UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
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SECURITIES EXCHANGE ACT OF 1934 |
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For the quarterly period ended June 30, 2015 |
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OR |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
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SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period from ______________ to ________________ |
Commission file number: 000-51134
MMRGLOBAL, INC.
(Exact name of Registrant as Specified in Its Charter)
DELAWARE |
33-0892797 |
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(State or Other Jurisdiction of |
(I.R.S. Employer |
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4401 WILSHIRE BLVD., SUITE 200 |
90010 |
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(Address of Principal Executive Offices) |
(Zip Code) |
(310) 476-7002
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer o
Accelerated filer o
Non-accelerated filer o
(Do not check if a smaller reporting company) Smaller reporting company x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: As of July 30, 2015, the issuer had 902,504,231 shares of common stock outstanding.
TABLE OF CONTENTS
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Part I. | FINANCIAL INFORMATION | 1 | |||||||||||
Item 1. | Condensed Consolidated Financial Statements - Unaudited | 1 | |||||||||||
Condensed Consolidated Balance Sheets at June 30, 2015 (unaudited) and December 31, 2014 (audited) | 1 | ||||||||||||
Condensed Consolidated Statements of Operations - Three and Six Months Ended June 30, 2015 and June 30, 2014 - (unaudited) | 2 | ||||||||||||
Condensed Consolidated Statements of Cash Flows - Six Months Ended June 30, 2015 and June 301, 2014 - (unaudited) | 3 | ||||||||||||
Notes to Condensed Consolidated Financial Statements - Unaudited | 4 | ||||||||||||
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 14 | |||||||||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 16 | |||||||||||
Item 4. | Controls and Procedures | 17 | |||||||||||
Part II. | OTHER INFORMATION | 17 | |||||||||||
Item 1. | Legal Proceedings | 17 | |||||||||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 17 | |||||||||||
Item 3. | Defaults Upon Senior Securities | 17 | |||||||||||
Item 4. | Mine Safety Disclosures | 17 | |||||||||||
Item 5. | Other Information | 17 | |||||||||||
Item 6. | Exhibits | 18 | |||||||||||
Signatures | 19 |
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PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements - Unaudited
MMRGLOBAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, | December 31, | |||||
2015 | 2014 | |||||
(unaudited) | (audited) | |||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | - | $ | 309,393 | ||
Accounts receivable, less allowances of $173,591 in 2015 and 2014 | 87,998 | 47,718 | ||||
Inventory | 13,537 | 13,537 | ||||
Prepaid expenses and other current assets | 49,626 | 162,184 | ||||
Total current assets | 151,161 | 532,832 | ||||
Property and equipment, net | 26,220 | 32,118 | ||||
Intangible assets, net | 1,790,710 | 1,790,622 | ||||
Total assets | $ | 1,968,091 | $ | 2,355,572 | ||
LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||
Current liabilities: | ||||||
Line of credit, related party | $ | 857,604 | $ | 753,704 | ||
Related party payables | 1,278,480 | 952,835 | ||||
Compensation payable | 594,034 | 491,109 | ||||
Severance liability | 620,613 | 620,613 | ||||
Accounts payable and accrued expenses | 4,789,904 | 4,668,960 | ||||
Deferred revenue | 42,929 | 51,312 | ||||
Convertible notes payable | 987,827 | 932,047 | ||||
Notes payable, current portion | 369,410 | 360,343 | ||||
Notes payable, related party | 253,664 | 253,664 | ||||
Capital leases payable, current portion | 13,221 | 13,221 | ||||
Total current liabilities | 9,807,686 | 9,097,808 | ||||
Commitments and contingencies (See Note 9) | ||||||
Stockholders' deficit: | ||||||
Preferred stock - $0.001 par value, 5,000,000 shares authorized, 0 issued and outstanding. | ||||||
Common stock, $0.001 par value, 1,250,000,000 shares authorized, 867,504,231 and 774,417,739 shares issued and outstanding as of June 30, 2015 and December 31, 2014, respectively |
867,298 | 774,211 | ||||
Additional paid-in capital | 56,681,651 | 56,437,812 | ||||
Accumulated deficit | (65,388,544) | (63,954,259) | ||||
Total stockholders' deficit | (7,839,595) | (6,742,236) | ||||
Total liabilities and stockholders' deficit | $ | 1,968,091 | $ | 2,355,572 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
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MMRGLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended | Six Months Ended | ||||||||||||
June 30, | June 30, | ||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||
Revenues | |||||||||||||
Subscriber | $ | 13,091 | $ | 28,955 | $ | 47,252 | $ | 58,718 | |||||
MMRPro | 260 | 4,499 | 4,320 | 12,068 | |||||||||
License fees | 3,000 | 21,876 | 9,480 | 470,038 | |||||||||
Total revenues | 16,351 | 55,330 | 61,052 | 540,824 | |||||||||
Cost of revenues | 60,924 | 43,041 | 134,256 | 141,442 | |||||||||
Gross profit (loss) | (44,573) | 12,289 | (73,204) | 399,382 | |||||||||
General and administrative expenses | 486,503 | 913,241 | 948,496 | 2,343,221 | |||||||||
Sales and marketing expenses | 160,244 | 357,660 | 317,695 | 826,390 | |||||||||
Technology development | - | 25,833 | - | 50,636 | |||||||||
Loss from operations | (691,320) | (1,284,445) | (1,339,395) | (2,820,865) | |||||||||
Other income | 51,836 | - | 51,836 | - | |||||||||
Interest and other finance charges, net | (53,458) | (145,695) | (146,726) | (258,647) | |||||||||
Net loss | $ | (692,942) | $ | (1,430,140) | $ | (1,434,285) | $ | (3,079,512) | |||||
Net loss available to common shareholders per share: | |||||||||||||
Basic and diluted | $ | (0.00) | $ | (0.00) | $ | (0.00) | $ | (0.00) | |||||
Weighted average common shares outstanding: | |||||||||||||
Basic and diluted | 820,222,544 | 732,728,964 | 798,417,144 | 719,610,866 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
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MMRGLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended June 30, | ||||||
2015 | 2014 | |||||
Operating activities: | ||||||
Net loss | $ | (1,434,285) | $ | (3,079,512) | ||
Adjustments to reconcile net loss to net cash | ||||||
used in operating activities: | ||||||
Depreciation and amortization | 158,226 | 151,891 | ||||
Deferred rent | - | 48,107 | ||||
Warrants issued for services | 8,818 | 63,035 | ||||
Stock-based compensation | 11,111 | 510,295 | ||||
Common stock issued for services | 13,000 | 272,847 | ||||
Amortization of loan discount | 55,780 | 141,106 | ||||
Subtotal - Non-cash adjustments | 246,935 | 1,187,281 | ||||
Effect of changes in: | ||||||
Accounts receivable | (40,280) | 48,400 | ||||
Prepaid expenses and other current assets | 112,558 | 5,439 | ||||
Accounts payable and accrued expenses | 327,415 | 443,660 | ||||
Related party payables | 325,645 | 305,527 | ||||
Compensation payable | 102,925 | 141,468 | ||||
Deferred revenue | (8,383) | (1,470) | ||||
Subtotal - net change in operating assets & liabilities | 819,880 | 943,024 | ||||
Net cash used in operating activities | (367,470) | (949,207) | ||||
Investing activities: | ||||||
Purchase of property and equipment | (1,252) | - | ||||
Filing of patents | (151,164) | (134,796) | ||||
Costs of continuing MMRPro and website development | - | (53,627) | ||||
Net cash used in investing activities | (152,416) | (188,423) | ||||
Financing activities: | ||||||
Net proceeds from convertible notes | - | 200,000 | ||||
Proceeds from shares issued for financing activities | 29,777 | 1,062,219 | ||||
Book Overdraft | 42,335 | - | ||||
Net proceeds from warrant exercises | - | 42,000 | ||||
Proceeds from note payable | - | 85,000 | ||||
Payments of line of credit | 138,381 | (91,261) | ||||
Payments of capital lease | - | (2,425) | ||||
Net cash provided by financing activities | 210,493 | 1,295,533 | ||||
Net increase (decrease) in cash | (309,393) | 157,903 | ||||
Cash, beginning of period | 309,393 | 10,359 | ||||
Cash, end of period | $ | - | $ | 168,262 | ||
Supplemental disclosures of cash flow information: | ||||||
Cash paid for interest | $ | 93,268 | $ | 40,669 | ||
Cash paid for income taxes | $ | 1,675 | $ | 1,600 | ||
Supplemental disclosure of non-cash investing and financing activities: | ||||||
Conversion of convertible notes into common stock | $ | - | $ | 190,000 | ||
Shares issued for reduction of payables | $ | 274,220 | $ | 130,130 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
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MMRGLOBAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2015
NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION
MMRGlobal Inc. (referred to herein, unless otherwise indicated, as "MMR," the "Company," the "issuer," "we," "us," and "our") was originally incorporated as Favrille, Inc. ("Favrille") in Delaware in 2000, and since its inception and before the Merger (as defined below), operated as a biopharmaceutical company focused on the development and commercialization of targeted immunotherapies for the treatment of cancer and other diseases of the immune system. In May 2008, Favrille's ongoing Phase 3 registration trial for the FavId vaccine failed to show a statistically significant improvement in the treatment of patients with follicular B-cell Non-Hodgkin's lymphoma. On January 27, 2009, the Company, through MyMedicalRecords, Inc. ("MMR Inc."), what is now our wholly-owned operating subsidiary, conducted a reverse merger with Favrille.
Through our wholly-owned operating subsidiary MMR Inc., the Company's primary business is to license and provide secure and easy-to-use online Personal Health Records ("PHRs") and MyEsafeDepositBox storage solutions, including a professional offering to physicians' offices and similar organizations known as MMRPro. In January 2009, as a result of the Merger, we acquired biotech assets and other intellectual property including anti-CD20 antibodies as well as data and samples from the FavId/Specifid vaccine clinical trials for the treatment of B-cell Non-Hodgkin's lymphoma.
On March 8, 2011, we formed a subsidiary, which we named MMR Life Sciences Group, Inc., exclusively to maximize the value of our biotech assets including our patents, anti-CD20 antibodies, and FavId vaccine technologies acquired by MyMedicalRecords, Inc. through the merger with Favrille. As of this date the assets have not been transferred to the subsidiary.
We (formerly Favrille) were incorporated in Delaware in 2000, MMR Inc. was incorporated in Delaware in 2005, and both are headquartered in Los Angeles, CA.
Principles of Consolidation
The consolidated financial statements include the accounts of MMRGlobal, and its wholly-owned subsidiaries MMR and MMR Life Sciences Group, Inc. All intercompany transactions and balances are eliminated upon consolidation.
Basis of Presentation
We have prepared the accompanying consolidated unaudited financial statements in accordance with accounting principles generally accepted in the United States of America, or GAAP, for interim financial statements and with instructions to Form 10-Q pursuant to the rules and regulations of Securities and Exchange Act of 1934, as amended, or the Exchange Act and Article 8-03 of Regulation S-X promulgated under the Exchange Act. Accordingly, these financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of our management, we have included all adjustments considered necessary (consisting of normal recurring adjustments) for a fair presentation. Operating results for the three and six months ended June 30, 2015 are not indicative of the results that may be expected for the fiscal year ending December 31, 2015. You should read these unaudited condensed consolidated financial statements in conjunction with the audited financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2014.
