We maintain our web site at www.medixall.com. Information on this web site is not a part of this report.
Unless specifically set forth to the contrary, when used in this prospectus the terms MediXall", the "Company," "we", "us", "our" and similar terms refer to MediXall Group, Inc., a Nevada corporation, and its subsidiary, IHL of Florida, Inc., a Florida corporation. In addition, 2016 refers to the year ended December 31, 2016, 2017 refers to the year ended December 31, 2017, and 2018 refers to the year ending December 31, 2018.
ITEM 1. BUSINESS.
History
MediXall Group, Inc. (formerly Continental Rail Corp.) was incorporated under the laws of the state of Nevada on December 21, 1998 under the name IP Gate, Inc.
On December 31, 2002, IP Gate, Inc. entered into a share exchange agreement and merged with Action Stocks, Inc., a Nevada corporation. Under the terms of the agreement, the original shareholders of IP Gate retained ownership of their shares and Action Stocks shareholders received 14.25 shares of the surviving corporation for each share they owned prior to the merger. The management of the former Action Stocks became the officers and directors of the surviving corporation, which then changed its name to Action Stocks, Inc.
On June 3, 2003, Action Stocks merged with Classic Health Systems. Classic Health Systems was in the Durable Medical Goods industry delivering equipment for home care such as oxygen, ventilators, beds, and CPAPs.
On June 23, 2003 Action Stocks changed its name to Specialized Home Medical Services, Inc. as a result of the acquisition of Classic Health Systems Inc. which continued as a wholly owned subsidiary. On January 3, 2006, the officers and directors resigned in favor of a new board and the incoming President and CEO purchased a block of treasury stock, and became the majority shareholder. Immediately following this change of control, the new management added another wholly owned subsidiary, South East Stamp Sales, LLC in order to expand the companys operations. This new subsidiary provided cataloging and valuation services for auction companies. In December 2007, the durable medical equipment business and inventory was sold for cash to a similar business operating in the same market, due to declining sales.
Specialized Home Medical Services changed its name to IGSM Group, Inc. in April 2007 to reflect its diverse operations and the removal of the medical related business. The South East Stamp Sales, LLC subsidiary continued operations until December 2009, when it lost the majority of its business due to an economic downturn in its primary customer. The company attempted to engage in an internet technology business through a licensing or acquisition strategy, but it was unsuccessful.
Late December 2012, the Company contracted the services of TBG Holdings Corporation (TBG) who assisted with restructuring the Company into a short-line and regional freight railroad holding company. On June 23, 2013, IGSM Group entered into a share exchange agreement with Transportation Management Services, Inc. under which IGSM acquired all of the outstanding stock of TMS in exchange for the issuance of 1,500,000 shares of preferred IGSM stock. TMS was in the business of providing consulting services to railroad companies. IGSM Group changed its name to Continental Rail Corp effective July 10, 2013.
On June 19, 2015, the Company entered into an agreement with Continental Rail, LLC (LLC), a Florida limited liability company, and the Series A Preferred Shareholders of the Company. The Company was actively seeking to secure financing for the purchase of the Delta Southern Railroad (Delta), a Class III short-line railroad headquartered in Tallulah, Louisiana. Delta was subsequently purchased by Golden Gate Capital (Golden Gate), a private equity firm in San Francisco, California. Golden Gate decided that it was in its best interest to utilize the railroad operations management skills of certain Preferred Shareholders of the Company to manage the daily operations of Delta (the Manager). By the terms of the Agreement, however the Delta Manager cannot be owned (more than 10%) or controlled by a public company. Consequently, the LLC was organized by the Preferred Shareholders as the vehicle to manage Delta and satisfy the conditions set forth in the agreement. In conjunction with this transaction the Company received a 10% interest in the LLC and the preferred shareholders returned their preferred shares to the Company for cancelation.
On June 24, 2016, the Company entered into a share exchange agreement with TBG where the Company exchanged 100% of its membership interest in the LLC in exchange for 1,000,000 shares of the Company held by TBG. The exchange of the LLC interest was facilitated for the purpose of the Companys pursuit of future acquisitions and/or mergers with other public and/or private entities that would expand its opportunities to create value for the Companys shareholders. The 1,000,000 shares were cancelled.
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On November 22, 2016, Continental Rail Corp. filed a Certificate of Amendment pursuant to Nevada Revised Statutes (NRS) sections 78.385 and 78.390 and a Certificate of Change pursuant to NRS 78.0295 with the Nevada Secretary of State. The Certificate of Amendment provided for a change in the Companys name from Continental Rail Corp. to MediXall Group, Inc. to reflect a change in our business model to a Healthcare Incubator of development-stage healthcare technology companies. The Certificate of Change provided for a 1 for 15 reverse stock split of the Companys issued and outstanding common stock, reducing the number of common shares outstanding from 38,921,911 to 2,595,379 of which approximately 85% was controlled by related parties. No preferred shares were outstanding at the time of the Merger discussed below.
On December 13, 2016 the Company, completed a Share Exchange Agreement and Plan of Reorganization (the Merger) with IHL of Florida, Inc., a Florida corporation (IHL) established in April, 2016 and under common control with the Company. Pursuant to the Merger, IHL shareholders transferred to the Company all their issued and outstanding shares of capital stock. In exchange, the Company agreed to issue 41,131,000 shares of common stock to IHL shareholders, including 18,599,750 shares issued to common control parties and 264,894 shares of Series A Preferred Stock, all issued to common control parties, and convertible into 24,900,000 shares of common stock. The share issuances represent approximately 94.1% of the total issued and outstanding shares of common stock of the Company post-closing. As a result, the Company (i) became the 100% parent of IHL; (ii) assumed the operations of IHL; and (iii) changed its name from Continental Rail Corp. to MediXall Group, Inc.
Due to the common control of IHL and the Company, pursuant to ASC 805-50-25, Transactions Between Entities Under Common Control and other SEC guidance including for lack of economic substance, the Merger was accounted for as a transfer of the carrying amounts of assets and liabilities under the predecessor value method of accounting. Financial statement presentation under the predecessor values method of accounting as a result of a business combination between entities under common control requires the receiving entity (i.e., the Company) to report the results of operations as if both entities had always been combined. The consolidated financial statements include both entities full results since the inception of IHL in April, 2016.
