Revolutions Medical CORP - FORM 10-Q

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EXCEL - IDEA: XBRL DOCUMENT - Revolutions Medical CORP	Financial_Report.xls
EX-31.2 - EXHIBIT 31.2 - Revolutions Medical CORP	v326667_ex31-2.htm
EX-32.2 - EXHIBIT 32.2 - Revolutions Medical CORP	v326667_ex32-2.htm
EX-32.1 - EXHIBIT 32.1 - Revolutions Medical CORP	v326667_ex32-1.htm
EX-31.1 - EXHIBIT 31.1 - Revolutions Medical CORP	v326667_ex31-1.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 quarter ended: September 30, 2012

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from ___________ to____________

Commission File Number: 000-28629

REVOLUTIONS MEDICAL CORPORATION

(Exact name of registrant as specified in its charter)

Nevada		73-1526138
(State or other jurisdiction		(I.R.S. Employer
of incorporation)		Identification No.)

670 Marina Drive, 3rd Floor

Charleston, SC 29492

(Address of principal executive offices and Zip Code)

(843) 971-4848

(Registrant’s telephone number, including area code)

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 past 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

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

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

Large accelerated filer	£	Accelerated filer	£

Non-accelerated filer	£	Smaller reporting company	S

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

Yes ¨ No x

As of November 13, 2012, there were 68,878,763 shares outstanding of the registrant’s common stock.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements.	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	17

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	24

Item 4.	Controls and Procedures.	24

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings.	25

Item 1A.	Risk Factors.	26

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds.	26

Item 3	Defaults Upon Senior Securities.	28

Item 4.	Mine Safety Disclosures.	28

Item 5.	Other Information.	28

Item 6.	Exhibits.	28

Signatures		29

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

REVOLUTIONS MEDICAL CORPORATION

(A Development Stage Company)

BALANCE SHEET

AS OF SEPTEMBER 30, 2012 AND DECEMBER 31, 2011

(Unaudited)

	September 30,			December 31,
	2012			2011
	(unaudited)
ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	1,073		$	4,844
Accounts receivable		560			0
Inventory		320,837			0
Due from shareholder		71,300			25,000
Due from litigation		311,000			311,000
Prepaid expenses		35,601			312,501
Total current assets		740,371			653,345

Property and equipment, net		1,138,273			1,185,664
Goodwill		23,276			23,276
Licensing agreement		15,000			15,000
Patent development		123,418			101,426

TOTAL ASSETS	$	2,040,338		$	1,978,711

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
Accounts payable and accrued liabilities	$	1,283,738		$	719,901
Credit cards		0			59,217
Accrued salaries		149,140			120,000
Accrued interest payable		118,836			64,670
Convertible promissory notes, net of discounts of $200,278 and 307,126, respectively		544,385			80,535
Embedded conversion option liabilities		314,928			442,311
Note payable Gifford Mabie		708,188			807,640
Total current liabilities		3,119,215			2,294,274

Total liabilities		3,119,215			2,294,274

STOCKHOLDERS' DEFICIT:
Preferred stock, $0.001 par value, 5,000,000 shares authorized; 1,000,000 shares issued and outstanding		1,000			1,000
Common stock, $0.001 par value, 250,000,000 shares authorized; 65,628,176 and 54,729,606 shares issued and outstanding at 9/30/12 and 12/31/11, respectively		65,628			54,730
Treasury Stock		0			0
Additional paid-in capital		32,893,316			29,463,498

Accumulated deficit		(34,038,821	)		(29,834,791	)
Total stockholders' deficit		(1,078,877	)		(315,563	)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	2,040,338		$	1,978,711

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

REVOLUTIONS MEDICAL CORPORATION

(A Development Stage Company) STATEMENTS OF OPERATIONS FROM INCEPTION (AUGUST 16, 1996) THROUGH SEPTEMBER 30, 2012 FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011 (UNAUDITED)


													August 16, 1996
													(Inception Date)
	Three Months Ended September 30,						Nine Months Ended September 30,						to September 30,
	2012			2011			2012			2011			2012
Revenue	$	349		$	0		$	1,189		$	0		$	1,189
Cost of sales		219			0			9,200			0			9,200
Gross profit		130			0			(8,011	)		0			(8,011	)

Research and development		9,900			0			99,588			111,832			3,054,826
Depreciation and amortization		28,341			1,625			67,136			4,778			169,277
General and administrative expenses		826,489			564,910			3,017,340			2,260,713			29,277,363
Loss from operations		(864,600	)		(566,535	)		(3,192,075	)		(2,377,323	)		(32,509,477	)

OTHER INCOME (EXPENSE)
Interest income		0			0			0			10			17,286
Interest expense		(411,659	)		(130,295	)		(1,198,603	)		(321,123	)		(2,100,796	)
Gain on disposal of assets		0			0			0			0			794
Loss on extinguishment of debt		0			0			0			0			(152,914	)
Adjustments to fair value of derivatives		(30,930	)		1,439			189,046			(79,092	)		9,914
Foreign currency adjustment		(4,475	)		0			(3,497	)		0			(3,377	)
Gain from litigation		0			0			0			0			311,000
Other income (expenses)								1,098			0			205,327
		(447,064	)		(128,856	)		(1,011,956	)		(400,205	)		(1,712,766	)

Net loss before minority interest	$	(1,311,664	)	$	(695,391	)	$	(4,204,031	)	$	(2,777,528	)	$	(34,222,243	)

Minority interest in subsidiary loss														(183,422	)
Net loss		(1,311,664	)		(695,391	)		(4,204,031	)		(2,777,528	)		(34,038,821	)
Weighted average number of common shares outstanding, basic and diluted		59,880,928			47,739,213			59,880,928			47,739,213			39,056,508

Basic and diluted net loss per share attributable to common stockholders	$	(0.02	)	$	(0.01	)	$	(0.07	)	$	(0.06	)		(0.87	)

(A Development Stage Company)

STATEMENTS OF CASH FLOWS

FROM INCEPTION (AUGUST 16, 1996) THROUGH SEPTEMBER 30, 2012 AND

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

	From Inception (August 16, 1996) Through September 30, 2012			Nine Months Ended September 30
				2012			2011
OPERATING ACTIVITIES
Loss from operations before minority interest	$	(34,038,821	))	$	(4,204,031	)	$	(2,777,528	)
Plus non-cash charges to earnings
Stock compensation expense		2,018,280			0			0
Depreciation and amortization		132,633			40,791			4,778
Purchase R&D - Clear Image		3,309,514			0			0
Common stock issued for services		5,994,037			410,675			355,850
Preferred stock issued for services		270,000			0			0
Expenses paid by third parties		57,134			0			0
Contribution of services by officer and employees		799,154			0			0
Services by officer and employees paid for
with non-cash consideration		694,661			0			0
Compensation cost for option price reduction		50,000			0			0
Amortization of debt discounts		(233,459	)		106,849			0
Amortization of compensation cost for options granted to non-employees and common stock issued for services		1,775,577			0			0
Allowance for doubtful accounts		50,900			0			0
Gain on extinguishment of debt		(10,398	))		0			0
Write-off of Notes Receivable		14,636			0			0
Write-off of Notes Payable		(8,239	)		0			0
Write-off of organizational costs		3,196			0			0
Write-off of zero value investments		785,418			0			0
Write-off of leasehold improvements and computer equipment		2,006			0			0
Compensation costs for stock options and warrants granted to non-employees		1,573,913			0			0
Adjustment to fair value of derivatives		(10,239	)					0
SEC settlement Gifford Mabie		(32,381	)		(99,453	)

Change in working capital accounts:
Accounts recievable		(560	)		(560	)		0
Prepaid expenses		243,156			276,900			0
Inventory		(320,837	)		(320,837	)		0
(Increase) decrease in receivables from related parties		(142,006	)		(46,300	)		0
(Increase) decrease in goodwill		(23,276	)		0			0
(Increase) decrease in other receivables		(761,938	)		0			86,896
Increase (decrease) in accrued salaries and consulting		(118,257	)		29,140			0
Increase (decrease) in accrued interest		260,013			54,166			43,334
Increase (decrease) in accounts payable and accrued liabilities		3,299,356			504,620			(139,332	)
Total operating activities		(14,366,827	)		(3,248,040	)		(2,426,002	)
INVESTING ACTIVITIES
Purchase of equipment and furnishings		(1,229,423	)		0			(157,621	)
Leasehold improvements		(33,000	)		6,600
Investment in patent development		(148,418	)		(21,992	)		(19,000	)
Investment in Ives Health Company		(251,997	)		0			0
Investment in The Health Club		(10,000	)		0			0
Total investing activities		(1,672,838	))		(15,392	)		(176,621	)
FINANCING ACTIVITIES
Loans from shareholders		15,707			0			0
Repayment of loans from shareholders		(8,005	)		0			0
Repayments of Promissory Notes		57,325			0			0
Issuance of unexercised options for cash		635,707			635,707			0
Issuance of unexercised warrants for cash		394,136			394,136			0
Common stock subscribed		546,500						0
Sale of preferred stock for cash:		(1,000	)		0			0
Sale of common stock for cash:
To third-party investors (prior to merger)		574,477			0			0
To third-party investors		5,743,614			400			0
From exercise of stock options and warrants		4,289,503			291,915			1,465,820
Common stock issued for payment of debt		2,532,919			1,271,700			427,921
Less: Issue Costs		(102,318	)		—			0
Beneficial conversion feature		530,808			436,184			0
Derivative Liability		154,269			(127,383	)		0
Debt Discount								0
Convertible debentures issued for cash		974,663			357,002			439,598
Payment of exclusive license note payable		(100,000	)		—			—
Treasury stock
Total financing activities		16,238,305			3,259,661			2.535,910
Minority interest		(197,567	)		—
Change in cash		1,073			(3,771	)		(66,713	)
Cash at beginning of period		0			4,844			69,517
Cash at end of period	$	1,073		$	1,073		$	2,804

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

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2012

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Nature of Operations

Revolutions Medical Corporation, a Nevada corporation (“the Company”), has been endeavoring to design, develop and commercialize auto retractable vacuum safety syringes. Our present product development effort is focused on the RevVac™ Auto Retractable Vacuum Safety Syringe, which is designed specifically to reduce accidental needle stick injuries and lower the spread of blood borne diseases. The Company also has developed a suite of proprietary MRI software tools; RevColor™, Rev3D™, RevDisplay™. These tools are designed to enhance general diagnostic confidence through education and research use and in the future we believe will have specific commercial applications. The Company’s administrative facilities are located in Charleston, South Carolina. The Company’s primary third-party manufacturing facility is located in Wuxi, China.

