering the
same. No service charge will be made for such registration or transfer or exchange, except that Holder shall pay any tax or other
governmental charges payable in connection therewith.
2. The Company
shall be entitled to withhold from all payments any amounts required to be withheld under applicable laws.
3. This Note may
be transferred or exchanged only in compliance with the Securities Act of 1933, as amended ("
Act
") and applicable
state securities laws. Any attempted transfer to a non-qualifying party shall be treated by the Company as void. Prior to due
presentment for transfer of this Note, the Company and any agent of the Company may treat the person in whose name this Note is
duly registered on the Company's records as the owner hereof for all other purposes, whether or not this Note be overdue, and
neither the Company nor any such agent shall be affected or bound by notice to the contrary. Any Holder of this Note electing
to exercise the right of conversion set forth in Section 4(a) hereof, in addition to the requirements set forth in Section 4(a),
and any prospective transferee of this Note, also is required to give the Company written confirmation that this Note is being
converted ("
Notice of Conversion
") in the form annexed hereto as
Exhibit A
. The date of receipt (including
receipt by telecopy) of such Notice of Conversion shall be the Conversion Date.
4. (a) The
Holder of this Note is entitled, at its option, , and after full cash payment for the shares convertible hereunder,
to
convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock
(the "
Common Stock
"), at a price ("
Conversion Price
") for each share of Common Stock equal to
58% of the
lowest trading price
of the Common Stock as reported on the OTCQB maintained by the OTC Markets Group,
Inc. upon which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future
("
Exchange
"), for the
twenty
prior
trading days including the day upon which
a Notice of Conversion is received by the Company or its transfer agent (provided such Notice of Conversion is delivered by fax
or other electronic method of communication to the Company or its transfer agent after 4 P.M. Eastern Standard or Daylight Savings
Time if the Holder wishes to include the same day closing price). If the shares have not been delivered within 3 business days,
the Notice of Conversion may be rescinded. Such conversion shall be effectuated by the Company delivering the shares of Common
Stock to the Holder within 3 business days of receipt by the Company of the Notice of Conversion. Accrued but unpaid interest
shall be subject to conversion. No fractional shares or scrip representing fractions of shares will be issued on conversion, but
the number of shares issuable shall be rounded to the nearest whole share
.
To the extent the Conversion Price of the Company’s
Common Stock closes below the par value per share, the Company will take all steps necessary to solicit the consent of the stockholders
to reduce the par value to the lowest value possible under law. The Company agrees to honor all conversions submitted pending
this increase.
In the event the Company experiences a DTC “Chill” on its shares, the conversion price shall be
decreased to 48% instead of 58% while that “Chill” is in effect.
In no event shall the Holder be allowed to effect
a conversion if such conversion, along with all other shares of Company Common Stock beneficially owned by the Holder and its
affiliates would exceed 9.9% of the outstanding shares of the Common Stock of the Company.
(b) Interest on any unpaid principal
balance of this Note shall be paid at the rate of 8% per annum. Interest shall be paid by the Company in Common Stock ("Interest
Shares"). Holder may, at any time, send in a Notice of Conversion to the Company for Interest Shares based on the formula
provided in Section 4(a) above. The dollar amount converted into Interest Shares shall be all or a portion of the accrued interest
calculated on the unpaid principal balance of this Note to the date of such notice.
(c) During the
first six months this Note is in effect, the Company may redeem this Note by paying to the Holder an amount as follows: (i) if
the redemption is within the first 60 days this Note is in effect, then for an amount equal to 115% of the unpaid principal amount
of this Note along with any interest that has accrued during that period, (ii) if the redemption is after the 61st day this Note
is in effect, but less than the 120
th
day this Note is in effect, then for an amount equal to 130% of the unpaid principal
amount of this Note along with any accrued interest and (iii) if the redemption is after the 120
th
day this Note is
in effect, but less than the 180
th
day this Note is in effect, then for an amount equal to 145% of the unpaid principal
amount of this Note along with any accrued interest. This Note may not be redeemed after 180 days. The redemption must be closed
and paid for within 3 business days of the Company sending the redemption demand or the redemption will be invalid and the Company
may not redeem this Note.
(d) Upon (i)
a transfer of all or substantially all of the assets of the Company to any person in a single transaction or series of related
transactions, (ii) a reclassification, capital reorganization or other change or exchange of outstanding shares of the Common
Stock, or (iii) any consolidation or merger of the Company with or into another person or entity in which the Company is not the
surviving entity (other than a merger which is effected solely to change the jurisdiction of incorporation of the Company and
results in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of Common Stock)
(each of items (i), (ii) and (iii) being referred to as a "Sale Event"), then, in each case, the Company shall, upon
request of the Holder, redeem this Note in cash for 150% of the principal amount, plus accrued but unpaid interest through the
date of redemption, or at the election of the Holder, such Holder may convert the unpaid principal amount of this Note (together
with the amount of accrued but unpaid interest) into shares of Common Stock immediately prior to such Sale Event at the Conversion
Price.
(e) In case of
any Sale Event in connection with which this Note is not redeemed or converted, the Company shall cause effective provision to
be made so that the Holder of this Note shall have the right thereafter, by converting this Note, to purchase or convert this
Note into the kind and number of shares of stock or other securities or property (including cash) receivable upon such reclassification,
capital reorganization or other change, consolidation or merger by a holder of the number of shares of Common Stock that could
have been purchased upon exercise of the Note and at the same Conversion Price, as defined in this Note, immediately prior to
such Sale Event. The foregoing provisions shall similarly apply to successive Sale Events. If the consideration received by the
holders of Common Stock is other than cash, the value shall be as determined by the Board of Directors of the Company or successor
person or entity acting in good faith.
5. No provision of this Note shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of, and interest on, this Note at the time, place, and rate, and in the form,
herein prescribed.
6. The Company
hereby expressly waives demand and presentment for payment, notice of non-payment, protest, notice of protest, notice of dishonor,
notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for hereunder and
shall be directly and primarily liable for the payment of all sums owing and to be owing hereto.
7. The Company
agrees to pay all costs and expenses, including reasonable attorneys' fees and expenses, which may be incurred by the Holder in
collecting any amount due under this Note.
8. If one or more
of the following described "Events of Default" shall occur:
(a) The Company
shall default in the payment of principal or interest on this Note or any other note issued to LG Capital Funding, LLC by the
Company; or
(b) Any of the
representations or warranties made by the Company herein or in any certificate or financial or other written statements heretofore
or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of this Note, or the Securities
Purchase Agreement under which this note was issued shall be false or misleading in any material respect; or
(c) The Company
shall fail to perform or observe, in any material respect, any covenant, term, provision, condition, agreement or obligation of
the Company under this Note or any other note issued to LG Capital Funding, LLC; or
(d) The Company
shall (1) become insolvent; (2) admit in writing its inability to pay its debts generally as they mature; (3) make an assignment
for the benefit of creditors or commence proceedings for its dissolution; (4) apply for or consent to the appointment of a trustee,
liquidator or receiver for its or for a substantial part of its property or business; (5) file a petition for bankruptcy relief,
consent to the filing of such petition or have filed against it an involuntary petition for bankruptcy relief, all under federal
or state laws as applicable; or
(e) A trustee,
liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent
and shall not be discharged within thirty (30) days after such appointment; or
(f) Any governmental
agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control of the
whole or any substantial portion of the properties or assets of the Company; or
(g) One or more money judgments, writs or warrants
of attachment, or similar process, in excess of fifty thousand dollars ($50,000) in the aggregate, shall be entered or filed against
the Company or any of its properties or other assets and shall remain unpaid, unvacated, unbonded or unstayed for a period of
fifteen (15) days or in any event later than five (5) days prior to the date of any proposed sale thereunder; or
(h) defaulted
on or breached any term of any other note of similar debt instrument into which the Company has entered and failed to cure such
default within the appropriate grace period; or
(i) The Company
shall have its Common Stock delisted from a trading market (including the OTC BB market) or, if the Common Stock trades on an
exchange, then trading in the Common Stock shall be suspended for more than 10 consecutive days;
(j) Intentionally
omitted;
(k) The Company
shall not deliver to the Holder the Common Stock pursuant to paragraph 4 herein without restrictive legend within 3 business days
of its receipt of a Notice of Conversion; or
(l) The Company
shall not replenish the reserve set forth in Section 12, within 3 business days of the request of the Holder.
(m) The Company
shall not be “current” in its filings with the Securities and Exchange Commission; or
(n) The Company
shall lose the “bid” price for its stock in a market (including the OTCQB marketplace or other exchange).
Then, or
at any time thereafter, unless cured within 5 days, and in each and every such case, unless such Event of Default shall have been
waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the
Holder and in the Holder's sole discretion, the Holder may consider this Note immediately due and payable, without presentment,
demand, protest or (further) notice of any kind (other than notice of acceleration), all of which are hereby expressly waived,
anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately,
and without expiration of any period of grace, enforce any and all of the Holder's rights and remedies provided herein or any
other rights or remedies afforded by law. Upon an Event of Default, interest shall accrue at a default interest rate of 24% per
annum or, if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted by law. In
the event of a breach of Section 8(k) the penalty shall be $250 per day the shares are not issued beginning on the 4
th
day after the conversion notice was delivered to the Company. This penalty shall increase to $500 per day beginning on the 10
th
day. The penalty for a breach of Section 8(n) shall be an increase of the outstanding principal amounts by 20%. In case
of a breach of Section 8(i), the outstanding principal due under this Note shall increase by 50%. Further, if a breach of Section
8(m) occurs or is continuing after the 6 month anniversary of the Note, then the Holder shall be entitled to use the lowest closing
bid price during the delinquency period as a base price for the conversion. For example, if the lowest closing bid price during
the delinquency period is $0.01 per share and the conversion discount is 50% the Holder may elect to convert future conversions
at $0.005 per share. If this Note is not paid at maturity, the outstanding principal due under this Note shall increase by 10%.
If the Holder shall commence an action
or proceeding to enforce any provisions of this Note, including, without limitation, engaging an attorney, then if the Holder prevails
in such action, the Holder shall be reimbursed by the Company for its attorneys’ fees and other costs and expenses incurred
in the investigation, preparation and prosecution of such action or proceeding.
Make-Whole for Failure
to Deliver Loss. At the Holder’s election, if the Company fails for any reason to deliver to the Holder the conversion shares
by the by the 3rd business day following the delivery of a Notice of Conversion to the Company and if the Holder incurs a Failure
to Deliver Loss, then at any time the Holder may provide the Company written notice indicating the amounts payable to the Holder
in respect of the Failure to Deliver Loss and the Company must make the Holder whole as follows:
Failure to Deliver Loss = [(High
trade price at any time on or after the day of exercise) x (Number of conversion shares)]
The Company must
pay the Failure to Deliver Loss by cash payment, and any such cash payment must be made by the third business day from the time
of the Holder’s written notice to the Company.
9. In case any
provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable,
such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and
the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby.
10. Neither this
Note nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the Company
and the Holder.
11. The Company
represents that it is not a “shell” issuer and has not been a “shell” issuer for the 12 months following
the Company’ having reported Form 10 type information indicating it is no longer a “shell issuer.
12. The Company
shall issue irrevocable transfer agent instructions reserving 28,000,000 shares of its Common Stock for conversions under this
Note (the “Share Reserve”). Upon full conversion of this Note, any shares remaining in the Share Reserve shall be
cancelled. Conversion Notices may be sent to the Company or its transfer agent via electric mail. The company should at all times
reserve a minimum of four times the amount of shares required if the note would be fully converted. The Holder may reasonably
request increases from time to time to reserve such amounts.
13. The Company
will give the Holder direct notice of any corporate actions, including but not limited to name changes, stock splits, recapitalizations
etc. This notice shall be given to the Holder as soon as possible under law.
14. This Note shall be governed by and construed
in accordance with the laws of New York applicable to contracts made and wholly to be performed within the State of New York and
shall be binding upon the successors and assigns of each party hereto. The Holder and the Company hereby mutually waive trial
by jury and consent to exclusive jurisdiction and venue in the courts of the State of New York. This Agreement may be executed
in counterparts, and the facsimile transmission of an executed counterpart to this Agreement shall be effective as an original.
IN WITNESS WHEREOF,
the Company has caused this Note to be duly executed by an officer thereunto duly authorized.
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Dated:
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MEDIFIRST SOLUTIONS, INC.
|
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By:
|
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Title:
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EXHIBIT A
NOTICE OF CONVERSION
(To be Executed by
the Registered Holder in order to Convert the Note)
The undersigned hereby
irrevocably elects to convert $___________ of the above Note into _________ Shares of Common Stock of MEDIFIRST SOLUTIONS, Inc.
(“Shares”) according to the conditions set forth in such Note, as of the date written below.
If Shares are to be
issued in the name of a person other than the undersigned, the undersigned will pay all transfer and other taxes and charges payable
with respect thereto.
Date of Conversion:__________________________________________________
Applicable Conversion Price:___________________________________________
Signature:
_________________________________________________________
[Print Name of Holder and Title of Signer]
Address: __________________________________________________________
_________________________________________________________________
SSN or EIN_________________________________________________________
Shares are to be registered in the following name: ____________________________
Name:
____________________________________________________________
Address: __________________________________________________________
Tel:
______________________________________________________________
Fax:______________________________________________________________
SSN or EIN: ________________________________________________________
Shares are to be sent or delivered to the following account:
Account Name:______________________________________________________
Address:___________________________________________________________
Exhibit
4.4
NEITHER
THE ISSUANCE OR SALE OF THE SECURITIES REPRESENTED BY THIS NOTE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE
HAVE BEEN REGITERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN
A GERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A
UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
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Principal Amount: $35,000
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Date: October 15, 2015
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CONVERTIBLE
PROMISSORY NOTE
Medifirst
Solutions, Inc.,
(hereinafter called the "Borrower"), hereby promises to pay to the order of
Crown Bridge Partners,
LLC,
a New York Limited Liability Company, or its registered assigns (the "Holder") the sum of $35,000 (with an
Original Issuance Discount of $5,000 resulting in a total funding amount of $30,000), together with any interest as set forth
herein, on October 15, 2016 (the "Maturity Date"), and to pay interest on the unpaid principal balance hereof at the
rate of five percent (5%) (the "Interest Rate") per annum from the date hereof (the "Issue Date") until the
same becomes due and payable, whether at maturity or upon acceleration or otherwise.
This
Note may be prepaid in accordance with Section 1.9 of this Note. Interest after the date of issuance shall be computed on the
basis of a 365-day year and the actual number of days elapsed. All payments due hereunder (to the extent not converted into common
stock) shall be made in lawful money of the United States of America.
All
payments shall be made at such address as the Holder shall hereafter give to the Borrower by written notice made in accordance
with the provisions of this Note. Whenever any amount expressed to be due by the terms of this Note is due on any day which is
not a business day, the same shall instead be due on the next succeeding day which is a business day and, in the case of any interest
payment date which is not the date on which this Note is paid in full, the extension of the due date thereof shall not be taken
into account for purposes of determining the amount of interest due on such date. As used in this Note, the term "business
day" shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the city of New York, New York
are authorized or required by law or executive order to remain closed. Each capitalized term used herein, and not otherwise defined,
shall have the meaning ascribed thereto in the supporting documents of same date (attached hereto).