Prior to the merger, on July 8, 2016, IHL entered into a Share Exchange Agreement with MediXall, Inc., a Florida corporation founded in November 2015. MediXall, Inc is a technology and innovative-driven organization purposefully designed and structured to bring effective change to the healthcare industry by improving healthcare and reducing costs. The Company currently has the rights to use 13 patents and 18 pending patents related to healthcare technologies licensed by The Quantum Group, Inc., (a privately-held Florida corporation), an incubator of companies that design, develop and deploy innovative solutions, technology, products, and services to the healthcare industry. MediXall, Inc. had no material operations prior to the Share Exchange which resulted in the acquisition of $2,200 of debt and no assets or revenue generating activities.
Business Overview
MediXall Group, Inc. (hereinafter MediXall) is a technology and innovation- driven organization purposefully designed and structured to bring effective change to the U.S. Healthcare Industry. We believe that our revolutionary approach will help drive much of the change we envision is needed in our healthcare system.
Our mission is to build out the MediXaid Provider Network and deliver products and services to that network that are focused on improving communication; providing better technology and support services; enabling more efficient, cost-effective healthcare for the consumer.
MediXall Group, Inc. currently has three operating divisions.
1.
MediXall Healthcare Marketplace (MediXall Platform)
2.
MediXall Finance Group
3.
MediXall Investment Group
The Healthcare EcoSystem
MediXalls mission for its Healthcare
EcoSystem is to create a dynamic distribution platform that attracts and supports new generations of healthcare technologies and services, delivering innovative solutions that help our Provider Network clients optimize their financial and operational performance. Management has developed three strategic initiatives for its Healthcare EcoSystem - the Network, the Marketplace, and the Strategic Partner Ecosystem - to identify opportunities in the market and seamlessly integrate innovative solutions that will benefit MediXall, our clients, and the healthcare industry as a whole.
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Strategic Initiative 1: Build a Robust Healthcare Provider Network
Since inception, MediXalls first strategic initiative was centered around building a robust MediXaid Provider Network of Healthcare Providers, which include licensed and certified diagnostic centers, medical service providers, medical product providers and physician practices. The MediXaid Provider Network continues to gain significant traction in South Florida, and the Companys network growth has accelerated over the past few months, now surpassing 5,500 healthcare providers registered in its Early Adopter Program.
Management believes that building the MediXaid Provider Network is key to expanding MediXalls reach, as it creates access to a growing network of credentialed service providers, fully vetted suppliers, medical facilities and diagnostic centers.
This affords MediXalls portfolio of products and services the opportunity to become the preferred resource of ancillary services to healthcare providers that participate in its provider network, as well as to other healthcare providers, physician groups, testing facilities, nursing homes and hospitals. Furthermore, MediXalls integrated network of providers will offer leverage to substantially accelerate distribution for future products and services that MediXall brings to market. In order to have a strong launch of the MediXall Platform and good momentum during the early quarters, MediXall has established a strong marketing and sales team that will grow with the company, continue to facilitate the rapid development of a strong healthcare provider network in South Florida and further serve as a foundation for expanding the Companys reach throughout the State, and nationwide.
Strategic Initiative 2: Develop a Central Platform Connecting Providers, Patients, and Stakeholders with Just-in-time Service Model
The second strategic initiative was to develop the MediXall Healthcare Marketplace, which would act as the central portal for the MediXaid Provider Network, consumer/patients, and many of the products and services we have under the MediXall Umbrella. Because of the complexity and fragmentations of the industry, online marketplaces such as WebMD have seen remarkable success within the U.S. digital healthcare market. Generally accepted as a forum with potential to reduce inefficiencies and increase transparency, the online marketplace is a free-market environment, utilizing the power of competition to empower the consumer as it reduces inefficiencies and increases transparencies. In this era of rapidly increasing deductibles and healthcare costs, the MediXall cloud-based platform is designed to be transformational and disruptive to traditional methods of medical care and provisioning of medical services to the consumer.
Our vision for the MediXall Platforms prominence in the healthcare marketplace is to create a unified online environment that connects physicians and caregivers to patients, and payers to the caregivers, across all healthcare settings. Starting with pricing transparency and leveraging the just-in-time service delivery model, we intend to expand our service offerings to enable smarter care and empower the customer/patient at virtually every point of the healthcare continuum; whether organically, through acquisitions, or through integration with our strategic partners solutions. As we expand the Healthcare EcoSystem, the MediXall Healthcare Marketplace will facilitate such transformation in the future of healthcare by offering community connectivity, interoperability, data analytics, and consumer engagement features and functionality.
Strategic Initiative 3: Create Partnerships and JVs to Offer Needed Products and Services to Both Healthcare Providers and Their Customer/Patients
The third strategic initiative was to create an integrated healthcare partner ecosystem that would enhance the operations of the healthcare providers, offering patients the tools and services that would allow them to take control of their own health-care. It is Managements prime directive to provide high-quality integrated services, encompassing a broad range of functionality and information, acting as a liason between providers, patients and payers. An outstanding ecosystem of strategic partners who extend the value of our platform in powerful ways is taking shape. These developers and partners have built healthcare apps, devices, and technology enabled services aimed at improving the quality of healthcare, empowering the patient, and lowering the cost of health delivery. In response to the enthusiastic welcome for healthcare pricing transparency from the 5,500-plus healthcare providers that have become Early Adopters of the MediXaid Provider Network so far, our team began to ask what more we could do to support our practitioners in building their practices. Many expressed a need for better access to patient information, better ways to increase attendance to appointments, and financial services to support both patient procedures and practice growth and operations. As part of our MediXall business model, we are selecting the highest quality and most effective products and services to add to our Healthcare EcoSystem that will address these needs, while at the same time help MediXaid Provider Network members increase their net margins and keep more of their revenue, as well as assist in reducing their business operations burden.
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After launch of the MediXall Healthcare Marketplace in March 2018, we plan to integrate with our technology partners, enabled by our application programming interface, or API, through which we will grant access to approved developers and partners. We believe that the opportunities and technology provided by our partners enhance the power of our marketplace and contribute to the attractiveness and critical position of the MediXall Platform within the Healthcare EcoSystem.
