10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(AMENDMENT NO. 1)

(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, 2014

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, Inc.

(Formerly 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 x No ¨

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. 113,672,248 shares of common stock are issued and outstanding as of November 11, 2014.

EXPLANATORY NOTE

This Amendment No. 1 on Form 10-Q/A amends and restates the quarterly report on Form 10-Q of Sanomedics, Inc. (formerly known as Sanomedics international Holdings, Inc.), or the Company, for the quarter ended September 30, 2014, as originally filed with the Securities and Exchange Commission, or the SEC, on November 14, 2014 . This Form 10-Q/A is being filed to restate the Company's condensed consolidated financial statements in Item 1 and related disclosures (including Management's Discussion and Analysis of Financial Condition and Results of Operations in Item 2) for the period ended September 30, 2014. As more fully described in Note 1 to the condensed consolidated financial statements, in connection with the initial preparation of our annual report on Form 10-K for the year ended December 31, 2014, we determined that certain previously issued financial statements contained errors. At that time, we evaluated the impact of these errors under the SEC's authoritative guidance on materiality and determined that the impact of these errors, individually and in the aggregate, on prior period financial statements was material. Based on that determination, we presented revised financial information that reflected the impact of the correction of these errors on our prior period financial statements in the notes to the financial statements that were included in our original quarterly report on Form 10-Q for the period ended September 30, 2014. In April 2014, after discussions with our auditors regarding our assessment of the materiality of the identified errors, management and the Audit Committee of our Board of Directors concluded that we should restate our unaudited interim financial statements for the periods ended June 30, 2014 and September 30, 2014, to reflect the correction of the previously identified errors and the correction of immaterial errors identified in the second and third quarter of 2014. We are also amending our unaudited interim financial statements for the period ended September 30, 2014 to reference the restatement and to correct the immaterial errors identified in the third quarter of 2014. In addition, we restated our unaudited interim financial statements for the period ended June 30, 2014 in our quarterly report on Form 10- Q for the period ended June 30, 2014. See Note 1 to our condensed consolidated financial statements in Item 1 for further information. Although this Form 10-Q/A supersedes the original filing in its entirety, this Form 10-Q/A only amends and restates Items 1and 2 of Part I as a result of and to reflect the restatements. No other information in the original filing is amended hereby. While the foregoing items have been updated, this amended report does not reflect any other events occurring after the original filing. In addition, currently dated certifications from our Chief Executive Officer and Chief Financial Officer are attached to this Form 10-Q/A as Exhibits 31.1, 31.2, 32.1 and 32.2, respectively. Accordingly, this Amendment No. 1 should be read in conjunction with the Original Report and our other filings with the SEC.

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TABLE OF CONTENTS

		Page No.
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements.		6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.		18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.		22
Item 4.	Controls and Procedures.		22
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings.		23
Item 1A.	Risk Factors.		24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.		24
Item 3.	Defaults Upon Senior Securities.		25
Item 4.	Mine Safety Disclosures.		25
Item 5.	Other Information.		25
Item 6.	Exhibits.		26

3

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 suppliers,

· 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,

· 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.

4

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 and 10-K/A for the year ended December 31, 2013. 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 2014” refers to the three months ended September 30, 2014, the “third quarter of 2013” refers to the three months ended September 30, 2013, and “2013” refers to the year ended December 31, 2013 and “2014” refers to the year ending December 31, 2014..

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

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Sanomedics International Holdings, Inc.

Condensed Consolidated Balance Sheets

	September 30,			December 31,
	2014			2013
	(Unaudited)			(Audited)
	(Restated)
Assets
Current Assets
Cash	$	40,103		$	9,560
Accounts receivable		30,786			19,225
Inventories		9,184			39,060
Prepaid expenses		682,915			612
Total Current Assets		762,988			68,457
Fixed assets, net		23,368			12,562
Patents, net		13,081			16,816
Deposit		7,999			7,999
Total Assets	$	807,436		$	105,834
Liabilities and Stockholders’ Deficit
Current Liabilities
Accrued salaries payable	$	348,608		$	705,569
Accounts payable and other liabilities		430,356			264,848
Accrued interest payable		233,904			362,284
Accrual for contingencies on contract rescission		165,669			500,000
Common stock payable		22,500			-
Convertible notes payable and advances - related parties net of discount, current portion		435,161			-
Convertible notes payable, net of discount		2,145,021			300,762
Derivative liabilities		3,219,644			1,070,728
Due to related parties		18,151			152,588
Total Current Liabilities		7,019,014			3,356,779
Convertible notes payable  and advances- related parties net of discount, net of current portion		271,368			1,873,123
Total Liabilities		7,290,382			5,229,902
Commitments and Contingencies
Stockholders’ Deficit
Preferred stock, $0.001 par value: 1,000 shares authorized,
issued and outstanding as of September 30, 2014 and December 31, 2013, respectively		1			1
Common stock, $0.001 par value: 250,000,000 shares authorized,
23,859,810 and 4,545,119 issued and outstanding as of September 30, 2014 and December 31, 2013, respectively.		23,860			4,545
Additional paid in capital		12,024,498			8,118,299
Stock subscription receivable		(20,000	)		(20,000	)
Accumulated deficit		(18,511,305	)		(13,226,913	)
Total Stockholders’ Deficit		(6,482,946	)		(5,124,068	)
Total Liabilities and Stockholders' Deficit	$	807,436		$	105,834

 See accompanying notes to condensed consolidated financial statements 

6

Sanomedics International Holdings, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
	(Restated)						(Restated)
Revenues, net	$	83,181		$	90,671		$	281,002		$	211,750
Cost of goods sold		12,703			12,197			42,928			45,789
Gross profit		70,478			78,474			238,074			165,961
Operating expenses
General and administrative		809,641			299,679			1,941,924			753,487
Stock compensation		246,738			93,000			726,071			348,738
Research and development		-			24,250			43,703			77,750
Depreciation and amortization		3,144			1,899			5,697			5,697
Total operating expenses		1,059,523			418,828			2,717,395			1,185,672
Loss from operations		(989,045	)		(340,354	)		(2,479,321	)		(1,019,711	)
Other income (expense)
Amortization of debt discount on convertible notes		(579,962	)		(87,650	)		(1,415,839	)		(141,987	)
Derivative expense		(125,860	)		(38,131,952	)		(937,931	)		(40,537,459	)
Change in fair value of derivative liabilities		(9,350	)		39,874,301			9,154			40,496,638
Loss on acquisition rescission		-			(1,250,000	)		-			(1,250,000	)
Interest expense		(288,690	)		(4,588	)		(460,457	)		(57,703	)
Total other (expense) income		(1,003,862	)		400,111			(2,805,073	)		(1,490,511	)
Net (loss) income  before income taxes		(1,992,907	)		59,757			(5,284,394	)		(2,510,222	)
Income taxes		-			-			-			-
Net (loss) income	$	(1,992,907	)	$	59,757		$	(5,284,394	)	$	(2,510,222	)
Net (loss) income per share - basic and diluted	$	(0.24	)	$	0.01		$	(0.39	)	$	(1.23	)
Weighted average number of shares outstanding during the period - basic and diluted		8,486,686			4,081,174			13,528,789			2,045,442

See accompanying notes to condensed consolidated financial statements

7

Sanomedics International Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	For the Nine Months Ended
	September 30,
	2014			2013
	(Restated)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(5,284,394	)	$	(2,510,222	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization		5,697			5,697
Stock compensation		726,071			348,738
Amortization of debt discount on convertible notes		1,415,839			141,987
Derivative expense		937,931			40,537,459
Change in fair value of derivative liabilities		(9,154	)		(40,496,638	)
Loss on rescission		-			1,250,000
Refinancing costs for revolving line of credit		474,131			-
Changes in operating assets and liabilities
Accounts receivable		(11,561	)		46,138
Inventories		29,876			850
Prepaid expenses and deposits		157,697			(10,634	)
Accrued salaries payable		-			119,391
Accounts payable and other liabilities		270,168			(36,161	)
Accrued interest payable		136,620			71,263
Accrual for contingencies on contract rescission		(334,331	)		-
Due to related parties		(134,437	)		84,872
Net Cash Used In Operating Activities		(1,619,847	)		(447,260	)
CASH FLOWS USED FROM INVESTING ACTIVITIES
Advances made to Prime Time Medcal		-			(400,000	)
Purchase of fixed assets		(12,768	)		-
Net Cash Used In Investing Activities		(12,768	)		(400,000	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from convertible notes payable and advances - related party		838,240			539,490
Proceeds from common stock subscription		22,500			-
Proceeds from revolving line of credit		905,768
Proceeds from convertible notes payable		149,400			375,000
Payoffs of convertible notes payable		(252,750	)		-
Net Cash Provided By Financing Activities		1,663,158			914,490
Net change in cash		30,543			67,230
Cash - beginning of year		9,560			26,084
Cash - end of period	$	40,103		$	93,314
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Income taxes	$	-		$	-
Interest	$	93,418		$	-
NON-CASH TRANSACTIONS:
Common stock issued to consultants for services	$	29,755		$	-
Common stock issued for conversion of debt	$	771,404		$	102,985
Common stock issued for acquisition	$	-		$	750,000
Accrued salaries payable converted to convertible promissory note-officer	$	-		$	703,339
Accrued salaries payable converted to common stock	$	211,365		$	-
Borrowings under revolving line of credit to convertible notes	$	1,404,899		$	-

See accompanying notes to condensed consolidated financial statements

8

Sanomedics, Inc. 

Notes to Condensed Consolidated Financial Statements 

September 30, 2014 

(Unaudited)

NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION

Sanomedics, Inc. (referred to herein as “we”, “us”, “our” or the “Company”) is a medical technology products and services holding company which through its subsidiaries, designs, develops, markets and distributes non-invasive infrared thermometers principally for healthcare providers.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulations S-X of the of the U.S. Securities and Exchange Commission. Accordingly, they do not include all the information and notes required by GAAP for annual financial statements.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments considered necessary to present fairly the financial position of the Company as of September 30, 2014 and December 31, 2013, and the condensed consolidated results of operations and cash flows for the nine months ended September 30, 2014 and 2013. Due to seasonality, potential changes in economic conditions, interest rate fluctuations and other factors, the results of operations for such interim periods are not necessarily indicative of the results 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), Anovent Inc. (since December 2011) and Biscayne Medical LLC (since July 2014). 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, as amended, 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, 2013. The interim results for the three and nine months ended September 30, 2014 are not necessarily indicative of the results for the full fiscal year.

NOTE 2 – RESTATEMENT OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As previously disclosed in our Form 10-Q for the period ended September 30, 2014, in connection with the initial preparation of our annual report on Form 10-K for the year ended December 31, 2014, we determined that certain previously issued financial statements contained errors. At that time, we evaluated the impact of these errors under the SEC's authoritative guidance on materiality and determined that the impact of these errors, individually and in the aggregate, on prior period financial statements was material. The following is a description of the areas in which these errors were identified and for which we made correcting adjustments to our condensed consolidated financial statements. There was no impact to our actual cash balances as a result of these errors, and these errors do not change net cash flows from financing and investing activities.

(1) Stock Compensation - We identified and corrected various errors in (1) the valuation of common stock shares issued to consultants for services rendered at fair value and, (2) the valuation of common stock shares issued to a related party in settlement of accrued salaries. The correction of these adjustments resulted in an increase in stock compensation expenses, as well as the adjustments to net loss and net loss per share.

(2) Derivative Liabilities- We identified and corrected various errors in the recognition of conversion derivative liabilities in connection with certain related party convertible notes. The correction of these adjustments resulted in an increase of derivative liabilities and increases in non-cash accounts of amortization of interest expense and changes in fair value associated with derivatives.

9

Sanomedics, Inc. 

Notes to Condensed Consolidated Financial Statements 

September 30, 2014

(Unaudited)

NOTE 2 – RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS- (continued)

The following tables present the impact of the restatement on the Company’s previously issued condensed consolidated financial statements.

Condensed Consolidated Balance Sheets:

	September 30, 2014						September 30, 2014 As Restated
	As previously Reported			Adjustments
Current Assets	$	762,988			-			762,988
Fixed Assets		23,368			-			23,368
Other Assets		21,080			-			21,080
Total Assets	$	807,436			-		$	807,436
Current Liabilities	$	6,416,394		$	602,620		$	7,019,014
Total liabilities		7,171,772			118,610			7,290,382
Total Stockholders’ Deficit	$	(6,364,336	)	$	(118,610	)	$	(6,482,946	)

Condensed Consolidated Statements of Operations:

	Three months ended September 30, 2014
	As previously Reported			Adjustments			As Restated
Revenues, net	$	83,181		$	-		$	83,181
Gross profit		70,478			-			70,478
Total Operating expenses		842,540			216,983			1,059,523
Loss from operations		(772,062	)		(216,983	)		(989,045	)
Total other income		(889,329	)		(114,533	)		(1,003,862	)
Net Income (Loss)	$	(1,661,391	)	$	(331,516	)	$	(1,992,907	)
Net loss per share-basic and diluted	$	(0.20	)	$	(0.04	)	$	(0.24	)

	Nine months ended September 30, 2014
	As previously
	Reported			Adjustments			As Restated
Revenues, net	$	281,002		$	-		$	281,002
Gross profit		238,074			-			238,074
Total Operating expenses		2,319,904			397,491			2,717,395
Loss from operations		(2,081,830	)		(397,491	)		(2,479,321	)
Total other income (expense)		(2,606,384	)		(198,689	)		(2,805,073	)
Net Loss		(4,688,214	)	$	(596,180	)	$	(5,284,394	)
Net loss per share-basic and diluted	$	(0.35	)	$	(0.04	)	$	(0.39	)

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Sanomedics, Inc. 