Going Concern and Management's Plan
As of June 30, 2015, our current liabilities exceeded our current assets by $9.66 million. Furthermore, during the six months ended June 30, 2015, we incurred losses of $1,434,285, as further explained in Management's Discussion and Analysis of Financial Condition and Results of Operations appearing in Item 2 of Part I of this Quarterly Report on Form 10-Q.
At June 30, 2015 and December 31, 2014, we had $0 and $303,393, respectively, in cash and cash equivalents. Historically, we issued capital stock, sold convertible debt and equity securities and received funds from The RHL Group, Inc. (a significant stockholder that is wholly-owned by our Chairman and Chief Executive Officer, Robert H. Lorsch) to operate our business. Although we received additional funding from The RHL Group pursuant to the Tenth Amended and Restated Note effective May 20, 2015 (the "Line of Credit"), we will still be required to obtain additional financing in order to meet installment payment obligations and the previously existing obligations under the Line of Credit, which had a balance of $1.54 million at June 30, 2015 and a total Unpaid Balance (as defined in the Line of Credit) of $1.79 million, which includes amounts borrowed under the Line of Credit, unpaid interest fees, any amounts guaranteed by The RHL Group, and other obligations due the RHL Group pursuant to the terms of the Tenth Amended and Restated Note and the Second Amended Security Agreement dated May 20, 2015(the "Security Agreement"). As a result of the above, we express uncertainty about our ability to continue as a going concern. The components of the RHL Group Note payable and the related balance sheet presentation as of June 30, 2015 are as follows: $0.85 million, which is included in the line of credit, related party; and $0.69 million related to other obligations due to The RHL Group which are included in related party payables.
Management's plan regarding our going concern is to continue utilizing the Line of Credit. At June 30, 2015, there was approximately $2.7 million available under the Line of Credit. Finally, we plan to sell additional convertible debt and equity securities, settle our existing liabilities through the issuance of equity securities, explore other debt financing arrangements, increase our existing subscriber and affiliate customer base, sell our products and services, and collect licensing fees from parties utilizing our intellectual property to obtain additional cash flow over the next twelve months. There can be no assurance that funds from these sources will be available when needed or, if available, will be on terms favorable to us or to our stockholders. If additional funds are raised by issuing equity securities, the percentage of ownership of our stockholders will be reduced, stockholders will experience additional dilution and/or such equity securities may provide for rights, preferences or privileges senior to those of the holders of our common stock. If we are unable to utilize our Line of Credit, our equity facility with Granite, obtain suitable alternative debt or equity financing, or increase sales of our products of increase licensing fees from the use of our intellectual property, our ability to execute our business plan and continue as a going concern may be adversely affected.
These matters raise substantial doubt about our ability to continue as a going concern. These financial statements were prepared under the assumption that we will continue as a going concern and do not include any adjustments that might result from the outcome of that uncertainty.
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NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) MANAGEMENT'S USE OF ESTIMATES
The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net revenue and expenses during each reporting period. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, allowances for doubtful accounts, the valuation of deferred income taxes, tax contingencies, long-lived and intangible assets, valuation of derivative liabilities and stock-based compensation. These estimates are based on historical experience and on various other factors that management believes to be reasonable under the circumstances, although actual results could differ from those estimates.
(b) CASH AND CASH EQUIVALENTS
We consider cash equivalents to be only those investments that are highly liquid, readily convertible to cash and with maturities of 90 days or less at the purchase date. We maintain our cash in bank deposit accounts that, at times, may exceed federally insured limits. We have not experienced any losses in such accounts and believe that we are not exposed to any significant credit or deposit risk on our cash. We had cash and cash equivalents of $0 and $303,393 as of June 30, 2015 and December 31, 2014, respectively.
(c) TRADE AND OTHER RECEIVABLES
Receivables represent claims against third parties that will be settled in cash. The carrying value of receivables, net of an allowance for doubtful accounts, if any, represents their estimated net realizable value. We estimate the allowance for doubtful accounts, if any, based on historical collection trends, type of customer, the age of outstanding receivables and existing economic conditions. If events or changes in circumstances indicate that specific receivable balances may be impaired, we give further consideration to the collectability of those balances and the allowance is adjusted accordingly. We write off past due receivable balances when collection efforts have been unsuccessful in collecting the amount due.
(d) INVENTORY
Inventory is stated at the actual cost, using the first-in-first-out method. On an on-going basis, we evaluate our inventory for obsolescence. This evaluation includes analysis of sales levels, sales projections, and purchases by item. If future demand or market conditions are different than our current estimates, an inventory adjustment may be required, and would be reflected in cost of goods sold in the period the revision is made.
(e) FAIR VALUE OF FINANCIAL INSTRUMENTS
ASC 820-10, Fair Value Measurements and Disclosures, requires entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized on the balance sheet, for which it is practicable to estimate fair value. ASC 820-10 defines the fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. As of June 30, 2015 and December 31, 2014, the carrying value of accounts receivable, deposits, related party payables, compensation payable, severance liabilities, and accounts payable and accrued expenses approximates fair value due to the short-term nature of such instruments. The carrying value of short-term debt approximates fair value as the related interest rates approximate rates currently available to us.
We utilize ASC 820-10 for valuing financial assets and liabilities measured on a recurring basis. ASC 820-10 defines fair value, establishes a framework for measuring fair value and generally accepted accounting principles, and expands disclosures about fair value measurements. This standard applies in situations where other accounting pronouncements either permit or require fair value measurements. ASC 820-10 does not require any new fair value measurements.
Accounting guidance also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
The standard describes three levels of inputs that may be used to measure fair value:
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Level 1: |
Quoted prices in active markets for identical or similar assets and liabilities. |
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Level 2: |
Quoted prices for identical or similar assets and liabilities in markets that are not active or observable inputs other than quoted prices in active markets for identical or similar assets and liabilities. |
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Level 3: |
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
(f) IMPAIRMENT OF LONG-LIVED ASSETS AND INTANGIBLES
We account for long-lived assets, which include property and equipment and identifiable intangible assets with finite useful lives (subject to amortization), in accordance with ASC 350-30. ASC 350-30 requires that we review long-lived assets for impairment whenever events or changes in circumstances indicate that we may not recover the carrying amount of an asset. We measure recoverability by comparing the carrying amount of an asset to the expected future undiscounted net cash flows generated by the asset. If we determine that the asset may not be recoverable, or if the carrying amount of an asset exceeds its estimated future undiscounted cash flows, we recognize an impairment charge to the extent of the difference between the fair value and the asset's carrying amount. We had no impairment charges during the six months ended June 30, 2015 and 2014.
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(g) REVENUE RECOGNITION
We generate our revenues from services, which are comprised of providing electronic access to consumer medical records and other vital documents, and from the licensing of our intellectual property and services. We recognize revenue only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed, and we are reasonably assured of collectability of the resulting receivable.
Our subscriber revenues consist of annual and monthly recurring retail subscriptions and usage-based fees, which are primarily paid in advance by credit card, and corporate accounts that are based on either an access-fee or actual number of users, and in each case billed in advance at the beginning of each month of service. We defer the portions of annual recurring subscription fees collected in advance and recognize them on a straight line basis over the subscription period.
We license the rights to use portions of our intellectual property portfolio, which includes certain patent rights essential to the sale of certain PHR products. Licensees typically pay a license fee in one or more installments and ongoing royalties based on their sales of products incorporating or using the Company's licensed intellectual property. License fees are recognized over the estimated period of benefit to the licensee, typically five to fifteen years. The Company earns royalties on such licensed products sold by its licensees at the time that the licensees' sales occur. The Company recognizes royalty revenues based on royalties reported by licensees during the quarter and when other revenue recognition criteria are met.
We grant exclusive and non-exclusive licenses for the sale and marketing of our services in international territories in consideration of license fees and ongoing royalties. The royalty fee is usually a percentage of revenue earned by the licensee and there are usually certain minimum guarantees. We defer the recognition of license fee revenues received in advance from international licensees for the grant of the license and recognize them over the period covered by the agreement. We defer the recognition of minimum guaranteed royalty payments received in advance and recognize them over the period to which the royalty relates. We include all such revenues under "License Fees." In those cases where a license agreement contains multiple deliverables, we account for the agreement in accordance with ASC 605-25 Revenue Recognition - Multiple-Element Arrangements.
We recognize revenue on sales of our MMRPro system in accordance with ASC 605-25, Revenue Recognition, Multiple-Element Arrangements.
Our multiple-deliverable arrangements consist solely of our MMRPro product. Significant deliverables within these arrangements include scanning equipment, various licenses to use third party software, a license to use our proprietary MMRPro application software, installation and training, dedicated telephone lines, secure online storage and warranties.
We determined all elements to be separate units of accounting as they have standalone value to the customers and/or they are sold by other vendors on a standalone basis. Delivery of the hardware and certain software elements of these arrangements occur at the inception of the agreement. We deliver installation and training at the inception of the agreement. We provide other software licenses, telephone lines and online secure storage over the three year term of the agreement. We include warranties in the arrangements, however the third party product manufacturer, and not us, is obligated to fulfill such warranties. The third-party warranty contracts are paid in advance and are not refundable.
We allocate the revenue derived from these arrangements among all the deliverables. We base such allocation on the relative selling price of each deliverable. With the exception of our proprietary MMRPro application software, we use third party evidence to set the selling prices used for this allocation. In all such cases, third parties sell the same or very similar products. For the MMRPro application software, we estimate the selling price based on recent discussions regarding licensure of that particular application on a standalone basis. To date, we have not licensed this software on a standalone basis.
We recognize the allocated revenue for each deliverable in accordance with SEC Staff Accounting Bulletin ("SAB") No. 104, Topic 13: Revenue Recognition. Under this guidance, we recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed and determinable and collectability is reasonably assured. This results in us recognizing revenue for the hardware, certain software and the warranties upon delivery to the customer, for the installation and training upon completion of these services, and ratably over the contract period for the software licenses, telephone lines and online secure storage.
Revenue from the licensing of our biotech assets may include non-refundable license and up-front fees, non-refundable milestone payments that are triggered upon achievement of a specific event, and future royalties or lump-sum payments on sales of related products. For agreements that provide for milestone payments, we adopted ASC 605-28-25, Revenue Recognition Milestone Method.
(h) SHARE-BASED COMPENSATION
We account for share-based compensation in accordance with ASC 718-20, Awards Classified as Equity. We apply ASC 718- 20 in accounting for stock-based awards issued to employees under the recognition of compensation expense related to the fair value of employee share-based awards, including stock options and restricted stock. Determining the fair value of options at the grant date requires judgment, including estimating the expected term that stock options will be outstanding prior to exercise, the associated volatility and the expected dividends. Judgment is required in estimating the amount of share-based awards expected to be forfeited prior to vesting. If actual forfeitures differ significantly from these estimates, share-based compensation expense could be materially impacted.