Development Stage Company

From its inception in 1996, the Company has been considered a development stage enterprise for financial reporting purposes as significant efforts have been devoted to raising capital and to research and development of various safety syringes and its proprietary MRI software tools.

Cash and Cash Equivalents

The Company considers highly liquid investments (those readily convertible to cash) purchased with original maturity dates of three months or less to be cash equivalents.

Generally Accepted Accounting Principles

On July 1, 2009, the Financial Accounting Standards Board (“FASB”) released its Accounting Standards Codification (“ASC”). The ASC became effective for interim or annual financial statements issued after September 15, 2009. The ASC is the single source of generally accepted accounting principles.

Income Taxes

The Company uses the liability method of accounting for income taxes as set forth in ASC 740, “Income Taxes.” Under the liability method, deferred taxes are determined based on the differences between the financial statement and tax basis of assets and liabilities at enacted tax rates in effect in the years in which the differences are expected to reverse.

Segment Information

The Company follows the guidance in ASC 280, “Segment Reporting”. The Company identifies its operating segments based on business activities, management responsibility and geographical location. During the period covered by these financial statements, the Company operated in a single business segment engaged in developing selected healthcare products.

Earnings (Loss) per Share

The Company computes net income per share in accordance with ASC 260, “Earnings per Share”. Under these provisions, basic net income (loss) per share is calculated by dividing net income (loss) available to common stockholders for the period by the weighted average shares of common stock of the Company outstanding during the period. Diluted net income per share is computed by dividing the net income for the period by the weighted average number of common and common equivalent shares outstanding during the period. The calculation of diluted income (loss) per share of common stock assumes the dilutive effect of stock options and warrants outstanding. During a loss period, the assumed exercise of outstanding stock options and warrants has an anti-dilutive effect. Therefore, the outstanding stock options were not included in the September 30, 2012, and December 31, 2011, calculations of loss per share.

Accounts receivable

The Company records trade receivables when revenue is recognized. No product has been consigned to customers. The Company’s allowance for doubtful accounts is primarily determined by review of specific trade receivables. Those accounts that are doubtful of collection are included in the allowance. These provisions are reviewed to determine the adequacy of the allowance for doubtful accounts. Trade receivables are charged off when there is certainty as to their being uncollectible. Trade receivables are considered delinquent when payment has not been made within contract terms.

The Company requires certain distributors to make a prepayment prior to beginning production or shipment of their order. Distributors may apply such prepayments to their outstanding invoices or pay the invoice and continue to carry forward the deposit for future orders. Such amounts are included in Other accrued liabilities on the Balance Sheet. The Company records an allowance for estimated returns as a reduction to Accounts receivable and Gross profit. To date, returns have been immaterial.

Inventories

Inventories are valued at the lower of cost or market, with cost being determined using actual average cost. The Company compares the average cost to the market price and records the lower value. Management considers such factors as the amount of inventory on hand and in the distribution channel, estimated time to sell such inventory, the shelf life of inventory, and current market conditions when determining excess or obsolete inventories. A reserve is established for any excess or obsolete inventories or they may be written off.

Use of Estimates

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

Reclassifications

Certain reclassifications may have been made to the prior year financial statements to conform to the current period presentation.

Revenue Recognition

Revenue is recognized for sales when title and risk of ownership passes to the customer, generally upon shipment from the manufacturing facility in Wuxi, China or from our warehouse facility in Ladson, South Carolina.

Valuation of Derivative Instruments

ASC 815-40 (formerly SFAS No. 133 “Accounting for derivative instruments and hedging activities”), requires that embedded derivative instruments be bifurcated and assessed, along with free-standing derivative instruments such as warrants, on their issuance date and in accordance with ASC 815-40-15 (formerly EITF 00-19 “Accounting for derivative financial instruments indexed to, and potentially settled in, a company’s own stock”) to determine whether they should be considered a derivative liability and measured at their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Black-Scholes option pricing formula. At September 30, 2012, the Company adjusted its derivative liability to its fair value, and reflected the change in fair value, in its statement of operations.

Fair Value Measurements

The Company measures its financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e. exit price), in an orderly transaction between market participants at the measurement date. The Company categorizes its assets and liabilities measured at fair value based upon the level of judgment associated with the inputs used to measure the fair value. Level inputs, as defined by ASC 820-10, are as follows:

Level 1 – quoted prices in active markets for identical assets or liabilities.

Level 2 – other significant observable inputs for the assets or liabilities through corroboration with market data at the measurement date.

Level 3 – significant unobservable inputs that reflect management’s best estimate of what market participants would use to price the assets or liabilities at the measurement date.

The following table summarizes fair value measurements by level at September 30, 2012, for assets and liabilities measured at fair value on a recurring basis:

	Level 1		Level 2		Level 3			Total
Cash and cash equivalents	$	1,073	$	—	$	—		$	1,073

Derivative liability	$	—	$	—	$	(314,928	)	$	(314,928	)

Derivative liability was valued under the Black-Scholes model with the following assumptions:

Risk free interest rate	0.18% to 0.19		%
Expected life	0 to 3 years
Dividend Yield		0	%
Volatility	0% to 162		%

The following is a reconciliation of the derivative liability:

Value at December 31, 2011	$	442,311
Issuance of instruments	$	174,447
Decrease in Value	$	(162,014	)
Reclassification	$	(139,816	)
Value at September 30, 2012	$	314,928

Notes and Loans Payable

At September 30, 2012 and December 31, 2011, notes and loans payable consist of:

	September 30, 2012			December 31, 2011
Convertible Promissory Note Payable to JMJ Financial, secured by the Company’s assets, one time interest charge of 8%, due February 22, 2014	$	191,663		$	207,161
Convertible Promissory Note Payable to Asher Enterprises secured by the Company’s assets, interest rate of 8.0% per annum, with payment due on or before April 26, 2012		—			40,000
Convertible Promissory Note Payable to Asher Enterprises secured by the Company’s assets, interest rate of 8.0% per annum, with payment due on or before June 1, 2012		---			45,000
Convertible Promissory Note Payable to Asher Enterprises secured by the Company’s assets, interest rate of 8.0% per annum, with payment due on or before August 7, 2012		---			42,500
Convertible Promissory Note Payable to Asher Enterprises secured by the Company’s assets, interest rate of 8.0% per annum, with payment due on or before September 19, 2012		---			53,000
Convertible Promissory Note Payable to TCA Global Credit Master Fund, LP secured by the Company’s assets, interest rate of 12.0% per annum, with payment due on or before January 3, 2013		175,000			---


Convertible Promissory Note Payable to Asher Enterprises secured by the Company’s assets, interest rate of 8.0% per annum, with payment due on or before February 15, 2013		53,000			---
Convertible Promissory Note Payable to Asher Enterprises secured by the Company’s assets, interest rate of 8.0% per annum, with payment due on or before March 21, 2013		42,500			---
Convertible Promissory Note Payable to Asher Enterprises secured by the Company’s assets, interest rate of 8.0% per annum, with payment due on or before May 10, 2013		42,500
					---
Convertible Promissory Note Payable issued in the course of a private placement to individual investors secured by the Company’s assets, interest rate of 8.0% per annum, with payment due one year from the date of each note		240,000			---

Total		744,663			387,661
Less: Unamortized Discount		(200,278	)		(307,126	)
	$	544,385		$	80,535

Commitments and Contingencies

JMJ Financial

On February 22, 2011, the Company issued a $1,050,000 Convertible Promissory Note to JMJ Financial, Inc. (“JMJ”), a private investor. The note bears interest in the form of a onetime interest charge of 8%, payable with the note’s principle amount on the maturity date, February 22, 2014. All or a portion of this note’s principle and interest is convertible at the option of JMJ from time to time, into shares of the Company’s common stock, originally fixed at a per share conversion price equal to 70% of the average of the 3 lowest closing prices for the Company’s common stock in the 20 trading days previous to the effective date of each such conversion.

On February 28, 2011, the Company issued a $500,000 Convertible Promissory Note to JMJ. The note bears interest in the form of a onetime interest charge of 8%, payable with the note’s principle amount on the maturity date, February 28, 2014. All or a portion of this note’s principle and interest is convertible at the option of JMJ from time to time, into shares of the Company’s common stock, originally fixed at a per share conversion price equal to 70% of the average of the 3 lowest closing prices for the Company’s common stock in the 20 trading days previous to the effective date of each such conversion. The principal amount owed to JMJ Financial at September 30, 2012, is $191,663 from the $1,050,000 Convertible Promissory Note. No amount is owed to JMJ Financial from the $500,000 Convertible Promissory Note.

On March 12, 2012 the Company filed a lawsuit against Justin Keener and JMJ Financial in Charleston County, South Carolina. The Company sought a rescission and financial relief for the convertible debt agreement signed February 22, 2011. The Company claimed that it was unable to deliver the shares requested in the common stock conversion requests dated January 9, 2012 for 1,000,000 shares and January 30, 2012 for 1,226,049 shares due to the risk of defaulting on the convertible debt agreement by losing Depository Trust Company “DTC” eligibility. The contract stated that the Company would be considered in default of the agreement if the Company lost DTC eligibility due to a “chill” placed upon the electronic transfer of the stock. The Company had previously been made aware of other companies that had entered into similar agreements losing DTC eligibility and felt that JMJ had put the Company in an untenable position of either defaulting by losing DTC eligibility or defaulting by failing to issue the requested shares. The Company claimed that JMJ’s unreasonably high demands for conversion caused a “frustration” of the principal purpose of the contract and supports the rescission of the contract and a return of the parties to their respective positions before the contract was signed. On April 12, 2012 the Company withdrew the lawsuit filed in South Carolina to pursue its rights and counterclaims in Miami-Dade County, Florida.

The Company also claims the default notice issued by JMJ obligated the Company to pay JMJ the outstanding principal balance under the note along with the accrued and unpaid interest. The principal balance due at the time JMJ issued the default notice amounted to $191,663. The Company disputes JMJ’s claims that the Company was liable for a sum far in excess of this based upon the default provision of the contract.

