WITH, INC. - FORM 10-Q - May 14, 2014

Attached files

file	filename
EXCEL - IDEA: XBRL DOCUMENT - WITH, INC.	Financial_Report.xls
EX-32.2 - EXHIBIT 32.2 - WITH, INC.	medl033114_ex322.htm
EX-31.1 - EXHIBIT 31.1 - WITH, INC.	medl033114_ex311.htm
EX-32.1 - EXHIBIT 32.1 - WITH, INC.	medl033114_ex321.htm
EX-31.2 - EXHIBIT 31.2 - WITH, INC.	medl033114_ex312.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D. C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2014

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 333-166743

MEDL MOBILE HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

NEVADA

(State or other jurisdiction of incorporation or organization)

80-0194367

(I.R.S. Employer Identification No.)

18475 Bandilier Circle

Fountain Valley, California 92708

(Address of principal executive offices)

(714) 617-1991

(Issuer's telephone number)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES 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. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o	Accelerated filer o

Non-accelerated filer o	Smaller reporting company x

(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

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 50,159,876 shares of common stock as of May 13, 2014.

NOTE REGARDING FORWARD-LOOKING STATEMENTS

Our disclosure and analysis in this Report contains forward-looking statements that provide our current expectations or forecasts of future events. Forward-looking statements in this Report include, without limitation:

● information concerning possible or assumed future results of operations, trends in financial results and business plans, including those related to earnings, earnings growth, revenue and revenue growth;

● statements about the level of our costs and operating expenses relative to our revenues, and about the expected composition of our revenues;

● statements about expected future sales trends for our products and services;

● statements about our future capital requirements and the sufficiency of our cash and cash equivalents;

● other statements about our plans, objectives, expectations and intentions; and

● other statements that are not historical fact.

Forward-looking statements generally can be identified by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “intends, “plans,” “should,” “seeks,” “pro forma,” “anticipates,” “estimates,” “continues,” or other variations thereof (including their use in the negative), or by discussions of strategies, plans or intentions. Such statements include but are not limited to statements under Part I, Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Report, and elsewhere in this Report. A number of factors could cause results to differ materially from those anticipated by such forward-looking statements. The absence of these words does not necessarily mean that a statement is not forward-looking. Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons.

You should not unduly rely on these forward-looking statements, which speak only as of the date of this Report. We undertake no obligation to publicly revise any forward-looking statement to reflect circumstances or events after the date of this Report, or to reflect the occurrence of unanticipated events. You should, however, review the factors and risks we describe in the reports we file from time to time with the Securities and Exchange Commission.

Table of Contents

		Page
	PART I	4
Item 1.	Financial Statements.	4
	Consolidated Balance Sheets as of March 31, 2014 (unaudited) and December 31, 2013	4
	Consolidated Statements of Operations for the three months ended March 31, 2014 and 2013 (unaudited)	5
	Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2014 and 2013 (unaudited)	6
	Consolidated Statements of Cash Flows for the three months ended March 31, 2014 and 2013 (unaudited)	7
	Notes to Consolidated Financial Statements (unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	30
Item 4.	Controls and Procedures.	30
	PART II	31
Item 1.	Legal Proceedings.	31
Item 1A.	Risk Factors.	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	31
Item 3.	Defaults Upon Senior Securities.	31
Item 4.	Mine Safety Disclosures.	31
Item 5.	Other Information.	31
Item 6.	Exhibits.	31
	SIGNATURES	32

ITEM 1. FINANCIAL STATEMENTS.

MEDL MOBILE HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS

	March 31, 2014	December 31, 2013
	(Unaudited)
ASSETS
Current assets:
Cash	$ 147,800	$ 887,322
Accounts receivable, net	366,987	177,947
Prepaid expenses	28,627	35,381
Total current assets	543,414	1,100,650

Fixed assets, net of depreciation	28,061	38,446

Other assets:
Security deposits	14,847	14,847
Marketable securities - available for sale	27,500	50,000
Intangible asset-customer base, net of amortization	69,000	78,000
Total other assets:	111,347	142,847

Total assets	$ 682,822	$ 1,281,943


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses	$ 288,113	$ 262,354
Accrued compensation expenses	61,199	120,910
Derivative liability	59,624	63,389
Total current liabilities:	408,936	446,653

Long term liabilities:
Deferred lease	23,681	26,684
Security deposit payable	5,200	5,200
Total long term liabilities	28,881	31,884

Total liabilities	437,817	478,537

Stockholders' equity
Preferred stock, $0.001 par value; 10,000,000 shares authorized; none issued and outstanding.	-	-
Common stock, $0.001 par value, 500,000,000 shares authorized; 50,159,876 and 50,021,711 issued and outstanding at March 31, 2014 and December 31, 2013 , respectively	50,160	50,022
Additional paid-in capital	8,793,937	8,731,288
Accumulated other comprehensive loss - marketable securities available for sale	(22,500)	-
Accumulated deficit	(7,993,705)	(7,533,214)

Total MEDL Mobile Holdings, Inc. stockholders' equity	827,892	1,248,096

Non-controlling interest in subsidiary	(582,887)	(444,690)

Total stockholders' equity	245,005	803,406

Total liabilities and stockholders' equity	$ 682,822	$ 1,281,943


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

MEDL MOBILE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

	Three months ended March 31,
	2014	2013

Revenues	$ 623,291	$ 473,081

Cost of goods sold	236,650	227,552

Gross profit	386,641	245,529

Expenses:
Selling, general and administrative	987,072	1,030,792
Total expenses	987,072	1,030,792

Net loss before other income (expense)	(600,431)	(785,263)

Other income (expense):
Change in fair value of warrants	3,765	(51,337)
Interest expense	(2,022)	(2,638)
Total other income (expense)	1,743	(53,975)

Net loss before provision for income taxes	(598,688)	(839,238)
Provision for income taxes	-	-

Net loss	(598,688)	(839,238)

Net loss attributable to non-controlling interest	138,197	30,147

Net loss attributable to MEDL Mobile Holdings, Inc.	$ (460,491)	$ (809,091)

NET LOSS PER COMMON SHARE
Basic and Diluted	$ (0.01)	$ (0.02)

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic and Diluted	50,078,812	44,088,941


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

MEDL MOBILE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)

	Three months ended March 31,
	2014	2013

Net loss attributable to MEDL Mobile Holdings, Inc.	$ (460,491)	$ (809,091)

Other comprehensive loss:
Unrealized loss on marketable securities - available for sale	(22,500)	-

Comprehensive loss attributable to MEDL Mobile Holdings, Inc.	$ (482,991)	$ (809,091)

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

MEDL MOBILE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	Three Months Ended March 31,
	2014			2013