We account for options and warrants issued to non-employees in accordance with ASC 505-50, Equity-Based Payments to Non- Employees. We treat options and warrants issued to non-employees the same as those issued to employees with the exception of determination of the measurement date. The measurement date is the earlier of (1) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty's performance is complete. Options and warrants granted to consultants are valued at their respective measurement dates, and recognized as an expense based on the portion of the total consulting services provided during the applicable period. As further consulting services are provided in future periods, we will revalue the associated options and warrants and recognize additional expense based on their then current values.
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We estimate the fair value of each stock option on the date of grant using the Black-Scholes option pricing model. We determine assumptions relative to volatility and anticipated forfeitures at the time of grant. We valued grants of stock options and warrants during the six months ended June 30, 2015 and 2014 using the following assumptions.
June 30, 2015 | June 30, 2014 | ||
Expected life in years | 0 - 5 Years | 0 - 5 Years | |
Stock price volatility | 144.64% - 171.22% | 144.64% - 171.22% | |
Risk free interest rate | 0.10% - 1.64% | 0.10% - 1.64% | |
Expected dividends | None | None | |
Forfeiture rate | 0% | 0% |
We base the assumptions used in the Black-Scholes models upon the following data: (1) our use of the contractual life of the underlying non-employee warrants as the expected life; the expected life of the employee options used in this calculation is the period of time the options are expected to be outstanding and has been determined based on historical exercise experience; (2) in the absence of an extensive public market for our shares, the expected stock price volatility of the underlying shares over the expected term of the option or warrant was taken at approximately the mid-point of the range for similar companies at the various grant dates; (3) we base the risk free interest rate on published U.S. Treasury Department interest rates for the expected terms of the underlying options or warrants; (4) we base expected dividends on historical dividend data and expected future dividend activity; and (5) we base the expected forfeiture rate on historical forfeiture activity and assumptions regarding future forfeitures based on the composition of current grantees.
(i) NET INCOME/LOSS PER SHARE
We apply the guidance of ASC 260-10, Earnings Per Share for calculating the basic and diluted loss per share. We calculate basic loss per share by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding. We compute diluted loss per share similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential shares had been issued and if the additional shares were dilutive. We exclude common equivalent shares from the computation of net loss per share if their effect is anti-dilutive.
We excluded all potential anti-dilutive common shares from the computation of diluted net loss per common share for the six months ended June 30, 2015 and 2014 because they were anti-dilutive due to our net loss position. Stock options, warrants and convertible notes excluded from the computation totaled 178,513,835 shares for the six months ended June 30, 2015 and 117,835,878 shares for the six months ended June 30, 2014, respectively.
(j) RECENT ACCOUNTING PRONOUNCEMENTS
In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. This new guidance is effective for the Company in the first quarter of 2018, with no early adoption permitted. The standard permits the use of either the retrospective or cumulative effect transition method. At this time we have not selected a transition method. We are currently evaluating the effect that ASU 2014-09 will have on our consolidated financial statements and related disclosures.
In August 2014, the FABS issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern ("ASU 2014-15"). ASU 2014-15 will explicitly require management to assess an entity's ability to continue as a going concern, and to provide related footnote disclosure in certain circumstances. The new standard will be effective for all entities in the first annual period ending after December 15, 2016. Earlier adoption is permitted. We are currently evaluating the impact of the adoption of ASU 2014-15. The adoption of this standard is not expected to have a material impact on the Company's consolidated financial statements.
NOTE 3 - RELATED PARTY PAYABLES, LINE OF CREDIT AND NOTE PAYABLE
On May 20, 2015, we and The RHL Group entered into a Tenth Amended and Restated Promissory Note (the "Amended Note"), effective as of May 20, 2015. The Tenth Note amends and restates that certain Ninth Amended Note entered into between the foregoing parties, effective July 10, 2014 (the " Existing Note " and together with its predecessor notes and the Amended Note, the " Credit Facility "), by: (i) extending the maturity date to April 29, 2016. In connection with the Tenth Amended Note, we issued The RHL Group warrants to purchase 1,764,642 shares of our common stock at $0.003 per share on May 20, 2015. Except as set forth above, the Amended Note does not materially alter the terms of the Existing Note. The Board of Directors has authorized the renewal of the Ninth Amended Note and we are currently in the process of such renewal.
Historically, the predecessor notes have increased over time the maximum amount of credit available under the Credit Facility from $100,000 to $1,000,000 to $3,000,000 to $4,500,000. The maximum amount of the Amended Note is $4,500,000. The Amended Note continues to bear interest at the lesser of 10% or the highest rate then permitted by law, and is secured (similar to the Existing Note) by a Security Agreement, which has been in effect since July 31, 2007, as renewed and amended to date (the "Security Agreement").
The Tenth Amended Note had a current balance of $1.54 million at June 30, 2015. The components of the Tenth Amended Note and the related balance sheet presentation as of June 30, 2015 are as follows: $0.85 million, which is included in the line of credit, related party; and $0.69 million for other obligations due to The RHL Group, which is included in related party payables.
Total interest expense for the three months ended June 30, 2015 and June 30, 2014 was $34,728 and $26,678, respectively. Total interest expense on the Line of Credit for the six months ended June 30, 2015 and 2014 amounted to $65,389 and $61,765, respectively. The unpaid interest balances as of June 30, 2015 and December 31, 2014 were $94,985 and $30,160, respectively.
In conjunction with the Tenth Amended Note, we were required to maintain certain financial covenants, including the requirement that we have at least $200,000 of cash in our bank accounts or such other amount as necessary to maintain operations through the subsequent thirty (30) days and timely pay any obligations due respecting payroll and all associated payroll taxes on and after June 30, 2015. Since we did not meet these covenants as of June 30, 2015, we received a waiver from The RHL Group until August 31, 2015.
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NOTE 4 - INCOME TAXES
Under ASC 740-270, Income Taxes - Interim Reporting, we are required to adjust our effective tax rate each quarter to be consistent with the estimated annual effective tax rate. We are also required to record the tax impact of certain discrete items, unusual or infrequently occurring, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, in the interim period in which they occur. In addition, we exclude jurisdictions with a projected loss for the year or a year-to-date loss where we cannot recognize a tax benefit from our estimated annual effective tax rate. The impact of such an exclusion could result in a higher or lower effective tax rate during a particular quarter, based upon the mix and timing of actual earnings versus annual projections.
Pursuant to ASC 740, Income Taxes, we performed an analysis of previous tax filings and determined that there were no positions taken that it considered uncertain. Therefore, there were no unrecognized tax benefits As of June 30, 2015.
MMR Inc., in its capacity as the operating company taking over our income tax positions in addition to its own positions after January 27, 2009 (see Note 1), has estimated its annual effective tax rate to be zero. MMRGlobal has based this on an expectation that the combined entity will generate net operating losses in 2015, and it is not likely that those losses will be recovered using future taxable income. Therefore, no provision for income tax has been recorded as of and for the six months ended June 30, 2015.
NOTE 5 - COMMITMENTS AND CONTINGENCIES
Leases
Effective September 1, 2013, we renewed our lease for office space in Los Angeles, California with a term through August 31, 2018. The lease currently requires a monthly payment of $8,250. Total rent expense for the six months ended June 30, 2015 and 2014 were $60,409 and $115,482 respectively. Future minimum lease payments as of June 30, 2015, under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) are as follows:
Year Ending | Operating | Capital | ||||
December 31, | Leases | Leases | ||||
2015 (Remainder of) | $ | 52,890 | $ | 13,221 | ||
2016 | 187,550 | - | ||||
2017 | 206,305 | - | ||||
2018 | 146,410 | - | ||||
593,155 | 13,221 | |||||
Less current portion | - | (13,221) | ||||
Total minimum lease payments | $ | 593,155 | $ | - |
Litigation Matters
From time to time, we are involved in various legal proceedings generally incidental to our business. While the result of any litigation contains an element of uncertainty, our management presently believes that the outcome of any known, pending or threatened legal proceeding or claim, individually or combined, will not have a material adverse effect on our financial statements.
On December 9, 2011, MyMedicalRecords, Inc. entered into a Non-Exclusive Settlement and Patent License Agreement with Surgery Center Management LLC ("SCM"). In consideration for the rights granted under that Agreement and in consideration of a settlement and release agreement, SCM contracted to pay MyMedicalRecords, Inc. an initial payment of $5 million payable on December 23, 2011, and additional payments of $5 million per year for five consecutive years. After unsuccessful attempts to collect the past due amount of $5 million, on January 19, 2012, MyMedicalRecords, Inc. filed a lawsuit in the Superior Court of the State of California for the County of Los Angeles for breach of contract. On February 13, 2014, SCM filed an answer to the complaint and a cross-complaint alleging claims for breach of that contract, among other things. On July 10, 2014, the court granted SCM's motion for summary adjudication on the claim for breach of contract in the complaint and its counterclaim for declaratory relief. On July 30, 2014, SCM filed its second amended cross-complaint, alleging substantially the same claims against the same parties. On December 5, 2014, the Court of Appeal issued an Alternative Writ of Mandate, finding the trial court erred in granting SCM's motion for summary adjudication. Pursuant to the Court of Appeal's Alternative Writ, on January 7, 2015, the trial court vacated its order granting SCM's motion for summary adjudication. On April 24, 2015, the trial court held a new hearing on that motion, and it entered an order denying SCM's motion in its entirety. On August 4, 2015, the Court granted MMR leave to amend its complaint to seek damages of $30 million (plus interest) from SCM. MyMedicalRecords, Inc. will continue to pursue its claim and defenses, but the Company cannot predict the chances of either a favorable or unfavorable outcome, nor does the Company have sufficient information regarding its ability to collect any judgment MyMedicalRecords, Inc. may obtain.
On April 10, 2013, MMR filed a complaint for patent infringement against Quest Diagnostics Inc. ("Quest") in the United States District Court for the Central District of California, alleging that Quest Diagnostics Inc. is infringing U.S. Patent No. 8,301,466. On October 11, 2013, MMR filed an unopposed motion to add a claim of infringement of U.S. Patent 8,498,883 to its complaint against Quest, which was granted on October 29, 2013. On December 22 and 23, 2014, the Court entered orders finding that the eight claims asserted (of the 42 total claims present) under the two asserted MMR patents were invalid. On January 9, 2015 the Court entered a final judgment in favor of defendants, and the case was closed. Defendants have filed a motion with the District Court to recover a portion of their purported costs and fees incurred in defense of the matter, which has not yet been ruled on by the Court.
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On February 11, 2013, MMR filed a complaint for patent infringement against WebMD Health Corp. and its wholly owned subsidiary WebMD Health Services Group, Inc. (collectively, "WebMD"), titled MyMedicalRecords, Inc. v. WebMD Health Corp et al., United States District Court, Central District of California. That complaint alleged that WebMD is infringing MMR's Personal Health Records patent U.S. Patent No. 8,301,466. On October 2, 2013, MMR filed a new complaint against WebMD in the United States District Court for the Central District of California, alleging infringement of U.S. Patent Nos. 8,301,466 and 8,498,883. On December 22 and 23, 2014, the Court entered orders finding that the eight claims asserted (of the 42 total claims present) under the two asserted MMR patents were invalid. On January 9, 2015 the Court entered a final judgment in favor of defendants, and the case was closed. Defendants have filed a motion with the District Court to recover a portion of their purported costs and fees incurred in defense of the matter, which has not yet been ruled on by the Court.