Furthermore, the strategic partnerships that MediXall is engaging will ultimately help to accelerate the Companys mergers and acquisitions pipeline and increase the value of the proposition for potential acquisition targets.
How the MediXall Healthcare EcoSystem Works
Our MediXall Healthcare Marketplace, along with our strategic partners and their respective products and services should create powerful network effects that benefit our entire Healthcare EcoSystem. As more local healthcare businesses adopt our platform, more provider listings appear on the MediXall Healthcare Marketplace and third-party partner sites available through the MediXaid Provider Network. As awareness of these businesses increases through these marketing channels, they will attract more consumers to our platform. Those consumers then attract even more healthcare businesses to our platform. As those businesses and consumers engage in more transactions on our platform, this increases bookings and partner revenue, and enables additional revenue streams from demand generation. Finally, as we add more healthcare providers and consumers to our Healthcare EcoSystem, we attract more technology developers and strategic partners who can leverage our Provider Network and use our API to develop additional apps and services that extend the capabilities of our MediXall Healthcare Marketplace.
Milestones
Since inception, MediXall Group has achieved the following:
·
The MediXall Healthcare Marketplace has soft-launched in the testing phase - on track for a 1st quarter 2018 controlled launch.
·
MediXaid Provider Network
’
s 5,500+ healthcare providers registered in the Early Adopter Program are now completing their legal agreements and being verified and reviewed for placement on the Platform.
·
In May 2017, MediXall partnered with Crossroads Capital Finance Group to offer financial products to our MediXaid Provider Network members, to assist them in developing their businesses and client/patient relationships.
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Based on the success of the joint venture, MediXall Group has entered into an agreement to purchase the Health Care division of Crossroads Capital Finance and have set up a MediXall Group division called MediXall Finance Group.
·
Entered into strategic partnerships with the following companies
o
SafeRide Health
–
a digital health platform that connects care providers to appropriate medically qualified transport and Lyft to manage no-shows and transportation for high risk or high need patients. Studies indicate that an es-timated 3.6 million Americans miss medical appointments because they lack quality public transit or dont have a car, costing the health care system an estimated $150 billion in delays.
o
Quantum Innovations Inc.
a developer of state-of-the-art business models with approved and pending patented technology, and leading industry re-search initiatives, Quantum Innovations provides unique value, solutions and insight towards the transformation of the healthcare industry.
Division 1: MediXall Healthcare Marketplace Overview
MediXall Healthcare Marketplace, a wholly owned subsidiary of MediXall Group, is currently launching a new generation Healthcare Platform to address the growing need of self-pay and high deductible consumers for greater transparency and price competition in their healthcare costs. Our integrated cloud-based platform for the healthcare industry helps providers simplify the way they run their businesses, attract and engage more patients, boost their revenues and focus more on providing high quality care to their patients. Moreover, the platform helps patient/clients find price transparency and gives them the ability to make informed choices based on price, location and schedule for requested medical products and services. In this era of rapidly increasing deductibles and healthcare costs, the cloud-based Healthcare Marketplace is designed to be transformational and disruptive to traditional methods of medical care and provisioning of medical services to the consumer.
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The MediXall Healthcare Marketplace is an electronic healthcare platform where patients/ clients can shop for their own medical services; diagnostic procedures and services; and medical equipment and devices. The platform will offer consumers and corporations, such as self-insured companies operating under ERISA (Employee Retirement Security Act of 1974) and private insurance companies, the ability to cost compare, price and sort for medical services and products by price, first available appointment and nearest location. We believe the platform will be disruptive to the traditional method of provisioning medical care and services; and, strike at the heart of runaway costs, in a climate of soaring personal deductibles and increasing healthcare insurance costs to individuals and corporations.
The cloud-based platform is designed to work in both a mobile and desktop environment. MediXall operates in a form of reverse auction where the consumer will choose from a list of the products and or services required. Qualified and vetted suppliers will compete based on a combination of quality score, location, best price and convenience. We firmly believe that MediXall will lower costs to the patient-consumer/ buyer and healthcare industry at large.
MediXall is bringing a consumer-centric marketing model that has been successful in the retail industry to the healthcare market. This new online, easily accessible and understood auction of medical care will offer patient/consumers the opportunity to review the services offered and costs of service for desired procedures, and ultimately a large number of practitioners will participate in order to compete. One has only to look at the success of Amazon, that brought a disruptive retail platform to the retail industry; and Uber for the taxi industry, that has been valued at $68 billion to see the huge potential for growth in shareholder value. MediXalls patent-protected technology secures a strong leadership position in this market innovation.
We believe millions of healthcare providers around the world are looking for a simple, efficient and reliable way to manage their operations, specifically their patient discovery & acquisition operation. Management tasks are generally time consuming, preventing providers from focusing on delivering their core services. This results in a loss of revenue-generating opportunities, lower client satisfaction and lower client retention. We developed the MediXall Healthcare Marketplace to enable these providers to focus on delivering high-quality care to patients and be able to outsource functions that are not their core concentration. Through our integrated cloud-based platform, we enable providers to easily maximize staff efficiency, in-crease patient volume, increase their revenue, and publicize their practice all in a cost-effective manner. We also plan to offer advanced marketing and client re-tention capabilities to help practices acquire and retain their clients, and analytics capabilities to help them improve their practice and plan for the future. At the same time, we offer consumers a single platform to discover, evaluate and book health-care services. We provide convenient one-stop-shop access to our providers medical services and products, which include the following general categories, but not limited to:
·
Physician services including cosmetic services and surgery;
·
Dental services including orthodontics, endodontics, and oral surgery, and other dental services;
·
Diagnostic services including MRI, MRA, CT Scan, Stress Tests, sonograms and ultrasounds;
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Laboratory services;
·
Pharmacies, pharmaceuticals and formularies;
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Medical supplies, medical equipment; and,
·
Home healthcare services.
In addition, provider reviews on our platform can only be written by consumers who have actually used a service by a MediXaid Network Provider Member through the MediXall Healthcare Marketplace. As a result, consumers are able to access credible reviews that provide a basis for informed decisions. The net effect of the vendor- competitive model of the platform is it empowers consumers to control their healthcare based on a combination of quality score, location, price and convenience.
