10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2013
	OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ____________ to __________

Commission File Number 033-25126-D

MedeFile International, Inc.

(Exact name of registrant as specified in its charter)

Nevada	85-0368333
State or other jurisdiction of	(I.R.S. Employer
incorporation or organization	Identification No.)

301 Yamato Rd, Suite 1200

Boca Raton, FL  33431

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code (561) 912-3393

Copies to:

Richard A. Friedman, Esq.

Jeff Cahlon, Esq.

Sichenzia Ross Friedman Ference LLP

61 Broadway, 32nd Floor

New York, New York 10006

Phone: (212) 930-9700

Fax: (212) 930-9725

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x  No o

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o  No  x

Number of shares outstanding of registrant’s class of common stock, par value $0.0001 (the “Common Stock”) 25,685,470 as of May 15, 2013.

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Table of Contents

	Page
PART I
FINANCIAL INFORMATION	3
ITEM 1. Financial Statements	15
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk	17
ITEM 4. Controls and Procedures	17
PART II
OTHER INFORMATION
ITEM 1. Legal Proceedings	17
ITEM 1A. Risk Factors	17
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds	17
ITEM 3. Defaults Upon Senior Securities	17
ITEM 4. Mine Safety Disclosures	17
ITEM 5. Other Information	17
ITEM 6. Exhibits	18
Signatures	19

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Item 1. Financial Statements.

Medefile International, Inc.

Condensed Consolidated Balance Sheets

	March 31			December 31,
	2013			2012
Assets	(unaudited)
Current assets
Cash	$	148,815		$	234,356
Accounts receivable, net		197			391
Inventory		55,171			55,458
Merchant services reserve		64,319			64,319
Prepaid insurance		-			998
Total current assets		268,502			355,522
Website development, net of accumulated amortization		200,000			167,245
Furniture and equipment, net of accumulated depreciation		901			1,529
Intangibles		1,339			1,339
Total assets	$	470,742		$	525,635
Liabilities and Stockholders' (Deficit)
Current Liabilities
Accounts payable and accrued liabilities	$	131,247		$	138,211
Deferred revenues		2,773			4,313
Derivative liability		1,608,861			5,618,819
Total Current Liabilities		1,742,881			5,761,343
Stockholders' (Deficit)
Preferred stock, $.0001 par value: 10,000,000 authorized,
no shares issued and outstanding		-			-
Common stock, $.0001 par value: 100,000,000 authorized;
11,813,189 and 11,413,189 shares issued and outstanding on
March  31, 2013 and December 31, 2012, respectively		1,181			1,141
Additional paid in capital		26,276,919			23,886,499
Accumulated deficit		(27,550,239	)		(29,123,348	)
Total stockholders' (deficit)		(1,272,139	)		(5,235,708	)
Total liability and stockholders'(deficit)	$	470,742		$	525,635

The accompanying notes are an integral part of these consolidated financial statements

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Medefile International, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

	The Three Months Ended
	March 31,
	2013			2012
Revenue	$	7,653		$	13,714
Cost of goods sold		286			66
Gross profit		7,367			13,648
Operating expenses
Selling, general and administrative expenses		247,885			239,774
Depreciation and amortization expenses		5,873			7,597
Total operating expenses		253,758			247,371
Loss from operations		(246,391	)		(233,723	)
Other income (expenses)
Gain (loss) on changes in fair value
of derivative liabilities		1,819,500			-
Total other income (expense)		1,819,500			-
Loss before income tax		1,573,109			(233,723	)
Provision for income tax		-			-
Net loss	$	1,573,109		$	(233,723	)
Net loss per share: basic and diluted	$	0.13		$	(0.29	)
Weighted average share outstanding basic and diluted		11,754,762			795,507

The accompanying notes are an integral part of these consolidated financial statements

4

Medefile International, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	The Three Months Ended
	March 31,
	2013			2012
Cash flows from operating activities
Net loss	$	1,573,109		$	(233,723	)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization		5,873			7,597
Stock based services		-			42,859
(Gain)loss  in fair value of derivitave liabilities		(1,819,500	)		-
Changes in operating assets and liabilities
Accounts receivable		194			(1,276	)
Inventory		289			66
Prepaid insurance		998			1,055
Accounts payable and accrued liabilities		(6,964	)		20,344
Merchant services reserve		-			(1,790	)
Deferred revenue		(1,540	)		(2,961	)
Net Cash used in operating activities		(247,541	)		(167,829	)
Cash flows from investing activities
Website development		(38,000	)		-
Net cash used in investing activities		(38,000	)		-
Cash flow from financing activities
Proceeds from common stock sale		200,000			-
Net cash provided by financing activities		200,000			-
Net increase (decrease) in cash and cash equivalents		(85,541	)		(167,829	)
Cash and cash equivalents at beginning of period		234,356			198,173
Cash and cash equivalents at end of period	$	148,815		$	30,344
Supplemental disclosure of cash flow information
Cash paid for interest	$	-		$	-
Cash paid for income taxes	$	-		$	-

The accompanying notes are an integral part of these consolidated financial statements

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Medefile International, Inc.

Notes to Consolidated Financial Statements

1. BASIS OF PRESENTATION AND NATURE OF BUSINESS OPERATIONS

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of MedeFile International Inc., a Nevada corporation (the "Company"), have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete consolidated financial statements. These unaudited condensed consolidated financial statements and related notes should be read in conjunction with the Company's Form 10-K for the fiscal year ended December 31, 2012. In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments that are of a normal recurring nature and which are necessary to present fairly the financial position of the Company as of March 31, 2013, and the results of operations and cash flows for the three months ended March 31, 2013 and 2012. The results of operations for the three months ended March 31, 2013 are not necessarily indicative of the results that may be expected for the entire fiscal year.

Nature of Business Operations

Medefile International, Inc., has developed and globally markets a proprietary, patient-centric, Internet-enabled Personal Health Record (iPHR) system for gathering, digitizing, maintaining, accessing and sharing an individual’s actual medical records. Medefile's goal is to revolutionize the medical industry by bringing patient-centric digital technology to the business of medicine. Medefile intends to accomplish its objective by providing individuals with a simple and secure way to access their lifetime of actual medical records in an efficient and cost-effective manner. Medefile's products and services are designed to provide healthcare providers with the ability to reference their patients’ actual past medical records, thereby ensuring the most accurate treatment and services possible while simultaneously reducing redundant procedures.

Interoperable with most electronic medical record systems utilized by physician practices, clinics, hospitals and other care providers, the highly secure, feature-rich MedeFile iPHR solution has been designed to gather all of its members’ actual medical records on behalf of each member, and create a single, comprehensive Electronic Health Record (EHR). The member can access his/her records 24-hours a day, seven days a week – or authorize a third party user – on any web-enabled device (PC, cell phone, PDA, e-reader, et al), as well as the portable MedeFile flash drive/keychain or branded UBS-bracelet.

By subscribing to the MedeFile system,  members empower themselves to take control of their own health and well-being, and empower their healthcare providers to make sound and lifesaving decisions with the most accurate, up-to-date medical information available.  In addition, with MedeFile, members enjoy the peace of mind that comes from knowing that their medical records are protected from fire, natural disaster, document misplacement or the closing of a medical or dental practice.

MedeFile enjoys a number of competitive advantages over other firms within the medical records marketplace, including:

· MedeFile has developed products and services geared to the patient, while containing the depth and breadth of information required by treating physicians and medical personnel.

· MedeFile does all the work of collecting and updating medical information on an ongoing basis; its dependence on the  patient taking action is minimal – particularly when compared to patient action required to support competing solutions.

· MedeFile provides a complete medical record. Other companies claim complete longitudinal records, but in reality only provide histories (usually completed by the member/patient), which are by no means complete or necessarily accurate records.

· MedeFile provides a coherent mix of services and products that are intended to affect the quality of healthcare by enabling the patient to manage and access the information normally retained by doctors and other care providers.

Going Concern

The accompanying financial statements have been prepared contemplating a continuation of the Company as a going concern. However, the Company has reported a net income of $1,573,109 for the three months ended March 31, 2013 and a net loss of $233,723 for the three months ended March 31, 2012 and had an accumulated deficit of $27,550,239 as of March 31, 2013.  The Company has negative working capital of $1,474,379 as of March 31, 2013.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The operating losses raise substantial doubt about the Company's ability to continue as a going concern. The Company's ability to obtain additional financing depends on the availability of its borrowing capacity, the success of its growth strategy and its future performance, each of which is subject to general economic, financial, competitive, legislative, regulatory, and other factors beyond the Company's control.

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We will need additional investments in order to continue operations to cash flow break even. Additional investments are being sought, but we cannot guarantee that we will be able to obtain such investments. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms.

However, the trading price of our common stock could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Further, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. If additional financing is not available or is not available on acceptable terms, we will have to curtail our operations.

Cash and Cash Equivalents

For purposes of these financial statements, cash and cash equivalents includes highly liquid debt instruments with maturity of less than three months.

Concentrations of Credit Risk

Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents. The Company places its cash and temporary cash investments with high credit quality institutions. At times, such investments may be in excess of the FDIC insurance limit.  Currently our operating account is not above the FDIC limit.

Advertising

The Company follows the policy of charging the costs of advertising to expense as incurred. The Company incurred advertising costs for the three months ended March 31, 2013 and 2012 of approximately $0 and $0 respectively.

Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. A valuation allowance is established against deferred tax assets that do not meet the criteria for recognition. In the event the Company were to determine that it would be able to realize deferred income tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the valuation allowance which would reduce the provision for income taxes.

The Company follows the accounting guidance which provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized initially and in subsequent periods. Also included is guidance on measurement, recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

Property and Equipment

Property and equipment are stated at cost. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings. Minor additions and renewals are expensed in the year incurred. Major additions and renewals are capitalized and depreciated over their estimated useful lives being 3 years up to 10 years.

Trademark Costs

Trademark costs incurred in the registration and acquisition of trademarks and trademark rights are capitalized. These costs will be amortized over the legal life of the related trademark once the trademark is awarded. The Company performs an annual review of its identified intangible assets to determine if facts and circumstances exist which indicate that the useful life is shorter than originally estimated or that the carrying amount of the assets may not be recoverable.

The Company expenses all software costs associated with the conceptual formulation and evaluation of alternatives until the application development stage has been reached. Costs to improve or support the technology are expensed as these costs are incurred.

7

Website Development

The Company's policy is to capitalize website development costs at original cost and amortize the balance over the life of the product.  The life of website is determined at completion of the project. The Company reviews the amounts capitalized for impairment whenever events or circumstances indicate that the carrying amounts of the assets may not be recoverable.

The Company expenses all development costs associated with the conceptual formulation and evaluation of alternatives until the application development stage has been reached. Costs to improve or support the technology are expensed as these costs are incurred.

Revenue Recognition

The Company generates revenue from licensing the right to utilize its proprietary software for the storage and distribution of healthcare information to individuals and affinity groups. For revenue from product sales, the Company recognizes revenue on four basic criteria which must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded.

Deferred Revenue

The Company generally receives subscription fees for its services. From time to time, the Company will receive quarterly or annual subscriptions paid in advance and deferred revenue is recorded at that time. The deferred revenue is amortized into revenue on a pro- rata basis each month. Customers with quarterly or annual subscriptions may cancel their subscriptions and request a refund for future months' revenues at any time. Therefore, a liability is recorded to reflect the amounts that are potentially refundable.  At March 31, 2013 and December 31, 2012, deferred revenue totaled $2,773 and$4,313, respectively.

Reclassifications

Certain reclassifications have been made in prior periods financial statements to conform to classifications used in the current period.

Recent Accounting Pronouncements

There are no recent accounting pronouncements that are expected to have a material effect on the Company’s financial statements.