A lawsuit was filed against the Company by JMJ Financial in Miami-Dade County, Florida on March 15, 2012. The lawsuit claims that the Company breached the terms of the convertible debt agreement by failing to issue shares requested in a stock conversion by JMJ on January 9, 2012 for 1,000,000 shares and on January 30, 2012 for 1,226,049 shares. JMJ is seeking the delivery of 2,226,049 shares of common stock of the Company, plus costs and prejudgment interest. On August 30, 2012, the Company filed its counterclaims against JMJ Financial which included Fraud by Concealment, among other claims. The Company alleges that Keener and JMJ had a responsibility and obligation under Florida law to disclose not to conceal during the negotiations of the agreement the fact that Keener and JMJ had outstanding and current issues with these type of convertible notes with DTC which could do detrimental harm to liquidity and electronic transfer of the Company's stock if DTC eligibility was "chilled". This would severely hamper future capital raising and harm its current shareholders but would solely benefit Keener and JMJ under the default clauses in this agreement.

Asher Enterprises, Inc.

During the three months ended September 30, 2012, Asher elected to convert $88,500 in convertible debt agreements into common stock. The conversion price was based upon 55% of the 3 lowest closing bid prices in the previous 10 days to conversion. This resulted in the conversion of 1,270,101 shares of common stock to satisfy this debt.

The Company entered into one securities purchase agreement in the third quarter of 2012 with Asher Enterprises, pursuant to which the Company issued a convertible promissory note to Asher Enterprises for an original principal amount of $42,500 on August 15, 2012, in return for aggregate gross cash proceeds of $42,500. The note bears interest at a rate of 8% per annum and provides for the payment of all principal and interest 9 months from the date of the notes’ respective issuance. The principal amount owed to Asher Enterprises at September 30, 2012, is $138,000. This includes the note issued for $42,500 in the third quarter of 2012 and the notes from May 15, 2012 for $53,000 and from June 21, 2012 for $42,500. The notes are convertible at the election of Asher Enterprises into that number of shares of the Company’s common stock determined by multiplying 55% by the average of the lowest three closing bid prices of the Company’s common stock on the OTC Markets OTCQB during the 10 business days immediately preceding the date of conversion, subject to adjustment.

TCA Global Credit Master Fund, LP

The Company entered into a securities purchase agreement in the first quarter of 2012 with TCA Global Credit Master Fund, LP (“TCA”), pursuant to which the Company issued a convertible promissory note to TCA for an original principal amount of $225,000 on January 3, 2012. The note bears interest at a rate of 12% per annum and provides for the payment of all principal and interest 12 months from the date of the note’s respective issuance. TCA elected to convert $50,000 of the convertible debt agreement into common stock on August 15, 2012. The conversion price was determined by multiplying 95% by the average of the two lowest daily volume weighted average prices of the Company’s common stock on the OTC Markets OTCQB during the 5 business days immediately preceding the date of conversion. This resulted in the conversion of 294,118 shares of common stock to satisfy this debt. The principal amount owed to TCA at September 30, 2012, is $175,000. The note is convertible at the election of TCA into that number of shares of the Company’s common stock determined by multiplying 95% by the average of the two lowest daily volume weighted average prices of the Company’s common stock on the OTC Markets OTCQB during the 5 business days immediately preceding the date of conversion, subject to adjustment.

Private convertible debt placement with individual investors

The Company entered into nine securities purchase agreements in the third quarter of 2012, with individual investors, pursuant to which the Company issued nine convertible promissory notes for an original principal amount of $25,000 on July 12, 2012, for $100,000 on July 13, 2012, for $50,000 on July 13, 2012, for $75,000 on July 26, 2012, for $25,000 on August 2, 2012, for $25,000 on August 30, 2012, for $25,000 on September 4, 2012 and for $15,000 on September 20, 2012, respectively, in return for aggregate gross cash proceeds of $390,000. The notes bear interest at a rate of 8% per annum and provide for the payment of all principal and interest 12 months from the date of the notes’ respective issuance. The notes also feature detachable warrants exercisable within one year of the agreement. All warrants issued along with the convertible debt agreements are outstanding, with a total of 3,666,005 warrants issued at 25 cents and 1,833,002 warrants issued at 50 cents. In determining the cost associated with the issuance of this debt and the appropriate fair value for the warrants, the Company uses the Black-Scholes option pricing formula. The principal amount owed according to these notes as of September 30, 2012, is $240,000. The notes are convertible at the election of the individual into that number of shares of the Company’s common stock determined by multiplying 75% by the average of the daily volume weighted average prices of the Company’s common stock on the OTC Markets OTCQB during the 5 business days immediately preceding the date of conversion, subject to adjustment.

During the three months ended September 30, 2012, seven investors elected to convert $350,000 in aggregate in convertible debt agreements into common stock. The conversion price was based upon 75% of the average of the daily volume weighted average prices of the Company’s common stock during the 5 business days immediately preceding the date of conversion, subject to adjustment. This resulted in the conversion of 2,725,136 shares of common stock to satisfy this debt.

Debt Discount

In connection with the two notes converted and the $138,000 outstanding from Asher Enterprises in the third quarter of 2012, we recorded interest expense to amortize the debt discount in the amount of $98,558 during the quarter ended September 30, 2012.

In connection with the sale of a Convertible Promissory Note Agreement on February 22, 2011, with JMJ, relating to a private placement of a total of up to $1,050,000 in principal amount, we recorded interest expense to amortize the debt discount in the amount of $21,701 during the quarter ended September 30, 2012. This amount is based upon the remaining unconverted amount of $191,663 from the $450,000 we received in four tranches from this agreement.

In connection with partial conversion of $50,000 and the $175,000 outstanding from TCA pursuant to a short-term note issued on January 3, 2012, we recorded interest expense to amortize the debt discount in the amount of $51,333 during the quarter ended September 30, 2012.

There remains a total of $200,278 of debt discount yet to be amortized as of September 30, 2012.

Beneficial Conversion Feature

From time to time, the Company may issue convertible notes that may have conversion prices that create an embedded beneficial conversion feature pursuant to the Emerging Issues Task Force guidance on beneficial conversion features. A beneficial conversion feature exists on the date a convertible note is issued when the fair value of the underlying common stock to which the note is convertible into is in excess of the remaining unallocated proceeds of the note after first considering the allocation of a portion of the note proceeds to the fair value of any attached equity instruments, if any related equity instruments were granted with the debt. In accordance with the guidance, the intrinsic value of the beneficial conversion feature is recorded as a debt discount with a corresponding amount to additional paid in capital. The debt discount is amortized to interest expense over the life of the note using the effective interest method. The notes issued by Asher in 2012 contain a beneficial conversion feature due to a fixed conversion price of $0.00009 and no adjustment due to dilutive issuance. Additionally, the notes issued through the private placement to individual investors all contain a beneficial conversion feature due to an amendment featuring a fixed conversion price of $0.00009 and no adjustment due to dilutive issuance. The total paid in capital for this beneficial conversion feature for these agreements as of September 30, 2012 is $530,807. Of this, $289,377 is due to the agreements with Asher Enterprises and $241,430 is due to the agreements with private investors.

Gifford Mabie Settlement

On April 8, 2008, the Company entered into a Memorandum of Understanding with its former Chief Executive Officer to settle an outstanding obligation through the issuance of its common stock on a quarterly basis commencing May 8, 2008, for one year. The value of the issuance of the common stock will be determined by the market value of the ten-day average price at the time of each quarterly issuance of common stock. During 2008, the Company issued 271,491 shares at a total value of $133,030 to partially repay this debt.

In 2010, the Company determined the final liability balance upon the complete liquidation of Mr. Mabie’s account and issued 400,000 shares of the Company’s common stock as additional repayment for this debt. The initial balance for this settlement debt as of October 12, 2010 was $924,568.

The agreement reached with the SEC on behalf of Gifford Mabie specifies that the Company is to periodically issue shares to the special account for Gifford Mabie in order that 2,500 shares can be sold each day the market is open until the liability is satisfied. When the 400,000 shares were placed in the special account on December 14, 2010, to be sold over the course of the next 160 days the market was open, an estimated value for these shares was determined based upon the 10 day average share price following the date of issuance. As of September 30, 2012, the remaining principal balance to be paid was $708,187 based upon this valuation.

Share Based Compensation

The Company relies on the guidance provided by ASC 718, (“Share Based Payments”). ASC 718 requires companies to expense the value of employee stock options and similar awards and applies to all outstanding and vested stock-based awards.

In computing the impact, the fair value of each option is estimated on the date of grant based on the Black-Scholes options-pricing model utilizing certain assumptions for a risk free interest rate; volatility, and expected remaining lives of the awards. The assumptions used in calculating the fair value of share-based payment awards represent management’s best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and the Company uses different assumptions, the Company’s stock-based compensation expense could be materially different in the future.

The fair value concepts were not changed significantly in ASC 718; however, in adopting this Standard, companies were given the option to choose among alternative valuation models and amortization assumptions. We elected to continue to use the Black-Scholes option pricing model and expense the options as compensation over the requisite service period of the grant. We will reconsider use of the Black-Scholes model if additional information becomes available in the future that indicates another model would be more appropriate, or if grants issued in future periods have characteristics that cannot be reasonably estimated using this model.

The Company’s 2007 Stock Option Plan, revised July 2011, permits the granting of stock options to its employees, directors, consultants and independent contractors for up to 20 million shares of its common stock. The Company believes that such awards encourage employees to remain employed by the Company and also to attract persons of exceptional ability to become employees of the Company. The plan allows the Company to issue either stock options or common shares.

On January 3, 2012, under the terms of The Company’s 2007 Stock Option Plan, 1,000,000 options were issued to Dr. Thomas Beahm, a Company director exercisable at 15 cents each.

On January 3, 2012, under the terms of The Company’s 2007 Stock Option Plan, 1,000,000 options were issued to the Company’s CEO, Rondald Wheet, exercisable at 15 cents each

On January 3, 2012, under the terms of The Company’s 2007 Stock Option Plan, 500,000 options were issued to the Company’s COO, Vincent Olmo, exercisable at 15 cents each.

On March 14, 2012, under the terms of The Company’s 2007 Stock Option Plan, 200,000 options were issued for consulting services exercisable at 40 cents each.

Consulting Agreements

Periodically, the Company issues consulting agreements to individuals who are obligated under the terms of the agreement, to market the Rev Vac safety syringe within various spheres of influence. These spheres of influence include, but are not limited to, medical product distributors, hospitals, doctors and government agencies. Consultants are vetted to the best of the Company’s abilities through due diligence reviews before the Company enters into any agreements. The purpose of these reviews is to determine a consultant’s ability to market the product for the Company.