On May 17, 2013, MMR filed a complaint for patent infringement against Jardogs, LLC (the "Jardogs Complaint") in the United States District Court for the Central District of California, alleging that Jardogs, LLC infringes U.S. Patent No. 8,301,466. On September 23, 2013, MMR filed a separate complaint for patent infringement against Allscripts Healthcare Solutions Inc. ("Allscripts") titled MyMedicalRecords, Inc. v. Allscripts Healthcare Solutions Inc., United States District Court, Central District of California (the "Separate Allscripts Complaint"). The Separate Allscripts Complaint alleged that Allscripts is infringing U.S. Patent Nos. 8,301,466 and 8,498,883. On October 4, 2013, MMR filed a motion to amend the Jardogs Complaint to add Allscripts as a party defendant and to allege that Allscripts is infringing U.S. Patent Nos. 8,301,466 and 8,498,883. The Court granted that motion on November 1, 2013. Thereafter, MMR dismissed the Separate Allscripts Complaint. On December 22 and 23, 2014, the Court entered orders finding that the eight claims asserted (of the 42 total claims present) under the two asserted MMR patents were invalid. On January 9, 2015 the Court entered a final judgment in favor of defendants, and the case was closed. Defendants have filed a motion with the District Court to recover a portion of their purported costs and fees incurred in defense of the matter, which has not yet been ruled on by the Court.
Allscripts also filed a Covered Business Method ("CBM") petition on November 3, 2014, before the Patent Trial and Appeal Board ("PTAB') alleging that claims 8-12 of U.S. Patent No. 8,301,466 are invalid. MMR filed a preliminary response on February 20, 2015. On May 5th the PTAB decided to implement the CBM. On January 15, 2015, MMR filed a notice of appeal in the Federal Circuit. Subsequently, MMR filed for voluntary dismissal of the appeal which was granted on July 7, 2015. On July 30, 2015, MMR informed the PTAB of the voluntary dismissal of the appeal and the final judgment of the District Court which has already found claims 8 through 12 to be invalid.
On April 2, 2015, the Company and Stradling Yocca Carlson & Rauth, P.C. ("SYCR"), received a letter from a mediator in regards to disputes over amounts of monies due SYCR regarding prior services rendered. SYCR and the Company have agreed to a mediation of the matter, however at this time a mediation date has not been set. As of the date hereof, the Company cannot predict the chances of either a favorable or unfavorable outcome.
On August 14, 2013, Gemini Master Fund, Ltd. purchased a convertible note from the Company. On or about February 23, 2015, Gemini filed an action against the Company for breach of contract seeking damages allegedly owed pursuant to the convertible note in the amount of $210,000 in the United States District Court for the Southern District of New York. The case has since been settled and dismissed.
NOTE 6 - STOCKHOLDERS' DEFICIT
Preferred Stock
We have 5,000,000 shares of preferred stock authorized. As of June 30, 2015, and December 31, 2014, there were no shares of preferred stock issued and outstanding.
Common Stock
As of June 30, 2015, we are authorized to issue 1,250,000,000 shares of common stock.
As of June 30, 2015, the total shares of our common stock issued and outstanding amounted to 867,504,231.
NOTE 7 - EQUITY ISSUANCES
Stock Option Activity
Our 2001 Equity Incentive Plan (the "2001 Plan") expired on June 5, 2011 and no options were issued under the 2001 Plan since that date. As of June 30, 2015, 14,184,557 shares remain issued under the 2001 Plan.
On September 1, 2011, our Board of Directors approved the adoption of a new plan to replace the 2001 Plan under the same general terms as the 2001 Plan. On June 20, 2012, our stockholders voted and approved the 2011 Equity Incentive Plan (the " 2011 Plan") at our 2012 Annual Stockholder Meeting. As of June 30, 2015, 23.36 million shares remain issued under the 2011 Plan, and 36.45 million shares of our common stock are reserved for future issuance under our 2011 Plan, which includes an automatic 5 million share annual increase pursuant to the terms of the 2011 Plan and a 20 million share increase authorized during our 2013 Annual Stockholder's Meeting.
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A summary of option activity for the six months ended June 30, 2015 is presented below. Options granted by MMR Inc. prior to the date of the Merger have been retroactively restated to reflect the conversion ratio of MMR Inc. to MMR shares.
Weighted- | ||||||||||
Average | ||||||||||
Weighted- | Remaining | |||||||||
Average | Contractual | Aggregate | ||||||||
Exercise | Life | Intrinsic | ||||||||
Options | Price | (Years) | Value | |||||||
Outstanding at December 31, 2014 | 37,541,722 | $ | 0.10 | 4.29 | $ | - | ||||
Granted | - | $ | - | - | $ | - | ||||
Exercised | - | $ | - | - | $ | - | ||||
Cancelled | - | $ | - | - | $ | - | ||||
Outstanding at June 30, 2015 (Unaudited) | 37,541,722 | $ | 0.10 | 4.72 | $ | - | ||||
Vested and expected to vest | ||||||||||
at June 30, 2015 (Unaudited) | 37,541,722 | $ | 0.10 | 4.72 | $ | - | ||||
Exercisable at June 30, 2015 (Unaudited) | 36,841,722 | $ | 0.10 | 4.65 | $ | - |
The aggregate intrinsic value in the table above is before applicable income taxes and is calculated based on the difference between the exercise price of the options and the quoted price of the common stock as of the reporting date.
There were no options issued during the six months ended June 30, 2015.
Total stock option expenses recorded during the six months ended June 30, 2015 and 2014 were $11,111 and $327,920, respectively.
The following table summarizes information about stock options outstanding and exercisable at June 30, 2015.
Options Outstanding | Options Exercisable | |||||||||||||||
Weighted | Weighted | Weighted | Weighted | |||||||||||||
Average | Average | Average | Average | |||||||||||||
Exercise | Number | Remaining | Exercise | Number | Remaining | Exercise | ||||||||||
Price | of Shares | Life (Years) | Price | of Shares | Life (Years) | Price | ||||||||||
$ | 0.05 - 0.09 | 12,900,000 | 6.91 | $ | 0.07 | 12,200,000 | 6.89 | $ | 0.07 | |||||||
$ | 0.10 - 0.15 | 23,011,461 | 3.69 | $ | 0.11 | 23,011,461 | 3.69 | $ | 0.11 | |||||||
$ | > 0.15 | 1,630,261 | 4.70 | $ | 0.19 | 1,630,261 | 4.70 | $ | 0.19 | |||||||
37,541,722 | 36,841,722 |
Warrants
A summary of the activity of our warrants for the six months ended June 30, 2015 is presented below:
Weighted Avg | ||||
Shares | Exercise Price | |||
Outstanding at December 31, 2014 | 70,028,410 | $ | 0.07 | |
Granted | 1,764,642 | $ | - | |
Exercised | - | $ | - | |
Cancelled | (7,500,000) | $ | 0.08 | |
Outstanding at June 30, 2015 (Unaudited) | 64,293,052 | $ | 0.07 | |
Exercisable at June 30, 2015 (Unaudited) | 62,869,441 | $ | 0.06 |
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Total warrant expenses recorded during the six months ended June 30, 2015 and 2014 were $8,818 and $63,035, respectively.
The following summarizes the total warrants outstanding and exercisable as of June 30, 2015:
Warrants Outstanding | Warrants Exercisable | |||||||||||||
Warrants | Weighted Avg | Weighted Avg | Warrants | Weighted Avg | Weighted Avg | |||||||||
Ranges | Outstanding | Remaining Life | Exercise Price | Exercisable | Remaining Life | Exercise Price | ||||||||
$0.02 - $0.25 | 64,293,052 | 1.76 | $ | 0.07 | 62,869,441 | 1.74 | $ | 0.06 | ||||||
64,293,052 | 62,869,441 |
The inputs used for the Black-Scholes option and warrant valuation model were as follows:
June 30, 2015 | June 30, 2014 | ||
Expected life in years | 0 - 5 Years | 0 - 5 Years | |
Stock price volatility | 144.64% - 171.22% | 144.64% - 171.22% | |
Risk free interest rate | 0.10% - 1.64% | 0.10% - 1.64% | |
Expected dividends | None | None | |
Forfeiture rate | 0% | 0% |
Shares Issued for Services or Reduction to Liabilities
During the six months ended June 30, 2015, we issued 85,100,000 shares of common stock with a value of $287,220 to various third parties and related parties and charged the proceeds to the appropriate accounts for the following reasons:
Six Months Ended June 30, 2015 | |||||
Purpose | Shares | Value | |||
Reduction of payables | 84,100,000 | $ | 274,220 | ||
Services provided | 1,000,000 | 13,000 | |||
Totals | 85,100,000 | $ | 287,220 |
The 85,100,000 issued shares were not contractually restricted. However, as these shares have not been registered under the Securities Act of 1933, as amended (the "Act"), they are restricted from sale until they are registered under the Act, or qualify for resale under the rules promulgated under the Act. All such shares were calculated at the trading closing price on the date of issuance.
Stock Bonus Agreements
From time to time, we issue shares of our common stock as a bonus for services rendered. Stock bonuses may be awarded upon satisfaction of specified performance goals pursuant to the Performance Stock Bonus Agreement.
On each grant date, we valued the stock bonus based on the share price and the expenses were amortized using the straight line method. Total stock bonus expenses recorded during the six months ended June 30, 2015 and 2014 were $0 and $ 182,375, respectively and are reflected in operating expenses in the accompanying consolidated statements of operations.
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NOTE 8 - NOTES PAYABLE
Notes payable consisted of the following:
June 30, | December 31, | |||||
2015 | 2014 | |||||
Promissory notes payable due to the former officers of MMRGlobal as part of severance packages, due in full on August 31, 2009, with no stated interest |
$ | 76,783 | $ | 76,783 | ||
Promissory notes payable due to the former officers of MMRGlobal pursuant to the Resignation and Post-Merger Employment Arrangement, due in full on August 31, 2009, with no stated interest |
25,444 | 25,444 | ||||
Promissory notes payable due to vendors relating to settlement of certain outstanding accounts payable, payable in 18 equal monthly installments commencing on July 27, 2009 and ending on January 27, 2011, with no stated interest |
223,116 | 223,116 | ||||
Short term loan due to a third-party with 6% interest | 44,067 | 35,000 | ||||
369,410 | 360,343 | |||||
Less: current portion | (369,410) | (360,343) | ||||
Notes payable, less current portion | $ | - | $ | - | ||
Short term loan due to a related-party, payable in full on January 2, 2014 with 12% interest |
$ | 203,664 | $ | 203,664 | ||
Short term loan due to a related-party, payable in full on May 31, 2014 with 12% interest |
50,000 | 50,000 | ||||
Notes payable related party, current portion | 253,664 | 253,664 | ||||
Less: current portion | (50,000) | (253,664) | ||||
Notes payable related party, less current portion | $ | - | $ | - |
NOTE 9 - CONVERTIBLE PROMISSORY NOTES
From time to time, we issue Convertible Promissory Notes. As of June 30, 2015, a total of $987,827 in convertible notes remained outstanding. As of June 30, 2015, all of these Notes have matured, however, the Company and the Holders have agreed to keep the balance as a Note Payable and the note holders have elected not to convert their note balances into shares of our common stock as of June 30, 2015.
