DMH INTERNATIONAL, INC. - FORM 10-Q

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EXCEL - IDEA: XBRL DOCUMENT - DMH INTERNATIONAL, INC.	Financial_Report.xls
EX-31.1 - DMH INTERNATIONAL, INC.	exh31_1.htm
EX-32.1 - DMH INTERNATIONAL, INC.	exh32_1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended September 30, 2014

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from to

Commission file numbers 000-32141

DMH INTERNATIONAL, INC.

(Name of registrant as specified in its charter)


Nevada		27-2689205
(State or Other Jurisdiction of Organization)		(IRS Employer Identification Number)


12502 West Atlantic Blvd, Coral Springs, Florida		33071
(Address of principal executive offices)		(Zip Code)

(954) 509-0911

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the 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 ¨

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

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


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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The number of shares outstanding of the registrant's common stock, par value $0.001 per share, as of November 19, 2014 there were 329,843,166 shares of common stock.

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements		3

Condensed Consolidated Balance Sheets as of September 30, 2014 (Unaudited) and December 31, 2013		3

Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2014 and 2013 (Unaudited)		4

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2014 and 2013 (Unaudited)		5

Notes to Condensed Consolidated Financial Statements (Unaudited)		6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		16

Item 3. Quantitative and Qualitative Disclosures about Market Risk		24

Item 4. Controls and Procedures		25

PART II. OTHER INFORMATION		25

Item 1. Legal Proceedings		25

Item 1A. Risk Factors		25

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		25

Item 3.Defaults Upon Senior Securities		26

Item 4. Mine Safety Disclosure		26

Item 5. Other Information		26

Item 6. Exhibits		26

DMH INTERNATIONAL, INC.

Condensed Consolidated Balance Sheets


	September 30, 2014	December 31, 2013
	$	$
	(Unaudited)
ASSETS

Cash	41,107	-
Total current assets	41,107	-
Goodwill	1,610,353	-
Total Assets	1,651,460	-

LIABILITIES

Current Liabilities
Accounts payable and accrued liabilities	239,542	224,018
Accounts payable – related party	266,522	221,522
Due to related parties	483,604	532,739
Convertible debt-net of discount of $97,326 and $0, respectively	266,674	-
Derivative liability	213,655	-
Total Liabilities	1,469,997	978,279

STOCKHOLDERS’ EQUITY (DEFICIT)
Preferred stock
Authorized: 10,000,000 preferred shares with a par value of $0.001 per share; Issued and outstanding: nil preferred shares	-	-
Common stock	323,429	271,500
Authorized: 450,000,000 common shares with a par value of $0.001 per share Issued and outstanding: 323,428,451 and 271,500,000 common shares at September 30, 2014 and December 31, 2013, respectively.
Preferred stock issuable	1,600,000	-
Common stock issuable	35,000	-
Additional paid-in capital	1,292,929	870,852
Deficit accumulated	(3,069,895)	(2,120,631)
Total Stockholders’ Equity (Deficit)	181,463	(978,279)
Total Liabilities and Stockholders’ Equity (Deficit)	1,651,460	-

(The accompanying notes are an integral part of these unaudited financial statements)

DMH INTERNATIONAL, INC.

Condensed Consolidated Statements of Operations

(Unaudited)


	For the Three Months Ended		For the Nine Months Ended
	September 30,		September 30,
	2014	2013	2014	2013
	$	$	$	$

Revenues	-	-	-	-
Operating Expenses
General and administrative	13,289	5,660	24,503	19,701
Management fees	15,000	15,000	45,000	45,000
Professional fees	212,135	149,650	615,285	603,620
Research and development	65,447	-	65,447	-
Total Operating Expenses	305,871	170,310	750,235	668,321
Other Expenses
Interest expense	4,555	-	4,694	-
Amortization of debt discount	76,029	-	111,271	-
Change in fair value of derivatives	(9,362)	-	39,215	-
Imputed interest	14,777	14,109	43,849	42,495
Total Other Expenses	85,999	14,109	199,029	42,495
Net Loss	(391,870)	(184,419)	(949,264)	(710,816)
Net Loss per Share – Basic and Diluted	(0.00)	(0.00)	(0.00)	(0.00)
Weighted Average Shares Outstanding – Basic and Diluted	301,406,397	212,500,000	290,309,115	188,179,487

(The accompanying notes are an integral part of these unaudited financial statements)

DMH INTERNATIONAL, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	For the nine months ended September 30,
	2014	2013
	$	$
Operating Activities
Net loss for the period	(949,264)	(710,816)
Adjustments to reconcile net loss to net cash used in operating activities:
Imputed interest	43,849	42,495
Amortization of debt discount	111,271	-
Change in fair value of derivatives	39,215	-
Stock issued for services	320,000	372,600
Changes in operating assets and liabilities:
Accounts Payable – Related Party	45,000	45,000
Accounts payable and Accrued liabilities	15,524	35,969
Net Cash Used in Operating Activities	(374,405)	(214,752)
Investing Activities
Cash acquired in merger	11,947	-
Advance paid in connection with merger	(20,000)	-
Net Cash Used in Investing Activities	(8,053)	-
Financing Activities
Due to related parties – borrowings	12,865	25,100
Due to related parties – repayments	(64,300)	(122,004)
Proceeds from loan	390,000	-
Proceeds from common stock subscribed	85,000	315,000
Net Cash Provided By Financing Activities	423,565	218,096
Increase in Cash	41,107	3,344
Cash – Beginning of Period	-	64
Cash – End of Period	41,107	3,408
Non-cash financing activities:
Common stocks issued for debt conversions	60,157	-
Recognition of derivative liability	208,597	-
Effect of reverse merger	-	-

(The accompanying notes are an integral part of these unaudited financial statements)

DMH INTERNATIONAL, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Description of Business and Reverse Acquisition

a) Description of Business

DMH International, Inc. (the “Company”) was incorporated in the state of Florida on March 26, 2010.

b) Going Concern

These financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. During the nine months ended September 30, 2014, the Company has a working capital deficit of $1,428,890 and accumulated deficit of $3,069,895. The continuation of the Company as a going concern is dependent upon the continued financial support from its management, and its ability to identify future investment opportunities and obtain the necessary debt or equity financing, and generating profitable operations from the Company’s future operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

c) Reverse Acquisition

On December 11, 2012, the Company entered into a share exchange agreement with DMH International, Inc. (“DMHI”), a public shell company. Pursuant to the agreement, DMHI acquired all of the outstanding shares of common stock of the Company (100 common shares) by issuing 125,000,000 common shares, comprised of 100,000,000 common shares from the President and Director of the Company and 25,000,000 newly issued common shares. Furthermore, the President and Director of DMHI cancelled 100,000,000 common shares as part of the share exchange agreement. As a result of the share exchange, the former shareholders of the Company controlled approximately 78% of the issued and outstanding common shares of DMHI resulting in a change in control. The transaction was accounted for as a reverse recapitalization transaction, as DMHI qualifies as a non-operating public shell company given the fact that the Company held nominal net monetary assets, consisting of only cash at the time of merger transaction. As Touch Medical Solutions, Inc. is deemed to be the purchaser for accounting purposes under recapitalization accounting, the equity of the Company is presented as the equity of the combined company and the capital stock account of the Company is adjusted to reflect the part value of the outstanding and issued common stock of the legal acquirer (DMHI) after giving effect to the number of shares issued in the share exchange agreement. Shares retained by DMHI are reflected as an issuance as of the acquisition date for the historical amount of the net assets of the acquired entity, which in this case is zero.

d) Merger

Effective July 22, 2014, the Company acquired all of the outstanding shares of Virtual Physician’s Network through issuance of 10,000,000 shares of the Company’s convertible preferred stock. Each share of our preferred stock has the voting rights of 20 shares of our common stock. Virtual Physician's Network was merged into the Company and became the Company’s wholly owned subsidiary. As of September 30, 2014, these shares have not been issued due to administrative delay. The 10,000,000 shares of convertible preferred stocks were accrued in preferred stocks issuable with a fair value of $1,600,000. Each share of convertible preferred stock was valued at 20 times of closing price of common stock price of $0.008 on the date of merger.