This
Note is free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive
rights or other similar rights of shareholders of the Borrower and will not impose personal liability upon the holder thereof.
The
following terms shall apply to this Note:
ARTICLE
I. CONVERSION RIGHTS
1.1
Conversion Right
. The Holder shall have the right at any time on or after the day that is six months from the date of this
Note to convert all or any part of the outstanding and unpaid principal amount of this Note into fully paid and non- assessable
shares of Common Stock, as such Common Stock exists on the Issue Date, or any shares of capital stock or other securities of the
Borrower into which such Common Stock shall hereafter be changed or reclassified at the conversion price (the "Conversion
Price") determined as provided herein (a "Conversion");
provided, however,
that in no event shall the Holder
be entitled to convert any portion of this Note in excess of that portion of this Note upon conversion of which the sum of (1)
the number of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares of Common Stock which
may be deemed beneficially owned through the ownership of the unconverted portion of the Notes or the unexercised or unconverted
portion of any other security of the Borrower subject to a limitation on conversion or exercise analogous to the limitations contained
herein) and (2) the number of shares of Common Stock issuable upon the conversion of the portion of this Note with respect to
which the determination of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of
more than 4.99% of the outstanding shares of Common Stock. For purposes of the proviso to the immediately preceding sentence,
beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of such proviso,
provided
,
further
,
however
, that the limitations on conversion may be waived by the Holder upon, at the election of the Holder,
not less than 61 days' prior notice to the Borrower, and the provisions of the conversion limitation shall continue to apply until
such 61st day (or such later date, as determined by the Holder, as may be specified in such notice of waiver). The number of shares
of Common Stock to be issued upon each conversion of this Note shall be determined by dividing the Conversion Amount (as defined
below) by the applicable Conversion Price then in effect on the date specified in the notice of conversion, (the "Notice
of Conversion"), delivered to the Borrower by the Holder in accordance with the Sections below; provided that the Notice
of Conversion is submitted by facsimile or e-mail (or by other means resulting in, or reasonably expected to result in, notice)
to the Borrower before 6:00 p.m., New York, New York time on such conversion date (the "Conversion Date").
The
term "Conversion Amount" means, with respect to any conversion of this Note, the sum of (1) the principal amount of
this Note to be converted in such conversion
plus
(2) at the Borrower's option, accrued and unpaid interest, if any, on
such principal amount at the interest rates provided in this Note to the Conversion Date,
plus
(3) at the Borrower's option,
Default Interest, if any, on the amounts referred to in the immediately preceding clauses (1) and/or (2)
plus
(4) at the
Holder's option, any amounts owed to the Holder.
1.2
Conversion Price.
(a)
Calculation of Conversion Price
. The conversion price (the “Conversion Price”) shall equal the Variable Conversion
Price (as defined herein) (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower
relating to the Borrower’s securities or the securities of any subsidiary of the Borrower, combinations, recapitalization,
reclassifications, extraordinary distributions and similar events). The “Variable Conversion Price” shall mean 55%
multiplied by the Market Price (as defined herein) (representing a discount rate of 45%). In addition, if the issuer is not DWAC
eligible at the time of conversion, the Variable Conversion Price shall mean 45% multiplied by the Market Price (representing
a discount rate of 55%). “Market Price” means the lowest Trading Price (as defined below) for the Common Stock during
the ten Trading Day period ending on the latest complete Trading Day prior to the Conversion Date.
“Trading
Price” means, for any security as of any date, the lowest trading price on the Over-the-Counter Bulletin Board, Pink Sheets
electronic quotation system or applicable trading market (the “OTC”) as reported by a reliable reporting service (“Reporting
Service”) designated by the Holder (i.e. Nasdaq) or, if the OTC is not the principal trading market for such security, the
lowest trading price of such security on the principal securities exchange or trading market where such security is listed or
traded or, if no lowest trading price of such security is available in any of the foregoing manners, the average of the lowest
trading prices of any market makers for such security that are listed in the “pink sheets”.
“Trading
Day” shall mean any day on which the Common Stock is tradable for any period on the stock exchange on which the Borrower’s
Common Stock is traded.
(b)
Conversion Price During Major Announcements
. Notwithstanding anything contained in the preceding section to the contrary,
in the event the Borrower (i) makes a public announcement that it intends to consolidate or merge with any other corporation (other
than a merger in which the Borrower is the surviving or continuing corporation and its capital stock is unchanged) or sell or
transfer all or substantially all of the assets of the Borrower or (ii) any person, group or entity (including the Borrower) publicly
announces a tender offer to purchase 50% or more of the Borrower's Common Stock (or any other takeover scheme) (the date of the
announcement referred to in clause (i) or (ii) is hereinafter referred to as the "Announcement Date"), then the Conversion
Price shall, effective upon the Announcement Date and continuing through the Adjusted Conversion Price Termination Date (as defined
below), be equal to the lower of (x) the Conversion Price which would have been applicable for a Conversion occurring on the Announcement
Date and (y) the Conversion Price that would otherwise be in effect. From and after the Adjusted Conversion Price Termination
Date, the Conversion Price shall be determined as set forth in this Section. For purposes hereof, "Adjusted Conversion Price
Termination Date" shall mean, with respect to any proposed transaction or tender offer (or takeover scheme) for which a public
announcement as contemplated by this Section has been made, the date upon which the Borrower (in the case of clause (i) above)
or the person, group or entity (in the case of clause (ii) above) consummates or publicly announces the termination or abandonment
of the proposed transaction or tender offer (or takeover scheme) which caused this Section 1.2(b) to become operative.
1.3
Authorized Shares
. The Borrower covenants that during the period the conversion right exists, the Borrower will reserve
from its authorized and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance
of Common Stock upon the full conversion of this Note. The Borrower is required at all times to have authorized and reserved 10
times the number of shares that is actually issuable upon full conversion of the Note (based on the Conversion Price of the Notes
in effect from time to time) (the "Reserved Amount"). In addition, if the Borrower’s per share price decreases
to a price where the Reserved Shares are less than 10 times the amount of shares that the note may be converted into, Borrower
shall immediately increase the Reserved Shares by written request to the Borrower’s transfer agent, to an amount equal to
10 times the conversion amount of the Note at the decreased conversion price.
The
Borrower represents that upon issuance after conversion, such shares will be duly and validly issued, fully paid and non-assessable.
In addition, if the Borrower shall issue any securities or make any change to its capital structure which would change the number
of shares of Common Stock into which the Notes shall be convertible at the then current Conversion Price, the Borrower shall at
the same time make proper provision so that thereafter there shall be a sufficient number of shares of Common Stock authorized
and reserved, free from preemptive rights, for conversion of the outstanding Notes.
The
Borrower (i) acknowledges that it has irrevocably instructed its transfer agent to
issue certificates for the Common Stock
issuable upon conversion of this Note, subject to Borrower agreement on conversion calculation and (ii) agrees that its issuance
of this Note shall constitute full authority to its officers and agents who are charged with the duty of executing stock certificates
to execute and issue the necessary certificates for shares of Common Stock in accordance with the terms and conditions of this
Note.
If,
at any time the Borrower does not maintain the Reserved Amount it will be considered an Event of Default as defined in this Note.
In addition, if Borrower does not increase the Reserved Share amount pursuant to Section 1.3, it shall be considered an Event
of Default as defined in this Note.
1.4
Method of Conversion
.
Mechanics
of Conversion
. The Holder shall have the right at any time on or after the day that is six months from the date of this Note
to convert all or any part of the outstanding and unpaid principal amount, by (A) submitting to the Borrower a Notice of Conversion
(by facsimile, e-mail or other reasonable means of communication dispatched on the Conversion Date prior to 6:00 p.m., New York,
New York time) and (B) calculation metrics with trading market data source information.
(a)
Surrender of Note Upon Conversion.
Notwithstanding anything to the contrary set forth herein, upon conversion of this Note
in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Borrower unless
the entire unpaid principal amount of this Note is so converted. The Holder and the Borrower shall maintain records showing the
principal amount so converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the
Holder and the Borrower, so as not to require physical surrender of this Note upon each such conversion. In the event of any dispute
or discrepancy, such records of the Borrower shall,
prima facie,
be controlling and determinative in the absence of manifest
error. Notwithstanding the foregoing, if any portion of this Note is converted as aforesaid, the Holder may not transfer this
Note unless the Holder first physically surrenders this Note to the Borrower, whereupon the Borrower will forthwith issue and
deliver upon the order of the Holder a new Note of like tenor, registered as the Holder (upon payment by the Holder of any applicable
transfer taxes) may request, representing in the aggregate the remaining unpaid principal amount of this Note. The Holder and
any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following
conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note represented by this Note may be
less than the amount stated on the face hereof.
(b)
Payment of Taxes
. The Borrower shall not be required to pay any tax which may be payable in respect of any transfer involved
in the issue and delivery of shares of Common Stock or other securities or property on conversion of this Note in a name other
than that of the Holder (or in street name), and the Borrower shall not be required to issue or deliver any such shares or other
securities or property unless and until the person or persons (other than the Holder or the custodian in whose street name such
shares are to be held for the Holder's account) requesting the issuance thereof shall have paid to the Borrower the amount of
any such tax or shall have established to the satisfaction of the Borrower that such tax has been paid.
Delivery
of Common Stock Upon Conversion
. Upon receipt by the Borrower from the Holder of a facsimile transmission or e-mail (or other
reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in this Section,
the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder certificates for the
Common Stock issuable upon such conversion within three (3) business days after such receipt (the "Deadline") (and,
solely in the case of conversion of the entire unpaid principal amount hereof, surrender of this Note) in accordance with the
terms hereof and the Securities Purchase Agreement.
(c)
Obligation of Borrower to Deliver Common Stock
. Upon receipt by the Borrower of a Notice of Conversion, the Holder shall
be deemed to be the holder of record of the Common Stock issuable upon such conversion, the outstanding principal amount and the
amount of accrued and unpaid interest on this Note shall be reduced to reflect such conversion, and, unless the Borrower defaults
on its obligations under this Article I, all rights with respect to the portion of this Note being so converted shall forthwith
terminate except the right to receive the Common Stock or other securities, cash or other assets, as herein provided, on such
conversion. If the Holder shall have given a Notice of Conversion as provided herein, the Borrower's obligation to issue and deliver
the certificates for Common Stock shall be absolute and unconditional, irrespective of the absence of any action by the Holder
to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against any person
or any action to enforce the same, any failure or delay in the enforcement of any other obligation of the Borrower to the holder
of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder of
any obligation to the Borrower, and irrespective of any other circumstance which might otherwise limit such obligation of the
Borrower to the Holder in connection with such conversion. The Conversion Date specified in the Notice of Conversion shall be
the Conversion Date so long as the Notice of Conversion is received by the Borrower before 6:00 p.m., New York, New York time,
on such date.
(d)
Delivery of Common Stock by Electronic Transfer
. In lieu of delivering physical certificates representing the Common Stock
issuable upon conversion, provided the Borrower is participating in the Depository Trust Company ("DTC") Fast Automated
Securities Transfer ("FAST") program, upon request of the Holder and its compliance with the provisions contained in
Section 1.1 and in this Section 1.4, the Borrower shall use its best efforts to cause its transfer agent to electronically transmit
the Common Stock issuable upon conversion to the Holder by crediting the account of Holder's Broker with DTC through its Deposit
Withdrawal Agent Commission ("DWAC") system.
(e)
Failure to Deliver Common Stock Prior to Deadline
. Without in any way limiting the Holder's right to pursue other remedies,
including actual damages and/or equitable relief, the parties agree that if delivery of the Common Stock issuable upon conversion
of this Note is not delivered by the Deadline (other than a failure due to the circumstances described in Section 1.3 above, which
failure shall be governed by such Section), or due to circumstances beyond the control of the Borrower, the Borrower shall pay
to the Holder $2,000 per day in cash, for each day beyond the Deadline that the Borrower fails to deliver such Common Stock. Such
cash amount shall be paid to Holder by the fifth day of the month following the month in which it has accrued or, at the option
of the Holder (by written notice to the Borrower by the first day of the month following the month in which it has accrued), shall
be added to the principal amount of this Note, in which event interest shall accrue thereon in accordance with the terms of this
Note and such additional principal amount shall be convertible into Common Stock in accordance with the terms of this Note. The
Borrower agrees that the right to convert is a valuable right to the Holder. The damages resulting from a failure, attempt to
frustrate, interference with such conversion right are difficult if not impossible to qualify. Accordingly the parties acknowledge
that the liquidated damages provision contained in this Section are justified. The Borrower shall not be held liable for delays
caused by the Borrower’s transfer agent that result in an issuance of shares beyond the three day deadline, so long as the
Borrower has made a good faith attempt to have the shares issued within the three day deadline.
1.5
Concerning the Shares
. The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred
unless (i) such shares are sold pursuant to an effective registration statement under the Act or (ii) the Borrower or its transfer
agent shall have been furnished with an opinion of counsel (which opinion shall be in form, substance and scope customary for
opinions of counsel in comparable transactions) to the effect that the shares to be sold or transferred may be sold or transferred
pursuant to an exemption from such registration or (iii) such shares are sold or transferred pursuant to Rule 144 under the Act
(or a successor rule) ("Rule 144") or (iv) such shares are transferred to an "affiliate" (as defined in Rule
144) of the Borrower who agrees to sell or otherwise transfer the shares only in accordance with this Section 1.5 and who is an
Accredited Investor. Except as otherwise provided herein (and subject to the removal provisions set forth below), until such time
as the shares of Common Stock issuable upon conversion of this Note have been registered under the Act or otherwise may be sold
pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately
sold, each certificate for shares of Common Stock issuable upon conversion of this Note that has not been so included in an effective
registration statement or that has not been sold pursuant to an effective registration statement or an exemption that permits
removal of the legend, shall bear a legend substantially in the following form, as appropriate:
"NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN
A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT.
The
legend set forth above shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer
legend if (i) the Borrower or its transfer agent shall have received an opinion of counsel, in form, substance and scope customary
for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Common Stock may be made
without registration under the Act, which opinion shall be accepted by the Company so that the sale or transfer is effected or
(ii) in the case of the Common Stock issuable upon conversion of this Note, such security is registered for sale by the Holder
under an effective registration statement filed under the Act or otherwise may be sold pursuant to Rule 144 without any restriction
as to the number of securities as of a particular date that can then be immediately sold. In the event that the Company does not
accept the opinion of counsel provided by the Buyer with respect to the transfer of Securities pursuant to an exemption from registration,
such as Rule 144 or Regulation S, at the Deadline, it will be considered an Event of Default pursuant to this note.
1.6
Effect of Certain Events
.