Fair Value of Financial Instruments

Cash and Equivalents, Store Deposits In-Transit, Receivables, Prepaid and Other Current Assets, Accounts Payable, Accrued Salaries and Wages and Other Current Liabilities

The carrying amounts of these items approximated fair value.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, Financial Accounting Standards Board (“FASB”) ASC Topic 820-10-35 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurements).

Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets.

Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3—Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

8

The application of the three levels of the fair value hierarchy under Topic 820-10-35 to our assets and liabilities are described below:  

	Fair Value Measurements
	Level 1		Level 2		Level 3		Total Fair Value
Assets
Merchant Service Reserves	$	64,319	$	-	$	-	$	64,319
Total	$	64,319	$	-	$	-	$	64,319
Liabilities
Deferred Revenues	$	2,773	$	-	$	-	$	2,773
Derivative Liability		-		-		1,608,861		1,608,861
Total	$	2,773	$	-	$	1,608,861	$	1,611,634

Impairment of Long Lived Assets

In accordance with Accounting Standards Codification (“ASC”) 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets, long-lived assets to be held and used are analyzed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. ASC 360-10 relates to assets that can be amortized and the life can be determinable. The Company reviews property and equipment and other long-lived assets for impairment annually, or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  Recoverability is measured by comparison of the asset’s carrying amount to future undiscounted net cash flows the assets are expected to generate.  Cash flow forecasts are based on trends of historical performance and management's estimate of future performance, giving consideration to existing and anticipated competitive and economic conditions.  If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted future cash flows arising from the assets or their fair values, whichever is more determinable.

Inventory

Inventories are stated at the lower of cost or market value.  Cost is determined by the first-in, first-out basis and market being determined as the lower of replacement cost or net realizable value. The Company records inventory write-downs for estimated obsolescence of unmarketable inventory based upon assumptions about future demand and market conditions.  For the three months ended March 31, 2013 and 2012, the Company did not have any inventory write downs.

Net Loss per Share

Basic and diluted loss per share amounts are computed based on net loss divided by the weighted average number of common shares outstanding. Warrants to purchase 3,037,546 common shares were not included in the computation of diluted loss per share because the assumed conversion and exercise would be anti-dilutive for the three months ending March 31, 2013.  

Management Estimates

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

Stock Based Compensation

The Company accounts for all compensation related to stock, options or warrants using a fair value based method whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. The Company uses the Black-Scholes pricing model to calculate the fair value of options and warrants issued to both employees and non-employees. Stock issued for compensation is valued using the market price of the stock on the date of the related agreement.

2.  ACCOUNTS RECEIVABLE

Due to the collection history of the Company, an allowance for doubtful accounts is not maintained.  Recognition of a specific uncollectible account is written directly against the invoice in accounts receivable and expensed in the current period.

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3.   WEBSITE DEVELOPMENT

Website development consists of the following:

	March 31, 2013			December 31, 2012
Website development	$	224,946		$	62,946
Additional development		38,000			162,000
Accumulated amortization		(62,946	)		(57,701	)
Net website development	$	200,000		$	167,245

During May 2012 the Company began redesigning its website.  The redesign is anticipated to be completed in May 2013.

Amortization is calculated over a three-year period beginning in the second quarter of 2010.  Amortization expense for the three months ending March 31, 2013 and 2012 is $5,245 and $5,245, respectively.

4. FURNITURE AND EQUIPMENT

Furniture and equipment consists of the following:

	March 31, 2013			December 31, 2011
Computers and equipment	$	169,286		$	169,286
Furniture and fixtures		38,618			38,618
Subtotal		207,904			207,904
Less: accumulated depreciation		(207,003	)		(206,375	)
Net furniture and equipment	$	901		$	1,529

Depreciation is calculated by using the straight-line method over the estimated useful life.   Depreciation expense totaled $628 and $2,352 for the three months ended March 31, 2013 and 2012, respectively.

5. WARRANT LIABILITY

In connection with certain securities purchase agreements entered into during the third quarter 2011 and the second quarter 2012 (see Note 6), the Company granted warrants with ratchet provisions. The warrants contain an expiration date of four years from the date of grant. During the first two years of grant, if the Company issues any additional shares of common stock at a price per share less than the exercise price in effect, the exercise price will be adjusted to equal the average price per share received by the Company for the additional shares issued. After the first two years, if the Company issues any additional shares of common stock at a price per share less than the exercise price in effect, the exercise price will be adjusted using a formula based on the existing exercise price, the outstanding shares before and after the issuance of such shares, and the average price during the issuance of such shares. In addition to the exercise price adjustment, the number of shares upon exercise of the warrants are also subject to adjustment.

Upon grant, the Company assesses the fair value of the warrants using the Black Scholes pricing model and records a warrant liability for the value. The Company then assesses the fair value of the warrants quarterly based on the Black Scholes Model and increases or decreases the warrant liability to the new value, and records a corresponding gain or loss. (see Note 6 for variables used in assessing the fair value). The Company uses expected volatility based primarily on historical volatility using weekly pricing observations for recent periods that correspond to the expected life of the warrants. The risk-free interest rate is based on U.S. Treasury securities rates.

Due to the ratchet provisions, the Company treats the warrants as a derivative liability in accordance with the provisions of ASC 815 “Derivatives and Hedging” (ASC 815). ASC 815 applies to any freestanding financial instruments or embedded features that have the characteristics of a derivative and to any freestanding financial instruments that potentially settle in an entity’s own common stock.

As of March 31, 2013, these warrants include the following:

Warrants granted during July 2011 in connection with the sale of 35,461 shares of common stock with the right to originally purchase up to 35,461 shares of the Company’s common stock with an original exercise price of $2.50. Due to the issuance of the Company’s common stock in April 2012, the exercise price was adjusted to $0.50 and the number of shares to 1,808,511. Fair value was determined using the following variables:

10

	Grant Date			March 31, 2013			December 31, 2012
Risk-free interest rate at grant date		1.21	%		0.57	%		0.54	%
Expected stock price volatility		194.9	%		148.4	%		187.0	%
Expected dividend payout		-			-			-
Expected option in life-years		4			2.27			2.5	1

Warrants granted during April 2012 in connection with the sale of 100,000 shares of the Company’s preferred stock to a significant shareholder and brother of the Chief Executive Officer with the right to purchase up to 200,000 shares of the Company’s common stock with an exercise price of $0.50. Fair value was determined using the following variables:

	Grant Date			March 31, 2013
Risk-free interest rate at grant date		0.47	%		0.57	%
Expected stock price volatility		137.8	%		148.4	%
Expected dividend payout		-			-
Expected option in life-years		3.75			3.0

Warrants granted during April 2012 in connection with the sale of 1,000,000 shares of the Company’s common stock with an exercise price of $0.50.

	Grant Date			March 31, 2013
Risk-free interest rate at grant date		0.47	%		0.57	%
Expected stock price volatility		137.8	%		148.4	%
Expected dividend payout		-			-
Expected option in life-years		3.75			3.0

Transactions involving warrants with ratchet provisions are as follows:

	Number of Warrants		Weighted-Average Price Per Share
Outstanding at December 31, 2011		1,200,000	$	0.50
Granted
Exercised
Canceled or expired
Additional due to ratchet trigger		1,808,511		0.50
Outstanding at December 31, 2012		3,008,511		0.50
Granted
Exercised
Canceled or expired
Addition due to ratchet trigger
Outstanding at March 31, 2013		3,008,511	$	0.50

As of March 31, 2013 and December 31, 2012, the warrant liability consisted of the following:

	March 31, 2013		December 31, 2012
Warrant liability (beginning balance)	$	5,618,819	$	111,636
Additional liability due to new grants				5,078,052
Loss(gain) on changes in fair market value of warrant liability		(3,707,898)		429,131
Net warrant liability	$	1,608,861	$	5,618,819

Change in fair market value of warrant liability resulted in a gain totaling $1,819,500 and $0 for the three months ended March 31, 2013 and 2012, respectively.

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6. EQUITY

Common Stock

On October 8, 2012, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Secretary of State of Nevada, pursuant to which (i) the Company effected a 5,000-to-1 reverse split of its common stock and (ii) the number of authorized shares of the Company’s common stock decreased from 75,000,000,000 to 100,000,000. The market effective date of the reverse split was October 9, 2012.  The effect of the stock split has been applied retroactively.

2012

On March 1, 2012, the Company issued 10,714 shares of common stock to a consultant. The market value of the shares was $42,859,

On April 18, 2012, the Company entered into a Securities Purchase Agreement with accredited investors pursuant to which, on April 18, 2012, the Company sold 1,000,000 shares of common stock for an aggregate purchase price of $500,000, and the Company issued four-year warrants to purchase 1,000,000 shares of common stock to the investors with an exercise price of $0.50. The Investors were purchasers under the Company’s Securities Purchase Agreements entered into in July 2011.

On April 23, 2012, the Company issued an aggregate of 7,980,133 shares of common stock to certain shareholders of the Company, in accordance with anti-dilution rights held by such shareholders, including 5,383,594 shares to Lyle Hauser valued at par $539, 1,632,000 shares to Kevin Hauser valued at fair market value for compensation expense of $9,792,000, and 964,539 shares valued at par $96 to purchasers under Securities Purchase Agreements entered into by the Company in July 2011. Lyle Hauser is the Company’s largest shareholder and the brother of Kevin Hauser, the Company’s chief executive officer.

On May 15, 2012, the Company entered into a Securities Purchase Agreement with accredited investors pursuant to which, on May 15, 2012, the Company sold 600,000 shares of common stock for an aggregate purchase price of $300,000, and the Company issued four-year warrants to purchase 600,000 shares of common stock to the Investors with an exercise price of $0.50. The investors were purchasers under the Company’s Securities Purchase Agreements entered into in July 2011.

On June 26, 2012, the Company entered into a Securities Purchase Agreement with accredited investors pursuant to which, on June 26, 2012, the Company sold 200,000 shares of common stock for an aggregate purchase price of $100,000, and the Company issued four-year warrants to purchase 200,000 shares of common stock to the investors with an exercise price of $0.50. The investors were purchasers under the Company’s Securities Purchase Agreements entered into in July 2011.  The Company issued 100,000 shares on July 18, 2012 and the remaining 100,000 shares on November 14, 2012.

On July 16, 2012, the Company issued 24,000 shares of common stock to a consultant in the amount of $60,000.

On September 20, 2012, the Company sold 100,000 shares of common stock for a purchase price of $50,000.   The shares were issued on November 14, 2012

On August 24, 2012, the Company entered into a Securities Purchase Agreement with accredited investors pursuant to which, the Company sold 500,000 shares of common stock for an aggregate purchase price of $250,000. 

2013

On January 17, 2013 the Company entered into a Securities Purchase Agreement pursuant to which, the Company sold 400,000 shares of common stock for an aggregate purchase price of $200,000

Preferred Stock

On April 10, 2012, the Company filed a certificate of designation of Series B Preferred Stock (the “Series B Certificate of Designation”) with the Secretary of State of Nevada, pursuant to which 100,000 shares of the Company’s preferred stock were designated as Series B Convertible Preferred Stock (the “Series B Preferred Stock”).  Pursuant to the Series B Certificate of Designation, the Series B Preferred Stock:

● Has a liquidation preference over the common stock equal to the stated value of $1.00 per share.  

● Votes as a single class with the common stock and entitles its holders, for each share of Series B Preferred Stock, to cast such number of votes equal to 0.00051% of the total number of votes entitled to be cast. Accordingly, a holder of all 100,000 shares of Series B Preferred Stock will have the right to cast 51% of the total number of votes entitled to be cast.  

● Will automatically convert into common stock at a ratio of 2 shares of common stock for each share of Series B Preferred Stock, effective upon the Company’s filing of a certificate of amendment to its articles of incorporation.

