UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 Form 10-Q (Mark One) ☑  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period endedJune 30, 2017or oTRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from__________ to _________Commission File Number000-52534 Picture 1 PARALLAX HEALTH SCIENCES, INC.(Exact name of registrant as specified in its charter) Nevada46-4733512(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)1327 Ocean Avenue, Suite B, Santa Monica, CA90401(Address of principal executive offices)(Zip Code)Registrant's telephone number, including area code:(310) 899-4442  Copy of all Communications to: Peter Hogan, Esq. Buchalter 1000 Wilshire Blvd., Suite 1500 Los Angeles, CA 90017 (213) 891-0700  Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the last 90 days.Yes ☐ No ☑Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registration statement was required to submit and post such files).Yes ☐ No ☑Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  Large accelerated filer☐Accelerated filer☐Non-accelerated filer☐Smaller reporting company☑  Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes ☐ No ☑   Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.  147,685,660 common shares issued and outstanding as of August 29, 2018  PART 1 – FINANCIAL INFORMATION  ITEM 1. FINANCIAL STATEMENTS  The Company’s unaudited interim consolidated financial statements for the six months ended June 30, 2017, form part of this quarterly report. They are stated in United States Dollars (US$) and are prepared in accordance with United States generally accepted accounting principles.  These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes for the year ended December 31, 2016, on Form 10-K, as filed with the Securities and Exchange Commission on July 11, 2018.   PARALLAX HEALTH SCIENCES, INC.CONSOLIDATED BALANCE SHEETSJune 30, 2017December 31, 2016(Unaudited)ASSETSCurrent assetsCash and cash equivalents$9,478$63,363Accounts receivable, net185,437765,785Rebates receivable52,48072,030Inventories164,726410,148Employee advances6,70011,002Prepaid expenses53,86992,865Total current assets472,6901,415,193Loans receivable-long-term169,902169,902Property and equipment, net24,68239,359Intangible assets, net2,517,924191,727Goodwill785,060785,060Deposits22,75022,750TOTAL ASSETS$3,993,008$2,623,991LIABILITIES AND STOCKHOLDERS' DEFICITCurrent liabilitiesAccounts payable and accrued expenses$4,956,371$3,974,351Pension plan contribution payables5,80610,822Note payable, related party185,000185,000Related party payables578,020240,080Total current liabilities5,725,1974,410,253Long term liabilitiesLicense fees payable, net of unamortized discount1,610,000540,000Royalties payable1,000,000200,000Notes and loans payable, unsecured95,97595,975Note payable, convertible144,000144,000Notes payable, related party, convertible1,207,2541,357,254Note payable, secured, net of unamortized discount15,816,00713,450,390Total long term liabilities19,873,23615,787,619Total liabilities25,598,43320,197,872Stockholders' deficitPreferred stock, $.001 par, 10,000,000 shares authorized,864834863,691 and 833,691 issued and outstandingat June 30, 2017, and December 31, 2016,  respectivelyCommon stock, $.001 par, 250,000,000 shares authorized,113,810107,067113,810,428 and 107,066,774 issued and outstandingat June 30, 2017, and December 31, 2016, respectivelyAdditional paid in capital-preferred665,803515,833Additional paid in capital-common2,978,3591,700,612Subscriptions receivable(342)(1,592)Accumulated deficit(25,363,919)(19,896,635)Total stockholders' deficit(21,605,425)(17,573,881)TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT$3,993,008$2,623,991  The accompanying notes are an integral part of these consolidated financial statements  2  PARALLAX HEALTH SCIENCES, INC.CONSOLIDATED STATEMENTS OF OPERATIONSFor the three months endedFor the six months endedJune 30, 2017June 30, 2016June 30, 2017June 30, 2016Revenue$803,574$6,812,592$2,764,534$14,217,251Cost of sales707,4786,050,6472,308,48412,176,326Gross profit96,096761,945456,0502,040,925Sales, marketing, and pharmacy expenses228,103353,427528,888988,893General and administrative expenses1,055,902965,0872,147,0422,026,720Operating loss(1,187,909)(556,569)(2,219,880)(974,688)Other income (expenses)Discount amortization(1,315,000)(1,275,000)(2,620,000)(2,550,000)Interest expense, net of interest income(324,102)(188,597)(627,404)(388,453)Total other income (expenses)(1,639,102)(1,463,597)(3,247,404)(2,938,453)Net loss$(2,827,011)$(2,020,166)$(5,467,284)$(3,913,141)Net (loss) per common share - basic$(0.025)$(0.017)$(0.050)$(0.032)Net (loss) per common share - diluted(0.018)(0.013)(0.035)(0.025)Weighted average common shares outstanding - basic111,422,546120,566,774109,358,489120,566,774Weighted average common shares outstanding - diluted157,463,485156,910,123155,399,428156,910,123    The accompanying notes are an integral part of these consolidated financial statements  3  PARALLAX HEALTH SCIENCES, INC.CONSOLIDATED STATEMENTS OF CASH FLOWSFor the six months endedJune 30, 2017June 30, 2016Cash flows from operating activities:Net loss$(5,467,284)$(3,913,141)Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization110,980103,179Stock compensation/stock option amortization173,50765,984Discount amortization2,620,0002,550,000Allowance for bad debt60,62023,935Changes in operating assets and liabilities:(Increase) decrease in trade and other receivables543,580(12,672)Decrease in inventories245,422367,495Decrease in prepaid expenses38,99621,051Increase in accounts payable and accrued expenses912,007745,481Decrease in pension plan contribution