(a)
Effect of Merger, Consolidation, Etc
. At the option of the Holder, the sale, conveyance or disposition of all or substantially
all of the assets of the Borrower, the effectuation by the Borrower of a transaction or series of related transactions in which
more than 50% of the voting power of the Borrower is disposed of, or the consolidation, merger or other business combination of
the Borrower with or into any other Person (as defined below) or Persons when the Borrower is not the survivor shall either: (i)
be deemed to be an Event of Default (as defined in Article III) pursuant to which the Borrower shall be required to pay to the
Holder upon the consummation of and as a condition to such transaction an amount equal to the Default Amount (as defined in Article
III) or (ii) be treated pursuant to Section 1.6(b) hereof. "Person" shall mean any individual, corporation, limited
liability company, partnership, association, trust or other entity or organization.
(b)
Adjustment Due to Merger, Consolidation, Etc
. If, at any time when this Note is issued and outstanding and prior to conversion
of all of the Notes, there shall be any merger, consolidation, exchange of shares, recapitalization, reorganization, or other
similar event, as a result of which shares of Common Stock of the Borrower shall be changed into the same or a different number
of shares of another class or classes of stock or securities of the Borrower or another entity, or in case of any sale or conveyance
of all or substantially all of the assets of the Borrower other than in connection with a plan of complete liquidation of the
Borrower, then the Holder of this Note shall thereafter have the right to receive upon conversion of this Note, upon the basis
and upon the terms and conditions specified herein and in lieu of the shares of Common Stock immediately theretofore issuable
upon conversion, such stock, securities or assets which the Holder would have been entitled to receive in such transaction had
this Note been converted in full immediately prior to such transaction (without regard to any limitations on conversion set forth
herein), and in any such case appropriate provisions shall be made with respect to the rights and interests of the Holder of this
Note to the end that the provisions hereof (including, without limitation, provisions for adjustment of the Conversion Price and
of the number of shares issuable upon conversion of the Note) shall thereafter be applicable, as nearly as may be practicable
in relation to any securities or assets thereafter deliverable upon the conversion hereof. The Borrower shall not affect any transaction
described in this Section 1.6(b) unless (a) it first gives, to the extent practicable, thirty (30) days prior written notice (but
in any event at least fifteen (15) days prior written notice) of the record date of the special meeting of shareholders to approve,
or if there is no such record date, the consummation of, such merger, consolidation, exchange of shares, recapitalization, reorganization
or other similar event or sale of assets (during which time the Holder shall be entitled to convert this Note) and (b) the resulting
successor or acquiring entity (if not the Borrower) assumes by written instrument the obligations of this Section 1.6(b). The
above provisions shall similarly apply to successive consolidations, mergers, sales, transfers or share exchanges.
(c)
Adjustment Due to Distribution
. If the Borrower shall declare or make any distribution of its assets (or rights to acquire
its assets) to holders of Common Stock as a dividend, stock repurchase, by way of return of capital or otherwise (including any
dividend or distribution to the Borrower's shareholders in cash or shares (or rights to acquire shares) of capital stock of a
subsidiary (i.e., a spin-off)) (a "Distribution"), then the Holder of this Note shall be entitled, upon any conversion
of this Note after the date of record for determining shareholders entitled to such Distribution, to receive the amount of such
assets which would have been payable to the Holder with respect to the shares of Common Stock issuable upon such conversion had
such Holder been the holder of such shares of Common Stock on the record date for the determination of shareholders entitled to
such Distribution.
(d)
Notice of Adjustments
. Upon the occurrence of each adjustment or readjustment of the Conversion Price as a result of the
events described in this Section 1.6, the Borrower, at its expense, shall promptly compute such adjustment or readjustment and
prepare and furnish to the Holder of a certificate setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based. The Borrower shall, upon the written request at any time of the Holder, furnish
to such Holder a like certificate setting forth (i) such adjustment or readjustment, (ii) the Conversion Price at the time in
effect and (iii) the number of shares of Common Stock and the amount, if any, of other securities or property which at the time
would be received upon conversion of the Note.
(e)
Exceptions
. Notwithstanding the forgoing in this Section 1.6, no adjustments shall be required or made for conversions
of any convertible notes outstanding at the time of funding of this Note, nor for the sale of restricted common stock at a discount
to the market or the issuances of S-8 registered shares for services subsequent to the funding of this Note.
1.7
Trading Market Limitations
. Unless permitted by the applicable rules and regulations of the principal securities market
on which the Common Stock is then listed or traded, in no event shall the Borrower issue upon conversion of or otherwise pursuant
to this Note and the other Notes issued pursuant to the Purchase Agreement more than the maximum number of shares of Common Stock
that the Borrower can issue pursuant to any rule of the principal United States securities market on which the Common Stock is
then traded (the "Maximum Share Amount"), which shall be 4.99% of the total shares outstanding on the Closing Date (as
defined in the Purchase Agreement), subject to equitable adjustment from time to time for stock splits, stock dividends, combinations,
capital reorganizations and similar events relating to the Common Stock occurring after the date hereof. Once the Maximum Share
Amount has been issued, if the Borrower fails to eliminate any prohibitions under applicable law or the rules or regulations of
any stock exchange, interdealer quotation system or other self-regulatory organization with jurisdiction over the Borrower or
any of its securities on the Borrower's ability to issue shares of Common Stock in excess of the Maximum Share Amount, in lieu
of any further right to convert this Note, this will be considered an Event of Default under Section 3.3 of the Note.
1.8
Status as Shareholder
. Upon submission of a Notice of Conversion by a Holder, (i) the shares covered thereby (other than
the shares, if any, which cannot be issued because their issuance would exceed such Holder's allocated portion of the Reserved
Amount or Maximum Share Amount) shall be deemed converted into shares of Common Stock and (ii) the Holder's rights as a Holder
of such converted portion of this Note shall cease and terminate, excepting only the right to receive certificates for such shares
of Common Stock and to any remedies provided herein or otherwise available at law or in equity to such Holder because of a failure
by the Borrower to comply with the terms of this Note. Notwithstanding the foregoing, if a Holder has not received certificates
for all shares of Common Stock prior to the third (3rd) business day after the expiration of the Deadline with respect to a conversion
of any portion of this Note for any reason, then (unless the Holder otherwise elects to retain its status as a holder of Common
Stock by so notifying the Borrower) the Holder shall regain the rights of a Holder of this Note with respect to such unconverted
portions of this Note and the Borrower shall, as soon as practicable, return such unconverted Note to the Holder or, if the Note
has not been surrendered, adjust its records to reflect that such portion of this Note has not been converted. In all cases, the
Holder shall retain all of its rights and remedies (including, without limitation, (i) the right to receive Conversion Default
Payments pursuant to Section 1.3 to the extent required thereby for such Conversion Default and any subsequent Conversion Default
and (ii) the right to have the Conversion Price with respect to subsequent conversions determined in accordance with Section 1.3)
for the Borrower's failure to convert this Note.
1.9
Prepayment
. This Note may be prepaid pursuant to the following schedule: Payment on Day 1-180 will result in 135% of the
face value being owed. Interest after the date of issuance shall be computed on the basis of a 365-day year and the actual number
of days elapsed. All payments due hereunder (to the extent not converted into common stock) shall be made in lawful money of the
United States of America.
ARTICLE
II. CERTAIN COVENANTS
2.1
Distributions on Capital Stock
. So long as the Borrower shall have any obligation under this Note, the Borrower shall not
without the Holder's written consent (a) pay, declare or set apart for such payment, any dividend or other distribution (whether
in cash, property or other securities) on shares of capital stock other than dividends on shares of Common Stock solely in the
form of additional shares of Common Stock or (b) directly or indirectly or through any subsidiary make any other payment or distribution
in respect of its capital stock except for distributions pursuant to any shareholders' rights plan which is approved by a majority
of the Borrower's disinterested directors.
2.2
Restriction on Stock Repurchases
. So long as the Borrower shall have any obligation under this Note, the Borrower shall
not without the Holder's written consent redeem, repurchase or otherwise acquire (whether for cash or in exchange for property
or other securities or otherwise) in any one transaction or series of related transactions any shares of capital stock of the
Borrower or any warrants, rights or options to purchase or acquire any such shares.
2.3
Sale of Assets
. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the
Holder's written consent, sell, lease or otherwise dispose of any significant portion of its assets outside the ordinary course
of business. Any consent to the disposition of any assets may be conditioned on a specified use of the proceeds of disposition.
2.4
Advances and Loans
. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without
the Holder' s written consent, lend money, give credit or make advances to any person, firm, joint venture or corporation, including,
without limitation, officers, directors, employees, subsidiaries and affiliates of the Borrower, except loans, credits or advances
(a) in existence or committed on the date hereof and which the Borrower has informed Holder in writing prior to the date hereof,
(b) made in the ordinary course of business or (c) not in excess of $100,000.
ARTICLE
III. EVENTS OF DEFAULT
If
any of the following events of default (each, an "Event of Default") shall occur:
3.1
Failure to Pay Principal or Interest
. The Borrower fails to pay the principal hereof or interest thereon when due on this
Note, whether at maturity, upon acceleration or otherwise. Any amount of principal or interest on this Note which is not paid
when due shall bear interest at the rate of Eighteen percent (18%) per annum from the due date thereof until the same is paid
("Default Interest").
3.2
Conversion and the Shares
. Except for circumstances beyond the control of the Borrower, the Borrower fails to issue shares
of Common Stock to the Holder (or announces or threatens in writing that it will not honor its obligation to do so) upon exercise
by the Holder of the conversion rights of the Holder in accordance with the terms of this Note, fails to transfer or cause its
transfer agent to transfer (issue) (electronically or in certificated form) any certificate for shares of Common Stock issued
to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, the Borrower directs its
transfer agent not to transfer or delays, impairs, and/or hinders its transfer agent in transferring (or issuing) (electronically
or in certificated form) any certificate for shares of Common Stock to be issued to the Holder upon conversion of or otherwise
pursuant to this Note as and when required by this Note, or fails to remove (or directs its transfer agent not to remove or impairs,
delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions
in respect thereof) on any certificate for any shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant
to this Note as and when required by this Note (or makes any written announcement, statement or threat that it does not intend
to honor the obligations described in this paragraph). It is an obligation of the Borrower to remain current in its obligations
to its transfer agent. It shall be an event of default of this Note, if a conversion of this Note is delayed, hindered or frustrated
due to a balance owed by the Borrower to its transfer agent. If at the option of the Holder, the Holder advances any funds to
the Borrower's transfer agent in order to process a conversion, such advanced funds shall be paid by the Borrower to the Holder
within forty eight (48) hours of a demand from the Holder.
3.3
Breach of Covenants
. The Borrower breaches any material covenant or other material term or condition contained in this
Note and any collateral documents including but not limited to the Purchase Agreement.
3.4
Breach of Representations and Warranties
. Any representation or warranty of the Borrower made herein or in any agreement,
statement or certificate given in writing pursuant hereto or in connection herewith (including, without limitation, the Purchase
Agreement), shall be false or misleading in any material respect when made and the breach of which has (or with the passage of
time will have) a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.
3.5
Receiver or Trustee
. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors,
or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business,
or such a receiver or trustee shall otherwise be appointed.
3.6
Judgments
. Any money judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary
of the Borrower or any of its property or other assets for more than
$50,000,
and shall remain unvacated, unbonded or unstayed for a period of twenty (20) days unless otherwise consented to by the Holder,
which consent will not be unreasonably withheld.
3.7
Bankruptcy
. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary,
for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any
subsidiary of the Borrower.
3.8
Delisting of Common Stock
. The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTCBB
or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or
the American Stock Exchange, or if the Depository Trust Company shall place a chill on the common stock, which does not allow
for the electronic deposit of such stock.
3.9
Failure to Comply with the Exchange Act
. The Borrower shall fail to comply with the reporting requirements of the Exchange
Act; and/or the Borrower shall cease to be subject to the reporting requirements of the Exchange Act.
3.10
Liquidation
. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.
3.11
Cessation of Operations
. Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable to
pay its debts as such debts become due, provided, however, that any disclosure of the Borrower's ability to continue as a "going
concern" shall not be an admission that the Borrower cannot pay its debts as they become due.
3.12
Maintenance of Assets
. The failure by Borrower to maintain any material intellectual property rights, personal, real property
or other assets which are necessary to conduct its business (whether now or in the future).
3.13
Financial Statement Restatement
. The restatement of any financial statements filed by the Borrower with the SEC for any
date or period from two years prior to the Issue Date of this Note and until this Note is no longer outstanding, if the result
of such restatement would, by comparison to the original financial statement, have constituted a material adverse effect on the
rights of the Holder with respect to this Note or supporting documents.
3.14
Reverse Splits
. The Borrower effectuates a reverse split of its Common Stock without at least twenty (20) days prior written
notice to the Holder.
3.15
Replacement of Transfer Agent
. In the event that the Borrower proposes to replace its transfer agent, the Borrower fails
to provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form
as initially delivered pursuant to the Purchase Agreement (including but not limited to the provision to irrevocably reserve shares
of Common Stock in the Reserved Amount) signed by the successor transfer agent to Borrower and the Borrower.
3.16
Cross-Default
. Notwithstanding anything to the contrary contained in this Note or the other related or companion documents,
a breach or default by the Borrower of any covenant or other term or condition contained in any of the Other Agreements, after
the passage of all applicable notice and cure or grace periods, shall, at the option of the Borrower, be considered a default
under this Note and the Other Agreements, in which event the Holder shall be entitled (but in no event required) to apply all
rights and remedies of the Holder under the terms of this Note and the Other Agreements by reason of a default under said Other
Agreement or hereunder. "Other Agreements" means, collectively, all agreements and instruments between, among or by:
(1) the Borrower, and, or for the benefit of, (2) the Holder and any affiliate of the Holder, including, without limitation, promissory
notes; provided, however, the term "Other Agreements" shall not include the related or companion documents to this Note.
Each of the loan transactions will be cross-defaulted with each other loan transaction and with all other existing and future
debt of Borrower to the Holder.
Upon
the occurrence and during the continuation of any Event of Default, the Note shall become immediately due and payable and
the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the greater of
(i) 150%
times
the
sum
of (w) the then outstanding principal amount of this Note
plus
(x) accrued and
unpaid interest on the unpaid principal amount of this Note to the date of payment (the "Mandatory Prepayment
Date")
plus
(y) Default Interest, if any,
plus
(z) any amounts owed to the Holder (the then
outstanding principal amount of this Note to the date of payment
plus
the amounts referred to in clauses (x), (y) and
(z) shall collectively be known as the "Default Sum") or (ii) the "parity value" of the Default Sum to be
paid, where parity value means (a) the highest number of shares of Common Stock issuable upon conversion of or otherwise
pursuant to such Default Sum in accordance with Article I, treating the Trading Day immediately preceding the Mandatory
Prepayment Date as the "Conversion Date" for purposes of determining the lowest applicable Conversion Price, unless
the Default Event arises as a result of a breach in respect of a specific Conversion Date in which case such Conversion Date
shall be the Conversion Date),
multiplied by
(b) the highest Closing Price for the Common Stock during the period
beginning on the date of first occurrence of the Event of Default and ending one day prior to the Mandatory Prepayment Date
(the "Default Amount") and all other amounts payable hereunder shall immediately become due and payable, all
without demand, presentment or notice, all of which hereby are expressly waived, together with all costs, including, without
limitation, legal fees and expenses, of collection, and the Holder shall be entitled to exercise all other rights and
remedies available at law or in equity.