On April 12, 2012, the Company entered into a securities purchase agreement with Lyle Hauser (the “Preferred Stock Investor”). Lyle Hauser is the Company’s largest shareholder and the brother of Kevin Hauser, the Company’s chief executive officer. Pursuant to the purchase agreement, on April 12, 2012, the Company sold 100,000 shares of Series B Preferred Stock to the Preferred Stock Investor for an aggregate purchase price of $100,000, and the Company issued four-year warrants to purchase 200,000 shares of common stock to the Preferred Stock Investor with an exercise price of $0.50. On April 23, 2012, 100,000 Series B Preferred shares were converted to 200,000 shares of common stock

12

Stock Options

2006 Incentive Stock Plan

In January 2006, the Board of Directors of the Company approved an Incentive Stock Plan, pursuant to which they have initially reserved 10,000,000 shares of common Stock for issuance. Under the 2006 Incentive Stock, the Board has granted an aggregate of 5,640,000 options to employees pursuant to certain employment agreements. All previously granted options have expired unexercised.

2008 Amended and Restated Incentive Stock Plan

In November 2008, our Board of Directors adopted the 2008 Equity Incentive Plan and subsequently amended it in January 2009, June 2009 and July 2009 (the “2008 Plan”). The purpose of the 2008 Plan was to provide an incentive to attract and retain directors, officers, consultants, advisors and employees whose services are considered valuable, to encourage a sense of proprietorship and to stimulate an active interest of such persons into our development and financial success. Under the 2008 Plan, the Company is authorized to issue incentive stock options intended to qualify under Section 422 of the Code, non-qualified stock options, stock appreciation rights, performance shares, restricted stock and long term incentive awards. The 2008 Plan will be administered by our Board of Directors until such time as such authority has been delegated to a committee of the board of directors.

2010 Incentive Stock Plan

In December 2009, our Board of Directors adopted the 2010 Equity Incentive Plan (the “2010 Plan”). The purpose of the 2010 Plan was to provide an incentive to attract and retain directors, officers, consultants, advisors and employees whose services are considered valuable, to encourage a sense of proprietorship and to stimulate an active interest of such persons into our development and financial success. Under the 2010 Plan, we are authorized to issue incentive stock options intended to qualify under Section 422 of the Code, non-qualified stock options, stock appreciation rights, performance shares, restricted stock and long term incentive awards. The 2010 Plan will be administered by our Board of Directors until such time as such authority has been delegated to a committee of the Board of Directors.

Other Warrants

During the first quarter of 2008 the Company awarded 35 Common Stock warrants, at an exercise price of $2800 per share, to former Board members at the quoted stock price on the effective date of the awards. The warrants have an expiration date of five years from the issue date and contain provisions for a cash exercise. The estimated value of the compensatory warrants granted to non-employees in exchange for services and financing expenses was determined using the Black-Scholes pricing model and the following assumptions:

Risk-free interest rate at grant date	4.75	%
Expected stock price volatility	155	%
Expected dividend payout	--
Expected option in life-years	5

On June 22, 2011, the Company awarded 2,000 Common Stock warrants, at an exercise price of $50 per share, to consultants for services at the quoted stock price on the effective date of the awards. The warrants have an expiration date of four years from the issue date and contain provisions for a cash exercise. The estimated value of the compensatory warrants granted to non-employees in exchange for services and financing expenses was determined using the Black-Scholes pricing model and the following assumptions listed below:

On July 28, 2011, the Company awarded 27,000 Common Stock Warrants, at an exercise price of $25 per share to consultants for services at the quoted stock price on the effective date of the awards.  The warrants have an expiration date of three years from the issue date and contain provisions for a cash exercise.  The estimated value of the compensatory warrants granted to non-employees in exchange for services was determined using the Black-Scholes pricing model and the assumptions listed below.

Risk-free interest rate at grant date	0.39	%
Expected stock price volatility	172.1	%
Expected dividend payout	--
Expected option in life-years	4

13

Transactions involving warrants are summarized as follows:

	Number of Warrants		Weighted-Average Price Per Share
Outstanding at December 31, 2011		29,035		30.07
Granted		-		-
Exercised		-		-
Canceled or expired		-		-
Outstanding at December 31, 2012		29,035	$	30.07
Granted		-		-
Exercised		-		-
Canceled or expired		-		-
Outstanding at March 31, 2013		29,035	$	30.07

Warrants Outstanding
					Weighted
					Average
					Remaining
Exercise			Number		Contractual
Prices			Outstanding		Life (years)
	$	2,800		35	.75
		25		2,000	2.00
		50		27,000	3.00
				29,035	2.92

7. RELATED PARTY TRANSACTIONS

None.

8.  SUBSEQUENT EVENTS

On April 15, 2013, the Company entered into a Securities Purchase Agreement with accredited investors pursuant to which the Company sold 2,000,000 shares of common stock for an aggregate purchase price of $400,000. 

On May 1, 2013 the Company issued an aggregate of 11,872,281shares of common stock to purchasers under the securities purchase agreements entered into by the Company in July 2011 and April 2012 pursuant to anti-dilution rights held by such purchasers..

14

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

This Management’s Discussion and Analysis of Financial Condition and Results of Operations may contain "forward-looking statements." The terms "believe," "anticipate," "intend," "goal," "expect," and similar expressions may identify forward-looking statements. These forward-looking statements represent the Company's current expectations or beliefs concerning future events. The matters covered by these statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements, including customer acceptance of new products, the impact of competition and price erosion, as well as other risks and uncertainties. In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation that the strategy, objectives or other plans of the Company will be achieved. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Except as may be required under applicable securities laws, we undertake no duty to update this information. More information about potential factors that could affect our business and financial results is included in the section entitled "Risk Factors"

OVERVIEW

Organizational History

On November 1, 2005, Bio-Solutions International, Inc. ("Bio-Solutions") entered into an Agreement and Plan of Merger (the "Agreement") with OmniMed Acquisition Corp., (the "Acquirer), a Nevada corporation and a wholly owned subsidiary of Bio-Solutions, OmniMed International, Inc., a Nevada corporation ("OmniMed"), and the shareholders of OmniMed (the "OmniMed Shareholders"). Pursuant to the Agreement, Bio-Solutions acquired all of the outstanding equity stock of OmniMed from the OmniMed Shareholders. As consideration for the acquisition of OmniMed, Bio-Solutions agreed to issue 1,979 shares of Bio-Solutions' common stock to the OmniMed Shareholders.

As a result of the Agreement, the OmniMed Shareholders assumed control of Bio-Solutions. Effective November 21, 2005, Bio-Solutions changed its name to OmniMed International, Inc.  Effective January 17, 2006, OmniMed changed its name to MedeFile International, Inc. ("MedeFile" or the "Company").

Overview of Business

MedeFile International, Inc., through its MedeFile, Inc. subsidiary, has developed and globally markets a proprietary, patient-centric, Internet-enabled Personal Health Record (iPHR) system for gathering, digitizing, maintaining, accessing and sharing an individual’s actual medical records. Our goal is to revolutionize the medical industry by bringing patient-centric digital technology to the business of medicine. We intend to accomplish its objective by providing individuals with a simple and secure way to access their lifetime of actual medical records in an efficient and cost-effective manner. Our products and services are designed to provide healthcare providers with the ability to reference their patient's actual past medical records, thereby ensuring the most accurate treatment and services possible while simultaneously reducing redundant procedures.

Interoperable with most electronic medical record systems utilized by physician practices, clinics, hospitals and other care providers, the highly secure, feature-rich MedeFile iPHR solution has been designed to gather all of its members’ actual medical records on behalf of each member, and create a single, comprehensive Electronic Health Record (EHR).  The member can access his/her records 24-hours a day, seven days a week – or authorize a third party user – on any web-enabled device (PC, cell phone, PDA, e-reader, et al), as well as the portable MedeFile flash drive/keychain or branded UBS-bracelet.

By subscribing to the MedeFile system, members can empower themselves to take control of their own health and well-being, as well as empower their healthcare providers to make sound and lifesaving decisions with the most accurate, up-to-date medical information available.  In addition, with MedeFile, members enjoy the peace of mind that comes from knowing that their medical records are protected from fire, natural disaster, document misplacement or the closing of a medical or dental practice.

We believe we enjoy a number of direct, competitive advantages over others in the medical records marketplace:

·   We have developed products and services geared to the patient, while containing the depth and breadth of information required by treating physicians and medical personnel

·   We do all the work of collecting and updating medical information on an ongoing basis; its dependence on the patient taking action is minimal – particularly when compared to patient action required to support competing solutions.

·   We provide a complete medical record.  Other companies claim complete longitudinal records, but in reality only provide histories (usually completed by the member/patient), which are by no means complete or necessarily accurate records

·   We provide a coherent mix of services and products that are intended to affect the quality of healthcare by enabling the patient to manage and access the information normally retained by doctors and other care providers.

15

RESULTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2013 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2012

Revenues

Revenues for the three months ended March 31, 2013 totaled $7,653 compared to revenues of $13,714 for the three months ended March 31, 2012.   The decrease in membership revenue is primarily related to a decrease in the amount of members and medical record reimbursement revenue received from members. Medical record reimbursement revenue is a dollar for dollar reimbursement for charges from members’ doctors for sending updated medical records to MedeFile. The off-setting expense is charged to selling general and administrative expense.  The Company has decreased its marketing and advertising efforts through a previously used telemarketing campaign.  As a result, there has been a substantial decrease in memberships over the previous period.  Revenues received from memberships are recognized through the period of the membership, and, therefore, revenue recognized represents a fraction of the membership in the quarter being reported.   

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended March 31, 2013 totaled $247,885, an increase of $8,109 or approximately 3% compared to selling, general and administrative expenses of $239,774 for the three months ended March 31, 2012. Overall there was an increase in the total selling, general and administrative which is primarily due to increased costs associated with marketing campaign and business development expenses.  

Depreciation and Amortization Expense

Depreciation and amortization expense totaled $5,873 for the three months ended March 31, 2013, compared to $7,597 for the three months ended March 31, 2012. The decrease is as expected due to some assets being fully depreciated. Amortization began in the second quarter of 2010 and is expensed at $5,245 per quarter over a three-year period.

Net Income (Loss)

Our net income for three months ended March 31, 2013 was $1,573,109, or $0.13 per share, an increase of $1,806,832, compared to a net loss of $233,723, or $0.29 per share, during the three months ended March 31, 2012. The significant change is directly related to adjustments in the fair value of our derivative liability at March 31, 2013. Our operating loss for the three months ended March 31, 2013 was $246,391 compared to an operating loss of $233,723 in the previous year’s comparable period. The slight increase in operating loss of $12,668 is primarily the result of an increase in our general and administrative expenses as detailed above.

FINANCIAL CONDITION

Liquidity and Capital Resources

As of March 31, 2013, we had cash and cash equivalents of $148,815, inventory of $55,171, merchant services reserve of $64,319, and accounts receivable of $197.  Net cash used in operating activities for the three months ended March 31, 2013 was approximately $247,541. Current liabilities of $1,742,881 consisted of $131,246 for accounts payable and accrued liabilities, deferred revenues of $2,773 and warrant liabilities of $1,608,861. We have a net negative working capital of $1,474,379.

The accompanying financial statements have been prepared contemplating a continuation of the Company as a going concern. The Company has reported a net income of $1,573,109 for the three months ended March 31, 2013 and had an accumulated deficit of $27,550,239 as of March 31, 2013.  The Company has a net negative working capital of $5,405,821 as of December 31, 2012.

The Company currently estimates that it will require approximately $420,000 to continue its operations for the next twelve months.  Additional investments are being sought, but we cannot guarantee that we will be able to obtain such investments. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the trading price of our common stock and conditions in the U.S. stock and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Further, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. If additional financing is not available or is not available on acceptable terms, we will have to curtail our operations

Off-Balance Sheet Arrangements

We do not have any off balance sheet arrangements as of March 31, 2013 or as of the date of this report.

Critical Accounting Policies

The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect our reported assets, liabilities, revenues, and expenses, and the disclosure of contingent assets and liabilities.

