Attached files
| file | filename |
|---|---|
| EX-31.2 - MIT Holding, Inc. | v223887_ex31-2.htm |
| EX-31.1 - MIT Holding, Inc. | v223887_ex31-1.htm |
| EX-32.2 - MIT Holding, Inc. | v223887_ex32-2.htm |
| EX-32.1 - MIT Holding, Inc. | v223887_ex32-1.htm |
United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2011
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File No: 333-13679
MIT HOLDING, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE
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20-5068091
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(State or other jurisdiction of
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(I.R.S. Employer ID No)
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incorporation or organization)
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37 West Fairmont Ave., Suite 202, Savannah, GA 31406
(Address of principal executive office) (Zip Code)
Registrant's telephone number: (912) 925-1905
N/A
Former name, former address and former fiscal year,
(if changed since last report)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.) Yes o No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o
(Do not check if a smaller reporting company)
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Smaller reporting company x
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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
The number of shares of common stock, no par value per share, outstanding as of May 23, 2011 was 57,296,571
MIT HOLDING, INC.
FORM 10-Q
QUARTERLY PERIOD ENDED March 31, 2011
INDEX
TABLE OF CONTENTS
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Page
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||
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PART I – FINANCIAL INFORMATION
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||
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Item 1:
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Financial Statements
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F-1
|
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Item 2:
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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1
|
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Item 3:
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Quantitative and Qualitative Disclosures About Market Risk
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6 |
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Item 4T:
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Controls and Procedures
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6 |
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PART II – OTHER INFORMATION
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||
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Item 1:
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Legal Proceedings
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7 |
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Item 1A:
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Risk Factors
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7 |
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Item 2:
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Unregistered Sales of Equity Securities and Use of Proceeds
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7 |
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Item 3:
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Defaults Upon Senior Securities
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7 |
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Item 4:
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Removed and Reserved
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7 |
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Item 5:
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Other Information
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7 |
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Item 6:
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Exhibits
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7 |
MIT HOLDING, INC.
CONSOLIDATED BALANCE SHEETS
UNAUDITED AND UNREVIEWED
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March 31, 2011
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December 31, 2010
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|||||||
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ASSETS
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||||||||
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CURRENT ASSETS
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||||||||
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Cash and cash equivalents
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$
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89,706
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$
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177,620
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||||
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Amount due from lender received January 24, 2011 (Note G)
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-
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50,000
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||||||
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Accounts receivable, net of allowance for doubtful accounts of $436,145 and $1,241,477, respectively
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2,713,948
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565,777
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||||||
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Inventories
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522,483
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201,068
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||||||
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Employee advances
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5,162
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6,100
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||||||
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Prepaid expenses and other current assets
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70,417
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65,000
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||||||
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Total current assets
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3,401,716
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1,065,565
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||||||
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PROPERTY AND EQUIPMENT, net of accumulated depreciation of $129,373 and $126,373, respectively
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1,079,682
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13,324
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||||||
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OTHER ASSETS
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||||||||
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Intercompany accounts and other assets
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11,614,858
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|||||||
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Non-compete agreement, net of accumulated amortization of $137,925 and $97,929, respectively
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52,076
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62,075
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||||||
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Total other assets
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11,666,934
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62,075
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||||||
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TOTAL ASSETS
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$
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16,148,332
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$
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1,140,964
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||||
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LIABILITIES AND STOCKHOLDERS' DEFCICIENCY
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||||||||
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CURRENT LIABILITIES
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||||||||
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Accounts payable and accrued expenses
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$
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3,591,284
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$
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2,140,246
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||||
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Current portion of long-term debt
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81,522
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111,198
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||||||
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Total current liabilities
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3,672,806
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2,251,444
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||||||
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Long-term debt
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14,661,384
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814,623
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||||||
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Common stock subject to mandatory redemption; 5,000,000 shares issuable at December 31, 2010 (Note F)
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250,000
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250,000
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||||||
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Estimated liability for equity-based financial instruments with characteristics of liabilities: 10
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||||||||
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Series A Convertible Preferred stock (1,796.73 and 1,796.73 shares issued and outstanding at March 31, 2011 and December 31, 2010, respectively)
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103,264
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71,869
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||||||
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Warrants
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4,817
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817
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||||||
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TOTAL LIABILITIES
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18,692,197
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3,388,753
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||||||
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STOCKHOLDERS' DEFICIENCY
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||||||||
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Preferred stock, $0.000001 par value; 5,000,000 shares authorized, 1,796.73 and 1,796.73 shares issued and outstanding at March 31, 2011 and December 31, 2010, respectively (included in liabilities)
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-
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-
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||||||
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Common stock, $0.000001 par value; 250,000,000 shares authorized, 52,254,571 and 52,254,571 shares issued and outstanding and to be issued at March 31, 2011 and December 31, 2010, respectively
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52
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52
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||||||
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Additional paid-in capital
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6,504,362
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6,279,362
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||||||
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Accumulated deficit
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(9,048,353
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)
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(8,527,203
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)
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||||
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Total stockholders' deficiency
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(2,543,939
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)
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(2,247,789
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)
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||||
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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY
|
$
|
16,148,332
|
$
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1,140,964
|
||||
The accompanying notes are an integral part of these statements
F-1
MIT HOLDING, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010
UNAUDITED AND UNREVIEWED
|
March 31, 2011
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March 31, 2010
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|||||||
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Revenue
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||||||||
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Sales and services rendered
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$
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5,084,052
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$
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1,677,136
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||||
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Cost of medical supplies
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3,709,296
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708,638
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||||||
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Gross profit
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1,374,756
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968,498
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||||||
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Operating Expenses
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||||||||
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Salaries and payroll cost
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964,486
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391,103
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||||||
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Selling, general and administrative
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853,012
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353,143
|
||||||
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Provision for doubtful accounts
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-
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-
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||||||
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Depreciation and amortization
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22,249
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12,999
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||||||
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Total operating expenses
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1,839,747
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757,245
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||||||
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Income (loss) from operations
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(464,991
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)
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211,253
|
|||||
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Other income (expense):
|
||||||||
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Impairment of goowill relating to acquisition of NDHP and PLTC
|
||||||||
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Income (expense) from revaluation of equity-based financial instruments with characteristics of liabilities at fair values
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(35,395
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)
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(332,169
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)
|
||||
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Interest expense
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(67,428
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)
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(80,594
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)
|
||||
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Income (loss) before provision for income taxes
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(567,814
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)
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(201,510
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)
|
||||
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Provision for income taxes
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-
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-
|
||||||
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Net income (loss)
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(567,814
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)
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(201,510
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)
|
||||
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Increase in cumulative dividends payable on Series A Preferred Stock
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25,655
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28,451
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||||||
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Net income (loss) attributable to common stockholders
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$
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(593,496)
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$
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(229,961
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)
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|||
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Net loss per common share:
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||||||||
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Basic and diluted
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$
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(0.01
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)
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$
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(0.00
|
)
|
||
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Weighted average number of common shares outstanding:
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||||||||
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Basic and diluted
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54,945,682
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51,880,349
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||||||
The accompanying notes are an integral part of these statements.
F-2
MIT HOLDING, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIENCY)
UNAUDITED AND UNREVIEWED
|
Total
|
||||||||||||||||||||||||||||
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Common Stock,
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Additional
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Stockholders’
|
||||||||||||||||||||||||||
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$.000001 par value
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Paid-in
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Accumulated
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Equity
|
|||||||||||||||||||||||||
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Shares
|
Amount
|
Capital
|
Deficit
|
(Deficiency)
|
||||||||||||||||||||||||
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Balance at December 31, 2010
|
-
|
-
|
52,254.571
|
52
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6,279,362
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(8,527,203
|
)
|
(2,247,789
|
)
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|||||||||||||||||||
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-
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-
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-
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-
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-
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||||||||||||||||||||||||
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Net income for the three months ended March 31, 2011
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-
|
-
|
-
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-
|
|
(567.814
|
)
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(567,814
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)
|
|||||||||||||||||||
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Balance at March 31, 2011
|
-
|
$
|
-
|
52,254,571
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$
|
52
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$
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6,279,362
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$
|
(8,823,353
|
)
|
$
|
(2,815,603
|
)
|
||||||||||||||
The accompanying notes are an integral part of these statements.