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The unaudited financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars. All the intercompany accounts and transactions have been eliminated. The Company’s fiscal year end is December 31.

DMH INTERNATIONAL, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

2. Summary of Significant Accounting Policies (continued)

Use of Estimates

The preparation of financial statements in conformity with US 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. The Company regularly evaluates estimates and assumptions related to the useful life and valuation of long-lived assets, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Interim Financial Statements

These interim financial statements have been prepared on the same basis as the annual financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period.

Cash and cash equivalents

The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents. As at September 30, 2014 and December 31, 2013, the Company had no cash equivalents.

Property and Equipment

Property and equipment is comprised of computer equipment and is recorded at cost. The Company amortizes the cost of equipment on a straight-line basis over their estimated useful lives of three years. The Company reviews all property and equipment for impairment annually.

Goodwill

The Company evaluates the carrying value of goodwill during the fourth quarter of each year and between annual evaluations if events occur or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. Such circumstances could include, but are not limited to (1) a significant adverse change in legal factors or in business climate, (2) unanticipated competition, or (3) an adverse action or assessment by a regulator. When evaluating whether goodwill is impaired, the Company compares the fair value of the reporting unit to which the goodwill is assigned to the reporting unit's carrying amount, including goodwill. The fair value of the reporting unit is estimated using a combination of the income, or discounted cash flows, approach and the market approach, which utilizes comparable companies' data. If the carrying amount of a reporting unit exceeds its fair value, then the amount of the impairment loss must be measured. The impairment loss would be calculated by comparing the implied fair value of reporting unit goodwill to its carrying amount. In calculating the implied fair value of reporting unit goodwill, the fair value of the reporting unit is allocated to all of the other assets and liabilities of that unit based on their fair values. The excess of the fair value of a reporting unit over the amount assigned to its other assets and liabilities is the implied fair value of goodwill. An impairment loss would be recognized when the carrying amount of goodwill exceeds its implied fair value.

Revenue Recognition

Revenue will be recognized only when the price is fixed and determinable, persuasive evidence of an arrangement exists, the service has been provided, and collectability is assured. The Company is not exposed to any credit risks as amounts are prepaid prior to performance of services.

DMH INTERNATIONAL, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

2. Summary of Significant Accounting Policies (continued)

Basic and Diluted Net Loss per Share

The Company computes net loss per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive. As of September 30, 2014 and 2013, the Company has 236,727,869 and 0 shares convertible under note agreement that are anti-dilutive and not included in diluted loss per share.

Financial Instruments

The Company adopted the FASB standard related to fair value measurement at inception. The standard defines fair value, establishes a framework for measuring fair value and expands disclosure of fair value measurements. The standard applies under other accounting pronouncements that require or permit fair value measurements and, accordingly, does not require any new fair value measurements. The standard clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The recorded values of long-term debt approximate their fair values, as interest approximates market rates. As a basis for considering such assumptions, the standard established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows.

Level 1. Observable inputs such as quoted prices in active markets;

Level 2. Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and

Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The Company’s financial instruments are cash, accounts payable, accrued liabilities and amounts due to related parties. The recorded values of cash, accounts payable, accrued liabilities and amounts due to related parties approximate their fair values based on their short-term nature.

The following table presents assets and liabilities that were measured and recognized at fair value as of September 30, 2014 and December 31, 2013 on a recurring basis:


		Fair Value Measurements at September 30, 2014
Description		Level 1		Level 2		Level 3		Total Realized Loss
Derivative Liability	$	-	$	-	$	213,655	$	-
Totals	$	-	$	-	$	213,655	$	-


		Fair Value Measurements at December 31, 2013
Description		Level 1		Level 2		Level 3		Total Realized Loss
Derivative Liability	$	-	$	-	$	-	$	-
Totals	$	-	$	-	$	-	$	-

DMH INTERNATIONAL, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

2. Summary of Significant Accounting Policies (continued)

Income Taxes

Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted ASC 740 “Accounting for Income Taxes” as of its inception. Pursuant to ASC 740, the Company is required to compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in this financial statement because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.

Recent Accounting Pronouncements

In June 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-10, “Development Stage Entities”. The amendments in this update remove the definition of a development stage entity from the Master Glossary of the ASC thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. The amendments in this update are applied retrospectively. The early adoption of ASU 2014-10 removed the development stage entity financial reporting requirements from the Company.

In June 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-12, Compensation – Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. The new guidance requires that share-based compensation that require a specific performance target to be achieved in order for employees to become eligible to vest in the awards and that could be achieved after an employee completes the requisite service period be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation costs should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. This new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2015. Early adoption is permitted. Entities may apply the amendments in this Update either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. The adoption of ASU 2014-12 is not expected to have a material impact on our financial position or results of operations.

In June 2014, the FASB issued ASU No. 2014-10: Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation , to improve financial reporting by reducing the cost and complexity associated with the incremental reporting requirements of development stage entities. The amendments in this update remove all incremental financial reporting requirements from U.S. GAAP for development stage entities, thereby improving financial reporting by eliminating the cost and complexity associated with providing that information. The amendments in this Update also eliminate an exception provided to development stage entities in Topic 810, Consolidation, for determining whether an entity is a variable interest entity on the basis of the amount of investment equity that is at risk. The amendments to eliminate that exception simplify U.S. GAAP by reducing avoidable complexity in existing accounting literature and improve the relevance of information provided to financial statement users by requiring the application of the same consolidation guidance by all reporting entities. The elimination of the exception may change the consolidation analysis, consolidation decision, and disclosure requirements for a reporting entity that has an interest in an entity in the development stage. The amendments related to the elimination of inception-to-date information and the other remaining disclosure requirements of Topic 915 should be applied retrospectively except for the clarification to Topic 275, which shall be applied prospectively. For public companies, those amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. Early adoption is permitted. The adoption of ASU 2014-10 is not expected to have a material impact on our financial position or results of operations.

DMH INTERNATIONAL, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

2. Summary of Significant Accounting Policies (continued)

In July 2013, FASB issued ASU No. 2013-11, "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists." The provisions of ASU No. 2013-11 require an entity to present an unrecognized tax benefit, or portion thereof, in the statement of financial position as a reduction to a deferred tax asset for a net operating loss carryforward or a tax credit carryforward, with certain exceptions related to availability. ASU No. 2013-11 is effective for interim and annual reporting periods beginning after December 15, 2013. The adoption of ASU No. 2013-11 is not expected to have a material impact on the Company's Consolidated Financial Statements.

In February 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, to improve the transparency of reporting these reclassifications. Other comprehensive income includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income into net income. The amendments in the ASU do not change the current requirements for reporting net income or other comprehensive income in financial statements. All of the information that this ASU requires already is required to be disclosed elsewhere in the financial statements under U.S. GAAP. The new amendments will require an organization to:

Present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income - but only if the item reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period; and

Cross-reference to other disclosures currently required under U.S. GAAP for other reclassification items (that are not required under U.S. GAAP) to be reclassified directly to net income in their entirety in the same reporting period. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is initially transferred to a balance sheet account (e.g., inventory for pension-related amounts) instead of directly to income or expense.

The amendments apply to all public and private companies that report items of other comprehensive income. Public companies are required to comply with these amendments for all reporting periods (interim and annual). The amendments are effective for reporting periods beginning after December 15, 2012, for public companies. Early adoption is permitted. The adoption of ASU No. 2013-02 is not expected to have a material impact on our financial position or results of operations.

