MMRGlobal, Inc. (referred to herein, unless otherwise indicated, as "MMR", the "Company," "we," "us," and "our") was originally incorporated as Favrille, Inc. ("Favrille") in Delaware in 2000, and since its inception and before the Merger (as defined below), operated under a different management team as a biopharmaceutical company focused on the development and commercialization of targeted immunotherapies for the treatment of cancer and other diseases of the immune system.

On January 27, 2009, the Company, through MyMedicalRecords, Inc., what is now our wholly-owned operating subsidiary, originally incorporated as MyMedicalRecords.com, Inc., ("MMR Inc.") in Delaware in 2005, conducted a reverse merger with Favrille. We refer to this transaction as the "Merger".

On February 9, 2009, and in connection with the Merger, we changed our legal entity name from Favrille, Inc. to MMR Information Systems, Inc. Subsequently, on June 16, 2010, we changed our legal entity name to MMRGlobal, Inc., which we believe more accurately reflects the nature of our operations.

On March 8, 2011 we formed a subsidiary, which we named MMR Life Sciences Group, Inc., exclusively to maximize the value of our biotech assets including our anti-CD20 antibodies and related FavId™/Specifid™ vaccine technologies identified by our Management as remaining assets from the Merger. As of this date, the assets have not been transferred to the subsidiary.

On March 28, 2012 we formed a subsidiary, which we named Expression Systems, LLC, exclusively to hold a certain group of insect samples from the Merger which we believe are an intricate part of the manufacturing process of the FavId™/Specifid™ idiotype vaccine.

Following the Merger, we adopted MMR Inc.'s business of empowering consumers to manage their Personal Health Records ("PHR") and other important documents, whether paper-based or digital, and by doing so, to better control and organize their lives overall. Starting in 2005, MMR Inc. began filing patents for PHRs that could be used by any person or any healthcare professional anywhere in the world regardless of the technology on the other end. Today, we provide patented secure online storage and document management solutions for Personal Health Records and other important documents such as insurance policies, deeds, driver's license, IDs, passports, estate planning documents, advance directives, photos, as well as legal and travel documents among others.

We expanded our operations and added document imaging, storage and management solutions as a product line directed to healthcare professionals. The product is called MMRPro and it is designed to eliminate paper and allow health care professionals to run their medical offices without dramatically changing the way they operate allowing them to store and share health records with their patients on a real-time basis.

We now have numerous Health Information Technology ("HIT") and Biotech patents issued, pending, and applied for in the United States and numerous other countries around the world. As a result, we have evolved from an operating business selling products and services to consumers and healthcare professionals to a company whose value proposition is based on a combination of factors including:

• A personal health records company specializing in storing medical records and other important documents for consumers and health care professionals
• A document imaging and management company for healthcare professionals
• A licensor of Biotech Intellectual Property based on a portfolio of biotech assets developed at a cost of more than 100 million dollars
• And a licensor of Health Information Technology patents and other Intellectual Property in numerous counties around the world

The following description of our business relates to our current business and operations.

Since inception, MMR's health IT business has evolved from a development company, to a provider and reseller of Personal Health Records and document imaging and scanning systems (MMR Services), to a Licensor of MMR's intellectual property. And during 2013, developments in the industry were positive for us as a provider of patented Personal Health Records driven by the need for eligible healthcare professionals to provide over 50% of patients online access to their health information such as through a PHR or patient portal starting in January 2014. This was part of the patient engagement requirements under Meaningful Use Stage 2 finalized in August 2012 to fully qualify for payments under the EHR Incentive Program mandated by the HITECH Act, and usage is expected to expand to 90% with Stage 3 Meaningful Use requirements. We anticipate that we will continue to benefit from patient engagement measures both as mandated by the government and also because of factors driven by the private sector, such as consumers having to take on a greater share of their healthcare costs, employer worksite wellness programs, the web-based personal medical home, and the interest in web-based social networking and the Health 2.0 movement.

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Industry developments coupled with the strength of our health IT patents, which are discussed further below, are expected to increase demand for our products and services. MMR's vision from the start was to provide patients and families with an easy-to-use online system for accessing their medical records and other important documents and securely sharing them with all their healthcare providers using MMR's proprietary technology platform. Since our company began, we have made it our mission to ensure the patient shares in the electronic exchange of his or her health data along with their providers so they can make the informed decisions necessary to better manage their care and participate in cost savings that can accrue from timely access to information. We believed it was especially important for individuals and families to have access to their critical health information in the event of an emergency, from an individual emergency to a widespread natural disaster like Hurricanes Katrina and Sandy. So we conceived of multiple ways this communication could connect and be interoperable with various entities and we filed hundreds of patents and claims to this effect.

We also have an agreement with Microsoft® HealthVault® to integrate our services with their platform as demand for access to HealthVault® increases in the marketplace.

Our health information technology patents became the focus of our licensing and enforcement activities in 2012 and 2013, having been granted ten patents by the United States Patent and Trademark Office ("USPTO") directed towards health information technology along with additional HIT patents in seven other countries of commercial interest including Australia, others in New Zealand, Singapore, Japan, Mexico, and Canada. These patents have the potential effect of enabling us to control a dominant marketplace position in personal healthcare, being well-positioned to benefit from the explosion in health IT both in the U.S. and globally.

We also continue efforts to maximize the current and future value of the biotech assets acquired from Favrille, Inc. when the Merger was completed in January 2009. These assets include, but are not limited to, the exploitation and licensing of patents, data and samples from our pre-Merger clinical vaccine trials, the FavId™/Specifid™ idiotype vaccine, and the anti-CD20 antibodies. Anti-CD20 antibodies are useful in treating B-Cell malignancies, including Non- Hodgkin's Lymphoma (NHL) and additional B-Cell mediated conditions such as rheumatoid arthritis. We understand the anti-CD20 antibody assets are potential candidates for the next generation of a Rituximab-type therapy. Rituximab is marketed under the trade name Rituxan® in the United States by Biogen Idec and Genentech (wholly owned member of the Roche Group) and under the name MabThera® by Roche in the rest of the world except Japan, where it is co- marketed by Chugai and Zenyaku Kogyo Co. Ltd. Rituxan® is one of the world's most successful monoclonal antibodies with reported annual sales of over USD $7.5 billion in 2013. Rituxan is due to go off patent in 2015.

We were an Independent Software Vendor of Kodak until Kodak filed for bankruptcy protection on January 19, 2012. During 2013, we filed a claim in the United States Bankruptcy Court Southern District of New York for $827,818.74 in damages from development and other costs incurred building MMRPro with Kodak. We are still purchasing Kodak scanners for use in our MMRPro products and services, but these Kodak scanners are now being purchased through Kodak resellers. Because of the Kodak bankruptcy, we decided to identify secondary suppliers for scanners and software in support of MMRPro. As a result, we recently announced that we have redesigned our MMRPro system to work with any scanning and/or imaging solution.

In 2012 and 2013, based on government regulations, industry growth and increased awareness, our licensing or patents became the focus of our business. Of the ten U.S patents, involving inventions pertaining to Personal Health Records, Patient Portals and other Electronic Health Record Systems, five U.S. patents were issued or allowed in 2013. Also in 2013, MMR was issued patents in Japan and Canada.

We utilize the services of McKee, Voorhees & Sease, our patent prosecution counsel since the filing of MMR's first patent applications in 2005, to file new applications with the United States Patent and Trademark Office ("USPTO"). In addition, we currently use Liner Grode Stein Yankelevitz Sunshine Regenstreif & Taylor LLP ("Liner") in contacting prospective infringers of our IP in an effort to educate them about MMR's portfolio of intellectual property, and file actions companies we believe infringe. Our patent licensing efforts increased significantly over the past year, and we continued contacting organizations regarding our health IT patents in an effort to create strategic business relationships and/or license our patented technology.

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Adding to our biotech intellectual property portfolio in 2013 and early 2014, we received an additional U.S. patent from the U.S. Patent and Trademark Office for a "Method and Composition for Altering a B Cell Mediated Pathology" (Patent No. 8,637,638). Additional continuation patent filing has also been pursued in the U.S. to obtain still further protection for the compositions and methods of manufacturing compositions for B-cell vaccines used in the fight against lymphoma and potentially other forms of cancer. Significant manufacturing patent protection has been obtained in the U.S., including U.S. Patent Nos. 8,637,638; 8,114,404; 8,113,486 and 6,911,204, Mexico, Singapore, Hong Kong, Japan and Europe, and is pending in various other countries of commercial interest. In 2013, we finalized the validation in countries of commercial interest for its European Union patent (European Patent No. 01979228.2) directed at "Method and Composition for Altering a B Cell Mediated Pathology," protecting the manufacturing of our B-cell vaccines (which was under appeal in Europe for some time). This issued patent is currently validated in numerous countries of commercial interest including the United Kingdom, France, Germany, Switzerland, Spain, Italy, the Netherlands, Denmark, Sweden, Finland, Ireland and Belgium.

The biotech intellectual property portfolio also includes patents and applications directed to "Antibodies and Methods for Making and Using Them." The first U.S. patent protecting anti-CD20 monoclonal antibodies was issued in mid-2013 (Patent No. 8,465,741), followed by the first Australian patent (2007338607) and thereafter South Korean patent (10-2009-7015196) providing market protection of our specific antibodies that have particular utility in fighting cancers. These newly issued patents are in addition to the Mexican patent granted in 2012 for the antibody assets. Patents for our antibodies are also pending in a number of additional countries including the United States, Australia, Brazil, Canada, China, Hong Kong, India, Europe, Japan and Korea. All together, these patents and pending applications represent a valuable addition to our biotechnology portfolio acquired as a result of MMR's reverse merger with Favrille, Inc. in 2009. Favrille invested more than $100 million in research and development on its FavId™/Specifid™ vaccine trials and use of customized tumor cells to treat lymphoma patients and other technologies. MMR has continued to make progress in protecting our IP, including its anti-CD20 antibodies, and seeks licensing agreements that include milestone payments such as what we have with Celgene.

Although we continue to seek ways to maximize the value of our biotech assets through licensing and strategic business opportunities with universities and other biotech companies, we remain focused on our primary business, which is the development and distribution of the MyMedicalRecords Personal Health Record, MMRPro, and other related solutions in health IT, as well as the protection and enforcement of our intellectual property. The growth in Telemedicine is expected to fuel the value of our IP because Telemedicine portals require connectivity to the patient, giving MMR the opportunity to increase revenue by offering a combined Alcatel-Lucent platform with MMR's patented PHR through organizations and employers with direct connection to the doctor and wellness management tools.

Additionally, we will continue to use social media to build greater awareness for our products and services. In 2013, we increased utilization of social media (YouTube, Facebook, Twitter) to enhance brand loyalty for our MyMedicalRecords PHR and connect with a greater number of potential users. We are also rolling out an affiliated marketing program, in which marketing partners such as list publishers and health-related websites will be offered the ability to bring the Personal Health Record to their customers on a "Per Acquisition" basis, which means MMR only pays them if we received a paid subscription. This program can give MMR the ability to put its marketing message in front of millions of new viewers, in a targeted way, without having to pay costs of advertising upfront.

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Our Products

Our suite of secure, web-based products all are built on proprietary, patented and patent-pending technologies that allow users to easily store, organize, retrieve and share their protected health information and other data in a timely and secure manner from anywhere in the world.

Our consumer product, "MyMedicalRecords", is an easy-to-use, secure web-based PHR system, which allows documents, images and voice mail messages to be transmitted in and out of our system using a variety of methods, including fax, voice, and file upload. Most importantly, our system doesn't require or rely on any specific Electronic Medical Records ("EMR") platform to work; a consumer's MyMedicalRecords PHR can store and maintain medical records that are sent from any of the consumer's healthcare providers. A MyMedicalRecords PHR can receive and store medical records in a variety of secure formats, including image, voice, and discrete data in HL7, XML or other formats, that are exported or communicated from EHR, EMR or Telemedicine systems. The account holder receives a notification at virtually the same time new information is received in our system from their healthcare provider. This notification can be sent to up to three different user e-mail addresses (including text-enabled cell phones and smartphones). Our PHR is secured not only by a unique user ID, but also by multiple passwords. Further, the consumer can access his or her files via the Internet or a web-enabled phone and, using an intuitive, customized filing system, can categorize, annotate and file his or her records in a way that makes sense to him or her and that maximizes his or her easy access and subsequent retrieval of the records. In addition to giving each consumer greater control over his or her own PHR, each consumer can also quickly and easily print, download, e-mail or fax records from his or her PHR, sharing this information with healthcare providers and others as he or she moves through the continuum of care.

The Company is constantly in the process of evolving its products and adding new features that will facilitate connectivity with other systems such as Electronic Medical Records systems. The new features facilitate connectivity with any standalone EMR systems and other Electronic Medical Records systems, and laboratory reporting systems. Using an HL7 interface we are able to populate data, such as that required in a Continuity of Care Document, and send it as well as lab test results, medication lists and other discrete data directly to the consumer's MyMedicalRecords PHR. Further, and at the consumer's option, the system can electronically transmit PDFs from the consumer's confidentially maintained PHR directly into an EMR or EHR. We believe this robust multi-way communications capability will increase adoption of our system by consumers, vendors, and healthcare providers alike because our system can operate as a patient portal that can share electronic data across and between those with a need to access and use that data.