F-3
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE
THREE MONTHS ENDED MARCH 31, 2011 AND 2010
UNAUDITED AND UNREVIEWED
|
March 31, 2011
|
March 31, 2010
|
|||||||
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OPERATING ACTIVITIES
|
||||||||
|
Net income (loss)
|
$
|
(567,814
|
)
|
$
|
(201,510
|
)
|
||
|
Adjustments to reconcile net income (loss) to cash provided by operating activities:
|
||||||||
|
Income from revaluation of equity-based financial instruments with characteristics of liabilities at fair values
|
35,395
|
332,169
|
||||||
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Depreciation and amortization
|
22,249
|
12,999
|
||||||
|
Issuance of common stock for services
|
12,400
|
|||||||
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Amount due from lender
|
50,000
|
|||||||
|
Changes in operating assets and liabilities:
|
||||||||
|
Accounts receivable
|
(734,871
|
)
|
(26,841
|
)
|
||||
|
Inventories
|
(163,345
|
)
|
(5,194
|
)
|
||||
|
Prepaid expenses and other current assets
|
938
|
(7,343
|
)
|
|||||
|
Employee advances
|
(15,179
|
)
|
281
|
|||||
|
Accounts payable and accrued expenses
|
1,371,417
|
(33,718
|
)
|
|||||
|
Net cash provided by operating activities
|
(1,210
|
)
|
83,243
|
|||||
|
INVESTING ACTIVITIES
|
||||||||
|
Capital expenditures
|
(49,131
|
)
|
-
|
|||||
|
Net cash used for investing activities
|
(49,131
|
)
|
||||||
|
FINANCING ACTIVITIES
|
||||||||
|
Proceeds from debt
|
-
|
-
|
||||||
|
Repayment of debt
|
(39,541
|
)
|
(94,943
|
)
|
||||
|
Net cash used for financing activities
|
(39,541
|
)
|
(94,943
|
)
|
||||
|
NET INCREASE (DECREASE) IN CASH
|
(89,882)
|
(11,700
|
)
|
|||||
|
CASH BALANCE BEGINNING OF PERIOD
|
180,489
|
113,596
|
||||||
|
CASH BALANCE END OF PERIOD
|
$
|
90,607
|
$
|
101,896
|
||||
|
Supplemental Disclosures:
|
||||||||
|
Interest
|
$
|
67,428
|
$
|
80,593
|
||||
|
Taxes
|
$
|
-
|
$
|
-
|
||||
|
Non-cash Financing Activities:
|
||||||||
|
Conversion of accounts payable to fixed rate term note due Cardinal Health on
March 31, 2010
|
$
|
-
|
$
|
305,728
|
||||
|
$
|
$
|
-
|
||||||
|
|
$
|
$
|
-
|
|||||
|
-
|
||||||||
|
-
|
||||||||
|
-
|
||||||||
|
$
|
$
|
-
|
||||||
|
Common stock subject to mandatory redemption issuable to Globank Corp. pursuant to
March 31, 2011 loan modification (charged to debt discounts)
|
$
|
$
|
-
|
|||||
The accompanying notes are an integral part of these statements.
F-4
MIT HOLDING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
UNAUDITED AND UNREVIEWED
NOTE A – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
1.
|
Nature of Operations/ Basis of Presentation
|
Nature of Operations
MIT Holding, Inc., a Delaware corporation, is a holding company. Through three wholly-owned subsidiaries, MIT distributes wholesale pharmaceuticals, administers intravenous infusions, operates an ambulatory center where therapies are administered and sells and rents home medical equipment.
Effective January 21, 2011, MITRX Corporation (“MITRX”) (a wholly owned subsidiary incorporated in South Carolina on December 30, 2010) acquired the equity interests National Direct Home Pharmacy, Inc. (“NDHP”), operator of a mail order pharmacy, and Palmetto Long Term Care Pharmacy, LLC (“PLTC”), operator of a long term care pharmacy. Both entities operate from Columbia, South Carolina.
Medical Infusion Technologies, Inc. was incorporated in November 1991 in the state of Georgia. On July 6, 2006, an agreement and plan of merger was made between MIT Holding, Inc., a Delaware corporation, Medical Infusion Technologies, Inc., and MIT Acquisition A, Inc. By this agreement, MIT Holding, Inc. became the parent company and Medical Infusion Technologies, Inc. and MIT Ambulatory Care Center, Inc., the wholly-owned subsidiaries.
MIT Holding, Inc. Merger with Convention All Holdings, Inc.
Our company was formerly known as Convention All Holdings, Inc. and, on May 2, 2007, we acquired a 100% ownership interest in MIT Holding, Inc. through a merger of MIT Holding, Inc. with and into MIT CVAH Acquisition Corp., a newly formed Delaware corporation and wholly-owned subsidiary, in exchange for 32,886,779 shares of our common stock. Simultaneously with the Merger, the company formerly known as MIT Holding, Inc. changed its name to Medical Infusion Group, Inc., and we changed our name to MIT Holding, Inc. As a result of the Merger, we now own 100% of Medical Infusion Group, Inc., a Delaware corporation, which, in turn, continues to own 100% of the issued and outstanding shares of capital stock of MIT Ambulatory Care Center, Inc., a Georgia corporation ("Ambulatory"), Medical Infusion Technologies, Inc., a Georgia corporation (“Infusion”) and MIT International Distribution, Inc., a Delaware corporation (“MIT International”).
F-5
MIT HOLDING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
UNAUDITED AND UNREVIEWED
NOTE A – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Basis of Presentation
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America.
|
2.
|
Principles of Consolidation
|
The accompanying consolidated financial statements include the accounts of MIT Holdings, Inc and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
|
3.
|
Use of estimates
|
The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 reporting period. Actual results could differ from those estimates.
|
4.
|
Cash Equivalents
|
Investments having an original maturity of 90 days or less that are readily convertible into cash are considered cash equivalents. The Company had no cash equivalents as of March 31, 2011 and December 31, 2009.
|
5.
|
Fair Value of Financial Instruments
|
The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, net, accounts payable and accrued expenses, and debt. The fair value of these financial instruments approximate their carrying amounts reported in the balance sheets due to the short term maturity of these instruments or based upon market quotations or quotations of instruments with similar interest rates and similar maturities.
|
6.
|
Inventories
|
Inventories are stated at the lower of cost (first-in, first-out) or market (net realizable value). They consist mainly of pharmaceutical supplies and medical equipment.
F-6
NOTE A – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
7.
|
Property and Equipment
|
Property and equipment are stated at cost and are depreciated principally on methods and at rates designed to amortize their costs over their estimated useful lives.
The estimated service lives of property and equipment are principally as follows:
|
Furniture and fixtures
|
5- 7 years
|
|
|
Computer equipment
|
3- 7 years
|
|
|
Vehicles
|
5- 7 years
|
Repairs and maintenance are expensed as incurred. Expenditures that increase the value or productive capacity of assets are capitalized.
|
8.
|
Long-Lived Assets
|
Property and equipment and other long-lived assets, including non-compete agreements, are evaluated for impairment whenever events or conditions indicate that the carrying value of an asset may not be recoverable, but not less than annually. If the sum of undiscounted cash flows is less than the carrying value of the related asset or group of assets, a loss is recognized for the difference between the fair value and carrying value of the asset or group of assets.
|
9.
|
Revenue Recognition
|
Sales and services are recorded when products are delivered to the customers. Provision for discounts, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. In instances where products are configured to customer requirements, revenue is recorded upon the successful completion of the Company’s final test procedures.
|
10.
|
Stock-Based Compensation
|
Stock-based compensation is accounted for at fair value in accordance with Accounting Standards Codification (“ASC”) 718, “Compensation- Stock Compensation”.
F-7
MIT HOLDING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
UNAUDITED AND UNREVIEWED
NOTE A – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
In addition to requiring supplemental disclosures, ASC 718, Compensation – Stock Compensation, addresses the accounting for share-based payment transactions in which a company receives goods in exchange for (a) equity instruments of the company or (b) liabilities that are based on the fair value of the company’s equity instruments or that may be settled by the issuance of such equity instruments. FASB ASC 718 focuses primarily on accounting for transactions in which a company obtains employee services in share-based payment transactions.
References to the issuances of restricted stock refer to stock of a public company issued in private placement transactions to individuals who are eligible to sell all or some of their shares of restricted Common Stock pursuant to Rule 144 promulgated under the Securities Act of 1933 (“Rule 144”), subject to certain limitations. In general, pursuant to Rule 144, a stockholder who is not an affiliate and has satisfied a six-month holding period may sell all of his restricted stock without restriction, provided that the Company has current information publicly available. Rule 144 also permits, under certain circumstances, the sale of restricted stock, without any limitations, by a non-affiliate of the Company that has satisfied a one-year holding period.
|
11.
|
Advertising Costs
|
Advertising costs are expensed as incurred. Advertising expense totaled $ 112,844 for the year ended March 31, 2011 and $ 21,348 for the year ended December 31, 2009.
|
12.
|
Income Taxes
|
Deferred income taxes are recognized for temporary differences between the tax bases of assets and liabilities and their reported amounts in the financial statements by applying enacted statutory tax rates expected to apply in the years in which these temporary differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is not more likely than not that some portion or all of the deferred tax assets will be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.
|
13.
|
Net Income (Loss) per Common Share
|
Basic net income (loss) per common share is computed on the basis of the weighted average number of common shares outstanding during the period.