In January 2013, the FASB issued ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which clarifies which instruments and transactions are subject to the offsetting disclosure requirements originally established by ASU 2011-11. The new ASU addresses preparer concerns that the scope of the disclosure requirements under ASU 2011-11 was overly broad and imposed unintended costs that were not commensurate with estimated benefits to financial statement users. In choosing to narrow the scope of the offsetting disclosures, the Board determined that it could make them more operable and cost effective for preparers while still giving financial statement users sufficient information to analyze the most significant presentation differences between financial statements prepared in accordance with U.S. GAAP and those prepared under IFRSs. Like ASU 2011-11, the amendments in this update will be effective for fiscal periods beginning on, or after January 1, 2013. The adoption of ASU 2013-01 is not expected to have a material impact on our financial position or results of operations.

3. Related Party Transactions

As of September 30, 2014 and December 31, 2013, the Company owes $89,216 to the CFO of the Company. The amounts owing are unsecured, non-interest bearing, and due on demand. Imputed interest at 8% has been expensed and recorded as additional paid-in capital of $5,338 and $5,859 for the nine months ended September 30, 2014 and 2013, respectively. As of September 30, 2014 and December 31, 2013, $165,000 and $120,000 included in accounts payable is the management fees owed to CFO, respectively. At September 30, 2014 and December 31, 2013, $101,522 included in accounts payable and accrued liabilities is owed to a company formerly controlled by the CFO of the Company. These amounts owing are unsecured, non-interest bearing, and due on demand. Imputed interest at 8% has been expensed and recorded as additional paid-in capital of $14,159 and $10,443 for the nine months ended September 30, 2014 and 2013, respectively.

As of September 30, 2014 and December 31, 2013, the Company owes $392,088 and $443,523, respectively to the CEO and companies controlled by him. The amounts owing are unsecured, non-interest bearing, and due on demand. The amount owing has an imputed interest at 8%. Imputed interest at 8% has been expensed and recorded as additional paid-in capital of $24,352 and $26,193 for the nine months ended September 30, 2014 and 2013, respectively.

As of September 30, 2014 and December 31, 2013, the Company owes $2,300 and $0, respectively to a company controlled by a shareholder of the Company.

DMH INTERNATIONAL, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

4. Convertible Notes

On March 3, 2014, the Company issued a convertible redeemable Note in the amount of $40,000. The proceeds were received on March 7, 2014. The Note carries interest at 9% annum and matures on March 3, 2015. The Note holder is entitled to convert all or a portion of the principal into shares of common stock at a conversion price of 58% the average two lowest closing bid price in the 20 trading days prior to the conversion date. During the nine months ended September 30, 2014, the debt holder made two conversions of a total of 13,428,451 shares of the company’s restricted stock satisfying $26,000 of the note with a fair value of $60,157 (See Note 6).

On March 31, 2014, the Company issued a convertible redeemable Note in the amount of $50,000. The proceeds were received on April 2, 2014. The Note carries interest at 9% annum and matures on March 31, 2015. The Note holder is entitled to convert all or a portion of the principal into shares of common stock at a conversion price of 55% the average two lowest closing bid price in the 20 trading days prior to the conversion date.

On May 5, 2014, the Company issued a convertible redeemable Note in the amount of $50,000. The proceeds were received on May 7, 2014. The Note carries interest at 9% annum and matures on March 31, 2015. The Note holder is entitled to convert all or a portion of the principal into shares of common stock at a conversion price of 55% the average two lowest closing bid price in the 20 trading days prior to the conversion date.

On July 25, 2014, the Company issued a convertible redeemable Note in the amount of $250,000. $125,000 each of the proceeds was received on June 25, 2014 and July 25, 2014, respectively (Total $250,000). The Note carries interest at 8% annum and matures on January 25, 2015. The Note holder is entitled to convert all or a portion of the principal into shares of common stock at a conversion price of the lower of $0.01 or 60% the average three lowest VWAP prices in the 15 trading days prior to the conversion date. The Holder shall not be entitled to convert the Note in connection with that number of shares of Common Stock which would be in excess of the sum of (i) the number of shares of Common Stock beneficially owned by the Holder and its affiliates on a Conversion Date, and (ii) the number of shares of Common Stock issuable upon the conversion of the Note would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the issued and outstanding shares of Common Stock of the Borrower on such Conversion Date. Also, the aggregate conversion by the Holder may not exceed 9.99% if a form 13d or equivalent is filed.

In the evaluation of the financing arrangements, the Company concluded that the conversion features did not meet the conditions set forth in current accounting standards for equity classification. Since equity classification is not available for the conversion feature, it requires bifurcation and liability classification, at fair value. The Company elected to account for the hybrid contract under the guidance of ASC 815-15-25-4. The fair values of the Company’s derivative liabilities were estimated at the issuance date and are revalued at each subsequent reporting date, using a binomial option pricing model. In connection with the issuance of these convertible notes payable, the Company encountered a day-one derivative loss of $41,902 related to the recognition of (i) the hybrid note and (ii) the derivative instrument arising from the fair value measurement due to the fair value of the hybrid note and embedded derivative exceeding the proceeds that the Company received from the arrangement. Therefore, the Company was required to record a loss on the derivative financial instrument. In addition, the fair value will change in future periods, based upon changes in the Company’s common stock price and changes in other assumptions and market indicators used in the valuation techniques. These future changes will be recognized in changes in fair value of derivatives on the Company’s statement of operations. At September 30, 2014, these convertible note payable, at fair value, were recorded at $213,655 (See Note 5). Accordingly, the company recognized gain of $2,687 in changes in fair value of derivative on the Company’s statement of operations at September 30, 2014

In addition, the proceeds of $208,597 received as a result of the issuance of these convertible notes is attributable to the value of the call option embedded in the note, which was recorded as a debt discount and will be amortized over the term of the note under the interest method. Amortization for the nine months ended September 30, 2014 is $111,271.

5. Derivative Liabilities

As discussed in Note 4 under Convertible Notes, the Company issued convertible notes payable that provide for the issuance of convertible notes with variable conversion provisions. The number of shares of common stock to be issued is based on the future price of the Company’s common stock. The number of shares of common stock issuable upon conversion of the note is indeterminate. Pursuant to ASC 815-15 Embedded Derivatives, the fair values of the variable conversion shares to be issued were recorded as derivative liabilities on the issuance date. The fair values of the Company’s derivative liabilities were estimated at the issuance date and are revalued at each subsequent reporting date, using a binomial option pricing model. The changes in fair value of derivatives for $39,215 on the Company’s statement of operations consisted of a loss of $41,902 due to the value in excess of the face value of the convertible notes and a gain of $2,687 attributable to market value of the convertible notes.

DMH INTERNATIONAL, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

5. Derivative Liabilities (Continued)

The following is a summary of changes in the fair market value of the derivative liability during the nine months ended September 30, 2014 and the year ended December 31, 2013, respectively:


		Derivative Liability Convertible debts Total
Balance, December 31, 2013	$	-
Increase in derivative value due to issuances of convertible promissory notes		250,499
Decrease in derivative value due to issuances of common stocks for conversions		(34,157)
Change in fair market value of derivative liabilities due to the mark to market adjustment		(2,687)
Balance, September 30, 2014	$	$213,655

6. Common shares

Convertible preferred stock issued for merger

On July 22, 2014, the Company acquired all of the outstanding shares of Virtual Physician's Network through issuance of 10,000,000 shares of convertible preferred stock. Each share of convertible preferred stock has the voting rights of 20 shares of the Company’s common stock. Upon the occurrence of a mandatory conversion event, which occurs immediately following the business day on which the Corporation’s shareholders have approved an amendment to the Corporation’s Articles of Incorporation which provide for a sufficient number of authorized common stock which will permit the holders of the convertible preferred stock to convert such shares into the Company’s Common Stock, the outstanding shares of convertible preferred stock shall automatically be converted at a conversion rate of 20 shares of Common Stock for every 1 share of convertible preferred stock. As of September 30, 2014, these shares have not been issued due to administrative delay. They were valued at $1,600,000, which is 20 times of closing price of common stock price of $0.008 on the date of merger. As of September 30, 2014, these shares have not been issued due to administrative delay. The 10,000,000 shares of convertible preferred stocks were accrued in preferred stocks issuable with a fair value of $1,600,000.