We base our estimates and judgments on historical experience and on various other assumptions we believe to be reasonable under the circumstances. Future events, however, may differ markedly from our current expectations and assumptions. While there are a number of significant accounting policies affecting our consolidated financial statements; we believe the following critical accounting policy involves the most complex, difficult and subjective estimates and judgments:

Revenue Recognition

The Company generates revenue from licensing the right to utilize its proprietary software for the storage and distribution of healthcare information to individuals and affinity groups. For revenue from product sales, the Company recognizes revenue on four basic criteria which must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company defers any revenue for which the product has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required.

Stock-based Compensation

The Company accounts for all compensation related to stock, options or warrants using a fair value based method whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. The Company uses the Black-Scholes pricing model to calculate the fair value of options and warrants issued to both employees and non-employees. Stock issued for compensation is valued using the market price of the stock on the date of the related agreement.

Recent Accounting Pronouncements

There are no recent accounting pronouncements that are expected to have a material effect on the Company’s financial statements.

16

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a Smaller Reporting Company as defined Rule 12b-2 of the Exchange Act and in item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item 3.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosure.

As of the end of the period covered by this Quarterly Report, we conducted an evaluation, under the supervision and with the participation of our Chief Executive Officer (Principal Executive and Financial Officer) of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation, our Chief Executive Officer (Principal Executive and Financial Officer) concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and also are effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer (Principal Executive and Financial Officer), to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

During the quarter ended March 31, 2013, there has been no change in our internal control over financial reporting (as defined in Rule  13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected,  or is reasonably likely to materially affect, our internal control over financial reporting.

 PART II - OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, the Company may become involved in litigation relating to claims arising out of its operations in the normal course of business. We are not involved in any pending legal proceeding or litigation and, to the best of our knowledge, no governmental authority is contemplating any proceeding to which we are a party or to which any of our properties is subject, which would reasonably be likely to have a material adverse effect on the Company.

Item 1A. Risk Factors

As a Smaller Reporting Company as defined Rule 12b-2 of the Exchange Act and in item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item .

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

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information

None. 

17

Item 6. Exhibits

31.1	Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended.
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
EX-101.INS	XBRL INSTANCE DOCUMENT
EX-101.SCH	XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT
EX-101.CAL	XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
EX-101.DEF	XBRL TAXONOMY EXTENSION DEFINITION LINKBASE
EX-101.LAB	XBRL TAXONOMY EXTENSION LABELS LINKBASE
EX-101.PRE	XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE

18

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.

	MEDEFILE INTERNATIONAL, INC.
May 15, 2013	By:	/s/ Kevin Hauser
		Kevin Hauser
		President, Chief Executive Officer, Acting Chief Financial Officer and Director (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

19

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Kevin Hauser, certify that:

1. I have reviewed this quarterly report on Form 10-Q of MedeFile International, 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 financing reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 15, 2013	By:	/s/ Kevin Hauser
		Kevin Hauser
		Chief Executive Officer, Chief Financial Officer (principal executive officer, principal financing officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of MedeFile International, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kevin Hauser, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 1350 as adopted pursuant to Section 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; and

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

Date: May 15, 2013	By:	/s/ Kevin Hauser
		Kevin Hauser
		Chief Executive Officer, Acting Chief Financial Officer (principal executive officer, principal financing officer)

XML

EQUITY (Detail Textuals 4) (2006 Incentive Stock Plan)	1 Months Ended
	Jan. 31, 2006
2006 Incentive Stock Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares of common stock reserved for issuance	10,000,000
Number of options granted to employees	5,640,000

XML

EQUITY - Transactions involving warrants (Details 2) (Warrant)	3 Months Ended	12 Months Ended
	Mar. 31, 2013	Dec. 31, 2012
Warrant
Class Of Warrant Or Right Outstanding [Roll Forward]
Number of Warrants, Outstanding	29,035	29,035
Number of Warrants, Granted
Number of Warrants, Exercised
Number of Warrants, Canceled or expired
Number of Warrants, Outstanding	29,035	29,035
Class Of Warrant Or Right Weighted Average Price [Roll Forward]
Weighted average price per share, warrants outstanding	30.07	30.07
Weighted-Average Price Per Share, Granted
Weighted-Average Price Per Share, Exercised
Weighted-Average Price Per Share, Canceled or expired
Weighted average price per share, warrants outstanding	30.07	30.07

XML

WEBSITE DEVELOPMENT (Detail Textuals) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Website Development [Abstract]
Amortization expense	$ 5,245	$ 5,245
Finite lived intangible assets, Amortization period	3 years

XML

EQUITY (Detail Textuals 2) (USD $)	1 Months Ended	0 Months Ended	1 Months Ended		0 Months Ended	1 Months Ended			0 Months Ended	1 Months Ended
	Sep. 20, 2012	Jul. 16, 2012 Consultants	Mar. 31, 2012 Security Purchase Agreement Consultants	Jan. 17, 2013 Security Purchase Agreement Accredited Investors	Nov. 14, 2012 Security Purchase Agreement Accredited Investors	Aug. 24, 2012 Security Purchase Agreement Accredited Investors	Jul. 18, 2012 Security Purchase Agreement Accredited Investors	Jun. 26, 2012 Security Purchase Agreement Accredited Investors	May 15, 2012 Security Purchase Agreement Accredited Investors	Apr. 18, 2012 Security Purchase Agreement Accredited Investors
Schedule Of Equity [Line Items]
Common stock issued for consultants (in shares)		24,000	10,714
Market value of shares issued to consultants		$ 60,000	$ 42,859
Number of stock sold (in shares)	100,000			400,000	100,000	500,000	100,000	200,000	600,000	1,000,000
Aggregate purchase price of common stock sold	$ 50,000			$ 200,000		$ 250,000		$ 100,000	$ 300,000	$ 500,000
Number of share stock called by warrants								200,000	600,000	1,000,000
Exercise price of warrants (in dollars per share)								0.50	0.50	0.50
Term of warrants								4 years	4 years	4 years

XML

FURNITURE AND EQUIPMENT

3 Months Ended

Mar. 31, 2013

Property, Plant and Equipment [Abstract]

FURNITURE AND EQUIPMENT

4. FURNITURE AND EQUIPMENT

Furniture and equipment consists of the following:

	March 31, 2013			December 31, 2011
Computers and equipment	$	169,286		$	169,286
Furniture and fixtures		38,618			38,618
Subtotal		207,904			207,904
Less: accumulated depreciation		(207,003	)		(206,375	)
Net furniture and equipment	$	901		$	1,529

Depreciation is calculated by using the straight-line method over the estimated useful life.   Depreciation expense totaled $628 and $2,352 for the three months ended March 31, 2013 and 2012, respectively.

XML

WARRANT LIABILITY - Summry of transactions involving warrants (Details 1) (Warrants with ratchet provisions)	3 Months Ended	12 Months Ended
	Mar. 31, 2013	Dec. 31, 2012
Warrants with ratchet provisions
Warrant Outstanding [Roll Forward]
Number of Warrants, Outstanding	3,008,511	1,200,000
Number of Warrants, Granted
Number of Warrants, Exercised
Number of Warrants, Canceled or expired
Additional due to ratchet trigger		1,808,511
Number of Warrants, Outstanding	3,008,511	3,008,511
Warrants Outstanding Weighted Average Price Per Share [Roll Forward]
Outstanding at December 31, 2011	0.50	0.50
Weighted-Average Price Per Share, Granted
Weighted-Average Price Per Share, Exercised
Weighted-Average Price Per Share, Canceled or expired
Additional due to ratchet trigger		0.50
Outstanding at December 31, 2012	0.50	0.50

XML

WARRANT LIABILITY - Summary of Fair value of warrants (Details)	1 Months Ended	3 Months Ended	12 Months Ended	1 Months Ended	3 Months Ended	1 Months Ended	3 Months Ended
	Jul. 31, 2011 Warrants granted during July 2011	Mar. 31, 2013 Warrants granted during July 2011	Dec. 31, 2012 Warrants granted during July 2011	Apr. 30, 2012 Warrants granted during April 2012	Mar. 31, 2013 Warrants granted during April 2012	Apr. 30, 2012 Warrants granted during April 2012 Significant shareholder and brother of Chief Executive Officer	Mar. 31, 2013 Warrants granted during April 2012 Significant shareholder and brother of Chief Executive Officer
Class of Warrant or Right [Line Items]
Risk-free interest rate at grant date	1.21%	0.57%	0.54%	0.47%	0.57%	0.47%	0.57%
Expected stock price volatility	194.90%	148.40%	187.00%	137.80%	148.40%	137.80%	148.40%
Expected dividend payout
Expected option in life-years	4 years	2 years 3 months 7 days	2 years 6 months 4 days	3 years 9 months	3 years	3 years 9 months	3 years

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WARRANT LIABILITY - Summry of warrant liability (Details 2) (USD $)	3 Months Ended	12 Months Ended
	Mar. 31, 2013	Dec. 31, 2012
Fair Value Of Warrant Liability [Roll Forward]
Warrant liability (beginning balance)	$ 5,618,819	$ 111,636
Additional liability due to new grants		5,078,052
Loss(gain) on changes in fair market value of warrant liability	(3,707,898)	429,131
Net warrant liability	$ 1,608,861	$ 5,618,819

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WARRANT LIABILITY (Detail Textuals) (USD $)	1 Months Ended	3 Months Ended	12 Months Ended				1 Months Ended		1 Months Ended		1 Months Ended
	Sep. 20, 2012	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2013 Warrant	Dec. 31, 2012 Warrant	Dec. 31, 2011 Warrant	Jul. 31, 2011 Warrants granted during July 2011 Common Stock	Apr. 12, 2012 Warrants granted during July 2011 Common Stock	Apr. 30, 2012 Warrants granted during April 2012 Common Stock	Apr. 30, 2012 Warrants granted during April 2012 Significant shareholder and brother of Chief Executive Officer Common Stock	Apr. 30, 2012 Warrants granted during April 2012 Significant shareholder and brother of Chief Executive Officer Preferred Stock
Class of Warrant or Right [Line Items]
Term of warrants expired from date of grant		4 years
Company issues the additional shares of common stock period		2 years
Method used for fair value of warrant granted		Black Scholes pricing model
Number of stock sold (in shares)	100,000						35,461		1,000,000		100,000
Number of share stock called by warrants							35,461		1,808,511	200,000
Exercise price of warrants (in dollars per share)				30.07	30.07	30.07	2.50	0.50	0.50		0.50
Loss (gain) on changes in fair market value of warrant liability		$ 1,819,500	$ 429,131

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WEBSITE DEVELOPMENT

3 Months Ended

Mar. 31, 2013

Website Development [Abstract]

WEBSITE DEVELOPMENT

3.   WEBSITE DEVELOPMENT

Website development consists of the following:

	March 31, 2013			December 31, 2012
Website development	$	224,946		$	62,946
Additional development		38,000			162,000
Accumulated amortization		(62,946	)		(57,701	)
Net website development	$	200,000		$	167,245

During May 2012 the Company began redesigning its website.  The redesign is anticipated to be completed in May 2013.

Amortization is calculated over a three-year period beginning in the second quarter of 2010.  Amortization expense for the three months ending March 31, 2013 and 2012 is $5,245 and $5,245, respectively.