If
the Borrower fails to pay the Default Amount within three (3) business days of written notice that such amount is due and payable,
then the Holder shall have the right at any time, so long as the Borrower remains in default (and so long and to the extent that
there are sufficient authorized shares), to require the Borrower, upon written notice, to immediately issue, in lieu of the Default
Amount, the number of shares of Common Stock of the Borrower equal to the Default Amount divided by the Conversion Price then
in effect.
ARTICLE
IV. MISCELLANEOUS
4.1
Failure or Indulgence Not Waiver
. No failure or delay on the part of the Holder in the exercise of any power, right or
privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other right, power or privileges. All rights and remedies existing hereunder
are cumulative to, and not exclusive of, any rights or remedies otherwise available.
4.2
Notices
. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder
shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered
or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid,
or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party
shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder
shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting
facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where
such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during
normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by
express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first
occur. The addresses for such communications shall be:
If
to the Borrower, to:
Medifirst
Solutions, Inc.
4400
Route 9 South, Suite 1000
Freehold,
NJ 07728
Attn:
Bruce Schoengood, President
If
to the Holder:
Crown
Bridge Partners, LLC
1173a
2
nd
Avenue, Suite 126
New
York, NY 10065
4.3
Amendments
. This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and
the Holder. The term "Note" and all reference thereto, as used throughout this instrument, shall mean this instrument
(and the other Notes issued pursuant to the Purchase Agreement) as originally executed, or if later amended or supplemented, then
as so amended or supplemented.
4.4
Assignability
. This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit
of the Holder and its successors and assigns. Each transferee of this Note must be an "accredited investor" (as defined
in Rule 501(a) of the 1933 Act). Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral
in connection with a
bona fide
margin account or other lending arrangement.
4.5
Cost of Collection
. If default is made in the payment of this Note, the Borrower shall pay the Holder hereof costs of collection,
including reasonable attorneys' fees.
4.6
Governing Law
. This Note shall be governed by and construed in accordance with the laws of the State of New York without
regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated
by this Note shall be brought only in the state courts of New York or in the federal courts located in the state of New York.
The parties to this Note hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and
shall not assert any defense based on lack of jurisdiction or venue or based upon
forum non conveniens.
The Borrower and
Holder waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees
and costs. In the event that any provision of this Note or any other agreement delivered in connection herewith is invalid or
unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may
prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement.
Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding
in connection with this Agreement or any other Transaction Document by mailing a copy thereof via registered or certified mail
or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any other manner permitted by law.
4.7
Certain Amounts
. Whenever pursuant to this Note the Borrower is required to pay an amount in excess of the outstanding
principal amount (or the portion thereof required to be paid at that time) plus accrued and unpaid interest plus Default Interest
on such interest, the Borrower and the Holder agree that the actual damages to the Holder from the receipt of cash payment on
this Note may be difficult to determine and the amount to be so paid by the Borrower represents stipulated damages and not a penalty
and is intended to compensate the Holder in part for loss of the opportunity to convert this Note and to earn a return from the
sale of shares of Common Stock acquired upon conversion of this Note at a price in excess of the price paid for such shares pursuant
to this Note. The Borrower and the Holder hereby agree that such amount of stipulated damages is not plainly disproportionate
to the possible loss to the Holder from the receipt of a cash payment without the opportunity to convert this Note into shares
of Common Stock.
4.8
Notice of Corporate Events
. Except as otherwise provided below, the Holder of this Note shall have no rights as a Holder
of Common Stock unless and only to the extent that it converts this Note into Common Stock. The Borrower shall provide the Holder
with prior notification of any meeting of the Borrower's shareholders (and copies of proxy materials and other information sent
to shareholders). In the event of any taking by the Borrower of a record of its shareholders for the purpose of determining shareholders
who are entitled to receive payment of any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire
(including by way of merger, consolidation, reclassification or recapitalization) any share of any class or any other securities
or property, or to receive any other right, or for the purpose of determining shareholders who are entitled to vote in connection
with any proposed sale, lease or conveyance of all or substantially all of the assets of the Borrower or any proposed liquidation,
dissolution or winding up of the Borrower, the Borrower shall mail a notice to the Holder, at least twenty (20) days prior to
the record date specified therein (or thirty (30) days prior to the consummation of the transaction or event, whichever is earlier),
of the date on which any such record is to be taken for the purpose of such dividend, distribution, right or other event, and
a brief statement regarding the amount and character of such dividend, distribution, right or other event to the extent known
at such time. The Borrower shall make a public announcement of any event requiring notification to the Holder hereunder substantially
simultaneously with the notification to the Holder in accordance with the terms of this Section 4.8.
4.9
Remedies
. The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the
Holder, by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that
the remedy at law for a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened
breach by the Borrower of the provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies
at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing
or curing any breach of this Note and to enforce specifically the terms and provisions thereof, without the necessity of showing
economic loss and without any bond or other security being required.
IN
WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly authorized officer:
Medifirst
Solutions, Inc.
|
Signed:
|
|
|
|
By:
|
Bruce Schoengood
|
|
|
Title:
|
President
|
|
15
Exhibit 10.3
Sale and Purchase Agreement for Goods
Dated: August 25, 2015
|
Between:
|
Bradley
Schoengood
|
|
|
|
|
|
|
|
1015
Spanish River Road
|
|
|
|
|
|
|
|
Boca
Raton, FL 33432
|
(“Seller”)
|
|
|
|
|
|
And:
|
Medical
Lasers Manufacturer, Inc.
|
|
|
|
|
|
|
|
4400
Route 9 South, Suite 1000
|
|
|
|
|
|
|
|
Freehold,
NY 07726
|
(“Buyer”)
|
1. Buyer hereby purchases from Seller and Seller
hereby sells to Buyer hand-held laser devices (collectively referred to as the “Units”), specifically identified as
follows:
Infrared Model TTML-810200 10 Units
Green Model TTML-532500 10 Units
2. T
he
Purchase price for the Units will be 10,000 shares of the Series B Convertible Preferred Stock of Medifirst Solutions, Inc.
(“Medifirst”)
valued at $ 50,000
(“Shares”)
. The Shares will be registered in the name of Seller in book entry form only.
Buyer will have the option to pay Seller $50,000 in cash at any time prior to the exercise of Seller’s conversion rights
under the Shares. In the event of such cash payment by Buyer, Seller agrees to execute all instruments reasonably necessary surrender
the Shares to Medifirst.
3.
Seller
will deliver the Units to Buyer within 7 days of the date of this Agreement. Seller will be responsible for payment of all
delivery charges. Upon delivery of the Units to Buyer, Buyer will provide satisfactory written evidence to Seller that the
Shares have been registered in the name of Seller.
4. Seller
disclaims any warranty of merchantability or fitness for a particular purpose in connection with Buyer’s purchase of the
Units under this Agreement.
5. This Agreement shall be binding on and inure
to the benefit of the parties and their respective successors and assigns, if any.
6.
No modification, waiver, amendment, discharge
or change of this Agreement shall be valid unless the same is in writing and signed by parties hereto.
7.
This Agreement contains all of the understandings
and agreements of the parties hereto with respect to the subject matter discussed herein. All prior agreements whether written
or oral are merged herein and shall be of no force or effect.
8.
This Agreement shall be construed in accordance
with the laws of the State of New Jersey and any proceeding or actions arising between the Parties in any matter pertaining or
related to this Agreement shall, to the extent permitted by law, be held in Monmouth County, New Jersey.
IN WITNESS WHEREOF, the parties
have executed this Agreement to be effective as of the Effective Date.
|
Seller:
|
|
Buyer :
|
|
|
|
|
|
|
|
Bradley Schoengood
|
|
Medical Lasers Manufacturer, Inc.
|
|
|
|
|
|
|
|
By:
|
|
|
By:
|
|
Exhibit 10.4
TRADEMARK
ASSIGNMENT AGREEMENT
This
Trademark Assignment Agreement
(“Agreement”)
is entered into as of August 21, 2015
(“Effective
Date”)
b by and between Bradley Schoengood
(“Assignor”)
and Medical Lasers Manufacturer,
Inc., a Nevada corporation
(“Assignee”)
.
WHEREAS,
the Assignor owns the entire right, title and interest in and to certain U.S. trademark registered with the United States Patent
and Trademark Office as described in the attached Exhibit A
(“Trademark”)
.
WHEREAS,
Assignee desires to acquire all of Assignor’s right, title and interest in and to the Trademark together with all of the
goodwill of the business symbolized thereby and Assignor desires to assign such right, title and interest in and to the Trademark
to Assignee, upon the terms and conditions of this Agreement.
NOW,
THEREFORE, for good and valuable consideration the receipt and sufficiency of which is hereby acknowledged by Assignor, the parties
agree as follows:
1. Assignor
hereby conveys and assigned to Assignee and Assignee hereby accepts from Assignor, all of Assignor’s right, title and interest
in and to the Trademark, together with the goodwill of the business symbolized by the Trademark.
2. Assignor
represents and warrants that:
(a) Assignor
owns the entire right, title and interest in and to the Trademark;
(b) all
registrations for the Trademark are currently valid and in full force and effect;
(c) Assignor
has not licensed the Trademark to any other person or entity or granted, expressly or impliedly, any rights with respect to the
Trademark to any other person or entity;
(d) there
are no liens or security interests against the Trademark;
(e) Assignor
has all authority necessary to enter into this Agreement.
3. At
any time and from time to time after the Effective Date, Assignor will execute and deliver to Assignee, at Assignee’s request,
such other instruments of sale, transfer, conveyance and assignment and take such other action, at Assignor’s expense, as
Assignee may reasonably deem necessary and desirable in order to perfect or otherwise enable the transfer and assignment to Assignee
and to confirm Assignee’s title to the Trademark and all federal and state trademark registrations thereof.
4. Assignee
shall cause to be delivered to Assignor 4,000 shares of the Series B Convertible Preferred Stock
(“Preferred Stock”)
of Medifirst Solutions, Inc, a Nevada corporation, which corporation is the Assignee’s parent company valued at
$20,000. The Preferred Stock will be registered in book entry form only. Assignee or its parent company has the option to pay
Assignor $20,000 in cash at any time prior to the exercise of Assignor’s conversion rights under the Preferred Stock, in
which case Assignor agrees to surrender all right, title and interest in and to the Preferred Stock. Payment terms are 90 days
from date of this agreement.
5. After the Effective Date, Assignor will make no further use of the Trademark or any trademark confusingly similar thereto
anywhere is the world and Assignor agrees not to challenge Assignee’s use or ownership or validity of the Trademark or this
Agreement.
6. This
Agreement shall be binding on and inure to the benefit of the parties and their respective successors and assigns, if any.
7. No
modification, waiver, amendment, discharge or change of this Agreement shall be valid unless the same is in writing and signed
by parties hereto.
8. This
Agreement contains all of the understandings and agreements of the parties hereto with respect to the subject matter discussed
herein. All prior agreements whether written or oral are merged herein and shall be of no force or effect.
9. This Agreement shall be construed in accordance with the laws of the State of New Jersey and any proceeding or actions
arising between the Parties in any matter pertaining or related to this Agreement shall, to the extent permitted by law, be
held in Monmouth County, New Jersey.
IN
WITNESS WHEREOF, the Parties have executed this Agreement to be effective as of the Effective Date.
ASSIGNOR:
Bradley
Schoengood
ASSIGNEE:
MEDICAL
LASERS MANUFACTURER, INC.
|
By:
|
|
|
|
|
Bruce Schoengood, President/CEO
|
|
EXHIBIT
A
|
Serial Number
|
|
Country
|
|
Title/Trademark
|
|
Registration Date
|
|
86267024
|
|
US
|
|
Time Machine Program
|
|
12/23/2014
|
Exhibit 10.9
THE
SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY THE SECURITIES ACT OF 1933, AS AMENDED,
AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT)
US $50,000.00
MEDIFIRST
SOLUTIONS, INC.
8%
CONVERTIBLE REDEEMABLE NOTE
DUE
MARCH 7, 2017
FOR
VALUE RECEIVED, MEDIFIRST SOLUTIONS, Inc. (the “Company”) promises to pay to the order of LG CAPITAL FUNDING, LLC
and its authorized successors and permitted assigns ("
Holder
"), the aggregate principal face amount of Fifty
Thousand Dollars (U.S. $50,000.00) on March 7, 2017 ("
Maturity Date
") and to pay interest on the principal amount
outstanding hereunder at the rate of 8% per annum commencing on March 7, 2016. The interest will be paid to the Holder in whose
name this Note is registered on the records of the Company regarding registration and transfers of this Note. The principal of,
and interest on, this Note are payable at 1218 Union Street, Suite #2, Brooklyn, NY 11225, initially, and if changed, last appearing
on the records of the Company as designated in writing by the Holder hereof from time to time. The Company will pay each interest
payment and the outstanding principal due upon this Note on the Maturity Date, less any amounts required by law to be deducted
or withheld, to the Holder of this Note by check or wire transfer addressed to such Holder at the last address appearing on the
records of the Company. The forwarding of such check or wire transfer shall constitute a payment of outstanding principal hereunder
and shall satisfy and discharge the liability for principal on this Note to the extent of the sum represented by such check or
wire transfer. Interest shall be payable in Common Stock (as defined below) pursuant to paragraph 4(b) herein.
This
Note is subject to the following additional provisions:
1. This
Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as requested by the
Holder surrendering the same. No service charge will be made for such registration or transfer or exchange, except that Holder
shall pay any tax or other governmental charges payable in connection therewith.
2. The
Company shall be entitled to withhold from all payments any amounts required to be withheld under applicable laws.
3. This
Note may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended ("
Act
") and
applicable state securities laws. Any attempted transfer to a non-qualifying party shall be treated by the Company as void. Prior
to due presentment for transfer of this Note, the Company and any agent of the Company may treat the person in whose name this
Note is duly registered on the Company's records as the owner hereof for all other purposes, whether or not this Note be overdue,
and neither the Company nor any such agent shall be affected or bound by notice to the contrary. Any Holder of this Note electing
to exercise the right of conversion set forth in Section 4(a) hereof, in addition to the requirements set forth in Section 4(a),
and any prospective transferee of this Note, also is required to give the Company written confirmation that this Note is being
converted ("
Notice of Conversion
") in the form annexed hereto as
Exhibit A
. The date of receipt (including
receipt by telecopy) of such Notice of Conversion shall be the Conversion Date.