Each Note contains the following general terms and provisions:
During the second quarter of 2015, we did not enter into any Convertible Promissory Notes.
Shares issuable upon conversion for convertible notes payable was 76,679,061 as of June 30, 2015.
The total interest expense attributed to the Beneficial Conversion Feature of the Notes and related warrants for the six months ended June 30, 2015 and 2014 was $55,780 and $86,106, respectively.
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NOTE 10 - RESTRUCTURING ACTIVITIES
In connection with the merger with Favrille, Inc. in 2009, we signed promissory notes with certain former executives totaling $76,783.
As of June 30, 2015, the total remaining severance liabilities amounted to $620,613, which is reflected as severance liability on the accompanying consolidated balance sheets. This consists of $571,362 payable to former non-executive employees.
NOTE 11 - RELATED PARTY TRANSACTIONS
Our Chairman and Chief Executive Officer, Robert H. Lorsch, is also the Chief Executive Officer of The RHL Group, Inc. and has full voting power over all of the capital stock of The RHL Group, Inc. Mr. Lorsch directly and indirectly through The RHL Group, Inc., beneficially owns approximately 16.4% our total outstanding voting stock. The RHL Group, Inc. has loaned us money pursuant to the Tenth Amended Note and all predecessor notes. See Note 3 - Related Party Note Payable above.
The RHL Group is an investment holding company which provides consulting, operational and technical services to us, which we refer to as the RHL Services. As part of the RHL Services, The RHL Group provides us with unrestricted access to its internal business and relationship contact database of more than 10,000 persons and entities, which includes clients of The RHL Group and other individuals which may hold value to us. The RHL Group also provides infrastructure support to us, including allowing us unlimited access to its facilities, equipment, and data, information management and server systems. In addition to allowing us the use of its office support personnel, The RHL Group has also consented to allow us to utilize the full-time services of Mr. Lorsch as our President, Chairman and Chief Executive Officer, which requires substantial time and energy away from his required duties as The RHL Group's Chairman and Chief Executive Officer. In addition, The RHL Group has made its President, Kira Reed, available as our spokesperson. Ms. Reed, who is Mr. Lorsch's spouse, also manages our social networking activities.
In consideration for the above, The RHL Group, Inc. has a consulting arrangement with MMR. A copy of the consulting agreement is filed as an exhibit in our Form 8-K, as filed with the SEC on May 4, 2009 and is hereby incorporated by reference.
We incurred $12,500 during the six months ended June 30, 2015 and 2014, toward marketing consulting services from Bernard Stolar, a director. We included $180,263 and $174,273 in related party payables as of June 30, 2015 and December 31, 2014, respectively, in connection with these services and board fees.
We contract with a significant vendor for the development and maintenance of the software applications necessary to run our MyMedicalRecords PHR, MyEsafeDepositBox and MyMedicalRecords Pro products. Our outside developer supports our software development needs through a team of software engineers, programmers, quality control personnel and testers, who work with our internal product development team on all aspects of application development, design, integration and support of our products. This vendor is also a stockholder. For the six months ended June 30, 2015 and 2014, the total expenses relating to this stockholder amounted to $60,000 and $60,000, respectively. In addition, we capitalized $0 of software development costs for the quarter ended June 30, 2015. As of June 30, 2015 and December 31, 2014, the total amounts due to the stockholder and included in related party payables amounted to $70,000 and $10,000, respectively.
On September 15, 2009, we entered into a five year agreement with E-Mail Frequency, LLC and David Loftus, Managing Partner of E-Mail Frequency, LLC, a significant stockholder of the Company, which was amended during 2011 to increase the term for an additional five years and provide licensor a non- exclusive right to target, market and exploit the Employee Benefits market.
We licensed an existing 80 million person direct marketing database (the "Database") of street addresses, cellular phone numbers, e-mail addresses and other comprehensive data with E-Mail Frequency. The agreement allows us to market, through the use of the Database, our MyMedicalRecords PHR, MyEsafeDepositBox virtual vault, and MMRPro document management system to physicians and their patients. Under the terms of the Agreement, we paid $250,000 to David Loftus as a one-time consulting fee in the form of 2,777,778 shares of our common stock. We recorded the $250,000 one-time licensee fee as a prepaid consulting fee. Amortization expense for each of the quarters ended June 30, 2015 and 2014 was $0 and $12,500. Included in related party payables at June 30, 2015 and December 31, 2014 of $64,615 and $64,615, respectively, in respect to these services.
NOTE 12 - SUBSEQUENT EVENTS
We have evaluated subsequent events of our condensed consolidated financial statements. There were no material subsequent events requiring additional disclosure in these financial statements.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion of our financial condition and results of operations in conjunction with our financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and the description of our business appearing in our Annual Report on Form 10-K for the year ended December 31, 2014, filed with the SEC on March 31, 2015, as amended by Form 10-K/A for the year ended December 31, 2014, as filed with the SEC on April 30, 2015 (together, the "Form 10-K"). This discussion contains forward-looking statements, which inherently involve risks and uncertainties. Please see "Cautionary Note Regarding Forward-Looking Statements" below. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including the risks faced by us described in "Risk Factors" in Item 1A of the Form 10-K.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains certain forward-looking statements. The words "anticipate," "expect," "believe," "plan," "intend," "will" and similar expressions are intended to identify such statements. Although the forward-looking statements in this Quarterly Report on Form 10-Q reflects the good faith judgment of our management, such statements are subject to various risks and uncertainties, including but not limited to the risks identified in our Form 10-K and in our press releases and other filings with the SEC.
Assumptions related to forward-looking statements involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Any of such assumptions could be inaccurate. You should not place undue reliance on these forward-looking statements, which are based on our current views and assumptions. In evaluating these statements, you should specifically consider various factors, including the foregoing risks and those outlined under "Risk Factors" in Item 1A of the Form 10-K. Our forward-looking statements represent estimates and assumptions only as of the date of this Quarterly Report on Form 10-Q. Except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances occurring after the date of this Quarterly Report on Form 10-Q.
Overview
Background
We provide secure and easy-to-use online Personal Health Records ("PHRs") electronic safe deposit box storage solutions, and document management and imaging systems for healthcare professionals
Source of Revenues
MMR remains focused on its primary Health IT business of selling the MyMedicalRecords PHR and MMRPro document and imaging systems for healthcare professionals. We derive revenues from the provision of services, which are comprised of facilitating electronic access to consumer medical records and other vital documents through subscribers on a direct subscription basis or an "access" basis through various types of organizations including direct sales, affinity and membership groups, healthcare organizations and retailers, and in both cases, we record these revenues under "Subscriber" in our income statement. We also sell direct to consumers through paid advertising or other per enquiry marketing relationships. When sold to corporations, affinity and membership organizations, hospitals and other business to business customers, we charge a minimum monthly fee plus user fees to the organization based on the number of users who will have access to our services through such organization, whether or not such users actually activate their authorized account. During the six months ended June 30, 2015, we received $47,252 from subscriber revenues.
In addition, MMR has numerous patents issued, pending or applied for pertaining to provisioning of online medical and Personal Health Records in 12 countries of commercial interest including the U.S., and defends its global intellectual property rights through the filing of patent infringement complaints.
We also generate revenues from the licensing of our Health IT and biotech assets, which may include non-refundable license and up-front fees, non-refundable milestone payments that are triggered upon achievement of a specific event and future royalties or lump-sum payments on sales of related products. We record these licensing revenues under "License Fees" in our income statement. We are sometimes paid an upfront license fee and milestone payments and we recognize those fees as revenue as payments are received. We will record those fees as revenue when payments are received. During the six months ended June 30, 2015, we received $9,480 from license fees revenues.
We also have generated revenues from licensing the sale and marketing of our services internationally and, to a lesser extent, from ancillary fee payments including web and marketing development services, amongst others. We record these licensing revenues under "License Fees" and other ancillary revenues under "Other Revenues" in our income statement. When we enter into a licensing arrangement, we are sometimes paid an upfront license fee and typically receive ongoing royalty payments that are often based on a percentage of revenue earned by our licensee. We recognize these fees over the license period. When we receive ancillary one-time payments, we record them when services or products are delivered.
Cost of Revenue
Our cost of revenue includes the cost of manufacturing our retail product and related packaging, maintaining our voice and fax mailboxes, long-distance call transport costs, fax and voice call processing costs, credit card transaction processing costs, web hosting and management fees, website maintenance and support costs, costs associated with creating and mailing enrollment packages to our subscribers and the cost of scanners. Cost of revenue also includes customer service costs. We also charge to cost of revenue our direct selling costs, which include commissions paid to sales representatives who sell our wholesale and access based accounts.
Operating Expenses
The largest component of our operating expenses is our general and administrative expenses, which include personnel salaries and benefits, office rent and supplies, insurance costs, fees for legal and professional services, as well as our expenses for corporate telecommunications and Internet access not associated with our products. Our operating expenses also include sales and marketing expenses (which include expenses associated with attending trade shows and travel costs, as well as a portion of personnel salaries allocated to sales and marketing activities), as well as technology development expenses (which includes expenses related to research and development as well as a portion of personnel salaries allocated to development activities).
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Recent Accounting Pronouncements
For a description of recent accounting pronouncements and how we apply such pronouncements to our financial statements, see the accompanying notes to our consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.
Competition
The following competitive factors may affect our future performance.
MyMedicalRecords PHR
Although we believe that no other product in the marketplace compares to what we provide in our comprehensive PHR and other offerings, there are other PHR providers in the consumer health information management marketplace today that compete for our services. These include NoMoreClipboard.com, Dossia, WebMD Health Manager, ZweenaHealth, MiVia, and numerous others including patient-portals offered by EMR Vendors, health exchanges, and insurance companies, hospitals and HMOs for their policyholders and patients. Each of our competitors offers varying PHR products and services for online storage and access to medical records at varying price points (at the basic "free" level, with minimal recordkeeping capability that usually includes advertising).
MyEsafeDepositBox
Our MyEsafeDepositBox product competes with a number of online backup and electronic data storage services. The increasing use of external hard drives and flash drives to backup data also has the potential to compete with online data storage services such as our MyEsafeDepositBox product.
MMRPro
MMRPro competes with scanning services that market their services to doctors seeking to convert their historical paper records into electronic files, as well as EMR systems.
MMRPro also competes with EMR systems that offer doctors the opportunity to make their entire office paperless.
Results of Operations for the six months ended June 30, 2015 as compared to the six months ended June 30, 2015
Revenues
Revenues for the six months ended June 30, 2015 and 2014 were $61,052 and $540,824, respectively, a decrease of $479,772 or 88.7%, and for the three months ended June 30, 2015 and 2014 were $16,351 and $55,330, respectively, a decrease of $38,979 or 70.4%. The decrease for the quarter was primarily due to a decrease in license fees resulting from the settlement of patent litigation with a major international retailer in the first six months of 2014, with no similar transaction in 2015. Despite the changing environment in the US regarding patent laws the Company continues to explore opportunities to monetize its international patent portfolio globally in both health information technology and biotechnology.