Notes to Condensed Consolidated Financial Statements  

September 30, 2014

(Unaudited)

NOTE 3 – LIQUIDITY AND GOING CONCERN-(restated)

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 which have caused an accumulated deficit of $18,511,305 and a working capital deficit of $6,256,026 as of September 30, 2014. 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 third parties including CLSS Holdings LLC (“CLSS”), a company owned by a former officer and a shareholder of the Company. Through September 30, 2014, the Company obtained its liquidity principally from approximately $906,000 of borrowing under a Revolving Line of Credit secured on January 9, 2014 from TCA Global Credit Master Fund (“TCA”), which was assumed by Redwood Management LLC (“Redwood”) on September 23, 2014, and $838,000 of cash advances from CLSS. Management’s plan is to seek equity and/or debt financing. 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 its ability to successfully secure other sources of financing 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 – REVOLVING LINE OF CREDIT AND REFINANCING

TCA Credit Agreement:

On January 9, 2014, we entered into a Senior Secured Revolving Credit Facility Agreement (the "Credit Agreement") with TCA. Pursuant to the Credit Agreement, TCA extended to us a $5 million revolving credit facility. An initial credit line of $2,300,000 was provided by TCA at closing, with $1,000,000 funded on the date of closing and the remaining $1,300,000 representing funding for pending acquisitions.

The amounts borrowed pursuant to the Credit Agreement are evidenced by a Revolving Note (the "Note") from us and certain of our subsidiaries in the principal amount of $1,000,000 which bore interest at the rate of 11% per annum and matured July 9, 2014. The Note was convertible at the option of TCA into shares of our common stock at a variable conversion price equal to 85% of the lowest daily trading volume weighted average price of our common stock during the five business days preceding the conversion date, however to date the holder has not opted to convert the Note into Company stock. At closing we also paid TCA an equity advisory fee of $160,000 which was paid through the issuance of 134,454 shares of our common stock.

The Credit Agreement contained negative and financial covenants. The Company was not in compliance with certain of these covenants and on May 12, 2014, TCA provided the Company with a notice of default of the Credit Agreement. On May 21, 2014, the Company, along with several other entities, filed a Complaint in the Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida, against TCA for breach of contract and unjust enrichment. On July 1, 2014, TCA filed a separate action against the Company, two officers of the Company, and its wholly owned subsidiaries, claiming that the Company has defaulted on the note, and seeking at least $901,142 in damages, plus pre-judgment interest, attorney’s fees, costs, foreclosure on associated collateral, and the proceeds from any sale of that collateral.

11

Sanomedics, Inc. 

Notes to Condensed Consolidated Financial Statements  

September 30, 2014 

(Unaudited)

NOTE 4 – REVOLVING LINE OF CREDIT AND REFINANCING- (continued)

Redwood Refinancing:

On September 23, 2014, we executed a series of agreements with TCA and Redwood including a certain amendment agreement with Redwood, modifying the Credit Agreement previously entered into with TCA on January 9, 2014. Redwood entered into a Debt Purchase Agreement with TCA related to the TCA obligations. Pursuant to those agreements, Redwood assumed the TCA obligations, including conversion rights of TCA transferred to Redwood. In connection therewith, the Company executed two replacement revolving notes, one for $117,075 and a second for $1,287,824 (the “Notes”). The Notes are convertible at the option of Redwood into shares of our common stock. Refer to Note 5.

The foregoing refinancing lifted the pending default status of the TCA obligations and also placed their current litigation proceedings against the Company and certain of its officers in abeyance until the TCA obligations were entirely paid in full.

On October 20, 2014, Redwood accelerated the complete payoff of the Note to TCA and, accordingly, the Company was deemed to have satisfied all outstanding debt obligations owed to TCA and all litigation between the Company, its officers and TCA was dismissed.

NOTE 5 – CONVERTIBLE NOTES PAYABLE AND ADVANCES – RELATED PARTIES, NET OF DISCOUNTS-(restated)

Convertible notes payable and advances to related parties consist of the following:

	September 30, 2014		December 31, 2013
Secured Convertible Promissory Note - CLSS Holdings, LLC, dated September 30, 2010. Note accrued interest at 9% per annum. (D)	$	-	$	50,000
Secured Convertible Promissory Note - CLSS Holdings, LLC, dated March 12, 2011. Note accrued interest at 9% per annum. (D)		-		66,750
Secured Convertible Promissory Note - CLSS Holdings, LLC, dated September 30, 2011. Note accrued interest at 9% per annum. (D)		-		95,000
Secured Convertible Promissory Note - CLSS Holdings, LLC, dated March 12, 2011. Note accrued interest at 8% per annum.		-		334,787
Five (5) Secured Convertible Promissory Notes-CLSS Holdings LLC, dated February 21, 2014. Notes accrue interest at 8% per annum, due and payable on March 1, 2016 (C)(D)		132,476		-
Secured Convertible Promissory Note-CLSS Holdings LLC, dated May 8, 2014. Notes accrue interest at 8% per annum, due and payable on May 6, 2016 (C)(D)		95,000		-
Two (2) Secured Convertible Promissory Notes-CLSS Holdings LLC, dated June 30, 2014. Note accrues interest at 8% per annum, due and payable on June 1, 2016 – net of discount of $484,010 (C)(D)		43,892		-
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 $210,678(B)		192,661		200,954
Total Notes		464,029		747,491
Other advances from CLSS Holdings, LLC, not evidenced by a Promissory Note (A)		242,500		1,125,632
		706,529		1,873,123
Less: Current portion		435,161		-
	$	271,368	$	1,873,123

12

Sanomedics, Inc.  

Notes to Condensed Consolidated Financial Statements  

September 30, 2014 

(Unaudited)

NOTE 5 – CONVERTIBLE NOTES PAYABLE AND ADVANCES –RELATED PARTIES, NET OF DISCOUNTS-(restated) - (continued)

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 ranging from $0.25 to $0.50 per share.

(A) On February 21, 2014 the Company memorialized advances from CLSS into various convertible promissory notes, accruing interest at 9% and matures March 1, 2016.

(B) This note is convertible at a conversion price equal to the discount in the average of the lowest three closing bid prices of the common stock during the 10 day trading days prior to conversion. The embedded conversion features resulted in a derivative liability which has been measured using the Monte Carlo valuation method at September 30, 2014 and December 31, 2013. On July 25, 2014, the Company issued 2,904,163 shares of restricted common stock in connection with the partial redemption of convertible debt.

(C) Through the nine (9) months ended September 30, 2014, convertible notes totaling $667,609 were converted into 5,330,500 shares of common stock at conversion prices ranging from $0.08 to $0.21 per share.

(D) Through the nine (9) months ended September 30, 2014, $709,750 was assigned by the holder to eight (8) third parties, which subsequently converted to 3,347,332 shares of common stock at conversion prices ranging from $0.02 to $0.36 per share.

NOTE 6 – CONVERTIBLE NOTES PAYABLE

Third party convertible notes payable consists of the following:

	September 30,			December 31,
	2014			2013
Convertible promissory note with interest at 9% per annum, convertible into common shares at fixed price of $0.50 per share. Matures on August 24, 2014, net of unamortized discount of $9,503 and $37,500, respectively (E).	$	65,497		$	37,500
Seven (7) convertible promissory notes with interest ranging from 6% to 12% per annum, convertible into common shares at prices ranging from 10% to 50% discount to defined market prices. Maturity ranges through October 25, 2014, net of unamortized discounts of $-0- and $229,907, respectively (A) (B) (E).		36,500			151,519
Two (2) convertible promissory notes with interest at 12% per annum (zero interest first 90 days) plus a 10% original discount interest, convertible into common shares at a conversion price per share of 30% discount to a defined market price. Matures through December 9, 2014, net of unamortized discount of $4,361 and $97,587 respectively (A)(C).		53,237			111,743
Seven (7) convertible promissory notes with interest ranging from 8% to 12% per annum, convertible into common shares at prices ranging from 25% to 70% discount to defined market prices. Maturity ranges through March 31, 2015, net of unamortized discounts of $204,693.(A)(B)(C)		117,308			-
Four (4) convertible promissory notes with interest ranging from 8% to 12% per annum, convertible into common shares at a conversion prices per share of 50% discount to a defined market prices. Maturity ranges through September 11, 2015, net of unamortized discounts of $260,312.(A)(B)(C)		101,519			-
Two (2) convertible promissory notes with interest at 8% per annum, convertible into common shares at a conversion price per share of 15% discount to a defined market price. Matures through August 1, 2015, net of unamortized discount of $124,544 and $ -0-, respectively. (A)		715,456			-
Convertible promissory note with interest at 12% per annum, convertible into common shares at a conversion price per share of 15% discount to a defined market price. Matures on September 21, 2015, net of unamortized discount of $76,722 and $ -0-, respectively.(A)(D) See Note 4		15,353			-
Convertible promissory note with interest at 12% per annum, convertible into common shares at a conversion price per share of 15% discount to a defined market price. Matures on September 21, 2015, net of unamortized discount of $247,672 and $ -0-, respectively.(A) See Note 4		1,040,151			-
		2,145,021			300,762
Less current portion		(2,145,021	)		(300,762	)
Long-term portion of convertible debt	$	-		$	-

(A) These convertible promissory notes are generally convertible at a conversion price equal to the discount to the average of the lowest three closing bid prices of the common stock during the 10 trading days prior to conversion. The embedded conversion features resulted in a derivative liability which has been measured using the Monte Carlo valuation method at September 30, 2014 and December 31, 2013.

(B) Through the period ended September 30, 2014, six (6) convertible notes totaling $375,057 were converted into 3,570,790 shares of common stock.

(C) Through the period ended September 30, 2014, three (3) convertible notes totaling $252,750 were paid.

(D) On September 29, 2014, $25,000 of debt was converted into 896,539 shares of common stock.

(E) Pending conversion of debt to common stock at request of debt holder.

In accordance with ASC 470-20 Debt with Conversion and Other Options, at time of issuance the Company allocated $2,307,152 and $828,906 of the derivative liability as discounts against the convertible notes. The discounts are being amortized to interest expense over the term of the notes using the effective interest method. The Company recorded $1,415,839 and $54,337 of interest expense pursuant to the amortization of the note discounts for the nine months ended September 30, 2014 and 2013, respectively.

13

Sanomedics, Inc. 

Notes to Condensed Consolidated Financial Statements (continued) 

September 30, 2014

(Unaudited)

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 and requires the recognition of derivative liabilities.

For the derivative instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then revalued at each reporting date The Company estimates the fair value of the embedded derivatives using a Monte Carlo simulation valuation model that combines expected cash outflows with market-based assumptions regarding risk-adjusted yields, stock price volatility, probability of a change of control and the trading information of our common stock into which the notes are convertible, as appropriate to value the derivative instruments at inception and subsequent valuation dates and the value is reassessed at the end of each reporting period, in accordance with FASB ASC Topic 815-15.

The aggregate fair value of derivative liabilities as of September 30, 2014 and December 31, 2013 amounted to $3,219,644 and $1,070,728, respectively. The net increase of $2,148,916 in the fair value of the derivative liabilities from 2013 has been reflected as unamortized discount of $1,622,494 reflected in the convertible notes payable to officer and third parties, the amortization of debt discount of $1,415,839 and the change in fair value of the derivatives between the respective periods is included in other income (expenses) amounting to $9,154.

NOTE 8 – COMMITMENTS AND CONTINGENCIES

JMJ Litigation

On May 29, 2014, Justin Keener d/b/a JMJ Financial (“JMJ”) filed a Complaint against the Company in the Circuit Court of the 11th Judicial Circuit in and for Miami-Dade County, Florida. In the Complaint, JMJ alleges that the Company breached a convertible promissory note dated June 17, 2013, pursuant to which JMJ provided $150,000 to the Company on or about June 19, 2013, and an additional $50,000 to the Company on or about December 12, 2013. JMJ alleges that on February 4, 2014, it agreed to accept $280,000 in satisfaction of the note. JMJ alleges that the Company paid $186,667 to JMJ on February 19, 2014. On July 21, 2014, the Company filed its Answer, Affirmative Defenses, and Counterclaim against JMJ. As affirmative defenses, the Company asserts, among others, that JMJ is not entitled to the relief requested because the promissory note at issue charges usurious interest rates in violation of Florida’s usury laws, and because JMJ’s claims for lost profits are speculative. The Company also asserts counter-claims for Declaratory Relief (seeking an order that the promissory note is usurious under Florida law and the entire debt and conversion rights thus are unenforceable, and all moneys paid on the Note by the Company to JMJ must be returned to the Company) and for usury (seeking damages for all moneys paid pursuant to the promissory note, reasonable attorneys’ fees, and costs). On August 29, 2014, JMJ filed a Motion to Dismiss the Company’s Counterclaim, arguing that the transactions at issue are not subject to Florida’s usury laws, and further arguing that the Company cannot maintain a claim for usury because no interest was paid on the note. The Company intends to defend against JMJ’s claims, and pursue its claims, vigorously.

14

Sanomedics, Inc. 