We are currently selling our MyMedicalRecords PHR product directly to consumers, corporations (as an employee benefit), physicians, small hospitals, surgery centers and other healthcare professionals including nursing associations, retail pharmacies, and veterinarians, and to affinity organizations as a "value- added" service for their members or clients. We introduced a Prepaid Personal Health Record Card at the start of 2012 through healthcare professionals, home healthcare agencies and facilities, and patient advocates. We plan on offering our Prepaid Personal Health Record Card through retailers in the near future. We also sell to insurance companies and plan to sell through financial services organizations. The PHR is offered both via the MyMedicalRecords web site and as a private- labeled product. When sold to employers and/or affinity groups, we count members as individuals who have received paid access to the MMR system through their employers' benefit programs or as a member benefit from a respective affinity group. We count users as the individuals in that member group that activate and commence usage of their individual PHR account. In addition, the MyMedicalRecords PHR is an important component of the MMRPro professional document management and imaging system, which we are selling to physician offices and other healthcare professionals (See section on "MMRPro").

Our MyMedicalRecords PHR product is bilingual in English and Spanish and allows users to store and segregate information for up to 10 family members in a single account. It is a patient-controlled PHR that provides portability for the user, which means our MyMedicalRecords PHR can stay with the individual through changes in doctors, jobs and insurers.

Through an Internet-based solution, the MyMedicalRecords PHR takes advantage of the one piece of equipment still being used in virtually every doctor's office: a fax machine. Healthcare providers can transmit documents to a patient's MyMedicalRecords PHR mailbox without making any changes to existing patient or practice management software. Our MyMedicalRecords PHR product can be used to provide secure storage for a variety of important confidential records, including:

• Patient charts, notes, and medical histories;
• Vaccination and immunization records;
• Lab reports and test results, including any images (or, if offered by a laboratory, links that the user can use to access the laboratory's stored images);
• Copies of prescription orders;
• X-ray results and images (either the actual images or, if offered by a radiology provider, links that the user can use to access the provider's stored images);
• EKG results and images (either the actual images or, if offered by an imaging provider, links that the user can use to access the provider's stored images);
• Birth certificates, living wills, healthcare powers of attorney and advance directives;
• Lab report and pharmacy records through 4medica; and
• Telemedicine data through Alcatel-Lucent ng Connect

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In addition, users can store important legal, insurance and financial documents, as well as copies of identification documents such as passports and driver's license in their MyMedicalRecords PHR account.

Users also have the ability to fax records out of their MyMedicalRecords PHR account using an integrated Internet fax service. This feature gives users the ability to easily share information with multiple providers with the privacy of web-based faxing that doesn't require them to print out documents and then place them in a physical fax machine. This feature also transforms the PHR into a proprietary integrated fax messaging service, which we believe provides a significant competitive advantage over other PHRs.

The MyMedicalRecords PHR product is designed to enable consumers to store their important medical records and other health information in one central and secure place where they can manage those records and control how they are accessed and shared. The market for our products is significant. While every healthcare consumer in the U.S., as well as those in other countries, is a potential user of the MyMedicalRecords PHR product, we believe that our product has the greatest appeal to the following particular market niches:

• The chronically ill and their families and other caregivers who must share health information with and among many healthcare professionals (this "co-morbid population" represents a disproportionate share of U.S. healthcare costs);
• Physicians who must provide patients with timely electronic access to their personal health information;
• Individuals with Health Savings Accounts who need to carefully manage their eligible expenses over the course of a year;
• Consumers who are caring for their "senior" parents and who need their parent's current medical information readily available in case of their parent's unexpected illness or emergency situation;
• Consumers with newborns who will be able to build a complete medical file for the newborn, one that can be maintained and updated throughout the newborn's entire life;
• Employees who are forced to change physicians and other healthcare providers when their employer changes health insurance plans and who therefore need to manage transferring their health information to new providers;
• Consumers who are concerned about having access to their PHRs and other important documents in a disaster or other emergency;
• Travelers and business people working overseas who might need to access their medical records in the event of an emergency;
• Hospitals required to provide patients' discharge summaries and after-care instructions electronically;
• Home healthcare professionals who need the efficiencies of technology, particularly PHRs, to maintain and share patient records and manage daily activities;
• Wireless providers who are seeing smartphones increasingly used as a hub for remote patient monitoring devices that can export data to PHRs to improve coordination of care in the patient-centered medical home;
• Veterans and Medicare recipients who are using Blue Button to transfer their respective health information into a comprehensive, portable and easy-to-use PHR;
• Corporations seeking to offer their employees a valuable benefit, e.g. companies implementing workforce wellness programs and those with expatriate employees would be particularly interested;
• Pharmacists who recognize PHRs as a way to offer consumer counseling more effectively and efficiently; and
• Local, State, and Federal governmental agencies that need an immediate yet easy solution to help families and businesses preserve their vital documents in the event of a man-made or natural disaster.

We sell our MyMedicalRecords PHR product direct to consumers on a monthly and annual subscription basis. We use the Internet as a distribution channel where consumers can enroll in our service online. We also occasionally offer free trials and discounted pricing as a way to incentivize consumer acceptance of our MyMedicalRecords PHR product. The retail price point may be different than what the product is being sold for on the Internet.

We also offer a value-added service to our MyMedicalRecords PHR which we call Personal Touch. When a user enrolls in Personal Touch, their records are collected by a health professional, who then organizes them and places them into their PHR. Personal Touch is sold as an additional service and charged separately from the basic MyMedicalRecords Personal Health Record service.

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For special key account programs, such as healthcare providers that would like to make the service available to patients, corporations who want to offer the service as a benefit to employees, insurance companies who offer this to policyholders, or affinity groups and other organizations who want to offer the service to their members, we provide different access-based pricing plans, which vary based on the number of people in the organization and the expected use of the product across the organization's members. For large corporate or key accounts, we co-brand or private label our site.

Our MyMedicalRecords PHR product offers users multiple ways to enter and maintain their personal medical information, including by fax, voice, digital file upload and online annotations as well as through customized web service links. We believe our patented integrated capability makes our MyMedicalRecords PHR product easier to use and more accessible to potential customers and healthcare professionals. This gives us a unique competitive advantage in the marketplace and creates a barrier to competitive entry. In addition to the core document conversion, storage and retrieval capabilities, our MyMedicalRecords PHR product provides a layer of useful, value-added interactive tools to help users better manage their personal and/or their families' medical records. These tools include:

• Integration with Electronic Medical Record Systems and Laboratory Reporting Services.

We are integrating our PHR with laboratory reporting services, Electronic Medical Record and Electronic Health Record systems, beginning with 4medica, an integrated iEHR, which is used by thousands of doctors nationwide, through the creation of a messaging interface which was launched in 2013. In this workflow, the MyMedicalRecords Personal Health Record is able to exchange discrete data, such as patient demographic information and lab test results, with the clinical system. In addition, standard reports from the EMR system, such as the Continuity of Care Document (CCD) can be transmitted into the PHR either in PDF or discrete data format.

• Forms Management and Electronic Signature

The MyMedicalRecords Personal Health Record also now supports the completion and secure electronic signing of doctor office forms. So a participating provider who offers the product to his or her patients can have them complete and sign Patient Intake, Registration, Consent and other forms before they get to the office. MyMedicalRecords can transmit the forms directly into a doctor's clinical system. This creates a major efficiency benefit for the doctor office.

• Ability to Attach Received Faxes to E-mail Notifications.

Users can elect to have records attached to the notification e-mail they receive when a new medical record is received into their account. This capability is intended to save users the extra step of logging into their account to view new records, which we believe creates a higher level of convenience and usability.

• Health History

Users can enter their personal health history, including information about doctors (such as a doctor's name, address and specialty), vaccinations and immunizations, hospitalizations/surgeries, allergies and other medical conditions that may affect ongoing healthcare.

• Appointment Calendar Feature

Users are able to take advantage of a calendar feature to schedule and generate reminders about upcoming doctor and other health-related appointments. These reminders appear when a user logs into his or her MyMedicalRecords PHR account and also can be sent to the user's e-mail address (or e- mail enabled smartphone) and imported into any calendar program including Microsoft ^®  Outlook ^® .

• Prescription History and Refill Reminder Feature

Users are able to enter their prescriptions, pharmacies and refill dates into their MyMedicalRecords PHR accounts. The system generates reminders about refills, which are visible to users when they log into their accounts and are sent to their e-mail addresses (or e-mail enabled cell phone).

• Drug Information and Interaction Database

Users can check for potential interactions across multiple prescriptions and over the counter drugs with this comprehensive database, licensed from Multum. When each user adds a new drug to their MMR PHR prescription history, they can quickly determine if that medication has any kind of negative interaction with other prescriptions they take. This tool is especially vital because preventable adverse drug interactions kill as many as 100,000 and injure more than 1.5 million Americans each year. Consumers who see multiple providers are especially at risk.

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• Voice Reminders and Messaging

We have created our MyMedicalRecords PHR product to promote more efficient communication between doctors and patients. In addition to using a patient's personal MyMedicalRecords PHR telephone number to fax health information to a patient's secure online account, people can use the telephone number to leave a voice message, such as an appointment reminder, in a secure voice mailbox that is only accessible by the MyMedicalRecords PHR user. Users can also take advantage of this feature to leave themselves a reminder message such as for a doctor appointment or prescription refill reminder. Our MyMedicalRecords PHR product is designed to send a user a notification via e-mail when he or she receives a voice message. This gives users a helpful tool that they can access remotely.

• Secondary Passwords on Selected File Folders

Users can assign a second password to four of the file folders in their MyMedicalRecords PHR account. This feature creates an additional layer of security for personal vital or medical documents that a MyMedicalRecords PHR user does not want a doctor to have access to in the event that the user has given the doctor access to the account, or if the user does not want other family members to be able to see selected information.

• Emergency Login For Physicians and Other Emergency Response Personnel

Users can create a special password, one for each family member, which doctors and other emergency response personnel can use to gain access to the particular family member's medical records in the event of a medical emergency. This password grants access to an account but does not allow any additions, changes or deletions to be made to the account. In addition, users can decide which records a doctor will be able to see in an emergency situation. Users can write this password on an emergency sticker they receive when they enroll in our MyMedicalRecords PHR service, which can be affixed to a driver's license or personal ID. Users can even include a photograph in their emergency profile.

• Health Information Library

Users have the option to access wellness programs and interactive audio and visual health encyclopedias, licensed from third-parties, in both English and Spanish.

• Telemedicine.

We have integrated our PHR with the Alcatel Lucent ng Connect Telemedicine suite. This takes data directly from wireless Bluetooth monitoring devices, such as blood pressure monitors, and deposit readings directly into the MyMedicalRecords PHR. We believe that these enhancements will increase usability and make it easier for consumers to view their important medical records.

We believe our MyMedicalRecords PHR product technology presents potential market opportunities beyond its core "Personal Health Records" storage and management purpose. In the wake of recent hurricanes, tsunamis, earthquakes, fires and other disasters, a great deal of emphasis has been placed on families having a secure place to store their records and vital documents where they cannot be lost or damaged. Our MyMedicalRecords PHR product addresses this need because it allows for the fax transmission, upload and storage of insurance, financial and other personal documents, as well as a place to store digital files such as photographs. We believe this recent emphasis provides us with an opportunity to expand our core market and use our MyMedicalRecords PHR product technology to create the essential "safe deposit" box for all important documents and records of a family or small business. The MyEsafeDepositBox virtual storage product extends the MyMedicalRecords technology into these additional markets.

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MyEsafeDepositBox - An Online Secure Document Storage System

We believe that the MyEsafeDepositBox product offers distinctive value in the online storage market due to our telecommunications platform enabling users to fax vital records directly into their MyEsafeDepositBox account without having to first scan paper-based records and have access to a computer to upload information, though the system can receive and store uploaded documents as well. It also permits service providers, such as insurance agents or lenders, to fax documents directly into a user's secure online account. Users also benefit from the ability to sort, store and manage their vital records, while also using a free form text search to find records stored in their account with specific annotations. Our ability to provide private label branding of this product affords banks, insurance companies, escrow services and other financial and legal businesses to provide not only a useful product but also a product that reinforces that business's identity.

In addition, we believe our MyEsafeDepositBox product may also serve as a valuable tool for younger consumers who would not otherwise utilize a PHR storage system, but are looking for a secure way to organize their personal information to take better control over their financial affairs

Because of the similarity in functionality between our MyMedicalRecords PHR product and our MyEsafeDepositBox product, we market these products through some of the same channels. The crossover marketing strategy for our MyMedicalRecords PHR product and MyEsafeDepositBox product focuses primarily on the following channels:

• To corporate accounts, as an added employee benefit for their employees or bundled or co-branded with their product offerings to their customers;
• To insurance companies who are looking for a valuable benefit to provide risk and accident policyholders both in the United States and abroad;
• Through affinity groups (such as alumni organizations and other membership organizations) and discount health benefit membership groups to their members;
• To associations and organizations seeking our solution as an emergency preparedness tool;
• To charitable and critical illness organizations as ways to raise funds;
• To legal, accounting, mortgage, and other organizations that have the need to securely store and transmit documents to and from their clients; and
• Direct to consumers as a retail subscription product.

A typical EMR implementation costs well in excess of $100,000 and can take several weeks or months to integrate into a doctor's practice. Even worse, during this implementation, a doctor's office is asked to significantly reduce their patient load by as much as 50% which means that the practice loses one-half of its revenue during the implementation period and possibly longer. In a healthcare economy where patient load is critical to a doctor's financial success, this can be very problematic. MMRPro is sold on a three-year license, which includes all hardware, software and system management

We recently introduced a new version of MMRPro, MMRPro Plus, which allows the solution to work with virtually any scanner. MMRPro Plus installs as a client on an office computer instead of being built into the intelligence of the scanner. It offers the same features and functionality as the original MMRPro and therefore is ideal for officers where scanners already have been installed.

