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EX-32 - CERTIFICATION - LIFESTYLE MEDICAL NETWORK, INC.f10q0913ex32_lifestyle.htm
EX-31 - CERTIFICATION - LIFESTYLE MEDICAL NETWORK, INC.f10q0913ex31_lifestyle.htm


 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________________________

Form 10-Q

x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2013

o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from ______________ to _______________

Commission file number 000-52408

LIFESTYLE MEDICAL NETWORK INC.
(Exact Name of Registrant as Specified in Its Charter)

Nevada
 
13-1026995
(State or Other Jurisdiction of
 
(I.R.S. Employer
Incorporation or Organization)
  Identification No.)
 
201 South Orange Ave., Suite 1510, Orlando, FL
 
32810
(Address of principal executive offices)
 
(Zip Code)

__________________(407) 514-1230_______________
(Registrant's Telephone Number, Including Area Code)

_____________________________________________
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 
x  Yes  o  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 o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. (Check One):

Large accelerated filer o
Accelerated filer                      o
   
Non-accelerated filer      o
Smaller reporting company x
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o   No x
 
The number of shares outstanding of the issuer's common stock, $0.001 par value per share, was 25,335,101 as of November 8, 2013.
 


 
 

 
 
LIFESTYLE MEDICAL NETWORK, INC.
 
INDEX
 
   
Page
     
Part I.  
Financial Information
1
     
Item 1.
Financial Statements.
1
     
 
Consolidated Balance Sheets as of September 30, 2013 (unaudited) and December 31, 2012
2
     
 
Consolidated Statements of Operations for the nine months Ended September 30, 2013 and 2012, and for the period October 8, 2010 (Date of Formation) through September 30, 2013 (unaudited)
3
     
 
Consolidated Statement of Stockholders’ Equity for the Period October 8, 2010 (Date of Formation) through September 30, 2013 (unaudited)
4
     
 
Consolidated Statements of Cash Flows for the nine months Ended September 30, 2013 and 2012, and for the period October 8, 2010 (Date of Formation) through September 30, 2013 (unaudited)
5
     
 
Notes to Unaudited Consolidated Financial Statements
7
     
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
13
     
Item 3.
Quantitative and Qualitative Disclosures About Market Risk.
14
     
Item 4.
Controls and Procedures.
14
     
Part II.
Other Information
15
     
Item 6.  
Exhibits.
15
     
Signatures
15
 
 
 

 
 
PART I — FINANCIAL INFORMATION

ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS.
 
Certain information and footnote disclosures required under accounting principles generally accepted in the United States of America have been condensed or omitted from the following consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. The following unaudited consolidated financial statements should be read in conjunction with the year-end consolidated financial statements and notes thereto included in the Company's Form 10-K for the year ended December 31, 2012.

The results of operations for the nine months ended September 30, 2013 and 2012, and for the period October 8, 2010 (Date of Formation) through September 30, 2013 are not necessarily indicative of the results for the entire fiscal year or for any other period.
 
 
1

 
 
LIFESTYLE MEDICAL NETWORK INC. AND SUBSIDIARIES
(Formerly EMERGING MEDIA HOLDINGS INC. AND SUBSIDIARIES)
(a Development Stage Company)
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
 
   
September 30,
   
December 31,
 
   
2013
   
2012
 
ASSETS
CURRENT ASSETS:
           
Cash and cash equivalents
  $ 8     $ 38  
Loan receivable - net of allowance of $42,500
    -       -  
Prepaid expenses
    2,013       2,466  
                 
Total Current Assets
    2,021       2,504  
                 
Intangible assets - net
    95,836       100,000  
Other assets
    6,000       6,000  
TOTAL ASSETS
  $ 103,857     $ 108,504  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY DEFICIENCY
CURRENT LIABILITIES:
               
Short-term debt to related party
  $ 757,200     $ 737,200  
Short-term debt
    51,833       -  
Accounts payable and accrued expenses
    126,728       44,013  
                 
Total Current Liabilities
    935,761       781,213  
                 
Commitments and Contingencies
    -       -  
                 
STOCKHOLDERS' EQUITY DEFICIENCY:
               
Common stock, $.001 par value, 200,000,000 shares
               
authorized; 25,335,101 and 25,205,101 shares issued and 25,334,983 and 25,204,983
               
shares outstanding at September 30, 2013 and December 31, 2012, respectively
    25,335       25,205  
Additional paid-in-capital
    7,063,780       6,934,025  
Accumulated deficit during the development stage
    (7,911,782 )     (7,622,702 )
Less: Cost of common stock in treasury, 118 and 118 shares
               
at September 30, 2013 and December 31, 2012, respectively
    (9,237 )     (9,237 )
Total Stockholders' Equity Deficiency
    (831,904 )     (672,709 )
                 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY DEFICIENCY
  $ 103,857     $ 108,504  
 
See notes to unaudited consolidated financial statements
 
 
2

 
 
LIFESTYLE MEDICAL NETWORK INC. AND SUBSIDIARIES
 
(Formerly EMERGING MEDIA HOLDINGS INC. AND SUBSIDIARIES)
 
(a Development Stage Company)
 