Notes to Condensed Consolidated Financial Statements  

September 30, 2014 

(Unaudited)

NOTE 8 – COMMITMENTS AND CONTINGENCIES-(continued)

Prime Time Medical Litigation

After assuming control of the acquisition of PTM in August 2013, the Company discovered that the Seller failed to disclose that there were on-going audits with respect to PTM’s Medicare and Medicaid billings for periods prior to the consummation of the transaction. These audits have escalated and, as a result, PTM can no longer invoice

Medicare and Medicaid for any products or services and be paid for such products and services until the outcome of the audits which could last at least two years. Also, as a result of other Medicare and Medicaid audits for periods prior to the consummation of the transaction, Medicare and Medicaid are demanding payments for products that PTM was paid prior to the closing of the transaction that were improper. It is estimated that PTM may owe Medicare and Medicaid up to $500,000 in improper payments and at least another $500,000 in accounts receivable that will not be paid to PTM pending the outcome of the audits. On March 13, 2014, after discovering numerous material differences between financial statements reproduced by the Company and the financial statements provided by the Seller in connection with the Stock Purchase Agreement, coupled with the foregoing events and Medicare and Medicaid’s constraint on PTM’s business and payment stream, the Board of Directors of the Company determined that the business could no longer survive and thus opted to pursue a rescission of the completed transaction with PTM.

As a result of discoveries of fraud and misrepresentations in the acquisition of PTM described above, on March 18, 2014, the Company filed a lawsuit against the Seller in Miami-Dade County, Florida Case No.14007055CA01, alleging breach of contract, fraud in the inducement, fraudulent misrepresentation, unjust enrichment, conversion, breach of fiduciary duty and damages. The Company is seeking judgment against the Seller, restitution, rescission of the Purchase Agreement and Employment Agreement and return of all moneys paid to the Seller.

On March 19, 2014 the Company was served with a lawsuit filed by the Seller against the Company and Anovent, Inc. in Hillsborough County, Florida Case No. 14-CA-2520 DIV K, alleging the following: breach of the Employment Agreement entered into with the Company; improper notice of termination; breach of the Short Term Note for $850,000; breach of Promissory Notes A and B for $500,000 each, and further includes an action to foreclose a security interest in personal property and intangibles as a result of the alleged defaults of the Notes and rights under the Security Agreement. The litigation filed by the Seller was transferred to Miami Dade County and subsequently, on October 14, 2014, transferred by administrative judge to the same division as the Company’s litigation against the Seller. The Company has filed a Motion to consolidate the two lawsuits.

The Company believes there is no merit to the Seller’ lawsuit and intends to defend itself aggressively.

Exergen Litigation

On May 21, 2013, Exergen Corporation commenced legal action in the United States District Court for the District of Massachusetts against the Company, alleging infringement of certain intellectual property through the Company’s sale of the Caregiver Thermometer, as well as the Company's prior sales of its talking non-contact thermometer. Exergen is seeking various types of relief, including damages and an injunction against further alleged infringement of the intellectual property. On September 3, 2013, the Company filed its answer to Exergens’ complaint and asserted counterclaims and affirmative defenses for non-infringement and invalidity of the asserted patents. The Company believes the alleged claim of infringement is without merit and will vigorously defend its rights to market and sell the thermometers.

15

Sanomedics, Inc. 

Notes to Condensed Consolidated Financial Statements 

September 30, 2014 

(Unaudited)

NOTE 8 – COMMITMENTS AND CONTINGENCIES-(continued)

Other 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.

NOTE 9 – COMMON STOCK

On January 16, 2014, a former officer and shareholder assigned 650 shares of preferred stock from his holdings of 750 shares allocating 452 shares to two (2) members of management, 100 shares to its Chairman of the Board and 98 shares to a family member.

On January 28, 2014, in exchange for a reduction of debt of the Company owed to CLSS for a share price of $0.10 per share, the Company issued 3,142,270 shares of restricted common stock to various existing individual shareholders designated by the owner of CLSS.

On February 21, 2014, the Company converted a Convertible Note due to CLSS for $282,740 into 1,323,750 shares restricted at a price per share of $0.2136.

On January 21, 2014, and, in connection with a Securities Purchase Agreement and convertible promissory note in the principal amount of $50,000, the Company converted the note into a total of 150,000 shares of the Company’s common stock at a conversion price of $0.03 per share.

On February 28, 2014, the Company issued 107,656 shares of common stock to two (2) parties as commissions on the TCA lending financing.

During January 21, 2014 to March 28, 2014, the Company issued a total of 868,921 shares of restricted common stock to four (4) companies in connection with the conversion of convertible debt held.

On March 28, 2014, the Company issued 134,454 shares of common stock as payment of advisory fee to TCA in connection with the TCA lending facility.

From April 1, 2014 to June 30, 2014, the Company issued a total of 869,333 shares of common stock to six (6) companies in connection with the conversion of convertible debt held.

On April 28, 2014 and May 16, 2014, the Company converted a total of $362,353 portions of a Convertible Note due CLSS totaling $539,491 into 1,152,394 shares restricted at a prices ranging from $0.25 to $0.45.

During April and May 2014, pursuant to portions of Convertible Notes due to CLSS, the holder assigned to three (3) third parties the principal amounts totaling $140,000. These three notes were converted on April 24, 2014, May 5, 2014 and May 21, 2014 into a total of 400,000 shares.

On June 9, 2014 the Company issued 182,500 shares of restricted common stock at a price of $0.41 per share to a third party as payment for services related to investor relations.

16

Sanomedics, Inc. 

Notes to Condensed Consolidated Financial Statements 

September 30, 2014 

(Unaudited)

NOTE 9 – COMMON STOCK- (continued)

On June 11, 2014, the Company issued 584,724 shares of restricted common stock to a former officer and a shareholder at a price per share of $0.25 in settlement of $145,596 of unpaid and accrued salaries.

From July 1, 2014 through September 30, 2014, the Company issued a total of 2,430,722 shares of restricted common stock to a former officer and shareholder at prices per share ranging from $0.04 to $0.25 in settlement of $211,365 of unpaid and accrued salaries.

On July 25, 2014, the Company issued 2,904,163 shares of restricted common stock to an officer of the Company in connection with the partial conversion of convertible stock held.

On August 29, 2014 and September 17, 2014, the Company issued a total of 400,000 shares of restricted common stock to two (2) consultants as payment for financial and investor relations services.

On August 29, 2014, the Company converted a portion of Convertible Note due to CLSS for $313,000 into 864,480 shares restricted at a price per share of $0.082.

From July 1, 2014 through September 30, 2014, the Company issued a total of 4,349,324 shares to six (6) parties in connection with the conversion of convertible debt held.

NOTE 10 – SUBSEQUENT EVENTS

Third Party Debt Financing:

(a) On October 24, 2014, we entered into two (2) convertible debentures (the “Debentures”) with Redwood and REDWOOD FUND II, LLC in the principal amounts of $189,375 and $63,125, respectively. On October 27, 2014, Redwood funded the Company an initial tranche of $125,000 pursuant to the terms thereof, with the remaining $127,500 balance to be funded in one week after execution. The principal sum of the Debentures carries a 1% original issue discount from the stated principal amounts. The maturity date of the Debentures plus interest at 13% per annum is April 24, 2015 or such earlier date as the Debentures are required or permitted to be repaid as provided in the Debentures agreement.

All principal and accrued interest on the Debentures is convertible into shares of the Company’s common stock at the election of the holder thereof at any time at a conversion price equal to 65% of the lowest traded volume weighted average price (“VWAP”) during the 10 trading days prior to conversion.

(b) On October 24, 2014, a convertible note originally for $213,612 held by a third party, was purchased and assigned to a new third party lender for $254,916. The convertible promissory note carries interest at 8% per annum, convertible into common shares at a conversion price equal to 62.5% of the lowest traded VWAP price during the 10 trading days prior to conversion and matures on May 23, 2015.

Share Issuances:

During October 1, 2014 and November 3, 2014, the Company issued a total of 31,399,803 shares to five (5) parties in connection with the conversion of $287,951 in convertible debt held.

On October 6, 2014 and November 10, 2014 the Company issued a total of 3,613,425 shares of restricted common stock to a former officer and shareholder at a prices ranging from $0.02 to $0.04 in settlement of $96,164 of unpaid and accrued salaries.

During October, 2014 through November 10, 2014, the Company issued 18,612,912 shares to a Company owned by a former officer and shareholder in connection with the conversion of $193,782 in convertible debt held.

From October 1, 2014 to November 10, 2014 the Company issued Redwood a total of 34,222,678 shares in connection with the conversion of $451,982 in convertible debt held.

Management has evaluated the subsequent events through November 14, 2014, the date at which the condensed consolidated financial statements were available for issue. 

17

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 three months and nine months ended September 30, 2014 and 2013 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, 2013, as amended, 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, healthcare staffing, and other related and innovative medical products, services and technology businesses.

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 2013 and through this 2014 quarter 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 innovative medical device companies and/or healthcare related service operating businesses that can be rolled into our operations. We will also seek acquisitions and development opportunities related to other aspects of the sleep apnea space.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosure of contingent assets and liabilities. We believe the critical accounting policies in Note 1 to the audited consolidated financial statements for the year ended December 31, 2013 appearing in our Annual Report on Form 10-K, as amended, provide information the affect of our more significant judgments and estimates used in the preparation of our consolidated financial statements. Actual results may differ from these estimates under different assumptions and conditions.

18

RESULTS OF OPERATIONS

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,
	Restated						Restated
	2014			2013			2014			2013
	Unaudited			Unaudited			Unaudited			Unaudited
Revenues, net		100	%		100	%		100	%		100	%
Costs and Expenses as a percentage of net revenues:
Cost of goods sold		15	%		13	%		15	%		22	%
Gross margin		85	%		87	%		85	%		78	%
General and administrative		973	%		331	%		691	%		356	%
Stock compensation		297	%		103	%		258	%		165	%
Research and development		0	%		27	%		16	%		37	%
Depreciation and amortization		4	%		2	%		2	%		3	%
Loss from operations		-1189	%		-375	%		-882	%		-482	%
Other income(expense):
Amortization of debt discount on convertible notes		-697	%		-97	%		-504	%		-67	%
Derivative expense		-151	%		-42,055	%		-334	%		-19,144	%
Change in fair value of derivative liabilities		-11	%		43,977	%		3	%		19,125	%
Loss on acquisition rescission		0	%		-1,379			0	%		-590	%
Interest expense		-347	%		-5	%		-164	%		-27	%
Net loss		-2,396	%		66	%		-1,668	%		-1,181	%

Three Months Ended September 30, 2014 compared to the Three Months Ended September 30, 2013

Revenues, net: Our net revenues decreased modestly during the third quarter of 2014 from the comparable periods in 2013, as we continue launch of our new professional model the “Caregiver” compared to the sales of our previous first generation products.

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 increased modestly in the third quarter of 2014 as compared to the first quarter of 2013 due to the stabilization of pricing of the newer professional models during the 2014 period as compared to a mix of product models in 2013 bearing a slightly lower cost. We anticipate our costs of goods sold as a percentage of revenues, net will remain the same throughout the balance of 2014, although there are no assurances that it will.

Operating Expenses: Operating expenses consist of general and administrative expenses, stock compensation, research and development and depreciation and amortization. For the third quarter of 2014, operating expenses increased primarily as a result of increases in debt issue cost associated with new borrowings, legal and professional fees and commission expense. Overall, our operating expenses increased 153% in the third quarter of 2014 from the third quarter of 2013. These changes are reflective primarily of increases in general and administrative expenses, offset by decreases in research and development expenses and stock compensation in the 2014 period.

19

Other income (expense): Other expense increased in the 2014 period from the comparable 2013 period. The increase is primarily attributable to a net increase in derivative expenses associated with conversion prices of convertible note, partially 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. Additionally the increase in other expenses was attributed to the amortization of discount on the convertible debt and interest expense from the new borrowings.

Nine Months Ended September 30, 2014 compared to the Nine Months Ended September 30, 2013

Revenues, net: Our net revenues increased substantially for the nine months ended September 30, 2014 from the comparable periods in 2013, as a result of the continued selling and marketing of our new professional model the “Caregiver” compared to the sales of our previous first generation products.

Cost of goods sold: Cost of goods sold as a percentage of revenues, net decreased in the nine months ended September 30, 2014 from the comparable period in 2013 due to the favorable pricing of the newer professional models. We anticipate our costs of goods sold as a percentage of revenues, net will remain the same throughout the balance of 2014, although there are no assurances that it will.

Operating Expenses: The approximate $1.5 million increase in operating expenses for the nine months ended September 30, 2014 from the comparable 2013 period was primarily a result of increases in debt issue cost associated with new borrowings, legal and professional fees and commission expense. Overall, our operating expenses increased 129% for the nine months ended September 30, 2014 as compared to 2013. These changes reflect increases in general and administrative expenses and stock based compensation, offset slightly by decreases in research and development expenses in the 2014 period.

Other income (expense): Other income (expense) increased approximately $1.3 million in the 2014 period from the comparable 2013 period. The increase is primarily attributable to an increase in the amortization of debt discounts from increased borrowings and net increase in 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. Additionally the decrease in other income (expense) was attributed to the increase in interest expense from the new borrowings.

Financial Condition

September 30, 2014 (unaudited) compared to December 31, 2013

Assets: At September 30, 2014, as compared to December 31, 2013, our current assets increased by approximately $695,000 and our total assets increased by approximately $702,000. The increase in current assets is primarily attributable to increases in prepaid expenses, primarily retainers for legal services in connection with the Exergen litigation.