Common stock issued for reverse merger

On December 11, 2012, the Company entered into a share exchange agreement (the “Agreement”) with DMH International Inc. (“DMHI”), a Nevada company. Under the terms of the Agreement, the Company issued 100% of the issued and outstanding common shares of Touch Medical Solutions, Inc. (“TMSI”) in exchange for 125,000,000 common shares, comprised of 100,000,000 common shares from the President and Director of DMHI and 25,000,000 newly issued common shares. In addition, the President and Director of DMHI returned and cancelled 100,000,000 common shares. The Agreement results in management and shareholders of TMSI to hold 78% of the issued and outstanding common shares of the Company, resulting in a reverse recapitalization transaction (See Note 1). Following the above events, there were 161,000,000 shares outstanding, including:


Shares		Held By:
125,000,000		TMSI Shareholders
36,000,000		Existing DMHI Shareholders

Common stock issued in a private placement

During January, 2014, the Company issued 5,000,000 shares of the Company’s common stock to a subscriber at a price per share of $0.01 for total proceeds of $50,000.

During March, 2014, the Company granted 7,000,000 shares of the Company’s common stock to a subscriber at a price per share of $0.005 for total proceeds of $35,000. These shares were accrued in common stock issuable at March 31, 2014 as the shares were not issued until April 2014.

DMH INTERNATIONAL, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

6. Common shares (Continued)

During April, 2014, the Company issued 7,000,000 shares of the Company’s common stock to a subscriber at a price per share of $0.005 for total proceeds of $35,000.

During May, 2013, the Company issued 31,500,000 shares of the Company’s common stock to a subscriber at a price per share of $0.01 for total proceeds of $315,000.

During November, 2013, the Company issued 8,000,000 shares of the Company’s common stock to three subscribers at a price per share of $0.005 for total proceeds of $40,000.

Common stock issued for services

During August, 2014, the Company issued a total of 5,000,000 shares of the Company’s restricted common stock to two consultants for consulting services rendered. The shares were valued at $0.007 per share, the closing price of the stock on the date of grant. The Company recorded an equity compensation charge of $35,000 during the nine months ended September 30, 2014. The fair value of common stock issued for services was fully expensed on the date of grant due to no clawback provision in the agreement.

During September, 2014, the Company issued 10,000,000 shares of the Company’s restricted common stock to a consultant for consulting services for a term of one year. The shares were valued at $0.006 per share, the closing price of the stock on the date of grant. The Company recorded an equity compensation charge of $60,000 during the nine months ended September 30, 2014. The fair value of common stock issued for services was fully expensed on the date of grant due to no clawback provision in the agreement.

During February, 2014, the Company issued 5,000,000 shares of the Company’s restricted common stock to a consultant for consulting services for a term of one year. The shares were valued at $0.02 per share, the closing price of the stock on the date of grant. The Company recorded an equity compensation charge of $100,000 during the nine months ended September 30, 2014. The fair value of common stock issued for services was fully expensed on the date of grant due to no clawback provision in the agreement.

During February, 2014, the Company issued 5,000,000 shares of the Company’s restricted common stock to a consultant for consulting services for a term of one year. The shares were valued at $0.015 per share, the closing price of the stock on the date of grant. The Company recorded an equity compensation charge of $75,000 during the nine months ended September 30, 2014. The fair value of common stock issued for services was fully expensed on the date of grant due to no clawback provision in the agreement.

During March, 2014, the Company granted a total of 5,000,000 shares of the Company’s restricted common stock to a consultant for consulting services for a term from six months. The 1,500,000 shares were issued, and the remaining 3,500,000 shares will be issued in connection with the agreement following the filing of a new S-8 Stock Plan. The 3,500,000 shares were accrued in common stocks issuable with a fair value of $35,000. The shares were valued at $0.01 per share, the closing price of the stock on the date of grant. The Company recorded an equity compensation charge of $50,000 during the ninemonths ended September 30, 2014. The fair value of common stock issued for services was fully expensed on the date of grant due to no clawback provision in the agreement.

During April, 2013, the Company issued 15,000,000 shares of the Company’s restricted common stock to a consultant for marketing services for nine months. The shares were valued at $0.0129 per share, the closing price of the stock on the date of grant. The Company recorded an equity compensation charge of $193,500 during the year ended December 31, 2013. The fair value of common stock issued for services was fully expensed on the date of grant due to no clawback provision in the agreement.

During April, 2013, the Company issued 5,000,000 shares of the Company’s restricted common stock to a consultant for investor relations services for a year. The shares were valued at $0.0129 per share, the closing price of the stock on the date of grant. The Company recorded an equity compensation charge of $64,500 during the year ended December 31, 2013. The fair value of common stock issued for services was fully expensed on the date of grant due to no clawback provision in the agreement.

During June, 2013, the Company issued 1,000,000 shares of the Company’s restricted common stock to a consultant for investor relations services for six months. The shares were valued at $0.0065 per share, the closing price of the stock on the date of grant. The Company recorded an equity compensation charge of $6,500 during the year ended December 31, 2013. The fair value of common stock issued for services was fully expensed on the date of grant due to no clawback provision in the agreement.

DMH INTERNATIONAL, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

6. Common shares (Continued)

During July, 2013, the Company issued a total of 23,000,000 shares of the Company’s restricted common stock to four consultants for investor relations and consulting services for a term from six months to one year. The shares were valued at $0.0047 per share, the closing price of the stock on the date of grant. The Company recorded an equity compensation charge of $108,100 during the year ended December 31, 2013. The fair value of common stock issued for services was fully expensed on the date of grant due to no clawback provision in the agreement.

During October, 2013, the Company issued a total of 19,000,000 shares of the Company’s restricted common stock to officers and employees for services. The shares were valued at $0.0091 per share, the closing price of the stock on the date of grant. The Company recorded an equity compensation charge of $172,900 during the year ended December 31, 2013. The fair value of common stock issued for services was fully expensed on the date of grant due to no clawback provision in the agreement.

During October, 2013, the Company issued a total of 4,500,000 shares of the Company’s restricted common stock to six consultants for consulting services that have been rendered. The shares were valued at $0.0091 per share, the closing price of the stock on the date of grant. The Company recorded an equity compensation charge of $40,950 during the year ended December 31, 2013. The fair value of common stock issued for services was fully expensed on the date of grant due to no clawback provision in the agreement.

During November, 2013, the Company issued a total of 3,500,000 shares of the Company’s restricted common stock to six consultants for investor relations and consulting services for a term from six months to one year. The shares were valued in the range from $0.012 to $0.024 per share, the closing price of the stock on the date of grant. The Company recorded an equity compensation charge of $68,200 during the year ended December 31, 2013. The fair value of common stock issued for services was fully expensed on the date of grant due to no clawback provision in the agreement.

Common Stock Issued for Debt Conversions

During September, 2014, following the convertible note agreement in the amount of $40,000 on March 3, 2014, the debt holder made the following conversions of a total of 13,428,451 shares of the company’s restricted stock satisfying $26,000 of the note with a fair value of $60,157 (See Note 4).


Date	Number of shares converted	Fair Value of Debt Converted
9/15/2014	6,708,698	$30,634
9/22/2014	6,719,753	$29,523

7. Merger

On July 22, 2014, we completed the Merger Agreement with Virtual Physician's Network. Pursuant to the agreement, the Company acquired all of the outstanding shares of Virtual Physician's Network through issuance of 10,000,000 shares of the Company’s convertible preferred stock. Each share of preferred stock has the voting rights of 20 shares of our common stock. Virtual Physician's Network was merged into the Company and became the Company’s wholly owned subsidiary. As of September 30, 2014, these shares have not been issued due to administrative delay. The 10,000,000 shares of convertible preferred stocks were accrued in preferred stocks issuable with a fair value of $1,600,000. Each share of convertible preferred stock was valued at 20 times of closing price of common stock price of $0.008 on the date of merger.