CONSOLIDATED STATEMENTS OF OPERATIONS
 
(Unaudited)
 
 
             
         
 
         
 
   
For the Period
 
   
For the Three Months Ended
   
For the Nine Months Ended
   
October 8, 2010
(Date of Formation)
through
 
   
September 30,
   
September 30,
   
September 30,
 
   
2013
   
2012
   
2013
   
2012
   
2013
 
         
(As restated)
         
(As restated)
       
                               
Revenues
  $ -     $ -     $ -     $ -     $ -  
                                         
Costs and expenses:
                                       
Selling, general and administrative expenses
    95,830       249,828       283,455       774,224       1,708,224  
Impairment loss
    -       -       -       -       5,392,308  
      95,830       249,828       283,455       774,224       7,100,532  
                                         
Loss from operations
    (95,830 )     (249,828 )     (283,455 )     (774,224 )     (7,100,532 )
                                         
Other income (expense):
                                       
Interest expense
    (1,875 )     (1,875 )     (5,625 )     (50,400 )     (156,593 )
Loss on extinguishment of debt
    -       -       -       -       (654,657 )
Total other income (expense)
    (1,875 )     (1,875 )     (5,625 )     (50,400 )     (811,250 )
                                         
Loss from operations before
                                       
provision for income taxes
    (97,705 )     (251,703 )     (289,080 )     (824,624 )     (7,911,782 )
                                         
Provision for income taxes
    -       -       -       -       -  
                                         
Net loss
  $ (97,705 )   $ (251,703 )   $ (289,080 )   $ (824,624 )   $ (7,911,782 )
                                         
Loss per common share
  $ (0.00 )   $ (0.01 )   $ (0.01 )   $ (0.04 )        
                                         
Weighted average common shares outstanding
                                       
- basic and diluted
    25,280,753       25,205,101       25,236,420       22,567,948          
 
See notes to unaudited consolidated financial statements
 
 
3

 
 
LIFESTYLE MEDICAL NETWORK INC. AND SUBSIDIARIES
 
(Formerly EMERGING MEDIA HOLDINGS INC. AND SUBSIDIARIES)
 
(a Development Stage Company)
 
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY DEFICIENCY
 
(Unaudited)
 
                                     
         
Common Stock
    Additional    
Accumulated
Deficit
during the
       
         
Number of
         
Paid
    Development    
Treasury
 
   
Total
   
Shares
   
Amount
   
In Capital
   
Stage
   
Stock
 
Balance, October 8, 2010 (Date of Formation)
  $ -       5,000,000     $ 5,000     $ (5,000 )   $ -     $ -  
                                                 
Balance, December 31, 2010
    -       5,000,000       5,000       (5,000 )     -       -  
                                                 
Effect of reverse acquisition
    -       1,195,101       1,195       8,042       -       (9,237 )
                                                 
Contribution of capital from shareholders
    3,000,300                       3,000,300                  
 
                                               
Net loss for the year ended
                                               
  December 31, 2011
    (556,467 )                             (556,467 )        
                                                 
Balance, December 31, 2011
    2,443,833       6,195,101       6,195       3,003,342       (556,467 )     (9,237 )
                                                 
Issuance of common stock for repayment
                                               
  of note payable and accrued interest
    3,800,000       19,000,000       19,000       3,781,000                  
                                                 
Issuance of common stock for services
    5,500       10,000       10       5,490                  
                                                 
Issuance of warrants for services
    144,193                       144,193                  
                                                 
Net loss for the year ended
                                               
  December 31, 2012
    (7,066,235 )                             (7,066,235 )        
                                                 
Balance, December 31, 2012
    (672,709 )     25,205,101       25,205       6,934,025       (7,622,702 )     (9,237 )
                                                 
Issuance of warrants for services
    118,335                       118,335                  
                                                 
Issuance of common stock for services
    11,550       130,000       130       11,420                  
                                                 
Net loss for the nine months ended
                                               
  September 30, 2013
    (289,080 )                             (289,080 )        
                                                 
Balance, September 30, 2013
  $ (831,904 )     25,335,101     $ 25,335     $ 7,063,780     $ (7,911,782 )   $ (9,237 )
 
See notes to unaudited consolidated financial statements
 
 
4

 
 
LIFESTYLE MEDICAL NETWORK INC. AND SUBSIDIARIES
(Formerly EMERGING MEDIA HOLDINGS INC. AND SUBSIDIARIES)
(a Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
   
         
 
   
For the Period
 
   
For The Nine Months Ended
   
October 8, 2010
(Date of Formation)
through
 
   
September 30,
   
September 30,
 
   
2013
   
2012
   
2013
 
         
(As restated)
       
Cash flows from operating activities:
                 
Net loss
  $ (289,080 )   $ (824,624 )   $ (7,911,782 )
Adjustments to reconcile net loss to net cash
                 
used in operating activities:
                       
Amortization
    4,164       230,769       511,856  
Reserve for bad debt
    -       -       42,500  
Impairment loss
    -       -       5,392,308  
Loss on extinguishment of debt
    -       -       654,657  
Non-cash compensation
    129,885       120,438       279,578  
Changes in operating assets and liabilities:
                 