Division 2: MediXall Finance Group Overview
As mentioned under Milestones, prompted by the success of the joint venture between Crossroads Capital Finance Group and the MediXaid Provider Network, the company has entered into an agreement to purchase the Health Care division of Crossroads Capital Finance, and, accordingly, is setting up a MediXall Group division called MediXall Finance Group. This is the second revenue center currently generating revenue. MediXalls growing lineup of institutional and private lenders has custom-designed financing products to serve four critical needs in the healthcare sector:
1)
Medical Procedure Loans for Healthcare Practitioners to offer their patients the option to receive care when they need it, and to make payments over time
2)
Cosmetic and Elective Procedure Loans through Practitioners
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3)
Commercial Loans for business expansion, equipment purchases and leases
4)
Medical Accounts Receivable loans to help practices bridge the gap between the time when service is rendered, and payment is received.
MediXall Finance Groups products are designed to assist practitioners and their patient/clients through each phase of their evolution, from setting up and equip-ping a state-of-the-art practice, helping patients get the care they need right now, whether medically imperative or elective, and helping practices smooth out the process of maintaining cash flow.
Division 3: MediXall Investment Group
The foundation concepts for the MediXall Platform and the Healthcare EcoSystem were developed in cooperation with the MediXall Group Chairman, Noel Guillama, MD, and strategic partner company Quantum Group, Inc. MediXall Investment Group has developed a new model for a healthcare Ecosystem hub to address the challenges and opportunities associated with the current state of Healthcare: enabling consumers to find a best match for their healthcare-related needs and associated products. The MediXall Investment Group will seek to acquire, or partner with owners of superior healthcare inventions to create mutually beneficial agreements that generate revenue through the use of patented intellectual property.
Approaching the Healthcare EcoSystem as a whole, MediXall creates, partners with, and invests in companies that embody our mission statement. Before we engage in binding agreements with a company, it must address three or more of these five objectives:
1.
Reduce cost
2.
Promote better care and improves overall consumer wellness
3.
Create efficiencies and reduces waste and/or redundancies
4.
Follow the master trend in healthcare and demographics
5.
Remain consistent with U.S. Policies in the industry
Market Analysis: Rising Healthcare Costs
Healthcare spending, overall, is very high in the United States, and growing. From 2005 to 2016, health care spending in the United States tripled. In 2016, it reached nearly $3.4 trillion, up 4.8 percent from 2015. That makes healthcare one of the countrys largest industries, equaling approximately17.8 percent of gross domestic product. In comparison, health care costs were $27.2 billion in 1960, just 5 percent of GDP. That translates to an annual health care cost of $10,348 per person in 2016 versus just $146 per person in 1960. Health care costs have risen faster than annual income. According to The Centers for Medicare and Medicaid Services (CMS), U.S. health care spending is projected to reach nearly $5.5 trillion by 2025, a full 20 percent of GDP.
Furthermore, the average insurance premium for consumers has risen 19% over the past five years, to $7,000 for single coverage in 2017, and to nearly $19,000 for family coverage, according to the Kaiser Family Foundation. However, only 80% of health insurance premiums go towards paying for service, while the other 20% is lost in administrative overhead. Oftentimes healthcare providers go unpaid for months, or longer causing ever increasing costs.
Despite employers paying about three quarters of their workers premiums, according to the Society for Human Resource Management, individual workers health costs have gone up as well. In addition to premium increases, their out-of-pocket costs, which include what they spend for deductibles, co-pays and co-insurance, have risen too. Between 2005 and 2015 average out-of-pocket costs grew 66%, or more than twice the growth rate in wages during that period, according to Kaiser.
The Patients Perspective
Patients struggle to bear the high costs of health care in the United States by paying increasingly expensive insurance premiums, which can only serve as a cap on a family
’
s exposure to
fi
nancial ruin. Because of high annual deductibles, most patients
’
day to day care is still paid out of pocket.
Since costs such as a doctor visits and many other routine visits are paid out of pocket, price comparison is increasingly important. Currently, consumers suffer from a lack of transparency, trust, and a general inability to systematically access the best health care at the most affordable price.
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While the internet has increased the amount of information available to health care consumers, many self-pay consumer purchases are a result of chance, haphazard decision making, procrastination, and poor information. Moreover, many Healthcare Providers have not thought about what they would charge a cash-pay patient who pays up-front at the time of service. As a result, the self-pay consumer pays the health care provider at the providers Usual and Customary Rate, which on average is 40% more than what insurance companies pay for their insured members. This discount represents one of the largest advantages of the insurance model.
Prices for a given procedure vary widely, however, within a town, state, countrywithout necessarily any real difference in the quality of outcomes as well. Researchers for a Health Care Cost Institute study found the national average price for 242 common serviceseverything from lab tests and X-rays to more extensive procedures like hip replacements and angioplastiesvaried extensively across states as well as within metropolitan areas. For example, in Cleve-land, the average price paid for a pregnancy ultrasound was $522. But just 60 miles away in Canton, Ohio, the average price was $183, according to the study.
An Amino Study of MRI prices found that the price of an MRI can be thousands of dollars more if you go to a hospital than if you go to an imaging center, depending on your state. Although many qualify for subsidized insurance premiums, they are still required to pay their deductible up front. In 2015, the Affordable Care Act capped this at $6,500 for an individual and $13,200 for a family-potentially ruinous costs for many low to middle income Americans.
As a result, increasing numbers of patients go without insurance entirely, thinking their healthcare needs would not justify the expense of an insurance premium. Oliver Wyman found that enrollment in the healthcare exchanges decreased by 22 percent in 2016 and 2017. This population, often young and too well off to qualify for government-funded welfare programs like Medicaid, therefore neglect going to the doctor for routine visits. This represents a loss both for patients and providers.
The Providers Perspective
For health care providers, offering services to insured patients is complicated, costly and fraught with delays. As indicated above, providers customarily discount their services by an average of 40% as a result of the insurance companies bargaining positioning. Moreover, providers often must wait for months before a claim is reviewed and approved by insurance companies and they receive payment. Finally, providers must write off a large percentage of their billings due to unpaid co-pays, deductible, co-insurance, disputed billing, and other situations.