Liabilities:At September 30, 2014, our current liabilities increased by approximately $3,662,000 from December 31, 2013. This increase is attributable primarily due to the increased borrowing of a $1,000,000 Revolving Line of Credit from TCA and $1,844,000 in convertible promissory notes from other third party lenders, which accordingly, also resulted in an increase of approximately $1,546,000 in non-cash derivative liabilities. Our long-term liabilities decreased primarily as a result of the lesser borrowing demand from related parties and increased conversions of debt into equity.

20

Liquidity and Capital Resources

At September 30, 2014 our cash on hand was approximately $40,000. At September 30, 2014, we had a working capital deficit of $6,256,026 as compared to a working capital deficit of $3,288,322 at December 31, 2013.

Since our inception in 2009, we obtained our liquidity principally from approximately $4.2 million principal amount of cash advances from CLSS, a company owned by a former officer and one of our shareholders. The Company has executed promissory notes totaling approximately $755,000 as of September 30, 2014 with

CLSS. Each note (a) bears annual interest ranging from 8.0% to 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. Additionally since 2013 we have also had to rely upon third party lending as an additional source of capital. As of September 30, 2014, the total of the third party debt borrowings, net of discount, was $2,145,021 as compared to $300,762 as of December 31, 2013. The increase primarily consisted of $1,055,504 due to Redwood. During October 2014, the third party debt borrowings have been reduced by approximately $1,000,000 through common stock share conversions.

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, 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 $2,900,000 in secured obligations between Redwood and the related parties which mature in July 2015 and through March 2016, respectively, which are secured by substantially all of our assets, and we do not have sufficient funds to pay those obligations. In October 31, 2014, the debt to Redwood and the related parties was reduced by approximately $1,000,000 from debt conversions to equity.

At September 30, 2014, we had approximately $40,000 in cash on hand; and unless and until we increase our sales, receive additional financing from third parties or capital from stock offerings, which we may never achieve, in the absence of on-going cash infusions, 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, 2014

	Nine Months Ended September 30,
	2014			2013
					(Restated)
Net cash used in operating activities	$	(1,619,847	)	$	(447,260	)
Net cash used in investing activities	$	( 12,768	)	$	(400,000	)
Net cash provided by financing activities	$	1,663,158		$	914,490

21

Operating Activities

Our total cash used by operating activities increased 262% for the nine months ended September 30, 2014, compared to the nine months ended September 30, 2013. The increase is primarily due to increases in non-cash impact primarily associated with expenses associated with embedded liabilities on convertible debt and prepaid expenses, offset by the decreases in accrued salaries and other liabilities.

Investing Activities

During the 2014 period we used cash for additional tooling of molds for accessories to our thermometer. In the 2013 period we also invested cash in the purchase of a new acquisition in which the purchase contract was rescinded.

Financing Activities

Our total cash provided for financing activities increased by 82% for the nine months ended September 30, 2014 compared to the nine months ended September 30, 2013. The increase is primarily due to the additional Revolving Line of Credit borrowing from TCA and increases in net proceeds of notes issued to related parties and third parties.

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, 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.

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. 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.

22

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

The Company is subject to the various legal proceedings and claims discussed below as well as certain other claims that have not been resolved and that have arisen in the ordinary course of business. In the opinion of management, there was not at least a reasonable possibility that the Company may have incurred a material loss, or a material loss in excess of a recorded accrual, with respect to loss contingencies. However, the outcome of legal proceedings and claims brought against the Company is subject to significant uncertainty. Therefore, although management considers the likelihood of such an outcome to be remote, if one or more of these legal matters were resolved against the Company in a reporting period for amounts in excess of management’s expectations, the Company’s consolidated financial statements for the reporting period could be materially adversely affected.

Exergen Corporation

On May 21, 2013, Exergen Corporation commenced legal action in the United States District Court for the District of Massachusetts against the Company, alleging infringement of certain intellectual property through the Company’s sale of the Caregiver Thermometer, as well as the Company's prior sales of its talking non-contact thermometer. Exergen is seeking various types of relief, including damages and an injunction against further alleged infringement of the intellectual property. On September 3, 2013, the Company filed its answer to Exergens’ complaint and asserted counterclaims and affirmative defenses for non-infringement and invalidity of the asserted patents. The Company believes the alleged claim of infringement is without merit and will vigorously defend its rights to market and sell the thermometers.

Prime Time Medical and Mark Miklos

After assuming control of the acquisition of PTM in August 2013, the Company discovered that the Seller of PTM (“Miklos”) failed to disclose that there were on-going audits with respect to PTM’s Medicare and Medicaid billings for periods prior to the consummation of the transaction. These audits had escalated and, as a result, PTM could no longer invoice Medicare and Medicaid for any products or services and be paid for such products and services until the outcome of the audits which could last at least two years. Also, as a result of other Medicare and Medicaid audits for periods prior to the consummation of the transaction, Medicare and Medicaid are demanding reimbursements for products that PTM was paid prior to the closing of the transaction that were improper. It is estimated that PTM may owe Medicare and Medicaid up to $500,000 in improper payments and at least another $500,000 in accounts receivable that will not be paid to PTM pending the outcome of the audits. On March 13, 2014, after discovering numerous material differences between financial statements reproduced by the Company and the financial statements provided by Miklos in connection with the Stock Purchase Agreement, coupled with the foregoing events and Medicare and Medicaid’s constraint on PTM’s business and payment stream, the Board of Directors of the Company decided that the business could no longer survive and thus opted to pursue a rescission of the completed transaction with PTM.

As a result of discoveries of fraud and misrepresentations in the acquisition of PTM described above, on March 18, 2014, the Company filed a lawsuit against Mark R. Miklos in Miami-Dade County, Florida Case No.14007055CA01, alleging breach of contract, fraud in the inducement, fraudulent misrepresentation, unjust enrichment, conversion, breach of fiduciary duty and damages. The company is seeking judgment against the Seller, restitution, rescission of the Purchase Agreement and Employment Agreement and return of all moneys paid to the Seller.

On March 19, 2014 the Company was served with a lawsuit filed by Mark Miklos against the Company and Anovent, Inc. in Hillsborough County, Florida Case No. 14-CA-2520 DIV K, alleging the following: breach of the Employment Agreement entered into with the Company; improper notice of termination; breach of the Short Term Note for $850,000; breach of Promissory Notes A and B for $500,000 each, and further includes an action to foreclose a security interest in personal property and intangibles as a result of the alleged defaults of the Notes and rights under the Security Agreement. The litigation filed by Miklos was transferred to Miami Dade County and subsequently, on October 14, 2014, transferred by administrative judge to the same division as the Company’s litigation against Mr. Miklos. The Company has filed a Motion to consolidate the two lawsuits.

The Company believes there is no merit to Mr. Miklos’ lawsuit and intends to defend itself aggressively.

Justin Keener d/b/a JMJ Financial

On May 29, 2014, Justin Keener d/b/a JMJ Financial (“JMJ”) filed a Complaint against the Company in the Circuit Court of the 11th Judicial Circuit in and for Miami-Dade County, Florida. In the Complaint, JMJ alleges that the Company breached a convertible promissory note dated June 17, 2013, pursuant to which JMJ provided $150,000 to the Company on or about June 19, 2013, and an additional $50,000 to the Company on or about December 12, 2013. JMJ alleges that on February 4, 2014, it agreed to accept $280,000 in satisfaction of the note. JMJ alleges that the Company paid $186,667 to JMJ on February 19, 2014. JMJ alleges that the Company has breached the promissory note by failing to repay the purported outstanding amount of the note either through conversion into the Company’s common stock or through cash payment, and seeks an award of damages (including but not limited to purported lost profits and opportunity costs relating to an inability to convert and thereafter sell the Company’s shares), interest, attorneys’ fees, and costs. On July 21, 2014, the Company filed its Answer, Affirmative Defenses, and Counterclaim against JMJ. As affirmative defenses, the Company asserts, among others, that JMJ is not entitled to the relief requested because the promissory note at issue charges usurious interest rates in violation of Florida’s usury laws, and because JMJ’s claims for lost profits are speculative. The Company also asserts counter-claims for Declaratory Relief (seeking an order that the promissory note is usurious under Florida law and the entire debt and conversion rights thus are unenforceable) and for usury (seeking damages for all moneys paid pursuant to the promissory note, reasonable attorneys’ fees, and costs). The Company intends to defend against these claims vigorously.

TCA Global Credit Master Fund, LP

On May 21, 2014, the Company, along with several other entities, filed a Complaint in the Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida, against TCA for breach of contract and unjust enrichment. On July 1, 2014, TCA filed a separate action against the Company, two officers of the Company, and its wholly owned subsidiaries, claiming that the Company has defaulted on the note, and seeking at least $901,142 in damages, plus pre-judgment interest, attorney’s fees, costs, foreclosure on associated collateral, and the proceeds from any sale of that collateral.

On October 17, 2014, we executed an additional series of agreements with TCA and Redwood including a certain amendment agreement with Redwood, modifying the Credit Agreement previously entered into with TCA on January 9, 2014. Redwood entered into a debt purchase agreement with TCA related to the TCA obligations. Pursuant to those agreements, Redwood assumed the TCA obligations, including conversion rights. In connection therewith SIMH executed a Replacement Revolving Note for $1,225,154 (the “Note”). The Note is convertible at the option of Redwood into shares of our common stock.

On October 20, 2014, Redwood accelerated the complete payoff of the Note to TCA and, accordingly, the Company was deemed to have satisfied all outstanding debt obligations owned to TCA and all litigation with TCA was dismissed.

23

Item 1A. Risk Factors.

Please see the risk factors disclosed in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2013, as amended, filed with the SEC.

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

On July 8, 2014, a portion of a convertible note originally for $265,000 held by CLSS was purchased and assigned to a third party lender for $85,000. The convertible promissory note carries interest at 9% per annum, convertible into common shares at fixed price of $0.50 per share and matures on July 7, 2015, On July 11, 2014, a conversion for $20,217 resulted in a share issuance of 175,000 shares. The recipients were accredited investors and the issuances were exempt from registration under the Securities Act of 1933 in reliance on an exemption provided by Section 3(a)(9) of that act

From July 1, 2014 to September 30, 2014, the Company issued a total of 4,174,324 shares to six (6) parties in connection with the conversion of convertible debt held, as follows:

Date :	Shares Issued:
July 16, 2014		200,000
July 16, 2014		43,478
August 11, 2014		133,333
August 20, 2014		285,714
August 20, 2014		200,000
September 4, 2014		358,974
September 8, 2014		250,000
September 15, 2014		153,061
September 19, 2014		686,275
September 22, 2014		86,206
September 24, 2014		152,173
September 26, 2014		300,000
September 29, 2014		428,571
September 29, 2014		896,539

The recipients were accredited investors and the issuances were exempt from registration under the Securities Act of 1933 in reliance on an exemption provided by Section 3(a)(9) of that act.

From July 1, 2014 through September 30, 2014, the Company issued a total of 2,430,722 shares of restricted common stock to a former officer and shareholder at prices per share ranging from $0.04 to $0.25 in settlement of $211,365 of unpaid and accrued salaries. The issuances were exempt from registration under the Securities Act of 1933 in reliance on exemptions provided by Section 4a(2) of that act.

On July 25, 2014, and August 29, 2014, the Company issued 2,904,163 and 864,480 shares, respectively, of restricted common stock at a price per share of $0.10 and $0.082 to CLSS in connection with the partial conversion of convertible stock held. The recipient was an accredited investor and the issuance was exempt from registration under the Securities Act of 1933 in reliance on exemptions provided by Section 3(a)(9) of that act.

On August 29, 2014 and September 17, 2014, the Company issued 150,000 and 250,000 shares of restricted common stock at prices of $0.08 and $0.07 per share, respectively, to two (2) consultants as payment for financial and investor relations services. The recipients were accredited or otherwise sophisticated investors who had access to financial and business information concerning the Company. The issuances were exempt from registration under the Securities Act of 1933 in reliance on exemptions provided by Section 4a(2) of that act.

24

During October, 2014 and November 3, 2014, the Company issued a total of 31,399,803 shares to five (5) parties in connection with the conversion of $287,951 in convertible debt held. The recipients were accredited investors and the issuances were exempt from registration under the Securities Act of 1933 in reliance on an exemption provided by Section 3(a)(9) of that act.

On October 6, 2014 the Company issued 1,194,781 shares of restricted common stock to a former officer and shareholder at a price of $0.04 in settlement of $47,791 of unpaid and accrued salaries. The issuances were exempt from registration under the Securities Act of 1933 in reliance on exemptions provided by Section 4a(2) of that act.

During October, 2014, through November 10, 2014, the Company issued 18,612,912 shares to a Company owned by a former officer and shareholder in connection with the conversion of $193,782 in convertible debt held. The recipient was an accredited investor and the issuance was exempt from registration under the Securities Act of 1933 in reliance on exemptions provided by Section 3(a)(9) of that act.

From October 1, 2014 to November 10, 2014 the Company issued Redwood a total of 34,222,678 shares in connection with the conversion of $451,982 in convertible debt held. The recipients were accredited investors and the issuances were exempt from registration under the Securities Act of 1933 in reliance on an exemption provided by Section 3(a)(9) of that act.

Item 3. Defaults Upon Senior Securities.

 None

Item 4. Mine Safety Disclosures.

Not applicable to our company’s operations.

Item 5. Other Information.