Cash flows from operating activities:
Net loss	$	(460,491	)	$	(809,091	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		19,385			20,782
Stock based compensation on options granted		41,435			65,786
Change in fair value of derivative liability		(3,765	)		51,337
Common stock issued for services		15,000			—
Change in allowance for doubtful accounts		3,700			—
Non-controlling interest		(138,197	)		(30,147	)
Changes in operating assets and liabilities:
Accounts receivable		(192,740	)		238,743
Prepaid expenses		6,754			35,927
Security deposits		—			6,300
Accounts payable and accrued expenses		(33,952	)		(76,518	)
Deferred lease		(3,003	)		(3,817	)
Net cash used in operating activities		(745,874	)		(500,698	)

Cash flows from investing activities:
Purchase of office equipment		—			(1,377	)
Net cash used in investing activities		—			(1,377	)

Cash flows from financing activities:
Proceeds from line of credit payable		—			193,000
Proceeds from exercise of stock options		6,352			—
Proceeds from issuance of subsidiary common stock		—			525,000
Net cash provided by financing activities		6,352			718,000

Net increase (decrease) in cash		(739,522	)		215,925

Cash at beginning of period		887,322			112,745

Cash at end of period	$	147,800		$	328,670

SUPPLEMENTAL CASH FLOW INFORMATION:
Interest	$	—		$	—
Income taxes	$	800		$	800

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

Unrealized loss on marketable securities available for sale	$	22,500		$	—
Issuance of common stock for payment of legal fees	$	—		$	100,000
Issuance of common stock for investment in securities available for sale	$	—		$	50,000

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

MEDL MOBILE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014

(Unaudited)

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION

MEDL Mobile Holdings, Inc. (the “Registrant”) through its wholly owned subsidiary, MEDL Mobile, Inc. (“MEDL” and together with the Registrant, “we”, “our”, “us”, or the “Company”) is a developer, incubator, marketer and aggregator of mobile application software, or “Apps”.

The Registrant was incorporated in Nevada on May 22, 2008. On June 24, 2011, the Registrant acquired MEDL Mobile, Inc. (“MEDL” and together with the Registrant, “we,” “our,” “us,” or the “Company”), a California corporation, and the business of MEDL became the sole line of business of the Registrant.

On February 28, 2012, the Registrant acquired Inedible Software, LLC (“Inedible”), a developer of mobile Apps and related mobile App technologies whose principal asset was a customer list. While the acquisition of Inedible was structured as a purchase of an entity, the Registrant did not acquire any ongoing business operations and the purpose of the transaction was to acquire Inedible’s customer list as a conduit to Apple, Inc. for future potential. As a result, Inedible became a wholly owned subsidiary of the Registrant. The results of operations of Inedible are included on a going forward basis from the date of acquisition although Inedible is no longer actively engaged in any business activities.

On November 2, 2012, the Company formed Hang With, Inc. (“Hang With”) a Nevada corporation with 75,000,000 authorized shares of common stock with a par value of $0.001 per share. Hang With allows live real-time video to be sent from one phone to many. The goal of the platform is twofold: 1) to become the premiere social media network for people around the globe to connect, communicate and share experiences via live streaming broadcasts; and 2) to enable celebrities and public figures to easily monetize their fan bases. Any user can be a broadcaster and/or a follower. After a follower receives a notification that the broadcaster is live, the follower views a short pre-roll advertisement before watching a live video feed sent directly from the broadcaster’s smartphone camera. The follower is able to chat with the broadcaster and other followers during the broadcast. A post-roll advertisement ends the broadcast. As of March 31, 2014, we own 75.77% of Hang With.

Going Concern

The consolidated financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company incurred a net loss of $460,491 for the three months ended March 31, 2014, has incurred losses since inception resulting in an accumulated deficit of $7,993,705 as of March 31, 2014, and has had negative cash flows from operating activities since inception. The Company anticipates further losses in the development of its business.

The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. The Company’s ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development of the Company’s contemplated plan of operations, or its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of all of the entities that make up the Company. All significant inter-company balances and transactions have been eliminated.

Basis of Accounting

The accompanying unaudited interim financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the United States Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, stockholders’ equity or cash flows. It is management's opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation.

The results of operations for the three months ended March 31, 2014 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2014. The accompanying statements should be read in conjunction with the more detailed financial statements, and the related footnotes thereto, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 31, 2014.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, the Company evaluates its estimates, including, but not limited to, those related to investment tax credits, bad debts, income taxes and contingencies. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.

Reclassification

The Company has made certain reclassifications to conform prior periods’ data to the current presentation. These reclassifications had no effect on reported assets, liabilities or results of operations.

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments and other short-term investments with maturity of three months or less, when purchased, to be cash equivalents. The Company maintains cash and cash equivalent balances at one financial institution that is insured by the Federal Deposit Insurance Corporation. Any amounts of cash in financial institutions over FDIC insured limits, exposes the Company to cash concentration risk. As of March 31, 2014 and December 31, 2013, the Company has no cash equivalents.

Revenue Recognition

Our main source of revenue is from the development of custom applications or “Apps” for customers. We use a hybrid method for recognizing revenue that includes elements from both ASC 985-605, Software Revenue Recognition and ASC 605-35, Construction-Type and Production-Type Contracts.

We recognize revenues in accordance with ASC 985-605 when persuasive evidence of an agreement exists, delivery of the software has occurred, the fee is fixed or determinable, and collectability is probable. Nonrecurring revenues related to perpetual license sales with multiple elements are recognized in accordance with the guidance on software revenue recognition.

When the arrangement with a customer includes significant production, modification, or customization of the software, we recognize the related revenue using the percentage-of-completion method in accordance with the accounting guidance and certain production-type contracts contained in ASC 605-35. We use the percentage of completion method provided all of the following conditions exist:

the contract includes provisions that clearly specify the enforceable rights regarding goods or services to be provided and received by the parties, the consideration to be exchanged and the manner and terms of settlement;

the customer can be expected to satisfy its obligations under the contract;

the Company can be expected to perform its contractual obligations; and

reliable estimates of progress towards completion can be made.

We measure completion based on achieving milestones detailed in the agreements with the customers. Costs of providing services, including services accounted for in accordance with ASC 605-35, are expensed as incurred.

The following is an example of how revenue is recognized involving an arrangement with a customer that includes significant production, modification, or customization of the software: a typical project will require between 50-100 working days from beginning to end. On average 25-50 cumulative working days are expended prior to the start of development and this work typically includes, design, storyboards, and architecture. Prior to developing the App, hard costs are incurred as a number of variables are taken into account for preparation. Those often include the following:

understanding the client's business situation and environment, including their competitive landscape;

researching and establishing the goals of the App;

understanding and researching the target and potential App use cases;

developing a monetization strategy;

determining functionality and articulating the functionality through a storyboard and functional specification document; and

determining the resources and timeline needed to complete the final work product.