DMH INTERNATIONAL, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

7. Merger (Continued)

This acquisition was accounted for as a business combination under the purchase method of accounting, given that substantially all of the Company’s assets and ongoing operations were acquired. The purchase resulted in $1,610,353 of goodwill. According to the purchase method of accounting, the Company recognized the identifiable assets acquired and liabilities assumed as follows:


		July 22, 2014
Consideration:
Preferred convertible stock issued	$	1,600,000
Cash paid prior to closing		20,000
Total consideration given		1,620,000

Fair value of identifiable assets acquired and liabilities assumed:
Cash	$	11,947
Due to a related party		(2,300)
Total fair value of assets acquired and liabilities assumed		9,647

Consideration paid in excess of fair value (Goodwill)(1)		1,610,353

(1) The consideration paid in excess of the net fair value of assets acquired and liabilities assumed has been recognized as goodwill.

Management believes the product line of Virtual Physician's Network acquired will enable the Company to enhance their business model and strengthen its future cash flows to fund operations and take advantage of additional growth opportunities.

8. Subsequent Events

During October, 2014, following the convertible note agreement in the amount of $40,000 on March 3, 2014, the debt holder made the third conversions of a total of 2,904,864 shares of the company’s restricted stock satisfying $8,000 of the note.

During October, 2014, following the convertible note agreement in the amount of $50,000 on March 31, 2014, the debt holder made two conversions of a total of 3,509,851 shares of the company’s restricted stock satisfying $10,000 of the note.

DMH International, Inc. is referred to hereinafter as “we”, “us” or “our”

Forward Looking Statements

This Quarterly Report on Form 10-Q for the period ending September 30, 2014, contains forward-looking statements that involve risks and uncertainties, as well as assumptions that if they never materialize or prove incorrect, could cause our results of to differ materially from those expressed or implied by such forward-looking statements. The words or phrases "would be," "will allow, "intends to," "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," or similar expressions are intended to identify "forward-looking statements." We are subject to risks detailed in Item 1(a). All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including: (a) any projections of revenue, gross margin, expenses, earnings or losses from operations, synergies or other financial items; and (b) any statements of the plans, strategies and objectives of management for future operations; and (c) any statement concerning developments, plans, or performance. Unless otherwise required by applicable law, we do not undertake and we specifically disclaim any obligation to update any forward-looking statements to reflect occurrences, developments, unanticipated events or circumstances after the date of such statement.

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

Introduction

The Company was incorporated in the state of Florida on March 26, 2010. In anticipation of a business combination, in December 2012, we entered into the merger agreement with Touch Medical Solutions, Inc., whereby we assumed TMSI’s business operations. On July 22, 2014 we merged with Virtual Physician's Network (VPN). We are currently in the business of developing and bringing to market a suite of medical software products. Our principal executive offices are located at 12502 West Atlantic Blvd., Coral Springs, Florida.

We have never been the subject of a bankruptcy, receivership or similar proceeding. Additionally, apart from the merger discussed herein, we have never been the subject of a material reclassification, merger, consolidation, or purchase or sale of a significant amount of assets not in the ordinary course of business.

In 2009, we began prototyping a Picture Archiving and Communication System (“PACS”) solution for market exploration. In July 2010, we were accepted as a Wake Forest University Demon Incubator startup company.

In January 2013, we signed an exclusive agreement with MyDICOM, LLC and ChangZhou Wealth Information & Technology Co. Ltd to provide product development, deployment and support. The agreement allows us to continually improve our product offerings while managing our expenses. The engineers and employees of MyDICOM and ChangZhou Wealth Information & Technology Co. Ltd were to function as a de facto arm of the company in supplying the contractual support. In May of 2013, we terminated the agreement with MyDICOM.

In October 2013 we announced a definitive Letter of Intent to merge with the Virtual Physician's Network (VPN), a mobile healthcare business applications company offering the first fully integrated virtual event and professional networking platform combined with proprietary practice building tools for surgeons, healthcare professionals and medical vendors. Virtual Physician's Network provides this through the Virtual Physician's Network mobile app available in the App store (Apple devices), Google Play (Droid devices) and on their web based application. The merger was completed on July 22, 2014.

On March 26, 2014 we announced that we were expanding our Advisory Board in anticipation of the completion of the announced merger with the Virtual Physician's Network (VPN). In anticipation of the closing, DMH is expanding our Advisory Board to include medical professionals that will aid in the testing, utilization and promotion of the Company's software products.

On July 24, 2014 we announced that the much-anticipated merger of DMHI and Virtual Physicians Network was completed. As anticipated, the CEO of Virtual Physicians Network, George England, assumed the same role for DMHI. The former CEO of DMH International, Rik J Deitsch, will stay on with DMHI and serve as Chairman of the Board.

On July 31, 2014 we announced that Miracle Mile Medical Center (MMMC) in Los Angeles, CA has agreed to participate in the beta launch of Virtual Physician's Network (VPN). Miracle Mile Medical Center is located in the heart of the beautiful Miracle Mile District in Los Angeles, CA. Their facility is dedicated to providing quality, clinical care in a compassionate and warm atmosphere. MMMC was founded in 2004 by Gil Tepper, M.D., F.A.C.S. and offers inpatient, outpatient and specialized services to the community. Dr. Tepper is a nationally recognized orthopedic spine surgeon and the current Chief of Staff at MMMC.

On August 5, 2014 we announced that Florida Back Institute in Boca Raton, FL had agreed to participate in the beta launch of Virtual Physician's Network (VPN). The Florida Back Institute is located in Boca Raton Florida and was founded in 1989 by Orthopedic Spine Surgeon Jeffrey Fernyhough, M.D. and Neurosurgeon Jordan Davis, M.D. For 25 years the Florida Back Institute has offered a complete multi-specialty treatment approach to spinal disorders.

On August 20, 2014 we announced that BUYINS.NET, a leading provider of Regulation SHO compliance monitoring, short sale trading statistics and market integrity surveillance, had initiated coverage on DMH International (DMHI) after releasing the latest short sale data through August 18, 2014. The total aggregate number of shares shorted since August 2013 was approximately 45 million shares. Approximately 26.42% of daily trading volume was short selling. The SqueezeTrigger price for all DMHI shares shorted was $.015.

On August 21, 2014 we announced that Michigan Head and Spine Institute (MHSI) had agreed to participate in the beta launch of Virtual Physician's Network (VPN). The Michigan Head and Spine Institute is one of Michigan's largest groups of neurosurgeons, physiatrists, and neuropsychologists. With 9 locations in the greater southeastern Michigan area, MHSI provides complete care for injuries and diseases related to the head, brain, skull and spine.

On September 10, 2014 we announced that the Joan C. Edwards School of Medicine at Marshall University in Huntington, West Virginia had agreed to participate in the beta launch of Virtual Physician's Network (VPN).

On October 8, 2014 we announced that we will be exhibiting at the North American Spine Society (NASS) 2014 annual meeting next month in San Francisco, CA. Our attendance is part of the national launch of the Virtual Physician's Network mobile technology. The NASS annual meeting is one of the largest academic spine meetings in the world where spine care professionals from around the globe will share the latest information, innovative techniques and procedures, best practices, and new technologies.

On October 23, 2014 we announced that we had agreed to a partnership with Rapid Improvement, Inc., a Natural Language Processing (NLP) technology company in Washington, D.C. This new added feature to the Virtual Physicians Network mobile platform will enhance the value of VPN to their users as well as add an additional revenue stream for DMHI in the form of analytics reporting.

Operating Strategy

Management is of the opinion that the leaders of the technology market as a whole are beating their competitors by presenting a more effective end user experience and fulfillment of base requirements. We believe that products were judged by the number of features they offer; however, there has been an increasing trend towards not providing the greatest number of features, but rather to provide a simpler user interface than its competitors combined with a solid product workflow. We will attempt, as a medical device provider, to offer products that are user friendly and which have a core workflow that clients can easily implement and use. We believe that a goal of applying our product ideas efficiently will allow our customers to maintain high medical standards to help them to grow in their own individual markets.