Diluted net income (loss) per common share is computed on the basis of the weighted average number of common shares and dilutive securities (such as warrants and convertible securities) outstanding. Dilutive securities having an anti-dilutive effect on diluted net income (loss) per share are excluded from the calculation.
F-8
MIT HOLDING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
UNAUDITED AND UNREVIEWED
NOTE A – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For the years ended March 31, 2011 and 2010, diluted weighted average number of common shares outstanding exclude 3,593,460 (2009: 3,793,460) shares issuable on conversion of Series A Preferred Stock, 600,000 shares issuable on exercise of outstanding options and 8,418,780 shares issuable on exercise of outstanding warrants.
|
14.
|
Reclassifications
|
Certain prior period amounts have been reclassified to conform to the current period presentation.
|
15.
|
Recent Accounting Pronouncements
|
Effective for interim and annual periods ending after September 15, 2009, the FASB Accounting Standards Codification (the “Codification”) is the single source of authoritative literature of U.S. generally accepted accounting principles (“GAAP”). The Codification consolidates all authoritative accounting literature into one internet-based research tool, which supersedes all preexisting accounting and reporting standards, excluding separate rules and other interpretive guidance released by the SEC. New accounting guidance is now issued in the form of Accounting Standards Updates, which update the Codification. The adoption of the Codification did not result in any change in the Company’s significant accounting policies.
F-9
MIT HOLDING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
UNAUDITED AND UNREVIEWED
NOTE A – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
In August 2009, the FASB issued an update to ASC 820. This Accounting Standards Update ("ASU") No. 2009-5, Measuring Liabilities at Fair Value ("ASU 2009-5") amends the provisions in ASC 820 related to the fair value measurement of liabilities and clarifies for circumstances in which a quoted price in an active market for the identical liability is not available. ASU 2009-5 is intended to reduce potential ambiguity in financial reporting when measuring the fair value of liabilities. ASU 2009-5 was effective for the Company in the first quarter of fiscal year 2010. ASU 2009-5 concerns disclosure only. The adoption of ASU 2009-5 did not have a material effect on the Company's consolidated financial statements.
In December 2009, the FASB issued Accounting Standards Update ("ASU") 2009-17, which codifies SFAS No. 167, Amendments to FASB Interpretation No. 46(R) issued in June 2009. ASU 2009-17 requires a qualitative approach to identifying a controlling financial interest in a variable interest entity ("VIE"), and requires ongoing assessment of whether an entity is a VIE and whether an interest in a VIE makes the holder the primary beneficiary of the VIE. ASU 2009-17 is effective for annual reporting periods beginning after November 15, 2009. The adoption of ASU 2009-17 did not have a material effect on the Company's financial statements.
In January 2010, the FASB issued ASU 2010-6, Improving Disclosures About Fair Value Measurements, which requires reporting entities to make new disclosures about recurring or nonrecurring fair-value measurements including significant transfers into and out of Level 1 and Level 2 fair-value measurements and information on purchases, sales, issuances, and settlements on a gross basis in the reconciliation of Level 3 fair-value measurements. ASU 2010-6 is effective for annual reporting periods beginning after December 15, 2009, except for Level 3 reconciliation disclosures which are effective for annual periods beginning after December 15, 2010. The Company believes that the adoption of ASU 2010- 6 will not have a material effect on its consolidated financial statements.
Certain other accounting pronouncements have been issued by FASB and other standard setting organizations which are not yet effective and have not yet been adopted by the Company. The impact on the Company’s consolidated financial position and results of operations from adoption of these standards is not expected to be material.
NOTE B—GOING CONCERN
At March 31, 2011, the company had negative working capital of $1,185,879 and a stockholders’ deficiency of $2,247,789. From inception the Company has incurred an accumulated deficit of $8,527,203. These factors raise substantial doubt as the Company’s ability to continue as a going concern. There can be no assurance that sufficient funds required during the next year or thereafter will be generated from operations or that funds will be available from external sources such as debt or equity financings or other potential sources. The lack of additional capital resulting from the inability to generate cash flow from operations or to raise capital from external sources would force the Company to substantially curtail or cease operations and would, therefore, have a material adverse effect on its business. Furthermore, there can be no assurance that any such required funds, if available, will be available on attractive terms or that they will not have a significant dilutive effect on the Company’s existing stockholders.
The accompanying financial statements do not include any adjustments related to the recoverability or classification of asset-carrying amounts or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.
F-10
MIT HOLDING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
UNAUDITED AND UNREVIEWED
NOTE C – ACQUISITION OF NDHP AND PLTC
As noted above, effective January 21, 2011, MITRX acquired NDHP and PLTC, (collectively, the “Acquired Entities”) which has been accounted for in the accompanying financial statements as a purchase transaction. As a result, the financial position and results of operations of the Acquired Companies prior to the date of the acquisition have been excluded from the accompanying financial statements.
The estimated fair values of the identifiable net assets of the Acquired Companies at January 21, 2011 (effective date of acquisition) consisted of:
|
|
||||||||||||
|
PLTC
|
NDHP
|
Combined
|
||||||||||
|
Cash and cash equivalents
|
$ | 2,795 | $ | 3,284 | $ | 6,079 | ||||||
|
Accounts receivable
|
1,310,117 | - | 1,310,117 | |||||||||
|
|
||||||||||||
|
Inventory
|
158,071 | - | 158,071 | |||||||||
|
Prepaid expenses and other current assets
|
- | |||||||||||
|
Property and equipment, net
|
269,042 | 760,309 | 1,029,351 | |||||||||
|
Patents
|
||||||||||||
|
Contract valuation
|
11,030,500 | - | 11,030,500 | |||||||||
|
Acquired goodwill, net
|
334,358 | - | 334,358 | |||||||||
|
Medipharm Busines
|
250,000 | - | 250,000 | |||||||||
|
Total assets
|
13,354,883. | 763,593 | 14,118,476 | |||||||||
|
Current portion of debt
|
||||||||||||
|
Accounts payable
|
1,256,474 | 1,256,474 | ||||||||||
|
Accrued expenses
|
145,833 | 145,833 | ||||||||||
|
Accrued compensation
|
||||||||||||
|
Long term portion of debt
|
7,326,984 | 6,919,915 | 14,246,899 | |||||||||
|
Total liabilities
|
8,729,291 | 6,919,915 | 15,649,206 | |||||||||
|
Identifiable net assets
|
$ | 4,625,592 | $ | 6,156,322 | $ | (1,530,730 | ) | |||||
Goodwill of $1,530,510 (excess of the $220 consideration paid to the stockholders over the $1,530,730 negative identifiable net assets of the acquired companies ) was recorded at the January 21, 2011 effective acquisition date. As the Company believed that the estimated fair value of the goodwill was $11,030,500, no impairment of goodwill was recorded.
F-11
MIT HOLDING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
UNAUDITED AND UNREVIEWED
NOTE C – ACQUISITION OF NDHP AND PLTC (continued)
The following pro forma information summarizes the results of operations for the periods indicated as if the acquisition occurred at December 31, 2009. The pro forma information is not necessarily indicative of the results that would have been reported had the transaction actually occurred on December 31, 2009, nor is it intended to project results of operations for any future period.