Fifty percent (50%) of the work is completed upon completion of these six phases and at that point in time the customer typically signs our contract and makes a nonrefundable 50% payment. We record the 50% nonrefundable payment as revenue at that point in time. When the Beta version of the App is complete, or at such other time as may be specifically agreed to in the contract, the customer is invoiced for an additional 25% of the total contract price and such payment is booked as revenue. When the App is completed and ready for App store release, the customer is invoiced for the final 25% of total contract price and such payment is booked as revenue.

We also generate revenue from in App advertising and the sale of Apps through the Apple store and other App marketplaces. Revenue from advertising is recognized in the period that the ad impressions are delivered, on an accrual basis. Revenue from the sale of Apps is recognized in the period the App is sold to the end user, on an accrual basis.

Marketable Securities Available for Sale

Securities available for sale are carried at fair value. Unrealized gains or losses on securities available for sale are recognized on a periodic basis as an element of comprehensive income based on changes in the fair value of the security. Once liquidated, realized gains or losses on the sale of marketable securities available for sale will be reflected in the Company’s net loss for the period in which the securities are liquidated. At the end of each period, the Company evaluates the carrying value of the marketable securities for a decrease in value. We evaluate the company underlying these marketable securities to determine whether a decline in fair value below the amortized cost basis is other than temporary. If the decline in fair value is judged to be “other-than-temporary”, the cost basis of the individual security shall be written down to fair value as a new cost basis and the amount of the write-down is charged to earnings.

Intangible Assets

Intangible assets are stated at cost. Expenditures of costs incurred to renew or extend the term of a recognized intangible asset and materially extend the useful life are capitalized. When assets are sold or otherwise written off due to asset impairment, the cost and the related accumulated amortization are removed from the accounts and any realized gain or loss is recognized at that time. Useful lives of intangible assets are periodically evaluated for reasonableness and the assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may no longer be recoverable.

Amortization is computed primarily on the straight-line method for financial statement purposes over the estimated useful life. Estimated useful lives will vary based on the nature of the intangible asset.

Fair Value of Financial Instruments

The Company adopted ASC 820, Fair Value Measurements and Disclosures, for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing US GAAP that requires the use of fair value measurements which establishes a framework for measuring fair value and expands disclosure about such fair value measurements.

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

	Level 1:	Observable inputs such as quoted market prices in active markets for identical assets or liabilities

	Level 2:	Observable market-based inputs or unobservable inputs that are corroborated by market data

	Level 3:	Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.

The carrying amounts reported in the balance sheet for cash, accounts payable, and accrued liabilities approximate their estimated fair market value based on the short-term maturity of this instrument.

In addition, FASB ASC 825-10-25, Fair Value Option was effective for January 1, 2008. ASC 825-10-25 expands opportunities to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value.

Fair value of financial instruments is as follows:

	March 31, 2014		December 31, 2013
	Fair Value	Input Level	Fair Value	Input Level

Securities available for sale	$ 27,500	Level 1	$ 50,000	Level 1
Derivative liability	$ 59,624	Level 3	$ 63,389	Level 3

The following table presents a reconciliation of the derivative liability measured at fair value on a recurring basis using significant unobservable input (Level 3) from December 31, 2013 to March 31, 2014:

		Conversion feature derivative liability
Balance December 31, 2013	$	63,389
Change in fair value		(3,765	)
Balance March 31, 2014	$	59,624

Loss Per Share of Common Stock

Basic net loss per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share ("EPS") include additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options and warrants. Common stock equivalents, totaling 8,490,171 and 6,397,000 at March 31, 2014 and 2013, respectively, were not included in the computation of diluted earnings per share in 2014 and 2013 on the consolidated statement of operations due to the fact that the Company reported a net loss in 2014 and 2013 and to do so would be anti-dilutive for that period.

Goodwill and Other Intangible Assets

In accordance with ASC 350-30-65 (formerly SFAS 142, Goodwill and Other Intangible Assets), the Company assesses the impairment of identifiable intangibles whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Intangible assets were comprised of website assets. Factors the Company considers to be important which could trigger an impairment review include the following:

Significant underperformance relative to expected historical or projected future operating results;

Significant changes in the manner of use of the acquired assets or the strategy for the overall business; and

Significant negative industry or economic trends.

When the Company determines that the carrying value of intangibles may not be recoverable based upon the existence of one or more of the above indicators of impairment and the carrying value of the asset cannot be recovered from projected undiscounted cash flows, the Company records an impairment charge. The Company measures any impairment based on a projected discounted cash flow method using a discount rate determined by management to be commensurate with the risk inherent in the current business model. Significant management judgment is required in determining whether an indicator of impairment exists and in projecting cash flows. The Company did not consider it necessary to record any impairment charges during the period ended March 31, 2014.

Stock-Based Compensation

Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the consolidated financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.

Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third parties, compensation expense is determined at the “measurement date.” The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company initially records compensation expense based on the fair value of the award at the reporting date.

Recent Accounting Pronouncements

There were updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to have a material impact on the Company’s financial position, results of operations or cash flows. We do not believe that the adoption of any recently issued accounting standards will have a material effect on our financial position and results of operations.

NOTE 3 - RELATED PARTY TRANSACTIONS

In 2011 the Company entered into a sub-lease with a company in which the Company’s CEO and his family are shareholders. The sublease is for approximately 4,500 square feet. The term of the sub-lease is from January 1, 2011 and ends at November 30, 2015. In January 2014 we increased the amount of space under this sublease from 4,500 square feet to 6,800 square feet. (see Note 5 for further details).

We entered into a consulting agreement with FA Corp, a consulting firm owned and controlled by Mr. Williams, our Chief Financial Officer, for providing SEC reporting, financial and bookkeeping related services by FA Corp at the rate of $100 per hour. The consulting agreement commenced on November 26, 2012 and shall continue unless terminated by either party by giving written notice to the other party. For the three months ended March 31, 2014 and 2013, FA Corp earned $39,751 and $43,755 for services rendered, of which $12,975 and $15,829 was outstanding and reflected in accounts payable as of March 31, 2014 and 2013.

NOTE 4 – INVESTMENT IN MARKETABLE SECURITIES

Securities available for sale at March 31, 2014 consisted of the following:

	Cost	Gross Unrealized Gains/(Losses)	Gross Realized Gains/(Losses)	Fair Value

Marketable Securities available for sale	$ 50,000	$ (22,500)	$ -	$ 27,500

On March 8, 2013, in connection with a strategic license agreement, the Company issued 147,692 shares of common stock, valued at $50,000, to the licensor and the licensor issued to the Company 2,500,000 shares of licensor’s common stock, valued at $50,000. The license gives us the right to sell a limited license for United States Patent Number 7,822,816 to business entities that license or purchase our Apps. Under the license, the Company is required to pay the licensor 12.5% of the gross amounts received from purchasers who acquire the limited license to use the patent.