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MMRPro is being marketed to:

• Physicians, particularly small group and sole practitioners who still do not have any way to digitize the paper in their offices and who do not want to invest the hundreds of thousands of dollars necessary to implement an Electronic Medical Record, or EMR, system;
• Other healthcare professionals such as dentists, veterinarians, and chiropractors;
• Community hospitals and other clinics which do not have the funds or technology resources to invest in an EMR system;
• Surgery centers and specialty clinics; and
• EMR and Electronic Health Records ("EHR") vendors who are looking for a way to bring a PHR into their systems without having to build their own import modules.

• Integration with EMR systems.

Through a partnership with Interbit Data (located in Natick, MA) we are part of a joint software solution that allows hospitals and other clinical facilities to instantly make health information available to patients securely over the Internet using the MMRPatientView portal from any EMR system without first having to scan, fax or print any documents. The Interbit Data- MMR module is certified for Meaningful Use with MEDITECH systems. Although the solution is only deployed for MEDITECH at this time, we believe that it can work with virtually any EMR platform, which opens up a significant new market opportunity for MMRGlobal.

• Integrated e-Prescribe Module.

MMRPro also includes an integrated e-Prescribe module that gives doctors the ability to do automated prescription ordering and refills. The e-Prescribe software gives doctors a choice of all formulations for a given medication, as well as available generic alternatives and shows what patient benefit coverage will be for the prescription. Any special instructions for the patient can also be entered into the module so they are automatically printed on the prescription label. A prescription order can be faxed or automatically transmitted to the pharmacy. In addition, the e-Prescribe module also makes it possible for doctors to keep a drug history on all their patients, as well as check for any interactions and allergies in real-time.

• Integrated Fax Messaging

MMRPro supports both inbound and outbound Internet fax. While fax continues to be a primary way doctors send and receive information such as lab reports, doctors are increasingly concerned about the privacy issues associated with a fax machine in an open area. MMRPro solves the problem by allowing faxes to be initiated from or delivered directly to admin or doctor computer desktops through its integrated fax messaging. Faxes, which are viewable as PDFs, can be assigned to different doctors in the practice and then filed as part of the patient record. Each practice receives one main fax number for the office, and then individual numbers can be assigned to each doctor in the practice.

• Voice Messagin g.

MMRPro also accepts voice messages into its system so doctor can hear voice messages from labs or other providers and keep messages as part of the patient record.

• Practice-specific Branding and Content

MMRPro allows providers to create custom content for their practices that patients see when they access records through the MMR Patient View portal. For example, a practice could use this feature to include a message to remind patients to get flu shots or give a wellness tip.

• Practice-specific Forms Management

A practice can maintain its own library of forms that it uses most often, such as admissions, insurance and treatment forms and print these, with the bar code, on demand when patients come in for an appointment.

• Dynamic Communication with Doctor's Practice Management System.

Through a user designated hot-key, MMRPro seamlessly integrates, on a real-time basis, the patient data contained in the physician's practice management system saving the need of having to reenter data.

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• Patient View.

In addition to its product functionality, MMRPro includes a "Stimulus Program" that creates cost-savings and revenue opportunity for its users; in fact, we believe our Stimulus Program can generate at least as much money for a doctor practice over a three-year term as the $44,000 that is possible through the HITECH Act over a five-year period.

We believe that MMRPro can ultimately eliminate the need for doctor office staff to go into patient charts to retrieve their records. We estimate that this can cost a doctor office as much as $50 per occurrence, when all of the labor and copying costs associated with retrieving a patient record are included. If MMRPro makes it possible for a doctor office to eliminate having to manually retrieve just one record per day, it would translate to a savings of more than $10,000 in a single year.

Doctors have the opportunity to earn administrative reimbursements when their patients upgrade from the free MMRPatientView portal to a full-featured, paid MyMedicalRecords PHR. We share 30% of the subscription revenue from those upgrades with doctors on a monthly basis and believes that patient acceptance for the MyMedicalRecords PHR will be driven by the benefit of being able to store and manage medical records from all doctors for up to 10 family members, not just the one doctor and one family member capability of the free MMR-PatientView Portal.

Demand for both our consumer and professional health IT products is driven primarily by the U.S. healthcare and the health information technology markets. More recently, we have been expanding our consumer market through strategic partnerships with local pharmacies, nurse advocates and home healthcare specialists, all of whom have significant one-on-one relationships with patients who can benefit immediately from the use of our PHR. Likewise, starting in 2012, we created a retail consumer model through the use of Prepaid Personal Health Record cards for marketing through retail outlets such as pharmacies, and we are also expanding our presence into the wellness and prevention market. On the professional side, demand is increasing in the field of ambulatory surgical centers as well as other clinics looking for a cost-effective scanning and document management solution with high usability. Specialty practice areas such as pediatrics, chronic care illnesses and geriatrics are also key areas for expanding the MMRPro solution with our integrated patient portal, MMRPatientView, with upsell to a full-featured MyMedicalRecords PHR. Additionally, as the use of Teleconsulting and Telemedicine becomes more prevalent, MMRPro's patient portal and MyMedicalRecords PHR are patented solutions that provide a user-friendly proprietary platform to facilitate collaboration between doctors and other healthcare providers with patients, such as exemplified by our programs with Alcatel-Lucent and ng Connect.

While the U.S. holds the largest share of the global healthcare IT market, slated to grow domestically at a CAGR of nearly 20% during 2014-2018, health IT is also a growth industry internationally, expected to continue increasing so that by 2017 the global market will expand at a compound annual growth rate of 7.0 percent. Countries sharing a common goal to control healthcare costs are looking to EMR and PHR solutions to achieve this. The global demand is evidenced by our agreements in China, Australia and other countries in development to offer Personal Health Record and electronic document management and imaging services. Moreover, in a global economy, companies are increasingly sending employees overseas, a practice which is expected to increase demand for our MyMedicalRecords PHR among ex-pats, particularly in Europe and the Middle East. Also, medical tourism is on the rise with estimates of a $100 billion market, and this fuels the need for medical records that are truly universal and can be accessed anytime from anywhere. It should be noted here that the growth of health IT at home and abroad is further impetus for ensuring the protection and enforcement of our patent portfolio worldwide. In light of the continued occurrence of emergencies and natural disasters, demand for both our MyMedicalRecords and MyEsafeDepositBox products are driven by relief and educational organizations, as well as by consumers and small businesses, with international focus based on tools that help in disaster preparedness and personal protection.

In developing and marketing our products and services, we plan to continue to participate in the burgeoning consumer health information market and health IT market for patients and healthcare professionals who need to comply with federal legislation, including the Health Information Technology for Economic and Clinical Health Act (HITECH Act) which is part of the American Reinvestment and Recovery Act of 2009 (ARRA). Additionally, we believe that the healthcare reform legislation, the Patient Protection and Affordable Care Act (PPACA), will ultimately stimulate a significant behavioral shift in how consumers manage and control their own health. The healthcare industry is implementing new processes to complement the individual insurance mandate (which requires most Americans to obtain insurance coverage beginning in 2014), Accountable Care Organizations ("ACOs"), and hospital readmission penalties.

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Recognizing that PPACA's reforms are likely to trigger greater consumer interest in and control over individual health information and combined with the healthcare industry's transformation from a pay-for-service system to one that is pay-for-performance or outcomes-based, we are well-positioned to respond given its health IT products and services. While the HITECH Act's Meaningful Use program has incentivized thousands of healthcare providers and facilities to implement computerized medical records, the reforms in PPACA virtually mandate interoperability between and among healthcare providers. For example, an ACO's success is dependent on the ACO's ability both to coordinate care to improve outcomes and to reduce costs; objectives that cannot be achieved without interoperable healthcare IT solutions. Just as the Medicare Shared Savings program rewards physicians operating in ACOs for keeping patients healthy which usually reduces overall costs, greater participation in and control over the individual's own health is becoming mandated by law and encouraged by public and private employers. These driving factors are contributing to a prevailing consensus that patient portals and PHRs are necessary to achieve success of all involved.

We recognize the critical nature of managing an individual's health information requires that our products and advances be implemented with the utmost care to protect the privacy and confidentiality of our customers' data. The Health Insurance Portability and Accountability Act of 1996, commonly referred to as HIPAA, requires covered entities to protect the privacy and confidentiality of the protected health information, or PHI, of their patients and customers. Although we are not a covered entity (as that term is defined in HIPAA), we consider it important to take into account the Privacy and Security Standards and other requirements of HIPAA when implementing our products and services and believe that we meet and/or exceed current HIPAA standards.

The Health Information Technology for Economic and Clinical Health Act, commonly referred to as HITECH, enacted on February 17, 2009 as part of the American Recovery and Reinvestment Act, expanded HIPAA's reach beyond that of just covered entities. Now, business associates, defined as entities that perform a function, activity, or service on behalf of a covered entity and that require use of or access to the PHI of the covered entity, as well as vendors of Personal Health Records (PHRs) that use or access protected health information (PHI), must also comply with the HIPAA's Security Standards and many of HIPAA's Privacy Standards.

As a vendor of PHRs, we are implementing policies and procedures, and reviewing our relationships with all necessary parties on an ongoing basis, to ensure our compliance with HITECH and its associated regulations. While we contend that we are not technically a business associate as that term is defined under HIPAA's three-prong test (since the beneficiary of the PHR is the patient, not the covered entity), the work we are doing to ensure compliance with HITECH as a vendor of PHRs will ensure that we comply with HITECH if we are ultimately determined to be a business associate.

One of the most critical aspect of HITECH is its requirement to notify individuals if their PHI has been, or will likely be, disclosed without the individual's authorization (i.e., there is a breach). We both recognize and fully support this requirement and are working to ensure its contracts with covered entities address and delineate all responsibilities associated with the breach notification process. Moreover, because we believe in the quality, safety and security of our products and services, users of MMRPro, MMRPatientView and MyMedicalRecords receive protection under MMRGlobal's Million Dollar Cyber Liability Insurance Policy. In the event of a loss, users are protected from actual loss or damage caused by an error in our PHR and MMRPro systems and are assisted with their defense costs in the event of a violation of the expanded HIPAA regulations under the HITECH Act.

Health information technology (HIT) is at the forefront of efforts to reform the U.S. healthcare system, viewed as essential to controlling costs, improving care and saving lives. Starting in August 2012 when the Centers for Medicare and Medicaid Services (CMS) released its final rule for Meaningful Use Stage 2, Personal Health Records moved to occupy a dominant position in the healthcare IT landscape because it was now a requirement that eligible professionals provide their patients timely online access to their health information. The commitment to achieve widespread adoption of Electronic Medical Records was legislated by the HITECH Act, which contained provisions allocating more than $27 billion to eligible professionals and hospitals that digitize their medical records systems through "Meaningful Use" of health IT.

In addition to demand created by HITECH, health IT is expected to continue opening up widespread market opportunities in the healthcare industry because the need to control healthcare costs is expected to remain at the top of the domestic agenda for some time. Healthcare spending reached an estimated $2.9 trillion in 2013, now accounting for about 18 percent of GDP, and is expected to reach $4.7 trillion by 2020. According to estimates by the Congressional Budget Office, healthcare spending is on pace to exceed all discretionary spending by 2016.

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We believe the need to control healthcare costs through 21 ^st  century solutions such as EHRs and PHRs supported by regulatory requirements will continue to drive health IT adoption. For instance, adding to the HITECH Act, PPACA also represents a significant opportunity for us This laws include broadening health insurance to cover millions of Americans starting in 2014, implementing new healthcare payment and delivery models, and funding programs that promote healthy behaviors to both prevent and manage chronic diseases, which account for more than 75 percent of healthcare treatment costs. Regarding the insurance mandate, there has been a sweeping amount of publicity about the launch of the insurance marketplace exchange Healthcare.gov on October 1, 2013 due to widely documented technical errors. However, these continue to be addressed into 2014 and extensive advertising campaigns are having a positive effect on sign-ups. We believe this has helped to build consumer awareness of the responsibility they share in their healthcare costs and the need for such tools as Personal Health Records to help control their out-of-pocket spending.

Even though the ACA did not directly legislate for a federal incentive program for EMR/EHR adoption in the way that HITECH did, the components of the bill build on computerized medical records and the electronic sharing of information to achieve better results in line with the new outcomes-based reimbursement model of healthcare. So, for example, the challenges created by the influx of newly insured to better manage the cost of their care, or the efficiencies mandated by ACA in the form of Accountable Care Organizations (ACOs) that reward providers for quality of care rather than quantity, is expected to result in greater demand for health IT solutions because they are critical for the coordination of care required to achieve improved outcomes, with Personal Health Records specifically having a positive impact in the way technology tools can lower the cost of care among defined populations.

Additional drivers of health IT that are expected to become more prevalent in the coming years are new multi-platform, multi-channel models of healthcare delivery. According to health economist and iHealthBeat contributor, Jane Sarasohn-Kahn, mobile apps, home-based monitors, Wi-Fi scales, text messaging and e-mail communication will gain traction in the coming years to ensure patients stay well. We are well-positioned to benefit from multiple technology integrations, demonstrated by our partnership with the Alcatel- Lucent ng Connect Program first announced in 2011. We anticipate more strategic partnerships with wireless providers as a result of our integrated telecommunications platform which delivers a PHR that allows medical records to be shared among all healthcare professionals involved in a patient's care using TeleHealth platforms.