|
Pro Forma
|
Three Months ended March 31,
|
|||||||
|
2011
|
2010
|
|||||||
|
Revenue
|
||||||||
|
Sales and services rendered
|
$ | 6,005,131 | $ | 5,443,161 | ||||
|
Cost of medical supplies
|
4,469,449 | 3,757,574 | ||||||
|
Gross profit
|
1,535,682 | 1,685,587 | ||||||
|
|
||||||||
|
Salaries and payroll cost
|
1,137,050 | 779,003 | ||||||
|
Selling, general and administrative
|
1,028,707 | 901,338 | ||||||
|
Provision for doubtful accounts
|
- | |||||||
|
Depreciation and amortization
|
45,999 | 52,007 | ||||||
|
Total operating expenses
|
2,211,756 | 1,732,548 | ||||||
|
Net income (loss) from operations
|
(676,074 | ) | (46,961 | ) | ||||
|
Other income (expense):
|
||||||||
|
Income from revaluation of equity-based financial
|
||||||||
|
instruments with characteristics of liabilities at
|
||||||||
|
fair values
|
(35,395 | ) | (332,169 | ) | ||||
|
Interest expense
|
(67,728 | ) |
(168,673
|
) | ||||
|
Net income (loss) before provision for income taxes
|
(778,897 | ) | (547,803 | ) | ||||
|
Provision for income taxes
|
- | - | ||||||
|
Net income (loss)
|
(778,897 | ) | (547,803 | ) | ||||
|
Increase in cumulative dividends payable on Series A
|
||||||||
|
Preferred Stock
|
25,655 | 28,451 | ||||||
|
Net loss attributable to common stockholders
|
$ | (804,552 | ) | $ | (576,254 | ) | ||
|
Basic earnings (loss) per common share
|
(.01 | ) | $ | (.01 | ) | |||
|
Weighted average shares outstanding-basic and diluted
|
54,945,682 | 51,880,349 | ||||||
F-12
MIT HOLDING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
UNAUDITED AND UNREVIEWED
NOTE D – ACCOUNTS RECEIVABLE
Accounts receivable consist of:
|
March 31,
|
||||||||
|
2011
|
2010
|
|||||||
|
Ambulatory care
|
$
|
663,651
|
$
|
644,934
|
||||
|
Infusions
|
467,238
|
514,937
|
||||||
|
Durable medical equipment
|
184,525
|
418,480
|
||||||
|
MITRX
|
1,310,117
|
|||||||
|
Wholesale
|
-
|
43,640
|
||||||
|
Total
|
2,625,531
|
1,621,451
|
||||||
|
Allowance for doubtful accounts
|
(436,145
|
)
|
(937,293
|
)
|
||||
|
Net
|
$
|
2,189,386
|
$
|
684,158
|
||||
The allowance for doubtful accounts changed as follows:
|
Year Ended March 31,
|
||||||||
|
2011
|
2010
|
|||||||
|
Balance, beginning of year
|
$
|
508,719
|
$
|
1,241,447
|
||||
|
Provision for doubtful accounts
|
-
|
-
|
||||||
|
Writeoffs
|
(72,574
|
)
|
(304,134
|
)
|
||||
|
Balance, end of year
|
$
|
436,145
|
$
|
937,293
|
||||
F-13
MIT HOLDING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
UNAUDITED AND UNREVIEWED
NOTE E – INVENTORIES
Inventories consist of:
|
March 31,
|
||||||||
|
2011
|
2010
|
|||||||
|
Ambulatory care
|
$
|
86,791
|
$
|
69,235
|
||||
|
Infusions
|
52,674
|
87,947
|
||||||
|
Durable medical equipment
|
34,716
|
29,940
|
||||||
|
MitRx
|
348,302
|
|||||||
|
Total
|
$
|
522,483
|
$
|
287,122
|
||||
NOTE F – NON-COMPETE AGREEMENT
Non-compete agreement consists of:
|
March 31,
|
||||||||
|
2011
|
2010
|
|||||||
|
Consideration to seller of Infusion and Ambulatory (and Company's chief operating officer) attributable to non-compete agreement executed May 10, 2005
|
$
|
200,000
|
$
|
200,000
|
||||
|
Accumulated amortization
|
(147,924
|
)
|
(137,925
|
)
|
||||
|
Net
|
$
|
52,076
|
$
|
62,075
|
||||
The non-compete agreement is being amortized over the estimated remaining period of the agreement (see Note M).
F-14
MIT HOLDING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
UNAUDITED AND UNREVIEWED
NOTE G – LONG-TERM DEBT
The Company’s debt is as follows:
|
March 31,
|
March 31,
|
|||||||
|
2011
|
2010
|
|||||||
|
Globank Corp., interest at 14.9% payable monthly commencing January 1, 2001(interest at 60% in 2009 and 2010), due in monthly installments of $1,000 from February 1, 2011 to December 1, 2013 and a balloon payment of $1,002,727 on January 1, 2014, secured by Company assets and guaranties of the Company’s chief executive officer and the Company’s three subsidiaries (less unamortized debt discounts of $410,000 and $0, respectively) MIT’s newly elected Co-Chairman and Co-President, Walter H.C. Drakeford (“Drakeford”) whom is also the Company’s new Chief Financial Officer, Secretary and Director has had a professional relationship with a financing entity in which the president of Globank is involved in.
|
$
|
625,727
|
$
|
500,000
|
||||
|
Cardinal Health fixed rate term note, interest at 10% due in monthly installments of principal and interest of $7,798 through April 10, 2014, secured by guaranty of the Company’s Chief Executive Officer
|
245,386
|
305,728
|
||||||
|
The Coastal Bank - installment loan, interest at 10%, initially due September 28, 2008, now informally due in monthly installments of principal and interest of $10,000 through April 20, 2011, secured by Company assets and guaranty of the Company’s Chief Executive Officer
|
-
|
119,516
|
||||||
|
The Coastal Bank – vehicle loans, interest at rates ranging from 6.5% to 8.22%, due in monthly installments of principal and interest through November 21, 2010
|
-
|
4,795
|
||||||
|
CuraScript (former supplier) pursuant to Settlement Agreement, interest at 0%, due in monthly installments of $15,000 through July 15, 2010
|
-
|
82,500
|
||||||
|
Note for legal fees, interest at 0%, past due at December 31, 2009, reclassified to accounts payable and accrued expenses in 2010
|
-
|
137,500
|
||||||
|
Total
|
871,113
|
939,254
|
||||||
|
Current portion of debt
|
81,522
|
939,254
|
||||||
|
Long – term debt
|
$
|
789,591
|
$
|
-
|
||||
At March 31, 2011, the debt is due as follows:
|
Year ending December 31,
|
||||
|
2011
|
$ | 111,198 | ||
|
2012
|
89,623 | |||
|
2013
|
97,353 | |||
|
2014
|
1,038,007 | |||
|
Total
|
1,335,821 | |||
|
Less unamortized debt discounts
|
(410,000 | ) | ||
|
Net
|
$ | 925,821 | ||
F-15
MIT HOLDING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
UNAUDITED AND UNREVIEWED
NOTE G – LONG-TERM DEBT (continued)
On Decembe 31, 2010, the Company entered into a Loan and Security Agreement (the “New Loan”) with Globank Corp. (“Globank”) to modify the Original Agreement and Original Note dated July 29, 2008. Pursuant to the New Loan and Amended and Restated Promissory Note, the principal amount increased from $500,000 to $1,037,727, the maturity date was extended from July 29, 2010 to January 1, 2014,and the interest rate was reduced from 60% to 14.9% per annum. The $537,727 increase in principal was applied as follows:
|
Company satisfaction of accrued interest payable on Original Note
|
$ | 322,727 | ||
|
Company satisfaction of Renewal Fee due to Globank
|
160,000 | |||
|
Company satisfaction of attorney fees
|
5,000 | |||
|
Company receipt of New Loan proceeds on January 24, 2011
|
50,000 | |||
|
Total
|
$ | 537,727 |
Also, pursuant to the New Loan, the Company agreed to issue Globank 5,000,000 restricted shares of its common stock (which occurred January 19, 2011)(the “Stock”) and Globank agreed not to transfer the Stock without the Company’s prior written consent and appointed the Company’s Chairman of the Board as its proxy with respect to the Stock for all voting purposes to December 31, 2013. The Company is to redeem the Stock no later than January 1, 2014 for an amount equal to $250,000 (“Minimum Stock Redemption Amount”) plus 50% of the excess of the Payoff Value (based on the average closing sales price of the Stock for the 5 consecutive trading days immediately preceding the Payoff Date) over $250,000, if any. The New Loan also provides for anti-dilution rights to Globank whereby Globank is to be issued additional shares of Company common stock if the Company issues additional shares to another person or entity (so that Globank retains the same percentage of stock ownership). The Stock has been reflected at the Minimum Stock Redemption Amount of $250,000 as “Common Stock Subject to Mandatory Redemption” within liabilities in the consolidated balance sheet at March 31, 2011.
The Renewal Fee of $160,000 and the Minimum Redemption Amount of $250,000 have been reflected as debt discounts in the consolidated balance sheet at March 31, 2011 and will be amortized over the term of the New Note and recognized as interest expense.
NOTE H – ESTIMATED LIABILITY FOR EQUITY-BASED FINANCIAL INSTRUMENTS WITH CHARACTERISTICS OF LIABILITIES
Effective January 1, 2009, in accordance with EITF Issue No. 07-05, “Determining Whether an Instrument (or Embedded Feature) is indexed to an Entity’s Own Stock”, the Company reclassified the fair values at January 1, 2009 of the outstanding Series A Convertible Preferred Stock and warrants from the private placement of the units which closed May 31, 2007 from stockholders’ equity to liabilities, as follows:
F-16
MIT HOLDING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
UNAUDITED AND UNREVIEWED
|
Common
|
||||||||
|
Shares
|
Fair
|
|||||||
|
Equivalent
|
Value
|
|||||||
|
Series A Convertible Preferred Stock
|
3,793,460
|
$
|
227,608
|
|||||
|
Warrants
|
8,168,780
|
106,194
|
||||||
|
Total financial instruments
|
11,962,240
|
$
|
333,802
|
|||||
Since at January 1, 2009 the carrying value of the outstanding financial instruments was $2,871,316, the Company recognized a cumulative effect adjustment resulting from a change in accounting principle of $2,537,514. Accordingly, the accumulated deficit balance at December 31, 2008 was decreased from $9,899,884 to $7,362,370, as adjusted, on January 1, 2009.
