10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2013

or

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________________ to __________________________

Commission file number: 000-54167

Sanomedics International Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware	27-3320809
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

444 Brickell Avenue, Suite 415, Miami, Florida	33131
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (305) 433-7814

not applicable

(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 ¨ No x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	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 ¨ No x

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 33,118,592 shares of common stock are issued and outstanding as of November 19, 2013.

TABLE OF CONTENTS

		Page No.
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements.		5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.		18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.		25
Item 4.	Controls and Procedures.		25
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings.		26
Item 1A.	Risk Factors.		26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.		26
Item 3.	Defaults Upon Senior Securities.		26
Item 4.	Mine Safety Disclosures.		26
Item 5.	Other Information.		26
Item 6.	Exhibits.		27

2

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This report includes forward-looking statements that relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Words such as, but not limited to, “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “targets,” “likely,” “aim,” “will,” “would,” “could,” and similar expressions or phrases identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and future events and financial trends that we believe may affect our financial condition, results of operation, business strategy and financial needs. Forward-looking statements include, but are not limited to, statements about our:

• our revenues and profits are not assured,

• we may be unable to continue as a going concern,

• ability to close the pending acquisition,

• our ability to pay our obligations represented by secured notes when they become due,

• we may not be able to obtain the substantial additional capital we need,

• cost and quality issues might arise from our dependence on a third-party, sole source Chinese manufacturer,

• we may be unable to make or successfully integrate acquisitions,

• we may not be able to compete effectively,

• our research and development may be unsuccessful; our next generation products may not be developed, or if developed, may fail to win commercial acceptance,

• we may be unable to develop next generation products if we cannot hire electrical engineers,

• growth, if any, could be unmanageable,

• product shortages may arise if our contract manufacturer fails to comply with government regulations,

• our medical devices may not meet government regulations,

• current economic conditions may jeopardize our fund-raising efforts,

• our intellectual property may not be protectable,

• we face intellectual property risks that may negatively affect our brand names, reputation, revenues, and potential profitability,

• our trademarks are valuable, and any inability to protect them could reduce the value of our products and brands,

• product warranties and product liabilities could be costly,

• we may be unable to replace current management, we may receive unfavorable results in the outcome of any pending lawsuits.

• management actions could cause substantial dilution and stock price declines and discourage a takeover,

• we are engaged in a number of related party transactions,

• management could terminate employment, and our operations and viability would be hurt, if we cannot fund the 2010 bonuses and accrued salaries which were earned,

• our common stock is quoted on the OTC Markets, which may discourage investors from purchasing it more than if it was listed on a national exchange,

• our common stock is illiquid,

• the application of the “penny stock” rules could adversely affect transactions in our common stock and could increase transaction cost,

• the price of our common stock may be very volatile,

• a significant portion of our outstanding shares are restricted securities and the sale of those shares will depress our stock price

• as an issuer of a “penny stock,” the protection provided by the Federal securities laws relating to forward looking statements does not apply to us, and

• we have not paid dividends in the past and do not expect to pay dividends for the foreseeable future. Any return on investment may be limited to the value of our common stock, if any.

3

You should read thoroughly this report and the documents that we refer to herein with the understanding that our actual future results may be materially different from and/or worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements including those made in Part I. Item 1A. Risk Factors appearing in our Annual Report on Form 10-K for the year ended December 31, 2012. Other sections of this report include additional factors which could adversely impact our business and financial performance. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. These forward-looking statements speak only as of the date of this report, and you should not rely on these statements without also considering the risks and uncertainties associated with these statements and our business.

OTHER PERTINENT INFORMATION

Unless specifically set forth to the contrary, when used in this report the terms “we,” “our,” “us,” and similar terms refers to Sanomedics International Holdings, Inc., a Delaware corporation, and our wholly-owned subsidiaries. In addition, the “third quarter of 2013” refers to the three months ended September 30, 2013, the “third quarter of 2012” refers to the three months ended September 30, 2012, “2012” refers to the year ended December 31, 2012 and “2013” refers to the year ending December 31, 2013.

Unless specifically set forth to the contrary, the information which appears on our website at www.sanomedics.com, www.thermomedics.com  and  www.primetimemedical.com is not part of this report.

4

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

Sanomedics International Holdings, Inc.

Condensed Consolidated Balance Sheets

	September 30,			December 31,
	2013			2012
	(Unaudited)			(Audited)
Assets
Current Assets
Cash	$	93,314		$	26,084
Accounts receivable, net		866,453			8,117
Inventories		290,625			2,171
Employee receivables		4,850			-
Prepaid expenses		2,635			-
Total Current Assets		1,257,877			36,372
Fixed assets, net		95,426			17,049
Other Assets
Goodwill		2,891,635			-
Non-Compete		200,000			-
Patents, net		33,061			36,796
Deposits		10,945			-
Total Other Assets		3,135,641			36,796
Total Assets	$	4,488,944		$	90,217
Liabilities and Stockholders’ Deficit
Current Liabilities
Accrued salaries payable	$	706,569		$	1,290,516
Accounts payable and other liabilities		968,952			243,836
Accrued interest payable		293,499			217,001
Bank debt		244,923			-
Convertible notes payable, net of discount, current portion		214,438			4,688
Acquisition notes payable, current portion		1,286,000			-
Vendor leases payable		167,958			-
Installment notes payable, current		7,716			-
Derivative liabilities		1,293,517			40,697
Due to related parties		150,610			65,738
Notes payable - related parties net of discount, current portion		-			1,379,427
Total Current Liabilities		5,334,182			3,241,903
Notes payable - related parties net of discount, net of current portion		2,149,035			-
Installment notes payable, net of current portion		41,404			-
Acquisition notes payable, net of current portion		664,000			-
Convertible notes payable, net of discount, net of current portion		-			12,500
Total Liabilities		8,188,621			3,254,403
Commitments and Contingencies		-			-
Stockholders’ Deficit
Preferred stock, $0.001 par value: 1,000 shares authorized,
issued and outstanding as of September 30, 2013 and December 31, 2012, respectively		1			1
Common stock, $0.001 par value: 250,000,000 shares authorized,
27,326,723 and 20,403,586 issued and outstanding as of September 30, 2013 and December 31, 2012, respectively.		27,327			20,404
Additional paid in capital		7,853,042			5,748,691
Stock subscription receivable		(20,000	)		(20,000	)
Accumulated deficit		(11,560,047	)		(8,913,282	)
Total Stockholders’ Deficit		(3,699,677	)		(3,164,186	)
Total Liabilities and Stockholders' Deficit	$	4,488,944		$	90,217

See accompanying notes to condensed consolidated financial statements

5

Sanomedics International Holdings, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2013			2012			2013			2012
Revenues, net	$	422,827		$	934		$	543,906		$	35,962
Cost of goods sold		299,111			6,130			332,702			40,822
Gross profit (loss)		123,716			(5,196	)		211,204			(4,860	)
Operating expenses
General and administrative		466,498			617,969			920,305			1,370,685
Research and development		24,250			-			77,750			8,500
Stock compensation		93,000			204,888			348,738			369,751
Depreciation and amortization		2,711			1,073			6,509			3,195
Total operating expenses		586,459			823,930			1,353,302			1,752,131
Loss from operations		(462,743	)		(829,126	)		(1,142,098	)		(1,756,991	)
Other income (expense)
Amortization of debt discount		(131,621	)		-			(185,958	)		-
Derivative expense		(270,807	)		-			(3,101,605	)		-
Unrealized gain on fair value of derivatives		796,727			-			1,844,355			-
Interest expense		(8,344	)		(35,457	)		(61,459	)		(144,413	)
Total other income (expense)		385,955			(35,457	)		(1,504,667	)		(144,413	)
Net loss before income taxes		(76,787	)		(864,583	)		(2,646,765	)		(1,901,404	)
Income taxes		-			-			-			-
Net loss	$	(76,787	)	$	(864,583	)	$	(2,646,765	)	$	(1,901,404	)
Net  loss per share - basic and diluted	$	(0.00	)	$	(0.06	)	$	(0.16	)	$	(0.13	)
Weighted average number of shares outstanding during the period - basic and diluted		21,214,765			14,369,139			16,672,586			14,313,131

See accompanying notes to condensed consolidated financial statements

6

Sanomedics International Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	For the Nine Months Ended
	September 30,
	2013			2012
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(2,646,765	)	$	(1,901,404	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		6,509			3,195
Stock compensation		348,738			515,853
Reserve for bad debts		25,575			-
Reserve for obsolete and slow moving inventory		87,437			-
Amortization of debt discount on convertible notes		185,958			-
Derivative expense		3,101,605			-
Unrealized gain on fair value of derivative liabilities		(1,844,355	)		-
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable		(86,226	)		345
Inventory		(130,500	)		34,442
Other current assets		(9,335	)		1,926
Deposits		(13,892	)		-
Bank overdraft		-			(4,522	)
Accrued salaries payable		119,392			574,468
Accounts payable and other liabilities		275,327			5,922
Accrued interest payable		76,499			142,466
Due to related parties		84,872			46,889
Net Cash Used In Operating Activities		(419,161	)		(580,420	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets		(162,302	)		-
Payment on acquisition of Prime Time Medical		(400,000	)		-
Net Cash Used In Investing Activities		(562,302	)		-
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes - related parties		694,992			174,000
Net payments on vendor and installment notes		(21,299	)		-
Issuance of stock subscriptions payable		-			102,500
Sale of common stock		-			238,000
Proceeds from convertible notes payable		375,000			75,000
Net Cash Provided By Financing Activities		1,048,693			589,500
Net increase in cash		67,230			9,080
Cash - beginning of period		26,084			-
Cash - end of period	$	93,314		$	9,080
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for:
Income taxes	$	-		$	-
Interest	$	-		$	-
Non-cash transactions:
Common stock issued to consultants for services	$	189,343		$	-
Common stock issued for conversion of debt, net of derivative	$	102,985		$	-
Conversion of debt to equity	$	-		$	1,758,310
Common stock issued for acquisition	$	750,000		$	-
Accrued salaries payable converted to convertible promissory note payable-officer	$	703,339		$	-

See accompanying notes to condensed consolidated financial statements

7

Sanomedics International Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

September 30, 2013

(Unaudited)

NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION

Sanomedics International Holdings, Inc. (referred to herein as “we”, “us”, “our” or the “Company”) formerly Grand Niagara Mining and Development Co, Inc. ("Grand Niagara") was originally incorporated in the state of Idaho in 1955 and re-domiciled in the state of Delaware on April 6, 2009. The Company, through its subsidiaries, designs, develops, markets and distributes non-invasive infrared thermometers principally for consumers and medical professionals.

On August 30, 2013, the Company acquired all the capital stock of Prime Time Medical, Inc (“Prime Time”), a Florida corporation for total purchase consideration of $3,100,000. Prime Time is a Durable Medical Equipment provider of home medical equipment with products such as power wheel chairs with specialization in complex rehab products, respiratory equipment including oxygen concentrators and nebulizer compressors, walkers, commodes, manual wheelchairs and support surface products for wound care management, servicing customers throughout West Central Florida.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. It is management's opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation. The results for the interim period are not necessarily indicative of the results to be expected for the full year.

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, which include Thermomedics, Inc. (since July 2009), and Prime Time (since September 2013). All significant inter-company accounts and transactions have been eliminated in consolidation.

The unaudited interim financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K, which contains the audited consolidated financial statements and notes thereto, together with the Management’s Discussion and Analysis, for the fiscal year ended December 31, 2012. The interim results for the three and nine months ended September 30, 2013 are not necessarily indicative of the results for the full fiscal year.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

All significant intercompany accounts and transactions have been eliminated in consolidation. The Company consolidates the following companies:

· Thermomedics Inc.

· Anovent, Inc.

· Prime Time Medical, Inc.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

8

Sanomedics International Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

September 30, 2013

(Unaudited)

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES –(continued)

Accounts Receivable

The Company reports accounts receivable net of estimated allowances for uncollectible accounts and adjustments. Accounts receivable are uncollateralized and primarily consist of amounts due from Medicare, other third-party payors, and patients. To provide for accounts receivable that could become uncollectible in the future, the Company establishes an allowance for uncollectible accounts to reduce the carrying amount of such receivables to their estimated net realizable value. The credit risk for other concentrations of receivables is limited due to the significance of Medicare as the primary payor. The Company believes the credit risk associated with its Medicare accounts, which have historically exceeded 60% of its patient accounts receivable, is limited due to (i) the historical collection rate from Medicare and (ii) the fact that Medicare is a U.S. government payor. The Company does not believe that there are any other concentrations of receivables from any particular payor that would subject it to any significant credit risk in the collection of accounts receivable.