The fair value of all stock compensation issued is determined by calculating the difference between the option exercise price and the closing price at the day of the option grant. Because the options were issued under a limited window for exercise (10 days), with very little expected volatility, no dividend yield and a negligible effect from interest, the value of the option based compensation was recorded as the difference between option exercise price and the closing share price upon the date of the grant. A valuation of these options was performed using the Black-Scholes model and due to the limited exercise window, the value under this method is the same as the difference between option exercise price and the closing price at the day of the option grant.

Long-Lived Assets

Property, plant and equipment, including significant improvements, are stated at cost. Expenditures for maintenance and repairs are charged to operating expenses as incurred. When properties are retired or otherwise disposed of, the cost of the asset and the related accumulated depreciation are removed from the accounts with the resulting gain or loss being reflected in results of operations.

Intangible assets include patents and trademarks, which are valued at acquisition through independent appraisals. Debt issuance costs are amortized over the terms of the various agreements. Patents and trademarks are amortized on a straight-line basis over periods varying from 7 to 40 years.

In 2007, the Company acquired a 62.2% interest in Clear Image, Inc. (“Clear Image”). Clear Image was a privately held company and was conducting research and development on Color MRI Technology. Clear Image was not able to secure the funding needed to keep this research and development going into the future. Clear Image had expensed the research and development costs in accordance with accounting standards in effect at the time. The Company believed it to be advantageous to acquire a controlling interest in Clear Image and keep the technology in development rather than starting all over again. The Company exchanged 8.2 million of its common shares which were trading at a market price of $0.40 at the date of acquisition. To arrive at a value for the Color MRI Technology, the Company and Clear Image determined the amount of funding provided for the research and development of this technology by looking at the amount expended from 1999 until the acquisition date. The value of the Company’s stock exchanged for the controlling interest exceeded those expensed amounts by approximately $23,000, which was recorded as goodwill because there were no other assets to value.

Critical Accounting Policies

In June 2009, FASB approved the FASB Accounting Standards Codification (“the Codification”) as the single source of authoritative nongovernmental GAAP. All existing accounting standard documents, such as FASB, American Institute of Certified Public Accountants, Emerging Issues Task Force and other related literature, excluding guidance from the SEC, have been superseded by the Codification. All other non-grandfathered, non-SEC accounting literature not included in the Codification has become non-authoritative. The Codification did not change GAAP, but instead introduced a new structure that combines all authoritative standards into a comprehensive, topically organized online database. The Codification is effective for interim or annual periods ending after September 15, 2009, and impacts our financial statements as all future references to authoritative accounting literature will be referenced in accordance with the Codification. There have been no changes to the content of our financial statements or disclosures during the quarter ended September 30, 2012, as a result of implementing the Codification.

Date of Management’s Review

Subsequent events have been evaluated through November 13, 2012, the date the financial statements were available to be issued.

NOTE 2 - UNCERTAINTIES

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The Company has just entered the production and sales stage and has not established sources of revenues to fully fund the development of business and pay operating expenses, resulting in a cumulative net loss of $(34,038,821) for the period from inception (August 16, 1996) to September 30, 2012. The ability of the Company to continue as a going concern during the next year depends on the successful completion of the Company’s capital raising and initial production and sales efforts to fund the development of its retractable safety syringe. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

NOTE 3 - MAXXON/GLOBE JOINT VENTURE AGREEMENT

On November 3, 2005, the Maxxon, Inc. (“Maxxon,” the former name of the Company) and Globe Med Tech, Inc. (“Globe”) entered into a definitive joint venture agreement to patent, develop, manufacture, market and distribute safety needle products throughout the world. Maxxon and Globe each own 50% of the joint venture. Maxxon contributed its safety syringe technology and patent rights related thereto and Globe contributed its safety syringe IV catheter and patent rights related thereto. In connection with the agreement, Maxxon issued restricted shares of its common stock, valued at $625,066, to Globe. Subsequent to December 31, 2006, the Company ended the joint venture and cancelled the shares of common stock and options that were issued to Globe pursuant to the agreement. On March 1, 2007, the Company filed a lawsuit in the District Court of Tulsa County, Oklahoma against Globe to rescind, terminate and seek monetary damages for the non-fulfillment and breach of a joint venture agreement entered into November 3, 2005, and other related agreements, in addition to an accounting of expenditures of funds under the terms and provisions of the agreements. On October 29, 2008, the Company filed a lawsuit in the District Court of Harris county Texas, a lawsuit for fraud and contempt of court for Globe and Andy Hu, individually. On October 24, 2011, the Company was granted its request for summary judgment against Globe and awarded $311,440 and the return of 266,667 shares of the Company’s common stock by a Federal District Court in Tulsa County, Oklahoma. In addition to the monetary award and the return of the Company’s common stock, Globe is also required to return all syringes, design files, and sample molds to the Company. Furthermore, the Court ordered that Globe assign to the Company all rights to the January 2009 issued United States patent for the RevVac™ auto-retractable vacuum safety syringe. Globe is prohibited from claiming any interest or ownership in the Company’s safety vacuum syringes going forward. On December 14, 2011, the Supreme Court of Oklahoma denied Globe’s appeal. The Company is currently going through the process of collecting on this judgment.

NOTE 4 - OTHER COMMITMENTS AND CONTINGENCIES

Employment Agreement with Rondald L. Wheet, Chief Executive Officer

Effective April 1, 2012, the Company and Mr. Wheet, our Chief Executive Officer, entered into a two (2) year employment agreement. The agreement provides for an annual salary of $247,500. He is responsible for the Company’s substantive and financial reporting requirements of the Securities Exchange Act of 1934, as amended, and is specifically allowed to hire any and all professionals necessary to assist that process. The Company will provide him with all reasonable and customary fringe benefits, including, but not limited to, participation in pension plans, profit sharing plans, employee stock ownership plans, stock option plans (whether statutory or not), stock appreciation rights plans, hospitalization, medical dental disability and life insurance, car allowance, vacation and sick leave. The Company will reimburse of all his reasonable and necessary travel, entertainment or other related expenses incurred by him in carrying out his duties and responsibilities under the agreement. The Company will also provide him with a cell phone, suitable office space, and membership dues in professional organizations and for any seminars and conferences related to Company business.

Mr. Wheet may elect, by written notice to the Company, to terminate his employment with continued pay through the employment agreement term if (i) the Company sells all of its assets, (ii) the Company merges with another business entity with a change in control,(iii) more than 50% of the outstanding stock is acquired by a third party, (iv) the Company requires Mr. Wheet to relocate or assigns duties not commensurate with his position as Chief Executive Officer, (v) Mr. Wheet is removed from the Board of Directors and (vi) the Company defaults in making payments required to Mr. Wheet under this agreement. For two years following his resignation or termination, Mr. Wheet will not work for or provide any services in any capacity to any competitor and will not solicit any of the Company’s customers or accounts.

Employment Agreement with Vincent Olmo, Chief Operating Officer

Effective April 11, 2011, the Company and Mr. Olmo, our Chief Operating Officer, entered into a three (3) year employment agreement. The agreement provides for an annual salary of $165,000 modified with a cost of living adjustment annually. He is responsible for all daily operating and production activities of the Company. The Company will provide him with all reasonable and customary fringe benefits, including, but not limited to, participation in pension plans, profit sharing plans, employee stock ownership plans, stock option plans (whether statutory or not), stock appreciation rights plans, hospitalization, medical dental disability and life insurance, car allowance, vacation and sick leave. The Company will reimburse all of his reasonable and necessary travel, entertainment or other related expenses incurred by him in carrying out his duties and responsibilities under the agreement. The Company will also provide him with a cell phone, suitable office space, and membership dues in professional organizations and for any seminars and conferences related to Company business.

Mr. Olmo may elect, by written notice to the Company, to terminate his employment with continued pay through the employment agreement term if (i) the Company sells all or substantially all of its assets, (ii) the Company merges with another business entity with a change in control,(iii) more than 50% of the outstanding stock is acquired by a third party, (iv) the Company requires Mr. Olmo to relocate or assigns duties not commensurate with his position as the Chief Operating Officer and (v) the Company defaults in making payments required to Mr. Olmo under this agreement. For two years following his resignation or termination, Mr. Olmo will not work for or provide any services in any capacity to any competitor and will not solicit any of the Company’s customers or accounts.

Employment Agreement with Burton Hodges, Chief Financial Officer

Effective June 1, 2011, the Company and Mr. Hodges, our Chief Financial Officer, entered into a three (3) year employment agreement. The agreement provides for an annual salary of $165,000 modified with a cost of living adjustment annually. He is responsible for all financial functions and capital resources of the Company, including corporate finance, project finance, corporate accounting, reporting and risk management. The Company will provide him with all reasonable and customary fringe benefits, including, but not limited to, participation in pension plans, profit sharing plans, employee stock ownership plans, stock option plans (whether statutory or not), stock appreciation rights plans, hospitalization, medical dental disability and life insurance, car allowance, vacation and sick leave. The Company will reimburse all of his reasonable and necessary travel, entertainment or other related expenses incurred by him in carrying out his duties and responsibilities under the agreement. The Company will also provide him with a cell phone, suitable office space, and membership dues in professional organizations and for any seminars and conferences related to Company business.

Mr. Hodges may elect, by written notice to the Company, to terminate his employment with continued pay through the employment agreement term if (i) the Company sells all or substantially all of its assets, (ii) the Company merges with another business entity with a change in control,(iii) more than 50% of the outstanding stock is acquired by a third party, (iv) the Company requires Mr. Hodges to relocate or assigns duties not commensurate with his position as the Chief Financial Officer and (v) the Company defaults in making payments required to Mr. Hodges under this agreement. For two years following his resignation or termination, Mr. Hodges will not work for or provide any services in any capacity to any competitor and will not solicit any of the Company’s customers or accounts.

Amounts Due Pursuant to Employment and Consulting Agreements

As of September 30, 2012, the Company had accrued $149,140 pursuant to employment agreements. Although the Company plans to settle these amounts, there is no assurance that its efforts to settle will be successful. No litigation related to these previous employment agreements has been initiated or threatened. There is no assurance, however, that such litigation will not be initiated in the future.