Cost of revenue
Cost of revenue for the six months ended June 30, 2015 and 2014 was $134,256 and $141,442, respectively, a decrease of $7,186 or 5.1%,. Cost of revenues for the three months ended June 30, 2015 and 2014 were $60,924 and $43, 041, respectively, for an increase of $17,883 or 41.5%.The increase for the quarter was mainly due to the increased website costs. The decrease for the six month period was mainly due to the renegotiation and reduction of platform costs.
Gross loss for the six months ended June 30, 2015 was $73,204 compared to a Gross profit of $399,382 for the six months ended June 30, 2014, a decrease of $472,586 or 118.37%. Gross loss for the three months ended June 30, 2015 was $44,573 compared to a Gross Profit of $12,289 for a decrease of $56,862 or 462.7%. The decrease for the quarter was primarily due to an increase cost for website fees. The decrease for the six month period was primarily due to a decrease in licensing fee which did not occur 2015.
Operating expenses
Total operating expenses for the six months ended June 30, 2015 and 2014 were $1,266,191 and $3,220,247, respectively, a decrease of $1,954,056 or 60.6%. Total operating expenses for the three months ended June 30, 2015 and 2014 were $646,747 and $1,296,754, respectively for a decrease of $649,908 or 50%. The decrease for the quarter and six month period was primarily due to a reduction in investor relations expenses, salaries, and marketing consulting fees as we work towards streamlining expenses.
General and administrative expenses for the six months ended June 30, 2015 and 2014 were $948,496 and $2,343,221, respectively, a decrease of $1,394,725 or 59.5%. General and administrative expenses for the three months ended June 30, 2015 and 2014 were $486,503 and $913,241, respectively, for a decrease of $426,738 or 46.7%. The decrease for the quarter and six month period was primarily due to a reduction in investor relations expenses, salaries, non-cash compensation expenses, and consulting fees as we streamline expenses.
Sales and marketing expenses for the six months ended June 30, 2015 and 2014 were $317,695 and $826,390, respectively, a decrease of $508,695 or 61.6%. Sales and marketing expenses for the three months ended June 30, 2015 and 2014 were $160,244 and $357,660, respectively, for a decrease of $197,416 or 55.2%. The decrease for the quarter and six month period was primarily due to lower business development fees, marketing consulting fees and stock option expense.
Technology development expenses for the six months ended June 30, 2015 and 2014 were $0 and $50,636, respectively, a decrease of $50,636 or 100% and for the three month period ending June 30, 2015 and 2014 were $0 and $25,853, respectively, for a decrease of $25,853 or 100%. The decrease for the quarter and six month period was development of our android mobile app was completed in 2014.
Interest and Other Finance Charges, Net
Interest and other finance charges for the six months ended June 30, 2015 and 2014 were $146,726 and $258,647, respectively, a decrease of $111,921 or 43.3%. Interest and other finance charges for the three months ended June 30, 2015 and 2014 were $53,458 and $145,695, respectively, for a decrease of $92,237 or 63.3%. The decrease for the quarter and the six month period was primarily due to decreased interest expense related to convertible notes.
15
Net loss
As a result of the foregoing, net loss for the six months ended June 30, 2015 and 2014 was $1,434,285 and $3,079,512, respectively, a decrease of $1,645,227 or 53.42%.Net loss for the three month period ending June 30, 2015 and 2014 was $692,942 and $1,430,160, respectively, for a decrease of $737,218 or 51.5%
Going Concern
As more fully described in Note 1 to the consolidated financial statements appearing above in this Quarterly Report on Form 10-Q, our independent registered public accounting firm included an explanatory paragraph in their report on our 2014 financial statements for the year ended December 31, 2014 related to the uncertainty of our ability to continue as a going concern. As of June 30, 2015, our current liabilities of $9.8 million exceeded our current assets of $0.15 million by $9.65 million.
For a description of our management's plan regarding our ability to continue as a going concern, please see Note 1 to the financial statements included above.
Liquidity and Capital Resources
As of June 30, 2015, our current liabilities exceeded our current assets by $9.65 million. Furthermore, during the quarter ended June 30, 2015, we incurred losses of $692,942. At the current level of borrowing, we require cash of $275,000 per year to service our debt and, in order to continue operating its business, we use an average of $278,000 cash per month, or $3.3 million per year.
In addition to the above cash burn from operations, we will be required to obtain additional financing in order to meet the obligations for installment payments of $621,000 under the Creditor Plan and our obligations under the secured indebtedness to The RHL Group under the Tenth Amended Note (which had a balance of $1.79 million at June 30, 2015, amongst other debt obligations. Such obligations are currently due and payable pursuant to the terms of the notes.
To finance our activities, we have relied on the issuance of stock and debt to the RHL Group. At June 30, 2015, we had a line of credit with the RHL Group in the amount of $4.5 million. Availability under this line of credit was $2.70 million as of June 30, 2015.
In addition, we may offer restricted stock to accredited investors and issue limited amounts of convertible debt. During 2014, we raised $1.07 million in sales of restricted common stock to accredited investors. We expect to continue offering limited amounts of convertible debt in 2015. The Company believes it can continue to generate revenue from its biotech and health information technology assets. We also expect to continue receiving (i) royalties from license fees related to our health information technology patents and other intellectual property; and (ii) revenue from sales of PHRs, MMRPro services, and other products and services including our new mHealth applications that will help reduce annual cash burn from operations. The Company is also planning on selling data and samples from its FavId™ vaccine trials to pharmaceutical manufacturers, universities and others for use in helping to speed the process of clinical trials for new drugs and disease management programs.
Cash Flows for the six months ended June 30, 2015 compared to six months ended June 30, 2014
Net cash used in operating activities for the six months ended June 30, 2015 and 2014 was $367,470 and $949,207, respectively. In 2015, we had a net loss of $1,434,285, plus non-cash adjustments (depreciation, amortization, common stock and warrants issued for services and interest, amortization of loan discount, and stock compensation expense) of $246,935, plus changes in operating assets and liabilities of $819,880. In 2014, net cash used in operating activities of $949,207 was comprised of a net loss of $3,079,512, plus similar non-cash adjustments of $1,187,281, plus changes in operating assets and liabilities of $943,024. Compared to 2014, the operating cash flow activities in 2015 were lower primarily due to a reduction in equity transactions and compensation expenses.
Net cash used in investing activities in the six months ended June 30, 2015 and 2014 totaled $152,416 and $188,423, respectively. Compared to 2014, investing activities in 2015 were lower mainly due to a decrease product development costs.
Net cash provided by financing activities in the six months ended June 30, 2015 and 2014 totaled $210,493 and $1,295,533, respectively. Financing activities primarily included proceeds generated from the issuance of convertible notes and common shares. Compared to 2014, financing activities in 2015 were lower primarily due to a decrease in shares issued for financing activities.
As of June 30, 2015, we had cash and cash equivalents of $0, compared to $168,262 as of June 30, 2014.
Description of Indebtedness
For a description of our indebtedness to The RHL Group, please See Note 3 - Related Party Note Payable, included above in this Quarterly Report on Form 10-Q.
Convertible Notes
For information relating to our Convertible Notes, please see Note 9 to our financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.
Commitments and Contingencies
For information relating to our commitments and contingent liabilities, please see Note 5 to our financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company and therefore, we are not required to provide information required by this item of Form 10-Q.
16
Item 4. Controls and Procedures
Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.
In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
As required by Rule 13a-15(b) under the Exchange Act, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures.
Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective and were operating at a reasonable assurance level.
Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting or in other factors identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the quarter ended June 30, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
The information in response to this item is incorporated herein by reference to Note 5 - Commitments and Contingencies under the "Litigation Matters" section of the Consolidated Condensed Financial Statements of this Quarterly Report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following is a summary of transactions by us since our previous disclosure Form 8-K filed with the Securities and Exchange Commission on May 27th 2015 involving sales of our securities that were not registered under the Securities Act of 1933, as amended (the "Securities Act"). Each offer and sale was exempt from registration under either Section 4(2) of the Securities Act or Rule 506 under Regulation D of the Securities Act because (I) the securities were offered and sold only to accredited investors; (ii) there was no general solicitation or general advertising related to the offerings; (iii) each investor was given the opportunity to ask questions and receive answers concerning the terms of and conditions of the offering and to obtain additional information; (iv) the investors represented that they were acquiring the securities for their own account and for investment; and (v) the securities were issued with restrictive legends:
On May 5, 2015, we granted a total of 1,666,667 shares of restricted common stock to an unrelated third-party, at a price of $0.003 per share.
On July 27, 2015, we granted a total of 35,000,000 shares of restricted stock to an unrelated third party at a price of $0.0036 in consideration of a reduction in payables.
All securities granted or sold under these agreements are unregistered and may only be resold or transferred if they later become registered or fall under an exemption to the Securities Act or applicable state laws. Our typical investor or grantee generally relies upon Rule 144 of the Securities Act, which, in addition to requiring several other conditions before resale may occur, requires that the securities issued be held for a minimum of six months. We generally used the proceeds of the foregoing sales of securities for repayment of indebtedness, working capital and other general corporate purposes.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
None.
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Exhibit Number |
Exhibit Description | |
10.1 | Tenth Amended and Restated Secured Promissory Note dated May 20, 2015 | |
31.1 | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934. | |
31.2 | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934. | |
32.1 | Certification of Chief Executive Officer Pursuant to Rule 13a-14(b)/15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350. | |
32.2 | Certification of Chief Financial Officer Pursuant to Rule 13a-14(b)/15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350. | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
18
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: August 14, 2015
MMRGlobal, Inc.
By: /s/ Robert H.
Lorsch
Robert H. Lorsch
Chairman, Chief Executive Officer and
President
By: /s/ Bernard Stolar
Bernard Stolar
Chief Financial Officer
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EXHIBIT INDEX 20
Exhibit
Number
Exhibit Description
10.1
Tenth Amended and Restated Secured Promissory Note dated May 20, 2015
31.1
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.
31.2
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.
32.1
Certification of Chief Executive Officer Pursuant to Rule 13a-14(b)/15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.
32.2
Certification of Chief Financial Officer Pursuant to Rule 13a-14(b)/15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.