Inventories

Inventories are stated at the lower of cost (on a first-in, first-out basis) or market value. The stated cost is comprised of finished goods of non-invasive thermometers, and Durable Medical Equipment from its recent acquisition of Prime Time which includes power wheel chairs with specialization in complex rehab products, respiratory equipment including oxygen concentrators and nebulizer compressors, walkers, commodes, manual wheelchairs and support surface products for wound care management.  Reserves, if necessary, are recorded to reduce inventory to market value based on assumptions about consumer demand, current inventory levels and product life cycles for the various inventory items. These assumptions are evaluated quarterly and are based on the Company’s business plan and from feedback from customers and the product development team; however, as the Company has a fairly limited operating history, estimates can vary significantly. We review the components of inventory on a regular basis for excess, obsolete and impaired inventory based on estimated future usage and sales. The likelihood of any material inventory write-downs depends on changes in competitive conditions, new product introductions by us or our competitors, or rapid changes in customer demand.

Reserves for Warranty

The Company records a reserve for non-invasive thermometers at the time product revenue is recorded based on historical rates.  The reserve is reviewed during the year and is adjusted, if appropriate, to reflect new product offerings or changes in experience. Actual warranty claims are tracked by product line. The warranty reserve was approximately $1,000 at September 30, 2013 and December 31, 2012.

Fixed Assets

Fixed assets are stated at cost, less accumulated depreciation. Depreciation is provided principally on the straight-line method over the estimated useful lives of the assets, which is generally three to ten years. The cost of repairs and maintenance is charged to expense as incurred. Expenditures for property betterments and renewals are capitalized. Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in other income or expense.

The Company will periodically evaluate whether events and circumstances have occurred that may warrant revision of the estimated useful lives of fixed assets or whether the remaining balance of fixed assets should be evaluated for possible impairment. The Company  uses an estimate of the related undiscounted cash flows over the remaining life of the fixed assets in measuring their recoverability.

9

Sanomedics International Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

September 30, 2013

(Unaudited)

NOTE 3 – LIQUIDITY AND GOING CONCERN

The condensed consolidated financial statements have been prepared on a going concern basis, and do not reflect any adjustments related to the uncertainty surrounding our recurring losses or accumulated deficit.

The Company currently has limited revenue and is experiencing recurring losses. These factors raise substantial doubt about its ability to continue as a going concern. Management has financed the Company's operations principally through loans from an affiliate of the Company’s former CEO, who is also one of the principal shareholders. Through September 30, 2013, the Company obtained its liquidity principally from approximately $694,000 of cash advances from an affiliate of the former Chairman and CEO and the Company's principal shareholder and, $375,000 from third party borrowings. The Company may need to continue borrowings from an affiliate of the former Chairman and CEO and the Company's principal shareholder and will also need to raise additional capital. However, management cannot provide any assurances that the Company will be successful in completing this financing and accomplishing any of its plans.

The ability of the Company to continue as a going concern is dependent upon continued financial commitments from related parties and eventually secure other sources of financing in addition to those funds provided by its affiliate and attain profitable operations. The accompanying condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

NOTE 4 – ACQUISITION

Pursuant to a Stock Purchase Agreement (the “Stock Purchase Agreement ”) with Prime Time and Mark R. Miklos, the sole equity holder of Prime Time (“Miklos”), on August 30, 2013 the Company acquired a 100% interest  and assumed full financial and operational control of Prime Time for a total purchase price of $3,100,000, subject to certain adjustments as summarized herein. The purchase price consisted of a combination of $1,350,000 in cash, promissory notes of $1,000,000 and shares of the Company’s restricted common stock with a value of $750,000.

On August 30, 2013, the Company issued two promissory notes (the “Prime Time Notes A and B”) to Miklos in the aggregate principal amount of $1,000,000.  Prime Time Note A in the principal amount of $500,000 bears interest at 5% per annum, with monthly payments of principal and interest, and matures three years after the closing date.  Prime Time Note B in the principal amount of $500,000  bears interest at 5% per annum, with annual payments of interest and principal payable annually over two years from the date of closing provided; however, that the principal balance of Prime Time Note B (and the respective annual payment) shall be reduced if: (i) the earnings before income taxes, depreciation and amortization (“EBITDA”) for the fiscal year ended December 31, 2013 is less than $975,000; and/or (ii) the EBITDA for the fiscal year ended December 31, 2014 is less than $975,000. At Miklos’ option, Prime Time Note B can be paid in shares of common stock of the Company on terms acceptable to Miklos and the Company. These notes have been presented as acquisition notes payable in the accompanying September 30, 2013 consolidated balance sheet.

On September 3, 2013, the Company issued 531,250 shares of its restricted common stock with a value of $750,000 in compliance with the share requisite of the Stock Purchase Agreement. Additionally the Company entered into an employment agreement with the Seller for certain management services and; also contains a covenant of the Seller not to compete with the Company for a two year period.

As of September 30, 2013, the balance of amounts owed on the purchase price of $950,000 has been presented as a current liability in the accompanying September 30, 2013 consolidated balance sheet.

10

Sanomedics International Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

September 30, 2013

(Unaudited)

NOTE 4 – ACQUISITION-(continued)

The Purchase Agreement further provided that the Company will engage its independent registered public accounting firm to conduct an audit of Prime Time’s financial statements for the years ended December 31, 2011 and 2012. If, for any reason the audit cannot be concluded, the Company will not be required to pay any amounts due under Notes A or B and such notes will be cancelled. The Company, however, has no right to receive a refund of the cash portion of the purchase price as tendered or to effect a cancellation of the Shares. In addition, if Prime Time’s total asset value at December 31, 2012 as determined in accordance with the audited financial statements is less than the value set forth on the financial statements previously provided to the Company, the purchase price will be reduced by such amount on a dollar for dollar basis through a return of a number of Shares equal to such deficiency, and, if the deficiency is greater than the Original Issue Price, through a set off of the amount which will be due under Note A.

The purchase price was allocated to the assets acquired and liabilities assumed as follows:

Assets Acquired	$	1,313,759
Liabilities assumed		(1,305,394	)
Intangibles:
Value assigned to Non-compete agreement		200,000
Goodwill		2,891,635
Total purchase price	$	3,100,000

Unaudited pro forma results of operations data as if the Company and Prime Time Medical had occurred as of January 1, 2011 are as follows:

							Nine Months
	Year Ended			Year Ended			Ended
	2011			2012				9-30-2013
Revenue	$	2,480,010		$	3,660,353		$	3,365,260
Loss from operations	$	(3,096,171	)	$	(1,493,030	)	$	(1,852,283	)
Net loss	$	(3,289,299	)	$	(1,782,153	)	$	(3,391,061	)
Net loss per share-basic and diluted	$	(0.24	)	$	(0.12	)	$	(0.20	)

Pro forma data does not purport to be indicative of the results that would have been obtained had these events actually occurred at January 1, 2011 and is not intended to be a projection of future results.

11

Sanomedics International Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

September 30, 2013

(Unaudited)

NOTE 5 – NOTES PAYABLE -RELATED PARTIES

	September 30, 2013		December 31, 2012
Notes Payable consists of the following:
Secured Convertible Promissory Note - CLSS Holdings, LLC, dated September 30,
2010. Note accrues interest at 9% per annum, due and payable on March 31, 2015
(A)( C)	$	100,000	$	181,000
Secured Convertible Promissory Note - CLSS Holdings, LLC, dated March 12, 2011.
Note accrues interest at 9% per annum, due and payable on March 31, 2015 (A)		367,000		367,000
Secured Convertible Promissory Note - CLSS Holdings, LLC, dated September 30,
2011. Note accrues interest at 9% per annum, due and payable on March 31, 2015,
(A)		220,000		220,000
Secured Convertible Promissory Note - CLSS Holdings, LLC, dated March 12, 2011.
Note accrues interest at 7.5% per annum, due and payable on March 31, 2015 (A)		334,787		334,787
Convertible Promissory Note-Officer, dated June 17, 2013. Note accrues interest
at 9% per annum, due and payable on March 30, 2015, net of discount of $589,722
(B) Refer to Note 7.		113,617		-
Total		1,135,404		1,102,787
Other advances from CLSS Holdings, LLC, not evidenced by a promissory note (A)		1,013,631		276,640
		2,149,035		1,379,427
Less: Current portion		-		1,379,427
Notes Payable-related parties	$	2,149,035	$	-

The secured convertible promissory notes above are collateralized by substantially all the assets of the Company and are convertible, at the holder's option, into common shares of the Company at a fixed conversion price of $0.50 per share. CLSS is wholly owned by the Company's Former CEO who also is a principal shareholder of the Company.

(A) On May 9, 2013, the Company and an affiliate of the Company’s former CEO agreed to terminate each of the above listed convertible notes and issue a single replacement convertible note that includes the obligations currently provided together with the advances and accrued interest of $238,868. The original convertible notes were not delivered to the Company and accordingly, the replacement note was not issued and voided. On August 13, 2013 an agreement was executed covering these Notes to extend the maturity of these Notes to March 31, 2015.

(B) On June 17, 2013, the Company and its President and a principal stockholder of the Company and a Director agreed to convert accrued salary totaling $703,339 into a long term convertible note as reflected above. The Note isconvertible, at the holder's option, into common shares of the Company at a fixed conversion price of $0.50 per share.

(C) On August 12, 2013 and September 17, 2013, $81,000 was assigned by the holder to seven  third parties, which subsequently converted to 1,265,535 and 6,000,000 shares of common stock, respectively, see Notes 6 and 9.

12

Sanomedics International Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

September 30, 2013

(Unaudited)

NOTE 6 – CONVERTIBLE NOTES PAYABLE

On August 24, 2012, the Company executed a convertible note for $75,000. The convertible note is unsecured and has a maturity date of August 24, 2014. Interest will accrue at 9% per annum until paid or maturity and is convertible into common shares at a fixed convertible price of $0.50 per share. In the event that the Company undertakes financing while this debt is unpaid, the holder shall have the right to convert at the lessor of the offering price or the fixed conversion price. As of September 30, 2013 and December 31, 2012, the convertible note amounted to $40,625 and $12,500, net of unamortized discounts of $34,375 and $62,500, respectively.

On December 6, 2012, the Company entered into a Securities Purchase Agreement and convertible promissory note (“Note”) in the principal amount of $37,500. The Note, which was due on August 29, 2013, bears interest at 8% per annum until paid or to maturity was converted on June 11, 2013 and June 18, 2013 into a total of 29,128 shares of the Company’s common stock at a conversion price equal to a 42% discount to the average of the lowest three closing bid prices of the common stock during the 10 trading days prior to conversion or $1.36 and $1.36 per share. As of September 30, 2013 and December 31, 2012, the convertible note amounted to $ -0- and $4,688, net of unamortized discount of $37,500 and $32,812, respectively.

On June 17, 2013, the Company entered into a Promissory Note (the “Note”) with a third party lender (“Lender”) in the principal amount up to $500,000. On June 19, 2013, the Lender executed the Note and funded the Company an initial tranche of $150,000 pursuant to the terms thereof. The principal sum of the Note carries a $50,000 original issue discount (“OID”) , which is prorated based on the consideration paid by the lender. The maturity date of each tranche funded under the Note is one year from the date of each payment by the Lender. The principal amount of the Note due is prorated based upon the consideration actually paid to us, plus a 10% OID, and we are only obligated to repay the amount of the funded Note, together with interest and fees. The Note may be prepaid by us at any time on or before 90 days from the date of issue interest free. After the initial 90 day period the Note bears a one-time interest charge of 12% applied to the principal sum. All principal and accrued interest on the Note is convertible into shares of the Company’s common stock at the election of the Lender at any time at a conversion price of the lesser of $2.75 or 70% of the lowest trade price in the 25 trading days prior to conversion. At all times while the Note is outstanding we agreed to reserve from our authorized but unissued shares of common stock 550,000 shares for the possible conversion of the Note; plus provide registration rights. As of September 30, 2013, the Note amounted to $89,483, net of unamortized discount of $60,517.

On August 27, 2013, the Company entered into a Securities Purchase Agreement and convertible promissory note (“Note”) in the principal amount of $73,500. The Note, which is due on May 29, 2014, bears interest at 8% per annum until paid or to maturity. The Company received the funds on August 30, 2013 net of $3,500 in legal fees. The Note conversion is at the election of the lender at any time after 180 days from issuance date of the Note at a conversion price equal to a 42% discount to the average of the lowest three closing bid prices of the common stock during the 10 trading days prior to conversion. As of September 30, 2013, the Note amounted to $9,900, net of unamortized discount of $63,600.

On September 9, 2013 the Company negotiated the reclassification of $68,675 in legal services recorded originally in accounts payable into a Convertible Note (“Note”)with a maturity date of June 9, 2014, bearing interest at 8% per annum. The Note conversion is at the election of the lender at any time up to maturity at a conversion price equal to a 10% discount to the average of the lowest three closing bid prices of the common stock during the 10 trading days prior to conversion. As of September 30, 2013 the Note amounted to $68,675.