Increase in other assets
    -       (6,000 )     (6,000 )
Increase (decrease) in accrued expenses
    82,715       (160,300 )     272,071  
Increase in prepaid expenses
    453       -       (2,013 )
Expenses paid on behalf of the company
    21,833       -       21,833  
                         
Net Cash Used In Operating Activities
    (50,030 )     (639,717 )     (744,992 )
                         
Cash flows from investing activities:
                       
Advances on loans
    -       (42,500 )     (42,500 )
 
                       
Net Cash Used In Investing Activities
    -       (42,500 )     (42,500 )
                         
Cash flows from financing activities:
                       
Proceeds from contributions from shareholders
    -       -       3,000,300  
Proceeds from short-term debt to related party
    20,000       715,000       757,200  
Proceeds from short-term debt
    30,000       -       30,000  
Repayment of debt
    -       -       (3,000,000 )
                         
Net Cash Provided by Financing Activities
    50,000       715,000       787,500  
                         
Net increase (decrease) in cash
    (30 )     32,783       8  
                         
Cash and cash equivalents - Beginning of year
    38       33       -  
                         
Cash and cash equivalents - End of period
  $ 8     $ 32,816     $ 8  
 
See notes to unaudited consolidated financial statements
 
 
5

 
 
LIFESTYLE MEDICAL NETWORK INC. AND SUBSIDIARIES
 
(Formerly EMERGING MEDIA HOLDINGS INC. AND SUBSIDIARIES)
 
(a Development Stage Company)
 
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
 
   
         
 
   
For the Period
 
   
For The Nine Months Ended
   
October 8, 2010
(Date of Formation)
through
 
   
September 30,
   
September 30,
 
   
2013
   
2012
   
2013
 
                   
Supplemental disclosure cash flow information:
             
                   
Cash paid for interest
  $ -     $ -     $ -  
                         
Cash paid for income taxes
  $ -     $ -     $ -  
                         
Supplementary information:
                       
Non-cash during the year for:
                       
                         
Issuance of common stock
  $ -     $ 5,000     $ 5,000  
                         
Intangible asset in exchange for short-term debt
  $ -     $ 6,000,000     $ 6,000,000  
                         
Common stock issued in exchange for debt and interest
  $ -     $ 3,165,000     $ 3,800,000  
                         
Details of reverse acquisition:
                       
Common stock issued
                  $ 1,195  
                         
Paid-in capital in connection with common stock issued
                    8,042  
                         
Treasury stock acquired
                    (9,237 )
                         
Net assets acquired
                  $ -  
 
See notes to unaudited consolidated financial statements
 
 
6

 
 
LIFESTYLE MEDICAL NETWORK INC. AND SUBSIDIARIES
(Formerly EMERGING MEDIA HOLDINGS INC. AND SUBSIDIARIES)
(a "Development Stage Company")

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013 AND THE PERIOD OCTOBER 8, 2010 (Date of Formation) THROUGH SEPTEMBER 30, 2013

1.  DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The consolidated balance sheet as of September 30, 2013 and the consolidated statements of operations, stockholders' deficiency and cash flows for the periods presented have been prepared by Lifestyle Medical Network, Inc. and Subsidiaries (the "Company" or "Lifestyle") and are unaudited.  The consolidated financial statements are prepared in accordance with the requirements for unaudited interim periods, and consequently, do not include all disclosures required to be made in conformity with accounting principals generally accepted in the United States of America.  In the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly the financial position, results of operations, changes in stockholders' deficiency and cash flows for all periods presented have been made.  The information for the consolidated balance sheet as of December 31, 2012 was derived from audited financial statements of the Company.

Organization

Lifestyle Medical Network Inc. and Subsidiaries (the “Company” or “Lifestyle”) (formerly Emerging Media Holdings, Inc.) was incorporated in the State of Nevada.  The Company directs its operations through its subsidiaries.  During 2011, the Company sold its media business in Moldova in exchange for 730,000 of its common shares.  In December 2011, the Company entered into an exchange agreement and purchased Lifestyle Medical Corp. ("LMC").  In connection with the acquisition, the operations of the Company are now the operations of LMC.  LMC operates its business under a License related to patent rights used in connection with the operations of medical clinics that provide medical services related to men's health, with proprietary trade names and logo designs.

On July 11, 2012, through a merger with the Company's wholly-owned Nevada subsidiary, Lifestyle Medical Network Inc., the name of the Company was changed to Lifestyle Medical Network Inc.  This corporate action was permitted to be taken by the Company’s Board of Directors without stockholder approval under Nevada law. In the merger, which was for the sole purpose of changing the Company’s name, there were no other changes to the Articles of Incorporation or any changes to the capital stock of the Company, or to its By-Laws or its officers and directors. The change of the corporate name was approved by FINRA, effective for trading purposes July 31, 2012.

The Company is considered a development stage enterprise as defined in the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 915, "Development Stage Entities" ("ASC 915").  The Company has limited revenue to date, continues to raise capital and there is no assurance that ultimately the Company will achieve a profitable level of operations.