101.INS
XBRL Instance Document
101.SCH
XBRL Taxonomy Extension Schema Document
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
XBRL Taxonomy Extension Label Linkbase Document
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
Exhibit 10.1
TENTH AMENDED AND RESTATED SECURED PROMISSORY NOTE
(For Revolving Line of Credit, Advances and Guaranteed Obligations)
(Up to) $4,500,000 |
May 20, 2015 |
Los Angeles, California |
$1,514,641.92 (current balance under Revolving Line of Credit)
$1,764,641.92 (total Unpaid Balance)
For Value Received, the undersigned MyMedicalRecords, Inc. (formerly mymedicalrecords.com, Inc.), a Delaware corporation ("Subsidiary") and MMRGlobal, Inc. (formerly MMR Information Systems, Inc., formerly Favrille, Inc.), a Delaware corporation ("Parent") (together, "Borrower"), promises to pay to the order of The RHL Group, Inc., a California corporation ("Lender"), the sum of up to Four Million Five Hundred Thousand Dollars ($4,500,000) on a revolving basis (sometimes referred to as a "Reserve Line of Credit" herein) with interest from the date of disbursement on the Unpaid Balance, as that term is used herein, and defined below, from time to time outstanding. Capitalized terms used herein without definition shall, unless otherwise indicated, have the meanings given to such terms in the Security Agreement dated July 31, 2007, as amended on June 30, 2012 under the First Amended Security Agreement, and as amended on May 20, 2015 under the Second Amended Security Agreement (together, the "Security Agreement"), which grants certain security interests in the Collateral owned by Borrower, as therein defined. Borrower and Lender agree that the terms of this Tenth Amended and Restated Secured Promissory Note ("Tenth Amended Note") apply to the Reserve Line of Credit.
This Tenth Amended Note is intended to update and amend that certain Secured Promissory Note (the "Original Note") dated July 30, 2007, as amended by the Amended and Restated Secured Promissory Note (the "First Amended Note"), dated August 23, 2007, and as further amended by the Second Amended and Restated Secured Promissory Note (the "Second Amended Note") dated August 1, 2008, which notes were approved by the Borrower's Board of Directors by resolutions dated July 23, 2007, August 30, 2007 and June 2, 2008, respectively, which was further amended by the Third Amended and Restated Secured Promissory Note dated April 29, 2009 (the "Third Amended Note"), which was further amended by the Fourth Amended and Restated Secured Promissory Note dated April 29, 2010 (the "Fourth Amended Note"), which was further amended by the Fifth Amended and Restated Secured Promissory Note dated April 29, 2011 (the "Fifth Amended Note") and further amended by the Sixth Amended and Restated Secured Promissory Note dated April 29, 2012 (the "Sixth Amended Note"), which was further amended by the Seventh Amended and Restated Secured Promissory Note (the "Seventh Amended Note") dated July 30, 2012, which was further amended by the Eighth Amended and Restated Secured Promissory Note (the "Eighth Amended Note") dated April 29, 2013 which was further amended by the Ninth Amended and Restated Secured Promissory Note (the "Ninth Amended Note") dated April 29, 2014, which is further amended by this Tenth Amended and Restated Secured Promissory Note (the "Tenth Amended Note") dated April 29, 2015. As stated therein, the Original Note, the First Amended Note, the Second
PROMISSORY NOTE |
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Amended Note, the Third Amended Note, the Fourth Amended Note, the Fifth Amended Note the Sixth Amended Note, the Seventh Amended Note, the Eighth Amended Note, and the Ninth Amended Note provided for increases, if necessary, in the sole determination of the Lender, in the amount of the Reserve Line of Credit, and the terms of the Security Agreement which provide for that agreement to apply to advances in excess of the therein stated "Amount." The terms of the Security Agreement shall be deemed to apply to, and a security interest is hereby granted to the Lender, for all advances made, under this Tenth Amended Note to the same extent, validity, security and priority as to advances under the Original Note, the First Amended Note, the Second Amended Note, the Third Amended Note, the Fourth Amended Note, the Fifth Amended Note, the Sixth Amended Note, the Seventh Amended Note, the Eighth Amended Note, and the Ninth Amended Note, with the exception that the Seventh Amended Note, the Eighth Amended Note, the Ninth Amended Note, and this Tenth Amended Note and the Security Agreement, are deemed to apply to the Parent as well as to the Subsidiary.
The original of the First Amended Note, Second Amended Note, Third Amended Note, , Fourth Amended Note, Fifth Amended Note, Sixth Amended Note, Seventh Amended Note, Eighth Amended Note, and Ninth Amended Note, have been marked as "superseded." If, and only if, the Tenth Amended Note is deemed unenforceable, or if the Security Agreement is, for any reason, deemed not to apply to the Tenth Amended Note, then the terms of the Ninth Amended Note, (or the Eighth Amended Note, or the Seventh Amended Note, or the Sixth Amended Note, or the Fifth Amended Note, or the Fourth Amended Note, or the Third Amended Note, or the Second Amended Note, or the Original Note, and the Guaranty previously signed by the Parent, as the case may be and if necessary) shall be deemed reinstated to the extent necessary to: (a) repay the advances of the Lender, and (b) provide for security to the Lender.
The term "Unpaid Balance" shall mean all of the following: (a) the funds actually lent to the Borrower, or either the Parent or the Subsidiary, including interest, fees, and costs thereon (which includes reasonable legal expenses and costs of Lender in connection with this Tenth Amended Note); (b) any funds paid or advanced for the benefit of the Borrower at the request of Borrower to third parties, including charges made on the Lender's credit or charge cards, or credit or charge cards for which Lender is liable (exclusive of interest on such charges) ("Credit Card Advances") on or after July 23, 2007; (c) subject to the last sentence of this paragraph, any amounts guaranteed by the Lender at the request of Borrower, for which the guarantees are still outstanding (including any personal guarantees by Robert H. Lorsch as approved by the Board of Directors); and (d) unpaid consulting fees to the Lender, salary to Robert H. Lorsch, or expenses accrued or owed to Lender. However, any amounts guaranteed by the Lender shall not be included in the balance under the Revolving Line of Credit, but shall reduce the balance available under the Reserve Line of Credit.
The entire Unpaid Balance shall be due and payable at the end of each calendar month, provided however, that if the Borrower is not otherwise in default under the Original Note, the First Amended Note, the Second Amended Note, the Third Amended Note, the Fourth Amended Note, the Fifth Amended Note, the Sixth Amended, the Seventh Amended Note, the Eighth Amended Note, the Ninth Amended Note, or the Tenth Amended Note or the Security Agreement, as amended from time to time, the Reserve Line of Credit shall continue in existence for the next succeeding month, and payment of the full Unpaid Balance shall be similarly
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deferred. However, notwithstanding any other provision in this Note: (a) the obligation to pay interest on a monthly basis, and the obligation to pay the Credit Card Advances, if any, shall continue to be due and payable on a monthly basis; and (b) unless otherwise agreed in writing by Lender, the entire unpaid balance shall be due and owing, without extension, May 20, 2016 (the "Final Maturity Date").
The monthly payment shall not include any interest for amounts guaranteed by the Lender unless the Lender has performed on the guarantee, whether by payment or otherwise, except that on the Final Maturity Date, the Borrower must pay all amounts due and any amounts due under any still then outstanding guarantees of Lender at the option of Lender. Notwithstanding anything to the contrary in this Note, or any of the predecessor notes that have been marked as "superseded," the Borrower shall pay at least $1,000 per month, starting on May 1, 2015 to the Lender or holder of this Note.
Upon the occurrence of an Event of Default, as defined in this Note or the Security Agreement, the Final Maturity Date shall be accelerated as against the Parent, the Subsidiary, or both, without further action by the Lender.
Interest shall accrue at the rate equal to the lesser of 10% per annum or the maximum rate allowed under the California State Constitution. Said rate shall continue in effect for the entire period of the Reserve Line of Credit up to the Final Maturity Date. At no time shall the interest rate, and fees, if applicable, exceed the maximum rate chargeable by law.
Borrower acknowledges and agrees that the Unpaid Balance is presently due and owing, that the Unpaid Balance is $1,764,641.92 as of May 20, 2015, that the amount under the revolving line is $1,514,641.92 (not including guarantees as per the last sentence under the "Unpaid Balance" paragraph above), and that there are no defenses, at law or in equity, to the amount due under this Note as of the date of the execution of this Note.
Lender will receive, concurrently with the execution of this Tenth Amended Note, 1,764,642warrants to acquire shares of Parent's common stock at an exercise price of $0.003 per share which represents one warrant per dollar outstanding on the Unpaid Balance of the Note as of the renewal date. Such warrants shall be fully vested and be exercisable in cash or in a cashless exercise at any time prior to their fifth anniversary of issuance, and which shall be non-transferable without the consent of Parent, which consent is not to be unreasonably withheld.
All payments on this Note are payable at, and all writings respecting the warrants shall be sent to, Lender's accountant at the following address, with a copy to Borrower: Anderson Financial, 12021 Wilshire Blvd., Suite 866, Los Angeles, California 90025, Attn: Marilyn Anderson, and The RHL Group, P.O. Box 17034, Beverly Hills, CA 90210, or at such other place as the Lender or any other holder hereof shall notify Borrower in writing.
All payments received by the Lender on this Note may be applied by Lender as follows: first, to the payment of all fees and expenses owed under this Note or the Security Agreement; second, to the payment of accrued and unpaid interest then due and owing; and third, to principal or as otherwise indicated by Lender.
PROMISSORY NOTE |
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This Note may be prepaid in whole or in part, without penalty. In the event of partial prepayments, the prepayments and proceeds shall be applied as described in the just preceding paragraph.
At any time or times on or after the date hereof (or, to avoid the provisions of Section 16(b) of the Securities Exchange Act of 1934, as amended, regarding "short swing profits," six months and one day from the date of the Lender's last purchase or sale of equity securities of the Parent), the Lender shall be entitled to convert up to Five Hundred Thousand Dollars ($500,000.00) of the outstanding and unpaid Conversion Amount (as defined below) into fully paid and non-assessable shares of the Parent's Common Stock (the "Common Stock") at the Conversion Rate (as defined below). The Parent shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock, the Parent shall round such fraction of a share of Common Stock down to the nearest whole share and the difference shall remain outstanding as Unpaid Balance under this Note until paid in accordance herewith. To convert any Conversion Amount into shares of Common Stock on any date (a "Conversion Date"), the holder shall deliver to the Parent a written notice of conversion so requesting at least five (5) days prior to the requested Conversion Date (a "Conversion Request"). Such Conversion Amount shall convert (a "Conversion Event") into fully paid and non-assessable shares of Common Stock at the Conversion Rate in the manner specified in below.
The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to the foregoing paragraph shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price (as defined below) (the "Conversion Rate").
As used herein, the term "Conversion Amount" means the sum of (A) the portion of the Principal to be converted with respect to which this determination is being made, which shall not exceed $500,000 in the aggregate, and (B) accrued and unpaid Interest with respect to such Principal, and the term "Conversion Price" shall be equal to $0.01 per share of Common Stock.
On or before a Conversion Event, the Lender shall surrender this Note (or an indemnification undertaking with respect to this Note in the case of its loss, theft or destruction), duly endorsed, at the Parent's principal corporate office, and provide in writing the name or names in which the certificate or certificates for shares of Common Stock are to be issued. The Parent shall, at its expense and as soon as practicable, thereafter issue and deliver, or cause its transfer agent to issue and deliver, to the Lender, or to the nominee or nominees of the Lender, a certificate or certificates for the number of shares of Common Stock to which the Lender shall be entitled. The person or persons entitled to receive the shares of Common Stock issuable upon a Conversion Event shall be treated for all purposes as the record holder or holders of such shares as of the Conversion Date. If this Note is physically surrendered for conversion and the outstanding Principal of this Note is greater than the Principal portion of the Conversion Amount being converted, then the Parent shall as soon as practicable and in no event later than five trading days after receipt of this Note, and at its own expense, issue and deliver to the Lender, a new Note representing the outstanding Principal not converted.