With healthcare's continuing prominence on the national agenda and mandates to share medical information electronically across the whole spectrum of care, we anticipate that market conditions will remain healthy for the growth of our patented Personal Health Record products and services. The role of health IT in cost containment and improved patient outcomes through patient engagement and coordination of care, the driving force of HITECH stimulus and the expansive role patient portals and PHRs have as a requirement for the Meaningful Use of an EHR, America's aging demographics underscored by the wave of baby boomers entering Medicare, the rise of chronic illnesses and their cost, and an increasingly global and mobile world are contributing factors that enable our products to benefit from the HIT value propositions in the marketplace. Even with the challenges and uncertainties healthcare providers face in their day-to- day practice, they are continuing to move away from outdated paper-based systems and focus on spending strategic dollars on health IT as ROI given economic stimulus, the transition of healthcare to more of an outcomes-based reimbursement model, growing peer pressure, and the fact that increasing numbers of patients are becoming informed healthcare consumers who demand it.

Patient portals and timely access to health information such as made possible by PHRs, which were a convenience under Meaningful Use Stage 1, are now a necessity under Meaningful Use Stage 2, and signifies where health IT is heading now and into the future. With the final rule of Meaningful Use Stage 2 released on August 23, 2012, patient engagement moved to the center of the health IT industry and has marked a new era as patients require online access to their health data versus the previous rule which only required a copy on request, and did not have to be specifically web-based. So, starting in January 2014, over 50% of an eligible professional's patients need to have the ability to access their health information online within four business days of the information being available, and this is expected to expand to 90% with Stage 3 Meaningful Use requirements. Eligible hospitals need to make the information available to patients within 36 hours of discharge. The new requirements have resulted in understandable pressure for hospitals and physicians in the EHR Incentive Program managed by CMS, and the prospects of decreasing incentives and increasing penalties are also strong drivers for adoption.

The ACA's insurance mandate is also an additional driver for our PHR products and services. With ultimately over 30 million Americans entering the insurance pool, it will therefore become increasingly important to have the kind of tools such as a PHR to communicate and engage with the patient population, but continued delays in the ACA's implementation may slow this demand. Additionally, ACOs will need to rely on health IT solutions to make possible greater coordination of care that is such a critical part of the outcomes-based healthcare model being implemented. The ACA also imposes measures to reduce high hospital readmission rates. On October 1, 2012, penalties went into effect in the form of fines imposed by Medicare against hospitals that readmit patients within 30 days of discharge for the same complaint or procedure. The penalties are part of a multifaceted effort by Medicare to reward facilities based on how they meet certain care quality and patient satisfaction metrics. It is believed that many of these can be achieved by providing patients and/or caretakers with effective tools that enable them to readily have the information on how to comply with appropriate follow-up care. This also coalesces around the personal medical home model where remote patient monitoring enables data collection into a PHR to provide continuous and coordinated care. According to a report produced by the Deloitte Center for Health Solutions, "Connected Care: Technology-enabled Care at Home," the effective application of in-home technologies can produce a net result of potential annual savings of 20 percent or more if chronic conditions and post- hospitalization care is managed by involved consumers in their homes.

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Social media and video contests are also being increasingly used to build PHR communities. MMR has joined with hundreds of other companies to "Take the Pledge" and we are expanding our presence across the Internet using social media to engage consumers on the value of having a Personal Health Record for themselves and their family. We also implemented the Blue Button initiative enabling Vets and Medicare recipients to share their data with healthcare providers, caregivers and other people they trust.

Organizations and enterprises not directly affected by Meaningful Use incentives are further promoting patient engagement. For example, employers are offering workplace wellness programs that reward employees for healthy behaviors to increase productivity and control insurance costs which are also supported by program policies in the ACA; health plans offer PHRs to patients to maintain data that monitors health progress in addition to claims data; pharmacies are growing their retail clinics and can offer PHRs for better care coordination and to offer health management tools such as prescription refill reminders; caregivers are placing PHRs at the top of their list of technology that can best support their practice issues; retailers can use PHRs as a tool to create stickiness and build loyalty programs at the point-of-sale; and wireless carriers are developing platforms for remote patient monitoring devices transmitted by smartphones into a patient's PHR for sharing by the entire medical team.

Finally, an ultimate driver for our products and services are consumers themselves. Through federal and state government initiatives, employer policies, and a stretched healthcare system, individuals and families are being challenged to take more responsibility for their health and healthcare costs and in response they are pushing for transparency. Studies show that patients who use a PHR are almost twice as like to be up to date with preventive services, and those who have access to their health information are able to make better decisions about their care which can translate into improved health and cost savings. So with increasing use of EHRs requiring patients be provided their personal health information in the form of a patient portal or Personal Health Record, Telemedicine and the development of mobile health apps (an estimated 500 million individuals are expected to be using mobile healthcare applications within the next five years), the use of social media to engage consumers in their healthcare, and pharmacies growing their retail clinics, we believe PHRs have a strong future as part of an overall health IT strategy. Moreover, our patented MyMedicalRecords PHR - Internet-based for 24/7 access, easy-to-use, private and secure, and multi- platformed for timely sharing of health data - fulfills what surveys reveal consumers are most looking for in a PHR, which is access to information online, privacy, the ability to track immunizations and monitor lab reports, communicate with doctors, and correct mistakes in their records.

Doctors continue to be under increasing pressure to make their offices "digital" as mandated by the Federal Government in order to qualify for incentive payments of $44,000 per physician through Medicare and $63,750 per physician through Medicaid under the HITECH Act. Stimulus funds from HITECH are paid out in three stages of "Meaningful Use" over a five- year period; for example, a doctor under Medicare who qualified for funds in 2010 began receiving payments in 2011 and will continue to through 2015. Doctors who have waited until 2013 or 2014 to have EHRs in place will be eligible for smaller bonuses. Because of the short time horizons and high costs involved, many eligible professionals, despite the stimulus funds, were initially resistant to using full-blown Electronic Medical Record systems. Studies cited in a Congressional Budget Office Report show that a three-doctor practice could spend as much as $162,000 in the first year to install and maintain a system. This doesn't include the "hidden" costs of lost revenue from having to reduce patient load and also delays in billing while a new system is being implemented. For hospitals, EHR implementation can run into many millions of dollars.

Regardless of the early resistance by practitioners, over 50 percent of physicians and 80 percent of hospitals have adopted Electronic Health Records as reported by the Department of Health and Human Services in May 2013. Yet increasing numbers of users are expressing dissatisfaction with their system. A spring 2013 Software Advice survey cited by CIO.com found that more than 30 percent of providers intended to replace their EHR system. The complexities of Meaningful Use appear to create increasing pressures on healthcare providers, which we believe also creates dynamic market conditions for the Company's MMRPro system. We believe MMR is well-positioned to serve providers as a cost-effective bridge or adjunct to a full blown Electronic Health Records system while at the same time providing an integrated patient portal/Personal Health Record, which is essential for qualifying for incentives under Meaningful Use Stage 2 patient engagement requirements. Moreover, because the fax is still being used by the majority of healthcare providers, especially with their patients, MMRPro's electronic fax capability enables them to run their practice like they always have while digitizing their office or changing or upgrading their current system. Additionally, with the MMR Stimulus Program, incentives are offered either in place of, or in addition to, Meaningful Use payments, where it has been acknowledged that for smaller practices the perks offered by the government may not be enough by themselves to get doctors on board. And when Meaningful Use incentives are removed from the equation altogether, as is the case with non-eligible professionals such as long- term acute care and rehabilitation facilities, our end-to-end, user-friendly solutions enable clinical data to be digitized and available across all sites of care.

As a result, we see a significant niche opportunity to provide an efficient, cost-effective system that helps healthcare professionals take the required first steps to any form of digital office - scanning and digitizing patient records. We believe that the simplicity and elegance of MMRPro makes it attractive to the many thousands of medical offices, community hospitals and other healthcare providers who are still paper-bound and searching for a way to start their digital conversion or are dissatisfied with their current system and can use MMRPro for easier digital recordkeeping and to improve patient engagement.

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Drivers for MyEsafeDepositBox Market

The primary market driver for our MyEsafeDepositBox product is the need for individuals and businesses to be able to easily, efficiently and securely maintain backup copies of paper-based financial, insurance, legal and other vital business and personal documents that can be retrieved at anytime from anywhere over an Internet-connected device, This is especially true during a disaster, where records can be inaccessible or permanently destroyed. Eventually, as consumers continue to grow less reliant on paper, MyEsafeDepositBox can also be marketed as helping them in reduce their carbon footprint.

Online storage is a growth industry that can be viewed as rebounding from the economic recession. According to International Data Corporation's, or IDC's, Worldwide Storage Software Qview, 2011 sales of storage software increased 11.6% over 2010 to $14.16 billion led by data protection and recovery. (StorageNewsletter.com). In-Stat reported the previous year that with home networking adoption passing 50% of households in North America and 13% worldwide, the consumer network storage market is seeing continued growth.

Both companies and individuals are continuing to seek solutions that will allow them to safely backup - and quickly restore - any lost data. We believe that our MyEsafeDepositBox product meets the need of a sub-set of this vast data storage market, and we target individuals and businesses that want to find a secure, web-based solution for storing their most critical personal, financial, legal and insurance records, rather than those looking to back up the entire contents of their computer hard drive or corporate network.

In addition, the need for individuals to augment their personal plans for disaster preparedness is reflected in a Red Cross poll that showed seven of 10 respondents were only somewhat prepared for a disaster, with 59% to 73% having no specific evacuation plan. For businesses, the need to implement a disaster recovery plan can be the key to their survival. In the publication, "The Definitive Handbook for Business Management," cited by Hewlett-Packard, it states that between 60% and 90% of companies that don't have a disaster plan find themselves out of business within 24 months of experiencing a major disaster. As natural and man-made disasters continue to grow - from hurricanes, earthquakes, and floods to computer viruses and even terrorist attacks - a common denominator for recovery is access to information and documentation, and we believe our MyEsafeDepositBox product meets this need by offering users a safe and easy way to store, access and recover all of their important documents and vital records online.

To date, we have signed agreements for our MyMedicalRecords PHR product, our MyEsafeDepositBox product, our MMRPro product, as well as licensing agreements to license our Biotech and Health IT Patents and other intellectual property. Our core products are sold directly to retail consumers, healthcare professionals, hospitals, surgery centers, dental offices, vendors, retailers, employees, affinity groups, membership organizations and licensees amongst others. Our Biotech and Health IT patents are being licensed to pharmaceutical companies, and other health IT companies as well as retailers. We also have a program for hospitals to give patients access to use our MyMedicalRecords Personal Health Record free of charge when they are discharged from inpatient facilities with the option to upgrade to a fully paid account.

We also offer private label versions of our MyMedicalRecords PHR product. In addition, we offer employee benefit programs to clients who provide MyMedicalRecords to their employees as a free benefit, similar to affinity and membership group clients. We receive compensation under these agreements either on a per enrolled account basis or on a membership basis in which we are paid based on the number of persons who are eligible to sign up for our service, regardless of the number that actually enrolls. Through an agreement with Microsoft ^®  HealthVault ^®  we have the opportunity to integrate our products with others connected to their platform in response to consumer demand.

In the affinity and membership group area, we continue to look for opportunities as organizations want to give their members access to the MyMedicalRecords PHR or MyEsafeDepositBox; we expect that these groups will continue to create new programs that bundle the MyMedicalRecords PHR and MyEsafeDepositBox virtual storage vault with their services.

On December 22, 2010, we entered into a Non-Exclusive License Agreement with Celgene Corporation ("Celgene"). Pursuant to the terms of the Agreement, the Company licensed to Celgene, on a non-exclusive basis, the use of our clinical and scientific data related to targeted immunotherapies for cancer and other disease treatments to stimulate a patient's immune response and certain other confidential information in the United States and Europe. In consideration for the rights granted under the Agreement, Celgene agreed to pay the Company certain upfront fees and development milestones. When a milestone is reached it continues to automatically trigger a payment to MMR. We have already received $850,000 in milestone payments under such agreement. As part of the agreement we get regular recurring updates from Celgene on the status of any upcoming milestones, we have no reason to believe that we will not receive the remaining amounts due under the terms of the agreement when milestones are reached. A copy of the agreement can be found on Exhibit 10.32 of the registrant's annual report on Form 10-K for the year ended December 31, 2010.

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On December 9, 2011, we entered into a thirty million dollar Non-Exclusive Settlement and Patent License Agreement with Surgery Center Management, LLC whereby we agreed to release SCM from prior patent infringement claims and granted SCM, on a non- exclusive basis, a license covering the Licensed Patents, which amongst other things, covers certain Licensed Products and/or Licensed Services to develop, make, have made, use, sell, lease, license, demonstrate, market and distribute the Licensed Products and/or Licensed Services under SCM's brand or private label for channel or distribution partners who purchase the SCM branded or Licensed Products and/or Licensed Services for resale to end customers. The Agreement contains customary provisions, as to the term of the Agreement, representations, warranties, and indemnities by each of the Company and SCM and was filed with the Securities and Exchange Commission as Exhibit 10-1 on Form 8-K on January 17, 2012.