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EQUITY - Fair value assumptions (Details 1) (Common Stock Warrants)	3 Months Ended	1 Months Ended
	Mar. 31, 2008 Former board members	Jul. 28, 2011 Consultants
Class of Warrant or Right [Line Items]
Risk-free interest rate at grant date	4.75%	0.39%
Expected stock price volatility	155.00%	172.10%
Expected dividend payout
Expected option in life-years	5 years	4 years

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EQUITY (Detail Textuals 5) (Warrant)	3 Months Ended	12 Months Ended		3 Months Ended	1 Months Ended
	Mar. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Mar. 31, 2008 Former board members	Jul. 28, 2011 Consultants	Jun. 22, 2011 Consultants
Class of Warrant or Right [Line Items]
Number of warrants awarded				35	27,000	2,000
Warrants Outstanding, Exercise Price	30.07	30.07	30.07	2,800.00	25.00	50.00
Term of warrants				5 years	3 years	4 years
Method used for fair value of the warrants				Black-Scholes pricing model	Black-Scholes pricing model	Black-Scholes pricing model

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Condensed Consolidated Balance Sheets (USD $)	Mar. 31, 2013	Dec. 31, 2012
Current assets
Cash	$ 148,815	$ 234,356
Accounts receivable, net	197	391
Inventory	55,171	55,458
Merchant services reserve	64,319	64,319
Prepaid insurance		998
Total current assets	268,502	355,522
Website development, net of accumulated amortization	200,000	167,245
Furniture and equipment, net of accumulated depreciation	901	1,529
Intangibles	1,339	1,339
Total assets	470,742	525,635
Current Liabilities
Accounts payable and accrued liabilities	131,247	138,211
Deferred revenues	2,773	4,313
Derivative liability	1,608,861	5,618,819
Total Current Liabilities	1,742,881	5,761,343
Stockholders' (Deficit)
Preferred stock, $.0001 par value: 10,000,000 authorized, no shares issued and outstanding
Common stock, $.0001 par value: 100,000,000 authorized; 11,813,189 and 11,413,189 shares issued and outstanding on March 31, 2013 and December 31, 2012, respectively	1,181	1,141
Additional paid in capital	26,276,919	23,886,499
Accumulated deficit	(27,550,239)	(29,123,348)
Total stockholders' (deficit)	(1,272,139)	(5,235,708)
Total liability and stockholders'(deficit)	$ 470,742	$ 525,635

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BASIS OF PRESENTATION AND NATURE OF BUSINESS OPERATIONS

3 Months Ended

Mar. 31, 2013

Organization Consolidation Basis Of Presentation Business Description and Accounting Policies [Abstract]

BASIS OF PRESENTATION AND NATURE OF BUSINESS OPERATIONS

1. BASIS OF PRESENTATION AND NATURE OF BUSINESS OPERATIONS

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of MedeFile International Inc., a Nevada corporation (the "Company"), have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete consolidated financial statements. These unaudited condensed consolidated financial statements and related notes should be read in conjunction with the Company's Form 10-K for the fiscal year ended December 31, 2012. In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments that are of a normal recurring nature and which are necessary to present fairly the financial position of the Company as of March 31, 2013, and the results of operations and cash flows for the three months ended March 31, 2013 and 2012. The results of operations for the three months ended March 31, 2013 are not necessarily indicative of the results that may be expected for the entire fiscal year.

Nature of Business Operations

Medefile International, Inc., has developed and globally markets a proprietary, patient-centric, Internet-enabled Personal Health Record (iPHR) system for gathering, digitizing, maintaining, accessing and sharing an individual’s actual medical records. Medefile's goal is to revolutionize the medical industry by bringing patient-centric digital technology to the business of medicine. Medefile intends to accomplish its objective by providing individuals with a simple and secure way to access their lifetime of actual medical records in an efficient and cost-effective manner. Medefile's products and services are designed to provide healthcare providers with the ability to reference their patients’ actual past medical records, thereby ensuring the most accurate treatment and services possible while simultaneously reducing redundant procedures.

Interoperable with most electronic medical record systems utilized by physician practices, clinics, hospitals and other care providers, the highly secure, feature-rich MedeFile iPHR solution has been designed to gather all of its members’ actual medical records on behalf of each member, and create a single, comprehensive Electronic Health Record (EHR). The member can access his/her records 24-hours a day, seven days a week – or authorize a third party user – on any web-enabled device (PC, cell phone, PDA, e-reader, et al), as well as the portable MedeFile flash drive/keychain or branded UBS-bracelet.

By subscribing to the MedeFile system,  members empower themselves to take control of their own health and well-being, and empower their healthcare providers to make sound and lifesaving decisions with the most accurate, up-to-date medical information available.  In addition, with MedeFile, members enjoy the peace of mind that comes from knowing that their medical records are protected from fire, natural disaster, document misplacement or the closing of a medical or dental practice.

MedeFile enjoys a number of competitive advantages over other firms within the medical records marketplace, including:

· MedeFile has developed products and services geared to the patient, while containing the depth and breadth of information required by treating physicians and medical personnel.

· MedeFile does all the work of collecting and updating medical information on an ongoing basis; its dependence on the  patient taking action is minimal – particularly when compared to patient action required to support competing solutions.

· MedeFile provides a complete medical record. Other companies claim complete longitudinal records, but in reality only provide histories (usually completed by the member/patient), which are by no means complete or necessarily accurate records.

· MedeFile provides a coherent mix of services and products that are intended to affect the quality of healthcare by enabling the patient to manage and access the information normally retained by doctors and other care providers.

Going Concern

The accompanying financial statements have been prepared contemplating a continuation of the Company as a going concern. However, the Company has reported a net income of $1,573,109 for the three months ended March 31, 2013 and a net loss of $233,723 for the three months ended March 31, 2012 and had an accumulated deficit of $27,550,239 as of March 31, 2013.  The Company has negative working capital of $1,474,379 as of March 31, 2013.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The operating losses raise substantial doubt about the Company's ability to continue as a going concern. The Company's ability to obtain additional financing depends on the availability of its borrowing capacity, the success of its growth strategy and its future performance, each of which is subject to general economic, financial, competitive, legislative, regulatory, and other factors beyond the Company's control.

We will need additional investments in order to continue operations to cash flow break even. Additional investments are being sought, but we cannot guarantee that we will be able to obtain such investments. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms.

However, the trading price of our common stock could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Further, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. If additional financing is not available or is not available on acceptable terms, we will have to curtail our operations.

Cash and Cash Equivalents

For purposes of these financial statements, cash and cash equivalents includes highly liquid debt instruments with maturity of less than three months.

Concentrations of Credit Risk

Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents. The Company places its cash and temporary cash investments with high credit quality institutions. At times, such investments may be in excess of the FDIC insurance limit.  Currently our operating account is not above the FDIC limit.

Advertising

The Company follows the policy of charging the costs of advertising to expense as incurred. The Company incurred advertising costs for the three months ended March 31, 2013 and 2012 of approximately $0 and $0 respectively.

Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. A valuation allowance is established against deferred tax assets that do not meet the criteria for recognition. In the event the Company were to determine that it would be able to realize deferred income tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the valuation allowance which would reduce the provision for income taxes.

The Company follows the accounting guidance which provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized initially and in subsequent periods. Also included is guidance on measurement, recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

Property and Equipment

Property and equipment are stated at cost. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings. Minor additions and renewals are expensed in the year incurred. Major additions and renewals are capitalized and depreciated over their estimated useful lives being 3 years up to 10 years.

Trademark Costs

Trademark costs incurred in the registration and acquisition of trademarks and trademark rights are capitalized. These costs will be amortized over the legal life of the related trademark once the trademark is awarded. The Company performs an annual review of its identified intangible assets to determine if facts and circumstances exist which indicate that the useful life is shorter than originally estimated or that the carrying amount of the assets may not be recoverable.

The Company expenses all software costs associated with the conceptual formulation and evaluation of alternatives until the application development stage has been reached. Costs to improve or support the technology are expensed as these costs are incurred.

Website Development

The Company's policy is to capitalize website development costs at original cost and amortize the balance over the life of the product.  The life of website is determined at completion of the project. The Company reviews the amounts capitalized for impairment whenever events or circumstances indicate that the carrying amounts of the assets may not be recoverable.

The Company expenses all development costs associated with the conceptual formulation and evaluation of alternatives until the application development stage has been reached. Costs to improve or support the technology are expensed as these costs are incurred.

Revenue Recognition

The Company generates revenue from licensing the right to utilize its proprietary software for the storage and distribution of healthcare information to individuals and affinity groups. For revenue from product sales, the Company recognizes revenue on four basic criteria which must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded.

Deferred Revenue

The Company generally receives subscription fees for its services. From time to time, the Company will receive quarterly or annual subscriptions paid in advance and deferred revenue is recorded at that time. The deferred revenue is amortized into revenue on a pro- rata basis each month. Customers with quarterly or annual subscriptions may cancel their subscriptions and request a refund for future months' revenues at any time. Therefore, a liability is recorded to reflect the amounts that are potentially refundable.  At March 31, 2013 and December 31, 2012, deferred revenue totaled $2,773 and$4,313, respectively.

Reclassifications

Certain reclassifications have been made in prior periods financial statements to conform to classifications used in the current period.

Recent Accounting Pronouncements

There are no recent accounting pronouncements that are expected to have a material effect on the Company’s financial statements.

Fair Value of Financial Instruments

Cash and Equivalents, Store Deposits In-Transit, Receivables, Prepaid and Other Current Assets, Accounts Payable, Accrued Salaries and Wages and Other Current Liabilities

The carrying amounts of these items approximated fair value.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, Financial Accounting Standards Board (“FASB”) ASC Topic 820-10-35 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurements).

Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets.

Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3—Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

The application of the three levels of the fair value hierarchy under Topic 820-10-35 to our assets and liabilities are described below:  

	Fair Value Measurements
	Level 1		Level 2		Level 3		Total Fair Value
Assets
Merchant Service Reserves	$	64,319	$	-	$	-	$	64,319
Total	$	64,319	$	-	$	-	$	64,319
Liabilities
Deferred Revenues	$	2,773	$	-	$	-	$	2,773
Derivative Liability		-		-		1,608,861		1,608,861
Total	$	2,773	$	-	$	1,608,861	$	1,611,634

Impairment of Long Lived Assets

In accordance with Accounting Standards Codification (“ASC”) 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets, long-lived assets to be held and used are analyzed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. ASC 360-10 relates to assets that can be amortized and the life can be determinable. The Company reviews property and equipment and other long-lived assets for impairment annually, or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  Recoverability is measured by comparison of the asset’s carrying amount to future undiscounted net cash flows the assets are expected to generate.  Cash flow forecasts are based on trends of historical performance and management's estimate of future performance, giving consideration to existing and anticipated competitive and economic conditions.  If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted future cash flows arising from the assets or their fair values, whichever is more determinable.

Inventory

Inventories are stated at the lower of cost or market value.  Cost is determined by the first-in, first-out basis and market being determined as the lower of replacement cost or net realizable value. The Company records inventory write-downs for estimated obsolescence of unmarketable inventory based upon assumptions about future demand and market conditions.  For the three months ended March 31, 2013 and 2012, the Company did not have any inventory write downs.

Net Loss per Share

Basic and diluted loss per share amounts are computed based on net loss divided by the weighted average number of common shares outstanding. Warrants to purchase 3,037,546 common shares were not included in the computation of diluted loss per share because the assumed conversion and exercise would be anti-dilutive for the three months ending March 31, 2013.  

Management Estimates

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

Stock Based Compensation

The Company accounts for all compensation related to stock, options or warrants using a fair value based method whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. The Company uses the Black-Scholes pricing model to calculate the fair value of options and warrants issued to both employees and non-employees. Stock issued for compensation is valued using the market price of the stock on the date of the related agreement.