These securities are publicly traded equity securities and are currently available for sale under Federal securities laws. The fair value of our available for sale marketable securities is determined based on quoted market prices on a quarterly basis. Unrealized gains or losses are recognized as an element of comprehensive income based on changes in the fair value of the security because those changes are determined to be temporary.

NOTE 5 - COMMITMENTS AND CONTINGENCIES

Lease

The Company was party to three non-cancelable lease agreements for office space through 2015. The first lease is a sub-lease for approximately 4,500 square feet of space located at 18475 Bandilier Circle, unit A, Fountain Valley, CA. In January 2014 we increased the amount of space under this sublease from 4,500 square feet to 6,800 square feet. The term of the sub-lease is from January 1, 2011 and ends on November 30, 2015. The second lease was for approximately 4,786 square feet and was located at 18350 Mt. Langley Street, Fountain Valley, CA. The term of this lease was September 1, 2011 through February 28, 2013. The third lease is for approximately 6,034 square feet of space located at 18475 Bandilier Circle, unit B, Fountain Valley, CA. The term of this lease is from May 1, 2012 and ends on November 30, 2015.

At March 31, 2014, aggregate future minimum payments under these leases is as follows:

2014	$	164,032
2015		153,098
Total	$	317,130

The Company subleased the 6,034 square feet of space located at 18475 Bandilier Circle, unit B, Fountain Valley, CA with its landlord’s approval from September 1, 2013 through November 30, 2015, with an annual base rent of $61,547.

The rents received from this sublease will be used to offset the corresponding rental expense. The total future minimum lease rental income under the rental lease agreement is as follows:

2014	$	46,160
2015		56,418
Total	$	102,578

Litigation

From time to time, the Company may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business. Litigation is, however, subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe would or could have, individually or in the aggregate, a material adverse effect on us.

NOTE 6 – LINE OF CREDIT

On January 17, 2013, the Company entered into a three-year, $500,000 secured revolving credit agreement (the “Line”). The Line is a revolving line of credit that allows the Company to repay principal amounts and re-borrow them at any time during the three-year term. The interest rate on borrowed funds is 10% per annum and the interest rate on undrawn funds is 2.0% per annum. Interest is due within 10 business days following the end of each calendar month. As of March 31, 2014, all amounts borrowed under the Line have been paid back. All borrowed funds from the Line are secured by a lien on all of the Company’s assets. Interest expense for the three months ended March 31, 2014 and 2013 was $2,022 and $2,638.

NOTE 7 – STOCKHOLDERS’ EQUITY

Preferred Stock

The authorized preferred stock of the Company consists of 10,000,000 shares of preferred stock at a par value of $0.001. As of March 31, 2014, the Company had no outstanding shares of preferred stock.

Common Stock

The authorized common stock of the Company consists of 500,000,000 shares of common stock with a par value of $0.001.

On February 21, 2013, the Company issued 200,000 shares of common stock at $0.50 per share for $100,000 of certain outstanding legal fees.

On March 8, 2013, in connection with a strategic license agreement that granted the Company the right to sell a limited license for United States Patent Number 7,822,816, the Company issued 147,692 shares of common stock, valued at $50,000, to the licensor and the licensor issued to the Company 2,500,000 shares of the licensor’s common stock, valued at $50,000.

On June 6, 2013, the Company issued 75,000 shares of common stock at $0.50 per share for $24,000 of certain outstanding marketing fees and $13,500 for a 4-month marketing services agreement from June to September 2013. The $13,500 expense for the shares issued for the 4-month marketing agreement was amortized over the four-month period beginning June 6, 2013.

On September 11, 2013, in connection with a strategic license agreement with a famous musician, the Company issued 725,000 shares of common stock, valued at $210,250, to the musician and his agents.

On September 30, 2013, the Company issued 33,207 shares of common stock for employee stock option exercises resulting in proceeds of $8,316.

On October 21, 2013, the Company issued 18,958 shares of common stock for an employee stock option exercise resulting in proceeds of $1,346.

On December 23, 2013, the Company issued 380,000 shares of common stock, valued at $95,000, for certain outstanding obligations.

On December 31, 2013, in connection with a strategic license agreement with a celebrity, the Company issued 5,000 shares of common stock, valued at $1,300, to the celebrity.

On December 31, 2013, the Company issued to an accredited investor 4,454,545 shares of common stock resulting in proceeds of $550,000.

On January 31, 2014, the Company issued 50,000 shares of common stock, valued at $15,000, to a consultant for business development services rendered.

On March 6, 2013, the Company issued 87,165 shares of common stock for employee stock option exercises resulting in proceeds of $6,102.

On March 21, 2014, the Company issued 1,000 shares of common stock for a stock option exercise resulting in proceeds of $250.

As of March 31, 2014, the Company has 50,159,876 shares of common stock issued and outstanding.

Hang With, Inc. Subsidiary Common Stock

The authorized common stock of Hang With, Inc. consists of 75,000,000 shares of common stock with a par value of $0.001.

Between January 10, 2013 and March 31, 2014, our Hang With, Inc. (“Hang With”) subsidiary raised an aggregate of $2,744,502 from the sale of 3,198,169 shares of Hang With common stock to accredited investors. The sales of the Hang With shares were effected as private placements intended to be exempt under Rule 506 of Regulation D and Regulation S. As of March 31, 2014, non-controlling shareholders own 24.23% of Hang With. In accordance with GAAP, the financial results of Hang With are consolidated in the Company’s financial statements, and the portion of net loss attributable the 24.23% non-controlling interest is disclosed as a separate line item in the Company’s unaudited financial statements included herein.

Warrants

The Company has warrants outstanding to purchase 3,000,000 shares of common stock at $0.30 per share as of March 31, 2014. The warrants are subject to full ratchet anti-dilution protection if the Company sells shares or share equivalents at less than the $0.30 exercise price. The warrants do not meet the conditions for equity classification and are required to be carried as a derivative liability, at fair value. Management estimates the fair value of the warrants on the inception date, and subsequently at each reporting period, using the Lattice option-pricing model, adjusted for dilution, because that technique embodies all assumptions (including volatility, expected terms, dilution and risk free rates) that are necessary to determine the fair value of freestanding warrants. This resulted in a derivative liability value of $59,624 at March 31, 2014. Significant inputs in calculating this valuation using the Lattice option-pricing model are as follows:

	March 31, 2014
Expected volatility	61.6%
Expected term	1.0 Year
Risk-free interest rate	0.13%
Expected dividend yield	0%

Share-Based Compensation and Options Issued to Consultants

2011 Equity Incentive Plan

The board of directors adopted the 2011 Equity Incentive Plan, as amended, (the “Plan”) of MEDL Mobile Holdings, Inc. (Nevada) that provided for the issuance of a maximum of 10,000,000 shares of common stock. As of March 31, 2014, there were options to purchase 5,490,171 shares outstanding under the Plan and approximately 3,896,000 shares remained available for future grant under the Plan.