The characteristics which require classification of the Series A Preferred Stock and warrants as liabilities are the Company’s obligations to reduce the conversion price of the Series A Preferred Stock and the exercise price of the warrants in the event that the Company sells, grants, or issues any nonexcluded shares, options, warrants, or any convertible instrument at a price below the $0.50 current conversion price of the Series A Preferred Stock. As a result, the Company remeasures the fair values of these financial instruments each quarter, adjusts the liability balances, and reflects changes in operations as “income (expense) from revaluation of equity-based financial instruments with characteristics of liabilities at fair values”.
The fair values of the financial instruments consisted of:
| March 31, 2011 | December 31, 2010 | |||||||||
|
Common
|
Common
|
|||||||||
|
Shares
|
Fair
|
Shares
|
Fair
|
|||||||
|
Equivalent
|
Value
|
Equivalent
|
Value
|
|||||||
|
Series A Convertible Preferred Stock
|
3,593,460
|
$
|
71,869
|
3,793,460
|
$
|
151,738
|
||||
|
Warrants
|
8,168,780
|
817
|
8,168,780
|
25,323
|
||||||
|
Total financial instruments
|
11,762,240
|
$
|
72,686
|
11,962,240
|
$
|
177,061
|
||||
Below is a reconciliation of the change in the fair values of the financial instruments from January 1, 2009 through March 31, 2011:
F-17
MIT HOLDING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
UNAUDITED AND UNREVIEWED
|
Common
|
||||||||
|
Shares
|
Fair
|
|||||||
|
Equivalent
|
Value
|
|||||||
|
Balance, January 1, 2009
|
11,962,240
|
$
|
333,802
|
|||||
|
Revaluation credited to operations
|
-
|
(164,271
|
)
|
|||||
|
Balance, March 31, 2009
|
11,962,240
|
169,531
|
||||||
|
Revaluation charged to operations
|
-
|
789,139
|
||||||
|
Balance, June 30, 2009
|
11,962,240
|
958,670
|
||||||
|
Revaluation credited to operations
|
-
|
(403,695
|
)
|
|||||
|
Balance, September 30, 2009
|
11,962,240
|
554,975
|
||||||
|
Revaluation credited to operations
|
-
|
(377,914
|
)
|
|||||
|
Balance December 31, 2009
|
11,962,240
|
177,061
|
||||||
|
Revaluation charged to operations
|
332,169
|
|||||||
|
Balance March 31, 2010
|
11,962,240
|
509,230
|
||||||
|
Revaluation credited to operations
|
-
|
(295,050
|
)
|
|||||
|
Balance June 30, 2010
|
11,962,240
|
214,180
|
||||||
|
Conversion of Series A Convertible Preferred Stock
|
(200,000
|
)
|
(8,000)
|
|||||
|
Revaluation credited to operations
|
-
|
(52,639
|
)
|
|||||
|
Balance September 30, 2010
|
11,762,240
|
153,541
|
||||||
|
Revaluation credited to operations
|
-
|
(80,855)
|
||||||
|
Balance, December 31,2010
|
11,762,240,
|
72,686,
|
||||||
|
Revaluation credited to operations
|
35,395
|
|||||||
|
Balance, March 31, 2011
|
11,762,240
|
$
|
108,081
|
|||||
NOTE I – PREFERRED STOCK
The Company is authorized to issue 5,000,000 shares of Preferred Stock, of which 5,000 shares have been designated Series A Preferred Stock, par value $ 0.000001. As of March 31, 2011 and December 31, 2009, there are 1,796.73 and 1,896.73 shares of Series A Preferred Stock issued and outstanding, respectively. Holders of Series A Preferred Stock are entitled at any time to convert their shares of Series A Preferred Stock into Common Stock, without any further payment therefore. Each share of Series A Preferred Stock is initially convertible into 2,000 shares of Common Stock, equivalent to a Conversion Price of $0.50 per share. The number of shares of Common Stock issuable upon conversion of the Series A Preferred Stock is subject to adjustment upon the occurrence of certain events, including, among others, a stock split, reverse stock split or combination of MIT's Common Stock; an issuance of Common Stock or other securities of MIT as a dividend or distribution on the Common Stock; a reclassification, exchange or substitution of the Common Stock; or a capital reorganization of MIT. In the event that MIT issues any additional shares of its Common Stock following the Offering, the Conversion rate will be that number of shares of Common Stock equal to $1,000 divided by the price per share at which MIT issues Common Stock in such offering. At our option, following the effectiveness of a registration statement registering the shares of Common Stock issuable upon the conversion of the Series A Preferred Stock and the exercise of the Warrants, if the price of the Common Stock trades above 300% of the Conversion Price per share during any period of 30 consecutive trading days and the average trading volume is at least 50,000 shares per day, for such 30 day period, each share of Series A Preferred Stock can be automatically converted into Common Stock at the Conversion Rate then in effect.
The liquidation preference amount of each share of Series A Preferred Stock is $1,000, or a total of $1,796,730 for the 1,796.73 shares issued and outstanding as of March 31, 2011 (December 31,2009: $1,896,730 for the 1,896.73 shares issued and outstanding).
F-18
MIT HOLDING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
UNAUDITED AND UNREVIEWED
NOTE I – PREFERRED STOCK (Continued)
As part of its private placement of the Units (including the Series A Preferred Stock) which closed May 31, 2007, the Company granted a financial advisor a five-year option to purchase up to 635 units (comprised of 635 shares of Series A Preferred Stock and warrants to purchase up to 1,270,000 shares of common stock at an exercise price of $0.75 per share to August 13, 2012) at a price of $1,000 per Unit.
Dividends accrue on the Series A Preferred Stock at the rate of 6% per annum and are cumulative. If and when declared, the Company may pay such dividends in cash or common stock. The cumulative undeclared and unpaid dividends are $386,297 and $295,831 at March 31, 2011 and December 31, 2009, respectively.
NOTE J – ISSUANCE OF COMMON STOCK
On March 31, 2009, the Board of Directors authorized the issuance of a total of 850,000 shares of common stock to Board Members and key employees valued at a price of $0.03 per share, or $25,500 total. On December 31, 2009, the Board of Directors authorized the issuance of a total of 2,139,937 shares of common stock to Board Members valued at prices ranging from $0.04 per share to $0.76 per share, or $148,352 total. The Company included the $173,582 estimated fair value of the shares in selling, general and administrative expenses in the statement of operations for the year ended December 31, 2009 and increased common stock and additional paid-in capital by the same amount.
On February 24, 2010, the Board of Directors authorized the issuance of a total of 320,000 shares of common stock to Board Members and key employees valued at a price of $0.04 per share, or $12,400 total. The Company included the $12,400 estimated fair value of the shares in selling, general and administrative expenses in the statement of operations for the year ended March 31, 2011 and increased the common stock and additional paid-in capital by the same amount.
On July 5, 2010, a holder of 100 shares of Series A Convertible Preferred Stock converted the 100 shares of Series A Convertible Preferred Stock into 200,000 shares of common stock. The Company reported the $8,000 estimated fair value of the common shares as a reduction of the “estimated liability for equity-based financial instruments with characteristics of liabilities” and increased common stock and additional paid-capital by the same amount.