June 30, 2014, $440,000 convertible promissory notes to Devlin Law Firm LLC with interest at 8% per annum, convertible into common shares at a conversion price per share of 15% discount to a defined market price. Matures through August 1, 2015. August 12, 2014, $35,000 Convertible promissory notes to Beaufort Capital Partners LLC with interest at 12% per annum, convertible into common shares at a conversion prices per share of 50% discount to a defined market prices. Maturity ranges through September 11, 2015.

August 29, 2014, $30,000 Convertible promissory notes to Beaufort Capital Partners LLC with interest at 12% per annum, convertible into common shares at a conversion prices per share of 50% discount to a defined market prices. Maturity ranges through September 11, 2015. September 11, 2014, $50,000 Convertible promissory notes to Coventry Enterprises LLC with interest at 8% per annum, convertible into common shares at a conversion prices per share of 50% discount to a defined market prices. Maturity ranges through September 11, 2015. September 11, 2014, $50,000 Convertible promissory notes to Coventry Enterprises LLC with interest at 8% per annum, convertible into common shares at a conversion prices per share of 50% discount to a defined market prices. Maturity ranges through September 11, 2015. September 22, 2014, $117,074.91 Convertible promissory note to Redwood Management LLC with interest at 12% per annum, convertible into common shares at a conversion price per share of 15% discount to a defined market price. Matures on September 21, 2015

September 22, 2014, $1,287,824.09 Convertible promissory to TCA Global Credit Master Fund note with interest at 12% per annum, convertible into common shares at a conversion price per share of 15% discount to a defined market price. Matures on September 21, 2015. September 30, 2014, $400,000 convertible promissory notes to Devlin Law Firm LLC with interest at 8% per annum, convertible into common shares at a conversion price per share of 15% discount to a defined market price. Matures through August 1, 2015. 

On October 24, 2014, a convertible note originally for $213,612 held by DebentureVisions Opportunity Fund LLC, was purchased and assigned to a new third party lender, RDW Capital, LLC for $254,916. The convertible promissory note carries interest at 8% per annum, convertible into common shares at a conversion price equal to 62.5% of the lowest traded VWAP price during the 10 trading days prior to conversion and matures on May 23, 2015.

25

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*
10.72	Amendment Agreement dated September 22, 2014 between Sanomedics International Holdings, Inc. and Redwood Management LLC (previously filed)
10.73	Replacement Revolving Note A dated September 22, 2014 to TCA Global Credit Master Fund, LPr (previously filed)
10.74	Replacement Revolving Note B dated September 22, 2014 to TCA Global Credit Master Fund, LPr (previously filed)
10.75	Amendment Agreement dated October 17, 2014 Sanomedics International Holdings, Inc. and Redwood Management LLC (previously filed)
10.76	Replacement Revolving Note A-3 dated October 17, 2014 to TCA Global Credit Master Fund, LPr (previously filed)
10.77	$189,375 Debenture dated October 24, 2014 payable to Redwood Management LLC (previously filed)
10.78	$63,125 Debenture dated October 24, 2014 payable to Redwood Fund II, LLC (previously filed)
10.79	$35,000 Securities Exchange and Settlement Agreement dated August 25, 2014 with Beaufort Capital Partners LLC (previously filed)
10.80	$30,000 Promissory Note dated August 12, 2014 with Beaufort Capital Partners LLC (previously filed)
10.81	$50,000 Replacement Promissory Note dated September 11, 2014 to Coventry Enterprises LLC (previously filed)
10.82	$50,000 Promissory Note dated September 11, 2014 to Coventry Enterprises LLC (previously filed)
10.83	$440,000 Convertible Note A dated June 30, 2014 to Devlin Law Firm LLC (previously filed)
10.84	$400,000 Convertible Note dated September 30, 2014 to Devlin Law Firm LLC (previously filed)
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

26

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, Inc.
April 20, 2015	By:	/s/ Keith Houlihan
		Keith Houlihan President
April 20, 2015	By:	/s/ David C. Langle
		David C. Langle Chief Financial Officer

27

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, 2014 of Sanomedics, 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: April 20, 2015	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, 2014 of Sanomedics, 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: April 20, 2015	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, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2014 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: April 20, 2015	By:	/s/ Keith Houlihan
		Keith Houlihan, President, principal executive officer
Dated: April 20, 2015	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.

XML

CONVERTIBLE NOTES PAYABLE AND ADVANCES - RELATED PARTIES, NET OF DISCOUNTS RESTATED (Tables) (Restated)

9 Months Ended

Sep. 30, 2014

Restated

Convertible notes payable and advances to related parties

Convertible notes payable and advances to related parties consist of the following:

	September 30, 2014		December 31, 2013
Secured Convertible Promissory Note - CLSS Holdings, LLC, dated September 30, 2010. Note accrued interest at 9% per annum. (D)	$	-	$	50,000
Secured Convertible Promissory Note - CLSS Holdings, LLC, dated March 12, 2011. Note accrued interest at 9% per annum. (D)		-		66,750
Secured Convertible Promissory Note - CLSS Holdings, LLC, dated September 30, 2011. Note accrued interest at 9% per annum. (D)		-		95,000
Secured Convertible Promissory Note - CLSS Holdings, LLC, dated March 12, 2011. Note accrued interest at 8% per annum.		-		334,787
Five (5) Secured Convertible Promissory Notes-CLSS Holdings LLC, dated February 21, 2014. Notes accrue interest at 8% per annum, due and payable on March 1, 2016 (C)(D)		132,476		-
Secured Convertible Promissory Note-CLSS Holdings LLC, dated May 8, 2014. Notes accrue interest at 8% per annum, due and payable on May 6, 2016 (C)(D)		95,000		-
Two (2) Secured Convertible Promissory Notes-CLSS Holdings LLC, dated June 30, 2014. Note accrues interest at 8% per annum, due and payable on June 1, 2016 – net of discount of $484,010 (C)(D)		43,892		-
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 $210,678(B)		192,661		200,954
Total Notes		464,029		747,491
Other advances from CLSS Holdings, LLC, not evidenced by a Promissory Note (A)		242,500		1,125,632
		706,529		1,873,123
Less: Current portion		435,161		-
	$	271,368	$	1,873,123

XML

Condensed Consolidated Statements of Operations (Unaudited) (USD $)	3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2014
Revenues, net	$ 90,671	$ 211,750
Cost of goods sold	12,197	45,789
Gross profit	78,474	165,961
Operating expenses
General and administrative	299,679	753,487
Stock compensation	93,000	348,738
Research and development	24,250	77,750
Depreciation and amortization	1,899	5,697
Total operating expenses	418,828	1,185,672
Loss from operations	(340,354)	(1,019,711)
Other income (expense)
Amortization of debt discount on convertible notes	(87,650)	(141,987)
Derivative expense	(38,131,952)	(40,537,459)
Change in fair value of derivative liabilities	39,874,301	40,496,638
Loss on acquisition rescission	(1,250,000)	(1,250,000)
Interest expense	(4,588)	(57,703)
Total other (expense) income	400,111	(1,490,511)
Net (loss) income before income taxes	59,757	(2,510,222)
Income taxes
Net (loss) income	59,757	(2,510,222)
Net (loss) income per share - basic and diluted	$ 0.01	$ (1.23)
Weighted average number of shares outstanding during the period - basic and diluted	4,081,174	2,045,442
Restated
Revenues, net			83,181	281,002
Cost of goods sold			12,703	42,928
Gross profit			70,478	238,074
Operating expenses
General and administrative			809,641	1,941,924
Stock compensation			246,738	726,071
Research and development				43,703
Depreciation and amortization			3,144	5,697
Total operating expenses			1,059,523	2,717,395
Loss from operations			(989,045)	(2,479,321)
Other income (expense)
Amortization of debt discount on convertible notes			(579,962)	(1,415,839)
Derivative expense			(125,860)	(937,931)
Change in fair value of derivative liabilities			(9,350)	9,154
Loss on acquisition rescission
Interest expense			(288,690)	(460,457)
Total other (expense) income			(1,003,862)	(2,805,073)
Net (loss) income before income taxes			(1,992,907)	(5,284,394)
Income taxes
Net (loss) income			$ (1,992,907)	$ (5,284,394)
Net (loss) income per share - basic and diluted			$ (0.24)	$ (0.39)
Weighted average number of shares outstanding during the period - basic and diluted			8,486,686	13,528,789

XML

CONVERTIBLE NOTES PAYABLE AND ADVANCES - RELATED PARTIES, NET OF DISCOUNTS RESTATED (Restated)

9 Months Ended

Sep. 30, 2014

Restated

NOTE 5 - CONVERTIBLE NOTES PAYABLE AND ADVANCES - RELATED PARTIES, NET OF DISCOUNTS RESTATED

Convertible notes payable and advances to related parties consist of the following:

	September 30, 2014		December 31, 2013
Secured Convertible Promissory Note - CLSS Holdings, LLC, dated September 30, 2010. Note accrued interest at 9% per annum. (D)	$	-	$	50,000
Secured Convertible Promissory Note - CLSS Holdings, LLC, dated March 12, 2011. Note accrued interest at 9% per annum. (D)		-		66,750
Secured Convertible Promissory Note - CLSS Holdings, LLC, dated September 30, 2011. Note accrued interest at 9% per annum. (D)		-		95,000
Secured Convertible Promissory Note - CLSS Holdings, LLC, dated March 12, 2011. Note accrued interest at 8% per annum.		-		334,787
Five (5) Secured Convertible Promissory Notes-CLSS Holdings LLC, dated February 21, 2014. Notes accrue interest at 8% per annum, due and payable on March 1, 2016 (C)(D)		132,476		-
Secured Convertible Promissory Note-CLSS Holdings LLC, dated May 8, 2014. Notes accrue interest at 8% per annum, due and payable on May 6, 2016 (C)(D)		95,000		-
Two (2) Secured Convertible Promissory Notes-CLSS Holdings LLC, dated June 30, 2014. Note accrues interest at 8% per annum, due and payable on June 1, 2016 – net of discount of $484,010 (C)(D)		43,892		-
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 $210,678(B)		192,661		200,954
Total Notes		464,029		747,491
Other advances from CLSS Holdings, LLC, not evidenced by a Promissory Note (A)		242,500		1,125,632
		706,529		1,873,123
Less: Current portion		435,161		-
	$	271,368	$	1,873,123

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 ranging from $0.25 to $0.50 per share.

(A) On February 21, 2014 the Company memorialized advances from CLSS into various convertible promissory notes, accruing interest at 9% and matures March 1, 2016.

(B) This note is convertible at a conversion price equal to the discount in the average of the lowest three closing bid prices of the common stock during the 10 day trading days prior to conversion. The embedded conversion features resulted in a derivative liability which has been measured using the Monte Carlo valuation method at September 30, 2014 and December 31, 2013. On July 25, 2014, the Company issued 2,904,163 shares of restricted common stock in connection with the partial redemption of convertible debt.

(C) Through the nine (9) months ended September 30, 2014, convertible notes totaling $667,609 were converted into 5,330,500 shares of common stock at conversion prices ranging from $0.08 to $0.21 per share.

(D) Through the nine (9) months ended September 30, 2014, $709,750 was assigned by the holder to eight (8) third parties, which subsequently converted to 3,347,332 shares of common stock at conversion prices ranging from $0.02 to $0.36 per share.

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CONVERTIBLE NOTES PAYABLE (Details) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Note Payable		$ 300,762
Less current portion		(300,762)
Long-term portion of convertible debt
Restated
Note Payable	2,145,021
Less current portion	(2,145,021)
Long-term portion of convertible debt
Convertible Promissory Note [Member]
Note Payable	65,497	37,500
Convertible promissory note One [Member]
Note Payable	36,500	151,519
Convertible promissory note Two [Member]
Note Payable	53,237	111,743
Convertible promissory note Three [Member]
Note Payable	117,308
Convertible promissory note four [Member]
Note Payable	101,519
Convertible promissory note five [Member]
Note Payable	715,456
Convertible promissory note six [Member]
Note Payable	15,353
Convertible promissory note Seven [Member]
Note Payable	$ 1,040,151

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CONVERTIBLE NOTES PAYABLE (Tables) (Restated)

9 Months Ended

Sep. 30, 2014

Restated

Convertible notes payable

Third party convertible notes payable consists of the following:

	September 30,			December 31,
	2014			2013
Convertible promissory note with interest at 9% per annum, convertible into common shares at fixed price of $0.50 per share. Matures on August 24, 2014, net of unamortized discount of $9,503 and $37,500, respectively (E).	$	65,497		$	37,500
Seven (7) convertible promissory notes with interest ranging from 6% to 12% per annum, convertible into common shares at prices ranging from 10% to 50% discount to defined market prices. Maturity ranges through October 25, 2014, net of unamortized discounts of $-0- and $229,907, respectively (A) (B) (E).		36,500			151,519
Two (2) convertible promissory notes with interest at 12% per annum (zero interest first 90 days) plus a 10% original discount interest, convertible into common shares at a conversion price per share of 30% discount to a defined market price. Matures through December 9, 2014, net of unamortized discount of $4,361 and $97,587 respectively (A)(C).		53,237			111,743
Seven (7) convertible promissory notes with interest ranging from 8% to 12% per annum, convertible into common shares at prices ranging from 25% to 70% discount to defined market prices. Maturity ranges through March 31, 2015, net of unamortized discounts of $204,693.(A)(B)(C)		117,308			-
Four (4) convertible promissory notes with interest ranging from 8% to 12% per annum, convertible into common shares at a conversion prices per share of 50% discount to a defined market prices. Maturity ranges through September 11, 2015, net of unamortized discounts of $260,312.(A)(B)(C)		101,519			-
Two (2) convertible promissory notes with interest at 8% per annum, convertible into common shares at a conversion price per share of 15% discount to a defined market price. Matures through August 1, 2015, net of unamortized discount of $124,544 and $ -0-, respectively. (A)		715,456			-
Convertible promissory note with interest at 12% per annum, convertible into common shares at a conversion price per share of 15% discount to a defined market price. Matures on September 21, 2015, net of unamortized discount of $76,722 and $ -0-, respectively.(A)(D) See Note 4		15,353			-
Convertible promissory note with interest at 12% per annum, convertible into common shares at a conversion price per share of 15% discount to a defined market price. Matures on September 21, 2015, net of unamortized discount of $247,672 and $ -0-, respectively.(A) See Note 4		1,040,151			-
		2,145,021			300,762
Less current portion		(2,145,021	)		(300,762	)
Long-term portion of convertible debt	$	-		$	-