4. (a) The
Holder of this Note is entitled, at its option, after full cash payment for the shares convertible hereunder,
to convert
all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock (the "
Common
Stock
"), at a price ("
Conversion Price
") for each share of Common Stock equal to 55% of the
lowest
trading price
of the Common Stock as reported on the OTCQB maintained by the OTC Markets Group, Inc. upon which the Company’s
shares are traded or any exchange upon which the Common Stock may be traded in the future ("
Exchange
"), for the
twenty
prior
trading days including the day upon which a Notice of Conversion is received by
the Company or its transfer agent (provided such Notice of Conversion is delivered by fax or other electronic method of communication
to the Company or its transfer agent after 4 P.M. Eastern Standard or Daylight Savings Time if the Holder wishes to include the
same day closing price). If the shares have not been delivered within 3 business days, the Notice of Conversion may be rescinded.
Such conversion shall be effectuated by the Company delivering the shares of Common Stock to the Holder within 3 business days
of receipt by the Company of the Notice of Conversion. For the avoidance of doubt, shares shall be considered delivered if the
Company has caused its transfer agent to deliver the share but the Company’s transfer agent is unable to do so without further
information or delivery instructions from the recipient, agent or broker that the Holder submitting the Notice of Conversion designates.
Accrued but unpaid interest shall be subject to conversion. No fractional shares or scrip representing fractions of shares will
be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share
.
To the extent the
Conversion Price of the Company’s Common Stock closes below the par value per share, the Company will take all steps necessary
to solicit the consent of the stockholders to reduce the par value to the lowest value possible under law. The Company agrees
to honor all conversions submitted pending this increase.
In the event the Company experiences a DTC “Chill” on
its shares, the conversion price shall be decreased to 45% instead of 55% while that “Chill” is in effect.
In
no event shall the Holder be allowed to effect a conversion if such conversion, along with all other shares of Company Common
Stock beneficially owned by the Holder and its affiliates would exceed 9.9% of the outstanding shares of the Common Stock of the
Company.
(b) Interest
on any unpaid principal balance of this Note shall be paid at the rate of 8% per annum. Interest shall be paid by the Company
in Common Stock ("Interest Shares"). Holder may, at any time, send in a Notice of Conversion to the Company for Interest
Shares based on the formula provided in Section 4(a) above. The dollar amount converted into Interest Shares shall be all or a
portion of the accrued interest calculated on the unpaid principal balance of this Note to the date of such notice.
(c) During
the first six months this Note is in effect, the Company may redeem this Note by paying to the Holder an amount equal to 135%
of the unpaid principal amount of this Note along with any interest that has accrued This Note may not be redeemed after 180 days
from its issuance. The redemption must be closed and paid for within 3 business days of the Company sending the redemption demand
or the redemption will be invalid and the Company may not redeem this Note.
(d) Upon (i) a transfer of all or substantially all of the assets of the Company to any person in a single transaction or series
of related transactions, (ii) a reclassification, capital reorganization or other change or exchange of outstanding shares of
the Common Stock, or (iii) any consolidation or merger of the Company with or into another person or entity in which the Company
is not the surviving entity (other than a merger which is effected solely to change the jurisdiction of incorporation of the Company
and results in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of Common Stock)
(each of items (i), (ii) and (iii) being referred to as a "Sale Event"), then, in each case, the Company shall, upon
request of the Holder, redeem this Note in cash for 150% of the principal amount, plus accrued but unpaid interest through the
date of redemption, or at the election of the Holder, such Holder may convert the unpaid principal amount of this Note (together
with the amount of accrued but unpaid interest) into shares of Common Stock immediately prior to such Sale Event at the Conversion
Price.
(e) In
case of any Sale Event in connection with which this Note is not redeemed or converted, the Company shall cause effective provision
to be made so that the Holder of this Note shall have the right thereafter, by converting this Note, to purchase or convert this
Note into the kind and number of shares of stock or other securities or property (including cash) receivable upon such reclassification,
capital reorganization or other change, consolidation or merger by a holder of the number of shares of Common Stock that could
have been purchased upon exercise of the Note and at the same Conversion Price, as defined in this Note, immediately prior to
such Sale Event. The foregoing provisions shall similarly apply to successive Sale Events. If the consideration received by the
holders of Common Stock is other than cash, the value shall be as determined by the Board of Directors of the Company or successor
person or entity acting in good faith.
5. No
provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal
of, and interest on, this Note at the time, place, and rate, and in the form, herein prescribed.
6. The
Company hereby expressly waives demand and presentment for payment, notice of non-payment, protest, notice of protest, notice
of dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for
hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereto.
7. The
Company agrees to pay all costs and expenses, including reasonable attorneys' fees and expenses, which may be incurred by the
Holder in collecting any amount due under this Note.
8 If
one or more of the following described "Events of Default" shall occur:
(a) The
Company shall default in the payment of principal or interest on this Note or any other note issued to the Holder by the Company;
or
(b) Any
of the representations or warranties made by the Company herein or in any certificate or financial or other written statements
heretofore or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of this Note, or
the Securities Purchase Agreement under which this note was issued shall be false or misleading in any material respect; or
(c) The
Company shall fail to perform or observe, in any respect, any covenant, term, provision, condition, agreement or obligation of
the Company under this Note or any other note issued to the Holder; or
(d) The
Company shall (1) become insolvent; (2) admit in writing its inability to pay its debts generally as they mature; (3) make an
assignment for the benefit of creditors or commence proceedings for its dissolution; (4) apply for or consent to the appointment
of a trustee, liquidator or receiver for its or for a substantial part of its property or business; (5) file a petition for bankruptcy
relief, consent to the filing of such petition or have filed against it an involuntary petition for bankruptcy relief, all under
federal or state laws as applicable; or
(e) A
trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without
its consent and shall not be discharged within thirty (30) days after such appointment; or
(f) Any
governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or
control of the whole or any substantial portion of the properties or assets of the Company; or
(g) One
or more money judgments, writs or warrants of attachment, or similar process, in excess of fifty thousand dollars ($50,000) in
the aggregate, shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid,
unvacated, unbonded or unstayed for a period of fifteen (15) days or in any event later than five (5) days prior to the date of
any proposed sale thereunder; or
(h) except
for the failure to pay principal or interest at maturity of the debt instruments set forth on
Schedule 8(h)
hereto, defaulted
on or breached any term of any other note of similar debt instrument into which the Company has entered and failed to cure such
default within the appropriate grace period; or
(i) The
Company shall have its Common Stock delisted from a trading market (including the OTC BB market) or, if the Common Stock trades
on an exchange, then trading in the Common Stock shall be suspended for more than 10 consecutive days or ceases to file its 1934
act reports with the SEC;
(j) If
a majority of the members of the Board of Directors of the Company on the date hereof are no longer serving as members of the
Board;
(k) The
Company shall not deliver to the Holder the Common Stock pursuant to paragraph 4 herein within 3 business days of its receipt
of a Notice of Conversion; or
(l) The Company shall not replenish the reserve set forth in Section 12, within 3 business days of the request of the Holder.
(m) The
Company shall not be “current” in its filings with the Securities and Exchange Commission; or
(n) The
Company shall lose the “bid” price for its stock in a market (including the OTCQB marketplace or other exchange).
Then,
or at any time thereafter, unless cured within 5 days, and in each and every such case, unless such Event of Default shall have
been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option
of the Holder and in the Holder's sole discretion, the Holder may consider this Note immediately due and payable, without presentment,
demand, protest or (further) notice of any kind (other than notice of acceleration), all of which are hereby expressly waived,
anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately,
and without expiration of any period of grace, enforce any and all of the Holder's rights and remedies provided herein or any
other rights or remedies afforded by law. Upon an Event of Default, interest shall accrue at a default interest rate of 24% per
annum or, if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted by law. In
the event of a breach of Section 8(k) the penalty shall be $250 per day the shares are not issued beginning on the 4
th
day after the conversion notice was delivered to the Company. This penalty shall increase to $500 per day beginning on the 10
th
day. The penalty for a breach of Section 8(n) shall be an increase of the outstanding principal amounts by 20%. In case
of a breach of Section 8(i), the outstanding principal due under this Note shall increase by 50%. If this Note is not paid at
maturity, the outstanding principal due under this Note shall increase by 10%. Further, if a breach of Section 8(m) occurs or
is continuing after the 6 month anniversary of the Note, then the Holder shall be entitled to use the lowest closing bid price
during the delinquency period as a base price for the conversion. For example, if the lowest closing bid price during the delinquency
period is $0.01 per share and the conversion discount is 50% the Holder may elect to convert future conversions at $0.005 per
share. If this Note is not paid at maturity, the outstanding principal due under this Note shall increase by 10%.
If
the Holder shall commence an action or proceeding to enforce any provisions of this Note, including, without limitation, engaging
an attorney, then if the Holder prevails in such action, the Holder shall be reimbursed by the Company for its attorneys’
fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.
Make-Whole
for Failure to Deliver Loss. At the Holder’s election, if the Company fails for any reason to deliver to the Holder the
conversion shares by the by the 3rd business day following the delivery of a Notice of Conversion to the Company and if the Holder
incurs a Failure to Deliver Loss, then at any time the Holder may provide the Company written notice indicating the amounts payable
to the Holder in respect of the Failure to Deliver Loss and the Company must make the Holder whole as follows:
Failure
to Deliver Loss = [(High trade price at any time on or after the day of exercise) x (Number of conversion shares)]
The
Company must pay the Failure to Deliver Loss by cash payment, and any such cash payment must be made by the third business day
from the time of the Holder’s written notice to the Company.
9. In case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise
invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the
maximum extent possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be
affected or impaired thereby.
10. Neither this Note nor any term hereof may be amended, waived, discharged or terminated other than by a written
instrument signed by the Company and the Holder.
11. The Company
represents that it is not a “shell” issuer and has not been a “shell” issuer for the 12 months
following the Company’ having reported Form 10 type information indicating it is no longer a “shell issuer.
12. The Company shall issue irrevocable transfer agent instructions reserving 29,325,000 shares of its Common Stock for
conversions under this Note (the “Share Reserve”) and only upon written request by the Holder to update such
Share Reserve, shall update such Share Reserve to the number of shares equal to 4x the discounted shares as calculated on the
date of such written request.”). Upon full conversion of this Note, any shares remaining in the Share Reserve shall be
cancelled. The Company shall pay all transfer agent costs associated with issuing and delivering the share certificates to
Holder. If such amounts are to be paid by the Holder, it may deduct such amounts from the Conversion Price. The company
should at all times reserve a minimum of four times the amount of shares required if the note would be fully converted.
The Holder may reasonably request increases from time to time to reserve such amounts. The Company will instruct its transfer
agent to provide the outstanding share information to the Holder in connection with its conversions.
13. The
Company will give the Holder direct notice of any corporate actions, including but not limited to name changes, stock splits,
recapitalizations etc. This notice shall be given to the Holder as soon as possible under law.
14. This
Note shall be governed by and construed in accordance with the laws of New York applicable to contracts made and wholly to be
performed within the State of New York and shall be binding upon the successors and assigns of each party hereto. The Holder and
the Company hereby mutually waive trial by jury and consent to exclusive jurisdiction and venue in the courts of the State of
New York. This Agreement may be executed in counterparts, and the facsimile transmission of an executed counterpart to this Agreement
shall be effective as an original.
IN
WITNESS WHEREOF, the Company has caused this Note to be duly executed by an officer thereunto duly authorized.
Dated:
|
|
MEDIFIRST
SOLUTIONS, INC.
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
Title:
|
|
EXHIBIT A
NOTICE
OF CONVERSION
(To
be Executed by the Registered Holder in order to Convert the Note)
The
undersigned hereby irrevocably elects to convert $___________ of the above Note into _________ Shares of Common Stock of MEDIFIRST
SOLUTIONS, Inc. (“Shares”) according to the conditions set forth in such Note, as of the date written below.
If
Shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer and other taxes
and charges payable with respect thereto.
Date
of Conversion:
____________________________________________________________________
Applicable
Conversion Price:
_____________________________________________________________
Signature:
___________________________________________________________________________
[Print
Name of Holder and Title of Signer]
Address:____________________________________________________________________________
____________________________________________________________________________
SSN
or EIN:
Shares
are to be registered in the following name: ______________________________________________
Name:_______________________________________________________________________________
Address:
_______________________________
_______________________________________________
Tel:
____________________________________
Fax:
____________________________________
SSN
or EIN:
______________________________
Shares
are to be sent or delivered to the following account:
Account
Name:
_________________________________________________________________________
Address:
______________________________________________________________________________
SCHEDULE
8(H)
|
Principal
Amount of Note:
|
|
Approx.
Date of Issuance:
|
|
|
|
|
|
$100,000.00
|
|
6/15/2015
|
|
|
|
|
|
$31,000.00
|
|
10/9/2015
|
|
|
|
|
|
$29,000.00
|
|
10/26/2015
|
9
Exhibit
10.10
THE
SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY THE SECURITIES ACT OF 1933, AS AMENDED,
AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT)
US $46,803.00
MEDIFIRST
SOLUTIONS, INC.
8%
CONVERTIBLE REDEEMABLE NOTE
DUE
MARCH 7, 2017
BACK
END NOTE 2
FOR
VALUE RECEIVED, MEDIFIRST SOLUTIONS, Inc. (the “Company”) promises to pay to the order of LG CAPITAL FUNDING, LLC
and its authorized successors and permitted assigns ("
Holder
"), the aggregate principal face amount of Forty
Six Thousand Eight Hundred Three Dollars (U.S. $46,803.00) on March 7, 2017 ("
Maturity Date
") and to pay interest
on the principal amount outstanding hereunder at the rate of 8% per annum commencing on March 7, 2016. The interest will be paid
to the Holder in whose name this Note is registered on the records of the Company regarding registration and transfers of this
Note. The principal of, and interest on, this Note are payable at 1218 Union Street, Suite #2, Brooklyn, NY 11225, initially,
and if changed, last appearing on the records of the Company as designated in writing by the Holder hereof from time to time.
The Company will pay each interest payment and the outstanding principal due upon this Note on the Maturity Date, less any amounts
required by law to be deducted or withheld, to the Holder of this Note by check or wire transfer addressed to such Holder at the
last address appearing on the records of the Company. The forwarding of such check or wire transfer shall constitute a payment
of outstanding principal hereunder and shall satisfy and discharge the liability for principal on this Note to the extent of the
sum represented by such check or wire transfer. Interest shall be payable in Common Stock (as defined below) pursuant to paragraph
4(b) herein.
This
Note is subject to the following additional provisions:
1. This
Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as requested by the
Holder surrendering the same. No service charge will be made for such registration or transfer or exchange, except that Holder
shall pay any tax or other governmental charges payable in connection therewith.
2. The
Company shall be entitled to withhold from all payments any amounts required to be withheld under applicable laws.
3. This
Note may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended ("
Act
") and
applicable state securities laws. Any attempted transfer to a non-qualifying party shall be treated by the Company as void. Prior
to due presentment for transfer of this Note, the Company and any agent of the Company may treat the person in whose name this
Note is duly registered on the Company's records as the owner hereof for all other purposes, whether or not this Note be overdue,
and neither the Company nor any such agent shall be affected or bound by notice to the contrary. Any Holder of this Note electing
to exercise the right of conversion set forth in Section 4(a) hereof, in addition to the requirements set forth in Section 4(a),
and any prospective transferee of this Note, also is required to give the Company written confirmation that this Note is being
converted ("
Notice of Conversion
") in the form annexed hereto as
Exhibit A
. The date of receipt (including
receipt by telecopy) of such Notice of Conversion shall be the Conversion Date.