13

Sanomedics International Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

September 30, 2013

(Unaudited)

NOTE 6 – CONVERTIBLE NOTES PAYABLE-(continued)

On September 18, 2013, the Company entered into a Securities Purchase Agreement and convertible promissory note (“Note”) in the principal amount of $40,000. The Note, which is due on September 18, 2014, bears interest at 9% per annum until paid or to maturity. The Company received the funds on September 25, 2013 net of $1,500 in legal fees. The Note conversion is at the election of the lender at any time after 180 days from issuance date of the Note at a conversion price equal to a 50% discount to the average of the lowest three closing bid prices of the common stock during the 10 trading days prior to conversion. As of September 30, 2013, the Note amounted to $2,637, net of unamortized discount of $37,363.

On September 20, 2013, the Company entered into a convertible promissory note (“Note”) in the principal amount of $36,500. The Note, which is due on June 20, 2014, bears interest at 8% per annum until paid or to maturity. The Company received the funds on September 19, 2013 net of $1,500 in legal fees. The Note conversion is at the election of the lender at any time after 180 days from issuance date of the Note at a conversion price equal to a 45% discount to the average of the lowest three closing bid prices of the common stock during the 10 trading days prior to conversion. As of September 30, 2013, the Note amounted to $1,337, net of unamortized discount of $35,163.

In accordance with ASC 470-20 Debt with Conversion and Other Options, the Company recorded total discounts of $268,518 and $-0- for the beneficial conversion features of the convertible debts incurred during the periods ended September 30, 2013 and September 30, 2012, respectively. The discounts are being amortized to interest expense over the term of the notes using the effective interest method. The Company recorded $185,958 and $-0- of interest expense pursuant to the amortization of the note discounts for the nine months ended September 30, 2013 and for the nine months  ended September 30, 2012, respectively; and $131,621 and $ -0- for the three months ended September 30, 2013 and September 30, 2012.

NOTE 7 – DERIVATIVE LIABILITIES

The Company analyzed the related party convertible note-officer and convertible promissory notes referred to in Notes 5 and 6 based on the provisions of ASC 815-15 and determined that the conversion options of the convertible notes qualify as embedded derivatives.

The fair value upon inception of the embedded derivatives are determined to total $3,101,605 and recorded as embedded derivative liabilities. The embedded derivatives are revalued at the end of each reporting period and any resulting gain or loss is recognized as a current period charge to the statement of operations.

The Company accounts for the embedded conversion features included in its common stock as well as derivative liabilities. The aggregate fair value of derivative liabilities as of September 30, 2013 and December 31, 2012 amounted to $1,293,517 and $40,697, respectively. The net decrease of $1,844,355 in the fair value of the derivative liabilities between the respective periods is included in other income as an unrealized gain on fair value of derivatives.

14

Sanomedics International Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

September 30, 2013

(Unaudited)

NOTE 8 – COMMITMENTS AND CONTINGENCIES

Litigation

From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm its business.

On May 21, 2013, Exergen Corporation commenced legal action in the United States District Court for the District of Massachusetts against us, claiming infringement of certain intellectual property. Exergen is seeking various types of relief, including an injunction against further infringement of certain intellectual property. Given the inherent uncertainty and unpredictability of litigation and due to the early status of this legal action, no range of loss or possible loss can be reasonably estimated at this time. However, we do not expect the outcome of this matter to have a material adverse effect on our consolidated financial statements when taken as a whole. As of September 30, 2013, and the date of this filing, no amount is accrued as a loss and is not considered probable or estimable.

NOTE 9 – STOCKHOLDERS’ DEFICIT

Common stock

On February 9, 2013, the Company issued a total of 50,000 shares of common stock to two consultant for services valued at $1.15 per share. As a result, the Company recorded stock compensation in the amount of $57,500 for the three months ended March 31, 2013.

On June 28, 2013, the Company issued a total of 25,895 shares of common stock to a public relations firm as settlement of its services valued at $1.50 per share. As a result, the Company recorded stock compensation in the amount of $38,842 for the three months ended June 30, 2013.

On June 11, 2013 and June 28, 2013, in connection with a Securities Purchase Agreement and convertible promissory note (“Note”) in the principal amount of $37,500, the Company converted the Note into a total of 29,128 shares of the Company’s common stock at a conversion price of $1.36  per share.

On August 12, 2013, pursuant to a portion of Convertible Note due to CLSS originally at $220,000 and sold to six (6) third parties by the original holder in the principal amount of $6,000, the Company converted the Note into a total of 6,000,000 shares of the Company’s common stock and issued to the six (6) parties for investor relation services valued at $6,000. The Company has instructed its transfer agent to place a stop and cancel 1,250,000 shares for failure of services performed.

On September 3, 2013, the Company issued 531,250 shares of common stock to Mark R. Miklos valued at $750,000 in connection with the acquisition of Prime Time .

On September 5, 2013, Redstone Investment Group, LLC was issued 75,000 shares of common stock for consulting services performed valued at $1.24 per share. As a result, the Company recorded stock compensation in the amount of $93,000 for the three months ended September 30, 2013.

On September 23, 2013, in connection with a Securities Purchase Agreement and convertible promissory note (“Note”) in the principal amount of $75,000, the Company converted $25,000 of the Note into a total of 211,864 shares of the Company’s common stock at a conversion price of $0.118 per share.

15

Sanomedics International Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

September 30, 2013

(Unaudited)

NOTE 9 – STOCKHOLDERS’ DEFICIT-(continued)

Stock Options

On March 7, 2013, the Company granted to its Chief Technology Officer 150,000 seven-year stock options with an exercise price of $0.50 per share. The Company determined that the fair value of the options was approximately $159,000 using the Black Scholes method and recorded as stock compensation in the accompanying condensed consolidated financial statements.

NOTE 10 – PENDING ACQUISITION

On July 10, 2013, the Company entered into an Equity Purchase Agreement (the “Equity Purchase Agreement ”) with Duke Medical Equipment LLC, a Texas limited liability company (“Duke Medical”) and Vann R. Duke, the sole equity holder of Duke (“Duke”). Duke Medical is a Durable Medical Equipment provider of home medical equipment servicing consumers throughout the Houston and Galveston, Texas area.

Pursuant to the Equity Agreement, at the closing Duke will transfer to the Company all the membership interest of Duke Medical for an aggregate purchase price of $7,000,000, subject to certain adjustments as summarized herein. The purchase price will be paid in a combination of cash, promissory notes and shares of the Company’s common stock. On the closing date the Company will make a total cash payment to the Seller of $2,000,000.

Additionally, at closing, the Company will issue two additional promissory notes (the “Duke Medical Notes A and B”) to Duke in the aggregate principal amount of $2,000,000. Duke Medical Note A in the principal amount of $1,000,000 will bear interest at 5% per annum, with monthly payments of principal and interest, and will mature eighteen (18) months after the closing date. Duke Medical Note B in the principal amount of $1,000,000 will bear interest at 5% per annum, with annual payments of interest and principal payable annually over two years from the date of closing provided; however, that the principal balance of Duke Medical Note B (and the respective annual payment) shall be reduced if: (i) EBITDA for the fiscal year ended December 31, 2013 is less than $1,500,000; and/or (ii) the EBITDA for the fiscal year ended December 31, 2014 is less than $1,500,000. At Duke’s option, Duke Medical Note B can be paid in shares of common stock of the Buyer on terms acceptable to Duke and the Company.

Total consideration also includes $3,000,000 in the form of shares, with the number of shares to be issued to be determined at closing by dividing $3,000,000 by the average of the closing bid price for the Company’s common stock as quoted on the OTC Bulletin Board, the OTC Pink Sheets or other similar quotation system, as applicable, for the five (5) trading days immediately preceding the closing (the “Duke Medical Original Issuance Price”).

The Equity Purchase Agreement also requires the Company to enter at closing into employment agreements with Duke and his spouse for certain management services and; also contains a covenant of Duke and his spouse not to compete with the Company for a two year period.

The Equity Purchase Agreement further provides that the Company will engage its independent registered public accounting firm to conduct an audit of Duke Medical’s financial statements for the years ended December 31, 2011 and 2012. If, for any reason the audit cannot be concluded, the Company will not be required to pay any amounts due under the Duke Medical Notes A or B and such notes will be cancelled. The Company, however, has no right to receive a refund of the cash portion of the purchase price as tendered or to effect a cancellation of the Shares.

16

Sanomedics International Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

September 30, 2013

(Unaudited)

NOTE 10 – PENDING ACQUISITION-(continued)

In addition, if Duke Medical’s total asset value at December 31, 2012 as determined in accordance with the audited financial statements is less than the value set forth on the financial statements previously provided to the Company, the purchase price will be reduced by such amount on a dollar for dollar basis through a return of a number of Shares equal to such deficiency, and, if the deficiency is greater than the Duke Medical Original Issue Price, through a set off of the amount which will be due under Duke Medical Note A.

NOTE 11 – SUBSEQUENT EVENTS

Financing:

During October 2013, the Company entered into four (4) separate Securities Purchase Agreements and convertible promissory notes (“Notes”) with three (3) companies for total principal amount of $287,750. The Notes, which are due ranging from July 2014 and October 2014, bear interest ranging from 6% to 12% per annum until paid or to maturity. The Note conversions are at the election of the lenders at any time at  conversion prices equal ranging from 40% to 50% discount to the average of the lowest two to three closing bid prices of the common stock during the 10 to 25 trading days prior to conversion. A portion of one of the notes for $75,000 was converted on October 18, 2013 for 611,246 shares and on November 12, 2013 for 1,138,952 shares, leaving a balance of $50,000 on the Note.

Share Issuances:

On October 29, 2013, the Company’s Board of Directors authorized the issuance of 3,000,000 shares to CLSS Holdings, LLC, a company wholly owned by a former director and officer of the Company, issued in connection and in partial consideration, for the amendment of extension of maturity of certain promissory notes held by the Company in favor of CLSS.

On October 30, 2013, the Board of Directors and holders of a majority of the Company’s outstanding voting securities approved resolutions granting the Board of Directors the authority to effect a reverse stock split of all of the outstanding shares of our common stock at a ratio of up to one for 15 (1:15) at any time prior to October 30, 2014.  The timing and final ratio of the reverse split is to be determined by the Board of Directors in their sole authority.  On November 11, 2013 the Company filed a Definitive Information Statement on Schedule 14C with the Securities and Exchange Commission regarding this action.  The Company expects the Board to finalize the ratio and timing for the reverse split in the near future, with an expected effective date in December 2013.  The Company will file a Current Report on Form 8-K with the SEC when these actions have been finalized.

Other:

On October 31, 2013, Prime Time received a letter from the designated Medicare Contractor notifying Prime Time that effective October 16, 2013 all claims for reimbursement have been selected for a comprehensive medical review of its billings for Medicare services pursuant to the Medicare Contractors statutory and regulatory authority.

Management has evaluated the subsequent events through November 20, 2013, the date at which the condensed consolidated financial statements were available for issue.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our financial condition and results of operations for the nine and three months ended September 30, 2013 and  2012 should be read in conjunction with the financial statements and the notes to those statements that are included elsewhere in this report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under Cautionary Notice Regarding Forward-Looking Statements appearing earlier in this report together with Part II, Item 1. of this report and Item 1A. Risk Factors, and the Business section in our Annual Report on Form 10-K for the year ended December 31, 2012, and our subsequent filings with the SEC..  We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.

OVERVIEW

We are a medical technology holding company that focuses on game changing products, services and ideas- a place where physicians, entrepreneurs, and medical companies can work together to drive innovative technologies through concept, development, and ultimately commercialization. We plan to grow our existing business organically and through strategic acquisitions specifically relating to medical diagnostic equipment, sleep disorder diagnosis treatments and complex rehabilitation technology.

Thermomedics, Inc. designs, develops and markets medical diagnostic equipment for professional healthcare providers. Our products are professionally designed for use in a wide range of medical settings, providing nearly instantaneous diagnostic information.

During the first and second quarters of 2013 our focus has been to continue the introduction and selling of our second generation product line. We are also pursuing the growth of our business through strategic acquisitions in the sleep apnea space.  As previously reported, on August 30, 2013, we closed on the purchase of 100% interest of Prime Time Medical, Inc. pursuant to a Stock Purchase Agreement with Prime Time Medical, Inc., a Florida corporation (“Prime Time”) and Mark R. Miklos, the sole equity holder of Prime Time. Prime Time is a durable medical equipment provider of home medical equipment with products such as power wheel chairs and scooters specializing in complex rehab products, respiratory equipment including oxygen concentrators and nebulizer compressors, diabetic supplies, hospital beds, bariatric equipment, walkers, CPMs, commodes, manual wheel chairs and support surface products for wound care management, servicing consumers throughout West Central Florida.  We are presently in the early stages of integrating Prime Time’s operations into our Company.