According to many providers, the wait time for payment from an insurance provider is 27-90 days on average from the time of service. The administrative burdens and payment delays often increase when government programs like Medicare and Medicaid are involved. Illinois, for example, has more than $5 billion dollars in unpaid state health insurance and $2 billion dollars in unpaid Medicaid bills to healthcare providers who in many cases have waited years to be reimbursed. The situation is so bad that many providers opt not to deal with Medicaid, turning away those most in need because they cannot afford to provide services for free. Approximately 50 percent of providers make this tough decision.
These administrative costs overburden providers as well as insurance companies. Approximately 80 percent of a healthcare insurance premium goes directly to medical services, on average. The remaining 20 percent goes to administrative costs of the insurance company.
These difficulties have led to a sharp increase of providers abandoning insurance companies in favor of cash only, concierge medicine, and other alternative business models. Many providers, however, cannot afford to completely replace their business model, which is what is often necessary to make the transition pro
fi
table.
MediXall Healthcare Ecosystem: Finding the Right Solution for Patients and Providers
By delivering a solution that better connect consumers with high-quality healthcare providers and wellness services, MediXall enables our Provider Network members to engage consumers with the level of price transparency and digital convenience that they have come to expect in every other aspect of their lives.
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Strategic Focus
Onboarding and Quality Assurance
MediXall is committed to promoting the highest level of quality care for its users. In support of this commitment, practitioners who join the MediXaid Provider Network must undergo a rigorous process called credentialing in order to be able to provide services through the MediXall Healthcare Marketplace.
Once a health provider has requested to join our marketplace, we conduct a full credentialing process that
evaluates the qualifications and practice history of a health provider. Credentialing involves many steps, which ensure that providers meet our stringent standards and are capable of providing MediXall users with the quality of care they have come to expect. Once a provider
’
s participation application is received, we verify the qualifications and practice history of a health provider. This information includes, but not limited to:
·
All medical and postgraduate training
·
Board certification in the provider
’
s area of specialty
·
Current licensure
·
Any sanctions against the provider's license
·
Malpractice coverage
·
Malpractice history, work history, medical history
If the provider passes all of these checks, the application is then forwarded to the MediXall Credentialing Committee for review. This committee includes healthcare providers from our provider network, along with providers from within the community. Providers who are approved by this committee become MediXall preferred providers and can begin providing services through our Healthcare Marketplace Platform.
Credentialing is a lengthy, but necessary, process to ensure that our users have access to quality healthcare providers. We expect to be capable of providing ownership disclosure on nearly all Providers. Meanwhile, the consumer on the buying side of the transaction will be protected by their aforementioned rolling encryption, uniquely coded profile and member identification for each user.
Sales and Marketing
We deploy a direct sales approach driven by an inside sales team based in Ft Lauderdale, Florida, and Orlando, Florida. Our sales team qualifies and manages prospective and current MediXaid Network Providers, aiming to initiate, retain, and expand their use of our platform over time. Our sales team partners with the technology team to provide consultation and product demonstration to prospects to accelerate the onboarding of new subscribers. As we begin the roll out of the MediXall Healthcare Marketplace to employers, we intend to develop and expand a field sales team responsible for discovery, qualification, and account management for larger organizations.
Our marketing efforts are focused on generating awareness of our platform, creating sales leads, establishing and promoting our brand, and cultivating a community of successful and vocal healthcare providers and consumers. We utilize both online and offline marketing initiatives, including search engine and email marketing, online display and print advertising, participation in trade shows, events and conferences, permission marketing, social media and media outreach, and strategic partnerships and endorsements.
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Revenue Model
Our revenue model is comprised of four primary components:
Technology Fees
. Revenue we receive from providers for the use of the technology, once a patient requests the appointment from that specific provider. All providers pay outstanding fees on a monthly basis to MediXall.
Subscription and Services
. With the Company soft-launching the MediXall Healthcare Marketplace in South Florida, early-adopter providers can join the platform for one year at no cost. During this time, the provider is only subject to technology fees as they accrue. We are leveraging this Provider user base and associated data to refine the app, identify what works and what does not work and offer enhancements and upgrades for Subscription fees. As we begin the broader-based market rollout of the MediXall Healthcare Marketplace, we expect subscription and services revenue will be generated primarily from sales of subscriptions and additional features for the MediXall Healthcare Marketplace. We expect most of subscription fees to be prepaid by subscribers on a monthly basis via a credit card and, to a lesser extent, billed to subscribers on an annual or quarterly basis.
Financing Revenue
. We earn financing revenue from revenue share arrangements with third-party payment processors and lenders on transactions between MediXaid Provider Network members who utilize our financing solutions and their consumers. Financing solutions offered to the MediXaid Provider Network in-clude: 1) Patient financing for healthcare practitioners to offer their patients the option to receive care when they need it, and to make payments over time, 2) Cosmetic and elective procedure financing through practitioners, 3) Commercial financing for practice expansion, equipment purchases and leases, and 4) Medical accounts receivable financing. We expect our financing revenue to increase both in absolute dollars and as a percentage of total revenue as we add new providers who utilize our financing solutions, as existing providers and consumers increase the volume of transactions that they process through our financing solutions, and as our aggregate volume of financing transactions reduces our related costs and increases margins.
Partner Product and Services
. MediXaid Provider Network members can choose to enter into a separate contract with MediXall technology partners to purchase additional features and functionalities, as well as other products and services. We receive a revenue share from these arrangements from our technology partners, which is recorded when earned. Additionally, we intend to develop the MediXall Healthcare Marketplace API, which will create a revenue stream from API platform partners for subscriber site access, data query, and consumer bookings.
Employees
As of December 31, 2017 we employed 19 full-time employees.
ITEM 1A. RISK FACTORS.
Before you invest in our securities, you should be aware that there are various risks. You should consider carefully these risk factors, together with all of the other information included in this annual report before you decide to purchase our securities. If any of the following risks and uncertainties develop into actual events, our business, financial condition or results of operations could be materially adversely affected.
RISKS RELATED TO OUR BUSINESS
The Company has no operating history and a new business model in an emerging and rapidly evolving market.