The Company generally grants stock options to employees and directors at exercise prices equal to the fair market value of the Company's stock on the dates of grant. Stock options are typically granted throughout the year and generally vest over four years of service thereafter and expire ten years from the date of the award, unless otherwise specified. The Company recognizes compensation expense for the fair value of the stock options over the requisite service period for each stock option award.

Total share-based compensation expense included in the consolidated statements of operations for the three months ended March 31, 2014 and 2013 was $41,435 and $65,786, respectively. For the three months ended March 31, 2014, compensation expense included in selling, general and administration is $31,085. Compensation expense included in cost of goods sold is $10,350.

To estimate the value of an award, the Company uses the Black-Scholes option-pricing model. This model requires inputs such as expected life, expected volatility and risk-free interest rate. The forfeiture rate also impacts the amount of aggregate compensation. These inputs are subjective and generally require significant analysis and judgment to develop. While estimates of expected life, volatility and forfeiture rate are derived primarily from the Company’s historical data, the risk-free rate is based on the yield available on U.S. Treasury constant maturity rates with similar terms to the expected term of the stock option awards. The fair value of share-based awards was estimated using the Black-Scholes model with the following weighted-average assumptions during the three months ended March 31, 2014:

Assumptions:

	2014
Dividend yield		0.00
Risk-free interest rate		.13	%
Expected volatility		61.6	%
Expected life (in years)		10.00

Option activity for the three months ended March 31, 2014 was as follows:

	Options		Weighted Average Exercise Price ($)		Weighted Average Remaining Contractual Life (Yrs.)		Aggregate Intrinsic Value ($)



Options outstanding at December 31, 2013		5,728,400		0.29		7.96		$82,818
Granted		-		-		-		-
Exercised		(88,165)		0.07		-		-
Forfeited or cancelled		(150,064)		0.07		-		-
Options outstanding at March 31, 2014		5,490,171		0.28		7.62		$38,220
Options expected to vest in the future as of March 31, 2014		1,769,703		0.29		8.12		$18,620
Options exercisable at March 31, 2014		3,720,468		0.27		7.33		$19,600
Options vested, exercisable and options expected to vest at March 31, 2014		5,490,171		0.28		7.58		$38,220

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of our common stock as of March 31, 2014 for those awards that have an exercise price currently below the closing price.

Unvested share activity for the three months ended March 31, 2014 was as follows:

	Unvested		Weighted
	Number of		Average Grant
	Options		Fair Value
Unvested balance at December 31, 2013		2,137,974		0.19
Granted		-		-
Vested		(218,207)		0.19
Cancelled		(150,064)		0.23
Forfeited		-		-
Unvested balance at March 31, 2014		1,769,703		0.20

At March 31, 2014, there was $377,693 unrecognized share-based compensation expense related to unvested employee share options with a weighted average remaining recognition period of 2.05 years.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Forward Looking Statements

Some of the statements contained in this Form 10-Q that are not historical facts are "forward-looking statements" which can be identified by the use of terminology such as "estimates," "projects," "plans," "believes," "expects," "anticipates," "intends," or the negative or other variations, or by discussions of strategy that involve risks and uncertainties. We urge you to be cautious of the forward-looking statements, that such statements, which are contained in this Form 10-Q, reflect our current beliefs with respect to future events and involve known and unknown risks, uncertainties and other factors affecting our operations, market growth, services, products and licenses. No assurances can be given regarding the achievement of future results, as actual results may differ materially as a result of the risks we face, and actual events may differ from the assumptions underlying the statements that have been made regarding anticipated events.

All written forward-looking statements made in connection with this Form 10-Q that are attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements. Given the uncertainties that surround such statements, you are cautioned not to place undue reliance on such forward-looking statements.

In this section, unless the context indicates otherwise, all references herein to “MEDL,” “the Company,” “we,” “our” or “us” refer collectively to MEDL Mobile Holdings, Inc. and its wholly owned subsidiaries.

Organizational History

On June 24, 2011, we acquired MEDL Mobile, Inc., a California corporation (“MEDL”), which became our wholly owned subsidiary. In connection with this acquisition, we changed our name from Resume in Minutes, Inc. to MEDL Mobile Holdings, Inc., discontinued our former business, and succeeded to the software business of MEDL Mobile, Inc. as our primary line of business.

On February 28, 2012, we acquired Inedible Software, LLC (“Inedible”), a developer of mobile apps and related mobile app technologies whose principal asset was a customer list. While the acquisition of Inedible was structured as a purchase of an entity, we did not acquire any ongoing business operations and the purpose of the transaction was to acquire Inedible’s customer list as a conduit to Apple for future potential. As a result, Inedible became a wholly owned subsidiary of the Company. The results of operations of Inedible are included on a going forward basis from the date of acquisition, although Inedible is no longer actively engaged in any business activities.

On November 2, 2012, we formed Hang With, Inc. to focus on creating a live social mobile video platform. Hang With, Inc. has issued shares to third party investors to fund its operations and, as a result, it now operates as a standalone company with MEDL as its largest shareholder.

Current Business

We currently operate two related businesses. Through our MEDL Mobile, Inc. subsidiary, we have developed a proprietary system for developing mobile application software, or “Apps”. To date, we have architected, designed and developed a library of several hundred apps and related technologies designed predominately for iPhone, iTouch, iPad and Android Devices. MEDL and MEDL Apps have been featured on CNBC, BBC, ABC, CBS, NBC, CNN, in the pages and web pages of USA Today, Esquire, Billboard, Fast Company, The New York Times, The LA Times, The Chicago Tribune, The Orange County Register, The Washington Post and The Guardian; and by top sites such as Mashable, Macworld, Yahoo, Huff Post College, TNW and Gizmodo. Multiple MEDL Apps have reached #1 in their category on the Apple App Store. Through our Hang With, Inc. subsidiary, we operate our “Hang w/” live social mobile video platform that is available for download on iPhone and android phones via Apple App Store and the Google Apps Marketplace.

Our principal executive offices are located at 18475 Bandilier Circle, Fountain Valley, California 92708, and our current telephone number at that address is (714) 617-1991. We maintain a website at: www.medlmobile.com. Our annual reports, quarterly reports, current reports on Form 8-K and amendments to such reports filed or furnished pursuant to section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), and other information related to this company are available on our website as soon as we electronically file those documents with, or otherwise furnish them to, the Securities and Exchange Commission. Our Hang With, Inc. subsidiary also maintains a website at www.hangwith.com. Our Internet websites and the information contained therein, or connected thereto, are not and are not intended to be incorporated into this Annual Report on Form 10-K.