NOTE K – STOCK OPTIONS AND COMMON STOCK PURCHASE WARRANTS
A summary of stock options and warrants activity for the years ended March 31, 2011 and 2009 follows:
|
Common Shares Equivalent
|
||||||||
|
Stock
|
||||||||
|
Options
|
Warrants
|
|||||||
|
Outstanding at December 31, 2008
|
600,000
|
8,418,780
|
||||||
|
Granted and issued
|
-
|
-
|
||||||
|
Exercised
|
-
|
-
|
||||||
|
Forfeited/expired/cancelled
|
-
|
-
|
||||||
|
Outstanding at December 31, 2009
|
600,000
|
8,418,780
|
||||||
|
Granted and issued
|
-
|
-
|
||||||
|
Exercised
|
-
|
|||||||
|
Forfeited/expired/cancelled
|
-
|
-
|
||||||
|
Outstanding at December 31, 2010
|
600,000
|
8,418,780
|
||||||
F-19
MIT HOLDING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
UNAUDITED AND UNREVIEWED
NOTE K – STOCK OPTIONS AND COMMON STOCK PURCHASE WARRANTS (Continued)
Stock options outstanding at March 31, 2011 and 2010 are:
|
Date Granted
|
Number
Outstanding
|
Number
Exercisable
|
Exercise
Price
|
Expiration
Date
|
|||||||||
|
May 2, 2007
|
600,000
|
600,000
|
$
|
0.50
|
May 2, 2012
|
||||||||
|
Totals
|
600,000
|
600,000
|
|||||||||||
Common stock purchase warrants outstanding at March 31, 2011 and March 31, 2010 are:
|
Date Granted
|
Number
Outstanding
|
Exercise
Price
|
Expiration Date
|
||||||
|
May 31, 2007
|
8,168,780
|
$
|
0.75
|
August 13, 2012
|
|||||
|
July 30, 2007
|
250,000
|
$
|
2.20
|
July 30, 2012
|
|||||
|
Total:
|
8,418,780
|
||||||||
NOTE L – INCOME TAXES
Expected income tax expense (benefit) computed by applying the United States statutory income tax rate of 34% to pretax income (loss) differs from the Company’s provision for (benefit from) income taxes, as follows:
|
Year Ended
|
Year Ended
|
|||||||
|
March 31, 2011
|
March 31, 2010
|
|||||||
|
Expected income tax expense (benefit) at 34%
|
$
|
26,803
|
$
|
(422,846
|
)
|
|||
|
Non-deductible stock-based compensation
|
4,216
|
59,110
|
||||||
|
Non-taxable income from revaluation of equity-based financial instruments with characteristics of liabilities at fair values
|
(32,768
|
)
|
(53,292
|
)
|
||||
|
Change in valuation allowance
|
1,749
|
417,028
|
||||||
|
Provision for income taxes
|
$
|
-
|
$
|
-
|
||||
F-20
MIT HOLDING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
UNAUDITED AND UNREVIEWED
NOTE L – INCOME TAXES (continued)
The components of net deferred income tax assets are as follows:
|
March 31, 2011
|
March 31, 2010
|
|||||||
|
Allowance for doubtful accounts
|
$
|
172,964
|
$
|
422,102
|
||||
|
Net operating loss carryforward
|
1,178,039
|
927,152
|
||||||
|
Total
|
1,351,003
|
1,349,254
|
||||||
|
Less valuation allowance
|
(1,351,003
|
)
|
(1,349,254
|
)
|
||||
|
Net deferred income tax assets
|
$
|
-
|
$
|
-
|
||||
Based on management’s present assessment, the Company has not yet determined it to be more likely than not a deferred income tax asset of up to approximately $1,351,003 attributable to the future utilization of the net operating loss carryforwards and other timing differences of approximately $3,973,539 as of March 31, 2011 will not be realized. Accordingly, the Company has maintained a 100% allowance against the deferred tax asset in the financial statements at March 31, 2011. The Company will continue to review this valuation allowance and make adjustments as appropriate. The $3,464,820 net operating loss carryforward expires $1,743,693 in year 2028, $983,226 in year 2029 and $737,901 in year 2030.
NOTE L – OPERATING SEGMENTS
The Company has four principal operating segments, which are as follows:
|
·
|
Medical Infusion Technologies-“MIT”
|
|
|
·
|
MIT International / Provector
|
|
|
·
|
Durable Medical Equipment - “DME”
|
|
|
·
|
MITRX Specialty Pharmacy
|
|
|
·
|
MIT Ambulatory Care Center -“Ambulatory Care”
|
“MIT” is a provider of intravenous therapies to patients at their home, at a designated facility. MIT’s primary product lines are centered upon infusion therapy.
“International / Provector” is the division responsible for the marketing and distribution of Provector on a worldwide basis for international sales only.
“DME” carries a variety of durable medical equipment and supplies.
MITRX Corporation is a specialty pharmacy that MIT acquired the operations of on January 21, 2011 that consisits of Palmetto Long Term Care Pharmacy which provides prescriptions to long term care patients in skilled nursing facilities and long term care facilities.
“Ambulatory Care” administers the intravenous therapies to patients in the Company’s facility.
The following tables show the summarized financial information of the Company’s reportable segments at March 31, 2011 and 2009 and for the years then ended:
F-21
MIT HOLDING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
UNAUDITED AND UNREVIEWED
NOTE M – OPERATING SEGMENTS (Continued)
For the three months ended March 31,
|
Medical
|
||||||||||||||||||||||||
|
Infusion
|
International/
|
Ambulatory
|
DME
|
MITRX
|
Combined
|
|||||||||||||||||||
|
- MIT
|
Provector
|
Care
|
|
|||||||||||||||||||||
|
2011
|
||||||||||||||||||||||||
|
Revenue
|
$ | 535.958 | $ | - | $ | 885,068 | $ | 77,375 | $ | 3,584,651 | $ | 5,084,052 | ||||||||||||
|
Income (loss) from operations
|
(85,805 | ) | (102,682 | ) | 205,749 | (9,088 | ) | (472,739 | ) | (464,991 | ) | |||||||||||||
|
Depreciation and amortization
|
9,999 | - | - | - | 12,250 | 22,249 | ||||||||||||||||||
|
Assets
|
$ | 576,977 | - | $ | 532,369 | $ | 132,013 | 14,906,973 | $ | 16,148,332 | ||||||||||||||
|
2010
|
||||||||||||||||||||||||
|
Revenue
|
$ | 589,864 | $ | - | $ | 959,724 | $ | 127,769 | $ | 1,677,136 | ||||||||||||||
|
Income (loss) from operations
|
(97,104 | ) | - | 263,826 | 44,531 | 211,253 | ||||||||||||||||||
|
Depreciation and amortization
|
12,999 | - | - | - | 12,999 | |||||||||||||||||||
|
Assets
|
$ | 557,557 | $ | - | $ |
692,980
|
$ |
567,516
|
$ |
2,655,565
|
||||||||||||||
NOTE N - COMMITMENTS AND CONTINGENCIES
Employment Agreements
Pursuant to an Employment Agreement with the Company’s chief executive officer effective June 30, 2006 and expiring June 30, 2011, the Company is obligated to pay its chief executive officer a salary of $250,000 per year.
Pursuant to an Employment Agreement with the Company’s chief operating officer effective May 10, 2005, as amended March 14, 2006, April 1, 2006, December 20, 2006, and June 7, 2007, the Company is obligated to pay its chief operating officer a salary of approximately $117,000 per year through May 10, 2010 and, on May 10, 2010, cash or common stock, at the option of the Company, equal to the amount (if any) by which $625,000 exceeds the sum of ( i ) the market value of the remainder of the 312,500 unsold shares issued to her on June 7, 2007 and ( ii) the proceeds, if any, received by her from the sale of any of the 312,500 shares. As part of the agreement, the Company’s chief operating officer has agreed not to compete with the Company for a period of three years after the sales of any shares of the Company. The agreement has been verbally extended and amended to defer the $625,000 common stock market value contingent liability of the Company until 2012.
Pursuant to an Employment Agreement with the Company’s pharmacist in charge effective May 10, 2005, as amended March 14, 2006, April 1, 2006, December 20, 2006, and June 7, 2007, the Company is obligated to pay its pharmacist in charge a salary of approximately $40,000 per year through May 10, 2010 and, on May 10, 2010, cash or common stock, at the option of the Company, equal to the amount (if any) by which $500,000 exceeds the sum of ( i ) the market value of the remainder of the 250,000 unsold shares issued to him on June 7, 2007 and ( ii) the proceeds, if any, received by him from the sale of any of the 250,000 shares. As part of the agreement, the pharmacist in charge has agreed not to compete with the Company for a period of three years after the sales of any shares of the Company. The agreement has been verbally extended and amended to defer the $500,000 common stock market value contingent liability of the Company until 2012.
F-22
MIT HOLDING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
UNAUDITED AND UNREVIEWED
NOTE O -COMMITMENTS AND CONTINGENCIES (continued)
Lease Agreements
The Company operates from two locations in Savannah, Georgia (under month to month verbal agreements at rents totaling approximately $8,200 per month) and from two locations in South Carolina (under written operating lease agreements expiring October 31, 2013 and April 30, 2012 at monthly rents ranging from $2,500 to $3,000 (for the first lease) and $800 to $824 (for the second lease), respectively). Rent expense for the years ended March 31, 2011 and 2009 was $116,722 and $ 111,300, respectively.
At March 31, 2011, future minimum rental commitments under all non-cancellable operating leases are due as follows:
|
Year ending December 31,
|
||||
|
2011
|
$ | 40,648 | ||
|
2012
|
39,296 | |||
|
2013
|
30,000 | |||
|
Total
|
$ | 109,944 | ||
Delinquent Payroll Tax Returns and Payments
The Company is delinquent in filing certain Federal and Georgia payroll tax returns resulting in the non-payment of the related withholdings and employer taxes. The delinquency and non-payments are for the quarterly periods ended December 31, 2009, March 31, 2010, June 30, 2010, and September 30, 2010.
The total amount of money owed (excluding potential late filing and late payment penalties) at March 31, 2011 is approximately $501,511 (which is included in “accounts payable and accrued expenses” in the accompanying consolidated balance sheet at March 31, 2011).
