COMMITMENTS AND CONTINGENCIES - Note 5

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

COMMITMENTS AND CONTINGENCIES - Note 5

NOTE 5 - COMMITMENTS AND CONTINGENCIES

Leases

We lease certain facilities and equipment under non-cancelable capital and operating leases, which expire at various dates through 2013. Effective September 1, 2010, we entered into a lease agreement to lease office space in Los Angeles, California. The lease requires a monthly payment of $6,655 commencing in September 2012. Effective November 1, 2010, the Company entered into a lease agreement to lease additional space adjacent to the current office space in Los Angeles, California. The lease requires an additional monthly payment of $3,193 commencing in November 2010. Both leases expire on August 31, 2013 unless renewed. Total rent expense for the three months ended September 30, 2012 and 2011 was $37,594 and $32,079, respectively. Total rent expense for the nine months ended September 30, 2012 and 2011 was $93,052 and $81,544, respectively. Future minimum lease payments as of September 30, 2012, under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) and future minimum capital lease payments are as follows:

Year Ending		Operating		Capital
December 31,		Leases		Leases
2012 (Remainder of)	$	29,544	$	2,635
2013		78,784		-
		-		-
Total minimum lease payments	$	108,328	$	2,635

Guarantee provided by The RHL Group

On May 6, 2011, the RHL Group agreed to guarantee up to $250,000 in payments to a vendor for future services to be rendered. In consideration of this guarantee, the RHL Group received (i) a warrant to purchase 625,000 shares of our common stock, at an exercise price of $0.046 per share, which was the closing price of our common stock on the date of the transaction, and (ii) 125,000 shares of our common stock priced as of the same date. In the event that the RHL Group has to perform on this guarantee, interest on any outstanding balance paid to the vendor by the RHL Group will be added to the balance of the Fifth Amended Note or any subsequent renewals. Additionally, any balances due to this vendor at any given time will reduce the amount available under the Fifth Amended Note or any subsequent renewals. The warrants and shares were issued on November 11, 2011 to the RHL Group.

On July 31, 2012, the RHL Group entered into guarantee agreements to guarantee certain obligations of MMR in the amount of $1,014,629. In consideration of this guarantee, the RHL Group received a warrant to purchase 3,055,432 shares of our common stock at an exercise price of $0.02 per share.

Guarantee provided by Robert H. Lorsch

On February 17, 2012, Robert Lorsch agreed to guarantee a convertible note with a principal amount of $150,000 to a third-party only in the event that the Company does not issue shares pursuant to a Conversion Notice.

Concentrations

For the three months ended September 30, 2012, our three largest customers (VisiInc PLC at $259,367, Ambulatory Surgery Center at $15,842 and DDS/Coverdell at $10,273) accounted for approximately 83% of our total revenue.

For the nine months ended September 30, 2012, our three largest customers (VisiInc PLC at $259,367, Celgene at $100,000 and E-Mail Frequency at $54,425) accounted for approximately 58% of our total revenue.

For the three months ended September 30, 2011, our four largest customers (Chartis at $100,000, Coverdell at $15,813, and 13 surgery centers equally at $13,129 each) accounted for approximately 81.4% of our total revenue.

For the nine months ended September 30, 2011, our four largest customers (Celgene at $500,000, Chartis at $100,000, Coverdell at $54,843, and 13 surgery centers equally at $13,129 each) accounted for approximately 75.8% of our total revenue.

Litigation Matters

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 January 26, 2012, MMR filed a complaint against a certain former officer of pre-merger Favrille, Inc., and other potential defendants (the "Favrille Defendants") that the Company believed may have misappropriated some of Favrille's intellectual and personal property. On July 31, 2011, Ropers Majeski, Kohn and Bentley ("Ropers"), a national firm with offices in San Francisco, Redwood City, San Jose, Los Angeles, New York and Boston, became counsel of record in this matter. The matter was settled as of September 12, 2012. The defendants in this suit have agreed to supply MMR significant information and data concerning the intellectual and personal property. The information and data will allow MMR to continue to value and exploit certain of the Company's intellectual and personal property through licensing and/or sales agreements.

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 September 19, 2012 the Company engaged Liner, Grode, Stein, Yankelevitz, Sunshine, Regenstreif & Taylor, LLP ("Liner") to substitute into this matter. The Agreement contains an arbitration clause and arbitration proceedings have commenced. An appeal is also presently pending the Second Appellate District of the California Court of Appeal stemming from the Superior Court's denial of SCM's Petition to Compel Arbitration. The Company and SCM have participated in an appellate mediation program administered by the California Court of Appeal and are in the process of implementing the results of the mediation. Thus, this litigation is currently pending before the arbitration tribunal, the Superior Court and the Court of Appeals. Counsel does not have enough facts at this time to predict the chances of either a favorable or unfavorable outcome, nor does counsel 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. To date no lawsuit has been filed. The FEHA has received a claim but is not investigating. A "right to sue" letter has not been issued.