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DERIVATIVE LIABILITIES (Details Narrative) (USD $)	Dec. 31, 2013	Sep. 30, 2014
Fair value of derivative liabilities	$ 1,070,728
Restated
Fair value of derivative liabilities		$ 3,219,644

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CONVERTIBLE NOTES PAYABLE (Details Narrative) (USD $)	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2014
Debt Instrument [Line Items]
Interest expense pursuant to the amortization of the note discounts	$ 54,337
Restated
Debt Instrument [Line Items]
Convertible notes totaling		375,057
Common stock converted shares		3,570,790
Convertible notes paid		252,750
Interest expense pursuant to the amortization of the note discounts		$ 1,415,839

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ORGANIZATION AND BASIS OF PRESENTATION (Restated)

9 Months Ended

Sep. 30, 2014

Restated

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION

Sanomedics, Inc. (referred to herein as “we”, “us”, “our” or the “Company”) is a medical technology products and services holding company which through its subsidiaries, designs, develops, markets and distributes non-invasive infrared thermometers principally for healthcare providers.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulations S-X of the of the U.S. Securities and Exchange Commission. Accordingly, they do not include all the information and notes required by GAAP for annual financial statements.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments considered necessary to present fairly the financial position of the Company as of September 30, 2014 and December 31, 2013, and the condensed consolidated results of operations and cash flows for the nine months ended September 30, 2014 and 2013. Due to seasonality, potential changes in economic conditions, interest rate fluctuations and other factors, the results of operations for such interim periods are not necessarily indicative of the results 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), Anovent Inc. (since December 2011) and Biscayne Medical LLC (since July 2014). 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, as amended, 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, 2013. The interim results for the three and nine months ended September 30, 2014 are not necessarily indicative of the results for the full fiscal year.

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LIQUIDITY AND GOING CONCERN (Restated)

9 Months Ended

Sep. 30, 2014

Restated

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 which have caused an accumulated deficit of $18,511,305 and a working capital deficit of $6,256,026 as of September 30, 2014. 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 third parties including CLSS Holdings LLC (“CLSS”), a company owned by a former officer and a shareholder of the Company. Through September 30, 2014, the Company obtained its liquidity principally from approximately $906,000 of borrowing under a Revolving Line of Credit secured on January 9, 2014 from TCA Global Credit Master Fund (“TCA”), which was assumed by Redwood Management LLC (“Redwood”) on September 23, 2014, and $838,000 of cash advances from CLSS. Management’s plan is to seek equity and/or debt financing. 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 its ability to successfully secure other sources of financing 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 (Restated)

9 Months Ended

Sep. 30, 2014

Restated

NOTE 6 - CONVERTIBLE NOTES PAYABLE

Third party convertible notes payable consists of the following:

	September 30,			December 31,
	2014			2013
Convertible promissory note with interest at 9% per annum, convertible into common shares at fixed price of $0.50 per share. Matures on August 24, 2014, net of unamortized discount of $9,503 and $37,500, respectively (E).	$	65,497		$	37,500
Seven (7) convertible promissory notes with interest ranging from 6% to 12% per annum, convertible into common shares at prices ranging from 10% to 50% discount to defined market prices. Maturity ranges through October 25, 2014, net of unamortized discounts of $-0- and $229,907, respectively (A) (B) (E).		36,500			151,519
Two (2) convertible promissory notes with interest at 12% per annum (zero interest first 90 days) plus a 10% original discount interest, convertible into common shares at a conversion price per share of 30% discount to a defined market price. Matures through December 9, 2014, net of unamortized discount of $4,361 and $97,587 respectively (A)(C).		53,237			111,743
Seven (7) convertible promissory notes with interest ranging from 8% to 12% per annum, convertible into common shares at prices ranging from 25% to 70% discount to defined market prices. Maturity ranges through March 31, 2015, net of unamortized discounts of $204,693.(A)(B)(C)		117,308			-
Four (4) convertible promissory notes with interest ranging from 8% to 12% per annum, convertible into common shares at a conversion prices per share of 50% discount to a defined market prices. Maturity ranges through September 11, 2015, net of unamortized discounts of $260,312.(A)(B)(C)		101,519			-
Two (2) convertible promissory notes with interest at 8% per annum, convertible into common shares at a conversion price per share of 15% discount to a defined market price. Matures through August 1, 2015, net of unamortized discount of $124,544 and $ -0-, respectively. (A)		715,456			-
Convertible promissory note with interest at 12% per annum, convertible into common shares at a conversion price per share of 15% discount to a defined market price. Matures on September 21, 2015, net of unamortized discount of $76,722 and $ -0-, respectively.(A)(D) See Note 4		15,353			-
Convertible promissory note with interest at 12% per annum, convertible into common shares at a conversion price per share of 15% discount to a defined market price. Matures on September 21, 2015, net of unamortized discount of $247,672 and $ -0-, respectively.(A) See Note 4		1,040,151			-
		2,145,021			300,762
Less current portion		(2,145,021	)		(300,762	)
Long-term portion of convertible debt	$	-		$	-

(A) These convertible promissory notes are generally convertible at a conversion price equal to the discount to the average of the lowest three closing bid prices of the common stock during the 10 trading days prior to conversion. The embedded conversion features resulted in a derivative liability which has been measured using the Monte Carlo valuation method at September 30, 2014 and December 31, 2013.

(B) Through the period ended September 30, 2014, six (6) convertible notes totaling $375,057 were converted into 3,570,790 shares of common stock.

(C) Through the period ended September 30, 2014, three (3) convertible notes totaling $252,750 were paid.

(D) On September 29, 2014, $25,000 of debt was converted into 896,539 shares of common stock.

(E) Pending conversion of debt to common stock at request of debt holder.

In accordance with ASC 470-20 Debt with Conversion and Other Options, at time of issuance the Company allocated $2,307,152 and $828,906 of the derivative liability as discounts against the convertible notes. The discounts are being amortized to interest expense over the term of the notes using the effective interest method. The Company recorded $1,415,839 and $54,337 of interest expense pursuant to the amortization of the note discounts for the nine months ended September 30, 2014 and 2013, respectively.

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REVOLVING LINE OF CREDIT AND REFINANCING (Restated)

9 Months Ended

Sep. 30, 2014

Restated

NOTE 4 - REVOLVING LINE OF CREDIT AND REFINANCING

TCA Credit Agreement:

On January 9, 2014, we entered into a Senior Secured Revolving Credit Facility Agreement (the "Credit Agreement") with TCA. Pursuant to the Credit Agreement, TCA extended to us a $5 million revolving credit facility. An initial credit line of $2,300,000 was provided by TCA at closing, with $1,000,000 funded on the date of closing and the remaining $1,300,000 representing funding for pending acquisitions.

The amounts borrowed pursuant to the Credit Agreement are evidenced by a Revolving Note (the "Note") from us and certain of our subsidiaries in the principal amount of $1,000,000 which bore interest at the rate of 11% per annum and matured July 9, 2014. The Note was convertible at the option of TCA into shares of our common stock at a variable conversion price equal to 85% of the lowest daily trading volume weighted average price of our common stock during the five business days preceding the conversion date, however to date the holder has not opted to convert the Note into Company stock. At closing we also paid TCA an equity advisory fee of $160,000 which was paid through the issuance of 134,454 shares of our common stock.

The Credit Agreement contained negative and financial covenants. The Company was not in compliance with certain of these covenants and on May 12, 2014, TCA provided the Company with a notice of default of the Credit Agreement. On May 21, 2014, the Company, along with several other entities, filed a Complaint in the Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida, against TCA for breach of contract and unjust enrichment. On July 1, 2014, TCA filed a separate action against the Company, two officers of the Company, and its wholly owned subsidiaries, claiming that the Company has defaulted on the note, and seeking at least $901,142 in damages, plus pre-judgment interest, attorney’s fees, costs, foreclosure on associated collateral, and the proceeds from any sale of that collateral.

Redwood Refinancing:

On September 23, 2014, we executed a series of agreements with TCA and Redwood including a certain amendment agreement with Redwood, modifying the Credit Agreement previously entered into with TCA on January 9, 2014. Redwood entered into a Debt Purchase Agreement with TCA related to the TCA obligations. Pursuant to those agreements, Redwood assumed the TCA obligations, including conversion rights of TCA transferred to Redwood. In connection therewith, the Company executed two replacement revolving notes, one for $117,075 and a second for $1,287,824 (the “Notes”). The Notes are convertible at the option of Redwood into shares of our common stock. Refer to Note 5.

The foregoing refinancing lifted the pending default status of the TCA obligations and also placed their current litigation proceedings against the Company and certain of its officers in abeyance until the TCA obligations were entirely paid in full.

On October 20, 2014, Redwood accelerated the complete payoff of the Note to TCA and, accordingly, the Company was deemed to have satisfied all outstanding debt obligations owed to TCA and all litigation between the Company, its officers and TCA was dismissed.

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Dec. 31, 2013	Sep. 30, 2014
Stockholders' Deficit
Preferred stock, par value	$ 0.001
Preferred stock, shares authorized	1,000
Preferred stock, shares issued	1,000
Preferred stock, shares outstanding	1,000
Common stock, par value	$ 0.001
Common stock, shares authorized	250,000,000
Common stock, shares issued	4,545,119
Common stock, shares outstanding	4,545,119
Restated
Stockholders' Deficit
Preferred stock, par value		$ 0.001
Preferred stock, shares authorized		1,000
Preferred stock, shares issued		1,000
Preferred stock, shares outstanding		1,000
Common stock, par value		$ 0.001
Common stock, shares authorized		250,000,000
Common stock, shares issued		23,859,810
Common stock, shares outstanding		23,859,810

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COMMON STOCK (Restated)

9 Months Ended

Sep. 30, 2014

Restated

NOTE 9 - COMMON STOCK

On January 16, 2014, a former officer and shareholder assigned 650 shares of preferred stock from his holdings of 750 shares allocating 452 shares to two (2) members of management, 100 shares to its Chairman of the Board and 98 shares to a family member.

On January 28, 2014, in exchange for a reduction of debt of the Company owed to CLSS for a share price of $0.10 per share, the Company issued 3,142,270 shares of restricted common stock to various existing individual shareholders designated by the owner of CLSS.

On February 21, 2014, the Company converted a Convertible Note due to CLSS for $282,740 into 1,323,750 shares restricted at a price per share of $0.2136.

On January 21, 2014, and, in connection with a Securities Purchase Agreement and convertible promissory note in the principal amount of $50,000, the Company converted the note into a total of 150,000 shares of the Company’s common stock at a conversion price of $0.03 per share.

On February 28, 2014, the Company issued 107,656 shares of common stock to two (2) parties as commissions on the TCA lending financing.

During January 21, 2014 to March 28, 2014, the Company issued a total of 868,921 shares of restricted common stock to four (4) companies in connection with the conversion of convertible debt held.

On March 28, 2014, the Company issued 134,454 shares of common stock as payment of advisory fee to TCA in connection with the TCA lending facility.

From April 1, 2014 to June 30, 2014, the Company issued a total of 869,333 shares of common stock to six (6) companies in connection with the conversion of convertible debt held.

On April 28, 2014 and May 16, 2014, the Company converted a total of $362,353 portions of a Convertible Note due CLSS totaling $539,491 into 1,152,394 shares restricted at a prices ranging from $0.25 to $0.45.

During April and May 2014, pursuant to portions of Convertible Notes due to CLSS, the holder assigned to three (3) third parties the principal amounts totaling $140,000. These three notes were converted on April 24, 2014, May 5, 2014 and May 21, 2014 into a total of 400,000 shares.

On June 9, 2014 the Company issued 182,500 shares of restricted common stock at a price of $0.41 per share to a third party as payment for services related to investor relations.

On June 11, 2014, the Company issued 584,724 shares of restricted common stock to a former officer and a shareholder at a price per share of $0.25 in settlement of $145,596 of unpaid and accrued salaries.

From July 1, 2014 through September 30, 2014, the Company issued a total of 2,430,722 shares of restricted common stock to a former officer and shareholder at prices per share ranging from $0.04 to $0.25 in settlement of $211,365 of unpaid and accrued salaries.

On July 25, 2014, the Company issued 2,904,163 shares of restricted common stock to an officer of the Company in connection with the partial conversion of convertible stock held.

On August 29, 2014 and September 17, 2014, the Company issued a total of 400,000 shares of restricted common stock to two (2) consultants as payment for financial and investor relations services.