In October 2010, we retained the public accounting firm Drakeford and Drakeford to contact the Internal Revenue Service and the Georgia tax authority to negotiate various payment plans associated with the amounts owed. In connection therewith, we sent $60,000 to Drakeford and Drakeford for the sole purpose of satisfying portions of these payroll tax obligations. To the extent unused, Drakeford and Drakeford is required to return any unused portion to the Company. The $60,000 is included in “Prepaid expenses and other current assets” in the accompanying consolidated balance sheet at March 31, 2011.
Additionally, information returns were not filed with the Internal Revenue Service relating to monies paid totaling
approximately $120,000 in 2010 to certain personnel treated as independent contractors The Internal Revenue Service may recharacterize these payments as salaries and attempt to assess the Company for social security taxes , interest, and penalties.
Stock-Based Compensation Plan
On June 7, 2007 the Board of Directors approved the 2007 Stock Incentive Plan (the "Plan") covering 5,000,000 shares. The shareholders subsequently approved the Plan. The shares underlying the Plan are restricted. The Plan is identical to MIT’s 2006 Stock Incentive Plan (which was adopted by Medical Infusion Group, Inc. (the former MIT Holding, Inc.) prior to the Merger) in all material respects, other than that the 2006 Stock Incentive Plan covers 7,000,000 shares. All awards under the 2006 Stock Incentive Plan were exchanged for awards under the Plan effective upon the Company’s May 2, 2007 merger with Medical Infusion Group, Inc.
The Plan is intended to benefit the stockholders of the Company by providing a means to attract, retain and reward individuals who can and do contribute to the longer-term financial success of the Company. Further, the recipients of stock-based awards under the Plan should identify their success with that of the Company's shareholders and therefore will be encouraged to increase their proprietary interest in the Company. The Compensation Committee administers the Plan.
F-23
MIT HOLDING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
UNAUDITED AND UNREVIEWED
NOTE P – RELATED PARTY TRANSACTIONS
During the years ended December 31,2010 and 2009, the Company incurred consulting fees of $282,000 and $83,000, respectively, included within “Selling, general and administrative” expenses to a company that has a professional relationship with the Company’s Co-chairmen.
NOTE O – SUBSEQUENT EVENTS
On February 4, 2011, MITRX Corporation, a South Carolina corporation and subsidiary of MIT Holding Inc. (“MIT” or the “Company”), executed two stock purchase agreements (the “Agreements”), pursuant to which it agreed to acquire one hundred Percent (100%) of the issued and outstanding equity interests of two companies; National Direct Home Pharmacy, Inc. and Palmetto Long Term Care Pharmacy, LLC a wholly owned subsidiary of Strategies Healthcare, Inc., which is jointly owned by two individuals. There are no material relationships between the sellers, their owners, affiliates, officers or directors and MIT’s officers, directors or affiliates.
Pursuant to the terms of the purchase agreements, MITRX is to acquire a fully operating home delivery/mail order pharmacy with annual gross sales of approximately Eighteen Million Dollars ($18,000,000) in exchange for the assumption of approximately $15,273,492 in total debt. The acquired companies have assets including but not limited to furniture, fixtures, licenses, government awards, private nursing home contracts, large individual customer bases and pharmaceutical equipment, including a PharmASSIST RobotX.
Closing of the acquisitions are subject to certain conditions precedent to sale, including completion of audits of financial statements of NDHP and PLTC (which has not yet occurred).
F-24
The statements contained in this 10Q, are not purely historical statements, but rather include what we believe are forward-looking statements. The forward-looking statements are based on factors set forth in the following discussion. Our actual results could differ materially from results anticipated in these forward-looking statements. All forward-looking statements included in this document are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements.
Overview
Through its subsidiaries, MIT distributes wholesale drugs, prepares intravenous medication for home infusion by the patient, operates ambulatory centers where intravenous infusions are administered and sells and rents home medical equipment. MIT is based in Savannah, Georgia and operates an ambulatory care center in Savannah. Our distribution of wholesale drugs has historically accounted for the majority of our revenues, although this was not the case in the quarter ended March 31, 2009, and is not anticipated to be a significant area of growth on the immediate future
MIT in 2008 expended substantial effort to obtain approvals and certification for ProVector™, a proprietary product developed by Dr. Thomas M. Kollars, Jr. (“Dr. Kollars”) in connection with Georgia Southern University Research & Services Foundation, Inc (“GSURSF”). This product could potentially eradicate the spread of certain mosquito-borne infectious diseases including malaria, dengue fever and West Nile virus. MIT intends to market ProVector™ through international distribution channels to developing nations.
On February 4, 2011, MITRX Corporation, a South Carolina corporation and subsidiary of MIT Holding Inc. ("MIT" or the "Company"), executed two stock purchase agreements (attached hereto as Exhibit 10.19 and 10.20) (the "Agreements"), pursuant to which it agreed to acquire one hundred Percent (100%) of the issued and outstanding equity interests of two companies; National Direct Home Pharmacy, Inc., owned by Lancelot D. Wright and John T. Crocker, Sr., and Palmetto Long Term Care Pharmacy, LLC a wholly owned subsidiary of Strategies Healthcare, Inc., which is owned by Lancelot D. Wright and Robert A. Williams. There are no material relationships between the sellers, their owners, affiliates, officers or directors and MIT's officers, directors or affiliates.
Critical Accounting Policies
Management's discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, impairment of long-lived assets, including finite lived intangible assets, accrued liabilities and certain expenses. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions.
Our significant accounting policies are summarized in Note 1 to our audited financial statements for the year ended December 31, 201. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements:
1
Inventories
Inventories are stated at the lower of cost (first-in, first-out) or market (net realizable value). They consist mainly of pharmaceutical supplies and medical equipment.
Revenue Recognition
Sales and services are recorded when products are delivered to the customers. Provision for discounts, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. In instances where products are configured to customer requirements, revenue is recorded upon the successful completion of the Company’s final test procedures.
Advertising Cost
Advertising cost is expensed as incurred.
Estimates
Preparing the Company’s financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect 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 reporting period. Actual results could differ from those estimates.
New Accounting Pronouncements
New accounting statements issued, and adopted by the Company, include the following:
In September 2006, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“SFAS 157”). This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. We are currently evaluating the impact on our consolidated financial statements of SFAS 157, which will become effective for us on January 1, 2008 for financial assets and January 1, 2009 for non-financial assets.
In February 2007, the Financial Accounting Standards Board issued SFAS 159, “The Fair Value Option for Financial Assets and Financial Liabilities”. SFAS No. 159 amends SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities”. SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The objective of SFAS No. 159 is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS No. 159 is expected to expand the use of fair value measurement, which is consistent with the Board’s long-term measurement objectives for accounting for financial instruments. SFAS No. 159 applies to all entities, including not-for-profit organizations. Most of the provisions of SFAS No. 159 apply only to entities that elect the fair value option. However, the amendment to SFAS No. 115 applies to all entities with available-for-sale and trading securities. Some requirements apply differently to entities that do not report net income. This statement is effective as of the beginning of each reporting entity’s first fiscal year that begins after November 15, 2007. The Company has not yet determined the effect of SFAS No. 159 on its financial position, operations or cash flows.
In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations.” It will require an acquirer to recognize, at the acquisition date, the assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree at their full fair values as of that date. In a business combination achieved in stages (step acquisitions), the acquirer will be required to remeasure its previously held equity interest in the acquiree at its acquisition-date fair value and recognize the resulting gain or loss in earnings. The acquisition-related transaction and restructuring costs will no longer be included as part of the capitalized cost of the acquired entity but will be required to be accounted for separately in accordance with applicable generally accepted accounting principles in the U.S. SFAS No. 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008.
2
In December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements.” The statement clarifies the definition of a non-controlling (or minority) interest and requires that non-controlling interests in subsidiaries be reported as a component of equity in the consolidated statement of financial position and requires that earnings attributed to the non-controlling interests be reported as part of consolidated earnings and not as a separate component of income or expense. However, it will also require expanded disclosures of the attribution of consolidated earnings to the controlling and non-controlling interests on the face of the consolidated income statement. SFAS No. 160 will require that changes in a parent’s controlling ownership interest, that do not result in a loss of control of the subsidiary, are accounted for as equity transactions among shareholders in the consolidated entity therefore resulting in no gain or loss recognition in the income statement. Only when a subsidiary is deconsolidated will a parent recognize a gain or loss in net income. SFAS No. 160 is effective for fiscal years beginning on or after December 15, 2008, and will be applied prospectively except for the presentation and disclosure requirements that will be applied retrospectively for all periods presented. The Company is currently evaluating the impact of SFAS No. 160 to its financial position and results of operations.
Results of Operations
Comparison of three months ended March 31, 2011 to three months ended March 31, 2010.