Additionally, on July 10, 2013, the Company entered into an Equity Purchase Agreement  with Duke Medical Equipment LLC, a Texas limited liability company (“Duke Medical”) and Vann R. Duke, the sole equity holder of Duke. Duke Medical is a durable medical equipment provider of home medical equipment servicing consumers throughout the Houston and Galveston, Texas area.

Pursuant to the Equity Purchase Agreement, at the closing the Seller will transfer to the Company all the membership interest of Duke Medical for an aggregate purchase price of $7,000,000, subject to certain adjustments as summarized herein. The purchase price will be paid in a combination of cash, promissory notes and shares of the Company’s common stock. On the closing date which was originally contemplated to be 90 days from the Equity Purchase Agreement, the Company will make a total cash payment to the Seller of $2,000,000.

We will need to raise additional capital to close the Duke Medical acquisition. Although we are currently in various discussions with several investment bankers and lending institutions, we do not have any firm commitments for the capital and there are no assurances we will be able to raise the necessary funds  to close the Duke Medical acquisition.  As a result, there are no assurances that this transaction will close and we may forfeit any deposits rendered.

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Critical Accounting Policies and Estimates

The methods, estimates and judgments we use in applying our accounting policies have a significant impact on the results we report in our consolidated financial statements. Some of our accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. We believe our critical accounting policies are those described below.

Revenue Recognition

The Company recognizes revenue at the time the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured.

Certain product sales are subject to rights of return. Such rights include the right to return defective items within 30 days and with certain large accounts a right to return unsold products. For products sold where the buyer has the right to return the product, the Company recognizes revenue at the time of sale only if (1) the Company’s price to the buyer is substantially fixed or determinable at the date of sale, (2) the buyer has paid the Company, or the buyer is obligated to pay the seller and the obligation is not contingent on resale of the product, (3) the buyer’s obligation to the Company would not be changed in the event of theft or physical destruction or damage of the product, (4) the buyer acquiring the product for resale has economic substance apart from that provided by the seller, (5) the Company does not have significant obligations for future performance to directly bring about resale of the product by the buyer, and (6) the amount of future returns can be reasonably estimated. The Company recognizes such product revenues when either it has met all the above criteria, including the ability to reasonably estimate future returns, when it can reasonably estimate that the return privilege has expired.

Revenue from sales of the Company’s products is recorded when title and risk of loss have passed to the buyer and provided the criteria for revenue recognition are met. The Company sells its products to individual consumers and resellers upon receipt of a written order. The Company has a limited return policy for defective items that requires that the customer give the Company notice within 30 days after receipt of the product; however, such risk is passed to the manufacturer and therefore, the Company recognizes revenue at the time of delivery without providing any reserve. For sales made by certain large accounts with a right to return unsold items, the Company provides for a reserve for the estimated amount of unsold items.

Accounts Receivable

The Company reports accounts receivable net of estimated allowances for uncollectible accounts and adjustments. Accounts receivable are uncollateralized and primarily consist of amounts due from Medicare, other third-party payors, and patients. To provide for accounts receivable that could become uncollectible in the future, the Company establishes an allowance for uncollectible accounts to reduce the carrying amount of such receivables to their estimated net realizable value. The credit risk for other concentrations of receivables is limited due to the significance of Medicare as the primary payor. The Company believes the credit risk associated with its Medicare accounts, which have historically exceeded 60% of its patient accounts receivable, is limited due to (i) the historical collection rate from Medicare and (ii) the fact that Medicare is a U.S. government payor. The Company does not believe that there are any other concentrations of receivables from any particular payor that would subject it to any significant credit risk in the collection of accounts receivable.

Inventories

Inventories are stated at the lower of cost (on a first-in, first-out basis) or market value. The stated cost is comprised of finished goods of non-invasive medical devices and equipment. Reserves, if necessary, are recorded to reduce inventory to market value based on assumptions about consumer demand, current inventory levels and product life cycles for the various inventory items, as follows:

● Consumer demand – our first generation products have been discontinued and have been written down to lower of cost or market.

● Current inventory levels – we have approximately 106 thermometer units remaining as of September 30, 2013.

● Product life cycles – although we continue to improve on the design and manufacturing of our second generation professional models, we believe our products are still readily marketable consumer products and demanded by professional healthcare practitioners.

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Derivative Liability

The Company evaluates its convertible instruments, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under ASC Topic 815, “Derivatives and Hedging.” The result of this accounting treatment is that the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income (expense). Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liabilities at the fair value of the instrument on the reclassification date. We analyzed the derivative financial instruments (the Convertible Notes), in accordance with ASC 815. The objective is to provide guidance for determining whether an equity-linked financial instrument is indexed to an entity’s own stock. This determination is needed for a scope exception which would enable a derivative instrument to be accounted for under the accrual method. The classification of a non-derivative instrument that falls within the scope of ASC 815-40-05 “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock” also hinges on whether the instrument is indexed to an entity’s own stock. A non-derivative instrument that is not indexed to an entity’s own stock cannot be classified as equity and must be accounted for as a liability. There is a two-step approach in determining whether an instrument or embedded feature is indexed to an entity’s own stock. First, the instrument's contingent exercise provisions, if any, must be evaluated, followed by an evaluation of the instrument's settlement provisions. The Company utilized multinomial lattice models that value the derivative liability within the notes based on a probability weighted discounted cash flow model. The Company utilized the fair value standard set forth by the Financial Accounting Standards Board, defined as the amount at which the assets (or liability) could be bought (or incurred) or sold (or settled) in a current transaction between willing parties, that is, other than in a forced or liquidation sale.

Stock-Based Compensation

The Company applies the fair value method stipulated by ASC Topic 718, Compensation - Stock Compensation in accounting for its stock based compensation. This standard states that compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period, if any. During 2012 as the Company did not have sufficient, reliable and readily determinable values relating to its common stock, the Company  used the stock value pursuant to its most recent private sale of stock by an affiliate of our CEO, for purposes of valuing stock based compensation. The Company believes that the market price of the Company's stock is not indicative of value as the stock is not widely held. During 2013 the fair value of restricted stock is estimated on the date of grant and is generally equal to the closing price of our common stock on that date.

20

Income Taxes

Income taxes are accounted for under the asset and liability method as stipulated by the ASC Topic 740, Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC Topic 740, the effect on deferred tax assets and liabilities or a change in tax rate is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced to estimated amounts to be realized by the use of a valuation allowance. A valuation allowance is applied when in management's view it is more likely than not (50%) that such deferred tax will not be utilized.

The Company adopted certain provisions under ASC Topic 740, which provide interpretative guidance for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Effective with the Company's adoption of these provisions, interest related to the unrecognized tax benefits is recognized in the consolidated financial statements as a component of income taxes.

In the unlikely event that an uncertain tax position exists in which the Company could incur income taxes, the Company would evaluate whether there is a probability that the uncertain tax position taken would be sustained upon examination by the taxing authorities. Reserves for uncertain tax positions would be recorded if the Company determined it is probable that a position would not be sustained upon examination or if payment would have to be made to a taxing authority and the amount is reasonably estimated. As of September 30, 2013, the Company does not believe it has any uncertain tax positions that would result in the Company having a liability to the taxing authorities. The Company's tax returns are subject to examination by the federal and state tax authorities for the tax years ended 2008 through 2012.

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 RESULTS OF OPERATIONS

As described elsewhere in this report, we closed on the acquisition of Prime Time on August 30, 2013. The results of operations for the third quarter of 2013 and the nine months ended September 30, 2013 include Prime Time’s operations from the date of acquisition. The following table summarizes our consolidated operating results as a percentage of net sales revenue for the periods indicated:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
	Unaudited			Unaudited			Unaudited			Unaudited
Revenues, net		100	%		100	%		100	%		100	%
Costs and Expenses as a percentage of net revenues:
Cost of goods sold		71	%		656	%		61	%		113	%
Gross margin (loss)		29	%		-556	%		39	%		-13	%
General and administrative		110	%		-66,164	%		169	%		3,811	%
Research and development		6	%		0	%		14	%		24	%
Stock compensation		22	%		21,936	%		64	%		1,028	%

Revenues, net: Our net revenues increased substantially during the third quarter of 2013 and the nine months ended September 30, 2013 from the comparable periods in 2012, both as a result of the introduction and continued launch of our new professional model the “Caregiver” compared to the sales of our previous first generation products, as well as revenues attributable to one month’s operations of Prime Time.  These revenues, which were $332,156, represented 79% and 61% of our net revenues for the three and nine months ended September 30, 2013, respectively.

Cost of goods sold: Cost of goods sold consists of product, shipping and other costs.  Cost of goods sold as a percentage of revenues, net decreased in the third quarter of 2013 as compared to the third quarter of 2012 due to the additional sales generated of the newer professional models during the 2013 period as well as the impact from the inclusion of Prime Time revenues. We anticipate our costs of goods sold as a percentage of revenues, net will remain the same throughout the balance of 2013, although there are no assurances that it will.

Operating Expenses: Operating expenses consist of general and administrative expenses, research and development, stock compensation and depreciation and amortization. For the third quarter of 2013, operating expenses decreased primarily as a result of decreases in officer payroll, legal and professional fees and rent expense.  Overall, our operating expenses decreased 29% in the third quarter of 2013 from the third quarter of 2012, and 23% for the nine months ended September 30, 2013 from the comparable period in 2012.  These changes reflect decreases in general and administrative expenses as well as non-cash stock based compensation and depreciation and amortization in all periods, offset by increases in research and development expenses in the 2013 periods.

General and administrative expenses for the three and nine months ended September 30, 2013 declined 25% and 33%, respectively, from the comparable 2012 periods.  These declines are primarily attributable to a reduction in salaries, less utilization of contracted consultants and efficient utilization of professional fees in our historic operations, offset by the impact of Prime Time’s operations which represented 42% and 33% in the third quarter and nine months ended September 30, 2013, respectively, of our total general and administrative expenses.  Research and development expenses in the 2013 periods reflect our continued testing of our newest product line.  Stock based compensation for the three and nine months ended September 30, 2013 declined 55% and 6%, respectively, from the comparable 2012 periods which reflects few grants and issuances in the 2013 periods.  Although we expect our general and administrative expenses to increase in the fourth quarter of 2013 as we continue with our sales growth, the inclusion of Prime Time’s operations for the entire quarter and additional acquisition plans, we are unable at this time to quantify the amount of the expected increase.

22

Other income (expense):  Other expense increased significantly in the 2013 periods from the comparable 2012 periods.  The increase is primarily attributable to an increase in derivative expenses associated with conversion prices of convertible note, offset by unrealized gains on the fair value of derivatives based upon changes in the market price of the underlying security.  We are required to recognize the non-cash gains and losses under GAAP which can materially impact our financial statements from period to period.

Financial Condition

September 30, 2013 (unaudited) compared to December 31, 2012

Assets:  At September 30, 2013, as compared to December 31, 2012, our current assets increased by approximately $1.2 million and our total assets increased by approximately $4.4 million. The increase in current assets is primarily attributable to increase in accounts receivable and inventories related to the consolidation of Prime Time into our company.  The increase in other assets also includes goodwill associated with the acquisition of Prime Time

Liabilities : At September 30, 2013, our current liabilities increased by approximately $2.1 million from December 31, 2012.  This increase is attributable primarily due to the impact of the consolidation of Prime Time including increases in accounts payable and other liabilities, acquisition notes payable and vendor leases payable, as well as changes in the carrying value of derivative liabilities, offset by a reduction in notes payable to related parties.  Our long-term liabilities increased primarily as a result of the liabilities associated with the Prime Time acquisition, as well as the inclusion of $2,149 million in convertible promissory notes due to an officer and director and former CEO and Director of the Company. On August 13, 2013 an agreement was executed covering these Notes to extend the maturity of these Notes to March 31, 2015.

Liquidity and Capital Resources

At September 30, 2013 our cash on hand was approximately $93,000. At September 30, 2013 we had a working capital deficit of $4,076,305 as compared to a working capital deficit of $3,205,531 at December 31, 2012.

Since our inception in 2009, we obtained our liquidity principally from approximately $2.1 million principal amount of cash advances from an affiliate of our former Chairman and CEO and one of our principal shareholders. The Company has executed promissory notes totaling approximately $1.0 million as of September 30, 2013, with CLSS Holdings, LLC (“CLSS”). Each note (a) bears annual interest at 9.0% (20% upon the occurrence, and during the continuance, of an event of default), is convertible into our common stock at a fixed conversion price of $0.50, and is not pre-payable by us, and (b) is subject to a security agreement under which all of our assets secure our loan repayment obligation.  As previously reported, on May 9, 2013, the Company and CLSS agreed to terminate the pending convertible notes and issue a single replacement convertible note that includes the obligations currently provided together with the advances and accrued interest of $238,868. The original convertible notes were not delivered to the Company and accordingly, the replacement note was not issued and has been voided. On August 13, 2013 an addendum was executed covering these notes to extend the maturity of these notes to March 30, 2015. As additional consideration for the extension of the maturity date, the addendum provided for up to an additional 5,000,000 shares of common stock to be issued at the earlier of the consideration date or maturity.