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EQUITY (Detail Textuals)	0 Months Ended
	Oct. 08, 2012	Mar. 31, 2013	Dec. 31, 2012	Oct. 07, 2012	Apr. 12, 2012
Equity [Abstract]
Reverse split of common stock	5,000-to-1
Common stock, shares authorized	100,000,000	100,000,000	100,000,000	75,000,000,000	75,000,000,000

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BASIS OF PRESENTATION AND NATURE OF BUSINESS OPERATIONS (Detail Textuals 1)	3 Months Ended
	Mar. 31, 2013
Maximum
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated useful lives	10 years
Minimum
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated useful lives	3 years

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EQUITY (Detail Textuals 1) (USD $)	1 Months Ended	3 Months Ended	0 Months Ended	1 Months Ended
	Sep. 20, 2012	Mar. 31, 2013	Jul. 16, 2012 Consultants	Mar. 31, 2012 Security Purchase Agreement Consultants
Schedule Of Equity [Line Items]
Aggregate purchase price of common stock sold	$ 50,000
Number of stock sold (in shares)	100,000
Proceeds from sale of stock (in shares)		200,000
Number of common stock issued to consultant			24,000	10,714
Market value of shares issued to consultants			$ 60,000	$ 42,859

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WEBSITE DEVELOPMENT - Summary of Website development (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Finite-Lived Intangible Assets [Line Items]
Accumulated amortization	$ (62,946)	$ (57,701)
Net website development	200,000	167,245
Website development
Finite-Lived Intangible Assets [Line Items]
Gross website development	224,946	62,946
Additional development
Finite-Lived Intangible Assets [Line Items]
Gross website development	$ 38,000	$ 162,000

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ACCOUNTS RECEIVABLE

3 Months Ended

Mar. 31, 2013

Receivables [Abstract]

ACCOUNTS RECEIVABLE

2.  ACCOUNTS RECEIVABLE

Due to the collection history of the Company, an allowance for doubtful accounts is not maintained.  Recognition of a specific uncollectible account is written directly against the invoice in accounts receivable and expensed in the current period.

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Statement Of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	11,813,189	11,413,189
Common stock, shares outstanding	11,813,189	11,413,189

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FURNITURE AND EQUIPMENT (Tables)

3 Months Ended

Mar. 31, 2013

Property, Plant and Equipment [Abstract]

Schedule of furniture and equipment

	March 31, 2013			December 31, 2011
Computers and equipment	$	169,286		$	169,286
Furniture and fixtures		38,618			38,618
Subtotal		207,904			207,904
Less: accumulated depreciation		(207,003	)		(206,375	)
Net furniture and equipment	$	901		$	1,529

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Document and Entity Information	3 Months Ended
	Mar. 31, 2013	May 15, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	Medefile International, Inc.
Entity Central Index Key	0000842013
Trading Symbol	mdfi
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Well-Known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding		25,685,470
Document Type	10-Q
Document Period End Date	Mar. 31, 2013
Amendment Flag	false
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1

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WARRANT LIABILITY (Tables)

3 Months Ended

Mar. 31, 2013

Class of Warrant or Right [Line Items]

Schedule of transactions involving warrants

	Number of Warrants		Weighted-Average Price Per Share
Outstanding at December 31, 2011		1,200,000	$	0.50
Granted
Exercised
Canceled or expired
Additional due to ratchet trigger		1,808,511		0.50
Outstanding at December 31, 2012		3,008,511		0.50
Granted
Exercised
Canceled or expired
Addition due to ratchet trigger
Outstanding at March 31, 2013		3,008,511	$	0.50

Schedule of warrant liability

	March 31, 2013		December 31, 2012
Warrant liability (beginning balance)	$	5,618,819	$	111,636
Additional liability due to new grants				5,078,052
Loss(gain) on changes in fair market value of warrant liability		(3,707,898)		429,131
Net warrant liability	$	1,608,861	$	5,618,819

Warrants granted during July 2011

Class of Warrant or Right [Line Items]

Schedule of fair value assumptions for warrants

	Grant Date			March 31, 2013			December 31, 2012
Risk-free interest rate at grant date		1.21	%		0.57	%		0.54	%
Expected stock price volatility		194.9	%		148.4	%		187.0	%
Expected dividend payout		-			-			-
Expected option in life-years		4			2.27			2.5	1

Warrants granted during April 2012

Class of Warrant or Right [Line Items]

Schedule of fair value assumptions for warrants

	Grant Date			March 31, 2013
Risk-free interest rate at grant date		0.47	%		0.57	%
Expected stock price volatility		137.8	%		148.4	%
Expected dividend payout		-			-
Expected option in life-years		3.75			3.0

Warrants granted during April 2012 | Significant shareholder and brother of Chief Executive Officer

Class of Warrant or Right [Line Items]

Schedule of fair value assumptions for warrants

	Grant Date			March 31, 2013
Risk-free interest rate at grant date		0.47	%		0.57	%
Expected stock price volatility		137.8	%		148.4	%
Expected dividend payout		-			-
Expected option in life-years		3.75			3.0

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Condensed Consolidated Statements of Operations (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Income Statement [Abstract]
Revenue	$ 7,653	$ 13,714
Cost of goods sold	286	66
Gross profit	7,367	13,648
Operating expenses
Selling, general and administrative expenses	247,885	239,774
Depreciation and amortization expenses	5,873	7,597
Total operating expenses	253,758	247,371
Loss from operations	(246,391)	(233,723)
Other income (expenses)
Gain (loss) on changes in fair value of derivative liabilities	1,819,500
Total other income (expense)	1,819,500
Loss before income tax	1,573,109	(233,723)
Provision for income tax
Net loss	$ 1,573,109	$ (233,723)
Net loss per share: basic and diluted (in dollars per share)	$ 0.13	$ (0.29)
Weighted average share outstanding basic and diluted (in shares)	11,754,762	795,507

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RELATED PARTY TRANSACTIONS

3 Months Ended

Mar. 31, 2013

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

7. RELATED PARTY TRANSACTIONS

None.

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EQUITY

3 Months Ended

Mar. 31, 2013

Equity [Abstract]

EQUITY

6. EQUITY

Common Stock

On October 8, 2012, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Secretary of State of Nevada, pursuant to which (i) the Company effected a 5,000-to-1 reverse split of its common stock and (ii) the number of authorized shares of the Company’s common stock decreased from 75,000,000,000 to 100,000,000. The market effective date of the reverse split was October 9, 2012.  The effect of the stock split has been applied retroactively.

2012

On March 1, 2012, the Company issued 10,714 shares of common stock to a consultant. The market value of the shares was $42,859,

On April 18, 2012, the Company entered into a Securities Purchase Agreement with accredited investors pursuant to which, on April 18, 2012, the Company sold 1,000,000 shares of common stock for an aggregate purchase price of $500,000, and the Company issued four-year warrants to purchase 1,000,000 shares of common stock to the investors with an exercise price of $0.50. The Investors were purchasers under the Company’s Securities Purchase Agreements entered into in July 2011.

On April 23, 2012, the Company issued an aggregate of 7,980,133 shares of common stock to certain shareholders of the Company, in accordance with anti-dilution rights held by such shareholders, including 5,383,594 shares to Lyle Hauser valued at par $539, 1,632,000 shares to Kevin Hauser valued at fair market value for compensation expense of $9,792,000, and 964,539 shares valued at par $96 to purchasers under Securities Purchase Agreements entered into by the Company in July 2011. Lyle Hauser is the Company’s largest shareholder and the brother of Kevin Hauser, the Company’s chief executive officer.

On May 15, 2012, the Company entered into a Securities Purchase Agreement with accredited investors pursuant to which, on May 15, 2012, the Company sold 600,000 shares of common stock for an aggregate purchase price of $300,000, and the Company issued four-year warrants to purchase 600,000 shares of common stock to the Investors with an exercise price of $0.50. The investors were purchasers under the Company’s Securities Purchase Agreements entered into in July 2011.

On June 26, 2012, the Company entered into a Securities Purchase Agreement with accredited investors pursuant to which, on June 26, 2012, the Company sold 200,000 shares of common stock for an aggregate purchase price of $100,000, and the Company issued four-year warrants to purchase 200,000 shares of common stock to the investors with an exercise price of $0.50. The investors were purchasers under the Company’s Securities Purchase Agreements entered into in July 2011.  The Company issued 100,000 shares on July 18, 2012 and the remaining 100,000 shares on November 14, 2012.

On July 16, 2012, the Company issued 24,000 shares of common stock to a consultant in the amount of $60,000.

On September 20, 2012, the Company sold 100,000 shares of common stock for a purchase price of $50,000.   The shares were issued on November 14, 2012

On August 24, 2012, the Company entered into a Securities Purchase Agreement with accredited investors pursuant to which, the Company sold 500,000 shares of common stock for an aggregate purchase price of $250,000. 

2013

On January 17, 2013 the Company entered into a Securities Purchase Agreement pursuant to which, the Company sold 400,000 shares of common stock for an aggregate purchase price of $200,000

Preferred Stock

On April 10, 2012, the Company filed a certificate of designation of Series B Preferred Stock (the “Series B Certificate of Designation”) with the Secretary of State of Nevada, pursuant to which 100,000 shares of the Company’s preferred stock were designated as Series B Convertible Preferred Stock (the “Series B Preferred Stock”).  Pursuant to the Series B Certificate of Designation, the Series B Preferred Stock:

● Has a liquidation preference over the common stock equal to the stated value of $1.00 per share.

● Votes as a single class with the common stock and entitles its holders, for each share of Series B Preferred Stock, to cast such number of votes equal to 0.00051% of the total number of votes entitled to be cast. Accordingly, a holder of all 100,000 shares of Series B Preferred Stock will have the right to cast 51% of the total number of votes entitled to be cast.

● Will automatically convert into common stock at a ratio of 2 shares of common stock for each share of Series B Preferred Stock, effective upon the Company’s filing of a certificate of amendment to its articles of incorporation.

On April 12, 2012, the Company entered into a securities purchase agreement with Lyle Hauser (the “Preferred Stock Investor”). Lyle Hauser is the Company’s largest shareholder and the brother of Kevin Hauser, the Company’s chief executive officer. Pursuant to the purchase agreement, on April 12, 2012, the Company sold 100,000 shares of Series B Preferred Stock to the Preferred Stock Investor for an aggregate purchase price of $100,000, and the Company issued four-year warrants to purchase 200,000 shares of common stock to the Preferred Stock Investor with an exercise price of $0.50. On April 23, 2012, 100,000 Series B Preferred shares were converted to 200,000 shares of common stock

Stock Options

2006 Incentive Stock Plan

In January 2006, the Board of Directors of the Company approved an Incentive Stock Plan, pursuant to which they have initially reserved 10,000,000 shares of common Stock for issuance. Under the 2006 Incentive Stock, the Board has granted an aggregate of 5,640,000 options to employees pursuant to certain employment agreements. All previously granted options have expired unexercised.

2008 Amended and Restated Incentive Stock Plan

In November 2008, our Board of Directors adopted the 2008 Equity Incentive Plan and subsequently amended it in January 2009, June 2009 and July 2009 (the “2008 Plan”). The purpose of the 2008 Plan was to provide an incentive to attract and retain directors, officers, consultants, advisors and employees whose services are considered valuable, to encourage a sense of proprietorship and to stimulate an active interest of such persons into our development and financial success. Under the 2008 Plan, the Company is authorized to issue incentive stock options intended to qualify under Section 422 of the Code, non-qualified stock options, stock appreciation rights, performance shares, restricted stock and long term incentive awards. The 2008 Plan will be administered by our Board of Directors until such time as such authority has been delegated to a committee of the board of directors.

2010 Incentive Stock Plan

In December 2009, our Board of Directors adopted the 2010 Equity Incentive Plan (the “2010 Plan”). The purpose of the 2010 Plan was to provide an incentive to attract and retain directors, officers, consultants, advisors and employees whose services are considered valuable, to encourage a sense of proprietorship and to stimulate an active interest of such persons into our development and financial success. Under the 2010 Plan, we are authorized to issue incentive stock options intended to qualify under Section 422 of the Code, non-qualified stock options, stock appreciation rights, performance shares, restricted stock and long term incentive awards. The 2010 Plan will be administered by our Board of Directors until such time as such authority has been delegated to a committee of the Board of Directors.