Amounts Due Pursuant to Employee Payroll Liabilities

As of September 30, 2012, the Company had accrued $319,052 pursuant to employment payroll liabilities. Although the Company plans to settle these amounts, there is no assurance that its efforts to settle will be successful. A tax lien has been filed against the Company by the South Carolina Department of Revenue due these delinquent payments. Action by federal taxing authorities has not been initiated or threatened at this point. There is no assurance, however, that such action will not be initiated in the future.

Amounts Due Pursuant to Accounts Payable Liabilities

As of September 30, 2012, the Company had accrued $875,320 pursuant to accounts payable with vendors. Although the Company plans to settle these amounts, there is no assurance that its efforts to settle will be successful. Of this balance, $236,630 is due to YesoMed, the Company’s manufacturing partner in Wuxi, China. $206,227 is due to YesoMed for the remaining balance of the first purchase order the Company placed with the manufacturer. The remaining balance of accounts payable of $432,463 is due for various services such as legal, accounting and consulting work.

Patent Applications for the Company’s Retractable Safety Syringes

The Company owns one (1) published patent on its Auto Retractable Vacuum RevVac™ safety syringe issued in January 2005 and one (1) published patent on its safety blood drawing device issued in June 2003. In January 2009, a second patent for the RevVac™ auto retractable vacuum safety syringe was issued by the U.S. patent office and published in April 2009 related to the Globe/Revolutions Medical Joint Venture. Upon the ruling in the Globe Med Tech lawsuit, the Company now has full ownership of the entire patent. The Company also filed international patent protection rights regarding the RevVac™ Auto Retractable Vacuum Safety Syringe in the following countries: Australia, China, Japan, Taiwan, Mexico, Canada and in Europe. Patents in Mexico and in China were issued in the 3^rd and 4^th quarters of 2011, respectfully.

The Company filed a U.S. provisional patent on May 2, 2011, on it new vacuum design for the pre-filled market. On May 2, 2012, the Company filed an international Patent Cooperation Treaty (PCT) for this new design.

The Company is also engaged in the development of technology which can segment and reference MRI images. By “segmenting” an image, the Company’s technology will let the user select a part of the image (bone, fluid, tissue) and render that selection in three dimensions. Essentially, different components of an image are given different colors and the user can choose the color or colors to be studied, thus eliminating those portions colored with the colors being discarded. By “referencing” the image to a database, the user can obtain similar, identified images to aid the user in interpretation of the image being studied. The Company currently owns four (4) separate patent applications, filed in June of 2007, each of which received USPTO office actions during 2010. The Company expects to receive issuances or additional office actions on some if not all of these patents over the next 12 months.

NOTE 5 - PREFERRED STOCK AND COMMON STOCK TRANSACTIONS

SERIES 2006 PREFERRED STOCK

Currently, 1,000,000 shares of Series 2006 Preferred Stock are outstanding. Rondald L. Wheet, our Chairman and Chief Executive Officer, has been issued the 1,000,000 shares.

SERIES 2009 PREFERRED STOCK

Currently no shares of Series 2009 Preferred Stock are outstanding. Tom O’Brien, our former President, returned 500,000 shares of Series 2009 Preferred Stock upon his resignation.

Dividends: The holder of the Series 2006 and the Series 2009 Preferred stock is entitled to receive, ratably, dividends when, as and if declared by the board of directors out of funds legally available therefore. If any dividend or other distributions are declared on our common stock, then a dividend or other distribution must also be declared on the outstanding Series 2006 and Series 2009 Preferred stock at the same time and on the same terms and conditions, so that each holder of Series 2006 and Series 2009 Preferred stock will receive the same dividend or distribution such holder would have received if the holder had converted his Series 2006 and Series 2009 Preferred stock as of the record date for determining stockholders entitled to receive such dividend or distribution.

Liquidation Preference: In the event of the liquidation, dissolution or winding up, the holders of Series 2006 or 2009 Preferred stock are entitled to receive a liquidation preference of $0.001 for each share of Series 2006 or Series 2009 Preferred stock prior to payment being made to any junior stock.

Conversion: The holders of Series 2006 and Series 2009 Preferred stock may convert each share into 1 share of common stock.

Preemption: The holders of Series 2006 and Series 2009 Preferred stock have no preemptive rights and they are not subject to further calls or assessments.

Voting Rights: The holders of Series 2006 and Series 2009 Preferred stock are entitled to 125 votes for each share of common stock into which their Series 2006 and Series 2009 Preferred stock is then convertible (currently 1 share), voting together with our common stock as a single class. Cumulative voting is not permitted. Upon conversion of a Series 2006 or Series 2009 Preferred share, each share of common stock issued upon the conversion will be entitled to only one (1) vote per share.

Redemption: There are no redemption or sinking fund provisions applicable to the Series 2006 or Series 2009 Preferred stock.

BLANK CHECK PREFERRED STOCK

The Company’s Articles of Incorporation authorize its board of directors to establish one or more additional series of preferred stock and to determine, with respect to any such series of preferred stock, its terms and rights, including: the designation of each series; the voting powers, if any, associated with each such series whether dividends, if any, will be cumulative or noncumulative and the dividend rate of each series; the redemption rights and price or prices, if any, for shares of each series; and preferences and other special rights, if any, of shares of each series in the event of any liquidation, dissolution, or distribution of the Company’s assets.

2012 COMMON STOCK TRANSACTIONS

During the nine months ended September 30, 2012, 400,000 shares were issued under the terms of the SEC settlement agreement with Gifford Mabie. The initial value of these shares totaled $140,160.

Pursuant to consulting agreements issued in first nine months of 2012, the Company issued stock from the exercise of options issued with these agreements in the amount of 475,000 shares with a total value of $108,025.

Also, during the first nine months of 2012, the Company issued stock from the exercise of warrants issued through a stock subscription agreement in 2010 in the amount of 800,000 shares with a total value of $394,136.

Also during the nine months ended September 30, 2012, the Company issued an additional 1,808,390 shares of common stock with a total value of $410,675 in lieu of cash as payment for outside services.

Also during the nine months ended September 30, 2012, the Company issued an additional 7,415,913 shares of common stock with a total value of $1,171,826 due to conversions of convertible debt agreements with Asher Enterprises, JMJ Financial and individual investors.

NOTE 6 - STOCK OPTIONS AND WARRANTS OUTSTANDING

The following tables summarize information about the stock options and warrants outstanding at September 30, 2012:

	OPTIONS		WARRANTS		TOTAL		WEIGHTED AVERAGE EXERCISE PRICE

Balance at December 31, 2011		15,473,750		3,371,600		18,845,350	$	0.27
Granted		2,675,000		5,649,007		8,324,007		0.28
Exercised		75,000		800,000		875,000		0.25
Expired/Forfeited		—		2,571,600		2,571,600		0.25

BALANCE AT September 30, 2012		18,073,750		5,649,007		23,722,757		0.26

	OPTIONS OUTSTANDING				EXERCISABLE
Range of Exercise Price	Number Outstanding at September 30, 2012	Weighted Average Remaining Contractual Life		Weighted Average Exercise Price	Number Exercisable at September 30, 2012		Weighted Average Exercise Price
OPTIONS
0.08 - 0.25	10,453,750	1.25	$	0.12	10,453,750	$	0.12
0.26-1.00	7,620,000	.73		0.40	7,620,000		0.40
1.00-10.00

	18,073,750				18,073,750

NOTE 7 - RELATED PARTY TRANSACTIONS

On September 1, 2009, the Company entered into a five (5) year lease agreement with Osprey South, LLC (“Osprey”), to lease the property at 670 Marina Drive, Suite 301, Building F, Charleston, South Carolina, 29492. The leased property is approximately 2,395 square feet. During the course of the five (5) year lease, ending on August 31, 2014, the Company is to pay Osprey $4,500 in monthly rental installments payable on the first day of each succeeding month. On July 1, 2011, the Company entered into a lease with Osprey for the office space adjacent to the existing office space on the third floor at 670 Marina Drive. The leased property is approximately 2,395 square feet. During the course of the five (5) year lease, ending on July 1, 2016, the Company is to pay Osprey a total of $10,000 in monthly rental installments payable on the first day of each succeeding month. The Company paid $30,000 in office rent to Osprey South, LLC for the third quarter of 2012. Ron Wheet is the sole member of Osprey South, LLC. The contract is a triple net lease with terms based upon market rates for class A office space at the time of the lease signing.

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

This quarterly report on Form 10-Q and other reports filed by Revolutions Medical Corporation (“we,” “us,” “our,” or the “Company”) from time to time with the U.S. Securities and Exchange Commission (the “SEC”) contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, the Company’s management as well as estimates and assumptions made by Company’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used in the filings, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments, and assumptions. We believe that the estimates, judgments, and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments, and assumptions are made. These estimates, judgments, and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates

Plan of Operation

The Company completed receipt of its first order of approximately 2.6 million 3ml RevVac™ safety syringes in August 2012 in three forty foot containers. The RevVac™ safety syringes passed all customs and inspections with the FDA and were placed in the Ladson, SC warehouse. The Company has inventory of the 3ml RevVac™ safety syringes in 21, 23 and 25 gauge needle sizes. The Company continues its product sales through introduction to distributors, advertisements through its online sales programs, attendance at numerous industry trade shows and a direct marketing campaign. The Company expects to be in full-scale production by the second quarter of 2013 for its 1ml, 5 ml and 10ml RevVac™ safety syringe.

This RevVac™ safety syringe uses vacuum technology to retract the needle into the plunger after use. The syringe cannot be reused once the vacuum is activated. Revolutions Medical believes its safety syringe has many advantages over its competition including price, ease of use and safety. It should virtually eliminate accidental needle stick injuries and also aid in reducing the spread of contagious diseases. The Company also believes that with the help of government regulatory initiatives and individual state law reforms that the safety syringe market will grow in the foreseeable future.

During 2010, Revolutions Medical entered into two university clinical studies utilizing its proprietary MRI software tools. These first two clinical studies are for cases involving head trauma and brain masses. These results are expected to clinically validate the use of its MRI software tools as an additional application to enhance the diagnostic confidence of physicians. In preparation for the expected commercial launch of the MRI software suite of products, the Company hired Strata Corporation (“Strata”) in March 2012. Strata is an expert in computer software and programming and the Company believes that by the second quarter of 2013, the first application of RevColor™, RevDisplay™ and Rev3D™ will be commercially available. The launch of this product will be a “software as a service” (SaaS) business model, where customers will log on to our secure website and send current black and white images to the Company via high speed internet (teleradiology), and the images will be sent back to the customer in color and three dimensional with auto segmentation. Preliminarily, the Company will charge a per-use fee, but may expand depending upon volume into monthly service agreements. Potential customers could include MRI centers, doctors, hospitals and even patients.