MediXall is an early-stage development enterprise and lacks any operating history to evaluate in assessing our future prospects. Our business and prospects in light of the risks and difficulties MediXall will encounter as a development stage company in a new and rapidly evolving market must be seriously considered. We may not be able to successfully address these risks and difficulties, which could materially harm our business and operating results. In addition, we do not know if our business model will operate effectively during the next economic downturn. Furthermore, we are unable to predict the likely duration and severity of any potential adverse economic conditions in the U.S. and other countries, but the longer the duration the greater risks we face in operating our business. There can be no assurance, therefore, that current economic conditions or worsening economic conditions, or a prolonged or recurring recession, will not have a significant adverse impact on our operating and financial results.
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We have no sales or financial history and cannot assure you that we will be profitable in the foreseeable future.
We had $22,232 in revenue during 2017; it will be some time before we become profitable. We expect our expenses will increase substantially for the foreseeable future as we seek to start operations and develop our product(s). It is difficult to accurately forecast MediXalls revenues and operating results and they could fluctuate in the future due to a number of factors. These factors may include: MediXalls ability to raise funds, and ability to further develop device applications; acceptance of device products; the amount and timing of operating costs and capital expenditures; competition from other market venues that may reduce market share and create pricing pressure; and adverse changes in general economic, industry and regulatory conditions and requirements. MediXalls operating results may fluctuate from year to year due to the factors listed above and others not listed. At times, these fluctuations may be significant.
We cannot assure you that MediXall will be able to develop the infrastructure necessary to achieve the potential sales growth.
Achieving revenue will require that MediXall develop a functional platform and build the necessary infrastructure to support sales, technical and client support functions. We cannot assure you that we can develop this infrastructure or will have the capital to do so and no commitments for needed capital are in place. MediXall will continue to design plans to establish growth, adding sales and sales support resources as capital permits, but at this time these plans are untested. If MediXall is unable to use any of its anticipated marketing initiatives or the cost of such initiatives were to significantly increase or such initiatives or its efforts to satisfy existing clients are not successful, MediXall may not be able to attract clients or retain existing clients on a cost-effective basis and, as a result, our revenue and results of operations would be affected adversely.
The markets that MediXall is targeting for revenue opportunities are emerging within a well-established healthcare industry, are rapidly developing and may change before we can access them.
The markets for traditional internet and mobile web products and services that MediXall is targeting for revenue opportunities are changing rapidly; and the barriers to entry into the niche identified by MediXall are high and require unique experience and qualification. We cannot provide assurance that MediXall will be able to realize these revenue opportunities before they change or before other companies enter or even dominate the market. Furthermore, MediXall has based certain of its revenue opportunities on statistics provided by third party industry sources. Such statistics are based on ever changing customer preferences due to our rapidly changing industry. With the introduction of new technologies and the influx of new entrants to the market, we expect competition to emerge and intensify in the future, which could adversely affect our ability to increase sales, limit client attrition and maintain our prices.
We could become subject to patent and other intellectual property litigation that could be costly, result in the diversion of management's attention, require us to pay damages and force us to discontinue selling our products.
Determining whether a product infringes a patent involves complex legal and factual issues, and the outcome of a patent litigation action is often uncertain. We have not conducted an extensive search of patents issued to third parties, and no assurance can be given that third-party patents containing claims covering our products, parts of our products, technology or methods do not exist, have not been filed or could not be filed or issued.
We believe our agreement with The Quantum Group, Inc. and the number of patents issued and patent applications filed in technical areas in which MediXall plans to operate could possibly serve to mitigate some of this risk. Our competitors or other third parties, including other third parties from whom we may license intellectual property, may assert that our products and the methods we employ in the use of our products are covered by U.S. or foreign patents held by them. In addition, because patent applications can take many years to issue and because publication schedules for pending applications vary by jurisdiction, there may be applications now pending of which we are unaware and which may result in issued patents which our current or future products infringe. Also, because the claims of published patent applications can change between publication and patent grant, there may be published patent applications that ultimately issue with claims that we infringe. There could also be existing patents that our platform may infringe upon and, of which, we are unaware. If the number of competitors in the market for medical/healthcare marketplace technology grows, and as the number of patents issued in this area grows, the possibility of patent infringement claims against us increases. In certain situations, we may determine that it is in our best interests to voluntarily challenge a third party's products or patents in litigation or other proceedings, including patent interferences or reexaminations. We may become involved in unwanted litigation that could be costly, result in diversion of management's attention, require us to pay damages and force us to discontinue selling our products.
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Infringement actions and other intellectual property claims and proceedings, whether with or without merit, may cause us to incur substantial costs and could place a significant strain on our financial resources, divert the attention of management from our business and harm our reputation. Some of our competitors may be able to sustain the costs of complex patent or intellectual property litigation more effectively than we can because they have substantially greater resources.
We cannot be certain that we will successfully defend against allegations of infringement of third-party patents and intellectual property rights. In the event that we become subject to a patent infringement or other intellectual property lawsuit and if the other partys patents or other intellectual property were upheld as valid and enforceable and we were found to infringe the other partys patents or violate the terms of a license to which we are a party, we could be required to pay damages.
Our business depends on the development and maintenance of the internet infrastructure.
The success of our services will depend largely on the development and maintenance of the internet infrastructure. This includes maintenance of a reliable network backbone with the necessary speed, data capacity and security, as well as timely development of complementary products, for providing reliable internet access and services. The Internet has experienced, and is likely to continue to experience, significant growth in the number of users and amount of traffic. The internet infrastructure may be unable to support such demands. In addition, increasing numbers of users, increasing bandwidth requirements or problems caused by viruses, worms, malware and similar programs may harm the performance of the internet. The backbone computers of the internet have been the targets of such programs. The internet has experienced a variety of outages and other delays as a result of damage to portions of its infrastructure, and it could face outages and delays in the future. These outages and delays could reduce the level of internet usage generally as well as the level of usage of our services, which could adversely impact our business.
The nature of the MediXaid platform requires sophisticated encryption technology to defend against hacking due to the personal information as well as the financial transaction data that will be utilized by a consumer/patient.
The art of hacking databases for the purposes of obtaining personal information as well as financial information on individuals is increasing substantially. MediXall is aware of these risks and will invest substantially in the development of its platform in accordance with the very latest data encryption/protection technologies; however, there is a real risk that the MediXaid platform could be compromised at some point in time exposing the company to lawsuits and unfavorable attention that would adversely impact our business and affect our ability to add clients, consumer/patients or manage attrition on the platform.