Acquisition of Lifestyle Medical Corporation

On December 29, 2011, the Company closed an acquisition of 100% of the outstanding shares of Lifestyle Medical Corp., incorporated under the laws of Florida, pursuant to an Exchange Agreement, executed on that date, by and between the Company and Lifestyle Medical Corporation. The consideration paid by the Company for the acquisition of LMC was 5,000,000 shares of the Company's common stock paid to the holders of 100% of the outstanding shares of LMC, valued at $2,500,000, the fair market value at the date of issuance.

LMC was incorporated under the laws of the state of Florida on November 14, 2011, and on December 27, 2011 (immediately prior to LMC’s acquisition by the Company) acquired 100% of the membership interests in Elite Professional IP Licensing, LLC, a Delaware limited liability company formed on October 8, 2010 (“Elite”), and 100% of the outstanding shares of Regional Professional Alliance, Inc., a Florida corporation incorporated on October 11, 2010 (“RPA”).  LMC, Elite and RPA are entities under common control and all three entities have the same ownership. At the time of its acquisition by LMC, Elite was the assignee, pursuant to an assignment effective May 9, 2011 (the “Assignment”), from Worldwide Medassets, Ltd. SAL (“WMA”) of WMA’s rights as licensee under an October 5, 2010, License Agreement (the “License” or "License Agreement") with Modular Properties Limited, Inc., as Licensor (“MPL”).  The fee that was payable to WMA in connection with the Assignment of the MPL License was $6,000,000, represented by a secured promissory note dated May 7, 2011 the (“WMA Note”) in the principal amount of $6,000,000 issued by Saddleworth Ventures, LLC, a Florida limited liability company ("Saddleworth Ventures") to WMA.  At that time the ownership of Saddleworth Ventures was identical to the ownership of Elite (now a wholly-owned subsidiary of the Company).  Mr. Christopher Smith, the Company's Chief Executive Officer, had a 25.6% equity interest in Elite at the time of the assignment of the license and the same interest in Saddleworth Ventures.  As of the December 27, 2011 acquisition of Elite by LMC, $3,000,000 of the amount owing under the WMA Note had been paid to WMA.
 
 
7

 
 
For accounting purposes only, the transactions between LMC with Elite and RPA and the transaction between EMH and LMC were treated as a recapitalization of LMC, as of December 29, 2011, with LMC as the acquirer.  The financial statements prior to December 29, 2011, are those of LMC and reflect the assets and liabilities of LMC at historical carrying amounts.  The financial statements show a retroactive restatement of LMC's historical stockholders' equity to reflect the equivalent number of shares issued to LMC.

Acquisition by the Company of the Rights to the License with MPL

As of January 5, 2012,  Saddleworth Ventures, with the consent of WMA, assigned the WMA Note to Saddleworth Consulting, LLC, a Florida limited liability company (“Saddleworth Consulting”), and Saddleworth Consulting assumed all obligations under the WMA Note, $3,000,000 of the principal amount of which was outstanding as of the date of the assignment.

Pursuant to a Stock Purchase Agreement, dated as of February 8, 2012, between the Company and Saddleworth Consulting, the Company agreed to issue 19,000,000 shares of its common stock to Saddleworth Consulting in exchange for the satisfaction by Saddleworth Consulting of the outstanding $3,000,000 principal balance and accrued interest on the WMA Note.  In consideration of the stock issuance, such outstanding principal balance and all obligations under the WMA note to WMA were satisfied by Saddleworth Consulting.
 
Going Concern

The consolidated financial statements for the nine months ended September 30, 2013 have been prepared on a going concern basis which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.  The Company has a past history of recurring losses from operations and is a development stage company.  The Company will require additional funding to execute its future strategic business plan.  Successful business operations and its transition to attaining profitability are dependent upon obtaining additional financing and achieving a level of revenue to support its cost structure.  These factors raise substantial doubt about the Company's ability to continue as a going concern.

Significant Accounting Policies

The Company’s significant accounting policies are summarized in Note 1 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.  There were no significant changes to these accounting policies during the nine months ended September 30, 2013 and the Company does not expect that the adoption of other recent accounting pronouncements will have a material impact on its financial statements.
 
2.  INTANGIBLES

The MPL License Agreement

The MPL License Agreement, under which the Company's wholly-owned subsidiary, Elite, is the licensee pursuant to the Assignment from WMA, provides for the license of medical services, operational systems, manuals, certain names and logo designs and other intellectual property in connection with the operation of medical clinics that provide services related to men’s health within the territory of the continental United States (the “Licensed Rights”).  The License Agreement provides for a fee of 6% of gross receipts of Licensee, payable quarterly.  The term of the License Agreement is for twenty (20) years from the effective date, May 9, 2011. The Company plans to establish new medical clinics or acquire existing clinics, as well as to provide consulting services to medical clinics utilizing the Licensed Rights.

Intangibles are the value of the MPL license and are stated at cost.  The intangibles are being amortized over 19.5 years, the life of the license.

As of December 31, 2012, management concluded the fair value of the license should be reduced to $100,000 based on a market analysis and the failure of the Company to open any clinics during 2012 and no contracts for the use of the license in the foreseeable future.  The Company recorded an impairment charge of $5,392,308 which is included in the Company’s consolidated statement of operations for the year ended December 31, 2012.
 