In consideration for the rights granted under the Agreement, SCM agreed to pay us $5 million dollars (the "Initial License Fee") plus an additional $5 million dollars annually during the five year term of the Agreement with the explicit understanding and requirement that the Settlement and Release portions of the Agreement become effective solely upon SCM's payment in full of the Initial License Fee. SCM also agreed to pay MMR additional royalties of ten percent (10%) of gross revenue at such time as an initial Two Hundred Million U.S. Dollars ($200,000,000 USD) of gross revenues are accrued on any Units sold, used or otherwise transferred pursuant to the terms of the Agreement.

The initial $5 million dollar payment became payable to us on December 23, 2011, with five additional payments due on November 15th 2012, 2013, 2014, 2015 and 2016.

We are currently seeking payment on the initial $5 million as well as the subsequent $5 million payments which were due in November 2012 and November 2013 as per the agreement. As of December 31, 2013, three of the four revenue recognition criteria of Staff Accounting Bulletin No. 104 had been met (persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed and determinable). We will not recognize any of this revenue until such time as collection is reasonably assured. We are currently in litigation against SCM and believe SCM has cash, accounts receivable, and/or other assets sufficient to pay the amounts due upon a successful outcome.

During 2013, our three largest customers (Visi, Inc. $302,000, Thorson Insurance Services $50,000 and XN Financial $44,000) accounted for approximately 68% of our total revenue. Due to the contributions of these customers to our consolidated revenue, we are dependent upon our relationships with these customers.

Revenue from our largest customer, which comprised 52% and 33% of our total revenue for the years ended December 31, 2013 and 2012, respectively, was transacted with a private entity in which we hold a minority equity investment.

Our marketing strategy for our MyMedicalRecords PHR product calls for continued focus on seven main sales channels:

• Licensing

Since the issuances of our patents in the U.S. and numerous countries we are focused on licensing the use of our proprietary technologies for the provisioning of Personal Health Records.

• Corporate Sales - Employee Benefit Offering

We are pursuing the human resources and benefits market to secure agreements or strategic arrangements providing for companies to offer our product to their employees and members. As a result of health reform, which encourages worksite wellness, companies are rethinking their roles in the new healthcare economy and we believe the user-friendly nature of our MyMedicalRecords PHR product makes it readily acceptable to employees and gives companies a low cost way to demonstrate their employee-friendliness.

• Affinity Groups and Membership Organizations.

Our MyMedicalRecords PHR product can be bundled with other health or travel-related services. For example, a travel accident insurance company can include our MyMedicalRecords PHR product in its suite of emergency medical and repatriation services for travelers going abroad. We believe giving users the ability to access their medical records in an emergency situation overseas may add considerable value to an insurance company's travel insurance policies. Additionally, an affinity group, such as an alumni association or charitable organization, may offer our MyMedicalRecords PHR product as a recruitment or renewal tool. We plan on continuing to utilize outside sales representatives who specialize in selling services to these market segments.

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• Private Label Branding

Our MyMedicalRecords PHR product is designed to allow site pages to be customized with a corporate, affinity group or membership organization logo and content that is specific to that entity. The technology built into our MyMedicalRecords PHR product also is designed to allow companies, groups or organization to instantly communicate with hundreds or even thousands of employees in the event of an announcement or emergency situation at no additional cost to MMR or in many cases, the client.

• Direct to Consumer Marketing

We intend to continue to focus on marketing our MyMedicalRecords PHR product directly to consumers via both online and off-line advertising vehicles. We have produced a series of television ads that are shown on syndicated television shows. The ads can be seen at  www.mmrontv. com . We continue to test pay-per- click advertising using booth Google Adwords and the other targeted platforms such as Facebook. In addition, we plan on continuing to exploit our relationship with E-Mail Frequency LLC continuing to test different e-mail creative, both text and HTML, as well as campaigns to target direct to consumer sales. Our MyMedicalRecords PHR product is currently available to individuals on a monthly or annual subscription basis as well as to those patients who upgrade from a free MMRPatientView account provided by their doctors.

• Healthcare Professionals.

We plan on continuing to offer our MyMedicalRecords PHR to patients at physician offices, hospitals, surgery centers, x- ray facilities and other facilities. In addition, we are planning to increase our marketing efforts in connection with sales to home caregivers and visiting nurses. We believe our ability to accept and transmit information in HL7 messaging formats will allow us to now more seamlessly integrate with existing EMR systems and populate the Personal Health Record with discrete data in addition to the PDF format already accepted by the Company's products.

• Retail.

We are in the process of establishing a distribution channel through retail where consumers will be able to purchase a Prepaid PHR card at retail stores including pharmacies, hospital gift shops, mass merchandisers and supermarkets amongst other specialty retailers. The prepaid retail card is manufactured as a high quality credit-card style card. The package surrounding it provides information on the PHR service to encourage both initial purchase and then active use. Because the prepaid card is not flimsy, emergency personnel will be able to find it in a user's wallet in the event of a medical emergency, thus reinforcing the special Emergency Log in feature of the MMR product. We plan to have a magnetic stripe on the back of the card as well, which will allow us to offer the prepaid product in conjunction with pharmacy or store loyalty programs.

• Other Markets.

W e plan  to focus a portion of our marketing efforts in selling to nursing and convalescent homes as well as other vertical markets that have the need to share, store and manage documents and health records in a secure manner such as the legal, accounting, mortgage banking, chronic illness foundations, and charitable organization markets .

Because of the similarity in functionality between our MyEsafeDepositBox product and our MyMedicalRecords PHR product, we market these products through many of the same channels. Both products are designed to offer users the ability to fax, upload and store important and private records or documents in a secure electronic environment, safe from fire or flood, and secure from the threat of identity theft. Thus, for example, we market our MyMedicalRecords PHR product to insurance companies as an additional benefit for health insurance policy holders, while at the same time marketing our MyEsafeDepositBox product to insurance companies that may offer it to their risk and casualty policy customers. In addition, we market our MyEsafeDepositBox to financial institutions and legal service providers as a safe and secure way for their customers to store important and private documents provided by these companies.

We have been working on enhancing the MMRPro platform as well as broadening its distribution and sales channels. We believe that, with Meaningful Use Stage 2 requirements in place that mandates providers giving patients' online access to their health information, MMRPro will gain accelerated acceptance with clinicians because of the fact that the product automatically creates a patient facing copy of scanned records through its MMRPatientView portal. We also believe that the successful adoption of the MMRPro product by our existing customer base will help simplify and possibly shorten the sales process as it acquires new customers.

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In addition to working with document imaging sales and distribution channels, MMRGlobal is utilizing distribution networks of companies who already sell other products into doctor offices. These distribution partners also help increase our integration and support network.

We also plan to utilize lead generation and telemarketing/appointment setting tools as a way to build a pipeline of customer opportunities that can be sold direct by MMR or through its distribution partners.

Through an agreement with Interbit Data (located in Natick, MA) we have created a joint software solution that will allow hospitals and other clinical facilities to use a Meaningful Use certified solution to instantly make health information available to patients securely over the Internet using the MMRPatientView portal from any EMR system without first having to scan, fax or print any documents. The Interbit Data-MMR module is certified for Meaningful Use with MEDITECH systems. MEDITECH is being used by more than 750 hospitals nationwide. Although the solution is only deployed for MEDITECH at this time, MMR believes that it can work with virtually any EMR platform, which opens up a significant new market opportunity for MMRGlobal.

In addition to the main marketing channels discussed above, we have also identified other potential markets for increasing sales of our products:

• Other Health IT Providers

We believe that there is a market for our health IT products through strategic relationships with other health information technology providers who see MMR's services as being complementary to their own offerings. This is also driven by Stage 2 Meaningful Use and requirements that vendors incorporate PHRs and patient portals in their products and services.

• Home Healthcare.

We also believe that distribution through visiting nurses, caregivers, home medical supply companies and patient advocates represents a significant new channel for our PHR. We are actively pursuing creating specialized programs where home healthcare works can offer cards to their clients and then populate the PHR with information from their home visits.

• Small Businesses

We believe our MyEsafeDepositBox products could serve as an affordable and easy-to-implement tool for small companies that have not, or do not want to, invest in expensive IT data backup infrastructure.

• Government Agencies

We believe that federal, state and local governments would be interested in our products as they provide a powerful, yet easy to use addition to any family's disaster preparedness plan and we continue to approach agencies at all levels to explore the possibility of setting up pilot programs.

• Travel Companies and the Travel Industry

We believe that travelers, specifically Expats, can represent a strong market for our products because these products are designed to enable travelers to access to their medical records, or other important documents (copies of passports, credit cards, etc.), in the event of an emergency when they are away from home. We plan to market our products to airlines, hotels, automobile clubs and other- travel related companies and organizations as well as to advertise on travel-related websites to reach this market.

• Finance, Accounting, and Insurance Companies.

We believe insurance companies are interested in offering a MyEsafeDepositBox type of service offering for their risk and accident policyholders. We are actively working with at least one large financial institution to utilize MyEsafeDepositBox to handle paperless loan processing and delivery solutions as well as replace uses for traditional safe deposit boxes.

• Consumer Product Companies

We believe we can better target health-conscious consumers who may have a greater interest in our products by developing strategic partnerships with consumer products companies, including wireless phone service providers.

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• Retailers

We exploit our intellectual property, technology and our MyMedicalRecords brand internationally. On January 4, 2010, we announced the completion of a definitive Cooperation Agreement ("the "Unis JV") with Unis-Tonghe Technology (Zhengzhou) Co., Ltd., or Unis, to form a joint venture to build a customized version of MMR's proprietary PHR services and professional document imaging and management solutions in China.

Under the JV, Unis and MMR agreed to form a joint venture in China for the purpose of deploying our PHR services and document imaging and management solutions as part of a total EMR solution in China. Under the agreement, we will own 40 % of the joint venture and Unis will own 60%.

As a result of lead times to develop customized EMR solutions in response to government specifications, this effort has taken several years. In the meantime, we have begun to leverage our resources in China with other U.S. partners including Alcatel-Lucent to help manage relationships in China locally.

Also pursuant to requests from Unis and the Chinese government, we have continued to respond to requests for changes in the Unis JV including changes continuing throughout 2013.

In 2012, we entered into an agreement with Australian company VisiInc PLC to sell our patented consumer and professional health IT products and services on the Visi platform utilizing the Vistime product in the health technology market in Australia. The agreement with VisiInc PLC calls for minimum performance guarantees to be paid to MMR annually.

We are also actively working with potential strategic partners in countries where our patents are issued which include Australia, New Zealand, Singapore, Japan, Mexico, Canada, Hong Kong, South Korea, Israel and Europe to leverage our global patent portfolio.

We have a Board of Advisors and a Medical Board of Advisors, which include the following individuals:

• Buzz Aldrin, Ph.D.

Apollo 11 Astronaut

• Titus Day

Managing Director, 6 Degrees Management

• Hon. Richard A. Gephardt

22nd Majority Leader of U.S. House of Representatives

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• C. Rowland Hanson

Former Executive with Microsoft, Neutrogena and Nautilus

• Hon. Asa Hutchinson

Former U.S. Congressman, First Under Secretary of Homeland Security

• "Sugar" Ray Leonard

Professional Athlete and Entrepreneur

• Fred Middleton

Managing Director, Sanderling Ventures

• James L. Spigarelli, Ph.D.

Former CEO and President, Midwest Research Institute

• JJ Virgin, CNS, CHFI

Health Correspondent and Nutritionist

• Michel Babajanian, M.D., FAC

Board-Certified Otolaryngologist and Head and Neck Surgeon

• Glenn D. Braunstein, M.D.

Chairman, Department of Medicine at Cedars-Sinai Medical Center

Director, Cedars-Sinai Thyroid Cancer Center

• David E. Bresler, PhD, LAc

Author, Consultant and Educator; President, Academy for Guided Imagery

• Shekhar Challa, M.D.

Board-Certified Gastroenterologist & Award-Winning Author

Co-Founder and President, Kansas Medical Clinic

• Jeremy Fine, M.D.

Board-Certified in Internal Medicine

• Theodore B. Goldstein, M.D.

Orthopedic Surgeon

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• William Goodman, M.D.

Pulmonary and Critical Care Physician

Academic Appointment at Dartmouth Medical School

• Cara Natterson, M.D.

Board-Certified Pediatrician and Author

Founder, Worry Proof Consulting

• Lawrence D. Piro, M.D.

Clinician, Researcher & Lecturer; International Expert in Hematologic Malignancies

The Angeles Clinic and Research Institute

• David Charles Rish, M.D.

Dermatologist; Academic Appointment at UCLA

• Prediman K. (PK) Shah, M.D.

Director, Division of Cardiology and the
Oppenheimer Atherosclerosis Research Center at Cedars-Sinai Medical Center

We work closely with our Board of Advisors to identify new business opportunities. In Addition, we work with our Medical Board of Advisors to find more effective and efficient uses of our products for healthcare professionals as well as finding new ways to exploit our biotech assets.

We currently contract with numerous third-party telecommunications carriers, data centers and other information technology service providers and developers to develop and maintain our products.

We contract with a third-party for the development and maintenance of the software applications necessary to run our MyMedicalRecords PHR, MyEsafeDepositBox and MyMedicalRecords Pro products. Our outside developers support our software development needs through a team of software engineers, programmers, quality control personnel and testers, who work with our internal product development team on all aspects of application development, design, integration and support of our products. Under our development contract, we own the intellectual property rights over all software applications developed pursuant to the contract. We pay our developer per-project fees for the development services provided and a monthly fee for support and maintenance services. Most of our agreements with developers renew automatically for one year periods subject to the right of either party to terminate the agreement by giving six months written notice to the other. Notwithstanding the ability to terminate MMR owns, controls and maintains copies of all its software, source code, and updates and changes as they occur.