Virtual Physician's Network

There are over 100 million surgeries and procedures performed in the United States each year in over 6,000 hospitals and 5,000 surgery centers. These staggering figures combined with the archaic use of current technology to coordinate all these events between surgeons, institutions and medical vendors and their professional societies has created a chaotic, wasteful, and inefficient system.

Virtual Physician’s Network is a HIPAA compliant and private mobile and web based app solution specifically designed to help improve clinical and financial outcomes for all the stakeholders participating in these 100 million surgical events. These stakeholders include surgeons, hospitals, surgery centers, healthcare professionals, medical device/pharma vendors and medical associations and societies.

We currently provide the Virtual Physician’s Network solutions through the App Store (IOS devices) and Google Play (Droid devices) as well as a web based solution through our Virtual Physician’s Network website www.virtualphysiciansnetwork.com.

The adoption of the Virtual Physician’s Network technology will be initially driven through the our beta group and key industry trade shows such as NASS (North American Spine Society) and AAOS (American Academy of Orthopaedic Surgeons). Further adoption will then be driven by sales representation from participating medical vendors.

Beta Launch

Because surgeons in their particular specialties such as Spine or Orthopedics have an incredibly strong industry influence on all the stakeholders in the healthcare space, Virtual Physician’s Network will focus their initial implementation and marketing efforts on surgeon adoption.

We are currently in the process of rolling out the Virtual Physicians Network v 1.0 mobile and web based app technology to key industry thought leaders in the orthopedic spine and neurosurgical spine markets in the U.S. These initial beta users include but are not limited to groups in FL, CA, MI, WV, NV, and NJ. Upon the successful implementation of the beta release of Virtual Physicians Network v. 1.0, we anticipate additional adoption from the peers and colleagues of these key thought leaders. Our beta launch is scheduled to be completed by the end of 2014.

The Virtual Physician’s Network platform is designed to accommodate all surgical and procedural specialties. Our goal is to expand into general orthopedics and cardiology for all the associated stakeholders in 2015.

Surgeon members experience

We currently offer surgeon members five core practice building tools through the Virtual Physician’s Network as well as an interactive HIPAA compliant surgical calendar. These tools include: Book a Case, Contact My Rep, Education, Product Info, CME. Our goal is to add our Outcomes tool in Q4 of 2014.

Medical Vendor members experience

We currently offer medical vendors two core tools to help vendor reps streamline and effectively manage their communications and requests from their surgeon customers: Confirm a Case and My Messages. We intend to add Education and Product Info tools in Q4 of 2014.

Our technology gives vendor reps instant and secure communication with their customers for case booking and communication. This not only eliminates costly mistakes but also saves valuable time allowing them to work more efficiently. We also give the companies that they represent a compelling platform to promote new devices and techniques to their surgeon and hospital customers through marketing experiences in the app.

Virtual Physician’s Network will provide support and training to these organizations to effectively promote the use of their Virtual Physicians Network app throughout the beta rollout in 2014.

Healthcare Professional members experience

We plan on releasing our Healthcare Professional experience in v. 2.0 of the Virtual Physician’s Network mobile app in late Q4. This experience will have four core tools for healthcare professionals to effectively be linked to the surgeons and vendors that are working in their hospitals and surgery centers. These tools include: My Cases, My Messages, Education and Product Info.

This gives all healthcare professionals that are involved in these surgical events the ability to instantly keep track of and privately respond to all requests and communications between their surgeons and vendors. It also provides them with an intuitive and quick reference to industry specific education and product information.

Professional Societies and Associations

Each year there are over 2,000 medical societies and associations that have an annual meeting. These industry meetings host large numbers of their membership and are sponsored by medical device and pharma companies. They typically include surgeons that are industry thought leaders as faculty for each meeting and focus on the latest techniques, procedures, treatments and technology most relevant to their specialties.

We plan on showcasing the Virtual Physician’s Network technology at many of these key meeting over the next 18 months. These industry meetings represent an excellent marketing opportunity for Virtual Physician’s Network to gain adoption from all of their targeted stakeholders who attend these events together.

Virtual Physician’s Network also provides these organizations with a more effective way to deliver Continuing Medical Education (CME) experiences, meeting information, and other educational experiences to their membership through the Virtual Physician’s Network app.

TouchPACS

With a growing PACS market and an emergent Electronic Medical Record (“EMR”) market, we plan to provide a technically advanced but cost effective combined solution to medical practices that have been largely ignored by existing vendors. We will offer as a primary foundation technology, a digital imaging and communications in medicine (“DICOM”) viewer on innovative hardware, a fully Certification Commission for Healthcare Information Technology (“CCHIT”) certified EMR solution, and safe and efficient storage of diagnostic images both as individual clinical assets and as parts of a larger enterprise.

Our goal is to bring a fully integrated PACS/RIS/EMR package to market within a realistic timeframe in order to meet FDA and the American Recovery and Reinvestment Act of 2009 (“ARRA”) standards, starting with an innovative EMR framework as a basis for future product expansions. The stated project goal is to begin marketing a combined PACS/RIS/EMR solution in 2015. With a CCHIT qualified EMR fully integrated with TouchPACS, we will be qualified for ARRA reimbursement.

The PACS will support the DICOM v3 standards for both communication and visualization as a solution, a scope of service contained within the boundaries of the total TouchEMR package. PACS is being modularized this way in order to allow for other such future standards/relational forks as laboratory control or inpatient expansion. PACS will be deemed as v1 complete upon clearance of Food and Drug Administration (“FDA”) Class2 certification with all parts intact, and EMR v1 will be considered v1 complete on receiving CCHIT certification. PACS/EMR will be implemented to include all necessary hardware and configuration for a customer, such that our expected target audience is considered “computer illiterate” and will not be expected to provide implementation equipment independently. To that end, simplification of very complex workflow and diagnostic processes is a central focus within our developed interfaces. We propose that smart implementation of clinical software as a workflow client/server process will allow us to market both products (PACS and EMR) as either standalone or paired.

Technology

Over the next 18 months Touch Medical Solutions plans:

To market both individually and combined as a full Practice Management suite the following products:

TouchERP - Medical Enterprise Resource Planning (“Medical Enterprise RP”) –Is designed for a complete solution to various business sectors, including healthcare. A combination of products providing Clinical Management, Resource Management, Financial Management, and a Practice Information System, that are critical to the medical practices in today’s healthcare industry.

TouchPMS – Practice Management Suite – This is a category of software that deals with the day-to-day operations of a medical practice. Such software frequently allows users to capture patient demographics, schedule appointments, maintain lists of insurance payers, perform billing tasks, and generate reports.

TouchEMR – Electronic Medical (Health) Record – This is a locally kept copy of the patient health information located at each applicable healthcare provider, which can then be merged with the central EHR record as diagnostic information changes. This record can be kept in any applicable form, as long as it contains the basic pieces of information necessary to resynchronize with a central provider.

TouchRIS–Radiology Information System – This is a computerized database used by radiology departments to store, manipulate and distribute patient radiological data and imagery. The system generally consists of patient tracking and scheduling, result reporting and image tracking capabilities. RIS complements HIS (Hospital Information Systems) and is critical to efficient workflow to radiology practices.

TouchPACS – Picture Archiving and Communications Systems - In medical imaging, PACS have been developed to provide economical storage, rapid retrieval of images, access to images acquired with multiple modalities, and simultaneous access at multiple sites.

TouchPHR – Personal Health Record – This is an abstract definition of copies of patient electronic health record information, such as radiology studies or lab results, which are provided to a clinic by a patient in electronic form. This is relative to any type of portable copy device, such a CDR or USB, and defines import and export guidance for merging copies into a local (practice level) EMR.

TouchTranscription – Integrates voice recording and digital scripting into the patient record.

TouchPaperlessOffice – Through the use of a Paperless Office Solution, medical providers can store, index, search, retrieve, and modify all aspects of a patient’s medical records to provide a paperless office that can eliminate bottlenecks in a patient work flow.