 
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The components of intangible assets are as follows:
 
License Agreements
     
       
Balance January 1, 2011
  $ -  
         
Acquisition of license
    6,000,000  
         
Amortization for the period May 8, 2011 through December 31, 2011
    (200,000 )
         
Balance December 31, 2011
    5,800,000  
         
Amortization for the year ended December 31, 2012
    (307,692 )
         
Impairment charge
    (5,392,308 )
         
Balance December 31, 2012
  $ 100,000  
         
Amortization expense for the nine months ended September 30, 2013
    (4,164 )
         
Balance September 30, 2013
  $ 95,836  
 
Amortization expense for the nine months ended September 30, 2013 and 2012 amounted to $4,174 and $230,769, respectively.  Amortization expense for the period October 8, 2010 (date of formation) through September 30, 2013 amounted to $511,856.

Estimated amortization expense for intangible assets for the next five years is as follows:
 
Year Ending
 
Amortization
 
December 31,
 
Expense
 
2013
  $ 1,390  
2014
    5,555  
2015
    5,555  
2016
    5,555  
2017
    5,555  
 
3.  LOAN RECEIVABLE

On February 3, 2012, LMC loaned $32,000 to Health Clinics of Florida, LLC.  On April 9, 2012 and August 10, 2012,  LMC advanced an additional $10,500.  The unsecured notes are interest free and due June 15, 2013.  In the event of default, interest on the outstanding balance shall accrue at a rate of ten percent (10%) per annum from the date of the default.  The manager of Health Clinics of Florida, LLC is a shareholder of the Company.  As of December 31, 2012, the Company recorded a reserve for the full amount of the receivable reducing the balance to $-0-.  The bad debt expense of $42,500 is included in the Company’s consolidated statement of operations for the year ended December 31, 2012.
 
 
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4.  DEBT

Short-term debt as of September 30, 2013 and December 31, 2012 were as follows:
 
   
September 30,
 
December 31,
 
   
2013
   
2012
 
Short-term Debt to Related Parties
           
Unsecured promissory note, interest free, due April 15, 2014  (1)
  $ 200,000     $ 200,000  
                 
Unsecured promissory note, interest free, due April 15, 2014 (2)
    75,000       75,000  
                 
Unsecured promissory note, interest free, due April 15, 2014 (2)
    60,000       60,000  
                 
Unsecured promissory notes, interest @ 10% per annum, due April 15, 2014 (3)
    75,000       75,000  
                 
Unsecured promissory notes, interest free due April 15, 2014 (4)
    347,200       327,200  
      757,200       737,200  
Less: Current portion
    757,200       737,200  
    $ -     $ -  
 
   
September 30,
 
     December 31,
 
Short-term Debt
    2013       2012  
Unsecured promissory note, interest free, due on demand
  $ 30,000     $ -  
                 
Unsecured promissory note, interest free, due on demand
    21,833       -  
      51,833       -  
Less: Current portion
    51,833       -  
    $ -     $ -  
 
(1)  On January 5, 2012, LMC borrowed $200,000 from the Dellinger Fund, a shareholder of the Company.  The note is interest free and has been extended to April 15, 2014.  In the event of default, the Dellinger Fund has the right to request and will be granted the issuance of two million shares of the Company's common stock.

(2)  On February 3, 2012 and March 1, 2012, LMC borrowed $75,000 and $60,000, respectively, from the Dellinger Fund, a shareholder of the Company.  The unsecured notes are interest free and are due April 15, 2014.  In the event of default, interest on the outstanding balance shall accrue at a rate of ten percent (10%) per annum from the date of the default.

(3)  On April 3, 2012, LMC borrowed $75,000 from the Dellinger Fund, a shareholder of the Company.  The unsecured note bears interest @ 10% per anum and is due April 15, 2014.  In the event of default, interest on the outstanding balance shall continue to accrue at a rate of ten percent (10%) per annum from the date of the default.

(4)  On various dates from March 23, 2012 through February 21, 2013, LMC borrowed $347,200 from the Dellinger Fund, a shareholder of the Company.  The unsecured notes are interest free and are due April 15, 2014.  In the event of a default, interest on the outstanding balance shall accrue at a rate of ten percent (10%) per annum from the date of the default.

Interest expense for the nine months ended September 30, 2013 and 2012 and the period October 8, 2010 (Date of Formation) through September 30, 2013 amounted to $5,625, $50,400 and $156,593, respectively.
 
 
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5.  ACCOUNTS PAYABLE AND ACCRUED EXPENSES
 
   
September 30,
   
December 31,
 
   
2013
   
2012
 
Interest
  $ 11,025     $ 5,400  
Salaries - Officer
    33,250       2,500  
Rent
    32,918       5,543  
Other
    49,535       30,570  
    $ 126,728     $ 44,013  

6.  INCOME TAXES

The Company adopted the provisions of ASC 740, "Income Taxes", ("ASC 740").  As a result of the implementation of ASC 740, the Company recognized no adjustment in the net liability for unrecognized income tax benefits.  The Company believes there are no potential uncertain tax positions and all tax returns are correct as filed.  Should the Company recognize a liability for uncertain tax positions, the Company will separately recognize the liability for uncertain tax positions on its balance sheet.  Included in any liability for uncertain tax positions, the Company will also setup a liability for interest and penalties.  The Company’s policy is to recognize interest and penalties related to uncertain tax positions as a component of the current provision for income taxes.