The Company is currently working on developing, enhancing and securing it proprietary MRI software tools for commercial launch. The Company believes that once clinical application validations using its MRI software suite of products including RevColor™, RevDisplay™ and Rev3D™ directed at concussions, stroke, Alzheimer’s and breast disease are achieved, it will eventually aid in the enhanced diagnosis, detection, and monitoring of such diseases and afflictions.

Results of Operations

For the three months ended September 30, 2012 compared to the three months ended September 30, 2011

Revenues

During the three months ended September 30, 2012, the Company had $349 in sales revenue, compared to $0 for the same period in 2011.

General and Administrative Expenses

During the three months ended September 30, 2012, the Company incurred $826,489 in general and administrative expenses, compared to $564,910 for the same period in 2011. Employee salaries were $207,036 for the three months ended September 30, 2012, an increase of $27,524, compared to $179,512 for the same period in 2012. This increase in salary expense is due primarily to additional salary paid in the third quarter of 2012 to the Company’s additional sales staff. In addition to this, compensation costs related to the issuance of options to officers and directors during the three months ended September 30, 2012, totaled $20,979, compared to $0 for the same period in 2011.

Further, consulting agreement fees and legal fees were $171,383 and $120,731, respectively, for the three months ended September 30, 2012, an increase in consulting fees of $33,649 and an increase in legal fees of $29,971, respectively, compared to $137,734 and $90,760 for the same period in 2011. The increase in consulting fees was partly due to the increased fees associated with additional product testing and compliance for the RevVac™ syringe. The increase in legal fees was due primarily to increased expenses related to the arbitration case the Company is involved in with MIG, its former contract manufacturer. A total of $60,302 in prepaid consulting agreements was expensed in the quarter ended September 30, 2012, compared to $91,284 for the same period in 2011. Interest and derivative adjustment expenses increased to $438,681 during the three months ended September 30, 2012, compared to $160,950 for the same period in 2011. This increase is due primarily to the new convertible debt agreements entered into with individual investors during the three months ended September 30, 2012. These agreements allow for an immediate conversion into shares of common stock and require the debt discount recorded at the time of the agreement to be fully amortized immediately. The total amount amortized to interest expense for these individual convertible debt agreements during the three months ended September 30, 2012, was $277,460. This is in contrast to the agreements entered into with Asher Enterprises, JMJ Financial, Inc. (“JMJ”) and TCA Global Credit Master Fund, LP (“TCA”) that amortize the debt discount over a period of time. We also incurred capital expenditures in the amount of $7,594 and $0 during the three months ended September 30, 2012 and 2011, respectively, for additional inventory of the 3 ml RevVac™ safety syringe.

Net Loss

Net loss for the three months ended September 30, 2012, was $(1,311,664) compared to $(695,391) for the same period in 2011, as the Company increased expenses primarily related to product liability insurance, investment banking fees, convertible debt interest, legal fees and consulting fees. The Company incurred a net operating loss of $(864,600) during the three months ended September 30, 2012, compared to a net operating loss of $(566,535) for the same period in 2011.

For the nine months ended September 30, 2012 compared to the nine months ended September 30, 2011

Revenues

During the nine months ended September 30, 2012 and 2011, respectively, the Company had $1,189 in sales revenue, compared to $0 for the same period in 2011.

General and Administrative Expenses

During the nine months ended September 30, 2012, the Company incurred $3,017,340 in general and administrative expenses, compared to $2,260,713 for the same period in 2011. Employee salaries were $429,452 for the nine months ended September 30, 2012, a decrease of $36,348, compared to $465,800 for the same period in 2011. In addition to this, compensation costs related to the issuance of options to officers and directors during the nine months ended September 30, 2012, totaled $445,438, compared to $0 for the same period in 2011. This increase is due primarily to options being issued to officers and directors in the first quarter of 2012.

Further, consulting agreement fees and legal fees were $690,284 and $489,810, respectively, for the nine months ended September 30, 2012, a decrease in consulting fees of $264,262 and an increase in legal fees of $212,109, respectively, compared to $954,546 and $277,701, respectively, for the same period in 2011. The decrease in consulting fees was partly due to the Company’s decision in 2011 to terminate the consulting agreement with Strategic Product Development (“SPD”). The increase in legal fees was due primarily to increased expenses related to securities issuance and SEC compliance along with legal expenses related to arbitration litigation and the protection of the Company’s intellectual property. A total of $284,925 in prepaid consulting agreements was expensed in the nine months ended September 30, 2012, compared to $529,346 for the same period in 2011. Interest and derivative adjustments increased to $1,198,603 during the nine months ended September 30, 2012, compared to $321,123 for the same period in 2011. This increase is due primarily to the new convertible debt agreements entered into with individual investors during the first quarter. These agreements allow for an immediate conversion into shares of common stock and require the debt discount recorded at the time of the agreement to be fully amortized immediately. The total amount amortized to interest expense during the first nine months of 2012 for these agreements was $632,706. This is in contrast to the agreements entered into with Asher, JMJ and TCA that amortize the debt discount over a period of time. We also incurred capital expenditures in the amount of $0 and $362,000 during the nine months ended September 30, 2012 and 2011, respectively, for payments to complete the final design of our production molds related to the 3 ml RevVac™ safety syringe. We also incurred capital expenditures in the amount of $320,837 and $0 during the six months ended September 30, 2012 and 2011, respectively, for inventory of the 3 ml RevVac™ safety syringe.

Net Loss

Net loss for the nine months ended September 30, 2012, was $(4,204,031) compared to $(2,777,528) for the same period in 2011, as the Company incurred greater expenses primarily related to an increase in salaries, additional compensation expenses, legal fees and expenses associated with the convertible debt agreements. The Company incurred a net operating loss of $(3,192,075) during the nine months ended September 30, 2012, compared to a net operating loss of $(2,377,323) for the same period in 2011.

Liquidity and Capital Resources

As of September 30, 2012, the Company did not have and currently does not have sufficient cash on hand to pay present obligations as they become due. In addition, due to current economic conditions and the Company’s related risks and uncertainties, there is no assurance that we will be able to raise additional capital on acceptable terms, if at all, to meet our current obligation over the next 12 months. Because of the foregoing, the Company’s auditors have expressed substantial doubt about our ability to continue as a going concern.

Status of Purchase Orders

The Company accepted a purchase order on March 14, 2012, from OX Technologies, Inc. (“OXT”) for 480,000 units of the RevVac™ safety syringe. The purchase order was contingent on the issuance of a Permit for Importation to OXT from the Mexican government. The Company has worked diligently with OXT to file the appropriate paperwork and respond to requests for further information from the Mexican authorities. The Company and OXT expect the Permit for Importation to be issued in the fourth quarter of 2012, at which time the order can be fulfilled. The Company also accepted a purchase order on March 15, 2012, from DS WorldMed, its distributor in the Middle East and South America. The purchase order was contingent on the issuance of an import permit in Iraq. DS WorldMed’s customer in Iraq has subsequently lost its right to distribute product in the country. As a result, DS WorldMed informed the Company in late-September that it would be cancelling its purchase order. The Company has subsequently notified DS WorldMed of its intention to revoke the exclusive distribution rights in all distribution territories as a result of DS WorldMed’s failure to perform in accordance with the distribution agreement between the Company and DS WorldMed dated December 31, 2011.

Net cash used for operating activities for the nine months ended September 30, 2012 and September 30, 2011, was $(3,248,040) and $(2,426,002), respectively. The net loss for the nine months ended September 30, 2012 and 2011, was $(4,204,031) and $(2,777,528), respectively. This increase is primarily attributable to the increased expense related to legal expenses, salaries and other compensation expenses, and the interest and derivative expenses related to the convertible debt agreements.

Net cash used for investing activities for the nine months ended September 30, 2012 and September 30, 2011, was $(15,392) and $(176,621), respectively. This cash used for investing activities in the first nine months of 2012 is a result of legal expenses related to patent development for the RevVac™ safety syringe.

Net cash obtained through all financing activities for the nine months ended September 30, 2012, was $3,259,661, as compared to $2,535,910 for the same period in 2011. The increase in cash obtained through financing activities is primarily a result of cash received from convertible debt agreements. Cash adjustments through the payment of debt totaled $357,002 during the nine months ended September 30, 2012. Common stock in the amount of $1,271,700 was issued in the first nine months of 2012 to satisfy convertible debt agreements. An increase due to the convertible debt’s beneficial conversion feature as of September 30, 2012, is $436,184. Convertible debentures issued for cash totaled $357,002 for the first nine months of 2012, and a decrease from the balance of the derivative liability as of September 30, 2012, totaled $127,383. For the nine months ended September 30, 2012, the Company received $291,915 from the exercise of options and warrants. The Company received $635,707 and $394,136 for the issuance of unexercised options and warrants, respectively, in the first nine months of 2012.

In order to fund the completion of the RevVac™ safety syringe production molds, we issued stock options and/or common stock when it is acceptable to third parties for services rendered in assisting us in the product distribution and marketing process. Compensation costs related to the issuance common stock to outside parties for services rendered during the nine months ended September 30, 2012 and 2011, were $410,675 and $355,850, respectively. Additionally, we received payments for exercised options and warrants during the nine months ended September 30, 2012, totaling $291,915, compared to $1,465,820 for the same period in 2011.

As of September 30, 2012, the Company did not have and currently does not have sufficient cash to pay present obligations as they become due. We are searching for additional financing to generate the liquidity necessary to continue our operations. Due to current economic conditions and the Company’s risks and uncertainties, there is no assurance that we will be able to raise any additional capital on acceptable terms, if at all. Because of these uncertainties, the auditors have expressed substantial doubt about our ability to continue as a going concern. If we obtain additional funds by selling any of our equity securities or by issuing common stock to pay current or future obligations, the percentage ownership of our stockholders will be reduced, stockholders may experience additional dilution, or the equity securities may have rights preferences or privileges senior to the common stock. If adequate funds are not available to us on satisfactory terms, we may be required to cease operating or otherwise modify our business strategy.