Our net revenues are not sufficient to pay our operating expenses and satisfy our obligations as they become due.  Although we expect that our revenues will continue to increase from both our historic operations as well as from the impact of Prime Time on our results, there are no assurances our revenues will increase to a level to fund our needs.   In addition, even if we succeed in substantially increasing our revenues, we still need substantial additional capital to pay our obligations as they become due and finance our business activities on an ongoing basis,.  We have approximately $2,150,000 in secured obligations to related parties which mature in March 2015 which are secured by substantially all of our assets, and we do not have sufficient funds to pay those obligations.  In addition, we also need to raise approximately $2,000,000 of capital to fund the cash portions of the purchase price of the pending acquisition of Duke Medical.

23

At September 30, 2013, we had approximately $93,000 in cash on hand; and unless and until we receive additional financing from third parties, which we may never achieve, in the absence of on-going cash infusions on an as needed basis by an affiliate of our former Chairman and CEO and one of our principal shareholders, we would be unable to continue to operate.  If we are unable to pay our obligations as they become due, the related parties who are holders of the secured notes could seek to foreclose on our assets.  In that event, we would be unable to continue our business and operations as they are now conducted and investors could lose their entire investments in our company.

Even if we are successful in raising the equity financing noted above we will require substantial additional funds to finance our business activities and acquisition strategy on an ongoing basis. There is no assurance that the additional financing we require would be available on reasonable terms, if at all; and if available, any such financing likely would result in a material and substantial dilution of the equity interests of our current shareholders. The unavailability of such additional financing could require us to delay, scale back or terminate our business activities, which would have a material adverse effect on our viability and prospects.

Summary of Cash Flow for the nine months ended September 30, 2013

	Nine Months Ended September 30,
	2013			2012
Net cash used in operating activities	$	(419,161	)	$	(580,420	)
Net cash used in investing activities	$	(562,302)		$	-
Net cash provided by financing activities	$	1,048,693		$	589,500

Operating Activities

Our total cash used by operating activities decreased by 28% for the nine months ended September 30, 2013, compared to the nine months ended September 30, 2012. The increase is primarily due to increases in accounts receivable, inventory, other current assets and deposits and decreases in accrued salaries payable and accrued interest payable, offset by the impact of the higher net loss, the impact of non-cash items and increases in accounts payable and other liabilities.

Investing Activities

During the 2013 period we used cash for the partial payment of the purchase price of Prime Time and for the purchase of fixed assets.  We did not use any cash for investing activities in the 2012 period.

Financing Activities

Our total cash provided for financing activities increased by 78% for the nine months ended September 30, 2013 compared to the nine months ended September 30, 2012. The increase is primarily due to increases in proceeds of notes issued to related parties and proceeds from the sale of convertible notes, net of repayments of notes, offset by decreases in the proceeds from the sale of common stock.

Current Commitments for Expenditures

Our current cash commitments for expenditures are mainly operational and SEC compliance in nature. We seek to use current revenue to pay vendors for materials for contracts, for payroll, and related employment expenditures (i.e. benefits).

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, and results of operations, liquidity or capital expenditures.

24

Item 3.   Quantitative and Qualitative Disclosures About Market Risk.

Not applicable to smaller reporting companies.

Item 4.   Controls and Procedures.

Evaluation of Disclosure Controls and Procedures.  We maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934.  In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met.  Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures.  The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.  Based on their evaluations as of the end of the period covered by this report, our President, who serves as our Principal Executive Officer, and our Chief Financial Officer have concluded that our disclosure controls and procedures were not effective such that the information relating to our company, required to be disclosed in our Securities and Exchange Commission reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to our management, including our Principal Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure, as a result of our failure to timely file several Current Reports on Form 8-K.  Subsequent to the end of the period, we expect to institute enhanced procedures to ensure that we comply with the proper reporting procedures in future periods.

Changes in Internal Control over Financial Reporting.  There have been no changes in our internal control over financial reporting during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

25

PART II – OTHER INFORMATION

Item 1.  Legal Proceedings.

No new events or changes during this quarter

Item 1A.  Risk Factors.

Please see the risk factors disclosed in Item 1A. of our Annual Report on Form 10-K for year ended December 31, 2012,  filed with the SEC.

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

On August 12, 2013, pursuant to a portion of Convertible Note due to CLSS originally at $220,000 and sold to six (6) third parties by the original holder in the principal amount of $6,000, the Company converted the Note into a total of 6,000,000 shares of the Company’s common stock and issued to the six (6) parties for investor relation services valued at $6,000. The Company has instructed its transfer agent to place a stop and cancel 1,250,000 shares for failure of services performed.

On September 3, 2013, the Company issued 531,250 shares of common stock to Mark R. Miklos valued at $750,000 in connection with the acquisition of Prime Time .

On September 5, 2013, Redstone Investment Group, LLC was issued 75,000 shares of common stock for consulting services performed valued at $1.24 per share.

On September 23, 2013, in connection with a Securities Purchase Agreement and convertible promissory note (“Note”) in the principal amount of $75,000, the Company converted $25,000 of the Note into a total of 211,864 shares of the Company’s common stock at a conversion price of $0.118  per share.

On October 29, 2013, the Company’s Board of Directors authorized the issuance of 3,000,000 shares to CLSS Holdings, LLC, a company wholly owned by a former director and officer of the Company, issued in connection and in partial consideration for the amendment of extension of maturity of certain promissory notes held by the Company in favor of CLSS.

Item 3.  Defaults Upon Senior Securities.

    None.

Item 4.  Mine Safety Disclosures.

    Not applicable to our company’s operations.

Item 5.  Other Information.

    None

26

Item 6.  Exhibits.

No.	Description
31.1	Rule 13a-14(a)/ 15d-14(a) Certification of principal executive officer *
31.2	Rule 13a-14(a)/ 15d-14(a) Certification of principal financial and accounting officer *
32.1	Section 1350 Certifications of President and Chief Financial Officer*
101.INS	XBRL INSTANCE DOCUMENT **
101.SCH	XBRL TAXONOMY EXTENSION SCHEMA **
101.CAL	XBRL TAXONOMY EXTENSION CALCULATION LINKBASE **
101.DEF	XBRL TAXONOMY EXTENSION DEFINITION LINKBASE **
101.LAB	XBRL TAXONOMY EXTENSION LABEL LINKBASE **
101.PRE	XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE **

___________

*  filed herewith

** In accordance with Regulation S-T, the XBRL-formatted interactive data files that comprise Exhibit 101 in this Quarterly Report on Form 10-Q shall be deemed “furnished” and not “filed”.

27

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Sanomedics International Holdings, Inc.
November 20, 2013	By:	/s/ Keith Houlihan
		Keith Houlihan, President
	By:	/s/ David C. Langle
		David C. Langle, Chief Financial Officer

28

EX-31.1

EXHIBIT 31.1

Rule 13a-14(a)/15d-14(a) Certification

I, Keith Houlihan, certify that:

1. I have reviewed this report on Form 10-Q for the period ended September 30, 2013 of Sanomedics International Holdings, 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.

Dated: November 20, 2013	By:	/s/ Keith Houlihan
		Keith Houlihan, President, principal executive officer

EX-31.2

EXHIBIT 31.2

Rule 13a-14(a)/15d-14(a) Certification

I, David C. Langle, certify that:

1. I have reviewed this report on Form 10-Q for the period ended September 30, 2013 of Sanomedics International Holdings, 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.

Dated: November 20, 2013	By:	/s/ David C. Langle
		David C. Langle, Chief Financial Officer, principal financial and accounting officer

EX-32.1

EXHIBIT 32.1

Section 1350 Certification

In connection with the Quarterly Report of Sanomedics International Holdings, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2013 as filed with the Securities and Exchange Commission (the “Report”), I, Keith Houlihan, President, and David C. Langle, Chief Financial Officer, of the Company, certify, pursuant to 18 U.S.C. SS. 1350, as adopted pursuant to SS. 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and

2. The information contained in the Report fairly presents, in all material respects, the financial conditions and results of operations of the Company.

Dated: November 20, 2013	By:	/s/ Keith Houlihan
		Keith Houlihan, President, principal executive officer
Dated: November 20, 2013	By:	/s/ David C. Langle
		David C. Langle, Chief Financial Officer, principal financial and accounting officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signatures that appear in typed form within the electronic version of this written statement 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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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2013

Notes to Financial Statements

Principles of Consolidation

All significant intercompany accounts and transactions have been eliminated in consolidation. The Company consolidates the following companies:

·   Thermomedics Inc.

·   Anovent, Inc.

·   Prime Time Medical, Inc.

Use Of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Accounts Receivable

The Company reports accounts receivable net of estimated allowances for uncollectible accounts and adjustments. Accounts receivable are uncollateralized and primarily consist of amounts due from Medicare, other third-party payors, and patients. To provide for accounts receivable that could become uncollectible in the future, the Company establishes an allowance for uncollectible accounts to reduce the carrying amount of such receivables to their estimated net realizable value. The credit risk for other concentrations of receivables is limited due to the significance of Medicare as the primary payor. The Company believes the credit risk associated with its Medicare accounts, which have historically exceeded 60% of its patient accounts receivable, is limited due to (i) the historical collection rate from Medicare and (ii) the fact that Medicare is a U.S. government payor. The Company does not believe that there are any other concentrations of receivables from any particular payor that would subject it to any significant credit risk in the collection of accounts receivable.

Inventories

Inventories are stated at the lower of cost (on a first-in, first-out basis) or market value. The stated cost is comprised of finished goods of non-invasive thermometers, and Durable Medical Equipment from its recent acquisition of Prime Time which includes power wheel chairs with specialization in complex rehab products, respiratory equipment including oxygen concentrators and nebulizer compressors, walkers, commodes, manual wheelchairs and support surface products for wound care management.  Reserves, if necessary, are recorded to reduce inventory to market value based on assumptions about consumer demand, current inventory levels and product life cycles for the various inventory items. These assumptions are evaluated quarterly and are based on the Company’s business plan and from feedback from customers and the product development team; however, as the Company has a fairly limited operating history, estimates can vary significantly. We review the components of inventory on a regular basis for excess, obsolete and impaired inventory based on estimated future usage and sales. The likelihood of any material inventory write-downs depends on changes in competitive conditions, new product introductions by us or our competitors, or rapid changes in customer demand.

Reserves for Warranty

The Company records a reserve for non-invasive thermometers at the time product revenue is recorded based on historical rates.  The reserve is reviewed during the year and is adjusted, if appropriate, to reflect new product offerings or changes in experience. Actual warranty claims are tracked by product line. The warranty reserve was approximately $1,000 at September 30, 2013 and December 31, 2012.

Fixed Assets

Fixed assets are stated at cost, less accumulated depreciation. Depreciation is provided principally on the straight-line method over the estimated useful lives of the assets, which is generally three to ten years. The cost of repairs and maintenance is charged to expense as incurred. Expenditures for property betterments and renewals are capitalized. Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in other income or expense.

The Company will periodically evaluate whether events and circumstances have occurred that may warrant revision of the estimated useful lives of fixed assets or whether the remaining balance of fixed assets should be evaluated for possible impairment. The Company  uses an estimate of the related undiscounted cash flows over the remaining life of the fixed assets in measuring their recoverability.