There is no U.S. tax provision due to losses from U.S. operations during the nine months ended September 30, 2013 and 2012.  Deferred income taxes are provided for the temporary differences between the financial reporting and tax basis of the Company's assets and liabilities. The principal item giving rise to deferred taxes is the net operating loss carryforward in the U.S.  Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.  The Company has set up a valuation allowance for losses for certain carryforwards that it believes may not be realized.

Section 382 of the U.S. Internal Revenue Code imposes an annual limitation on the availability of NOL carryforwards to offset taxable income when an ownership change occurs.  The Company's reverse capitalization meets the definition of an ownership change and some of the NOL's will be limited.

7.  STOCKHOLDERS' EQUITY

Pursuant to a Stock Purchase Agreement, dated as of February 8, 2012, between the Company and Saddleworth Consulting, the Company agreed to issue 19,000,000 shares of its common stock to Saddleworth Consulting in exchange for the satisfaction by Saddleworth Consulting of the outstanding $3,000,000 principal balance and $165,000 of accrued interest on the WMA Note.  In consideration of the stock issuance, such outstanding principal balance and all obligations under the WMA note to WMA, a shareholder of the Company, were satisfied by Saddleworth Consulting.

The fair value of the common shares issued amounted to $3,800,000.  The Company recorded a loss of $664,657 upon the extinguishment of debt which is included in the Company’s consolidated statement of operations for the year ended December 31, 2012.

8.  STOCK-BASED COMPENSATION

For the nine months ended September 30, 2013 and 2012 and for the period October 8, 2010 (Date of formation) through September 30, 2013, the Company issued 130,000, 10,000, and 140,000 shares and recorded compensation expense of $11,550, $5,500 and $17,050, respectively.

9.  WARRANTS

On February 6, 2012, the Company issued warrants as compensation to a third party to purchase 2,400,000 shares of the Company's common stock for services performed.  The warrants expire February 6, 2017.  The estimated value of the compensatory warrants was determined using the Black Scholes pricing model using the following assumptions:  Expected term of 5 years, a risk free interest rate of 0.32%, a dividend yield of -0-% and volatility of 432%.  The fair value of the warrant amounted to $479,912 to be amortized over three years.  The Company recorded an expense of $118,335 and $114,938 on the Company's consolidated statement of operations for the nine months ended September 30, 2013 and 2012, respectively.  For the period October 8, 2010 (Date of formation) through September 30, 2013, the Company recorded an expense of $265,528.

The following table summarizes the changes in warrants outstanding and the related price of the shares of the Company's common stock issued to non-employees of the Company.  The warrants were granted in lieu of cash compensation for services performed.
 
         
Weighted Average
 
   
Shares
   
Exercise Price
 
Outstanding, January 1, 2013
    2,400,000     $ 0.20  
Granted
    -       -  
Expired/Cancelled
    -       -  
Exercised
    -       -  
Outstanding - period ending September 30, 2013
    2,400,000     $ 0.20  
Exercisable - period ending September 30, 2013
    2,400,000     $ 0.20  
 
 
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10.  RELATED PARTY TRANSACTIONS
 
 a)
During the year ended December 31, 2011, Elite had activities with Saddleworth Ventures LLC, a related party.  The ownership of Saddleworth Ventures is identical to the ownership of Elite.  Saddleworth Ventures assigned the rights to Elite as licensee under the License Agreement with MPL.  In connection with the purchase of the license, $3 million of the $6 million purchase price was paid by the members of Elite on the amount owing under the WMA note.
 
 b)  
The Company entered into a consulting agreement with Saddleworth Ventures LLC.  Consulting fees for the nine months ended September 30, 2013 and 2012 were $-0- and $97,500, respectively.  See Note 11(a) for further information.
 
 c)  
During the year ended December 31, 2012, the Company received $737,200 in advances from the Dellinger Fund, a shareholder of the Company.  During the nine months ended September 30, 2013, the Dellinger Fund advanced an additional $20,000.  The majority of these advances are interest free.  The Company recorded interest expense for the nine months ended September 30, 2013 and 2012 in the amount of $5,625 and $50,400, respectively, on the advances that were not interest free.  See Note 4 for further information.

11.  COMMITMENTS AND CONTINGENCIES

Consulting Agreements

 a)  
In January 2012, Lifestyle entered into a consulting agreement with Saddleworth Ventures LLC ("Consultant").  The Consultant will provide services for management consulting, business advisory, shareholder information and public relations.  The term of the agreement is for three years.  Upon execution of the agreement, Lifestyle issued a payment to the Consultant in the amount of $25,000.  Additional cash fees or reimbursement of expenses shall be agreed upon by Lifestyle and the Consultant from time to time during the term of the agreement.  Consulting fees for the nine months ended September 30, 2013 and 2012 amounted to $-0- and $140,000, respectively.

 b)  
During 2012, Lifestyle entered into various consulting agreements with third parties in connection with business advisory services.  For the nine months ended September 30, 2013 and 2012, consulting services amounted to $5,666 and $131,000, respectively.

 c)  
On July 1, 2012, Lifestyle entered into an employment agreement with Christopher Smith ("Smith"), the Company's Chief Executive Officer.  The term of the agreement is for five years.  Lifestyle will pay Smith minimum compensation of $60K per year.  Smith will also receive a performance bonus based on a percentage of the Company's net operating profit before income taxes.  For the nine months ended September 30, 2013, payroll-officer amounted to $45,000.