Because we do not currently generate any cash from operations and have no credit facilities available, our only means of funding is through the sale of our common stock. We presently have 250,000,000 shares of common stock authorized, of which 65,628,176 shares were issued and outstanding as of September 30, 2012. If we obtain additional funds by selling any of our equity securities or by issuing common stock to pay current or future obligations, the percentage ownership of our stockholders will be reduced, stockholders may experience additional dilution, or the equity securities may have rights preferences or privileges senior to the common stock. If adequate funds are not available to us when needed on satisfactory terms, we may be required to cease operating or otherwise modify our business strategy.

Our estimated working capital requirement for the next 12 months is $3,100,000 with an estimated burn rate of $230,000 per month.

The Company entered into one securities purchase agreement in the third quarter of 2012 with Asher Enterprises, pursuant to which the Company issued a convertible promissory note to Asher Enterprises for an original principal amount of $42,500 on August 15, 2012, in return for aggregate gross cash proceeds of $42,500. The note bears interest at a rate of 8% per annum and provides for the payment of all principal and interest nine months from the date of the notes’ respective issuance. The principal amount owed to Asher Enterprises at September 30, 2012, is $138,000. This includes the note issued for $42,500 in the third quarter of 2012 and the notes from May 15, 2012, for $53,000 and from June 21, 2012, for $42,500. The notes are convertible at the election of Asher Enterprises into that number of shares of the Company’s common stock determined by multiplying 55% by the average of the lowest three closing bid prices of the Company’s common stock on the OTC Markets OTCQB during the ten business days immediately preceding the date of conversion, subject to adjustment.

The notes issued by Asher Enterprises in 2012, contain a beneficial conversion feature due to an amendment featuring a fixed conversion price of $0.00009 and no adjustment due to dilutive issuance. As a result, these notes were not bifurcated and valued with an embedded call option. The intrinsic value of the beneficial conversion feature is recorded as a debt discount with a corresponding amount to additional paid in capital. Additionally, the notes issued through the private placement to individual investors all contain a beneficial conversion feature due to an amendment featuring a fixed conversion price of $0.00009 and no adjustment due to dilutive issuance. The total paid in capital for this beneficial conversion feature for these agreements as of September 30, 2012, is $530,807. Of this, $289,377 is due to the agreements with Asher Enterprises and $241,430 is due to the agreements with private investors.

On February 22, 2011, the Company issued a $1,050,000 Convertible Promissory Note to JMJ, a private investor. The note bears interest in the form of a onetime interest charge of 8%, payable with the note’s principle amount on the maturity date, February 22, 2014. All or a portion of this note’s principle and interest is convertible at the option of JMJ from time to time, into shares of the Company’s common stock, originally fixed at a per share conversion price equal to 70% of the average of the three lowest closing prices for the Company’s common stock in the 20 trading days previous to the effective date of each such conversion. During the course of 2011, the Company borrowed $450,000 against this note. Over the course of the loan, JMJ elected to convert a total of $258,337 in principal from this note. The principal amount owed to JMJ at September 30, 2012, is $191,663.

On February 28, 2011, the Company issued a $500,000 Convertible Promissory Note to JMJ. The note bears interest in the form of a onetime interest charge of 8%, payable with the note’s principle amount on the maturity date, February 28, 2014. All or a portion of this note’s principle and interest is convertible at the option of JMJ from time to time, into shares of the Company’s common stock, originally fixed at a per share conversion price equal to 70% of the average of the three lowest closing prices for the Company’s common stock in the 20 trading days previous to the effective date of each such conversion.

The Company entered into a securities purchase agreement in the first quarter of 2012 with TCA Global Credit Master Fund, LP (“TCA”), pursuant to which the Company issued a convertible promissory note to TCA for an original principal amount of $225,000 on January 3, 2012. The note bears interest at a rate of 12% per annum and provides for the payment of all principal and interest 12 months from the date of the note’s respective issuance. TCA elected to convert $50,000 of the convertible debt agreement into common stock on August 15, 2012. The conversion price was determined by multiplying 95% by the average of the two lowest daily volume weighted average prices of the Company’s common stock on the OTC Markets OTCQB during the five business days immediately preceding the date of conversion. This resulted in the conversion of 294,118 shares of common stock to satisfy this debt. The principal amount owed to TCA at September 30, 2012, is $175,000. The note is convertible at the election of TCA into that number of shares of the Company’s common stock determined by multiplying 95% by the average of the two lowest daily volume weighted average prices of the Company’s common stock on the OTC Markets OTCQB during the five business days immediately preceding the date of conversion, subject to adjustment.

The Company entered into nine securities purchase agreements in the third quarter of 2012, with individual investors, pursuant to which the Company issued nine convertible promissory notes for an original principal amount of $25,000 on July 12, 2012, for $100,000 on July 13, 2012, for $50,000 on July 13, 2012, for $75,000 on July 26, 2012, for $25,000 on August 2, 2012, for $25,000 on August 30, 2012, for $25,000 on September 4, 2012 and for $15,000 on September 20, 2012, respectively, in return for aggregate gross cash proceeds of $390,000. The notes bear interest at a rate of 8% per annum and provide for the payment of all principal and interest 12 months from the date of the notes’ respective issuance. The notes also feature detachable warrants exercisable within one year of the agreement. All warrants issued along with the convertible debt agreements are outstanding, with a total of 3,666,005 warrants issued at $0.25 and 1,833,002 warrants issued at $0.50. In determining the cost associated with the issuance of this debt and the appropriate fair value for the warrants, the Company uses the Black-Scholes option pricing formula. The principal amount owed according to these notes as of September 30, 2012, is $240,000. The notes are convertible at the election of the individual into that number of shares of the Company’s common stock determined by multiplying 75% by the average of the daily volume weighted average prices of the Company’s common stock on the OTC Markets OTCQB during the five business days immediately preceding the date of conversion, subject to adjustment.

The following table summarizes total current assets, liabilities and working capital at September 30, 2012, compared to September 30, 2011.

	September 30, 2012 (unaudited)			September 30, 2011 (unaudited)			Increase/ (Decrease)
Current Assets	$	740,373		$	222,165		$	518,208
Current Liabilities	$	3,119,598		$	1,894,713		$	1,224,885
Working Capital Deficit	$	(2,379,225	)	$	(1,672,548	)	$	706,677

As of September 30, 2012, we had a working capital deficit of $2,379,225, as compared to a working capital deficit of $1,672,548 as of September 30, 2011, an increase of $706,677. Current assets increased primarily due to the litigation receivable of $311,000 from the judgment against Globe Med Tech and inventory of $320,837. Factors contributing to the increase in current liabilities include an increase in accounts payable due to purchase of the new production molds according to the terms of the manufacturing agreement signed with Yeso-med in December 2011. Additional factors increasing the current liabilities include an increase in accounts payable due to product purchases of $206,227, an increase in trades payable of 308,413 primarily due to increased legal and consulting fees and an increase in payroll tax liabilities of $249,321. The issuance of the convertible notes and the embedded derivatives associated with these notes increased current liabilities to $859,313 as of September 30, 2012, as compared to a balance of $621,762 as of September 30, 2011.

Other current assets include the amount related to pre-paid consulting expenses incurred through the issuance and exercise of stock options. The balance of prepaid consulting fees as of September 30, 2012, was $35,601, compared to $191,861 as of September 30, 2011. The remaining balance includes $71,300 for a short-term note receivable.

	September 30, 2012			September 30, 2011

Building	$	—		$	—
Production machinery and equipment		1,109,199			894,000
Furniture and fixtures		49,147			39,846
Office equipment		4,036			4,036
Leasehold improvements		33,000			41,800

Less: accumulated depreciation and amortization		(57,109	)		(14,360	)
Property, plant and equipment, net	$	1,138,273		$	965,322

Production machinery and equipment as of September 30, 2012, consisted primarily of amounts incurred in connection with the pilot molds and final molds related to the lines for the RevVac™ syringe. The Company continues to treat the amounts paid to MIG under the terminated agreement as production equipment until the outcome of the breach of contract arbitration is finalized.

	September 30, 2012		September 30, 2011

Goodwill	$	23,276	$	23,276
Licensing agreement		15,000		15,000
Patent development		123,418		29,000
Total other assets	$	161,694	$	67,276

The Company capitalizes patent development costs in the amount of $41,737 during the first nine months of 2012. During the same time period, the Company had amortization expenses of $19,745 from these patents.

The Company does not currently generate any cash from operations and does not have access to traditional credit facilities; however, the Company does expect an increase in product sales in the fourth quarter of 2012. Over the next 12 months, in order to implement our business plan and meet our liquidity needs going forward, the Company may sell shares of its common stock, issue additional convertible debt notes or permit warrant exercises. If we implement any of the foregoing financing alternatives to pay current or future obligations, the percentage ownership of our stockholders will be reduced, stockholders may experience additional dilution, or the equity securities may have rights preferences or privileges senior to the common stock. If adequate funds are not available to us when needed on satisfactory terms, we may be required to cease operating or otherwise modify our business strategy.

Current Liabilities consists of the following:

	September 30, 2012		September 30, 2011

Accounts payable and credit cards	$	875,326	$	149,773
Accrued salaries and payroll liabilities		468,569		190,108
Convertible debentures and accrued interest (net)		603,182		111,985
Note payable and accrued interest		768,226		830,176
Derivative liabilities		314,928		527,538
Other current liabilities		89,367		85,133
Total current liabilities	$	3,119,598	$	1,894,713

The primary change in the balance to Accounts payable is a result of the purchase agreement for the 1ml and 3ml RevVac™ safety syringe molds as well as increase in accounts payable from the initial orders of the 3ml RevVac™ safety syringe. Accrued salaries increased by $278,461 due to an increase in payroll tax liabilities of $249,321 and an increase in accrued salary of $29,140. Notes payable and accrued interest are a result of the settlement and determination of a liability with Gifford Mabie and the SEC. The issuance of the convertible debt agreements resulted in an increase in convertible debentures principal balance due. The conversion of outstanding convertible debt agreements resulted in a decrease in derivative liabilities. Other current liabilities include an amount due to a former employee of the Company.

Expected Purchase or Sale of Plant and Significant Equipment

The Company expects to purchase and begin making payments for the production of the 1ml, 5ml and 10ml RevVac™ safety syringe molds in the fourth quarter of 2012.