Our ability to offer MediXaid products and services may be affected by a variety of U.S. and foreign laws.
The laws relating to the liability of providers of online and mobile marketing services for activities of their users are in their infancy and currently unsettled both within the U.S. and abroad. Future regulations could affect our ability to provide current or future programming.
We will depend on the services of our executives.
We depend on the services of our executive officers, director and outside contractors. To date we have not entered into any employment agreements with our executives. The loss of the services of any of our executives could materially harm our business. In addition, we do not presently maintain a key-man life insurance policy on any of our officers or directors.
Our future depends, in part, on our ability to attract and retain key personnel. Our future also depends on the continued contributions of other key technical and marketing personnel. The loss of key personnel and the process to replace any of our key personnel would involve significant time and expense, may take longer than anticipated and may significantly delay or prevent the achievement of our business objectives.
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Risks Related to the Company
We have no operating history and that makes evaluation of our business difficult.
We are a development stage company. We have no operating history and that makes it difficult to evaluate our future prospects, including our ability to refocus our operations on the sales and marketing of our technology and to leverage our technology assets, all of which are critical to our success. An investor must consider our business and our prospects in light of the risks, uncertainties and difficulties frequently encountered by early stage companies, including limited capital, delays in service rollouts, marketing and sales obstacles and significant competition. We may encounter unanticipated problems, expenses and delays in developing and marketing our services and securing additional healthcare providers. We may not be able to successfully address these risks, and while these risks are common in early stage companies, they create uncertainties for investors evaluating our business. If we are unable to address these risks, our business may not grow, our stock price may suffer, and we may be unable to stay in business.
Claims relating to medical malpractice and other litigation could cause us to incur significant expenses
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From time to time, we may be party to various litigation matters, some of which could expose us to monetary damages. In addition, healthcare providers using our technology may be exposed to the risk of medical malpractice claims which could reduce the number of our customers and negatively impact our revenues. We believe the credentialing process that will be required of all healthcare providers will mitigate our exposure; however, our exposure to litigation will remain.
Failure to properly maintain effective and secure management information systems, update or expand processing capability or develop new capabilities to meet our business needs could result in operational disruptions and possible loss of data critical to our operations.
Our business will depend significantly on effective and secure information systems and the successful application of these continuously emerging technologies. In the future, these systems could support online customer service functions, provider and member administrative functions and support tracking and extensive analyses of medical expenses and outcome data.
These information systems and applications will require continual investment for maintenance, upgrades and enhancement to meet our operational needs and to handle our expansion and growth. Any inability or failure to properly maintain management information systems, successfully update or expand processing capability or develop new capabilities to meet our business needs in a timely manner could result in operational disruptions, loss of existing customers, difficulty in attracting new customers, impairment of the implementation of our growth strategies, delays in settling disputes with customers and providers, regulatory problems, increases in administrative expenses, loss of our ability to produce timely and accurate reports and other adverse consequences. To the extent a failure in maintaining effective information systems occurs, we may need to contract for these services with third-party management companies, which may be on less favorable terms to us and significantly disrupt our operations and information flow. Furthermore, our business requires the secure transmission of confidential information over public networks. Because of the confidential information we store and transmit, security breaches could expose us to a risk of regulatory action, litigation, possible liability and loss. Our security measures may prove inadequate to prevent security breaches and our business operations and profitability would be adversely affected by cancellation of contracts, loss of members and potential criminal and civil sanctions if security breaches occur.
General economic conditions, industry cycles, financial, business and other factors affecting our operations, many of which are beyond our control, may affect our future performance.
General economic conditions, industry cycles, financial, business and other factors may affect our operations. If we cannot generate sufficient cash flow from operations in the future, we may, among other things, be required to take one or more of the following actions:
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seek additional financing in the debt or equity markets;
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refinance or restructure all or a portion of our indebtedness;
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sell selected assets;
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reduce or delay planned capital expenditures; or
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discontinue operations.
In addition, any financing, refinancing or sale of assets might not be available on economically favorable terms, which may prevent us from future expansion and growth in new markets and, thus, negatively affect our business and financial condition.
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Risks Related to Our Intellectual Property
All intellectual property (IP) owned by The Quantum Group, Inc. (Quantum), inclusive of issued and pending patents has been licensed exclusively to MediXall.
The ability of The Quantum Group, Inc. to maintain the patent and technology innovation is a factor in the future successful use of these patents and intellectual property. Should Quantum fail to maintain the patents, or the pending patents, they would likely expire worthless and fall into the public domain. This would adversely affect MediXall and to the extent that these patents provided protection to MediXaid for its Marketplace Platform and other affiliated companies that may, in the future, rely upon these patents.
If we are unable to prevent unauthorized use or disclosure of our proprietary trade secrets and unpatented know-how, our ability to compete will be harmed.
Proprietary trade secrets, copyrights, trademarks and unpatented know-how are also very important to our business. We will rely on a combination of patents, trade secrets, copyrights, trademarks, confidentiality agreements, and other contractual provisions and technical security measures to protect certain aspects of our intellectual property, especially where we do not believe that patent protection is appropriate or obtainable. We will require our employees and consultants to execute confidentiality agreements in connection with their employment or consulting relationships with us. We also will require our employees and consultants to disclose and assign to us all inventions conceived during the term of their employment or engagement while using our property or which relate to our business; however, these measures may not be adequate to safeguard our proprietary intellectual property and conflicts may, nonetheless, arise regarding ownership of inventions. Such conflicts may lead to the loss or impairment of our intellectual property or to expensive litigation to defend our rights against competitors who may be better funded and have superior resources. Our employees, consultants, contractors and other advisors may unintentionally or willfully disclose our confidential information to competitors. In addition, confidentiality agreements may be unenforceable or may not provide an adequate remedy in the event of unauthorized disclosure. Enforcing a claim, that a third party illegally obtained and is using our trade secrets, is expensive and time consuming, and the outcome is unpredictable. Moreover, our competitors may independently develop equivalent knowledge, methods and know-how. Unauthorized parties may also attempt to copy or reverse-engineer certain aspects of the MediXaid Marketplace platform that we consider proprietary. As a result, third parties attempt to use our proprietary technology or information, and our ability to compete in the market would be adversely effected.