XML

Consolidated Statements of Operations (Unaudited) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Consolidated Statements Of Operations
Revenues, net	$ 422,827	$ 934	$ 543,906	$ 35,962
Cost of goods sold	299,111	6,130	332,702	40,822
Gross profit (loss)	123,716	(5,196)	211,204	(4,860)
Operating expenses
General and administrative	466,498	617,969	920,305	1,370,685
Research and development	24,250		77,750	8,500
Stock compensation	93,000	204,888	348,738	369,751
Depreciation and amortization	2,711	1,073	6,509	3,195
Total operating expenses	586,459	823,930	1,353,302	1,752,131
Loss from operations	(462,743)	(829,126)	(1,142,098)	(1,756,991)
Other income (expense)
Amortization of debt discount	(131,621)		(185,958)
Derivative expense	(270,807)		(3,101,605)
Unrealized gain on fair value of derivatives	796,727		1,844,355
Interest expense	(8,344)	(35,457)	(61,459)	(144,413)
Total other income (expense)	385,955	(35,457)	(1,504,667)	(144,413)
Net income (loss) before income taxes	(76,787)	(864,583)	(2,646,765)	(1,901,404)
Income taxes
Net loss	$ (76,787)	$ (864,583)	$ (2,646,765)	$ (1,901,404)
Net loss per share - basic and diluted	$ 0.00	$ (0.06)	$ (0.16)	$ (0.13)
Weighted average number of shares outstanding during the period - basic and diluted	21,214,765	14,369,139	16,672,586	14,313,131

XML

NOTES PAYABLE -RELATED PARTY

9 Months Ended

Sep. 30, 2013

Notes to Financial Statements

NOTE 5 - NOTES PAYABLE -RELATED PARTY

	September 30, 2013		December 31, 2012
Notes Payable consists of the following:
Secured Convertible Promissory Note - CLSS Holdings, LLC, dated September 30, 2010. Note accrues interest at 9% per annum, due and payable on March 31, 2015 (A)( C)	$	100,000	$	181,000
Secured Convertible Promissory Note - CLSS Holdings, LLC, dated March 12, 2011. Note accrues interest at 9% per annum, due and payable on March 31, 2015.		367,000		367,000
Secured Convertible Promissory Note - CLSS Holdings, LLC, dated September 30, 2011. Note accrues interest at 9% per annum, due and payable on March 31, 2015, (A)		220,000		220,000
Secured Convertible Promissory Note - CLSS Holdings, LLC, dated March 12, 2011. Note accrues interest at 7.5% per annum, due and payable on March 31, 2015.		334,787		334,787
Convertible Promissory Note-Officer, dated June 17, 2013. Note accrues interest at 9% per annum, due and payable on March 30, 2015, net of discount of $589,722 Refer to Note 7.
		113,617		-
Total		1,135,404		1,102,787
Other advances from CLSS Holdings, LLC, not evidenced by a promissory note (A)		1,013,631		276,640
		2,149,035		1,379,427
Less: Current portion		-		1,379,427
Notes Payable-related parties	$	2,149,035	$	-

The secured convertible promissory notes above are collateralized by substantially all the assets of the Company and are convertible, at the holder's option, into common shares of the Company at a fixed conversion price of $0.50 per share. CLSS is wholly owned by the Company's Former CEO who also is a principal shareholder of the Company.

(A)   On May 9, 2013, the Company and an affiliate of the Company’s former CEO agreed to terminate each of the above listed convertible notes and issue a single replacement convertible note that includes the obligations currently provided together with the advances and accrued interest of $238,868. The original convertible notes were not delivered to the Company and accordingly, the replacement note was not issued and voided. On August 13, 2013 an agreement was executed covering these Notes to extend the maturity of these Notes to March 31, 2015.

(B)   On June 17, 2013, the Company and its President and a principal stockholder of the Company and a Director agreed to convert accrued salary totaling $703,339 into a long term convertible note as reflected above. The Note isconvertible, at the holder's option, into common shares of the Company at a fixed conversion price of $0.50 per share.

(C)   On August 12, 2013 and September 17, 2013, $81,000 was assigned by the holder to seven  third parties, which subsequently converted to 1,265,535 and 6,000,000 shares of common stock, respectively, see Notes 6 and 9.

XML

ACQUISITION (Deatils Narrative) (USD $)	Sep. 30, 2013
Notes to Financial Statements
Current liability	$ 950,000

XML

ACQUISITION (Tables)

9 Months Ended

Sep. 30, 2013

Notes to Financial Statements

Purchase price for allocation to the assets acquired and liabilities assumed

The purchase price was allocated to the assets acquired and liabilities assumed as follows:

Assets Acquired	$	1,313,759
Liabilities assumed		(1,305,394	)
Intangibles:
Value assigned to Non-compete agreement		200,000
Goodwill		2,891,635
Total purchase price	$	3,100,000

Unaudited pro forma results of operations data,The Company and Prime Time Medical occurred

Unaudited pro forma results of operations data as if the Company and Prime Time Medical had occurred as of January 1, 2011 are as follows:

	Year Ended 2011			Year Ended 2012			Nine Months Ended 9-30-2013
Revenue	$	2,480,010		$	3,660,353		$	3,365,260
Loss from operations	$	(3,096,171	)	$	(1,493,030	)	$	(1,852,283	)
Net loss	$	(3,289,299	)	$	(1,782,153	)	$	(3,391,061	)
Net loss per share-basic and diluted	$	(0.24	)	$	(0.12	)	$	(0.20	)

XML

DERIVATIVE LIABILITIES (Details Narrative) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Derivative Liabilities Details Narrative
Fair value of derivative liabilities	$ 1,293,517	$ 40,697

XML

CONVERTIBLE NOTES PAYABLE (Details Narrative) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Debt Instrument [Line Items]
Convertible note payable					$ 12,500
Beneficial conversion features of convertible debts			268,518	0
Interest expense	270,807		3,101,605
On August 24, 2012 [Member]
Debt Instrument [Line Items]
Convertible note payable	40,625		40,625		12,500
Percentage of interest rate on convertible note	0.00%		0.00%		9.00%
Unamortized discounts	34,375		34,375		62,500
On December 6, 2012 [Member]
Debt Instrument [Line Items]
Convertible note payable	0		0		4,688
Percentage of interest rate on convertible note	42.00%		42.00%		8.00%
Unamortized discounts	37,500		37,500		32,812
On June 17 2013 [Member]
Debt Instrument [Line Items]
Unamortized discounts	60,517		60,517
Note Payable	89,483		89,483
On August 27, 2013 [Member]
Debt Instrument [Line Items]
Unamortized discounts	63,600		63,600
Note Payable	9,900		9,900
On September 9, 2013 [Member]
Debt Instrument [Line Items]
Note Payable	68,675		68,675
On September 18, 2013 [Member]
Debt Instrument [Line Items]
Unamortized discounts	37,363		37,363
Note Payable	2,637		2,637
On September 20, 2013 [Member]
Debt Instrument [Line Items]
Unamortized discounts	35,163		35,163
Note Payable	$ 1,337		$ 1,337

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NOTES PAYABLE -RELATED PARTY (Details) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Total Notes	$ 1,135,404	$ 1,102,787
Other advances from CLSS Holdings, Inc, LLC, not evidenced by a promissory Note	1,013,631	276,640
Notes payable - related party	2,149,035	1,379,427
Less: Current portion		1,379,427
Notes Payable-related parties	2,149,035
Secured Convertible Promissory Note September 30, 2010 [Member]
Total Notes	100,000	181,000
Secured Convertible Promissory Note March 12, 2011 [Member]
Total Notes	367,000	367,000
Secured Convertible Promissory Note September 30, 2011 [Member]
Total Notes	220,000	220,000
Secured Convertible Promissory Note One March 12, 2011 [Member]
Total Notes	334,787	334,787
Convertible Promissory Note June 17, 2013 [Member]
Total Notes	$ 113,617

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ORGANIZATION AND BASIS OF PRESENTATION

9 Months Ended

Sep. 30, 2013

Notes to Financial Statements

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION

Sanomedics International Holdings, Inc. (referred to herein as “we”, “us”, “our” or the “Company”) formerly Grand Niagara Mining and Development Co, Inc. ("Grand Niagara") was originally incorporated in the state of Idaho in 1955 and re-domiciled in the state of Delaware on April 6, 2009. The Company, through its subsidiaries, designs, develops, markets and distributes non-invasive infrared thermometers principally for consumers and medical professionals.

On August 30, 2013, the Company acquired all the capital stock of Prime Time Medical, Inc (“Prime Time”), a Florida corporation for total purchase consideration of $3,100,000. Prime Time is a Durable Medical Equipment provider of home medical equipment with products such as power wheel chairs with specialization in complex rehab products, respiratory equipment including oxygen concentrators and nebulizer compressors, walkers, commodes, manual wheelchairs and support surface products for wound care management, servicing customers throughout West Central Florida.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. It is management's opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation. The results for the interim period are not necessarily indicative of the results to be expected for the full year.

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, which include Thermomedics, Inc. (since July 2009), and Prime Time (since September 2013). All significant inter-company accounts and transactions have been eliminated in consolidation.

The unaudited interim financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K, which contains the audited consolidated financial statements and notes thereto, together with the Management’s Discussion and Analysis, for the fiscal year ended December 31, 2012. The interim results for the three and nine months ended September 30, 2013 are not necessarily indicative of the results for the full fiscal year.

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LIQUIDITY AND GOING CONCERN

9 Months Ended

Sep. 30, 2013

Notes to Financial Statements

NOTE 3 - LIQUIDITY AND GOING CONCERN

The condensed consolidated financial statements have been prepared on a going concern basis, and do not reflect any adjustments related to the uncertainty surrounding our recurring losses or accumulated deficit.

The Company currently has limited revenue and is experiencing recurring losses. These factors raise substantial doubt about its ability to continue as a going concern. Management has financed the Company's operations principally through loans from an affiliate of the Company’s former CEO, who is also one of the principal shareholders. Through September 30, 2013, the Company obtained its liquidity principally from approximately $694,000 of cash advances from an affiliate of the former Chairman and CEO and the Company's principal shareholder and, $375,000 from third party borrowings. The Company may need to continue borrowings from an affiliate of the former Chairman and CEO and the Company's principal shareholder and will also need to raise additional capital. However, management cannot provide any assurances that the Company will be successful in completing this financing and accomplishing any of its plans.

The ability of the Company to continue as a going concern is dependent upon continued financial commitments from related parties and eventually secure other sources of financing in addition to those funds provided by its affiliate and attain profitable operations. The accompanying condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

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CONVERTIBLE NOTES PAYABLE

9 Months Ended

Sep. 30, 2013

Notes to Financial Statements

NOTE 6 - CONVERTIBLE NOTES PAYABLE

On August 24, 2012, the Company executed a convertible note for $75,000. The convertible note is unsecured and has a maturity date of August 24, 2014. Interest will accrue at 9% per annum until paid or maturity and is convertible into common shares at a fixed convertible price of $0.50 per share. In the event that the Company undertakes financing while this debt is unpaid, the holder shall have the right to convert at the lessor of the offering price or the fixed conversion price. As of September 30, 2013 and December 31, 2012, the convertible note amounted to $40,625 and $12,500, net of unamortized discounts of $34,375 and $62,500, respectively.

On December 6, 2012, the Company entered into a Securities Purchase Agreement and convertible promissory note (“Note”) in the principal amount of $37,500. The Note, which was due on August 29, 2013, bears interest at 8% per annum until paid or to maturity was converted on June 11, 2013 and June 18, 2013 into a total of 29,128 shares of the Company’s common stock at a conversion price equal to a 42% discount to the average of the lowest three closing bid prices of the common stock during the 10 trading days prior to conversion or $1.36 and $1.36 per share. As of September 30, 2013 and December 31, 2012, the convertible note amounted to $ -0- and $4,688, net of unamortized discount of $37,500 and $32,812, respectively.

On June 17, 2013, the Company entered into a Promissory Note (the “Note”) with a third party lender (“Lender”) in the principal amount up to $500,000. On June 19, 2013, the Lender executed the Note and funded the Company an initial tranche of $150,000 pursuant to the terms thereof. The principal sum of the Note carries a $50,000 original issue discount (“OID”) , which is prorated based on the consideration paid by the lender. The maturity date of each tranche funded under the Note is one year from the date of each payment by the Lender. The principal amount of the Note due is prorated based upon the consideration actually paid to us, plus a 10% OID, and we are only obligated to repay the amount of the funded Note, together with interest and fees. The Note may be prepaid by us at any time on or before 90 days from the date of issue interest free. After the initial 90 day period the Note bears a one-time interest charge of 12% applied to the principal sum. All principal and accrued interest on the Note is convertible into shares of the Company’s common stock at the election of the Lender at any time at a conversion price of the lesser of $2.75 or 70% of the lowest trade price in the 25 trading days prior to conversion. At all times while the Note is outstanding we agreed to reserve from our authorized but unissued shares of common stock 550,000 shares for the possible conversion of the Note; plus provide registration rights. As of September 30, 2013, the Note amounted to $89,483, net of unamortized discount of $60,517.

On August 27, 2013, the Company entered into a Securities Purchase Agreement and convertible promissory note (“Note”) in the principal amount of $73,500. The Note, which is due on May 29, 2014, bears interest at 8% per annum until paid or to maturity. The Company received the funds on August 30, 2013 net of $3,500 in legal fees. The Note conversion is at the election of the lender at any time after 180 days from issuance date of the Note at a conversion price equal to a 42% discount to the average of the lowest three closing bid prices of the common stock during the 10 trading days prior to conversion. As of September 30, 2013, the Note amounted to $9,900, net of unamortized discount of $63,600.