4. (a) The
Holder of this Note is entitled, at its option, , and after full cash payment for the shares convertible hereunder,
to
convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock
(the "
Common Stock
"), at a price ("
Conversion Price
") for each share of Common Stock equal to
55% of the
lowest trading price
of the Common Stock as reported on the OTCQB maintained by the OTC Markets Group,
Inc. upon which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future
("
Exchange
"), for the
twenty
prior
trading days including the day upon which
a Notice of Conversion is received by the Company or its transfer agent (provided such Notice of Conversion is delivered by fax
or other electronic method of communication to the Company or its transfer agent after 4 P.M. Eastern Standard or Daylight Savings
Time if the Holder wishes to include the same day closing price). If the shares have not been delivered within 3 business days,
the Notice of Conversion may be rescinded. Such conversion shall be effectuated by the Company delivering the shares of Common
Stock to the Holder within 3 business days of receipt by the Company of the Notice of Conversion. For the avoidance of doubt,
shares shall be considered delivered if the Company has caused its transfer agent to deliver the share but the Company’s
transfer agent is unable to do so without further information or delivery instructions from the recipient, agent or broker that
the Holder submitting the Notice of Conversion designates. Accrued but unpaid interest shall be subject to conversion. No fractional
shares or scrip representing fractions of shares will be issued on conversion, but the number of shares issuable shall be rounded
to the nearest whole share
.
To the extent the Conversion Price of the Company’s Common Stock closes below the par
value per share, the Company will take all steps necessary to solicit the consent of the stockholders to reduce the par value
to the lowest value possible under law. The Company agrees to honor all conversions submitted pending this increase.
In the
event the Company experiences a DTC “Chill” on its shares, the conversion price shall be decreased to 48% instead
of 58% while that “Chill” is in effect.
In no event shall the Holder be allowed to effect a conversion if such
conversion, along with all other shares of Company Common Stock beneficially owned by the Holder and its affiliates would exceed
9.9% of the outstanding shares of the Common Stock of the Company.
(b) Interest
on any unpaid principal balance of this Note shall be paid at the rate of 8% per annum. Interest shall be paid by the Company
in Common Stock ("Interest Shares"). Holder may, at any time, send in a Notice of Conversion to the Company for Interest
Shares based on the formula provided in Section 4(a) above. The dollar amount converted into Interest Shares shall be all or a
portion of the accrued interest calculated on the unpaid principal balance of this Note to the date of such notice.
(c) During
the first six months this Note is in effect, but no earlier than the date upon which the obligation of the Holder under the Holder
issued Back End Note is fully satisfied, the Company may redeem this Note by paying to the Holder an amount equal to 135% of the
unpaid principal amount of this Note along with any unpaid interest that has accrued. This Note may not be redeemed after 180
days from its issuance. The redemption must be closed and paid for within 3 business days of the Company sending the redemption
demand or the redemption will be invalid and the Company may not redeem this Note. Notwithstanding the foregoing, if the $105,000
Rule 144 convertible redeemable note issued by the Company of even date herewith is redeemed by the Company within 6 months of
the issuance date of such Note, all obligations of the Company under this Note and all obligations of the Holder under the Holder
issued Back End Note will be automatically be deemed satisfied and this Note and the Holder issued Back End Note will be automatically
be deemed cancelled and of no further force or effect.
(d) Upon (i) a transfer of all or substantially all of the assets of the Company to any person in a single transaction or series
of related transactions, (ii) a reclassification, capital reorganization (excluding an increase in authorized capital) or other
change or exchange of outstanding shares of the Common Stock, other than a forward or reverse stock split or stock dividend, or
(iii) any consolidation or merger of the Company with or into another person or entity in which the Company is not the surviving
entity (other than a merger which is effected solely to change the jurisdiction of incorporation of the Company and results in
a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of Common Stock) (each of
items (i), (ii) and (iii) being referred to as a "Sale Event"), then, in each case, the Company shall, upon request
of the Holder, redeem this Note in cash for 150% of the principal amount, plus accrued but unpaid interest through the date of
redemption, or at the election of the Holder, such Holder may convert the unpaid principal amount of this Note (together with
the amount of accrued but unpaid interest) into shares of Common Stock immediately prior to such Sale Event at the Conversion
Price.
(e) In case of any Sale Event in connection with which this Note is not redeemed or converted, the Company shall cause effective
provision to be made so that the Holder of this Note shall have the right thereafter, by converting this Note, to purchase or
convert this Note into the kind and number of shares of stock or other securities or property (including cash) receivable upon
such reclassification, capital reorganization or other change, consolidation or merger by a holder of the number of shares of
Common Stock that could have been purchased upon exercise of the Note and at the same Conversion Price, as defined in this Note,
immediately prior to such Sale Event. The foregoing provisions shall similarly apply to successive Sale Events. If the consideration
received by the holders of Common Stock is other than cash, the value shall be as determined by the Board of Directors of the
Company or successor person or entity acting in good faith.
5. No
provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal
of, and interest on, this Note at the time, place, and rate, and in the form, herein prescribed.
6. The
Company hereby expressly waives demand and presentment for payment, notice of non-payment, protest, notice of protest, notice
of dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for
hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereto.
7. The
Company agrees to pay all costs and expenses, including reasonable attorneys' fees and expenses, which may be incurred by the
Holder in collecting any amount due under this Note.
8. If
one or more of the following described "Events of Default" shall occur:
(a) The
Company shall default in the payment of principal or interest on this Note or any other note issued to the Holder by the Company;
or
(b) Any
of the representations or warranties made by the Company herein or in any certificate or financial or other written statements
heretofore or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of this Note, or
the Securities Purchase Agreement under which this note was issued shall be false or misleading in any material respect; or
(c) The
Company shall fail to perform or observe, in any respect, any covenant, term, provision, condition, agreement or obligation of
the Company under this Note or any other note issued to the Holder; or
(d) The
Company shall (1) become insolvent; (2) admit in writing its inability to pay its debts generally as they mature; (3) make an
assignment for the benefit of creditors or commence proceedings for its dissolution; (4) apply for or consent to the appointment
of a trustee, liquidator or receiver for its or for a substantial part of its property or business; (5) file a petition for bankruptcy
relief, consent to the filing of such petition or have filed against it an involuntary petition for bankruptcy relief, all under
federal or state laws as applicable; or
(e) A
trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without
its consent and shall not be discharged within thirty (30) days after such appointment; or
(f) Any
governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or
control of the whole or any substantial portion of the properties or assets of the Company; or
(g) One
or more money judgments, writs or warrants of attachment, or similar process, in excess of fifty thousand dollars ($50,000) in
the aggregate, shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid,
unvacated, unbonded or unstayed for a period of fifteen (15) days or in any event later than five (5) days prior to the date of
any proposed sale thereunder; or
(h) except
for the failure to pay principal or interest at maturity of the debt instruments set forth on
Schedule 8(h)
hereto, defaulted
on or breached any term of any other note of similar debt instrument into which the Company has entered and failed to cure such
default within the appropriate grace period; or
(i) The
Company shall have its Common Stock delisted from an exchange (including the OTC Markets exchange) or, if the Common Stock trades
on an exchange, then trading in the Common Stock shall be suspended for more than 10 consecutive days or ceases to file its 1934
act reports with the SEC;
(j) If
a majority of the members of the Board of Directors of the Company on the date hereof are no longer serving as members of the
Board;
(k) The
Company shall not deliver to the Holder the Common Stock pursuant to paragraph 4 herein within 3 business days of its receipt
of a Notice of Conversion; or
(l)
The Company shall not replenish the reserve set forth in Section 12, within 5 business days of the request of the Holder;
or
(m) The Company’s Common Stock has a closing bid price of less than $0.003 per share for at least 5 consecutive trading days;
or
(n)
The aggregate dollar trading volume of the Company’s Common Stock is less than thirty thousand dollars ($30,000.00)
in any 5 consecutive trading days; or
(o)
The Company shall cease to be “current” in its filings with the Securities and Exchange Commission; or
(p) The Company shall lose the “bid” price for its stock in a market (including the OTCBB marketplace or other exchange)
Then,
or at any time thereafter, unless cured (except for 8(m) and 8(n) which are incurable defaults, the
sole remedy
of which
is to allow the Holder to cancel both this Note and the Holder Issued Note, and in each and every such case, unless such Event
of Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent
default) at the option of the Holder and in the Holder's sole discretion, the Holder may consider this Note immediately due and
payable, without presentment, demand, protest or (further) notice of any kind (other than notice of acceleration), all of which
are hereby expressly waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, and
the Holder may immediately, and without expiration of any period of grace, enforce any and all of the Holder's rights and remedies
provided herein or any other rights or remedies afforded by law. Upon an Event of Default, interest shall accrue at a default
interest rate of 24% per annum or, if such rate is usurious or not permitted by current law, then at the highest rate of interest
permitted by law. In the event of a breach of Section 8(k) the penalty shall be $250 per day the shares are not issued beginning
on the 4
th
day after the conversion notice was delivered to the Company. This penalty shall increase to $500 per day
beginning on the 10
th
day. The penalty for a breach of Section 8(p) shall be an increase of the outstanding principal
amounts by 20%. In case of a breach of Section 8(i), the outstanding principal due under this Note shall increase by 50%. Further,
if a breach of Section 8(o) occurs or is continuing after the 6 month anniversary of the Note, then the Holder shall be entitled
to use the lowest closing bid price during the delinquency period as a base price for the conversion. For example, if the lowest
closing bid price during the delinquency period is $0.01 per share and the conversion discount is 50% the Holder may elect to
convert future conversions at $0.005 per share. If this Note is not paid at maturity, the outstanding principal due under this
Note shall increase by 10%.
If
the Holder shall commence an action or proceeding to enforce any provisions of this Note, including, without limitation, engaging
an attorney, then if the Holder prevails in such action, the Holder shall be reimbursed by the Company for its attorneys’
fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.
Make-Whole
for Failure to Deliver Loss. At the Holder’s election, if the Company fails for any reason to deliver to the Holder the
conversion shares by the 3rd business day following the delivery of a Notice of Conversion to the Company and if the Holder incurs
a Failure to Deliver Loss, then at any time the Holder may provide the Company written notice indicating the amounts payable to
the Holder in respect of the Failure to Deliver Loss and the Company must make the Holder whole as follows:
Failure to Deliver
Loss = [(High trade price at any time on or after the day of exercise) x (Number of conversion shares)]
The
Company must pay the Failure to Deliver Loss by cash payment, and any such cash payment must be made by the third business day
from the time of the Holder’s written notice to the Company.
9. In
case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent
possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired
thereby.
10. Neither
this Note nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the
Company and the Holder.
11. The
Company represents that it is not a “shell” issuer and has never been a “shell” issuer or that if it previously
has been a “shell” issuer that at least 12 months have passed since the Company has reported form 10 type information
indicating it is no longer a “shell issuer. Further. The Company will instruct its counsel to either (i) write a “144”
opinion to allow for salability of the conversion shares or (ii) accept such opinion from Holder’s counsel.
12. Prior
to cash funding of this Note, The Company will issue irrevocable transfer agent instructions reserving 4x the number of shares
of Common Stock necessary to allow the holder to convert this note based on the discounted conversion price set forth in Section
4(a) herewith. Upon full conversion of this Note, the reserve representing this Note shall be cancelled. The Company will pay
all transfer agent costs associated with issuing and delivering the shares. If such amounts are to be paid by the Holder, it may
deduct such amounts from the Conversion Price. Conversion Notices may be sent to the Company or its transfer agent via electric
mail. The Company will instruct its transfer agent to provide the outstanding share information to the Holder in connection with
its conversions.
13. The
Company will give the Holder direct notice of any corporate actions, including but not limited to name changes, stock splits,
recapitalizations etc. This notice shall be given to the Holder as soon as possible under law.
14. This
Note shall be governed by and construed in accordance with the laws of New York applicable to contracts made and wholly to be
performed within the State of New York and shall be binding upon the successors and assigns of each party hereto. The Holder and
the Company hereby mutually waive trial by jury and consent to exclusive jurisdiction and venue in the courts of the State of
New York. This Agreement may be executed in counterparts, and the facsimile transmission of an executed counterpart to this Agreement
shall be effective as an original.
IN
WITNESS WHEREOF, the Company has caused this Note to be duly executed by an officer thereunto duly authorized.
Dated:
__________
|
|
MEDI
FIRST
SOLUTIONS, INC.
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
|
|
Title:
|
|
EXHIBIT A
NOTICE
OF CONVERSION
(To
be Executed by the Registered Holder in order to Convert the Note)
The
undersigned hereby irrevocably elects to convert $___________ of the above Note into _________ Shares of Common Stock of MEDIFIRST
SOLUTIONS, Inc. (“Shares”) according to the conditions set forth in such Note, as of the date written below.
If
Shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer and other taxes
and charges payable with respect thereto.
Date
of Conversion:_______________________________________________________________
Applicable
Conversion Price:
________________________________________________________
Signature:_______________________________________________________________________
[Print
Name of Holder and Title of Signer]
Address:________________________________________________________________________
________________________________________________________________________
SSN
or EIN: ______________________________
Shares
are to be registered in the following name:
__________________________________________
Name:
___________________________________________________________________________
Address:
________________________________________________________________________
Tel:
_________________________________________
Fax:
_________________________________________
SSN
or EIN:
___________________________________
Shares
are to be sent or delivered to the following account:
Account
Name:
_____________________________________________________________________
Address:
_________________________________________________________________________
SCHEDULE
8(H)
|
Principal
Amount of Note:
|
|
Approx.
Date of Issuance:
|
|
|
|
|
|
$100,000.00
|
|
6/15/2015
|
|
|
|
|
|
$31,000.00
|
|
10/9/2015
|
|
|
|
|
|
$29,000.00
|
|
10/26/2015
|
10
Exhibit 10.11
THE
SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY THE SECURITIES ACT OF 1933, AS AMENDED,
AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT)
US $39,557.48
REPLACEMENT
NOTE ORIGINALLY ISSUED AUGUST 31, 2015 IN THE AMOUNT OF $38,000.00
MEDIFIRST
SOLUTIONS, INC.