Other Warrants

During the first quarter of 2008 the Company awarded 35 Common Stock warrants, at an exercise price of $2800 per share, to former Board members at the quoted stock price on the effective date of the awards. The warrants have an expiration date of five years from the issue date and contain provisions for a cash exercise. The estimated value of the compensatory warrants granted to non-employees in exchange for services and financing expenses was determined using the Black-Scholes pricing model and the following assumptions:

Risk-free interest rate at grant date	4.75	%
Expected stock price volatility	155	%
Expected dividend payout	--
Expected option in life-years	5

On June 22, 2011, the Company awarded 2,000 Common Stock warrants, at an exercise price of $50 per share, to consultants for services at the quoted stock price on the effective date of the awards. The warrants have an expiration date of four years from the issue date and contain provisions for a cash exercise. The estimated value of the compensatory warrants granted to non-employees in exchange for services and financing expenses was determined using the Black-Scholes pricing model and the following assumptions listed below:

On July 28, 2011, the Company awarded 27,000 Common Stock Warrants, at an exercise price of $25 per share to consultants for services at the quoted stock price on the effective date of the awards.  The warrants have an expiration date of three years from the issue date and contain provisions for a cash exercise.  The estimated value of the compensatory warrants granted to non-employees in exchange for services was determined using the Black-Scholes pricing model and the assumptions listed below.

Risk-free interest rate at grant date	0.39	%
Expected stock price volatility	172.1	%
Expected dividend payout	--
Expected option in life-years	4

Transactions involving warrants are summarized as follows:

	Number of Warrants		Weighted-Average Price Per Share
Outstanding at December 31, 2011		29,035		30.07
Granted		-		-
Exercised		-		-
Canceled or expired		-		-
Outstanding at December 31, 2012		29,035	$	30.07
Granted		-		-
Exercised		-		-
Canceled or expired		-		-
Outstanding at March 31, 2013		29,035	$	30.07

Warrants Outstanding
					Weighted
					Average
					Remaining
Exercise			Number		Contractual
Prices			Outstanding		Life (years)
	$	2,800		35	.75
		25		2,000	2.00
		50		27,000	3.00
				29,035	2.92

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BASIS OF PRESENTATION AND NATURE OF BUSINESS OPERATIONS (Detail Textuals 2) (Warrant)	3 Months Ended
	Mar. 31, 2013
Warrant
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share amount	3,037,546

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EQUITY (Tables)

3 Months Ended

Mar. 31, 2013

Equity [Abstract]

Schedule of estimated value of the compensatory warrants granted to non-employees in exchange for services and financing expenses

Risk-free interest rate at grant date	4.75	%
Expected stock price volatility	155	%
Expected dividend payout	--
Expected option in life-years	5

Schedule of estimated value of the compensatory warrants granted to non-employees in exchange for services

Risk-free interest rate at grant date	0.39	%
Expected stock price volatility	172.1	%
Expected dividend payout	--
Expected option in life-years	4

Schedule of warrants transactions

	Number of Warrants		Weighted-Average Price Per Share
Outstanding at December 31, 2011		29,035		30.07
Granted		-		-
Exercised		-		-
Canceled or expired		-		-
Outstanding at December 31, 2012		29,035	$	30.07
Granted		-		-
Exercised		-		-
Canceled or expired		-		-
Outstanding at March 31, 2013		29,035	$	30.07

Warrants Outstanding
					Weighted
					Average
					Remaining
Exercise			Number		Contractual
Prices			Outstanding		Life (years)
	$	2,800		35	.75
		25		2,000	2.00
		50		27,000	3.00
				29,035	2.92

XML

BASIS OF PRESENTATION AND NATURE OF BUSINESS OPERATIONS (Tables)

3 Months Ended

Mar. 31, 2013

Organization Consolidation Basis Of Presentation Business Description and Accounting Policies [Abstract]

Schedule of three levels of the fair value hierarchy to assets and liabilities

	Fair Value Measurements
	Level 1		Level 2		Level 3		Total Fair Value
Assets
Merchant Service Reserves	$	64,319	$	-	$	-	$	64,319
Total	$	64,319	$	-	$	-	$	64,319
Liabilities
Deferred Revenues	$	2,773	$	-	$	-	$	2,773
Derivative Liability		-		-		1,608,861		1,608,861
Total	$	2,773	$	-	$	1,608,861	$	1,611,634

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SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2013

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

8.  SUBSEQUENT EVENTS

On April 15, 2013, the Company entered into a Securities Purchase Agreement with accredited investors pursuant to which the Company sold 2,000,000 shares of common stock for an aggregate purchase price of $400,000. 

On May 1, 2013 the Company issued an aggregate of 11,872,281shares of common stock to purchasers under the securities purchase agreements entered into by the Company in July 2011 and April 2012 pursuant to anti-dilution rights held by such purchasers..

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BASIS OF PRESENTATION AND NATURE OF BUSINESS OPERATIONS (Policies)

3 Months Ended

Mar. 31, 2013

Organization Consolidation Basis Of Presentation Business Description and Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of MedeFile International Inc., a Nevada corporation (the "Company"), have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete consolidated financial statements. These unaudited condensed consolidated financial statements and related notes should be read in conjunction with the Company's Form 10-K for the fiscal year ended December 31, 2012. In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments that are of a normal recurring nature and which are necessary to present fairly the financial position of the Company as of March 31, 2013, and the results of operations and cash flows for the three months ended March 31, 2013 and 2012. The results of operations for the three months ended March 31, 2013 are not necessarily indicative of the results that may be expected for the entire fiscal year.

Going Concern

Going Concern

The accompanying financial statements have been prepared contemplating a continuation of the Company as a going concern. However, the Company has reported a net income of $1,573,109 for the three months ended March 31, 2013 and a net loss of $233,723 for the three months ended March 31, 2012 and had an accumulated deficit of $27,550,239 as of March 31, 2013.  The Company has negative working capital of $1,474,379 as of March 31, 2013.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The operating losses raise substantial doubt about the Company's ability to continue as a going concern. The Company's ability to obtain additional financing depends on the availability of its borrowing capacity, the success of its growth strategy and its future performance, each of which is subject to general economic, financial, competitive, legislative, regulatory, and other factors beyond the Company's control.

We will need additional investments in order to continue operations to cash flow break even. Additional investments are being sought, but we cannot guarantee that we will be able to obtain such investments. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms.

However, the trading price of our common stock could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Further, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. If additional financing is not available or is not available on acceptable terms, we will have to curtail our operations.

Cash and Cash Equivalents

Cash and Cash Equivalents

For purposes of these financial statements, cash and cash equivalents includes highly liquid debt instruments with maturity of less than three months.

Concentrations of Credit Risk

Concentrations of Credit Risk

Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents. The Company places its cash and temporary cash investments with high credit quality institutions. At times, such investments may be in excess of the FDIC insurance limit.  Currently our operating account is not above the FDIC limit.

Advertising

Advertising

The Company follows the policy of charging the costs of advertising to expense as incurred. The Company incurred advertising costs for the three months ended March 31, 2013 and 2012 of approximately $0 and $0 respectively.

Income Taxes

Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. A valuation allowance is established against deferred tax assets that do not meet the criteria for recognition. In the event the Company were to determine that it would be able to realize deferred income tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the valuation allowance which would reduce the provision for income taxes.

The Company follows the accounting guidance which provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized initially and in subsequent periods. Also included is guidance on measurement, recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

Property and Equipment

Property and Equipment

Property and equipment are stated at cost. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings. Minor additions and renewals are expensed in the year incurred. Major additions and renewals are capitalized and depreciated over their estimated useful lives being 3 years up to 10 years.

Trademark Costs

Trademark Costs

Trademark costs incurred in the registration and acquisition of trademarks and trademark rights are capitalized. These costs will be amortized over the legal life of the related trademark once the trademark is awarded. The Company performs an annual review of its identified intangible assets to determine if facts and circumstances exist which indicate that the useful life is shorter than originally estimated or that the carrying amount of the assets may not be recoverable.

The Company expenses all software costs associated with the conceptual formulation and evaluation of alternatives until the application development stage has been reached. Costs to improve or support the technology are expensed as these costs are incurred.

Website Development

Website Development

The Company's policy is to capitalize website development costs at original cost and amortize the balance over the life of the product.  The life of website is determined at completion of the project. The Company reviews the amounts capitalized for impairment whenever events or circumstances indicate that the carrying amounts of the assets may not be recoverable.

The Company expenses all development costs associated with the conceptual formulation and evaluation of alternatives until the application development stage has been reached. Costs to improve or support the technology are expensed as these costs are incurred.

Revenue Recognition

Revenue Recognition

The Company generates revenue from licensing the right to utilize its proprietary software for the storage and distribution of healthcare information to individuals and affinity groups. For revenue from product sales, the Company recognizes revenue on four basic criteria which must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded.

Deferred Revenue

Deferred Revenue

The Company generally receives subscription fees for its services. From time to time, the Company will receive quarterly or annual subscriptions paid in advance and deferred revenue is recorded at that time. The deferred revenue is amortized into revenue on a pro- rata basis each month. Customers with quarterly or annual subscriptions may cancel their subscriptions and request a refund for future months' revenues at any time. Therefore, a liability is recorded to reflect the amounts that are potentially refundable.  At March 31, 2013 and December 31, 2012, deferred revenue totaled $2,773 and$4,313, respectively.

Reclassifications

Reclassifications

Certain reclassifications have been made in prior periods financial statements to conform to classifications used in the current period.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

There are no recent accounting pronouncements that are expected to have a material effect on the Company’s financial statements.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Cash and Equivalents, Store Deposits In-Transit, Receivables, Prepaid and Other Current Assets, Accounts Payable, Accrued Salaries and Wages and Other Current Liabilities

The carrying amounts of these items approximated fair value.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, Financial Accounting Standards Board (“FASB”) ASC Topic 820-10-35 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurements).

Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets.

Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3—Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

The application of the three levels of the fair value hierarchy under Topic 820-10-35 to our assets and liabilities are described below:  

	Fair Value Measurements
	Level 1		Level 2		Level 3		Total Fair Value
Assets
Merchant Service Reserves	$	64,319	$	-	$	-	$	64,319
Total	$	64,319	$	-	$	-	$	64,319
Liabilities
Deferred Revenues	$	2,773	$	-	$	-	$	2,773
Derivative Liability		-		-		1,608,861		1,608,861
Total	$	2,773	$	-	$	1,608,861	$	1,611,634

Impairment of Long Lived Assets

Impairment of Long Lived Assets

In accordance with Accounting Standards Codification (“ASC”) 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets, long-lived assets to be held and used are analyzed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. ASC 360-10 relates to assets that can be amortized and the life can be determinable. The Company reviews property and equipment and other long-lived assets for impairment annually, or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  Recoverability is measured by comparison of the asset’s carrying amount to future undiscounted net cash flows the assets are expected to generate.  Cash flow forecasts are based on trends of historical performance and management's estimate of future performance, giving consideration to existing and anticipated competitive and economic conditions.  If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted future cash flows arising from the assets or their fair values, whichever is more determinable.

Inventory

Inventory

Inventories are stated at the lower of cost or market value.  Cost is determined by the first-in, first-out basis and market being determined as the lower of replacement cost or net realizable value. The Company records inventory write-downs for estimated obsolescence of unmarketable inventory based upon assumptions about future demand and market conditions.  For the three months ended March 31, 2013 and 2012, the Company did not have any inventory write downs.

Net Loss per Share

Net Loss per Share

Basic and diluted loss per share amounts are computed based on net loss divided by the weighted average number of common shares outstanding. Warrants to purchase 3,037,546 common shares were not included in the computation of diluted loss per share because the assumed conversion and exercise would be anti-dilutive for the three months ending March 31, 2013.

Management Estimates

Management Estimates

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

Stock-Based Compensation

Stock Based Compensation

The Company accounts for all compensation related to stock, options or warrants using a fair value based method whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. The Company uses the Black-Scholes pricing model to calculate the fair value of options and warrants issued to both employees and non-employees. Stock issued for compensation is valued using the market price of the stock on the date of the related agreement.