On September 9, 2013 the Company negotiated the reclassification of $68,675 in legal services recorded originally in accounts payable into a Convertible Note (“Note”) with a maturity date of June 9, 2014, bearing interest at 8% per annum. The Note conversion is at the election of the lender at any time up to maturity at a conversion price equal to a 10% discount to the average of the lowest three closing bid prices of the common stock during the 10 trading days prior to conversion. As of September 30, 2013 the Note amounted to $68,675.

On September 18, 2013, the Company entered into a Securities Purchase Agreement and convertible promissory note (“Note”) in the principal amount of $40,000. The Note, which is due on September 18, 2014, bears interest at 9% per annum until paid or to maturity. The Company received the funds on September 25, 2013 net of $1,500 in legal fees. The Note conversion is at the election of the lender at any time after 180 days from issuance date of the Note at a conversion price equal to a 50% discount to the average of the lowest three closing bid prices of the common stock during the 10 trading days prior to conversion. As of September 30, 2013, the Note amounted to $2,637, net of unamortized discount of $37,363.

On September 20, 2013, the Company entered into a convertible promissory note (“Note”) in the principal amount of $36,500. The Note, which is due on June 20, 2014, bears interest at 8% per annum until paid or to maturity. The Company received the funds on September 19, 2013 net of $1,500 in legal fees. The Note conversion is at the election of the lender at any time after 180 days from issuance date of the Note at a conversion price equal to a 45% discount to the average of the lowest three closing bid prices of the common stock during the 10 trading days prior to conversion. As of September 30, 2013, the Note amounted to $1,337, net of unamortized discount of $35,163.

In accordance with ASC 470-20 Debt with Conversion and Other Options, the Company recorded total discounts of $268,518 and $-0- for the beneficial conversion features of the convertible debts incurred during the periods ended September 30, 2013 and September 30, 2012, respectively. The discounts are being amortized to interest expense over the term of the notes using the effective interest method. The Company recorded $185,958 and $-0- of interest expense pursuant to the amortization of the note discounts for the nine months ended September 30, 2013 and for the nine months  ended September 30, 2012, respectively; and $131,621 and $-0- for the three months ended September 30, 2013 and September 30, 2012.

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ACQUISITION

9 Months Ended

Sep. 30, 2013

Notes to Financial Statements

NOTE 4 - ACQUISITION

Pursuant to a Stock Purchase Agreement (the “Stock Purchase Agreement ”) with Prime Time and Mark R. Miklos, the sole equity holder of Prime Time (“Miklos”), on August 30, 2013 the Company acquired a 100% interest  and assumed full financial and operational control of Prime Time for a total purchase price of $3,100,000, subject to certain adjustments as summarized herein. The purchase price consisted of a combination of $1,350,000 in cash, promissory notes of $1,000,000 and shares of the Company’s restricted common stock with a value of $750,000.

On August 30, 2013, the Company issued two promissory notes (the “Prime Time Notes A and B”) to Miklos in the aggregate principal amount of $1,000,000. Prime Time Note A in the principal amount of $500,000 bears interest at 5% per annum, with monthly payments of principal and interest, and matures three years after the closing date.  Prime Time Note B in the principal amount of $500,000  bears interest at 5% per annum, with annual payments of interest and principal payable annually over two years from the date of closing provided; however, that the principal balance of Prime Time Note B (and the respective annual payment) shall be reduced if: (i) the earnings before income taxes, depreciation and amortization (“EBITDA”) for the fiscal year ended December 31, 2013 is less than $975,000; and/or (ii) the EBITDA for the fiscal year ended December 31, 2014 is less than $975,000. At Miklos’ option, Prime Time Note B can be paid in shares of common stock of the Company on terms acceptable to Miklos and the Company. These notes have been presented as acquisition notes payable in the accompanying September 30, 2013 consolidated balance sheet.

On September 3, 2013, the Company issued 531,250 shares of its restricted common stock with a value of $750,000 in compliance with the share requisite of the Stock Purchase Agreement. Additionally the Company entered into an employment agreement with the Seller for certain management services and; also contains a covenant of the Seller not to compete with the Company for a two year period.

As of September 30, 2013, the balance of amounts owed on the purchase price of $950,000 has been presented as a current liability in the accompanying September 30, 2013 consolidated balance sheet.

The Purchase Agreement further provided that the Company will engage its independent registered public accounting firm to conduct an audit of Prime Time’s financial statements for the years ended December 31, 2011 and 2012. If, for any reason the audit cannot be concluded, the Company will not be required to pay any amounts due under Notes A or B and such notes will be cancelled. The Company, however, has no right to receive a refund of the cash portion of the purchase price as tendered or to effect a cancellation of the Shares. In addition, if Prime Time’s total asset value at December 31, 2012 as determined in accordance with the audited financial statements is less than the value set forth on the financial statements previously provided to the Company, the purchase price will be reduced by such amount on a dollar for dollar basis through a return of a number of Shares equal to such deficiency, and, if the deficiency is greater than the Original Issue Price, through a set off of the amount which will be due under Note A.

The purchase price was allocated to the assets acquired and liabilities assumed as follows:

Assets Acquired	$	1,313,759
Liabilities assumed		(1,305,394	)
Intangibles:
Value assigned to Non-compete agreement		200,000
Goodwill		2,891,635
Total purchase price	$	3,100,000

Unaudited pro forma results of operations data as if the Company and Prime Time Medical had occurred as of January 1, 2011 are as follows:

	Year Ended 2011			Year Ended 2012			Nine Months Ended 9-30-2013
Revenue	$	2,480,010		$	3,660,353		$	3,365,260
Loss from operations	$	(3,096,171	)	$	(1,493,030	)	$	(1,852,283	)
Net loss	$	(3,289,299	)	$	(1,782,153	)	$	(3,391,061	)
Net loss per share-basic and diluted	$	(0.24	)	$	(0.12	)	$	(0.20	)

Pro forma data does not purport to be indicative of the results that would have been obtained had these events actually occurred at January 1, 2011 and is not intended to be a projection of future results.

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STOCKHOLDERS' DEFICIT (Details Narrative) (USD $)	3 Months Ended
	Sep. 30, 2013
Stockholders Deficit Details Narrative
Stock compensation	$ 93,000

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Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Stockholders' Deficit
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	1,000	1,000
Preferred stock, shares issued	1,000	1,000
Preferred stock, shares outstanding	1,000	1,000
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	250,000,000	250,000,000
Common stock, shares issued	27,326,723	20,403,586
Common stock, shares outstanding	27,326,723	20,403,586

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STOCKHOLDERS' DEFICIT

9 Months Ended

Sep. 30, 2013

Notes to Financial Statements

NOTE 9 - STOCKHOLDERS' DEFICIT

Common stock

On February 9, 2013, the Company issued a total of 50,000 shares of common stock to two consultant for services valued at $1.15 per share. As a result, the Company recorded stock compensation in the amount of $57,500 for the three months ended March 31, 2013.

On June 28, 2013, the Company issued a total of 25,895 shares of common stock to a public relations firm as settlement of its services valued at $1.50 per share. As a result, the Company recorded stock compensation in the amount of $38,842 for the three months ended June 30, 2013.

On June 11, 2013 and June 28, 2013, in connection with a Securities Purchase Agreement and convertible promissory note (“Note”) in the principal amount of $37,500, the Company converted the Note into a total of 29,128 shares of the Company’s common stock at a conversion price of $1.36  per share.

On August 12, 2013, pursuant to a portion of Convertible Note due to CLSS originally at $220,000 and sold to six (6) third parties by the original holder in the principal amount of $6,000, the Company converted the Note into a total of 6,000,000 shares of the Company’s common stock and issued to the six (6) parties for investor relation services valued at $6,000. The Company has instructed its transfer agent to place a stop and cancel 1,250,000 shares for failure of services performed.

On September 3, 2013, the Company issued 531,250 shares of common stock to Mark R. Miklos valued at $750,000 in connection with the acquisition of Prime Time .

On September 5, 2013, Redstone Investment Group, LLC was issued 75,000 shares of common stock for consulting services performed valued at $1.24 per share. As a result, the Company recorded stock compensation in the amount of $93,000 for the three months ended September 30, 2013.

On September 23, 2013, in connection with a Securities Purchase Agreement and convertible promissory note (“Note”) in the principal amount of $75,000, the Company converted $25,000 of the Note into a total of 211,864 shares of the Company’s common stock at a conversion price of $0.118 per share.

Stock Options

On March 7, 2013, the Company granted to its Chief Technology Officer 150,000 seven-year stock options with an exercise price of $0.50 per share. The Company determined that the fair value of the options was approximately $159,000 using the Black Scholes method and recorded as stock compensation in the accompanying condensed consolidated financial statements.

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Consolidated Statements of Cash Flows (USD $)	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (2,646,765)	$ (1,901,404)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	6,509	3,195
Stock compensation	348,738	515,853
Reserve for bad debts	25,575
Reserve for obsolete and slow moving inventory	87,437
Amortization of debt discount on convertible notes	185,958
Derivative expense	3,101,605
Unrealized gain on fair value of derivative liabilities	(1,844,355)
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable	(86,226)	345
Inventory	(130,500)	34,442
Other current assets	(9,335)	1,926
Deposits	(13,892)
Bank overdraft		(4,522)
Accrued salaries payable	119,392	574,468
Accounts payable and other liabilities	275,327	5,922
Accrued interest payable	76,499	142,466
Due to related parties	84,872	46,889
Net Cash Used In Operating Activities	(419,161)	(580,420)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets	(162,302)
Payment on acquisition of Prime Time Medical	(400,000)
Net Cash Used In Investing Activities	(562,302)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes - related parties	694,992	174,000
Net payments on vendor and installment notes	(21,299)
Issuance of stock subscriptions payable		102,500
Sale of common stock		238,000
Proceeds from convertible notes payable	375,000	75,000
Net Cash Provided By Financing Activities	1,048,693	589,500
Net increase in cash	67,230	9,080
Cash - beginning of period	26,084
Cash - end of period	93,314	9,080
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for: Income taxes
Cash paid during the period for: Interest
Non-cash Financing transactions:
Common stock issued to consultants for services	189,343
Common stock issued for conversion of debt, net of derivative	102,985
Conversion of debt to equity		1,758,310
Common stock issued for acquisition	750,000
Accrued salaries payable converted to convertible promissory note - officer	$ 703,339

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Consolidated Balance Sheets (Unaudited) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Current Assets
Cash	$ 93,314	$ 26,084
Accounts receivable, net	866,453	8,117
Inventories	290,625	2,171
Employee receivables	4,850
Prepaid expenses	2,635
Total Current Assets	1,257,877	36,372
Fixed assets, net	95,426	17,049
Other Assets
Goodwill	2,891,635
Non-Compete	200,000
Patents, net	33,061	36,796
Deposit	10,945
Total Other Assets	3,135,641	36,796
Total Assets	4,488,944	90,217
Current Liabilities
Accrued salaries payable	706,569	1,290,516
Accounts payable and other liabilities	968,952	243,836
Accrued interest payable	293,499	217,001
Bank debt	244,923
Convertible notes payable, net of discount, current portion	214,438	4,688
Acquisition notes payable, current portion	1,286,000
Vendor leases payable	167,958
Installment notes payable, current	7,716
Derivative liabilities	1,293,517	40,697
Due to related parties	150,610	65,738
Notes payable - related parties, current portion		1,379,427
Total Current Liabilities	5,334,182	3,241,903
Notes payable - related parties net of discount, net of current portion	2,149,035
Installment notes payable, net of current portion	41,404
Acquisition notes payable, net of current portion	664,000
Convertible notes payable, net of discount, net of current portion		12,500
Total Liabilities	8,188,621	3,254,403
Commitments and Contingencies
Stockholders' Deficit
Preferred stock, $0.001 par value: 1,000 shares authorized, issued and outstanding as of September 30, 2013 and December 31, 2012, respectively	1	1
Common stock, $0.001 par value: 250,000,000 shares authorized, 27,326,723 and 20,403,586 issued and outstanding as of September 30, 2013 and December 31, 2012 respectively.	27,327	20,404
Additional paid in capital	7,853,042	5,748,691
Stock subscription receivable	(20,000)	(20,000)
Accumulated deficit	(11,560,047)	(8,913,282)
Total Stockholders' Deficit	(3,699,677)	(3,164,186)
Total Liabilities and Stockholders' Deficit	$ 4,488,944	$ 90,217

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ACQUISITION (Deatils 1) (USD $)	3 Months Ended		9 Months Ended			12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013 Prime Time Medical [Member]	Dec. 31, 2012 Prime Time Medical [Member]	Dec. 31, 2011 Prime Time Medical [Member]
Revenue					$ 3,365,260	$ 3,660,353	$ 2,480,010
Loss from operations	(76,787)	(864,583)	(2,646,765)	(1,901,404)	(1,852,283)	(1,493,030)	(3,096,171)
Net loss	$ (76,787)	$ (864,583)	$ (2,646,765)	$ (1,901,404)	$ (3,391,061)	$ (1,782,153)	$ (3,289,299)
Net loss per share-basic and diluted	$ 0.00	$ (0.06)	$ (0.16)	$ (0.13)	$ (0.20)	$ (0.12)	$ (0.24)

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2013

Notes to Financial Statements

NOTE 8 - COMMITMENTS AND CONTINGENCIES

Litigation

From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm its business.