12.  EARNINGS PER SHARE

Basic earnings per share are computed by dividing net earnings by the weighted average number of common shares outstanding during the period.  Diluted earnings per common share are computed by dividing net earnings by the weighted average number of common shares and potential common shares outstanding during the period.  Potential common shares consist of outstanding common stock purchase warrants.  For the nine months ended September 30, 2013 and 2012, there were 2,400,000 and 2,400,000 potential common shares, respectively.

13.  RESTATEMENT

The Company’s consolidated statement of operations for the nine and three months ended September 30, 2012 have been restated to reflect amortization expense of $230,769 and $76,923, respectively, and an increase in the valuation of warrants issued for services of $19,059 and $42,970, respectively. The net loss for the six and three months ended June 30, 2012 increased to $824,624 and $253,353, respectively.

14.  SUBSEQUENT EVENTS

On October 13, 2013, the Company borrowed $150,000 from Edmond Malits (“Malits”). The promissory note bears interest at 12% per annum and both interest and principal are due February 14, 2014.
 
In connection with the promissory note, the Company will issue Malits 500,000 of the company’s common shares. Additionally, the Company will provide collateral for the loan, the Company’s shell on the OTCBB.
 
The Company has signed a letter of intent to purchase the assets and operations of a group of six primary care and specialty medical clinics in Houston, Texas, including the real estate properties of the clinics.  The letter of intent was recently extended to December 31, 2013, to permit the parties to close the transaction by the end of the Company’s current fiscal year.  The Company is proceeding to complete the negotiation and execution of definitive agreements for this transaction; the definitive agreements will contain closing conditions, including a financing contingency with respect to the institutional financing required for the purchase the real estate properties that are part of the group’s assets.
 
 
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ITEM 2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and notes thereto and the other financial information included elsewhere in this report.  Certain statements contained in this report, including, without limitation, statements containing the words “believes,” “anticipates,” “expects” and words of similar import, constitute “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  Such forward-looking statements involve known and unknown risks and uncertainties.  Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including our ability to create, sustain, manage or forecast our growth; our ability to attract and retain key personnel; changes in our business strategy or development plans; competition; business disruptions; adverse publicity; and international, national and local general economic and market conditions.

Organization

The Company was incorporated in the State of Nevada on September 3, 2003, under the name Beverly Hills Film Studios, Inc. and changed its name to Emerging Media holdings, Inc. on September 28, 2006. On September 30, 2006, we effectuated a share exchange whereby we acquired all of the outstanding equity interests in our wholly-owned subsidiary, IM “Media Alianta” SRL, the 100% owner of SA “Analiticmedia-Grup”, both Moldovan companies ("AMG"), and on May 2, 2008, the Company acquired the common stock of “TNT-Bravo” channel-ICS “Media Top Prim” SRL, the exclusive operator in Moldova of Russian channel TNT programs owned by Gazprom Media.

On July 11, 2012, through a merger with our wholly-owned Nevada subsidiary, Lifestyle Medical Network Inc., the name of our Company was changed from Emerging Media Holdings, Inc. to Lifestyle Medical Network Inc.  The change of our corporate name was approved by FINRA, effective for trading purposes on July 31, 2012.
 
Acquisition of Lifestyle Medical Corp.

On December 29, 2011, we closed an acquisition of 100% of the outstanding shares of Lifestyle Medical Corp. (“Lifestyle Medical”), which has rights to technologies and practices licensed to its subsidiary, Elite Professional IP Licensing, LLC (“Elite”), pursuant to an October 5, 2010 License Agreement with Modular Properties Limited, Inc. (the “License Agreement”). The consideration paid by the Company for the acquisition of Lifestyle Medical was 5,000,000 shares of our common stock paid to the holders of a majority of the outstanding shares of LMC, valued at $2,500,000. On February 2, 2012, we completed acquisition of the rights to our licensed men’s medical clinic operating technologies and processes, by acquiring from Worldwide Medassets, Ltd. (SAL) the full assignment of rights to the License Agreement, by the issuance of 19,000,000 shares of our common stock in exchange for the satisfaction of the outstanding $3,000,000 principal balance on the note issued to Worldwide Medassets, Ltd. in connection with the assignment of rights to the License Agreement to Elite.

On December 29, 2011, we completed the sale of our remaining Moldova media subsidiaries in exchange for the assumption of the liabilities of the subsidiaries and 250,000 shares of our common stock.
 
Basis of Presentation

Throughout this Form 10-Q, the terms "we," "us," "our" and "Company" refer to Lifestyle Medical Network, Inc., a Nevada corporation, and, unless the context indicates otherwise, includes our subsidiaries.