Our potential for success will depend upon our ability to:

(i) develop project synergy where our products are designed for projects to work both independently as well as in a multiple product suite;

(ii) develop enhanced workflow and customization by creating a system workflow that will adopt an existing practices workflow as opposed to the practice needing to change their process and ideology based on the systems constraints. While the main portions of the software suite must be standardized, customization will be allowed to accomplish individual practice goals; and

(iii) Training – All our customers will receive training before, during, and after implementation to fully understand how the systems are designed to be used.

PACS

In 2015, we plan bring to market our Enterprise PACS system (TouchPACS) at a competitive price point. The focus of TouchPACS is to keep hardware and subscription costs affordable, making it an option for any size or type of clinical practice. In addition to a traditional PACS system on-site, TouchPACS will also offer offsite content storage, automated backup solutions, and remote software access via a web based portal product. These traditionally have been separate offerings and have represented a significant integration challenge for the small to mid-sized medical practice. We plan that TouchPACS will also provide the ability to link multiple offices, providing practices the ability to have a single system supporting all sites in which they practice.

Clinical Trial Management

By the end of 2015, we plan to launch a Clinical Trial Management Solution or Laboratory Information System (TouchCT). Both the Clinical Trial Management Solutions and the TouchEMR product share many core requirements offering an opportunity to expand functionality of the TouchEMR product to satisfy trial management needs. An electronic Clinical Trial Management system can provide service to drug development and medical research companies who are in the process of bringing clinical products to market in a newly regulated drug certification process.

Form Factor

Our products will offer multiple suite configurations to fit customer needs. We will offer both traditional wall- mounted displays as well as portable laptops and tablet computers.

Management is of the opinion that having a portable solution will be most useful for physicians who treat patients in multiple locations as well as for other situations where the flexibility of being mobile is required.

We will also provide a web based DICOM viewer that will allow image presentation on smartphones including:

(i) iPhones

(ii) Android

but these will be used for preliminary diagnostics only (wet read), as such devices must be FDA Class-3 approved by equipment manufacturers in order to be used for final reads in a clinical setting.

Our systems will offer a touch screen display allowing easy manipulation of images without the need to sit at a workstation with a mouse and keyboard except where this is clinically required. Utilizing modern touch screen interface technology will be attractive to physicians who want to be ahead of the technology curve, or where a physician or physician assistant will be more effective without being tied to a keyboarded workspace.

For fully integrated PACS consumers, a multi-monitor diagnostic station solution will be used to assure full conformance with DICOM and diagnostic imaging standards.

Standards

DICOM Standard

Our imaging solutions are based on the DICOM medical imaging standard, as the service is compatible with virtually every digital imaging modality and PACS in use today. This makes it a solution for orthopedists, obstetricians, family practice physicians, dentists, and chiropractors, in addition to the traditional radiology market. Increasingly, small non-radiological clinics make limited use of imaging as part of their everyday practice; we will provide a simplified, but industrial quality, answer to their software needs.

Platform

We will rely on Microsoft technologies as the backbone of our systems. By utilizing the Microsoft Visual C# development tools, and the Microsoft Visual Studio .NET 2008/2010 development environments, management is of the opinion that TouchPACS will be able to leverage Microsoft’s extensive coding library and features, and to provide an assured vendor as a foundation technology partner for our customers. We will use Microsoft Team Foundation Server to enforce an Agile software development and design philosophy. This philosophy emphasizes close collaboration between the programmer team and business experts, face-to-face communication, frequent delivery of new deployable business value and tight, self-organizing teams.

DICOM Viewer

We will provide a DICOM viewer offering advanced layering, image manipulation and other features that are typically used in large-scale implementations. By utilizing touch screen technology, we will provide a feature to a physician looking to demonstrate technology advancement to its patients. We will seeking FDA Class-2 certification for diagnostic imaging modality classifications, and will publish a formal DICOM conformance statement as a function of the development process. We are not seeking certification for use with Digital Mammography (“MG”) during stage one development, but will seek to display high resolution MG in a non-diagnostic format. The viewer product typically will deploy as a multi-monitor diagnostic station, and a touch-based tablet application, and will include a module for internet-based reading as part of the EMR portal project that we are attempting to develop.

Workflow Clients

We will provide support to our clients; in addition to DICOM PACS stations, for supporting medical records as a foundation of our product suite, including but not limited to:

(i) transcription,

(ii) management,

(iii) paperless workstation, and

(iv) export and reporting clients.

The clients’ products will be designed to work within the touch-based format or touch-assisted in cases like transcription, and are intended to be deployed on our branded encapsulated workstations and tablets.

Servers

TouchPACS has products to serve both Health Level 7 (“HL7”), a standard for exchanging information between medical applications and DICOM formatted messages natively, and allows for implementations to be unified to a central server or split into multiple servers, based on the scale needs of each customer. TouchPACS is also developing web based portal system to allow for patient scheduling, non-diagnostic review, referring physician review, and remote diagnostic reading capabilities. The web portal system will be implemented in a compatible way with both DICOM and HL7 needs in mind, allowing for a PACS web product to be developed concurrently with the EMR web product.

Critical Accounting Policies and Estimates

Our condensed consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) applied on a consistent basis. 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, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

We regularly evaluate the accounting policies and estimates that we use to prepare our consolidated financial statements. In general, management’s estimates are based on historical experience, information from third party professionals, and various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management under different and/or future circumstances.

We believe that our critical accounting policies and estimates include our ability to continue as a going concern, revenue recognition, accounts receivable and allowance for doubtful accounts, inventory obsolescence, accounting for long-lived assets and accounting for stock based compensation.

Ability to Continue as a Going Concern: Our ability to continue as a going concern is contingent upon our ability to secure additional financing, increase ownership equity, and attain profitable operations. In addition, our ability to continue as a going concern must be considered in light of the problems, expenses and complications frequently encountered in established markets and the competitive environment in which we operate.

Revenue Recognition: In general, we record revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. Provision for sales returns will be estimated based on the Company's historical return experience.

Accounts Receivable and Allowance for Doubtful Accounts: Our accounts receivable are stated at estimated net realizable value. Accounts receivable are comprised of balances due from customers net of estimated allowances for uncollectible accounts. In determining collectability, historical trends are evaluated and specific customer issues are reviewed to arrive at appropriate allowances.

Long-Lived Assets: The carrying value of long-lived assets is reviewed annually and on a regular basis for the existence of facts and circumstances that may suggest impairment. If indicators of impairment are present, we determine whether the sum of the estimated undiscounted future cash flows attributable to the long-lived asset in question is less than its carrying amount. If less, we measure the amount of the impairment based on the amount that the carrying value of the impaired asset exceeds the discounted cash flows expected to result from the use and eventual disposal of the impaired assets.

Derivative Financial Instrument: We do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. Management evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income. For option-based simple derivative financial instruments, we use the Black-Scholes option pricing model to value the derivative instruments at inception and subsequent valuation dates. For complex embedded derivatives, we use a Dilution-Adjusted Black-Scholes method to value the derivative instruments at inception and subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

Share-Based Compensation: We record share-based compensation in accordance with FASB ASC 718, Stock Compensation. FASB ASC 718 requires that the cost resulting from all share-based transactions are recorded in the financial statements over the respective service periods. It establishes fair value as the measurement objective in accounting for share-based payment arrangements and requires all entities to apply a fair-value-based measurement in accounting for share-based payment transactions with employees. FASB ASC 718 also establishes fair value as the measurement objective for transactions in which an entity acquires goods or services from non-employees in share-based payment transactions.

Results of Operations

Comparison of Three Months Periods Ended September 30, 2014 and September 30, 2013

Operating Revenues

Operating revenues since the Company’s inception has been $nil.

Operating Expenses,

During the three months ended September 30, 2014, the Company incurred operating expenses of $305,871 compared with $170,310 during the three months ended September 30, 2013. The increase in operating expenses was attributed to an increase in professional fees of $62,485, research and development of $65,447 and a general increase of $7,629 in general and administrative expenses.