On August 29, 2014, the Company converted a portion of Convertible Note due to CLSS for $313,000 into 864,480 shares restricted at a price per share of $0.082.

From July 1, 2014 through September 30, 2014, the Company issued a total of 4,349,324 shares to six (6) parties in connection with the conversion of convertible debt held.

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (2,510,222)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	5,697
Stock compensation	348,738
Amortization of debt discount on convertible notes	141,987
Derivative expense	40,537,459
Change in fair value of derivative liabilities	(40,496,638)
Loss on rescission	1,250,000
Refinancing costs for revolving line of credit
Changes in operating assets and liabilities
Accounts receivable	46,138
Inventories	850
Prepaid expenses and deposits	(10,634)
Accrued salaries payable	119,391
Accounts payable and other liabilities	(36,161)
Accrued interest payable	71,263
Accrual for contingencies on contract rescission
Due to related parties	84,872
Net Cash Used In Operating Activities	(447,260)
CASH FLOWS USED FROM INVESTING ACTIVITIES
Advances made to Prime Time Medcal	(400,000)
Purchase of fixed assets
Net Cash Used In Investing Activities	(400,000)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from convertible notes payable and advances - related party	539,490
Proceeds from common stock subscription
Proceeds from convertible notes payable	375,000
Payoffs of convertible notes payable
Net Cash Provided By Financing Activities	914,490
Net change in cash	67,230
Cash - beginning of period	26,084
Cash - end of period	93,314
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for: Income taxes
Cash paid during the period for: Interest
NON-CASH TRANSACTIONS
Common stock issued to consultants for services
Common stock issued for conversion of debt	102,985
Common stock issued for acquisition	750,000
Accrued salaries payable converted to convertible promissory note-officer	703,339
Accrued salaries payable converted to common stock
Borrowings under revolving line of credit to convertible notes
Restated
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		(5,284,394)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		5,697
Stock compensation		726,071
Amortization of debt discount on convertible notes		1,415,839
Derivative expense		937,931
Change in fair value of derivative liabilities		(9,154)
Loss on rescission
Refinancing costs for revolving line of credit		474,131
Changes in operating assets and liabilities
Accounts receivable		(11,561)
Inventories		29,876
Prepaid expenses and deposits		157,697
Accrued salaries payable
Accounts payable and other liabilities		270,168
Accrued interest payable		136,620
Accrual for contingencies on contract rescission		(334,331)
Due to related parties		(134,437)
Net Cash Used In Operating Activities		(1,619,847)
CASH FLOWS USED FROM INVESTING ACTIVITIES
Advances made to Prime Time Medcal
Purchase of fixed assets		(12,768)
Net Cash Used In Investing Activities		(12,768)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from convertible notes payable and advances - related party		838,240
Proceeds from common stock subscription		22,500
Proceeds from revolving line of credit		905,768
Proceeds from convertible notes payable		149,400
Payoffs of convertible notes payable		(252,750)
Net Cash Provided By Financing Activities		1,663,158
Net change in cash		30,543
Cash - beginning of period		9,560
Cash - end of period		40,103
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for: Income taxes
Cash paid during the period for: Interest		93,418
NON-CASH TRANSACTIONS
Common stock issued to consultants for services		29,755
Common stock issued for conversion of debt		771,404
Common stock issued for acquisition
Accrued salaries payable converted to convertible promissory note-officer
Accrued salaries payable converted to common stock		211,365
Borrowings under revolving line of credit to convertible notes		$ 1,404,899

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Condensed Consolidated Balance Sheets (USD $)	Sep. 30, 2014	Dec. 31, 2013
Current Assets
Cash		$ 9,560
Accounts receivable		19,225
Inventories		39,060
Prepaid expenses		612
Total Current Assets		68,457
Fixed assets, net		12,562
Patents, net		16,816
Deposit		7,999
Total Assets		105,834
Current Liabilities
Accrued salaries payable		705,569
Accounts payable and other liabilities		264,848
Accrued interest payable		362,284
Accrual for contingencies on contract rescission		500,000
Common stock payable
Convertible notes payable and advances - related parties net of discount, current portion
Convertible notes payable, net of discount		300,762
Derivative liabilities		1,070,728
Due to related parties		152,588
Total Current Liabilities		3,356,779
Convertible notes payable and advances- related parties net of discount, net of current portion	271,368	1,873,123
Total Liabilities		5,229,902
Stockholders' Deficit
Preferred stock, $0.001 par value: 1,000 shares authorized, issued and outstanding as of September 30, 2014 and December 31, 2013, respectively		1
Common stock, $0.001 par value: 250,000,000 shares authorized, 23,859,810 and 4,545,119 issued and outstanding as of September 30, 2014 and December 31, 2013, respectively.		4,545
Additional paid in capital		8,118,299
Stock subscription receivable		(20,000)
Accumulated deficit		(13,226,913)
Total Stockholders' Deficit		(5,124,068)
Total Liabilities and Stockholders' Deficit		105,834
Restated
Current Assets
Cash	40,103	9,560
Accounts receivable	30,786
Inventories	9,184
Prepaid expenses	682,915
Total Current Assets	762,988
Fixed assets, net	23,368
Patents, net	13,081
Deposit	7,999
Total Assets	807,436
Current Liabilities
Accrued salaries payable	348,608
Accounts payable and other liabilities	430,356
Accrued interest payable	233,904
Accrual for contingencies on contract rescission	165,669
Common stock payable	22,500
Convertible notes payable and advances - related parties net of discount, current portion	435,161
Convertible notes payable, net of discount	2,145,021
Derivative liabilities	3,219,644
Due to related parties	18,151
Total Current Liabilities	7,019,014
Convertible notes payable and advances- related parties net of discount, net of current portion	271,368
Total Liabilities	7,290,382
Stockholders' Deficit
Preferred stock, $0.001 par value: 1,000 shares authorized, issued and outstanding as of September 30, 2014 and December 31, 2013, respectively	1
Common stock, $0.001 par value: 250,000,000 shares authorized, 23,859,810 and 4,545,119 issued and outstanding as of September 30, 2014 and December 31, 2013, respectively.	23,860
Additional paid in capital	12,024,498
Stock subscription receivable	(20,000)
Accumulated deficit	(18,511,305)
Total Stockholders' Deficit	(6,482,946)
Total Liabilities and Stockholders' Deficit	$ 807,436

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CONVERTIBLE NOTES PAYABLE AND ADVANCES - RELATED PARTIES, NET OF DISCOUNTS (Details Narrative) (USD $)	9 Months Ended
	Sep. 30, 2014
Holder to eight (8) third parties
Common stock convertible shares	3,347,332
Common stock convertible shares, value	$ 709,750
Conversion prices range	$0.02 to $0.36
Restated
Common stock convertible shares	5,330,500
Common stock convertible shares, value	$ 667,609
Conversion prices range	$0.08 to $0.21

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COMMITMENTS AND CONTINGENCIES (Restated)

9 Months Ended

Sep. 30, 2014

Restated

NOTE 8 - COMMITMENTS AND CONTINGENCIES

JMJ Litigation

On May 29, 2014, Justin Keener d/b/a JMJ Financial (“JMJ”) filed a Complaint against the Company in the Circuit Court of the 11th Judicial Circuit in and for Miami-Dade County, Florida. In the Complaint, JMJ alleges that the Company breached a convertible promissory note dated June 17, 2013, pursuant to which JMJ provided $150,000 to the Company on or about June 19, 2013, and an additional $50,000 to the Company on or about December 12, 2013. JMJ alleges that on February 4, 2014, it agreed to accept $280,000 in satisfaction of the note. JMJ alleges that the Company paid $186,667 to JMJ on February 19, 2014. On July 21, 2014, the Company filed its Answer, Affirmative Defenses, and Counterclaim against JMJ. As affirmative defenses, the Company asserts, among others, that JMJ is not entitled to the relief requested because the promissory note at issue charges usurious interest rates in violation of Florida’s usury laws, and because JMJ’s claims for lost profits are speculative. The Company also asserts counter-claims for Declaratory Relief (seeking an order that the promissory note is usurious under Florida law and the entire debt and conversion rights thus are unenforceable, and all moneys paid on the Note by the Company to JMJ must be returned to the Company) and for usury (seeking damages for all moneys paid pursuant to the promissory note, reasonable attorneys’ fees, and costs). On August 29, 2014, JMJ filed a Motion to Dismiss the Company’s Counterclaim, arguing that the transactions at issue are not subject to Florida’s usury laws, and further arguing that the Company cannot maintain a claim for usury because no interest was paid on the note. The Company intends to defend against JMJ’s claims, and pursue its claims, vigorously.

Prime Time Medical Litigation

After assuming control of the acquisition of PTM in August 2013, the Company discovered that the Seller failed to disclose that there were on-going audits with respect to PTM’s Medicare and Medicaid billings for periods prior to the consummation of the transaction. These audits have escalated and, as a result, PTM can no longer invoice

Medicare and Medicaid for any products or services and be paid for such products and services until the outcome of the audits which could last at least two years. Also, as a result of other Medicare and Medicaid audits for periods prior to the consummation of the transaction, Medicare and Medicaid are demanding payments for products that PTM was paid prior to the closing of the transaction that were improper. It is estimated that PTM may owe Medicare and Medicaid up to $500,000 in improper payments and at least another $500,000 in accounts receivable that will not be paid to PTM pending the outcome of the audits. On March 13, 2014, after discovering numerous material differences between financial statements reproduced by the Company and the financial statements provided by the Seller in connection with the Stock Purchase Agreement, coupled with the foregoing events and Medicare and Medicaid’s constraint on PTM’s business and payment stream, the Board of Directors of the Company determined that the business could no longer survive and thus opted to pursue a rescission of the completed transaction with PTM.

As a result of discoveries of fraud and misrepresentations in the acquisition of PTM described above, on March 18, 2014, the Company filed a lawsuit against the Seller in Miami-Dade County, Florida Case No.14007055CA01, alleging breach of contract, fraud in the inducement, fraudulent misrepresentation, unjust enrichment, conversion, breach of fiduciary duty and damages. The Company is seeking judgment against the Seller, restitution, rescission of the Purchase Agreement and Employment Agreement and return of all moneys paid to the Seller.

On March 19, 2014 the Company was served with a lawsuit filed by the Seller against the Company and Anovent, Inc. in Hillsborough County, Florida Case No. 14-CA-2520 DIV K, alleging the following: breach of the Employment Agreement entered into with the Company; improper notice of termination; breach of the Short Term Note for $850,000; breach of Promissory Notes A and B for $500,000 each, and further includes an action to foreclose a security interest in personal property and intangibles as a result of the alleged defaults of the Notes and rights under the Security Agreement. The litigation filed by the Seller was transferred to Miami Dade County and subsequently, on October 14, 2014, transferred by administrative judge to the same division as the Company’s litigation against the Seller. The Company has filed a Motion to consolidate the two lawsuits.

The Company believes there is no merit to the Seller’ lawsuit and intends to defend itself aggressively.

Exergen Litigation

On May 21, 2013, Exergen Corporation commenced legal action in the United States District Court for the District of Massachusetts against the Company, alleging infringement of certain intellectual property through the Company’s sale of the Caregiver Thermometer, as well as the Company's prior sales of its talking non-contact thermometer. Exergen is seeking various types of relief, including damages and an injunction against further alleged infringement of the intellectual property. On September 3, 2013, the Company filed its answer to Exergens’ complaint and asserted counterclaims and affirmative defenses for non-infringement and invalidity of the asserted patents. The Company believes the alleged claim of infringement is without merit and will vigorously defend its rights to market and sell the thermometers.

Other 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.

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RESTATEMENT OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Tables) (Restated)

9 Months Ended

Sep. 30, 2014

Restated

Condensed Consolidated Balance Sheets

Condensed Consolidated Balance Sheets:

	September 30, 2014						September 30,
	As previously Reported			Adjustments			2014 As Restated
Current Assets	$	762,988			-			762,988
Fixed Assets		23,368			-			23,368
Other Assets		21,080			-			21,080
Total Assets	$	807,436			-		$	807,436
Current Liabilities	$	6,416,394		$	602,620		$	7,019,014
Total liabilities		7,171,772			118,610			7,290,382
Total Stockholders’ Deficit	$	(6,364,336	)	$	(118,610	)	$	(6,482,946	)

Condensed Consolidated Statements of Operations

Condensed Consolidated Statements of Operations:

	Three months ended September 30, 2014
	As previously Reported			Adjustments			As Restated
Revenues, net	$	83,181		$	-		$	83,181
Gross profit		70,478			-			70,478
Total Operating expenses		842,540			216,983			1,059,523
Loss from operations		(772,062	)		(216,983	)		(989,045	)
Total other income		(889,329	)		(114,533	)		(1,003,862	)
Net Income (Loss)	$	(1,661,391	)	$	(331,516	)	$	(1,992,907	)
Net loss per share-basic and diluted	$	(0.20	)	$	(0.04	)	$	(0.24)

	Nine months ended September 30, 2014
	As previously Reported			Adjustments			As Restated
Revenues, net	$	281,002		$	—		$	281,002
Gross profit		238,074			—			238,074
Total Operating expenses		2,319,904			397,491			2,717,395
Loss from operations		(2,081,830			(397,491	)		(2,479,321	)
Total other income (expense)		(2,606,384	)		(198,689	)		(2,805,073	)
Net Loss		(4,688,214	)	$	(596,180	)	$	(5,284,394	)
Net loss per share-basic and diluted	$	(0.35	)	$	(0.04	)	$	(0.39	)

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DERIVATIVE LIABILITIES (Restated)

9 Months Ended

Sep. 30, 2014

Restated

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 and requires the recognition of derivative liabilities.