RISKS RELATED TO OUR COMMON STOCK
The market for our common stock is extremely limited and sporadic.
Our common stock is quoted on the OTCQB tier of the OTC Markets under the symbol MDXL. The market for our common stock is extremely limited and sporadic. Trading in stock quoted on the OTC Markets is often thin and characterized by wide fluctuations in trading prices, due to many factors that may have little to do with our operations or business prospects. This volatility could depress the market price of our common stock for reasons unrelated to operating performance. Moreover, the OTC Market is not a stock exchange, and trading of securities in the OTC Markets is often more sporadic than the trading of securities listed on a stock exchange such as Nasdaq or the NYSE MKT. Accordingly, stockholders may have difficulty reselling any of their shares.
The tradability of our common stock is limited under the penny stock regulations which may cause the holders of our common stock difficulty should they wish to sell the shares.
Because the quoted price of our common stock is less than $5.00 per share and we do not meet certain other exemptions, our common stock is considered a penny stock, and trading in our common stock is subject to the requirements of Rule 15g-9 under the Securities Exchange Act of 1934. Under this rule, broker/dealers who recommend low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice requirements. The broker/dealer must make an individualized written suitability determination for the purchaser and receive the purchasers written consent prior to the transaction. SEC regulations also require additional disclosure in connection with any trades involving a penny stock, including the delivery, prior to any penny stock transaction, of a disclosure schedule explaining the penny stock market and its associated risks. These requirements severely limit the liquidity of securities in the secondary market because few broker or dealers are likely to undertake these compliance activities and this limited liquidity will make it more difficult for an investor to sell his shares of our common stock in the secondary market should the investor wish to liquidate the investment. In addition to the applicability of the penny stock rules, other risks associated with trading in penny stocks could also be price fluctuations and the lack of a liquid market.
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Our board of directors has the authority, without stockholder approval, to issue preferred stock with terms that may not be beneficial to common stockholders and with the ability to affect adversely stockholder voting power and perpetuate their control over us.
Our Articles of Incorporation allows us to issue shares of preferred stock without any vote or further action by our stockholders. Our board of directors has the authority to fix and determine the relative rights and preferences of preferred stock. As a result, our board of directors could authorize the issuance of a series of preferred stock that would grant to holders the preferred right to our assets upon liquidation, the right to receive dividend payments before dividends are distributed to the holders of common stock and the right to the redemption of the shares, together with a premium, prior to the redemption of our common stock.
The ability of our principal stockholders, including our CEO, to control our business may limit or eliminate minority stockholders ability to influence corporate affairs.
The principal holders of our common stock, including TBG, and our CEO, have approximately 72% voting control. Because of their stock ownership, they are in a position to significantly influence membership of our board of directors, as well as all other matters requiring stockholder approval. The interests of our principal stockholders may differ from the interests of other stockholders with respect to the issuance of shares, business transactions with or sales to other companies, selection of other officers and directors and other business decisions. The minority stockholders have no way of overriding decisions made by our principal stockholders. This level of control may also have an adverse impact on the market value of our shares because our principal stockholders may institute or undertake transactions, policies or programs that result in losses may not take any steps to increase our visibility in the financial community and / or may sell sufficient numbers of shares to significantly decrease our price per share.
Because we are not subject to compliance with rules requiring the adoption of certain corporate governance measures, our stockholders have limited protection against interested director transactions, conflicts of interest and similar matters.
The Sarbanes-Oxley Act of 2002, as well as the rules enacted by the SEC, the stock exchanges, including the New York Stock Exchange, NYSE MKT and the Nasdaq Stock Market require the implementation of various measures relating to corporate governance. These measures are designed to enhance the integrity of corporate management and the securities markets and apply to securities that are listed on those exchanges. Our common stock is quoted in the over the counter market and we are not presently required to comply with many of the corporate governance provisions. Because we chose to avoid incurring the substantial additional costs associated with voluntary compliance, we have not yet adopted these measures. We do not currently have independent audit or compensation committees. As a result, directors have the ability, among other things, to determine their own level of compensation. Until we comply with such corporate governance measures, regardless of whether such compliance is required, the absence of such standards of corporate governance may leave our stockholders without protections against interested director transactions, conflicts of interest, if any, and similar matters and investors may be reluctant to provide us with funds necessary to expand our operations as a result thereof.
Since we are a shell company, certain provisions of Federal securities laws would not be available to us and our stockholders would be unable to rely on Rule 144.
Rule 405 of the Securities Act of 1933 defines a "shell company" as a company with no or nominal operations and either (i) no or nominal assets, (ii) assets consisting solely of cash and cash equivalents, or (iii) assets consisting of any amount of cash and cash equivalents and nominal other assets. Shell companies are subject to expanded and accelerated reporting and disclosure obligations and are not eligible to use certain forms of registration statements, among other restrictions. In addition, our stockholders would be unable to rely upon Rule 144 for the resale of unregistered shares of our common stock, including shares covered by our effective resale registration statement should that registration statement not remain current under the SEC rules, until Form 10 information has been on file for one year. The lack of availability of Rule 144 to our stockholders would limit their ability to resell our shares.
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We are an emerging growth company under the Jobs Act of 2012, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.
We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 , or the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933 for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are choosing to take advantage of the extended transition period for complying with new or revised accounting standards. As a result of this election, our financial statements may not be comparable to other companies that comply with the effective dates of certain accounting standards for public companies. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile, should a market for our stock develop of which there are no assurances.
Our status as an emerging growth company under the Jobs Act of 2012 may make it more difficult to raise additional capital as and when we need it.
Because of the exemptions from various reporting requirements provided to us as an emerging growth company and because we will have an extended transition period for complying with new or revised financial accounting standards, we may be less attractive to investors and it may be difficult for us to raise additional capital as and when we need it. Investors may be unable to compare our business with other companies in our industry if they believe that our financial accounting is not as transparent as other companies in our industry. If we are unable to raise additional capital as and when we need it, our financial condition and results of operations may be materially and adversely affected.