Revenues
Consolidated revenues for the quarter ended March 31, 2011 were $5,084,052 as compared to $1,677,136 for the quarter ended March 31, 2010 , representing an increase of $3,406,916 which consisted of $3,584,651 of new revenue for MITRX and a decrease of -$177,735 or -10.6% for prior operations. Consolidated cost of sales for the quarter ended March 31, 2011 were $3,709,370 or 73.0% of sales as compared to cost of sales for the quarter ended March 31, 2010 of $708,638, or 42.3% of sales. The increase included $2,953,461 of costs for MITRX and an increase of $42,271 to 755,908 from $708,638 for costs in the prior operations. This resulted in a gross profit for this quarter of $1,374,682 or 27.0% as compared to gross profit for the same quarter in 2010 of $968,498 or 57.7%. The decrease in our revenues for prior operations this quarter resulted from an overall decrease in referrals from our customer base. The increase in the costs of good sold for the quarter were due to increased costs of drugs as we discontinued mail order drugs on some therapies in the last quarter of the year.
The Company has four principal operating segments, which are as follows:
|
·
|
Medical Infusion Technologies-“MIT”
|
|
|
·
|
MITRX Corporation
|
|
|
·
|
MIT International / Provector
|
|
·
|
Medical Infusion Tech,DME-“DME”
|
|
|
·
|
MIT Ambulatory Care Center-“Ambulatory Care”
|
“MIT” is a provider of intravenous therapies to patients at their home, at a designated facility, or at the Company’s office facilities. MIT’s primary product lines are centered upon infusion therapy.
3
MITRX Corporation is a specialty pharmacy that MIT acquired the operations of on January 21, 2011 that consisits of Palmetto Long Term Care Pharmacy which provides prescriptions to long term care patients in skilled nursing facilities and long term care facilities and National Direct Home Pharmacy which fills prescriptions on a mail order basis.
MIT International / Provector has exclusive rights to market and distribute ProVector™ to international markets.
“Wholesale” primarily aims at a network of hard to find pharmaceuticals. It concentrates in sales on rare products in the pharmaceutical industry. Due to working capital constraints, opportunities in this product line are not available to MIT at this time.
“DME” carries the gamut of durable medical equipment and supplies.
“Ambulatory Care” administers the intravenous therapies to patients.
The following tables show the operations of the Company’s reportable segments:
For the three months ended March 31,
|
Medical
|
||||||||||||||||||||||||
|
Infusion
|
International/
|
Ambulatory
|
DME
|
MITRX
|
Combined
|
|||||||||||||||||||
|
- MIT
|
Provector
|
Care
|
|
|||||||||||||||||||||
|
2011
|
||||||||||||||||||||||||
|
Revenue
|
$ | 535.958 | $ | - | $ | 885,068 | $ | 77,375 | $ | 3,584,651 | $ | 5,084,052 | ||||||||||||
|
Income (loss) from operations
|
(85,805 | ) | (102,682 | ) | 205,749 | (9,088 | ) | (472,739 | ) | (464,991 | ) | |||||||||||||
|
Depreciation and amortization
|
9,999 | - | - | - | 12,250 | 22,249 | ||||||||||||||||||
|
Assets
|
$ | 576,977 | - | $ | 532,369 | $ | 132,013 | 14,906,973 | $ | 16,148,332 | ||||||||||||||
|
2010
|
||||||||||||||||||||||||
|
Revenue
|
$ | 589,864 | $ | - | $ | 959,724 | $ | 127,769 | $ | 1,677,136 | ||||||||||||||
|
Income (loss) from operations
|
(97,104 | ) | - | 263,826 | 44,531 | 211,253 | ||||||||||||||||||
|
Depreciation and amortization
|
12,999 | - | - | - | 12,999 | |||||||||||||||||||
|
Assets
|
$ | 557,557 | $ | - | $ |
692,980
|
$ |
567,516
|
$ |
2,655,565
|
||||||||||||||
4
Operating Expenses
Total operating expenses were $ 1,839,747 for the quarter ended March 31, 2011, from $757,245 for the same period in 2010. $1,103,929 was attributable to MITRX and $735,909 for prior operations which was a decrease of $21,427 or -2.8% with only minor changes from the prior year.
|
•
|
Salaries and payroll related costs were $1,009,788 for the three months ended March 31, 2011 consisting of $611,853 for MITRX and $397,935 for prior operations which increased $6,823 from $391,103 for the first quarter of 2010 or an increase of 1.75% over the quarter ended March 31, 2009.
|
|
•
|
Selling, general and administrative expenses were $807,710 for the period which was made up of $479,826 for MITRX and 327,833 for prior operations which represents a decrease of $25,259 from $353,143 for the same period in 2010 or 7.1%. For prior operations, the Company has been able maintain spending levels at a modest rate while continuing to serve our customer base. The increase was due primarily to an increase in consulting fees that were offset by decreased spending in virtually all areas of operating expenses including legal expenses, insurance, benefits, office expense and travel related expenses. We anticipate these expenditures to remain flat over the next quarter and any increases that do occur will be based on new spending to support increase in sales from new opportunities in subsequent quarters. Consulting Fees for the quarter were $173,314; other payroll related costs were $34,068; rent expense was $21,644; insurance expense was $20,288;legal and professional expenses were $19,506; office expense was $18,622;. MITRX expenses consisted of consulting fees of $72,500; lease expense of $74,642; payroll taxes of $65,033; computer expenses of 53,667.48; postage and delivery expense of $50,519; travel expenses of $28,515 and telephone expense of $25,614.
|
|
•
|
Depreciation and amortization decreased $3,000 or 23.8% to $9,999 for the quarter ended March 31, 2011 as compared to $12,999 for the same period in 2010. MITRX incurred depreciation of $12,250.
|
Operating Income
Income from operations decreased $676,588, from $211,253 in 2011 to -$465,065 in 2010. The decrease was attributable -$472,379 loss in MITRX for the three months ended March 31,2010 and a decrease of $203,578 from $211,253 in 2010 to $7,675 in 2011.
Net Income (Loss)
Net income (loss) decreased $366,378 from net (loss) of -$201,510 in 2010 to a net (loss) of -$567,888 in 2011. The decrease is attributable to the $296,774 decrease in the non cash charge from revaluation of equity based financial instruments with characteristics of liabilities ($35,395 expense in 2011 and $332,169 expense in 2010) and a $13,166 decrease in interest expense and the decrease of $201,150 in income from operations.
Liquidity and Capital Resources
As of March 31, 2011, we had cash of $89,706 as compared to $101,896 at March 31, 2010. For the three months ended March 31, 2011, net cash provided by operating activities aggregated $83,243 as compared to cash provided by operating activities of $83,243 for the three months ended March 31, 2010. Cash used by financing activities was $94,743 which was used to reduce creditor balances. As of December 31, 2010, we had cash of $177,620 as compared to a cash balance of $113,596 as of December 31, 2009.
5
We are subject from time to time to litigation relating to the activities of our business and in the marketplace which it serves. As of March 31, 2011, we were not engaged in any litigation.
Based on our current plan, we believe that our current cash balances and results of operations will be sufficient to fund our operations through for the next twelve months.
Off-Balance Sheet Arrangements
We are not a party to any off-balance sheet arrangements
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
Item 4T. Controls and Procedures
Evaluation of Disclosure Controls and Procedures. Under the supervision and with the participation of our management, including our Chief Executive Officer, William C. Parker, and Principal Financial Officer, John Sabia, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")) as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective such that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and (ii) accumulated and communicated to our management to allow timely decisions regarding disclosure. A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.
Changes in Internal Control Over Financial Reporting. During the most recent quarter ended March 31, 2010, 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.
INFLATION
Inflation has not had a material impact on our business.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this quarterly report on Form 10-Q contain or may contain forward-looking statements that are subject to known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause its actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors. Most of these factors are difficult to predict accurately and are generally beyond its control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Readers should carefully review this quarterly report in its entirety, including but not limited to its financial statements and the notes thereto. Except for its ongoing obligations to disclose material information under the Federal securities laws, the Company undertakes no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. For any forward-looking statements contained in any document, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
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Item 1. Legal Proceedings
From time to time, we are party to litigation that we consider to be a part of the ordinary course of our business. At present, we are not involved in any pending claims that we believe could reasonably be expected to have a material adverse effect on our business, financial condition, or results of operations.
Item 1A. Risk Factors
Not applicable.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Removed and Reserved .
Item 5. Other Information
None.
Item 6. Exhibits
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31.1
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Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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31.2
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Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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32.1
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Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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32.2
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Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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SIGNATURE
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.
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MIT HOLDING, INC.
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DATE: May 23, 2011
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By:
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/s/ William C Parker
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William C. Parker, Chief Executive Officer
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(principal executive officer)
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By:
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/s/ Walter H. C. Drakeford
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Walter H. C. Drakeford, the Principal Financial Officer
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(principal financial officer)
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