On May 21, 2013, Exergen Corporation commenced legal action in the United States District Court for the District of Massachusetts against us, claiming infringement of certain intellectual property. Exergen is seeking various types of relief, including an injunction against further infringement of certain intellectual property. Given the inherent uncertainty and unpredictability of litigation and due to the early status of this legal action, no range of loss or possible loss can be reasonably estimated at this time. However, we do not expect the outcome of this matter to have a material adverse effect on our consolidated financial statements when taken as a whole. As of September 30, 2013, and the date of this filing, no amount is accrued as a loss and is not considered probable or estimable.

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SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2013

Notes to Financial Statements

NOTE 11 - SUBSEQUENT EVENTS

Financing:

During October 2013, the Company entered into four (4) separate Securities Purchase Agreements and convertible promissory notes (“Notes”) with three (3) companies for total principal amount of $287,750. The Notes, which are due ranging from July 2014 and October 2014, bear interest ranging from 6% to 12% per annum until paid or to maturity. The Note conversions are at the election of the lenders at any time at  conversion prices equal ranging from 40% to 50% discount to the average of the lowest two to three closing bid prices of the common stock during the 10 to 25 trading days prior to conversion. A portion of one of the notes for $75,000 was converted on October 18, 2013 for 611,246 shares and on November 12, 2013 for 1,138,952 shares, leaving a balance of $50,000 on the Note.

Share Issuances:

On October 29, 2013, the Company’s Board of Directors authorized the issuance of 3,000,000 shares to CLSS Holdings, LLC, a company wholly owned by a former director and officer of the Company, issued in connection and in partial consideration, for the amendment of extension of maturity of certain promissory notes held by the Company in favor of CLSS.

On October 30, 2013, the Board of Directors and holders of a majority of the Company’s outstanding voting securities approved resolutions granting the Board of Directors the authority to effect a reverse stock split of all of the outstanding shares of our common stock at a ratio of up to one for 15 (1:15) at any time prior to October 30, 2014.  The timing and final ratio of the reverse split is to be determined by the Board of Directors in their sole authority.  On November 11, 2013 the Company filed a Definitive Information Statement on Schedule 14C with the Securities and Exchange Commission regarding this action.  The Company expects the Board to finalize the ratio and timing for the reverse split in the near future, with an expected effective date in December 2013.  The Company will file a Current Report on Form 8-K with the SEC when these actions have been finalized.

Other:

On October 31, 2013, Prime Time received a letter from the designated Medicare Contractor notifying Prime Time that effective October 16, 2013 all claims for reimbursement have been selected for a comprehensive medical review of its billings for Medicare services pursuant to the Medicare Contractors statutory and regulatory authority.

Management has evaluated the subsequent events through November 20, 2013, the date at which the condensed consolidated financial statements were available for issue. 

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DERIVATIVE LIABILITIES

9 Months Ended

Sep. 30, 2013

Notes to Financial Statements

NOTE 7 - DERIVATIVE LIABILITIES

The Company analyzed the related party convertible note-officer and convertible promissory notes referred to in Notes 5 and 6 based on the provisions of ASC 815-15 and determined that the conversion options of the convertible notes qualify as embedded derivatives.

The fair value upon inception of the embedded derivatives are determined to total $3,101,605 and recorded as embedded derivative liabilities. The embedded derivatives are revalued at the end of each reporting period and any resulting gain or loss is recognized as a current period charge to the statement of operations.

The Company accounts for the embedded conversion features included in its common stock as well as derivative liabilities. The aggregate fair value of derivative liabilities as of September 30, 2013 and December 31, 2012 amounted to $1,293,517 and $40,697, respectively. The net decrease of $1,844,355 in the fair value of the derivative liabilities between the respective periods is included in other income as an unrealized gain on fair value of derivatives.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2013

Notes to Financial Statements

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

All significant intercompany accounts and transactions have been eliminated in consolidation. The Company consolidates the following companies:

·   Thermomedics Inc.

·   Anovent, Inc.

·   Prime Time Medical, Inc.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Accounts Receivable

The Company reports accounts receivable net of estimated allowances for uncollectible accounts and adjustments. Accounts receivable are uncollateralized and primarily consist of amounts due from Medicare, other third-party payors, and patients. To provide for accounts receivable that could become uncollectible in the future, the Company establishes an allowance for uncollectible accounts to reduce the carrying amount of such receivables to their estimated net realizable value. The credit risk for other concentrations of receivables is limited due to the significance of Medicare as the primary payor. The Company believes the credit risk associated with its Medicare accounts, which have historically exceeded 60% of its patient accounts receivable, is limited due to (i) the historical collection rate from Medicare and (ii) the fact that Medicare is a U.S. government payor. The Company does not believe that there are any other concentrations of receivables from any particular payor that would subject it to any significant credit risk in the collection of accounts receivable.

Inventories

Inventories are stated at the lower of cost (on a first-in, first-out basis) or market value. The stated cost is comprised of finished goods of non-invasive thermometers, and Durable Medical Equipment from its recent acquisition of Prime Time which includes power wheel chairs with specialization in complex rehab products, respiratory equipment including oxygen concentrators and nebulizer compressors, walkers, commodes, manual wheelchairs and support surface products for wound care management.  Reserves, if necessary, are recorded to reduce inventory to market value based on assumptions about consumer demand, current inventory levels and product life cycles for the various inventory items. These assumptions are evaluated quarterly and are based on the Company’s business plan and from feedback from customers and the product development team; however, as the Company has a fairly limited operating history, estimates can vary significantly. We review the components of inventory on a regular basis for excess, obsolete and impaired inventory based on estimated future usage and sales. The likelihood of any material inventory write-downs depends on changes in competitive conditions, new product introductions by us or our competitors, or rapid changes in customer demand.

Reserves for Warranty

The Company records a reserve for non-invasive thermometers at the time product revenue is recorded based on historical rates.  The reserve is reviewed during the year and is adjusted, if appropriate, to reflect new product offerings or changes in experience. Actual warranty claims are tracked by product line. The warranty reserve was approximately $1,000 at September 30, 2013 and December 31, 2012.

Fixed Assets

Fixed assets are stated at cost, less accumulated depreciation. Depreciation is provided principally on the straight-line method over the estimated useful lives of the assets, which is generally three to ten years. The cost of repairs and maintenance is charged to expense as incurred. Expenditures for property betterments and renewals are capitalized. Upon sale or other disposition of a depreciable asset, cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in other income or expense.

The Company will periodically evaluate whether events and circumstances have occurred that may warrant revision of the estimated useful lives of fixed assets or whether the remaining balance of fixed assets should be evaluated for possible impairment. The Company  uses an estimate of the related undiscounted cash flows over the remaining life of the fixed assets in measuring their recoverability.

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NOTES PAYABLE -RELATED PARTY (Tables)

9 Months Ended

Sep. 30, 2013

Notes Payable -Related Party Tables

Schedule of Notes payable

	September 30, 2013		December 31, 2012
Notes Payable consists of the following:
Secured Convertible Promissory Note - CLSS Holdings, LLC, dated September 30, 2010. Note accrues interest at 9% per annum, due and payable on March 31, 2015 (A)( C)	$	100,000	$	181,000
Secured Convertible Promissory Note - CLSS Holdings, LLC, dated March 12, 2011. Note accrues interest at 9% per annum, due and payable on March 31, 2015.		367,000		367,000
Secured Convertible Promissory Note - CLSS Holdings, LLC, dated September 30, 2011. Note accrues interest at 9% per annum, due and payable on March 31, 2015, (A)		220,000		220,000
Secured Convertible Promissory Note - CLSS Holdings, LLC, dated March 12, 2011. Note accrues interest at 7.5% per annum, due and payable on March 31, 2015.		334,787		334,787
Convertible Promissory Note-Officer, dated June 17, 2013. Note accrues interest at 9% per annum, due and payable on March 30, 2015, net of discount of $589,722 Refer to Note 7.
		113,617		-
Total		1,135,404		1,102,787
Other advances from CLSS Holdings, LLC, not evidenced by a promissory note (A)		1,013,631		276,640
		2,149,035		1,379,427
Less: Current portion		-		1,379,427
Notes Payable-related parties	$	2,149,035	$	-

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PENDING ACQUISITION

9 Months Ended

Sep. 30, 2013

Notes to Financial Statements

NOTE 10 - PENDING ACQUISITION

On July 10, 2013, the Company entered into an Equity Purchase Agreement (the “Equity Purchase Agreement ”) with Duke Medical Equipment LLC, a Texas limited liability company (“Duke Medical”) and Vann R. Duke, the sole equity holder of Duke (“Duke”). Duke Medical is a Durable Medical Equipment provider of home medical equipment servicing consumers throughout the Houston and Galveston, Texas area.

Pursuant to the Equity Agreement, at the closing Duke will transfer to the Company all the membership interest of Duke Medical for an aggregate purchase price of $7,000,000, subject to certain adjustments as summarized herein. The purchase price will be paid in a combination of cash, promissory notes and shares of the Company’s common stock. On the closing date the Company will make a total cash payment to the Seller of $2,000,000.

Additionally, at closing, the Company will issue two additional promissory notes (the “Duke Medical Notes A and B”) to Duke in the aggregate principal amount of $2,000,000. Duke Medical Note A in the principal amount of $1,000,000 will bear interest at 5% per annum, with monthly payments of principal and interest, and will mature eighteen (18) months after the closing date. Duke Medical Note B in the principal amount of $1,000,000 will bear interest at 5% per annum, with annual payments of interest and principal payable annually over two years from the date of closing provided; however, that the principal balance of Duke Medical Note B (and the respective annual payment) shall be reduced if: (i) EBITDA for the fiscal year ended December 31, 2013 is less than $1,500,000; and/or (ii) the EBITDA for the fiscal year ended December 31, 2014 is less than $1,500,000. At Duke’s option, Duke Medical Note B can be paid in shares of common stock of the Buyer on terms acceptable to Duke and the Company.

Total consideration also includes $3,000,000 in the form of shares, with the number of shares to be issued to be determined at closing by dividing $3,000,000 by the average of the closing bid price for the Company’s common stock as quoted on the OTC Bulletin Board, the OTC Pink Sheets or other similar quotation system, as applicable, for the five (5) trading days immediately preceding the closing (the “Duke Medical Original Issuance Price”).

The Equity Purchase Agreement also requires the Company to enter at closing into employment agreements with Duke and his spouse for certain management services and; also contains a covenant of Duke and his spouse not to compete with the Company for a two year period.

The Equity Purchase Agreement further provides that the Company will engage its independent registered public accounting firm to conduct an audit of Duke Medical’s financial statements for the years ended December 31, 2011 and 2012. If, for any reason the audit cannot be concluded, the Company will not be required to pay any amounts due under the Duke Medical Notes A or B and such notes will be cancelled. The Company, however, has no right to receive a refund of the cash portion of the purchase price as tendered or to effect a cancellation of the Shares.

In addition, if Duke Medical’s total asset value at December 31, 2012 as determined in accordance with the audited financial statements is less than the value set forth on the financial statements previously provided to the Company, the purchase price will be reduced by such amount on a dollar for dollar basis through a return of a number of Shares equal to such deficiency, and, if the deficiency is greater than the Duke Medical Original Issue Price, through a set off of the amount which will be due under Duke Medical Note A.

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ACQUISITION (Details) (USD $)	9 Months Ended
	Sep. 30, 2013
Notes to Financial Statements
Assets Acquired	$ 1,313,759
Liabilities assumed	(1,305,394)
Intangibles:
Value assigned to Non-compete agreement	200,000
Goodwill	2,891,635
Total purchase price	$ 3,100,000

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Notes to Financial Statements
Warranty reserve	$ 1,000	$ 1,000

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Document and Entity Information	9 Months Ended
	Sep. 30, 2013	Nov. 19, 2013
Document And Entity Information
Entity Registrant Name	Sanomedics International Holdings, Inc
Entity Central Index Key	0001501972
Document Type	10-Q
Document Period End Date	Sep. 30, 2013
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		33,118,592
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2013

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LIQUIDITY AND GOING CONCERN (Details Narrative) (USD $)	Sep. 30, 2013
Liquidity And Going Concern Details Narrative
Due to Officers or Stockholders	$ 694,000
Third party borrowings	$ 375,000