MEDL’s business today is primarily organized in two areas of opportunity:

MEDL Custom Development

Mission: To develop the cutting edge standard for mobile applications across platform, operating system and classification - as work for hire on behalf of third parties.

Hang With, Inc.

Mission: To allow the world to Hang w/ each other via live-streaming video and simultaneous chat - and in so doing, to be the recognized leader in live-streaming social media.

In November 2012, we incorporated Hang With, Inc. and transferred the Hang w/ assets to that entity. Hang With, Inc. has issued shares to third party investors to fund its operations and, as a result, it now operates as a standalone company with MEDL as its largest shareholder.

1. Custom Development

Our custom development arm develops Apps for customers that vary in size from small start-ups to large multinational corporations, in a diverse range of industries including retailing, fast food, air travel, medical devices, higher education and fashion. We are typically paid a fixed price for development of the App. Our customers cover the development costs and own the final work product while we retain ownership of the elements of the computer code.

MEDL believes it is known for high quality strategic mobile development, securing development and consulting contracts with companies such as: Hyundai, Disney, Experian, Goodwill Industries, UCLA, BBK Worldwide, Taco Bell, Iconix Brand Group, Monster.com, Emirates Airlines, Teleflora, Medtronic, Kaiser Permanente and About.com.

At the present time, we prepare for our customers, packages for sale in the Apple App Store and the Google Android Marketplace. This package includes App store copy, sample screen shots and SEO tags to improve discovery of the Apps in the App stores. We are familiar with the App stores’ requirements and our average approval time is 5-10 days. We also work with customers to develop a custom launch plan, or to augment their existing plans. We use tools including social network marketing, viral videos, bloggers, banner marketing, public relations and integration into our clients’ existing advertising and marketing strategies to further this launch plan. We also leverage our extensive marketing and advertising experience to work with advertising, media and PR agencies.

In addition, we provide maintenance, reporting and upgrades and also integrate third party vendors into an App to provide a complete suite of user analytics, which allows customers to track downloads, total number of App user sessions, time spent per session, features of the App accessed and advertising click-through.

Our custom development team is well versed in working closely with in-house IT departments and other third party technology providers in order to deliver complex back-end integrations that result in simple-to-use front end user experiences.

2. Hang With, Inc.

The patent-pending “Hang w/” App allows live real-time video to be sent from one phone to many. The goal of the platform is twofold: 1) to become the premiere social media network for people around the globe to connect, communicate and share experiences via live streaming broadcasts; and 2) to enable celebrities and public figures to easily monetize their fan bases.

The “Hang w/” live social mobile video platform was approved for release by Apple on March 20, 2013 and is available for download on the Apple App Store. The “Hang w/” live social mobile video platform was approved for release by Google on July 9, 2013 and is available for download on android phones via the Google Apps Marketplace.

In January of 2014, the Hang w/ App passed 1,000,000 downloads.

By streaming live video directly from the phone of a celebrity (“Celeb”) to the phone of a fan, we believe Hang w/ allows a Celeb to create a real-time genuine relationship - and a built-in advertising model has the ability to generate revenue. More than just a celebrity platform, Hang w/ allows anyone with an iPhone, iPad or Android device to broadcast live to friends, family or even millions of viewers.

Broadcasts can be viewed live in the app, on Facebook, on the web, and via links shared on Twitter. Archived content can be viewed in the App, shared via social media, and distributed to content distribution partners. The App is free to use and is available on both iOS and Android.

Ad serving technology is fully embedded. Every broadcast can begin with a short video or image-based ad unit and can end with a clickable rich media ad unit.

An in-app “digital coin” system has been embedded and can be implemented to generate additional revenue through the purchase of digital goods.

Our goal is to generate revenues from our “Hang w/” live social mobile video platform through the sale of short video advertisements that will be played before and after each live broadcast. We have not yet initiated this revenues model and are currently permitting ad-free broadcasting over this platform.

Application features include:

Live streaming broadcast from one to many with variable bit rate broadcasting and simultaneous chat

Push Notification powered by Parse.

Integrated advertising platform capable of running video and rich media

Integrated “Coin” monetization platform

24 hour moderation platform with user protections

#hashtag content tagging and related channels

Broadcasts can be scheduled or spontaneous.

Viewers chat with the broadcaster and with each other

Broadcasters can choose to broadcast in 3, 6 or 9 minute units

60 minute broadcasts are available for verified celebrity accounts

Broadcasters can choose to make archived broadcasts public or private

Broadcasts stream live and on-demand to web and Facebook.

Hang w/ passed one million downloads in only nine months. We believe growth has been driven in part by celebrity social media activity, which has been shown to create spikes in downloads and activity.

The Hang w/ app provides multiple opportunities for users to share activity and content to social media - and allows users to invite their Facebook friends to download the application - all of which we believe drives awareness and growth.

Industry Background and Trends

Apps are designed to help a user perform specific tasks and are generally downloaded by users from an App store directly onto their smartphone or tablet. Apps have become increasingly popular which is evidenced by the following statistics published by the noted sources:

56% of American adults are now smartphone owners. Pew Internet & American Life Project, 2013

Apple has sold 500 million iPhones since its launch in 2007. - Forbes 2014

Up from 19.4% in 2013, mobile search will comprise an estimated 26.7% of the [Google’s] total ad revenues this year. – eMarketer 2014

Mobile app use [grew] 115% in 2013 – Flurry 2014

92 of the top 100 best global brands ranked by Interbrand were present in the Apple App Store, while 75 of the brands were present on Google Play. – Distimo 2013

On a typical day in November 2013, Distimo estimates the global revenues for the top 200 grossing apps at over $18M in the Apple App Store and over $12M for Google Play. In November 2012, these estimates were at $15M for the Apple App Store and only at $3.5M for Google Play. – Distimo 2013

Consumer spend on music apps increased 77% in 2013. – App Annie 2014

Apps are a now vital marketing tool for Hollywood movies, and provide additional revenue. In 2012, seven of the top 10 grossing movies had associated tie-in apps. In 2013, all of the top 10 grossing movie titles had tie-in apps. – App Annie, 2014

Nearly all Generation Y consumers owned a mobile phone of some kind and 72% owned smartphones. - Forrester, 2013

1.2 billion people worldwide were using mobile apps at the end of 2012. This is forecast to grow at a 29.8 percent each year, to reach 4.4 billion users by the end of 2017. – Portio Research 2013

In Q1 2013, there were 13.4 billion app downloads, up 11 percent from Q4 2012, creating revenue of US$2.2 billion. – Canalys 2013

By 2017, 25 percent of enterprises will have an enterprise app store – Gartner 2013

Global mobile traffic now accounts for 15% of all Internet traffic. – Internet Trends 2013

85% of people prefer mobile apps to mobile websites - WebDAM 2014

40% of CNN’s website traffic came from mobile in 2013 – CNN 2014

En route to the store, 70 percent of smartphone shoppers use a store locator to plan their shopping trip – Nielsen 2013

Mobile coupons are redeemed 10 times as often as traditional coupons. – eMarketer 2013

Results of Operations

Three Months Ended March 31, 2014 Compared to the Three Months Ended March 31, 2013 (unaudited)

The following table presents our results of operations for the three months ended March 31, 2014 compared to the three months ended March 31, 2013.