Significant Accounting Policies

The Company’s significant accounting policies are summarized in Note 1 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.  There were no significant changes to these accounting policies during the nine months ended September 30, 2013, and the Company does not expect that the adoption of other recent accounting pronouncements will have a material impact on its financial statements.

PLAN OF OPERATION

Through our Lifestyle Medical Corp. subsidiary, we intend to open, operate and acquire men’s sexual health clinics. We have no acquisitions contemplated or under discussion at this time.
 
 
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RESULTS OF OPERATIONS
 
NINE MONTHS ENDED SEPTEMBER 30, 2013 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 2012

During the nine months ended September 30, 2013, we incurred a net loss of $289,080, compared to a loss of $824,624 for the nine months ended September 30, 2012.  The decrease in the loss is primarily due to a decrease of approximately $495,000 in general and administrative expense, primarily consulting fees and amortization, and a decrease of approximately $45,000 in interest expense.
 
THREE MONTHS ENDED SEPTEMBER 30, 2013 COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30, 2012

During the three months ended September 30, 2013, we incurred a net loss of $97,705, compared to a net loss of $251,703 for the three months ended September 30, 2012.  The decrease in the loss is primarily due to our having a decrease of approximately $160,000 in general and administrative expenses, primarily consulting and amortization.

LIQUIDITY AND FINANCIAL RESOURCES
 
At September 30, 2013, we had a working capital deficiency of approximately $933,000.  At September 30, 2013, we had total assets of approximately $103,000, including cash of $8. Net cash used in operating activities in the nine months ended September 30, 2013 was $50,030, primarily from the net loss of approximately $289,000, offset by net cash from financing activities of $50,000 in that period.
 
It is expected that we will continue to incur operating losses in the future. In the first nine months of 2013, we had $-0- of revenues and operating expenses of $283,455.  As of September 30, 2013, we had $8 cash on hand to fund operations.  There is no assurance that we will operate profitably in the future.
 
On October 31, 2013, we obtained interim capital through a $150,000 loan, evidenced by a 12% Promissory Note with a principal amount of $150,000, due February 16, 2014; in connection with the loan we agreed to issue the lender 500,000 shares of our common stock. We will have to obtain significant additional capital to continue with our proposed business. There is no assurance that we will be able to obtain sufficient capital to implement our business plans. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  These conditions and uncertainties raise substantial doubt about the Company's ability to continue as a going concern.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
Off Balance Sheet Arrangements
 
We do not currently have any off balance sheet arrangements falling within the definition of Item 303(c) of Regulation S-B.
 
Inflation

To date inflation has not had a material impact on our operations.
 
ITEM 3.  Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

ITEM 4.  Controls and Procedures.

As of September 30, 2013, the end of the period covered by this quarterly report, the Chief Executive and Chief Financial Officer of the Company (the “Certifying Officer”) conducted an evaluation of the Company’s disclosure controls and procedures.  As defined under Sections 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the term “disclosure controls and procedures” means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including the Certifying Officer, to allow timely decisions regarding required disclosure.
 
Based on this evaluation, the Certifying Officer has concluded that the Company’s disclosure controls and procedures were not effective for the quarter ended September 30, 2013, to ensure that material information is recorded, processed, summarized and reported by management of the Company on a timely basis in order to comply with the Company’s disclosure obligations under the Exchange Act, and the rules and regulations promulgated there under.
 
Further, there were no changes in the Company’s internal control over financial reporting during the third fiscal quarter of our 2013 fiscal year that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
 
 
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PART II

Other Information

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

The table below shows the Company’s sales of unregistered securities for the Company’s fiscal quarter ended May 31, 2013.

Date
Title and Amount
Purchaser
Principal Underwriter
Total Offering Price/Underwriting Discounts
August 20, 2013
100,000 shares of common stock issued to Consultant.
Consultant.
NA
$0.06 per share/NA
 
The Company believes that the above transaction is exempt from registration under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(a)(2) thereof.

Item 6.  Exhibits.
 
31
Certification of Chief Executive Officer and Principal Financial Officer pursuant to Rule 13a-14(a)
   
32
Certification of Chief Executive Officer and Principal Financial Officer  pursuant to 18 U.S.C. Section 1350

Copies of the following documents are included as exhibits to this report pursuant to Item 601 of Regulation S-K.

SEC Ref. No.
 
Title of Document
101.INS
 
XBRL Instance Document
101.SCH
 
XBRL Taxonomy Extension Schema Document
101.CAL
 
XBRL Taxonomy Calculation Linkbase Document
101.DEF
 
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
 
XBRL Taxonomy Label Linkbase Document
101.PRE
 
XBRL Taxonomy Presentation Linkbase Document
 
The XBRL related information in Exhibits 101 to this Quarterly Report on Form 10-Q shall not be deemed “filed” or a part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, and is not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of those sections.
 
SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
LIFESTYLE MEDICAL NETWORK INC. 
(Registrant)
 
       
Date:   November 14, 2013
By:
/s/ Christopher Smith
 
   
Christopher Smith, Chief Executive Officer and Principal Financial Officer
 
 
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