We also contract collocation and hosting services to Level 4 and Level 5 certified data centers that monitor, manage and maintain our systems and storage facilities that service our production websites. Scheduled, non-escalatory, monthly payments are made for all collocation and hosting services. Services include managing and maintaining the production servers that host our MyMedicalRecords PHR and MyEsafeDepositBox and MMRPro applications and store user related data. The data center agreements are renewed automatically and a termination option is available to either party upon a six month prior written notice. MMR owns all hardware located in the data centers and has the option to remove it should a data center agreement be terminated. Notwithstanding the ability to terminate MMR owns and controls and maintains copies of all its software, source code, licenses and updates and changes as they occur.

In the event that we are unable to continue to obtain supply, development or maintenance services from any of our current suppliers or developers, we believe that we would be able to utilize other suppliers, developers, or maintenance services to continue the development and operation of our products. Prior to selecting our current suppliers, we received competitive bids from other vendors who would have been able to provide equivalent services. Thus, we believe that the marketplace for such services is broad enough that we would be able to reach commercially reasonable terms for the continued development of our products within the termination periods provided in each agreement.

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Disaster Recovery Plan

Our data centers have disaster recovery plans in place designed to ensure the safekeeping of records stored in a user's MyMedicalRecords PHR, MyEsafeDepositBox, MyMedicalRecordsMD and MMRPatientView accounts, while maintaining continuity of our services should our server site be affected by a natural or man-made disaster. Our main production sites have redundancy measures built-in at all levels of the infrastructure and are designed to facilitate maximum availability of our product websites. Our backup and recovery encryption and processes are FIPS 140-2 compliant.

Although we believe that no other product in the marketplace compares to what we provide in our comprehensive PHR and other offerings, there are other PHR providers in the consumer health information management marketplace today that compete for our services. These include MyMediConnect, NoMoreClipboard.com, Dossia, WebMD Health Manager, ZweenaHealth, and numerous others including Internet and patient-portals offered by EMR Vendors, health exchanges, and insurance companies, hospitals and HMOs for their policyholders and patients.

Each of our competitors offers varying PHR products and services for online storage and access to medical records at varying price points (at the basic "free" level, with minimal recordkeeping capability and usually includes advertising). However, we believe our MyMedicalRecords PHR product offers unique features that distinguish it from those of our competitors. In particular, we believe our MyMedicalRecords PHR product offers greater ease of use and accuracy than our competitors' products because copies of the actual medical records, such as laboratory test results and radiology reports can be faxed, read, or uploaded directly into the user's MyMedicalRecords PHR account. This helps ensure accuracy when compared to redacted data from a patient portal, multiple records from different providers or requiring users to input the data themselves, which may result in transcription errors, or go through a third party, which could result in more time, additional costs and can raise the issue of privacy.

In addition, most competitive services do not offer integrated inbound and outbound fax directly to or from the user account, or if they do they are usually required to go through third party intermediaries in order to share information with other providers along the continuum of care. Moreover, we believe our integrated fax offering alone can save members as much as $300 a year as compared to using similar electronic fax services.

In addition, while hospital patient, HMO patient and insurance policyholder Internet-portals allow users to see certain information regarding test results, prescriptions or claims data, and may even give patients the ability to set appointments and communicate with doctors, these portals typically only allow users to view data from that specific provider, and if a user changes his or her healthcare provider, insurance carrier or employer, the information may not be available in the future. Our MyMedicalRecords PHR product is designed to offer our customers a single secure online repository for all of their health information and records, from every provider, so that this information is available any time a MyMedicalRecords PHR user needs to access and share it, and our service is completely portable, meaning it stays with the member though changes in health plans, healthcare providers and employers. Moreover, the MyMedicalRecords account covers an entire family of up to 10 members, whereas other services typically only cover an individual or charge for additional family members.

We also believe the enhanced features offered at our price point, offer consumers unique and attractive advantages that separate our MyMedicalRecords PHR product from the competition. In addition, while competing services may raise consumer awareness about the need for access to personal health information and this increased awareness may likewise increase the marketability of our MyMedicalRecords PHR product, growth in the consumer health information management marketplace may also attract new entrants. However, while we believe that greater ease of use and array of enhanced features distinguish our MyMedicalRecords PHR product from those of our competitors, many of our competitors may have greater resources and may attempt to modify their product offerings to make them more competitive, including attempting to replicate some features of our MyMedicalRecords PHR product. Notwithstanding we seek to protect our proprietary technology through our patents in the U.S. and overseas and other countries of commercial interest.

Our MyEsafeDepositBox product competes with a number of online backup and electronic data storage services. The increasing use of external hard drives and flash drives to backup data also has the potential to compete with online data storage services such as our MyEsafeDepositBox product.

We believe that MyEsafeDepositBox is a superior product when compared with products such as My Vault® Storage or Allianz Protect in that it permits multiple service providers, such as insurance agents or lenders, to fax documents directly into a user's account. In addition, much like the MyMedicalRecords PHR, the MyEsafeDepositBox service also offers outbound fax and emergency login features which further differentiate us in the marketplace. We also have the ability to provide private label branding that affords banks, insurance companies, escrow services and other financial and legal businesses to provide not only a useful product but creates brand awareness and loyalty.

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MMRPro

MMRPro competes with scanning services that market their services to doctors seeking to convert their historical paper records into electronic files, as well as EMR systems. Scanning services typically do not provide the doctor with an integrated end- to-end system that not only scans the record, but automatically sorts it by patient and by patient chart tab. Most scanners merely digitize patient records and store them either on a local drive or a Local Area Network drive, which requires the doctors to have an IT consultant manage their online records. Since MMRPro is a "Software As Service" model, the scanner records are sent to a web- hosted application with redundant data storage facilities and MMR handles the physical storage and management of patient data in compliance with HIPAA's Privacy Rule and Security Standards. This not only relieves doctors of having to worry about their in-house records management, it also allows them to access patient records from any Internet-connected computer as well as to deploy a copy of a record for the patient.

MMRPro also competes with EMR systems that offer doctors the opportunity to make their entire office paperless. However, many doctors, particularly solo and small group practitioners, are still resisting EMRs with a high cost of conversion and the difficulty and expense associated with maintaining an EMR system. MMRPro provides an efficient alternative and or transition to a full-blown EMR for many thousands of dollars less cost. MMRPro also features a patient portal, MMRPatientView, which is a requirement of Meaningful Use and is both integrated with our end-to-end system or can be incorporated as a separate module within any EMR system, as is being done in partnership with Interbit Data for the MEDITECH EMR platform.

Since inception, our health IT business has evolved from a development stage company, to a provider and reseller of Personal Health Records and document imaging and scanning systems (MMR Services), to a Licensor of MMR's intellectual property. Continuing through 2013, we remained focused on maximizing the value of our intellectual property portfolio, particularly our 10 U.S. health IT patents that have been granted to date. Our health IT patent portfolio, which we have been building since 2005, currently includes our U.S. patents (with over 250 issued claims), 17 pending U.S. patent applications (with over 400 claims), seven foreign patents including two in Australia with others in New Zealand, Singapore, Japan, Mexico and Canada, and 14 other pending patent applications in foreign countries. These patents have the potential effect of enabling us to control a dominant marketplace position in personal healthcare, being well-positioned to benefit from the explosion in health IT globally. The full term of our health IT patents will not expire until September 12, 2025 or after.

Our health IT patent portfolio includes issued patents on our health IT products and services including our MyMedicalRecords, MyEsafeDepositBox and MMRPro product and services, which is in addition to our portfolio of biotech patents. MMR acquired significant intellectual property assets from the Merger with Favrille and continues to seek ways to exploit and monetize those assets, which include, but are not limited to, data from our pre-Merger clinical vaccine trials, the FavId™/Specifid™ vaccine, and the anti-CD20 antibodies.

Through our wholly owned subsidiary, MyMedicalRecords, Inc., we currently have 10 U.S. patents - Nos. 8,117,045 ("Method and System for Providing Online Medical Records"); 8,117,646 ("Method and System for Providing Online Records"); 8,121,855 ("Method and System for Providing Online Medical Records"); 8,321,240 ("Method and System for Providing Online Medical Records"); 8,301,466 ("Method and System for Providing Online Records"); 8,352,287 ("Method for Proving a User with a Service for Accessing and Collecting Personal Health Records"); 8,352,288 ("Method for Providing a User with a Web-Based Service for Accessing and Collecting Records"); 8,498,883 ("Method for Providing a User with a Service for Accessing and Collecting Prescriptions"); 8,626,532 ("Method for Providing a User with a Web- Based Service for Accessing and Collecting Health Records"); and 8,645,161 ("Method and System for Providing Online Records") - as well as additional applications and continuation applications.  These patents cover inventions pertaining to Personal Health Records, Patient Portals and other Electronic Health Record systems.  

At the start of 2013, we were issued two U.S. patents with claims totaling 57: U.S. Patent Nos. 8,352,287 and 8,352,288 were issued on January 8, 2013 after being allowed on November 28 and December 3, 2012, respectively. Significantly, claims in the `287 Patent expanded MMR's patent portfolio with additional claims directed toward a Web-based service to access and collect health records from different types of service providers, including, but not limited to, retail pharmacies as well as hospitals, providers and other healthcare professionals providing services over the Internet. The health records, including prescriptions, may be collected from service providers using various types of messaging including email, facsimile, uploads, and voice. The `288 Patent, our seventh, further raised the bar for our PHR intellectual property in that there are additional claims related to collecting insurance information, calendaring, and other features which are already provided by MMR's products and services. Claims in this patent address how healthcare providers send requested patient information to the patient, caretaker, provider or user by various means, including voice, fax, email or other electronic formats connected to a Personal Health Record system, patient portal or other locations on the Web. They also cover how users collect Personal Health Information on the Web or at other destination addresses without the healthcare provider having to enter specific personal identification numbers of the user. The information collected includes but is in not limited to a patient's medical history, chart notes, vaccination records, laboratory and other test results, prescriptions, and X-rays and images, as well as birth certificates and other important documents such as wills and advance directives.

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Our eighth U.S. patent - U.S. Patent No. 8,498,883 - was issued on July 30, 2013 after being allowed on June 6, 2013. Claims in the eighth patent, entitled "Method for Providing a User with a Service for Accessing and Collecting Prescriptions," includes 28 claims which are directed toward providing a user with the ability to access and manage prescriptions online by providing features that include sending prescriptions to a pharmacy, accessing prescriptions from a pharmacy, scheduling prescription refills, sending reminders regarding prescription refills including by text or email, and identifying adverse drug interactions by analyzing prescription medications. We received a Notice of Allowance from the USPTO for our ninth patent on August 8, 2013, entitled "Method for Providing a User with a Web-based Service for Accessing and Collecting Health Records," which was issued on January 7, 2014, U.S. Patent No. 8,626,532. The patent includes 27 claims, a portion of which are directed toward enabling users to access and collect their medical records in a secure and private manner using wireless devices such as smartphones, tablets or telemedicine platforms, amongst other systems, and represented a significant addition to MMR's U.S. patent portfolio. Additionally, our tenth U.S. patent, entitled "Method and System for Providing Online Records," was allowed on December 4, 2013 and subsequently issued on February 4, 2014, U.S. Patent No. 8,645,161, with 30 claims directed toward methods for accessing and collecting health records by providing a user interface that further includes a number of additional features which collect and display prescriptions, help submit prescriptions to pharmacies, collect and display health insurance information, send outgoing faxes, allow users to annotate health records and set up appointment reminders for visits with providers as wells as recurring medication reminders through a calendaring function.

Internationally, we have patents issued, pending and applied for in 11 other countries or regional authorities of commercial interest. Seven of the patents issued are in Australia, New Zealand, Singapore, Mexico, Japan and Canada. Each entitled "Method and System for Providing Online Medical Records," the Japanese Patent (#5191895) with 40 claims was issued on February 8, 2013, and the Canadian Patent (#2,615,128) was issued on September 10, 2013 and has 40 claims including claims corresponding to those in U.S. Patent No. 8,301,466. With the Canadian patent, our health IT intellectual property includes all of North America. MMR also has 15 other pending patent applications in foreign countries further including, Hong Kong, Israel, South Korea, Japan, Mexico, Europe, and China. There are also six pending Patent Cooperation Treaty ("PCT") applications. We also have hundreds of patent claims in pending U.S. applications including 17 U.S. utility patent applications related to health information technology. These include applications directed toward a Mobile Platform for Personal Health Records, a Method and System for Managing Personal Health Records with Telemedicine and Personal Health Monitoring Device Features, Prepaid Card Services related to Personal Health Records, a Universal Patient Record Conversion Tool, Aggregation of Data from Third Party Systems into a Personal Health Record Account, Electronic Health Records in Clinical Trials, a Data Exchange with Personal Health Record Service, Delivery of Electronic Medical Records or Electronic Health Records into a Personal Health Records Management System, a Health Record with Inbound and Outbound Fax Functionality, a Method and System for Providing Online Medical Records with Emergency Password, Data Exchange with Personal Health Record Service, Identifying Individual Associated with a Personal Health Record with Health Record Destination Address, and Personal Health Record with Genomics, We believe that many of the pending claims will ultimately be allowed including both health IT and non-health IT/medical applications which are pending in our entire patent portfolio.