Expected Significant Changes in the Number of Employees

The Company began leasing additional space in the same building as of July 1, 2011, and expects to hire between 3 to 7 office personnel to assist with operations as sales continue with the 3ml RevVac™ safety syringe.

Off-Balance Sheet Arrangements

As of September 30, 2012, the Company had no off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We do not hold any derivative instruments and do not engage in any hedging activities.

Item 4. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s principal executive officer (“PEO”) and principal financial officer (“PFO”), evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on this evaluation, the PEO and PFO concluded that, as of the end of such period, the Company’s disclosure controls and procedures were not effective to ensure that information that is required to be disclosed by the Company in the reports it files or submits under the Exchange Act 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 the Company’s management, including the PEO and PFO, as appropriate, to allow timely decisions regarding required disclosure.

(b) Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

The Company is currently in arbitration in the State of South Carolina with its former manufacturer, Medical Investment Group, Inc. (“MIG”), for failure to perform under the manufacturing and supply agreement dated September 17, 2010, and the amended manufacturing and supply agreement, dated January 7, 2011. The Company is seeking financial relief of $795,000, which it paid to MIG for production class molds and proprietary tooling for the 1ml and 3ml RevVac™ safety syringes, the termination of all warrants granted, and the termination of all production rights assigned. MIG is claiming that it was production ready in accordance with the manufacturing and supply agreements. The nature of the litigation focuses on MIG’s inability to produce a product that passed all compliance and quality testing parameters in the time frames outlined by the manufacturing and supply agreements.

During the 2^nd quarter of 2012, the Company, in accordance with the arbitration rules received discovery from Rich Theriault, MIG and SPD owner, and former consultant and manufacturer of Revolutions Medical, in the form of bank records, emails, phone records, contracts, agreements and sworn testimony in a deposition. The Company had already terminated the MIG manufacturing agreement in September 2011 for failure to perform and filed a Current Report on Form 8-K with the SEC. During the sworn testimony and backed up by written records, Rich Theriault admitted that he did not have any MIG investors, inflated prices on manufacturing molds, assigned certain rights through third party agreements in violation of the manufacturing agreement, purposely redirected approximately $800,000 in Revolutions Medical payments for manufacturing molds for his own personal use, and could not produce the 3ml RevVac™ safety syringe to meet ISO 14385 standards and other quality assurance tests to meet the requirements in the MIG manufacturing agreement. On April 17, 2012, Rich Theriault on behalf of MIG, dismissed all claims with prejudice against the Company, including all rights to the auto retractable vacuum safety syringe, all warrants and all cash claims. Mr. Theriault, under advice from counsel, exercised his 5^thamendment rights more than 100 times during the rest of his testimony. The Company is still pursuing its counter claims under the arbitration and the hearing has been rescheduled for November 8 and 9, 2012, in Charleston, South Carolina.

The Company relied on the scheduling of MIG in the manufacturing agreement and verbal confirmation of Rich Theriault as to its production readiness to be able to produce the 3ml RevVac™ safety syringe, to start the sales and distribution process in September 2010. The Company’s former President, Mr. Tom O’Brien, who has over 25 years experience in the medical device industry, planned this process which could take up to 12 months to introduce, educate, and agree to terms for the roll out of a new product with medical device distributors. All Company press releases relating to this rollout starting in September 2010 include forward looking and safe harbor language for unforeseen or unpredictability of events. The Company currently has manufacturing capabilities with their new manufacturer, Yeso-med, and shipped 3ml RevVac™ safety syringes to distributors in the 2^nd quarter of 2012. The Company continues to manufacture and sell its 3ml RevVac™ safety syringes to international and domestic distributors.

On March 12, 2012, the Company filed a lawsuit against Justin Keener and JMJ Financial in Charleston County, South Carolina. The Company is seeking a rescission and financial relief for the convertible debt agreement, executed February 28, 2011. The Company claims that it was unable to deliver the shares requested in the common stock conversion requests, due to the risk of defaulting on the convertible debt agreement by losing Depository Trust Company “DTC” eligibility. The contract states that the Company would be considered in default of the agreement if the Company lost DTC eligibility due to a “chill” placed upon the electronic transfer of the stock. The Company had previously been made aware of other companies that had entered into similar agreements losing DTC eligibility and felt that JMJ had put the Company in an untenable position of either defaulting by losing DTC eligibility or defaulting by failing to issue the requested shares. The Company claims that JMJ’s unreasonably high demands for conversion caused a “frustration” of the principal purpose of the contract and supports the rescission of the contract and a return of the parties to their respective positions before the contract was signed. On April 12, 2012, the Company withdrew the lawsuit filed in South Carolina to pursue its rights and counterclaims in Miami-Dade County, Florida.

On August 30, 2012, the Company filed its counterclaims against JMJ Financial, which included fraud by concealment, among other claims. The Company alleges that Mr. Keener and JMJ had a responsibility and obligation under Florida law to disclose not to conceal during the negotiations of the agreement the fact that Keener and JMJ had outstanding and current issues with these type of convertible notes with DTC which could do detrimental harm to liquidity and electronic transfer of the Company’s stock if DTC eligibility was "chilled". This would severely hamper future capital raising and harm its current shareholders but would solely benefit Keener and JMJ under the default clauses in this agreement.

On September 21, 2012, the Company received notification from the SEC that the SEC had filed a civil complaint in federal court in Georgia against the Company (the “Complaint”). The Complaint alleges that the Company issued five misleading press releases during August 2010-October 2010, and one press release in July 2011, related to the Company production schedule of its auto retractable safety syringe. The Complaint names the Company’s current Chief Executive Officer, Rondald L. Wheet, as a co-defendant. Among other relief requested, the Complaint seeks an order requiring the defendants to disgorge money received from its equity line financing during this period, in addition to other civil penalty amounts.

After review of the complaint, the Company believes that the SEC acted irresponsibly by relying heavily on the testimony of Rich Theriault, who recently was sued by the Company in Federal district court in South Carolina for fraud and RICO Act violations, among other claims. The Company also believes that this SEC private inquiry began because of a serious of malicious and libelous letters written by Philip “Marty” Hicks. Mr. Hicks was found guilty of libel against the Company and its Chief Executive Officer in September 2011, in South Carolina State Court and a damages hearing is expected in the fourth quarter of 2012, where the Company intends to provide damages in excess of $500,000. The Company, in consultation with its legal counsel intends to vigorously defend itself and Chief Executive Officer, Rondald L. Wheet.

Other than the matters outlined above, we are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

Item 1A. Risk Factors.

We believe there are no changes that constitute material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2011, filed with the SEC on March 30, 2012.

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

Other than those securities issued and reported in a current report on Form 8-K, the Company issued the following securities during the three months ended September 30, 2012:

On July 10, 2012, an individual investor elected to convert a $75,000 convertible promissory note into 619,573 shares of the Company’s common stock.

On July 11, 2012, an individual investor elected to convert a $25,000 convertible promissory note into 206,524 shares of the Company’s common stock.

On July 12, 2012, an individual investor elected to convert a $50,000 convertible promissory note into 342,367 shares of the Company’s common stock.

On July 26, 2012, 400,000 shares of common stock were issued to an individual investor. These shares were issued to an investor electing to exercise common stock purchase warrants into shares of the Company’s common stock at an exercise price of $0.25. The Company received a total of $100,000 from this exercise.

On August 8, 2012, pursuant to a consulting agreement, the Company issued 8,743 shares of the Company’s common stock to a consultant for outside consulting services rendered in the amount of $1,500.

On August 8, 2012, pursuant to a consulting agreement, the Company issued 8,342 shares of the Company’s common stock to a consultant for outside consulting services rendered in the amount of $1,500.

On August 8, 2012, an individual investor elected to convert a $50,000 convertible promissory note into 374,683 shares of the Company’s common stock.

On August 14, 2012, an individual investor elected to convert a $100,000 convertible promissory note into 730,811 shares of the Company’s common stock.

On August 14, 2012, pursuant to a consulting agreement, the Company issued 50,000 shares of the Company’s common stock to a consultant for outside consulting services rendered in the amount of $11,300.

On August 15, 2012, TCA elected to convert a portion of an outstanding convertible promissory note into 294,118 shares of the Company’s common stock for a total of $50,000.

On August 20, 2012, pursuant to a consulting agreement, the Company issued 396,476 shares of the Company’s common stock to a consultant for outside consulting services rendered in the amount of $60,000.

On August 20, 2012, pursuant to a consulting agreement, the Company issued 114,875 shares of the Company’s common stock to a consultant for outside consulting services rendered in the amount of $20,000.

On August 27, 2012, Asher Enterprises elected to convert an outstanding convertible promissory note into 511,328 shares of the Company’s common stock for a total of $46,000.

On September 4, 2012, an individual investor elected to convert a $25,000 convertible promissory note into 222,244 shares of the Company’s common stock.

On September 6, 2012, pursuant to a consulting agreement, the Company issued 10,744 shares of the Company’s common stock to a consultant for outside consulting services rendered in the amount of $1,500.

On September 7, 2012, an individual investor elected to convert a $25,000 convertible promissory note into 228,934 shares of the Company’s common stock.

On September 28, 2012, Asher Enterprises elected to convert a convertible promissory note into 758,773 shares of the Company’s common stock for $42,500.

All sales of the securities identified above were made pursuant to privately negotiated transactions that did not involve a public offering of securities and, accordingly, we believe that these transactions were exempt from the registration requirements of the Securities Act pursuant to Section 4(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder.

Item 3. Defaults Upon Senior Securities.

There were no defaults upon senior securities during the quarter ended September 30, 2012.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

There is no other information required to be disclosed under this item which has not been previously reported.

Item 6. Exhibits.

Exhibit No.		Description

31.1		Certification by the Principal Executive Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)). *

31.2		Certification by the Principal Financial Officer of Registrant pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)). *

32.1		Certification by the Principal Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *

32.2		Certification by the Principal Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *

*filed herewith

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	REVOLUTIONS MEDICAL CORPORATION

Date: November 14, 2012	By:	/s/ Rondald Wheet
		Name: Rondald Wheet
		Title: Chief Executive Officer (Principal Executive Officer)

Date: November 14, 2012	By:	/s/ Burt Hodges
		Name: Burt Hodges
		Title: Chief Financial Officer (Principal Financial Officer) (Principal Accounting Officer)

Revolutions Medical CORP - FORM 10-Q - November 14, 2012

Attached files

Revolutions Medical CORP Reports