	Three Months ended March 31,
	2014			2013			$ Change			% Change
Revenues	$	623,291		$	473,081		$	150,210			32	%
Cost of goods sold		236,650			227,552			9,098			4	%
Gross profit		386,641			245,529			141,112			57	%
Expenses:
Selling, general and administrative		987,072			1,030,792			(43,720	)		-4	%
Net loss before other income (expense)		(600,431	)		(785,263	)		(184,832	)		-24	%
Other income (expense):
Change in fair value of warrants		3,765			(51,337	)		55,102			-107	%
Interest expense		(2,022	)		(2,638	)		(616	)		100	%
Total other income (expense)		1,743			(53,975	)		55,718			-103	%
Net loss before provision for income taxes		(598,688	)		(839,238	)		(240,550	)		-29	%
Provision for income taxes		—			—			—			0	%
Net loss		(598,688	)		(839,238	)		(240,550	)		-29	%
Less: Net loss attributable to non-controlling interest		138,197			30,147			108,050			100	%
Net loss attributable to MEDL Mobile Holdings, Inc.	$	(460,491	)	$	(809,091	)	$	(348,600	)		-43	%

Revenues

Revenues primarily consisted of fees we received for developing custom Apps for third parties. Revenues for the three months ended March 31, 2014 increased to $623,291 as compared to $473,081 for the three months ended March 31, 2013, an increase of $150,210 or 32%. The increase is primarily attributable to an increase in the development of customized mobile applications for third parties during the three months ended March 31, 2014 as compared to the three months ended March 31, 2013 due to the majority of our company focusing on launching Hang With during the period ended March 31, 2013 but in 2014 we have a team dedicated to the Hang With application and a separate team dedicated to the development of customized mobile applications for third parties. This allowed our custom App development division to achieve profitability in the quarter ended March 31, 2014.

Based on the unpredictability of market and customer demand for our services, we cannot accurately predict revenue trends on a quarter-to-quarter basis.

Cost of Goods Sold

Cost of goods sold consists primarily of the cost of our employees and the cost of our contractors engaged in developing Apps for our customers. Cost of goods sold for the three months ended March 31, 2014 increased to $236,650 as compared to $227,552 for the three months ended March 31, 2013, an increase of $9,098 or 4%. Cost of goods sold increased only 4% even though revenues increased 32% primarily due to the elimination of legacy applications that we created in previous years that were causing us to incur additional programming costs but were not generating additional revenues. In the period ended March 31, 2014, the MEDL programmers dedicated to development of customized mobile applications mainly worked on creating new applications for third parties.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended March 31, 2014 decreased to $987,072 as compared to 1,030,792 for the three months ended March 31, 2014, a decrease of $43,720 or 4%. The decrease is primarily attributable to a $223,325 decrease in payroll and contract labor costs and a $95,445 reduction in general expenses due to our focused effort to reduce costs and the elimination of legacy applications that required additional personnel in the period ended March 31, 2013. In addition, better management of legal and other professional fees resulted in a $36,861 decrease in legal, accounting and other professional fees. These reductions were offset by an increase of $311,822 in expenses for our Hang With, Inc. subsidiary.

Other Income/Expense

Other income for the three months ended March 31, 2014 was $1,743 is comprised of a $3,765 decrease in the recorded fair value of warrants issued in a private placement in March 2012 less $2,022 of interest expense on our $500,000 line of credit. Other expense of $53,975 for the three months ended March 31, 2013 is comprised of a $51,337 increase in the recorded fair value of warrants issued in a private placement in March 2012 plus $2,638 of interest expense on our $500,000 line of credit.

Net Loss

Net loss attributable to MEDL Mobile Holdings, Inc. for the three months ended March 31, 2014 decreased $348,600 or 43% as compared to the three months ended March 31, 2013. The decrease in net loss was primarily the result of the majority of our custom App development division achieving profitability in the quarter ended March 31, 2014, our focused effort to reduce costs and the elimination of legacy applications that required additional personnel but did not generate additional revenues. The majority of our company focused on launching Hang With during the period ended March 31, 2013 but in 2014 we have a team dedicated to the Hang With application and a separate team dedicated to the development of customized mobile applications for third parties

Liquidity and Capital Resources

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, the availability of credit facilities, levels of accounts receivable and accounts payable and capital expenditures.

To date we have financed our operations through internally generated revenue from operations, the sale of equity securities, borrowings under a line of credit and shareholder loans.

As of March 31, 2014, we had cash of $147,800 and working capital of $134,478. As of the date of this Quarterly Report, our Hang With subsidiary raised an aggregate of $2,744,502 from the sale of shares of Hang With common stock to accredited investors. These funds are intended to be used to fund Hang With’s product development and commercialization efforts. Since we are compensated by Hang With for providing services, a portion of these funds have been paid to the Company and used by the Company to support this Company’s liquidity needs. In accordance with GAAP, Hang With’s cash is consolidated with the Company’s cash in the Company’s consolidated financial statements included herein.

Net cash used in operating activities for the three months ended March 31, 2014 was $745,874 compared to net cash used in operating activities of $500,698 for the three months ended March 31, 2013. The increase in net cash used in operating activities was primarily attributable to the fluctuations in accounts receivable, offset by various other fluctuations. Net cash used in investing activities for the three months ended March 31, 2014 was $0 as compared to $1,377 for the three months ended March 31, 2013. Net cash used in investing activities during the 2013 period resulted from the purchase of computer equipment. No such purchases were made during the 2014 period. Net cash provided by financing activities for the three months ended March 31, 2014 was $6,352 as compared to net cash provided by financing activities of $718,000 for the three months ended March 31, 2013. Net cash provided by financing activities during the 2014 period consists of proceeds received from the exercise of stock options. Net cash provided by financing activities for the 2013 period was the result of $193,000 of proceeds from a line of credit and $525,000 raised by Hang With.