After the patent issuances of 2011 through 2013, we believe we hold significant foundational patents under a "Method and System for Providing Online Medical Records," and "Method and System for Providing Online Records" and that the patents are relevant to any provider who transmits Electronic Health Records in that they limit their ability to communicate without infringement. As a result, the process of enforcement and licensing of our patent portfolio through the law firm Liner LLP (aka Liner Grode Stein Yankelevitz Sunshine Regenstreif & Taylor LLP) continued to build throughout 2013.

The Liner law firm is also representing us in the collection of $30 million dollars under our Settlement and Patent License Agreement with SCM as further described in our Litigation Matters section.

Although our primary business is the web-based storage and management of personal and professional health and vital records, we acquired intellectual property rights to certain biotech assets through the 2009 Merger with Favrille, Inc. which currently include five U.S. patents, four U.S. pending patent applications, eleven patents in foreign countries (including a European Patent validated in the following 12 countries: UK, France, Germany, Switzerland, Spain, Italy, Netherlands, Denmark, Sweden, Finland, Ireland and Belgium) and eighteen pending patent applications in foreign countries. We have been working to perfect the patent condition of these biotech assets for over five years. As early as May 2010, we successfully revived Favrille's original U.S. Patent directed to treating B-cell pathologies. Additional U.S. patent applications were also successfully revived (and since issued as U.S. patents) and formed the basis for various additional U.S. filings resulting in issued patents and pending applications. As a result, we now have biotech patents and patent applications pending in 23 foreign countries of commercial interest that provide competitive advantages for this biotechnology. The foreign countries include major European, Asian, North American, and South American markets, including for example, in the United States, Mexico, Australia, Brazil, Canada, China, Hong Kong, Singapore, Europe (including the 12 countries listed), India, Japan, and South Korea.

In April 2013, we received two Notices of Allowance for our anti-CD20 monoclonal antibody assets, which followed the granting of our first such patent in Mexico in August of last year for "Antibodies and Methods for Making and Using Them." As announced on April 15, 2013, we received a Notice of Allowance from the United States Patent and Trademark Office, resulting in U.S. Patent No. 8,465,741 (issued in June 2013), for our first U.S. patent for the anti-CD20 monoclonal antibody IP. Shortly thereafter, on April 22, 2013, we announced that the Australian Patent Office had issued a Notice of Allowance for our anti-CD20 monoclonal antibody assets, Application No. 2007338607 (issued in July 2013), under the same title, "Antibodies and Methods for Making and Using Them." In late 2013, we further received an issued patent in Korea (10-2009-7015196). These additional foreign patents reinforced the value of the U.S. and Mexico antibody patents, and continue to be used to seek expedited allowance in other countries operating under international patent treaties (referred to as the Patent Prosecution

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Highway). Use of the Patent Prosecution Highway allows both expedited examination and often allowance in various countries, by demonstrating willingness to amend patent claims to the same scope of allowed patent claims granted in another jurisdiction (such as the issued U.S. patent claims in U.S. Patent No. 8,465,741). In countries that do not participate in such treaties (or do not allow the same type of claims as those issued in the U.S.), additional antibody patent applications are being filed or the examining offices are being notified with a request for expedited examination to further enhance the review and issuance of patents in various foreign jurisdictions. These patents for our anti-CD20 monoclonal antibodies have particular utility in fighting cancers and are considered important assets of our based on benefits and commercial value demonstrated by Rituxan®, an anti-CD20 monoclonal antibody with reported sales of USD $7.5 billion in 2013, which is due to go off patent in 2015.

MMRGlobal's biotech assets also include the B-Cell vaccine patents and patent applications entitled "Method and Composition for Altering a B Cell Mediated Pathology" which relate to methods of manufacturing compositions for B-cell vaccines used in the fight against lymphoma and potentially other forms of cancer, including U.S. Patent Nos. 8,637,638; 8,114,404; 8,113,486 and 6,911,204. In January 2014, the fourth U.S. patent for B-Cell vaccine technology was issued (Patent No. 8,637,638) and additional continuation patent filings were made concurrently therewith in the U.S. to obtain still further protection for the compositions and methods of manufacturing compositions for B-cell vaccines used in the fight against lymphoma and potentially other forms of cancer. Issued foreign patents have also been granted for this technology in Europe, Hong Kong, Singapore and Mexico. Additional manufacturing patent applications are filed as such countries award new patents to further enhance the protection of the manufacturing patents already issued. For example, this year additional patents were filed in the U.S., Mexico and Japan to introduce additional patent claims protecting additional methods and compositions for altering B-cell pathologies using self-derived antigens in conjunction with specific-binding cytoreductive agents. In late 2013, the European Union patent (European Patent No. 01979228.2) for methods of manufacturing the B-cell vaccines, was fully validated in various countries selected by us as having particular commercial interest in the technology. The European Union patent has now been validated in and is enforceable in the following countries: United Kingdom, France, Germany, Switzerland, Spain, Italy, the Netherlands, Denmark, Sweden, Finland, Ireland and Belgium.

Currently, our biotech patent portfolio includes U.S. and foreign patents with expiration dates of August 2021 or later, relating to the manufacture of the B-cell vaccines. The issued antibody patents (and other patents which may issue relating to this technology) have substantially later expiration dates of September 2027 or later. Additional patent applications once granted may obtain additional term of biotech patent protection.

Our biotech assets are comprised of patents and pending patent applications, patient samples and data from the FavId™/Specifid™ idiotype vaccine trials and our proprietary anti-CD20 antibody panels to treat B-cell lymphoma and additional B-Cell mediated conditions such as rheumatoid arthritis. Subsequent to the Merger, we have recovered additional intellectual property, including certain physical assets used by Favrille, Inc. in the form of over 1,800 patient tissue samples, samples of the B-Cell vaccine, a collection of insect cells used in the manufacture of the vaccine (as protected by various U.S. and foreign patents) and other materials collected during the pre-Merger FavId/Specifid vaccine trials.

On December 22, 2010, we entered into a non-exclusive agreement with Celgene to license the use of our clinical and scientific data (originated by Favrille) related to targeted immunotherapies for cancer and other disease treatments to stimulate a patient's immune response and certain other confidential information. In consideration for the rights granted under the Agreement, Celgene agreed to pay us certain upfront fees and development milestones. When a milestone is reached it automatically triggers a payment to MMR.

We continue to work with scientists and experienced venture capitalists to assist us in generating revenue through licensing agreements as would be usual and customary in that industry. Moreover, we plan to continue pursuing license agreements with companies like Celgene that have expertise in the area of biotechnology and specifically in treating lymphomas and other cancers, and which can benefit from the use of our clinical and scientific data.

As we continue to develop our products, we continue to register our trade names and logos as trademarks and service marks and will seek to protect the copyrights in the initial and any other proprietary content that we develop to support our MyMedicalRecords PHR, MyEsafe and MMRPro products. We also own the source code for a handheld software program, developed to operate on the Palm operating system, which allows Palm users to create a personal medical history on a personal data assistant, or PDA, so that they can have access to this information while traveling and in the event an Internet connection is not available. We are in the process of developing applications to use MyMedicalRecords and MMRPro products on other handheld devices.

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Employees

As of December 31, 2013, we employed a total of six full-time employees and regularly use the full-time services of an additional four consultants. We also rely on a team of more than 9 developers and programmers located in India and Omaha, Nebraska.

From time to time, we are involved in various legal proceedings generally incidental to our business. While the result of any litigation contains an element of uncertainty, our management presently believes that the outcome of any known, pending or threatened legal proceeding or claim, individually or combined, will not have a material adverse effect on our financial statements.

On December 9, 2011, MyMedicalRecords, Inc. entered into a Non-Exclusive Settlement and Patent License Agreement (the "Agreement") with Surgery Center Management LLC ("SCM"). In consideration for the rights granted under the Agreement and in consideration of a settlement and release agreement, SCM contracted to pay MMR an initial payment of $5 million payable on December 23, 2011 and additional payments of $5 million per year for five consecutive years. After numerous attempts to collect the past due amount of $5 million, on January 19, 2012, MyMedicalRecords, Inc. filed a lawsuit in the Superior Court of the State of California for the County of Los Angeles for breach of contract and is seeking damages in an amount of $30 million. On or about February 13, 2014, SCM answered the MMR complaint and filed a cross-complaint against MMR alleging claims of breach of contract, among other things. We do not have enough facts at this time to predict the chances of either a favorable or unfavorable outcome, nor do we have any facts upon which to base any information regarding collectability.

On January 29, 2013, MMR filed a complaint for patent infringement against Walgreen Co., titled  MyMedicalRecords, Inc. v. Walgreen Co. , United States District Court, Central District of California ("Walgreen I"). The complaint alleges that Walgreen Co. is infringing MMR's Personal Health Records patent, U.S. Patent No. 8,301,466. On January 13, 2014, MMR filed a complaint for patent infringement against Walgreen Co., titled  MyMedicalRecords, Inc. v. Walgreen Co. , United States District Court, Central District of California ("Walgreen II"). The complaint alleges that Walgreen Co. is infringing MMR's Personal Health Records patent, U.S. Patent No. 8,498,883. On February 13, 2014, Walgreen Co. filed a Petition for Inter Partes Review of U.S. Patent No. 8,301,466 ("IPR Proceeding") at the United States Patent and Trademark Office. On March 6, 2014, the Company and Walgreen Co. entered into a settlement agreement, the terms of which are confidential, which will result in the dismissal with prejudice of Walgreen I and Walgreen II and the dismissal of the IPR Proceeding. On March 25, 2014 the USPTO ordered that the joint motion to terminate the [IPR] proceeding be granted and the proceeding thereby terminated.

On February 11, 2013, MMR filed a complaint for patent infringement against WebMD Health Corp. and its wholly owned subsidiary WebMD Health Services Group, Inc. (collectively, "WebMD"), titled  MyMedicalRecords, Inc. v. WebMD Health Corp et al. , United States District Court, Central District of California. That complaint alleged that WebMD is infringing MMR's Personal Health Records patent U.S. Patent No. 8,301,466. MMR subsequently withdrew the complaint per an agreement allowing MMR to the right to re-file without prejudice unless an agreement is reached within a specific period of time. On August 27, 2013, MMR terminated the agreement with WebMD. On October 2, 2013, MMR filed a new complaint against WebMD in the United States District Court for the Central District of California, alleging infringement of U.S. Patent Nos. 8,301,466 and 8,498,883. This matter is currently in the initial stages and we do not have enough facts at this time to predict the changes of either a favorable or unfavorable outcome, nor do we have any facts upon which to base any information regarding collectability.

On April 10, 2013, MMR filed a complaint for patent infringement against Quest Diagnostics Inc. ("Quest") in the United States District Court for the Central District of California, alleging that Quest Diagnostics Inc. is infringing U.S. Patent No. 8,301,466. On October 11, 2013, MMR filed an unopposed motion to add a claim of infringement of U.S. Patent 8,498,883 to its complaint against Quest, which was granted on October 29, 2013. This matter is currently in the initial stages and we do not have enough facts at this time to predict the chances of either a favorable or unfavorable outcome, nor do we have any facts upon which to base any information regarding collectability.

On May 17, 2013, MMR filed a complaint for patent infringement against Jardogs, LLC (the "Jardogs Complaint") in the United States District Court for the Central District of California, alleging that Jardogs, LLC infringes U.S. Patent No. 8,301,466. On September 23, 2013, MMR filed a separate complaint for patent infringement against Allscripts Healthcare Solutions Inc. ("Allscripts") titled MyMedicalRecords, Inc. v. Allscripts Healthcare Solutions Inc., United States District Court, Central District of California (the "Separate Allscripts Complaint"). The Separate Allscripts Complaint alleged that Allscripts is infringing U.S. Patent Nos. 8,301,466 and 8,498,883. On October 4, 2013, MMR filed a motion to amend the Jardogs Complaint to add Allscripts as a party defendant and to allege that Allscripts is infringing U.S. Patent Nos. 8,301,466 and 8,498,883. The Court granted that motion on November 1, 2013. Thereafter, MMR dismissed the Separate Allscripts Complaint. This matter is currently in the initial stages and we do not have enough facts at this time to predict the changes of either a favorable or unfavorable outcome, nor do we have any facts upon which to base any information regarding collectability.

MMR has received a letter from Sunil Singhal, a former employee. Mr. Sunil Singhal was employed as Executive Vice President of Technology and Product Development at MMR. He was placed on a 30-day administrative leave on February 13, 2012 and was given a 30-day notice of termination as approved by the Board of Directors of MMRGlobal on February 29, 2012. On March 30, 2012, Mr. Singhal was officially terminated. He filed a charge with the U.S. Equal Employment Opportunity Commission, but that body has declined to take action. In turn, he filed a claim with the California Department of Fair Employment and Housing ("DFEH").  The DFEH had declined to bring a citation, but it has issued a "right to sue" notice.  Mr. Singhal filed suit in the Los Angeles County Superior Court in 2013. MMR answered the

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complaint denying liability and damages. Discovery is underway. The Superior Court has requested that the parties engage in mediation. No trial date has been set.

On October 18, 2012, MMR was named as a defendant in an action filed in the California Superior Court, County of Los Angeles, by Naj Allana.  The matter was settled and the case dismissed.

Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or to furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934 are available free of charge through the SEC's website http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001285701&owner=include&count=40&hidefilings=0, after we electronically file such material with, or furnish it to, the SEC.

You may also read and copy any materials we file with the SEC at the SEC's Public Reference Room, located at 100 F Street, NE, Washington, DC 20549, on official business days during the hours of 10:00 am to 3:00 pm. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov.