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WEBSITE DEVELOPMENT (Tables)

3 Months Ended

Mar. 31, 2013

Website Development [Abstract]

Schedule of website development

	March 31, 2013			December 31, 2012
Website development	$	224,946		$	62,946
Additional development		38,000			162,000
Accumulated amortization		(62,946	)		(57,701	)
Net website development	$	200,000		$	167,245

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EQUITY - Warrants Outstanding and Exercisable (Details 3) (Warrant)	3 Months Ended
	Mar. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Warrants Outstanding
Exercise price of warrants (in dollars per share)	30.07	30.07	30.07
Warrants Outstanding, Number Outstanding	29,035	29,035	29,035
Warrants Outstanding, Weighted Average Remaining Contractual Life	2 years 11 months 1 day
Exercise Price $ 2800
Warrants Outstanding
Exercise price of warrants (in dollars per share)	2,800
Warrants Outstanding, Number Outstanding	35
Warrants Outstanding, Weighted Average Remaining Contractual Life	9 months
Exercise Price $ 25
Warrants Outstanding
Exercise price of warrants (in dollars per share)	25
Warrants Outstanding, Number Outstanding	2,000
Warrants Outstanding, Weighted Average Remaining Contractual Life	2 years
Exercise Price $ 50
Warrants Outstanding
Exercise price of warrants (in dollars per share)	50
Warrants Outstanding, Number Outstanding	27,000
Warrants Outstanding, Weighted Average Remaining Contractual Life	3 years

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BASIS OF PRESENTATION AND NATURE OF BUSINESS OPERATIONS (Detail Textuals) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Organization Consolidation Basis Of Presentation Business Description and Accounting Policies [Abstract]
Income (loss)	$ 1,573,109	$ (233,723)
Accumulated deficit	(27,550,239)		(29,123,348)
Net working capital	(1,474,379)
Advertising costs	0	0
Deferred revenues	$ 2,773		$ 4,313

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FURNITURE AND EQUIPMENT - Summary of Furniture and equipment (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Property, Plant and Equipment [Line Items]
Subtotal	$ 207,904	$ 207,904
Less: accumulated depreciation	(207,003)	(206,375)
Net furniture and equipment	901	1,529
Computers and equipment
Property, Plant and Equipment [Line Items]
Subtotal	169,286	169,286
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Subtotal	$ 38,618	$ 38,618

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SUBSEQUENT EVENTS (Detail Textuals) (USD $)	1 Months Ended		0 Months Ended	1 Months Ended			0 Months Ended	1 Months Ended	0 Months Ended
	Sep. 20, 2012	Jan. 17, 2013 Security Purchase Agreement Accredited Investors	Nov. 14, 2012 Security Purchase Agreement Accredited Investors	Aug. 24, 2012 Security Purchase Agreement Accredited Investors	Jul. 18, 2012 Security Purchase Agreement Accredited Investors	Jun. 26, 2012 Security Purchase Agreement Accredited Investors	May 15, 2012 Security Purchase Agreement Accredited Investors	Apr. 18, 2012 Security Purchase Agreement Accredited Investors	May 01, 2013 Subsequent Event Security Purchase Agreement Accredited Investors	Apr. 15, 2013 Subsequent Event Security Purchase Agreement Accredited Investors
Subsequent Event [Line Items]
Number of stock sold (in shares)	100,000	400,000	100,000	500,000	100,000	200,000	600,000	1,000,000	11,872,281	2,000,000
Aggregate purchase price of common stock sold	$ 50,000	$ 200,000		$ 250,000		$ 100,000	$ 300,000	$ 500,000		$ 400,000

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Cash flows from operating activities
Net loss	$ 1,573,109	$ (233,723)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	5,873	7,597
Stock based services		42,859
(Gain) loss in fair value of derivitave liabilities	(1,819,500)
Changes in operating assets and liabilities
Accounts receivable	194	(1,276)
Inventory	289	66
Prepaid insurance	998	1,055
Accounts payable and accrued liabilities	(6,964)	20,344
Merchant services reserve		(1,790)
Deferred revenue	(1,540)	(2,961)
Net Cash used in operating activities	(247,541)	(167,829)
Cash flows from investing activities
Website development	(38,000)
Net cash used in investing activities	(38,000)
Cash flow from financing activities
Proceeds from common stock sale	200,000
Net cash provided by financing activities	200,000
Net increase (decrease) in cash and cash equivalents	(85,541)	(167,829)
Cash and cash equivalents at beginning of period	234,356	198,173
Cash and cash equivalents at end of period	148,815	30,344
Supplemental disclosure of cash flow information
Cash paid for interest
Cash paid for income taxes

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WARRANT LIABILITY

3 Months Ended

Mar. 31, 2013

Warrant Liability [Abstract]

WARRANT LIABILITY

5. WARRANT LIABILITY

In connection with certain securities purchase agreements entered into during the third quarter 2011 and the second quarter 2012 (see Note 6), the Company granted warrants with ratchet provisions. The warrants contain an expiration date of four years from the date of grant. During the first two years of grant, if the Company issues any additional shares of common stock at a price per share less than the exercise price in effect, the exercise price will be adjusted to equal the average price per share received by the Company for the additional shares issued. After the first two years, if the Company issues any additional shares of common stock at a price per share less than the exercise price in effect, the exercise price will be adjusted using a formula based on the existing exercise price, the outstanding shares before and after the issuance of such shares, and the average price during the issuance of such shares. In addition to the exercise price adjustment, the number of shares upon exercise of the warrants are also subject to adjustment.

Upon grant, the Company assesses the fair value of the warrants using the Black Scholes pricing model and records a warrant liability for the value. The Company then assesses the fair value of the warrants quarterly based on the Black Scholes Model and increases or decreases the warrant liability to the new value, and records a corresponding gain or loss. (see Note 6 for variables used in assessing the fair value). The Company uses expected volatility based primarily on historical volatility using weekly pricing observations for recent periods that correspond to the expected life of the warrants. The risk-free interest rate is based on U.S. Treasury securities rates.

Due to the ratchet provisions, the Company treats the warrants as a derivative liability in accordance with the provisions of ASC 815 “Derivatives and Hedging” (ASC 815). ASC 815 applies to any freestanding financial instruments or embedded features that have the characteristics of a derivative and to any freestanding financial instruments that potentially settle in an entity’s own common stock.

As of March 31, 2013, these warrants include the following:

Warrants granted during July 2011 in connection with the sale of 35,461 shares of common stock with the right to originally purchase up to 35,461 shares of the Company’s common stock with an original exercise price of $2.50. Due to the issuance of the Company’s common stock in April 2012, the exercise price was adjusted to $0.50 and the number of shares to 1,808,511. Fair value was determined using the following variables:

	Grant Date			March 31, 2013			December 31, 2012
Risk-free interest rate at grant date		1.21	%		0.57	%		0.54	%
Expected stock price volatility		194.9	%		148.4	%		187.0	%
Expected dividend payout		-			-			-
Expected option in life-years		4			2.27			2.5	1

Warrants granted during April 2012 in connection with the sale of 100,000 shares of the Company’s preferred stock to a significant shareholder and brother of the Chief Executive Officer with the right to purchase up to 200,000 shares of the Company’s common stock with an exercise price of $0.50. Fair value was determined using the following variables:

	Grant Date			March 31, 2013
Risk-free interest rate at grant date		0.47	%		0.57	%
Expected stock price volatility		137.8	%		148.4	%
Expected dividend payout		-			-
Expected option in life-years		3.75			3.0

Warrants granted during April 2012 in connection with the sale of 1,000,000 shares of the Company’s common stock with an exercise price of $0.50.

	Grant Date			March 31, 2013
Risk-free interest rate at grant date		0.47	%		0.57	%
Expected stock price volatility		137.8	%		148.4	%
Expected dividend payout		-			-
Expected option in life-years		3.75			3.0

Transactions involving warrants with ratchet provisions are as follows:

	Number of Warrants		Weighted-Average Price Per Share
Outstanding at December 31, 2011		1,200,000	$	0.50
Granted
Exercised
Canceled or expired
Additional due to ratchet trigger		1,808,511		0.50
Outstanding at December 31, 2012		3,008,511		0.50
Granted
Exercised
Canceled or expired
Addition due to ratchet trigger
Outstanding at March 31, 2013		3,008,511	$	0.50

As of March 31, 2013 and December 31, 2012, the warrant liability consisted of the following:

	March 31, 2013		December 31, 2012
Warrant liability (beginning balance)	$	5,618,819	$	111,636
Additional liability due to new grants				5,078,052
Loss(gain) on changes in fair market value of warrant liability		(3,707,898)		429,131
Net warrant liability	$	1,608,861	$	5,618,819

Change in fair market value of warrant liability resulted in a gain totaling $1,819,500 and $0 for the three months ended March 31, 2013 and 2012, respectively.

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FURNITURE AND EQUIPMENT (Detail Textuals) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Property, Plant and Equipment [Abstract]
Depreciation	$ 628	$ 2,352

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EQUITY (Detail Textuals 3) (USD $)	1 Months Ended						0 Months Ended	1 Months Ended				1 Months Ended	0 Months Ended		1 Months Ended
	Sep. 20, 2012	Mar. 31, 2013	Dec. 31, 2012	Oct. 08, 2012	Oct. 07, 2012	Apr. 12, 2012	Apr. 10, 2012 Series B Preferred Stock	Apr. 23, 2012 Series B Preferred Stock	Apr. 23, 2012 Common Stock	Apr. 23, 2012 Common Stock Lyle Hauser	Apr. 23, 2013 Common Stock Lyle Hauser	Apr. 23, 2012 Common Stock Mr. Kevin Hauser	Apr. 12, 2012 Security Purchase Agreement Series B Preferred Stock Lyle Hauser	Apr. 23, 2012 Security Purchase Agreement Common Stock Mr. Kevin Hauser	Apr. 23, 2012 Security Purchase Agreement Common Stock Investor
Schedule Of Equity [Line Items]
Preferred stock designated as Series B Convertible Preferred Stock		10,000,000	10,000,000				100,000
Liquidation preference stated value							$ 1.00
Number of votes entitled to be cast							0.00051%
Total percentage of number of votes entitled to be cast per share							51.00%
Common stock for each share of Series B Preferred Stock							2
Common stock, shares authorized		100,000,000	100,000,000	100,000,000	75,000,000,000	75,000,000,000	75,000,000,000	200,000
Sale of stock, value	$ 50,000												$ 100,000
Number of stock sold (in shares)	100,000												100,000		964,539
Common stock issued for compensation									7,980,133	5,383,594		1,632,000
Warrants issued to purchase common stock to the investor													200,000
Warrants Outstanding, Exercise Price													0.50
Term of warrants													4 years
Value of shares issued												$ 9,792,000
Common stock, par value		$ 0.0001	$ 0.0001								$ 539			$ 96
Number of preferred stock converted								100,000
Shares issued upon conversion of preferred stock								200,000	200,000

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BASIS OF PRESENTATION AND NATURE OF BUSINESS OPERATIONS - Fair value hierarchy to our assets and liabilities (Details) (USD $)	Mar. 31, 2013
Level 1
Assets
Merchant Service Reserves	$ 64,319
Total	64,319
Liabilities
Deferred Revenues	2,773
Derivative Liability
Total	2,773
Level 2
Assets
Merchant Service Reserves
Total
Liabilities
Deferred Revenues
Derivative Liability
Total
Level 3
Assets
Merchant Service Reserves
Total
Liabilities
Deferred Revenues
Derivative Liability	1,608,861
Total	1,608,861
Total Fair Value
Assets
Merchant Service Reserves	64,319
Total	64,319
Liabilities
Deferred Revenues	2,773
Derivative Liability	1,608,861
Total	$ 1,611,634