8%
CONVERTIBLE REDEEMABLE NOTE
DUE
FEBRUARY 28, 2017
FOR
VALUE RECEIVED, MEDIFIRST SOLUTIONS, Inc. (the “Company”) promises to pay to the order of LG CAPITAL FUNDING, LLC
and its authorized successors and permitted assigns ("
Holder
"), the aggregate principal face amount of Thirty
Nine Thousand Five Hundred Fifty Seven Dollars 48/100 cents exactly (U.S. $39,557.48) on February 28, 2017 ("
Maturity
Date
") and to pay interest on the principal amount outstanding hereunder at the rate of 8% per annum commencing on February
29, 2016. The interest will be paid to the Holder in whose name this Note is registered on the records of the Company regarding
registration and transfers of this Note. The principal of, and interest on, this Note are payable at 1218 Union Street, Suite
#2, Brooklyn, NY 11225, initially, and if changed, last appearing on the records of the Company as designated in writing by the
Holder hereof from time to time. The Company will pay each interest payment and the outstanding principal due upon this Note on
the Maturity Date, less any amounts required by law to be deducted or withheld, to the Holder of this Note by check or wire transfer
addressed to such Holder at the last address appearing on the records of the Company. The forwarding of such check or wire transfer
shall constitute a payment of outstanding principal hereunder and shall satisfy and discharge the liability for principal on this
Note to the extent of the sum represented by such check or wire transfer. Interest shall be payable in Common Stock (as defined
below) pursuant to paragraph 4(b) herein.
This
Note is subject to the following additional provisions:
1. This
Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as requested by the
Holder surrendering the same. No service charge will be made for such registration or transfer or exchange, except that Holder
shall pay any tax or other governmental charges payable in connection therewith.
2. The
Company shall be entitled to withhold from all payments any amounts required to be withheld under applicable laws.
3. This
Note may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended ("
Act
") and
applicable state securities laws. Any attempted transfer to a non-qualifying party shall be treated by the Company as void. Prior
to due presentment for transfer of this Note, the Company and any agent of the Company may treat the person in whose name this
Note is duly registered on the Company's records as the owner hereof for all other purposes, whether or not this Note be overdue,
and neither the Company nor any such agent shall be affected or bound by notice to the contrary. Any Holder of this Note electing
to exercise the right of conversion set forth in Section 4(a) hereof, in addition to the requirements set forth in Section 4(a),
and any prospective transferee of this Note, also is required to give the Company written confirmation that this Note is being
converted ("
Notice of Conversion
") in the form annexed hereto as
Exhibit A
. The date of receipt (including
receipt by telecopy) of such Notice of Conversion shall be the Conversion Date.
4. (a) The
Holder of this Note is entitled, at its option, after full cash payment for the shares convertible hereunder,
to convert
all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock (the "
Common
Stock
"), at a price ("
Conversion Price
") for each share of Common Stock equal to 55% of the
lowest
trading price
of the Common Stock as reported on the OTCQB maintained by the OTC Markets Group, Inc. upon which the Company’s
shares are traded or any exchange upon which the Common Stock may be traded in the future ("
Exchange
"), for the
twenty
prior
trading days including the day upon which a Notice of Conversion is received by
the Company or its transfer agent (provided such Notice of Conversion is delivered by fax or other electronic method of communication
to the Company or its transfer agent after 4 P.M. Eastern Standard or Daylight Savings Time if the Holder wishes to include the
same day closing price). If the shares have not been delivered within 3 business days, the Notice of Conversion may be rescinded.
Such conversion shall be effectuated by the Company delivering the shares of Common Stock to the Holder within 3 business days
of receipt by the Company of the Notice of Conversion. For the avoidance of doubt, shares shall be considered delivered if the
Company has caused its transfer agent to deliver the share but the Company’s transfer agent is unable to do so without further
information or delivery instructions from the recipient, agent or broker that the Holder submitting the Notice of Conversion designates.
Accrued but unpaid interest shall be subject to conversion. No fractional shares or scrip representing fractions of shares will
be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share
.
To the extent the
Conversion Price of the Company’s Common Stock closes below the par value per share, the Company will take all steps necessary
to solicit the consent of the stockholders to reduce the par value to the lowest value possible under law. The Company agrees
to honor all conversions submitted pending this increase.
In the event the Company experiences a DTC “Chill” on
its shares, the conversion price shall be decreased to 45% instead of 55% while that “Chill” is in effect.
In
no event shall the Holder be allowed to effect a conversion if such conversion, along with all other shares of Company Common
Stock beneficially owned by the Holder and its affiliates would exceed 9.9% of the outstanding shares of the Common Stock of the
Company.
(b) Interest
on any unpaid principal balance of this Note shall be paid at the rate of 8% per annum. Interest shall be paid by the Company
in Common Stock ("Interest Shares"). Holder may, at any time, send in a Notice of Conversion to the Company for Interest
Shares based on the formula provided in Section 4(a) above. The dollar amount converted into Interest Shares shall be all or a
portion of the accrued interest calculated on the unpaid principal balance of this Note to the date of such notice.
(c) This
note may not be prepaid.
(d)
Upon (i) a transfer of all or substantially all of the assets of the Company to any person in a single transaction or series
of related transactions, (ii) a reclassification, capital reorganization or other change or exchange of outstanding shares of
the Common Stock, or (iii) any consolidation or merger of the Company with or into another person or entity in which the Company
is not the surviving entity (other than a merger which is effected solely to change the jurisdiction of incorporation of the Company
and results in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of Common Stock)
(each of items (i), (ii) and (iii) being referred to as a "Sale Event"), then, in each case, the Company shall, upon
request of the Holder, redeem this Note in cash for 150% of the principal amount, plus accrued but unpaid interest through the
date of redemption, or at the election of the Holder, such Holder may convert the unpaid principal amount of this Note (together
with the amount of accrued but unpaid interest) into shares of Common Stock immediately prior to such Sale Event at the Conversion
Price.
(e)
In case of any Sale Event in connection with which this Note is not redeemed or converted, the Company shall cause effective
provision to be made so that the Holder of this Note shall have the right thereafter, by converting this Note, to purchase or
convert this Note into the kind and number of shares of stock or other securities or property (including cash) receivable upon
such reclassification, capital reorganization or other change, consolidation or merger by a holder of the number of shares of
Common Stock that could have been purchased upon exercise of the Note and at the same Conversion Price, as defined in this Note,
immediately prior to such Sale Event. The foregoing provisions shall similarly apply to successive Sale Events. If the consideration
received by the holders of Common Stock is other than cash, the value shall be as determined by the Board of Directors of the
Company or successor person or entity acting in good faith.
5. No
provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal
of, and interest on, this Note at the time, place, and rate, and in the form, herein prescribed.
6. The
Company hereby expressly waives demand and presentment for payment, notice of non-payment, protest, notice of protest, notice
of dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for
hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereto.
7. The
Company agrees to pay all costs and expenses, including reasonable attorneys' fees and expenses, which may be incurred by the
Holder in collecting any amount due under this Note.
8. If
one or more of the following described "Events of Default" shall occur:
(a) The
Company shall default in the payment of principal or interest on this Note or any other note issued to the Holder by the Company;
or
(b) Any
of the representations or warranties made by the Company herein or in any certificate or financial or other written statements
heretofore or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of this Note, or
the Securities Purchase Agreement under which this note was issued shall be false or misleading in any material respect; or
(c) The
Company shall fail to perform or observe, in any respect, any covenant, term, provision, condition, agreement or obligation of
the Company under this Note or any other note issued to the Holder; or
(d) The
Company shall (1) become insolvent; (2) admit in writing its inability to pay its debts generally as they mature; (3) make an
assignment for the benefit of creditors or commence proceedings for its dissolution; (4) apply for or consent to the appointment
of a trustee, liquidator or receiver for its or for a substantial part of its property or business; (5) file a petition for bankruptcy
relief, consent to the filing of such petition or have filed against it an involuntary petition for bankruptcy relief, all under
federal or state laws as applicable; or
(e) A
trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without
its consent and shall not be discharged within thirty (30) days after such appointment; or
(f) Any
governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or
control of the whole or any substantial portion of the properties or assets of the Company; or
(g) One
or more money judgments, writs or warrants of attachment, or similar process, in excess of fifty thousand dollars ($50,000) in
the aggregate, shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid,
unvacated, unbonded or unstayed for a period of fifteen (15) days or in any event later than five (5) days prior to the date of
any proposed sale thereunder; or
(h) except
for the failure to pay principal or interest at maturity of the debt instruments set forth on
Schedule 8(h)
hereto, defaulted
on or breached any term of any other note of similar debt instrument into which the Company has entered and failed to cure such
default within the appropriate grace period; or
(i) The
Company shall have its Common Stock delisted from a trading market (including the OTC BB market) or, if the Common Stock trades
on an exchange, then trading in the Common Stock shall be suspended for more than 10 consecutive days or ceases to file its 1934
act reports with the SEC;
(j) If
a majority of the members of the Board of Directors of the Company on the date hereof are no longer serving as members of the
Board;
(k) The
Company shall not deliver to the Holder the Common Stock pursuant to paragraph 4 herein within 3 business days of its receipt
of a Notice of Conversion; or
(l)
The Company shall not replenish the reserve set forth in Section 12, within 3 business days of the request of the Holder.
(m) The
Company shall not be “current” in its filings with the Securities and Exchange Commission; or
(n)
The Company shall lose the “bid” price for its stock in a market (including the OTCQB marketplace or other exchange).
Then,
or at any time thereafter, unless cured within 5 days, and in each and every such case, unless such Event of Default shall have
been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option
of the Holder and in the Holder's sole discretion, the Holder may consider this Note immediately due and payable, without presentment,
demand, protest or (further) notice of any kind (other than notice of acceleration), all of which are hereby expressly waived,
anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately,
and without expiration of any period of grace, enforce any and all of the Holder's rights and remedies provided herein or any
other rights or remedies afforded by law. Upon an Event of Default, interest shall accrue at a default interest rate of 24% per
annum or, if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted by law. In
the event of a breach of Section 8(k) the penalty shall be $250 per day the shares are not issued beginning on the 4
th
day after the conversion notice was delivered to the Company. This penalty shall increase to $500 per day beginning on the 10
th
day. The penalty for a breach of Section 8(n) shall be an increase of the outstanding principal amounts by 20%. In case
of a breach of Section 8(i), the outstanding principal due under this Note shall increase by 50%. If this Note is not paid at
maturity, the outstanding principal due under this Note shall increase by 10%. Further, if a breach of Section 8(m) occurs or
is continuing after the 6 month anniversary of the Note, then the Holder shall be entitled to use the lowest closing bid price
during the delinquency period as a base price for the conversion. For example, if the lowest closing bid price during the delinquency
period is $0.01 per share and the conversion discount is 50% the Holder may elect to convert future conversions at $0.005 per
share. If this Note is not paid at maturity, the outstanding principal due under this Note shall increase by 10%.
If
the Holder shall commence an action or proceeding to enforce any provisions of this Note, including, without limitation, engaging
an attorney, then if the Holder prevails in such action, the Holder shall be reimbursed by the Company for its attorneys’
fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.
Make-Whole
for Failure to Deliver Loss. At the Holder’s election, if the Company fails for any reason to deliver to the Holder the
conversion shares by the 3rd business day following the delivery of a Notice of Conversion to the Company and if the Holder incurs
a Failure to Deliver Loss, then at any time the Holder may provide the Company written notice indicating the amounts payable to
the Holder in respect of the Failure to Deliver Loss and the Company must make the Holder whole as follows:
Failure
to Deliver Loss = [(High trade price at any time on or after the day of exercise) x (Number of conversion shares)]
The
Company must pay the Failure to Deliver Loss by cash payment, and any such cash payment must be made by the third business day
from the time of the Holder’s written notice to the Company.
9. In
case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent
possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired
thereby.
10. Neither
this Note nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the
Company and the Holder.
11. The
Company represents that it is not a “shell” issuer and has not been a “shell” issuer for the 12 months
following the Company’ having reported Form 10 type information indicating it is no longer a “shell issuer.
12. The
Company shall issue irrevocable transfer agent instructions reserving 4x the discounted shares (the “Share Reserve”),
initially calculated on the date of issuance of this Note or, if requested by the Holder, calculated on the date of written request
by the Holder to update such Share Reserve. Upon full conversion of this Note, any shares remaining in the Share Reserve shall
be cancelled. The Company shall pay all transfer agent costs associated with issuing and delivering the share certificates to
Holder. If such amounts are to be paid by the Holder, it may deduct such amounts from the Conversion Price. The company should
at all times reserve a minimum of four times the amount of shares required if the note would be fully converted. The Holder
may reasonably request increases from time to time to reserve such amounts. The Company will instruct its transfer agent to provide
the outstanding share information to the Holder in connection with its conversions.
13. The
Company will give the Holder direct notice of any corporate actions, including but not limited to name changes, stock splits,
recapitalizations etc. This notice shall be given to the Holder as soon as possible under law.
14. This
Note shall be governed by and construed in accordance with the laws of New York applicable to contracts made and wholly to be
performed within the State of New York and shall be binding upon the successors and assigns of each party hereto. The Holder and
the Company hereby mutually waive trial by jury and consent to exclusive jurisdiction and venue in the courts of the State of
New York. This Agreement may be executed in counterparts, and the facsimile transmission of an executed counterpart to this Agreement
shall be effective as an original.
IN
WITNESS WHEREOF, the Company has caused this Note to be duly executed by an officer thereunto duly authorized.
Dated:
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MEDIFIRST
SOLUTIONS, INC.
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By:
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Title:
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EXHIBIT
A
NOTICE
OF CONVERSION
(To
be Executed by the Registered Holder in order to Convert the Note)
The
undersigned hereby irrevocably elects to convert $___________ of the above Note into _________ Shares of Common Stock of MEDIFIRST
SOLUTIONS, Inc. (“Shares”) according to the conditions set forth in such Note, as of the date written below.
If
Shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer and other taxes
and charges payable with respect thereto.
Date
of Conversion:
_________________________________________________________________
Applicable
Conversion Price:
__________________________________________________________
Signature:
________________________________________________________________________
[Print
Name of Holder and Title of Signer]
Address:
_________________________________________________________________________
_________________________________________________________________________
SSN
or EIN: __________________________
Shares
are to be registered in the following name:___________________________________________
Name:
____________________________________
Address:__________________________________
Tel:
______________________________________
Fax:
______________________________________
SSN
or EIN:
________________________________
Shares
are to be sent or delivered to the following account:
Account
Name:
_______________________________________________________________________
Address:
____________________________________________________________________________
SCHEDULE
8(H)
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Principal
Amount of Note:
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Approx.
Date of Issuance:
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$100,000.00
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6/15/2015
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$31,000.00
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10/9/2015
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$29,000.00
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10/26/2015
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9
Exhibit
10.13
EMPLOYMENT
AGREEMENT
This
Employment Agreement (
“
Agreement
”
) is executed on March 18, 2016 to be effective as of January
1, 2012 between Medifirst Solutions, Inc., a Nevada corporation,
(“
Company
”)
and Bruce Schoengood
(“
Employee
”
)
.
Recital
The
Company desires to employ Employee as President and Chief Executive Officer of the Company and Employee desires to accept such
employment on the terms and conditions of this Agreement.
NOW
THEREFORE, FOR GOOD AND SUFFICIENT CONSIDERATION, INCLUDING BUT NOT LIMITED TO THE MUTUAL PROMISES HEREIN, THE PARTIES AGREE AS
FOLLOWS:
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1.