As described above, on January 27, 2009, we consummated a transaction with MMR, Inc. through a merger of our wholly-owned subsidiary with and into MMR pursuant to the terms of the Merger Agreement. In connection with the Merger, MMR Inc. became our wholly-owned subsidiary, with the former stockholders of MMR Inc. collectively owning (or having the right to acquire) shares of our common stock representing approximately 60.3% of the voting power of our capital stock on a fully diluted basis.

For accounting purposes, the Merger was treated as a reverse acquisition with MMR Inc. being the accounting acquirer. Accordingly, the historical financial results prior to the Merger are those of MMR Inc. and replace our historical financial results as we existed prior to the Merger.

We were incorporated in Delaware in 2000 and are headquartered in Los Angeles, CA. Effective February 9, 2009, after the Merger, we changed our corporate name to MMR Information Systems, Inc., or MMRIS. Subsequently, on June 16, 2010, we changed our name to MMRGlobal, Inc., which we believe more accurately reflects the nature of our operations.  

Starting in 2005, we began filing for patent protection for our PHR products and services. Over the last seven years, these patents have been in the process of issuance and we now have patents issued, pending, and applied for in numerous countries around the world.

As of December 31, 2013, current liabilities of $10,046,008 exceeded cash and cash equivalents of $10,359. As a result of the above, there is uncertainty about our ability to continue as a going concern.

Historically, we have issued capital stock, sold debt and equity securities and received funds from The RHL Group, Inc. (a significant stockholder that is wholly-owned by our Chairman, Chief Executive Officer and President) to operate our business. Although we received additional funding from The RHL Group pursuant to the Eight Amended and Restated Note dated April 29, 2013, we may be required to obtain additional financing in order to meet payment. As a result of the above, we express uncertainty about our ability to continue as a going concern.

On May 8, 2012, we filed a Form S-1 related to the offer and resale of up to 100,000,000 shares of our common stock, by the selling stockholder, Granite State Capital, LLC ("Granite"). Granite has agreed to purchase all 100,000,000 shares pursuant to the Investment Agreement dated April 16, 2012 (the "Investment Agreement"), between Granite and us. Subject to the terms and conditions of the Investment Agreement, we have the right to put up to $15 million in shares of our common stock to Granite. As of December 31, 2013 the amount available under the equity line facility was $13.5 million, however, that amount could be reduced based on the market price of our stock at the time any shares are sold.

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Our management intends to continue to utilize our available line of credit with The RHL Group (see Note 3), if necessary to address our uncertainty to continue as a going concern. At December 31, 2013, we had approximately $1,900,000 remaining as available under The RHL Group line of credit. Furthermore, we plan to continue to utilize portions of our standby equity line facility with Granite as needed. Additionally, we plan to continue selling additional debt and equity securities, continue to settle our existing liabilities through issuance of equity securities, explore other debt financing arrangements, continue to increase our existing subscriber and affiliate customer base, sell MMRPro products, and continue licensing our intellectual property to obtain additional cash flow over the next twelve months. We cannot assure you that funds from these sources will be available when needed or, if available, will be on terms favorable to us or to our stockholders. If we raise additional funds or settle liabilities by issuing equity securities, the percentage ownership of our stockholders will be reduced, stockholders may experience additional dilution or such equity securities may provide for rights, preferences or privileges senior to those of the holders of our common stock. For further details regarding our indebtedness with The RHL Group, Inc., see "-Liquidity and Capital Resources-Description of Indebtedness-The RHL Group, Inc.," below.

If we are unable to utilize our available line of credit with The RHL Group, the Granite equity line of credit, or obtain suitable alternative debt or equity financing, our ability to execute our business plan and continue as a going concern may be adversely affected.

For a complete description of our indebtedness to The RHL Group, please See Note 3 to the Financial Statements entitled - Related Party Note Payable, included elsewhere in this prospectus.

The RHL Group Note payable had a balance of $1,355,761 at December 31, 2013. The components of the RHL Group Note payable and the related balance sheet presentation as of December 31, 2013 are as follows: $979,545, which is included in the line of credit, related party; and $376,216 related to other obligations due to The RHL Group which are included in related party payables.

Total interest expense on this note for the years ended December 31, 2013 and 2012 amounted to $132,804 and $155,866 respectively. The unpaid interest balances as of December 31, 2013 and 2012 were approximately $24,000 and $35,000, respectively.

During the first quarter of 2013, we entered into 14 different Convertible Promissory Notes with 11 different unrelated third-parties for principal amounts totaling $0.49 million, with fixed conversion prices ranging from $0.02 to $0.028. These notes have the option to be converted into a total of 24,035,715 shares of our common stock. As of December 31, 2013, all of these notes have been converted.

During the second quarter of 2013, we entered into 13 different Convertible Promissory Notes with 13 different unrelated third- parties for principal amounts totaling $0.89 million with fixed conversion prices ranging from $0.0339 to $0.08. These notes have the option to be converted into a total of 19,263,258 shares of our common stock. As of December 31, 2013, all of these notes have been converted.

During the third quarter of 2013, we entered into seven different Convertible Promissory Notes with seven different unrelated third-parties for principal amounts totaling $0.52 million with fixed conversion prices ranging from $0.0265 to $0.035. These notes have the option to be converted into a total of 17,691,199 shares of our common stock. As of December 31, four notes with total principal of $0.17 million have been converted.

During the fourth quarter of 2013, we did not enter into any Convertible Promissory Notes. During that period, one note with a principal balance of $50,000 was converted.

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net revenue and expenses during each reporting period. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, allowances for doubtful accounts, the valuation of deferred income taxes, tax contingencies, long-lived and intangible assets, valuation of derivative liabilities and stock-based compensation. These estimates are based on historical experience and on various other factors that it believes to be reasonable under the circumstances. Actual results could differ from those estimates. For additional information relating to these and other accounting policies, see note 2 to our financial statements appearing elsewhere in this prospectus.

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Revenue Recognition

Our revenues are derived from the sale of services, hardware, and software systems used for providing electronic access to consumer medical records and other vital documents, as well as from the licensing of our intellectual property rights and services. We recognize revenue for such services only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed, and collectability of the resulting receivable is reasonably assured.

Our subscriber revenues consist of annual and monthly recurring retail subscriptions and usage-based fees, which are primarily paid in advance by credit card, and corporate accounts that are based on either an access-fee or actual number of users, and in each case billed in advance at the beginning of each month of service. We defer the portion of annual recurring subscription fees collected in advance and recognize them on a straight line basis over the subscription period.

We grant exclusive licenses for the sale and marketing of our services in international territories in consideration of an up-front license fee and an ongoing royalty. The royalty fee is usually a percentage of revenue earned by the licensee and there usually are certain minimum guarantees. License fee revenues received in advance from international licensees for the grant of the license are deferred and recognized over the period covered by the agreement. Minimum guaranteed royalty payments received in advance are deferred and recognized over the period to which the royalty relates. All such revenues are included under "License Fees and Other." In those cases where a license agreement contains multiple deliverables, the agreement is accounted for in accordance with ASC 605- 025 (formerly EITF 00-21, " Revenue Arrangements with Multiple Deliverables  "). As of the date hereof, we no longer had any active international licensing agreements.

We recognize revenue on sales of our MMRPro system in accordance with ASC 605-25,  Revenue Recognition, Multiple-Element Arrangements .

Our multiple-deliverable arrangements consist solely of our MMRPro product. Significant deliverables within these arrangements include sophisticated scanning equipment, various licenses to use third party software, a license to use our proprietary MMRPro application software, installation and training, dedicated telephone lines, secure online storage and warranties.

We determined all elements to be separate units of accounting as they have standalone value to the customers and/or they are sold by other vendors on a standalone basis. Delivery of the hardware and certain software elements of these arrangements occur at the inception of the agreement. We deliver installation and training at the inception of the agreement. We provide other software licenses, telephone lines and online secure storage over the three year term of the agreement. We include warranties in the arrangements, however the third party product manufacturer, and not us, is obligated to fulfill such warranties. The contracts are paid in advance and are not refundable.

We allocate the revenue derived from these arrangements among all the deliverables. We base such allocation on the relative selling price of each deliverable. With the exception of our proprietary MMRPro application software, we use third party evidence to set the selling prices used for this allocation. In all such cases, third parties sell the same or very similar products. For the MMRPro application software, we estimate the selling price based on recent discussions regarding licensure of that particular application on a standalone basis. To date, we have not licensed this software on a standalone basis.

We recognize the allocated revenue for each deliverable in accordance with SEC Staff Accounting Bulletin ("SAB") No. 104,  Topic 13: Revenue Recognition . Under this guidance, we recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed and determinable and collectability is reasonably assured. This results in us recognizing revenue for the hardware, certain software and the warranties upon delivery to the customer, for the installation and training upon completion of these services, and ratably over the contract period for the software licenses, telephone lines and online secure storage.

Revenue from the licensing of our Health Information Technology and biotech patents and related assets may include non- refundable license and up-front fees, non-refundable milestone payments that are triggered upon achievement of a specific event and future royalties or lump-sum payments on sales of related products. For agreements that provide for milestone payments, such as the Celgene Agreement, we adopted ASC 605-28-25,  Revenue Recognition, Milestone Method.

We account for income taxes in accordance with ASC 740-10,  Income Taxes . We recognize deferred tax assets and liabilities to reflect the estimated future tax effects, calculated at the tax rate expected to be in effect at the time of realization. We record a valuation allowance related to a deferred tax asset when it is more likely than not that some portion of the deferred tax asset will not be realized. Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates of the date of enactment.

ASC 740-10 prescribes a recognition threshold that a tax position is required to meet before being recognized in the financial statements and provides guidance on recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues. We classify interest and penalties as a component of interest and other expenses. To date, we have not been assessed, nor have we paid, any interest or penalties.

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We measure and record uncertain tax positions by establishing a threshold for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Only tax positions meeting the more-likely-than-not recognition threshold at the effective date may be recognized or continue to be recognized.

We account for website development costs in accordance with the provisions of ASC 350-50 and ASC 985-20. Pursuant to these provisions we capitalize internally developed website costs when the website under development has reached technological feasibility. These costs are amortized, typically over an estimated life of five years, using the larger of the amount calculated using the straight-line method or the amount calculated using the ratio between current period gross revenues and the total of current period gross revenues and estimated future gross revenues. At each balance sheet date, we evaluate the unamortized capitalized website costs compared to the net realizable value. The amount by which the unamortized capitalized website costs exceed its net realizable value is written off. The determination of estimated future gross revenues requires the exercise of judgment and assumptions by our management and actual results could vary significantly from such estimates.

We evaluate long-lived assets and identifiable intangible assets with finite useful lives in accordance with ASC 350-30 and ASC 360, and accordingly, management reviews our long-lived assets and identifiable intangible assets with finite useful lives for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. We recognize an impairment loss when the sum of the future undiscounted net cash flows expected to be realized from the asset is less than its carrying amount. If an asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Considerable judgment is necessary to estimate the fair value of the assets and accordingly, actual results could vary significantly from such estimates. Our most significant estimates and judgments relating to the long-lived asset impairments include the timing and amount of projected future cash flows.

We account for share-based compensation in accordance with ASC 718-20,  Awards Classified as Equity . We apply ASC 718-20 in accounting for stock-based awards issued to employees under the recognition of compensation expense related to the fair value of employee share-based awards, including stock options and restricted stock. Determining the fair value of options at the grant date requires judgment, including estimating the expected term that stock options will be outstanding prior to exercise, the associated volatility and the expected dividends. Judgment is required in estimating the amount of share-based awards expected to be forfeited prior to vesting. If actual forfeitures differ significantly from these estimates, share-based compensation expense could be materially impacted.

We account for options and warrants issued to non-employees in accordance with ASC 505-50,  Equity-Based Payments to Non-Employees . We treat options and warrants issued to non-employees the same as those issued to employees with the exception of determination of the measurement date. The measurement date is the earlier of (1) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty's performance is complete. Options and warrants granted to consultants are valued at their respective measurement dates, and recognized as expense based on the portion of the total consulting services provided during the applicable period. As further consulting services are provided in future periods, we will revalue the associated options and warrants and recognize additional expense based on their then current values.

We estimate the fair value of each stock option on the date of grant using the Black-Scholes option pricing model. We determine assumptions relative to volatility and anticipated forfeitures at the time of grant. We base the assumptions used in the Black-Scholes models upon the following data: (1) our use of the contractual life of the underlying non-employee warrants as the expected life; the expected life of the employee options used in this calculation is the period of time the options are expected to be outstanding and has been determined based on historical exercise experience; (2) in the absence of an extensive public market for our shares, the expected stock price volatility of the underlying shares over the expected term of the option or warrant was taken at approximately the mid-point of the range for similar companies at the various grant dates; (3) we base the risk free interest rate on published U.S. Treasury Department interest rates for the expected terms of the underlying options or warrants; (4) we base expected dividends on historical dividend data and expected future dividend activity; and (5) we base the expected forfeiture rate on historical forfeiture activity and assumptions regarding future forfeitures based on the composition of current grantees.

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Results of Operations

During 2013, the Company changed the focus of its business from the direct sales of its products and services to licensing and strategic partnership relationships whereby through those licensing and partnership relationships the Company projects receiving substantially increased revenue in the form of up front licensing fees plus sales of the Company's products and services.

The following table sets forth items in our statements of operations for the periods indicated.