Other expenses

Total other expense for the three months ended September 30, 2014 was $85,999, as compared to total other expenses for the three months ended September 30, 2013 of $14,109. The increase of $71,890 and approximately 510% in total other expenses was as a result of the gain on change in fair value of derivatives from $0 to $9,362 relating to the fluctuation of the liability related to convertible debt carried at fair, offset by an increase in amortization of debt discount from $0 to $76,029, an increase of interest expense from $0 to $4,555, and the slightly increase of imputed interest from $14,109 to $14,777 relating to imputed interest at 8% per annum on related party loans.

Net Loss

For the three months ended September 30, 2014, the Company recorded a net loss of $391,870 compared with $184,419 for the three months ended September 30, 2013.

Comparison of Nine Months Periods Ended September 30, 2014 and September 30, 2013

Operating Revenues

Operating revenues since the Company’s inception has been $nil.

Operating Expenses,

During the nine months ended September 30, 2014, the Company incurred operating expenses of $750,235 compared with $668,321 during the nine months ended September 30, 2013. The increase in operating expenses was attributed to an increase in professional fees of $11,665, an increase in research and development of $65,447 and a general increase of $4,802 in general and administrative expenses.

Other expenses

Total other expenses for the nine months ended September 30, 2014 was $199,029, as compared to total other expenses for the nine months ended September 30, 2013 of $42,495. The increase of $156,534 and approximately 368% in total other expenses was as a result of an increase in amortization of debt discount from $0 to $111,271, a loss on change in fair value of derivatives from $0 to $39,215 relating to the fluctuation of the liability related to convertible debt carried at fair, an increase of interest expense from $0 to $4,694, and an increase in imputed interest from $42,495 to $43,849 relating to imputed interest at 8% per annum on related party loans,

Net Loss

For the nine months ended September 30, 2014, the Company recorded a net loss of $949,264 compared with $710,816 for the nine months ended September 30, 2013.

Working Capital


	September 30, 2014 $	December 31, 2013 $
Current Assets	41,107	-
Current Liabilities	1,469,997	978,279
Working Deficits	(1,428,890)	(978,279)

Cash Flows


	Nine Months ended September 30, 2014 $	Nine Months ended September 30, 2013 $
Cash Flows used in Operating Activities	(374,405)	(214,752)
Cash Flows used in Investing Activities	(8,053)	-
Cash Flows from Financing Activities	423,565	218,096
Net Increase in Cash During Period	41,107	3,344

Liquidity and Capital Resources

As at September 30, 2014, the Company’s cash and total asset balance was $41,107 compared to $nil at December 31, 2013.

As of September 30, 2014, the Company had total liabilities of $1,469,997 compared with total liabilities of $978,279 at December 31, 2013. The increase in liabilities is primarily due to the derivative liabilities related to the convertible debt carried at fair value.

As of September 30, 2014, the Company had a working capital deficit of $1,428,890 compared with a working capital deficit of $978,279 as of December 31, 2013. The increase in the working capital deficit is primarily attributed to the derivative liabilities related to the convertible debt carried at fair value.

Going Concern

Our ability to continue as a going concern is contingent upon our ability to secure additional financing, increase ownership equity, and attain profitable operations. In addition, our ability to continue as a going concern must be considered in light of the problems, expenses and complications frequently encountered in established markets and the competitive environment in which we operate.

Uncertainties and Trends

Our operations and possible revenues are dependent now and in the future upon the following factors:

Whether we successfully develop and commercialize products from our research and development activities.

If we fail to compete effectively in the intensely competitive medical software area, our operations and market position will be negatively impacted.

If we fail to successfully execute our planned partnering and out-licensing of products or technologies, our future performance will be adversely affected.

The recent economic downturn and related credit and financial market crisis may adversely affect our ability to obtain financing, conduct our operations and realize opportunities to successfully bring our technologies to market.

Software industry related litigation is substantial and may continue to rise, leading to greater costs and unpredictable litigation.

If we fail to comply with extensive legal/regulatory requirements affecting the medical software industry, we will face increased costs, and possibly penalties and business losses.

Off-Balance Sheet Arrangements

We have not entered into any transaction, agreement or other contractual arrangement with an entity unconsolidated with us under whom we have:

An obligation under a guarantee contract.

A retained or contingent interest in assets transferred to the unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to such entity for such assets.

Any obligation, including a contingent obligation, under a contract that would be accounted for as a derivative instrument.

Any obligation, including a contingent obligation, arising out of a variable interest in an unconsolidated entity that is held by us and material to us where such entity provides financing, liquidity, market risk or credit risk support to, or engages in leasing, hedging or research and development services with us.

We do not have any off-balance sheet arrangements or commitments (other than the potential effect of certain legal contingencies) that have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

As of September 30, 2014, we carried out an evaluation under the supervision and the participation of our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of September 30, 2014, as defined in Rule 13a-15 under the Securities Exchange Act of 1934 (“Exchange Act”). Based on that evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that, because of the material weaknesses in internal control over financial reporting discussed in Section 9A of our annual report on Form 10-K, our disclosure controls and procedures were not effective, at a reasonable assurance level, as of September 30, 2014. In light of this, we performed additional post-closing procedures and analyses in order to prepare the Condensed Consolidated Financial Statements included in this report. As a result of these procedures, we believe our Condensed Consolidated Financial Statements included in this report present fairly, in all material respects, our financial condition, results of operations and cash flows for the periods presented. A control system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, with the company have been detected.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer, who also acted as our Principal Financial Officer as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

During the first quarter we continued the enhancement of our internal controls. Otherwise, there were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or 15d-15 under the Exchange Act that occurred during the quarter ended September 30, 2014 that have materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are not a party to any pending legal proceedings where any officer, director, affiliate of owner of 5% or more of our common stock is adverse to us or where the amount of damages claimed, exclusive of interest and costs, exceeds ten percent of our current assets. Pursuant to the terms of the Merger, responsibility for any liability emerging from our pre-merger business relies wholly with our pre-merger management.

Item 1A. Risk Factors

A smaller reporting company, as defined by Item 10 of Regulation S-K, is not required to provide the information required by this item.

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

On July 22, 2014, the Company acquired all of the outstanding shares of Virtual Physician's Network through issuance of 10,000,000 shares of convertible preferred stock. Each share of convertible preferred stock has the voting rights of 20 shares of the Company’s common stock. Upon the occurrence of a mandatory conversion event, which occurs immediately following the business day on which the Corporation’s shareholders have approved an amendment to the Corporation’s Articles of Incorporation which provide for a sufficient number of authorized common stock which will permit the holders of the convertible preferred stock to convert such shares into the Company’s Common Stock, the outstanding shares of convertible preferred stock shall automatically be converted at a conversion rate of 20 shares of Common Stock for every 1 share of convertible preferred stock. As of September 30, 2014, these shares have not been issued due to administrative delay. They were valued at 20 times of common stock price of $0.008 per share, the closing price of the stock on July 22, 2014, the date of merger.


Date	Number of shares converted	Fair Value of Debt Converted
9/15/2014	6,708,698	$30,634
9/22/2014	6,719,753	$29,523

With respect to the securities issuances described above, no solicitations were made and no underwriting discounts were given or paid in connection with these transactions. The Company believes that the issuance of these securities as described above were exempt from registration with the Securities and Exchange Commission pursuant to Section 4(2) of the Securities Act of 1933.

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosure

Note applicable.

Item 5. Other Information

None.

Item 6. Exhibits


Exhibit No.		Title
31.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

SIGNATURES

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


		DMH INTERNATIONAL, INC.
		Registrant

Dated: November 20, 2014		/s/ Rik J. Deitsch
		Rik J. Deitsch
		Chief Executive Officer

Dated: November 20, 2014		/s/ Jason Barry
		Jason Barry
		Chief Financial Officer

DMH INTERNATIONAL, INC. - FORM 10-Q - November 20, 2014

Attached files

DMH INTERNATIONAL, INC. Reports