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Term
of Employment
. For the consideration
and under the terms and conditions of this Agreement, the Company hereby employs Employee, and Employee hereby accepts employment,
as President and Chief Executive Officer effective January 1, 2012 and shall serve for a sixty (60) month term ending January
1, 2018
(“
Term
”),
unless earlier terminated under the provisions of this Agreement. At the
end of the Term, this Agreement shall automatically renew under the same terms and conditions unless amendment or modified
pursuant to Section 9 of this Agreement
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2.
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Compensation,
Benefits and Expense Reimbursement
. The
Company will pay Employee the following compensation:
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2.1 Base
Compensation
. An annual base salary of $100,000 which will be paid at the Company’s regular payroll periods, but not
less often than weekly. The Company acknowledges that Employee served as Chief Executive Officer of the Company during a portion
of the fiscal year ended December 31, 2011 and accrued unpaid compensation in the amount of $7,500.00. Such unpaid compensation
will be added to Employee’s initial base compensation payment.
2.2 Annual
Bonus
. In addition to the Base Compensation, the Company will pay Employee an annual bonus compensation
(“
Bonus
”)
equal to 20% of the Company’s net profits. For purposes of this Agreement, “net profits” shall be defined
as gross revenues less all operating expenses.
2.3
Benefits.
Employee will be eligible for health benefits sponsored
by the Company.
2.4
Vacation.
Employee will be entitled to vacation time not
to exceed three weeks for each twelve (12) month period during the Term. All untaken vacation time will be accrued and carried
forward during any succeeding twelve (12) month period during the Term.
2.5 Reimbursements
.
Employee may incur reasonable expenses, including expenses for entertainment, travel, and similar items consistent with the expense
reimbursement policy promulgated by the Company. For all Company allowed business expenses, the Company shall reimburse Employee
within a reasonable time after Employee submits an itemized account of the expenses detailing the expense, the location and the
business purpose of the expense. Reasonable expenses shall include expenses to establish a toll-free telephone line and fax capabilities
from Employee’s home. The Company may provide Employee with a Company credit card for reasonable and prior- approved travel
expenses.
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3.
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Duties
.
The Company hires Employee in the capacity as President and Chief Executive Officer Employee’s corporate duties will
generally be those of an executive officer as outline the Company’s Bylaws. Employee will perform these duties faithfully,
diligently, to the best of Employee’s ability, and to the Company’s best interest. Employee will devote Employee’s
full time and attention, reasonable periods of illness excluded, to the performance of these duties. Employee will comply
with the Company’s policies, standards, and regulations as well as with all laws, statutes, ordinances rules and regulations
relating to Employee’s employment and carrying out the duties of Employee’s employment. Employee will not engage
in any other business activity, regardless of whether such activity is pursued for profit, gain or other pecuniary advantage.
Passive investments are excluded from the foregoing prohibition.
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4.
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Employee’s
Representations and Warranties
. Employee
represents and warrants that there is no employment contract, restriction or other obligation to which Employee is subject
that prevents Employee from entering into this Agreement or from fully performing and honoring Employee’s duties and
obligations under this Agreement.
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5.
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Confidentiality
.
Without the Company’s prior written consent, and during and after employment with the Company, Employee will not disclose
to any person or firm any of Company’s patient lists, contracts, business opportunities, business plans, projections,
leads, marketing ideas or plans, features, relations with state and local governments, financial and technical information,
ideas, techniques, improved technologies, systems, designs, specifications, prototypes, samples, models, programs, computer
data, supplier lists or identities, drawings, specifications, techniques, software, trade secrets, and other proprietary information,
intellectual property, business methods, know-how and incidental activities thereto, that the Company has an interest in protecting
(collectively, “
Confidential Information
”). Except for disclosures reasonably made pursuant
to actual, potential, or prospective business transactions that advance the Company’s business and not for any purposes
of competition with the Company, Employee will diligently safeguard and protect Confidential Information. If Employee has
any question whether any matter constitutes Confidential Information or may be disclosed without breaching this Agreement,
Employee will submit the question to the Board of Directors of the Company or to the Company’s legal counsel in writing
before taking further action about the matter. Upon the Company’s request or upon the termination of Employee’s
employment with the Company, Employee will promptly return to the Company all materials furnished by the Company containing
Confidential Information, together will all copies and summaries of Confidential Information in the possession or under the
control of Employee. Nothing herein shall act as a transfer of any rights to any Confidential Information. This paragraph
specifically survives termination of this Agreement. Further, following termination of this Agreement, Employee shall not
use Confidential Information to solicit the Company’s clients and the Company’s employees for a period of two
(2) years in the contiguous United States.
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6.
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Restrictive
Covenants
. The Company is in the business
of providing out-patient, minimally invasive cosmetic surgical services and franchising cosmetic surgery centers throughout
the United States. This business is highly competitive, and the patient relationships that the Company has and intends to
establish and keep are essential to its current and future success and to its ability to pay compensation to Employee. It
is therefore necessary, as an essential condition to the Company agreeing to employ Employee, and without which the Company
would not do so, that Employee will not compete with the Company. Therefore, during employment and for a period of two (2)
years after employment ends, Employee will not compete with the Company during that two-year period in any way in the United
States by directly or indirectly participating, whether as an employee, officer, partner, shareholder, owner, consultant or
otherwise, with any person engaged in the kind of business described in the first sentence of this Section 6. Further,
Employee shall not during the two-year period solicit any employee of the Company to become an employee or independent contractor
of Employee or any other person or entity; or suggest to an employee of the Company that the employee should reduce or terminate
the employee’s relationship with the Company; or solicit any supplier, service provider, customer, or other business
relation of the Company to become a business relation of Employee; or suggest to a business relation of the Company that the
business relation should reduce or terminate the business relation’s business or relationship with the Company. The
agreements and covenants not to compete in this Section 6 are fair and reasonable in light of all the facts and circumstances
of the relationship between Employee and the Company Employee agrees that Employee has been provided notice of this non-competition
provision in a written employment offer at least two weeks before the first day of the Employee’s employment and that
Employee is an individual engaged in administrative, executive or professional work who performs predominantly intellectual,
managerial or creative tasks, exercises discretion and independent judgment is paid on a salary basis. To the extent that
any provision or portion of this Section 6 shall be held, found or deemed to be unreasonable, unlawful or unenforceable by
a court of competent jurisdiction, any such provision or portion thereof shall be deemed to be modified to the extent necessary
in order that any such provision or portion thereof shall be legally enforceable to the fullest extent permitted by New Jersey
law; and any court of competent jurisdiction shall, and the parties hereto hereby expressly authorize, request and empower
any court of competent jurisdiction to, enforce any such provision or portion thereof or to modify any such provision or portion
thereof in order that any such provision or portion thereof shall be enforced by the court to the fullest extent permitted
by applicable law. The Employee recognizes and agrees that the Company has a significant interest in New Jersey in protecting
its rights and therefore, New Jersey law shall apply regardless of the law of any other jurisdiction and regardless of where
Employee works or resides.
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7.
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Injunctive
Relief
. Employee’s breach or violation
of any provision of this Agreement would damage the Company seriously, and in a manner that could not be adequately compensated
by an award of damages against Employee. Therefore, if the Company determines Employee has breached or is violating this Agreement
or otherwise failing to perform it, the Company may bring an action to enjoin Employee from the violation or otherwise to
enforce this Agreement and Employee consents to this injunctive relief and enforcement. This injunctive relief is in addition
to any and all rights available to the Company under this Agreement, at law, and otherwise. Employee acknowledges that if
and when employment with the Company terminates under this Agreement, Employee’s experience and capabilities are such
that Employee can obtain employment in business activities that are of a different or non-competing nature with activities
as an employee of the Company; thus, injunctive relief will not prevent Employee from earning a reasonable livelihood. Employee
further acknowledges that the provisions of this Agreement are necessary to protect the Company’s legitimate business
interests and are reasonable in scope and content under New Jersey law which shall control. The provisions of this Agreement
will be enforceable notwithstanding the existence of any claim or cause of action of Employee against the Company, whether
predicated on this Agreement or otherwise. Injunctive relief may be brought in New Jersey courts which may be transferred
to other jurisdictions for enforcement of such injunctive relief.
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8.
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Attorney
Fees
. The prevailing party in any action
for an injunction or for enforcement of Sections 5 and 6, or either of them, will not be entitled to an award of attorney
fees and costs at any level of litigation, appeal and review. This provision is specifically negotiated so that each party
shall bear its own attorneys’ fees and costs in any action.
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9.
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Termination
.
Employee’s employment shall or may, as the context requires, be terminated under any one or more of the following circumstances:
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9.1
Employment
shall be terminated automatically at the end of the Term or any renewal of such Term.
9.2
Employment
shall be terminated at Employee’s death.
9.3
The
Company may terminate Employee’s employment solely for “cause”, by giving 30 days’ prior written notice.
For purposes of this Agreement, “cause” shall mean:
(i)
actions constituting gross and wanton misconduct, including fraud, embezzlement or theft, or gross neglect of duty which has resulted
or is likely to result in material economic damage to the Company:
(ii)
unethical medical practices as determined by the appropriate regulatory authority which has jurisdiction over Employee’s
medical practice and licensing;
(iii) intentional
disclosure of the Company’s Confidential Information contrary to the Company’s policies;
(iv) the
willful and continued failure to substantially perform your duties under this Agreement.
For
purposes of this Section 9.3, any act or failure to act, shall not be deemed willful or intentional unless it is done, or omitted
to be done, by Employee in bad faith or without a reasonable belief that Employee’s action or omission was in the best interests
of the Company. Failure to meet performance standards or objectives, by itself, will not constitute “cause”.
9.4
The
Company and Employee may mutually agree to terminate Employee’s employment at any time.
9.5
The
Company may terminate Employee’s employment immediately and at any time in the sole discretion of the Company’s Board
of Directors if Employee suffers a disability or inability due to physical or mental illness, or other cause, to perform
the essential function of Employee’s duties under this Agreement.
9.6
Upon
termination of employment, the compensation payable to Employee under Section 2 will be pro-rated to the date of termination
and will be paid as provided by law. Termination of employment will not relieve or release Employee from any obligations under
Sections 5 and 6, and, except as specifically provided in this Agreement, the provisions of those paragraphs will survive
termination of employment, however caused.
10.1 Invalid
Provisions
. Invalidity or unenforceability of any provision of this Agreement will not affect its other provisions. This Agreement
will be construed in all respects as if all invalid or unenforceable provisions were omitted.
10.2 Modification
.
No change or modification of this Agreement is valid unless it is in writing and signed by the party or parties to be bound.
10.3 Notice
.
Any notice to be given under this Agreement is sufficient if it is in writing and is sent by mail to Employee at Employee’s
address as it appears on the Company’s records, and to the Company at its principal office.
10.4 No
Assignment by Employee
. This Agreement is freely assignable by the Company. Employee may not assign any rights or delegate
any duties under this Agreement without the prior written consent of the Company.
10.5 No
Waiver
. A party’s failure to require strict performance of any provision of this Agreement is not a waiver of or prejudice
to the party’s right to require strict performance of the same provision in the future, of any other provision of this Agreement,
or of this section 10.5
10.6 Arbitration.
Any claim or controversy that arises out of or relates to this Agreement, or the breach thereof, will be settled by arbitration
in Monmouth County, New Jersey in accordance with the prevailing rules of the American Arbitration Association. Judgment upon
the award rendered may be entered in any court possession jurisdiction of arbitration awards.
10.7 Law
and Jurisdiction.
This Agreement has been negotiated, made and entered into entirely within the State of New Jersey. This
Agreement shall be governed by and construed in accordance with the laws of the State of New Jersey regardless of where Employee
resides or performs work. Venue and jurisdiction shall be Monmouth County, New Jersey.
10.8 Entire
Agreement
. This Agreement is the parties’ entire agreement relating to Employee’s employment with the Company,
and it supersedes and terminates any and all prior agreements or understandings between them about all such matters.
10.9 Counterparts.
This Agreement may be executed in several counterpart copies, each of which shall be deemed an original and shall constitute
one agreement.
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EMPLOYEE:
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COMPANY:
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MEDIFIRST
SOLUTIONS, INC.
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By
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Bruce
Schoengood
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Bruce
Schoengood, President
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5
Exhibit
31.1
Certification
of
Principal
Executive Officer
Of
MEDIFIRST SOLUTIONS, INC.
Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
I,
Bruce Schoengood, certify that:
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1.
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I
have reviewed this amended annual report on Form 10-K of Medifirst Solutions, Inc.;
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2.
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Based
on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect
to the period covered by this report;
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3.
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Based
on my knowledge, the financial statements, and other financial information included in this annual report, fairly present
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
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4.
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The
registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and we have:
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a)
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Designed
such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed
such internal control over financial reporting, or caused such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated
the effectiveness of the registrant’s disclosure controls and procedures and presented in this annual report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based
on such evaluation; and
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d)
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Disclosed
in this annual report any change in the registrant’s internal control over financial reporting that occurred during
the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report)
that has materially affected, or is likely to materially affect, the registrant’s internal control over financial reporting;
and
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5.
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The
registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors
(or persons performing the equivalent function):
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a)
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All
significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and
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b)
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Any
fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
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Dated:
April 14, 2016
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By:
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/s/
Bruce Schoengood
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Bruce
Schoengood
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Chief
Executive Officer
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Exhibit
31.2
Certification
of
Principal
Financial Officer
Of
MEDIFIRST SOLUTIONS, INC.
Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
I,
Bruce Schoengood, certify that:
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1.
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I
have reviewed this amended annual report on Form 10-K of Medifirst Solutions, Inc.;
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2.
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Based
on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect
to the period covered by this report;
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3.
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Based
on my knowledge, the financial statements, and other financial information included in this annual report, fairly present
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
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4.
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The
registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and we have:
|
|
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in which this report is being prepared;
|
|
|
|
|
|
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b)
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Designed
such internal control over financial reporting, or caused such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated
the effectiveness of the registrant’s disclosure controls and procedures and presented in this annual report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based
on such evaluation; and
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d)
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Disclosed
in this annual report any change in the registrant’s internal control over financial reporting that occurred during
the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report)
that has materially affected, or is likely to materially affect, the registrant’s internal control over financial reporting;
and
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5.
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The
registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors
(or persons performing the equivalent function):
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a)
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All
significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and
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b)
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Any
fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
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Dated:
April 14, 2016
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By:
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/s/
Bruce Schoengood
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Bruce
Schoengood
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Chief
Financial Officer
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Exhibit
32
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO
SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
In
connection with the amended annual report of Medifirst Solutions, Inc. (the “Company”) on Form 10-K for the fiscal
year ended December 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”),
each of the undersigned officers of the Company certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that, to such officer’s knowledge:
(1) The
Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The
information contained in the Report fairly presents, in all material respects, the financial condition and results of operations
of the Company as of the dates and for the periods expressed in the Report.
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Dated:
April 14, 2016
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By:
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/s/
Bruce Schoengood
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Bruce
Schoengood
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Chief
Executive Officer
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(Principal
Executive Officer)
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Dated: April
14, 2016
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By:
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/s/
Bruce Schoengood
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Bruce
Schoengood
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Chief
Financial Officer
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(Principal
Accounting Officer)
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