RELATED PARTY TRANSACTIONS - Note 11

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

RELATED PARTY TRANSACTIONS - Note 11

NOTE 11 - RELATED PARTY TRANSACTIONS

Our Chairman and Chief Executive Officer, Robert H. Lorsch, is also the Chief Executive Officer of The RHL Group, Inc. and has full voting power over all of the capital stock of The RHL Group, Inc. Mr. Lorsch directly and indirectly through The RHL Group, Inc., beneficially owns approximately 18.95% our total outstanding voting stock. The RHL Group, Inc. has loaned us money pursuant to the Seventh Amended Note and any predecessor notes. See Note 3 - Related Party Note Payable above.

The RHL Group is an investment holding company which provides consulting, operational and technical services to the Company, which we refer to as the RHL Services. As part of the RHL Services, The RHL Group provides the Company with unrestricted access to its internal business and relationship contact database of more than 10,000 persons and entities, which includes clients of The RHL Group and other individuals which may hold value to the Company. The RHL Group also provides infrastructure support to the Company, including allowing the Company unlimited access to its facilities, equipment, and data, information management and server systems. In addition to allowing the Company the use of its office support personnel, The RHL Group has also consented to allow the Company to utilize the full-time services of Mr. Lorsch as the Company's President, Chairman and Chief Executive Officer, which requires substantial time and energy away from his required duties as The RHL Group's Chairman and Chief Executive Officer. In addition, The RHL Group has made its President, Kira Reed, available as the Company's spokesperson. Ms. Reed, who is Mr. Lorsch's spouse, also manages the Company's social networking activities.

In consideration for the above, The RHL Group, Inc. has a consulting arrangement with MMR. A copy of the consulting agreement is filed as an Exhibit in our Form 8-K, as filed with the SEC on May 4, 2009 and is hereby incorporated by reference.

We incurred $12,500 during the three months ended September 30, 2012 and 2011 and $37,500 during the nine months ended September 30, 2012 and 2011, toward marketing consulting services from Bernard Stolar, a director. We included $24,000 and $122,695 in related party payables as of September 30, 2012 and December 31, 2011, respectively, in connection with these services.

We also incurred $12,500 during the three months ended September 30, 2012 and 2011 and $37,500 during the nine months ended September 30, 2012 and 2011, toward marketing consulting services from Hector Barreto, a former director and member of our Advisory Board. We included in related party payables as of September 30, 2012 and December 31, 2011 of $46,170 and $8,667, respectively, in connection with these services. In the first quarter of 2009, we entered into an agreement with The Latino Coalition, a non-profit organization in which Mr. Barreto is also the Chairman, to market our product to its members. On May 4, 2010, we granted to Latino Coalition 92,593 shares of common stock, valued at $24,908 in consideration for marketing services. We did not pay any amounts to the Latino Coalition in both 2012 and 2011. Mr. Barreto ceased to be a related party upon his departure from the Board of Directors on September 30, 2011.

We also incurred $0 during the three months ended September 30, 2012 and 2011, and incurred $394 and $6,983 during the nine months ended September 30, 2012 and 2011, respectively, for consulting services from Jack Zwissig, a director. We included in related party payables as of September 30, 2012 and December 31, 2011 of $9,876 and $41,885, respectively, in connection with these services.

We contract with a significant vendor for the development and maintenance of the software applications necessary to run our MyMedicalRecords PHR, MyEsafeDepositBox and MyMedicalRecords Pro products. Our outside developer supports 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. This vendor is also a stockholder. For the three months ended September 30, 2012 and 2011, the total expenses relating to this stockholder amounted to $15,000 and $171,468, respectively, and $156,117 and $349,995 during the nine months ended September 30, 2012 and 2011, respectively. In addition, we capitalized $41,184 of software development costs for the nine months ended September 30, 2012. As of September 30, 2012 and December 31, 2011, the total amounts due to the stockholder and included in related party payables amounted to $437,429 and $306,312, respectively.

On September 15, 2009, we entered into a five year agreement with E-Mail Frequency, LLC and David Loftus, Managing Partner of E-Mail Frequency, LLC, a significant stockholder of the Company. We licensed an existing 80 million person direct-marketing database of street addresses, cellular phone numbers, e-mail addresses and other comprehensive data with E-Mail Frequency. The agreement allows us to market, through the use of the Database, our MyMedicalRecords Personal Health Record, MyEsafeDepositBox virtual vault, and MMRPro document management system to physicians and their patients. Under the terms of the Agreement, we paid $250,000 to David Loftus as a one-time consulting fee in the form of 2,777,778 shares of our common stock. We recorded the $250,000 one-time licensee fee as a prepaid consulting fee and included in the prepaid expenses and other current assets as of December 31, 2009, less amortization of $12,500 included in operating expensed for the year ended December 31, 2009. Amortization expense for the three months ended September 30, 2012 and 2011 was $12,500. Amortization expense for the nine months ended September 30, 2012 and 2011 was $37,500. In addition, we incurred a total of $7,015 and $6,206 during the three months ended September 30, 2012 and 2011, respectively, and incurred $20,893 and $14,672 during the nine months ended September 30, 2012 and 2011, respectively, toward convertible notes interest to Mr. Loftus. We included in related party payables at September 30, 2012 and December 31, 2011 of $42,580 and $21,687, respectively, in respect to these services. Furthermore, Mr. Loftus is a value-added-reseller of MMRPro systems. We recognized $87,000 and $19,095 in revenue from E-Mail Frequency for the sale of MMRPro systems, during 2012 and 2011, respectively.