For the derivative instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then revalued at each reporting date The Company estimates the fair value of the embedded derivatives using a Monte Carlo simulation valuation model that combines expected cash outflows with market-based assumptions regarding risk-adjusted yields, stock price volatility, probability of a change of control and the trading information of our common stock into which the notes are convertible, as appropriate to value the derivative instruments at inception and subsequent valuation dates and the value is reassessed at the end of each reporting period, in accordance with FASB ASC Topic 815-15.

The aggregate fair value of derivative liabilities as of September 30, 2014 and December 31, 2013 amounted to $3,219,644 and $1,070,728, respectively. The net increase of $2,148,916 in the fair value of the derivative liabilities from 2013 has been reflected as unamortized discount of $1,622,494 reflected in the convertible notes payable to officer and third parties, the amortization of debt discount of $1,415,839 and the change in fair value of the derivatives between the respective periods is included in other income (expenses) amounting to $9,154.

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RESTATEMENT OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Restated)

9 Months Ended

Sep. 30, 2014

Restated

NOTE 2 - RESTATEMENT OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As previously disclosed in our Form 10-Q for the period ended September 30, 2014, in connection with the initial preparation of our annual report on Form 10-K for the year ended December 31, 2014, we determined that certain previously issued financial statements contained errors. At that time, we evaluated the impact of these errors under the SEC's authoritative guidance on materiality and determined that the impact of these errors, individually and in the aggregate, on prior period financial statements was material. The following is a description of the areas in which these errors were identified and for which we made correcting adjustments to our condensed consolidated financial statements. There was no impact to our actual cash balances as a result of these errors, and these errors do not change net cash flows from financing and investing activities.

(1) Stock Compensation - We identified and corrected various errors in (1) the valuation of common stock shares issued to consultants for services rendered at fair value and, (2) the valuation of common stock shares issued to a related party in settlement of accrued salaries. The correction of these adjustments resulted in an increase in stock compensation expenses, as well as the adjustments to net loss and net loss per share.

(2) Derivative Liabilities- We identified and corrected various errors in the recognition of conversion derivative liabilities in connection with certain related party convertible notes. The correction of these adjustments resulted in an increase of derivative liabilities and increases in non-cash accounts of amortization of interest expense and changes in fair value associated with derivatives.

The following tables present the impact of the restatement on the Company’s previously issued condensed consolidated financial statements.

Condensed Consolidated Balance Sheets:

	September 30, 2014						September 30,
	As previously Reported			Adjustments			2014 As Restated
Current Assets	$	762,988			-			762,988
Fixed Assets		23,368			-			23,368
Other Assets		21,080			-			21,080
Total Assets	$	807,436			-		$	807,436
Current Liabilities	$	6,416,394		$	602,620		$	7,019,014
Total liabilities		7,171,772			118,610			7,290,382
Total Stockholders’ Deficit	$	(6,364,336	)	$	(118,610	)	$	(6,482,946	)

Condensed Consolidated Statements of Operations:

	Three months ended September 30, 2014
	As previously Reported			Adjustments			As Restated
Revenues, net	$	83,181		$	-		$	83,181
Gross profit		70,478			-			70,478
Total Operating expenses		842,540			216,983			1,059,523
Loss from operations		(772,062	)		(216,983	)		(989,045	)
Total other income		(889,329	)		(114,533	)		(1,003,862	)
Net Income (Loss)	$	(1,661,391	)	$	(331,516	)	$	(1,992,907	)
Net loss per share-basic and diluted	$	(0.20	)	$	(0.04	)	$	(0.24	)

	Nine months ended September 30, 2014
	As previously Reported			Adjustments			As Restated
Revenues, net	$	281,002		$	—		$	281,002
Gross profit		238,074			—			238,074
Total Operating expenses		2,319,904			397,491			2,717,395
Loss from operations		(2,081,830			(397,491	)		(2,479,321	)
Total other income (expense)		(2,606,384	)		(198,689	)		(2,805,073	)
Net Loss		(4,688,214	)	$	(596,180	)	$	(5,284,394	)
Net loss per share-basic and diluted	$	(0.35	)	$	(0.04	)	$	(0.39	)

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RESTATEMENT OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Details) (USD $)	Dec. 31, 2013	Sep. 30, 2014
Current Assets	$ 68,457
Fixed Assets	12,562
Total Assets	105,834
Current Liabilities	3,356,779
Total liabilities	5,229,902
Total Stockholders' Deficit	(5,124,068)
As previously Reported [Member]
Current Assets		762,988
Fixed Assets		23,368
Other Assets		21,080
Total Assets		807,436
Current Liabilities		6,416,394
Total liabilities		7,171,772
Total Stockholders' Deficit		(6,364,336)
Adjustments [Member]
Current Assets
Fixed Assets
Other Assets
Total Assets
Current Liabilities		602,620
Total liabilities		118,610
Total Stockholders' Deficit		(118,610)
Restated
Current Assets		762,988
Fixed Assets		23,368
Other Assets		21,080
Total Assets		807,436
Current Liabilities		7,019,014
Total liabilities		7,290,382
Total Stockholders' Deficit		$ (6,482,946)

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SUBSEQUENT EVENTS (Restated)

9 Months Ended

Sep. 30, 2014

Restated

NOTE 10 - SUBSEQUENT EVENTS

Third Party Debt Financing:

(a) On October 24, 2014, we entered into two (2) convertible debentures (the “Debentures”) with Redwood and REDWOOD FUND II, LLC in the principal amounts of $189,375 and $63,125, respectively. On October 27, 2014, Redwood funded the Company an initial tranche of $125,000 pursuant to the terms thereof, with the remaining $127,500 balance to be funded in one week after execution. The principal sum of the Debentures carries a 1% original issue discount from the stated principal amounts. The maturity date of the Debentures plus interest at 13% per annum is April 24, 2015 or such earlier date as the Debentures are required or permitted to be repaid as provided in the Debentures agreement.

All principal and accrued interest on the Debentures is convertible into shares of the Company’s common stock at the election of the holder thereof at any time at a conversion price equal to 65% of the lowest traded volume weighted average price (“VWAP”) during the 10 trading days prior to conversion.

(b) On October 24, 2014, a convertible note originally for $213,612 held by a third party, was purchased and assigned to a new third party lender for $254,916. The convertible promissory note carries interest at 8% per annum, convertible into common shares at a conversion price equal to 62.5% of the lowest traded VWAP price during the 10 trading days prior to conversion and matures on May 23, 2015.

Share Issuances:

During October 1, 2014 and November 3, 2014, the Company issued a total of 31,399,803 shares to five (5) parties in connection with the conversion of $287,951 in convertible debt held.

On October 6, 2014 and November 10, 2014 the Company issued a total of 3,613,425 shares of restricted common stock to a former officer and shareholder at a prices ranging from $0.02 to $0.04 in settlement of $96,164 of unpaid and accrued salaries.

During October, 2014 through November 10, 2014, the Company issued 18,612,912 shares to a Company owned by a former officer and shareholder in connection with the conversion of $193,782 in convertible debt held.

From October 1, 2014 to November 10, 2014 the Company issued Redwood a total of 34,222,678 shares in connection with the conversion of $451,982 in convertible debt held.

Management has evaluated the subsequent events through November 14, 2014, the date at which the condensed consolidated financial statements were available for issue.

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CONVERTIBLE NOTES PAYABLE AND ADVANCES - RELATED PARTIES, NET OF DISCOUNTS (Details) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Total Notes	$ 464,029	$ 747,491
Other advances from CLSS Holdings, LLC, not evidenced by a Promissory Note (C)	242,500	1,125,632
Notes payable - related party gross	706,529	1,873,123
Less: Current portion	435,161
Notes Payable-related parties, net	271,368	1,873,123
Secured Convertible Promissory Note September 30, 2010 [Member]
Total Notes		50,000
Secured Convertible Promissory Note March 12, 2011 [Member]
Total Notes		66,750
Secured Convertible Promissory Note September 30, 2011 [Member]
Total Notes		95,000
Secured Convertible Promissory Note One March 12, 2011 [Member]
Total Notes		334,787
Secured Convertible Promissory Note February 21, 2014 [Member]
Total Notes	132,476
Secured Convertible Promissory Note May 8, 2014 [Member]
Total Notes	95,000
Convertible Promissory Note June 30, 2014 [Member]
Total Notes	43,892
Convertible Promissory Note June 17, 2013 [Member]
Total Notes	192,661	200,954
Secured Convertible Promissory Note May 8, 2014 [Member]
Total Notes
Secured Convertible Promissory Note June 30, 2014 [Member]
Total Notes

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RESTATEMENT OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Details 1) (USD $)	3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2014
Revenues	$ 90,671	$ 211,750
Gross profit	78,474	165,961
Total operating expenses	418,828	1,185,672
Loss from operations	(340,354)	(1,019,711)
Total other income	400,111	(1,490,511)
Net Income (Loss)	59,757	(2,510,222)
Net loss per share-basic and diluted	$ 0.01	$ (1.23)
As previously Reported [Member]
Revenues			83,181	281,002
Gross profit			70,478	238,074
Total operating expenses			842,540	2,319,904
Loss from operations			(772,062)	(2,081,830)
Total other income			(889,329)	(2,606,384)
Net Income (Loss)			(1,661,391)	(4,688,214)
Net loss per share-basic and diluted			$ (0.20)	$ (0.35)
Adjustments [Member]
Revenues
Gross profit
Total operating expenses			216,983	397,491
Loss from operations			(216,983)	(397,491)
Total other income			(114,533)	(198,689)
Net Income (Loss)			(331,516)	(596,180)
Net loss per share-basic and diluted			$ (0.04)	$ (0.04)
Restated
Revenues			83,181	281,002
Gross profit			70,478	238,074
Total operating expenses			1,059,523	2,717,395
Loss from operations			(989,045)	(2,479,321)
Total other income			(1,003,862)	(2,805,073)
Net Income (Loss)			$ (1,992,907)	$ (5,284,394)
Net loss per share-basic and diluted			$ (0.24)	$ (0.39)

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Document and Entity Information

9 Months Ended

Sep. 30, 2014

Nov. 11, 2014

Entity Registrant Name

Sanomedics, Inc.

Entity Central Index Key

0001501972

Document Type

10-Q

Document Period End Date

Sep. 30, 2014

Amendment Flag

true

Amendment Description

This Amendment No. 1 on Form 10-Q/A amends and restates the quarterly report on Form 10-Q of Sanomedics, Inc. (formerly known as Sanomedics international Holdings, Inc.), or the Company, for the quarter ended September 30, 2014, as originally filed with the Securities and Exchange Commission, or the SEC, on November 14, 2014 . This Form 10-Q/A is being filed to restate the Company's condensed consolidated financial statements in Item 1 and related disclosures (including Management's Discussion and Analysis of Financial Condition and Results of Operations in Item 2) for the period ended September 30, 2014. As more fully described in Note 1 to the condensed consolidated financial statements, in connection with the initial preparation of our annual report on Form 10-K for the year ended December 31, 2014, we determined that certain previously issued financial statements contained errors. At that time, we evaluated the impact of these errors under the SEC's authoritative guidance on materiality and determined that the impact of these errors, individually and in the aggregate, on prior period financial statements was material. Based on that determination, we presented revised financial information that reflected the impact of the correction of these errors on our prior period financial statements in the notes to the financial statements that were included in our original quarterly report on Form 10-Q for the period ended September 30, 2014. In April 2014, after discussions with our auditors regarding our assessment of the materiality of the identified errors, management and the Audit Committee of our Board of Directors concluded that we should restate our unaudited interim financial statements for the periods ended June 30, 2014 and September 30, 2014, to reflect the correction of the previously identified errors and the correction of immaterial errors identified in the second and third quarter of 2014. We are also amending our unaudited interim financial statements for the period ended September 30, 2014 to reference the restatement and to correct the immaterial errors identified in the third quarter of 2014. In addition, we restated our unaudited interim financial statements for the period ended June 30, 2014 in our quarterly report on Form 10- Q for the period ended June 30, 2014. See Note 1 to our condensed consolidated financial statements in Item 1 for further information. Although this Form 10-Q/A supersedes the original filing in its entirety, this Form 10-Q/A only amends and restates Items 1and 2 of Part I as a result of and to reflect the restatements. No other information in the original filing is amended hereby. While the foregoing items have been updated, this amended report does not reflect any other events occurring after the original filing. In addition, currently dated certifications from our Chief Executive Officer and Chief Financial Officer are attached to this Form 10-Q/A as Exhibits 31.1, 31.2, 32.1 and 32.2, respectively. Accordingly, this Amendment No. 1 should be read in conjunction with the Original Report and our other filings with the SEC.

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

113,672,248

Document Fiscal Period Focus

Q3

Document Fiscal Year Focus

2014

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LIQUIDITY AND GOING CONCERN (Details Narrative) (USD $)	Dec. 31, 2013	Sep. 30, 2014
Accumulated deficit	$ 13,226,913
Restated
Accumulated deficit		18,511,305
Working capital deficit		6,256,026
Borrowing under revolving line of credit secured		906,000
Cash advances from former Chairman, CEO and shareholder		$ 838,000