On January 17, 2013, we entered into a three-year, $500,000 secured revolving credit agreement (the “Line”) with an investment fund. The Line is a revolving line of credit that allows us to repay principal amounts and re-borrow them at any time during the three-year term. The interest rate on borrowed funds is 10% per annum and the interest rate on undrawn funds is 2.0% per annum. Interest is due within 10 business days following the end of each calendar month. All borrowed funds from the Line are secured by all of our assets. Although we have, from time to time, borrowed funds under the Line, we had fully repaid all such borrowings as of March 31, 2014.

On December 31, 2013, we completed a sale to one (1) investor pursuant to a Securities Purchase Agreement of 2,000,000 shares of the Company’s common stock at a price of $0.275 per share (“Financing”). On December 31, 2013, the Company and the investor also entered into an Amendment and Consent Agreement to amend certain terms of the March 28, 2012 Securities Purchase Agreement and Warrant agreements to, among other things, obtain consent for the Financing and eliminate certain restrictions placed on the Company. In connection with the Amendment and Consent Agreement, the investor agreed to a warrant reset price of $0.30, instead of a warrant reset price of $.0275 that would have been required due to the Financing. Also in connection with the Amendment and Consent Agreement and the Financing, the Company issued the investor 2,454,545 shares of the Company’s common stock.

We do not have any material commitments for capital expenditures during the next twelve months. Although we believe our net revenues and proceeds from the above described Line of Credit are sufficient to fund our current operating expenses, we may seek to raise additional funds in the future particularly if we are unable to generate positive cash flow as a result of our operations or require additional capital to expand our operations. Therefore our future operations may be dependent on our ability to secure additional financing. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the trading price of our common stock and a downturn in the U.S. equity and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. The inability to obtain additional capital may restrict our ability to grow and may reduce our ability to continue to conduct business operations. If we are unable to obtain additional financing, we may have to curtail our marketing and development plans and possibly cease our operations.

Critical Accounting Policies

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts in our consolidated financial statements and related notes. Our significant accounting policies are described in Note 1 to our consolidated financial statements included in our Annual Report dated December 31, 2013. We have identified below our critical accounting policies and estimates that we believe require the greatest amount of judgment. These estimates and judgments have a significant impact on our consolidated financial statements. Actual results could differ materially from those estimates. The accounting policies that reflect our more significant estimates and judgments and that we believe are the most critical to fully understand and evaluate our reported financial results include the following:

Revenue Recognition

Securities Available for Sale

Intangible Assets

Fair Value of Financial Instruments

Goodwill and Other Intangible Assets

Stock-Based Compensation

Revenue Recognition

the customer can be expected to satisfy its obligations under the contract;

the Company can be expected to perform its contractual obligations; and

reliable estimates of progress towards completion can be made.

understanding the client's business situation and environment, including their competitive landscape;

researching and establishing the goals of the App;

understanding and researching the target and potential App use cases;

developing a monetization strategy;

determining functionality and articulating the functionality through a storyboard and functional specification document; and

determining the resources and timeline needed to complete the final work product.

Securities Available for Sale

Intangible Assets

Fair Value of Financial Instruments

	Level 1:	Observable inputs such as quoted market prices in active markets for identical assets or liabilities

	Level 2:	Observable market-based inputs or unobservable inputs that are corroborated by market data

	Level 3:	Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.

Fair value of financial instruments are as follows:

	March 31, 2014		December 31, 2013
	Fair Value	Input Level	Fair Value	Input Level

Securities available for sale	$ 27,500	Level 1	$ 50,000	Level 1
Derivative liability	$ 59,624	Level 3	$ 63,389	Level 3

	Conversion feature derivative liability
Balance December 31, 2013	$	63,389
Change in fair value		(3,765	)
Balance March 31, 2014	$	59,624

Goodwill and Other Intangible Assets

Significant underperformance relative to expected historical or projected future operating results;

Significant changes in the manner of use of the acquired assets or the strategy for the overall business; and

Significant negative industry or economic trends.

Stock-Based Compensation

Off Balance Sheet Arrangements

We do not engage in any activities involving variable interest entities or off-balance sheet arrangements.

Recent Accounting Pronouncements

We do not believe that the adoption of any recently issued accounting standards will have a material effect on our financial position and results of operations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 4. CONTROLS AND PROCEDURES.

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e)) under the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time 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 its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Pursuant to Rule 13a-15(b) under the Exchange Act, the Company carried out an evaluation with the participation of the Company's management, including the Company's Chief Executive Officer ("CEO") and the Company's Chief Financial Officer ("CFO"), of the effectiveness of the Company's disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the quarter ended March 31, 2014. Based upon that evaluation, the Company's CEO and CFO concluded that the Company's disclosure controls and procedures were not effective as of March 31, 2014 due to the Company’s limited internal resources and lack of ability to have multiple levels of transaction review.

Management is in the process of determining how best to change our current system and implement a more effective system to insure that information required to be disclosed in this quarterly report on Form 10-Q has been recorded, processed, summarized and reported accurately. Our management acknowledges the existence of this issue, and intends to developed procedures to address them to the extent possible given limitations in financial and manpower resources. While management is working on a plan, no assurance can be made at this point that the implementation of such controls and procedures will be completed in a timely manner or that they will be adequate once implemented.

CHANGES IN INTERNAL CONTROLS

There were no changes in the Company's internal control over financial reporting that occurred during the Company’s fiscal quarter ended March 31, 2014, that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II--OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business. Litigation is, however, subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe would or could have, individually or in the aggregate, a material adverse effect on us.

ITEM 1A. RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

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

On January 31, 2014, the company issued 50,000 shares of common stock, valued at $15,000, to a consultant for business development services. The foregoing shares were issued in reliance upon an exemption from the registration requirements pursuant to Section 4(2) of the Securities Act of 1933, as amended.

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4- MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5 - OTHER INFORMATION

None.

ITEM 6 - EXHIBITS.

31.1		Section 302 Certification of Principal Executive Officer
31.2		Section 302 Certification of Principal Financial Officer
32.1*		Section 906 Certification of Principal Executive Officer
32.2*		Section 906 Certification of Principal Financial Officer
101**		The following materials from MEDL Mobile Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2014 are formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Cash Flow, and (iv) Notes to Consolidated Financial Statements.

In accordance with Item 601of Regulation S-K, this Exhibit is hereby furnished to the SEC as an accompanying document and is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933.

In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

MEDL Mobile Holdings, Inc.

May 13, 2014	By: /s/ Andrew Maltin
	Andrew Maltin Chief Executive Officer (Principal Executive Officer)
May 13, 2014	By: /s/ Murray Williams
	Murray Williams Chief Financial Officer (Principal Financial and Accounting Officer)

WITH, INC. - FORM 10-Q - May 14, 2014

Attached files

WITH, INC. Reports