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Notwithstanding anything else in this Agreement, the entire Unpaid Balance shall be due and owing, without extension on the occurrence of any of the following, unless otherwise agreed by Lender in writing: (a) a change in ownership or control of Borrower in an amount equal to or greater than one-third (1/3) of outstanding voting stock, other than transactions on a publicly traded market in the regular course of trading; (b) a transfer of at least one-third (1/3) of the assets of Borrower; (c) a change in the composition of Borrower's Board of Directors, Officers and/or senior management which is not approved by Lender; (d) Parent or Subsidiary shall first be the subject of a case pending in any United States Bankruptcy Court; (e) Parent or Subsidiary shall suffer the appointment of a receiver appointed in any state or federal court action, or other proceeding; (f) Parent or Subsidiary shall be the subject of any writ of attachment or writ of execution; (g) Parent or Subsidiary shall not be in full compliance with all of its covenants in prior agreements by May 15, 2016; (h) Parent and Subsidiary shall fall out of compliance with its covenants on or after May 15, 2015; (i) Borrower shall have less than $200,000 in cash in its bank accounts or such other amount as necessary to maintain operations, whichever is greater, through the subsequent thirty (30) days on and after May 20, 2015 or (j) Subsidiary and Parent shall not timely pay any obligations due respecting payroll and all associated payroll taxes at any time during the term of the Note. Notwithstanding the foregoing sentence, Lender hereby expressly waives, both now and in the future, any Default or Event of Default under this Note and the Security Agreement that arises from or is related to the Closing (as that term is defined in the Agreement and Plan of Merger and Reorganization dated November 8, 2008 by and among Borrower, Parent and a wholly-owned merger subsidiary of Parent (the "Merger Agreement") and the consummation of the transactions described in the Merger Agreement.
The Security Agreement, as amended from time to time, relating to the Original Note, the Amended Note, the Second Amended Note, the Third Amended Note, The Fourth Amended Note, the Fifth Amended Note, the Sixth Amended Note, the Seventh Amended Note, the Eighth Amended Note, the Ninth Amended Note and this Tenth Amended Note shall jointly be referred to as the "Loan Documents."
Upon the happening of any failure to make any payment under the Loan Documents, or any other "Event of Default" as defined in the Security Agreement, as amended from time to time, Lender may at its option declare the entire unpaid balance of this Note, together with interest accrued thereon, to be immediately due and payable. Upon receiving notice of Default, Borrower will have10 calendar days to cure such Event of Default. In the event the Borrower fails to cure the default, the Lender may proceed to exercise any rights or remedies that it may have under any of the Loan Documents or under this Note or such other rights and remedies which, subject to the provisions of this Note and Loan Documents, the Lender may have at law, equity or otherwise. In the event of such acceleration, Borrower may discharge its obligations to the Lender by paying the unpaid balance hereof as of the date of such payment, plus accrued interest and fees, in the manner set forth above.
Upon an Event of Default (as defined in the Security Agreement, as amended from time to time), the interest rate hereunder shall be computed as the higher of: (a) the highest rate then allowed by law, or (b) the rate described herein.
PROMISSORY NOTE |
Page 5 of 8 |
After default, in addition to principal and accrued interest, the Lender shall be entitled to collect all costs of collection, including, but not limited to, reasonable attorneys' fees incurred in connection with any of the lender's reasonable collection efforts, whether or not suit on this Note is filed, and all such costs and expenses shall be payable on demand.
No failure on the part of the Lender or other holder hereof to exercise any right or remedy hereunder, whether before or after the happening of a default, shall constitute a waiver thereof, and no waiver of any past default shall constitute waiver of any future default or of any other default. No failure to accelerate the debt evidenced hereby by reason of default hereunder, or acceptance of a past due installment or indulgence granted from time to time shall be construed to be a waiver of the right to insist upon prompt payment thereafter, or shall be deemed to be a novation of this Note or as a reinstatement of the debt evidenced hereby or a waiver of such right of acceleration or any other right, or be construed so as to preclude the exercise of any right which Lender may have, whether by the laws of the State of California, by agreement or otherwise, and Borrower and each endorser or guarantor hereby expressly waives the benefit of any statute or rule of law or equity which would produce a result contrary to or in conflict with the foregoing. This Note may not be changed orally, but only by an agreement in writing signed by the party against whom such agreement is sought to be enforced.
Borrower and each endorser or guarantor of this Note hereby waives presentment, protest, demand, and diligence, notice of dishonor and notice of nonpayment.
All agreements between Borrower and Lender, whether now existing or hereafter arising, and whether oral or written, are hereby expressly limited so that in no contingency or event whatsoever, whether by acceleration of maturity hereof or otherwise, shall the amount paid or agreed to be paid to Lender or the holder hereof, or collected by Lender or such holder for the use, forbearance or detention of the money to be loaned hereunder or otherwise, or for the payment or performance of any covenant or obligation contained herein, or in any other document pertaining to the indebtedness evidenced hereby, exceed the maximum amount permissible under governing usury laws as applicable in this transaction, If, under any circumstances whatsoever, fulfillment of any provision hereof or of the Loan Documents or any other documents, at the time performance of such provision shall be due, shall involve exceeding the limit of validity prescribed by law for this transaction, then the obligation to be fulfilled shall be reduced to the limit of such validity; and if under any circumstances Lender or other holder hereof shall ever receive an amount deemed interest by applicable law, which would exceed the highest lawful rate allowed for this transaction, such amount that would be excessive interest under governing laws as applicable to this transaction shall be applied to the reduction of the principal amount owing hereunder and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal and such other indebtedness, the excess shall be deemed to have been a payment made by mistake and shall be refunded to Borrower or to any other person making such payment on Borrower's behalf. All sums paid or agreed to be paid to the Lender hereto for the use, forbearance or detention of the indebtedness of Borrower evidenced hereby, outstanding from time to time shall, to the extent permitted by governing law, and to the extent necessary to preclude exceeding the limit of validity prescribed by law as applicable to this transaction, shall be amortized, pro-rated, allocated and spread from the date of disbursement of the proceeds of this Note until payment in full of the loan evidenced hereby so that the actual rate of interest on account of such indebtedness is uniform throughout the term hereof. The terms and provisions of this paragraph shall control and supersede every other provision of all agreements between Borrower, and endorser or guarantor and Lender.
PROMISSORY NOTE |
Page 6 of 8 |
This Note shall be governed by and construed under the laws of the State of California applicable to contracts made and to be performed entirely in that State without regard to the principles thereof regarding conflict of laws. Borrower and each endorser or guarantor hereby submits to personal jurisdiction in said State for the enforcement of Borrower's obligations hereunder, and waives any and all personal rights under the law of the other state to object to jurisdiction within such State for the purposes of litigation to enforce such obligations of Borrower. In the event such litigation is commenced, Borrower agrees that service of process may be made and personal jurisdiction over Borrower obtained, by service of a copy of the summons, complaint and other pleadings required to commence such litigation upon Borrower's appointed agent for service of process in such state with a copy to:
Ingrid Safranek (isafranek@mmrmail.com)
MMRGlobal, Inc.
MyMedicalRecords, Inc.
4401 Wilshire Blvd., Suite 200
Los Angeles, CA 90010
The holder of this note shall be entitled, without limitation, to all of the rights and remedies of the Lender under the Loan Agreements with respect to this Note. In the event of any conflict between the terms and conditions of the Security Agreement and those of this Note, the terms and conditions of this Note shall control. The obligations of Borrower pursuant to this Note are secured by the Security Agreement.
Borrower represents that it has obtained all of the corporate authority necessary to execute this Note.
[SIGNATURE PAGE FOLLOWS]
PROMISSORY NOTE |
Page 7 of 8 |
IN WITNESS WHEREOF, Borrower has executed this instrument by its duly authorized signatories as of the date first above written.
"Borrower"
MyMedicalRecords, Inc., a Delaware corporation ("Subsidiary")
Name: Ingrid Safranek
Title: CFO
Signature: ___________________________________
Date: ____________
MMRGlobal, Inc., a Delaware corporation ("Parent")
Name: Ingrid Safranek
Title: CFO
Signature: ___________________________________
Date: _____________
The RHL Group, Inc. ("Lender")
Name: Robert H. Lorsch
Title: CEO
Signature: ___________________________________
Date: _____________
PROMISSORY NOTE |
Page 8 of 8 |
Exhibit 31.1
Certification
I, Robert H. Lorsch, certify that:
1. I have reviewed this quarterly report on Form 10-Q of MMRGlobal, Inc.;
2. 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;
3. Based on my knowledge, the financial statements, and other financial information included in this 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;
4. 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 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;
(b) 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;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this 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
(d) Disclosed in this 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 fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. 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 functions):
(a) 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
(b) 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.
Date: August 14, 2015
|
/s/ Robert H. Lorsch Name: Robert H. Lorsch Title: Chief Executive Officer |
Exhibit 31.2
Certification
I, Bernard Stolar, certify that:
1. I have reviewed this quarterly report on Form 10-Q of MMRGlobal, Inc.;
2. 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;
3. Based on my knowledge, the financial statements, and other financial information included in this 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;
4. 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 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;
(b) 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;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this 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
(d) Disclosed in this 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 fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. 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 functions):
(a) 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
(b) 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.
Date: August 14, 2015
|
/s/ Bernard Stolar Name: Bernard Stolar Title: Chief Financial Officer |
Exhibit 32.1
Certification
I, Robert H. Lorsch, certify, pursuant to Rule 13(a)-14(b) or Rule 15(d)-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, that (i) the Quarterly Report on Form 10-Q of MMRGlobal, Inc. for the quarterly period ended June 30, 2015 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of1934, and (ii) the information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of MMRGlobal, Inc.
/s/ Robert H. Lorsch |
||
Name: |
|
Robert H. Lorsch |
Title: |
|
Chief Executive Officer |
Date: |
|
August 14, 2015 |
The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and is not being "filed" as part of the Form 10-Q or as a separate disclosure document for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to liability under that section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act except to the extent that this Exhibit 32.1 is expressly and specifically incorporated by reference in any such filing.
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
Certification
I, Bernard Stolar, certify, pursuant to Rule 13(a)-14(b) or Rule 15(d)-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, that (i) the Quarterly Report on Form 10-Q of MMRGlobal, Inc. for the quarterly period ended June 30, 2015 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (ii) the information contained in such Quarterly Report on Form 10-Q fairly presents in all material respects the financial condition and results of operations of MMRGlobal, Inc.
/s/ Bernard Stolar |
||
Name: |
|
Bernard Stolar |
Title: |
|
Chief Financial Officer |
Date: |
|
August 14, 2015 |
The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and is not being "filed" as part of the Form 10-Q or as a separate disclosure document for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to liability under that section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act except to the extent that this Exhibit 32.2 is expressly and specifically incorporated by reference in any such filing.
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
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