payable(5,016)––Increase (decrease) in related party payables443,686(260,568)Net cash used by operating activities(323,502)(309,256)Cash flows from investing activities:Purchase of professional equipment––(83,853)Net cash used by investing activities––(83,853)Cash flows from financing activities:Proceeds from notes payable––100,000Repayment of notes payable(184,383)(444,412)Proceeds from convertible notes payable, related party300,000––Proceeds from issuance of preferred shares150,000––Proceeds from issuance of common shares1,500––Proceeds from issuance of common shares for acquisition of intangible assets2,500––Net cash provided (used) by financing activities269,617(344,412)Net decrease in cash(53,885)(737,521)Cash - beginning of period63,363912,399Cash - end of period$9,478$174,878NON-CASH ACTIVITIESDiscounts on long-term liabilities$2,620,000$2,550,000Conversion of convertible related party payable to common stock$485,733$––Conversion of related party payables to non-related party payables$105,746$––Common stock issued for acquisition of intangible assets$622,500$––Acquisition of intangible assets$2,422,500$––Liabilities assumed upon acquisition of intangible assets$(1,800,000)$––Cancellation of common stock$––$11,459Subscriptions receivable$(342)$(192)SUPPLEMENTAL INFORMATIONInterest paid$219,333$62,254Income taxes paid$––$––   The accompanying notes are an integral part of these consolidated financial statements  4  PARALLAX HEALTH SCIENCES, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2017  NOTE 1. OVERVIEW AND NATURE OF BUSINESS  These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes for the year ended December 31, 2016. Notes to the unaudited interim consolidated financial statements that would substantially duplicate the disclosures contained in the audited consolidated financial statements have been omitted.  Parallax Health Sciences, Inc. (the “Company”) was incorporated in the State of Nevada on July 6, 2005.  The Company’s principal focus is on personalized patient care through pharmacy services provided by RoxSan Pharmacy, Inc. (“RoxSan”), remote healthcare services provided by Parallax Health Management, Inc. (formerly Qolpom, Inc.) (“PHM”), behavioral healthcare services provided by Parallax Behavioral Health Inc. (“PBH”), and eventually through the Parallax Diagnostics Inc.'s medical diagnostic testing platform, which is capable of diagnosing and monitoring several health issues.  On January 20, 2017, the Company changed the name of its wholly-owned subsidiary, Qolpom, Inc., to Parallax Health Management, Inc.  On March 22, 2017, the Company formed a wholly-owned subsidiary, Parallax Behavioral Health, Inc., a Delaware corporation.  On April 26, 2017, pursuant to a resolution of the Board of Directors, the Company and its wholly-owned subsidiary, Parallax Behavioral Health, Inc., completed the acquisition of 100% of certain intellectual property from ProEventa Inc., a Virginia Corporation (“ProEventa”), in accordance with the Intellectual Property Purchase Agreement between the Company, PBH and ProEventa (the “ProEventa Agreement”). ProEventa has an expertise in the development of behavioral health technologies, and is the wholly-owned subsidiary of Grafton Integrated Health Network, Inc., a non-profit Virginia corporation (“Grafton”), Pursuant to the ProEventa Agreement, consideration to ProEventa for the acquisition of the intellectual property was:  1.a stock purchase agreement to purchase 2,500,000 shares of the Company’s common stock; and 2.a revenue sharing agreement, providing for a cash earn-out to be paid to the ProEventa shareholders of up to $3,000,000, to be derived from certain net revenue generated by the Company, as defined in the agreement; and 3.a royalty agreement, providing for a royalty of 3% of the revenues be paid to ProEventa, up to $25,000,000 in revenues, generated from the intellectual property, and 4.a limited license to ProEventa for the use of certain of the Intellectual Property's technology at Grafton Schools.  On April 26, 2017, in conjunction with the ProEventa Agreement, the Company entered into a consulting agreement with James Gaynor, founder of ProEventa, that, among other things, provides for consideration to Mr. Gaynor as follows:  1.a stock purchase agreement to purchase 500,000 shares of the Company’s common stock at $0.001 per share; and 2.a grant of options to purchase 1,000,000 shares of the Company's common stock at a price of $0.25 per share, vesting annually over a three (3) year period beginning September 1, 2017.  On July 6, 2017, Mr. J. Michael Redmond was terminated as Chief Executive Officer and President of the Company and resigned as chairman and member of the board of directors, pursuant to his employment agreement.  Effective July 7, 2017, Mr. Paul R. Arena was appointed as Chief Executive Officer and President of the Company and elected as a member of the board of directors.  On December 22, 2017, RoxSan Pharmacy, Inc. terminated its operations and closed the business location in Beverly Hills, CA.  On May 14, 2018, pursuant to a unanimous resolution of the Boards of Directors of RoxSan Pharmacy, Inc. and Parallax Health Sciences, Inc., RoxSan filed a Chapter 7 petition in the United States Bankruptcy Court for the Central District of California.  Mr. Timothy Yoo was appointed trustee on May 15, 2018.  In connection with this filing, RoxSan seeks to discharge approximately $5 million of liabilities owed to various parties including more than $1 million owed to the Company.  The Company’s business segments consist of: Retail Pharmacy Services (“RPS”), Remote Care Services(“RCS”), Behavioral Healthcare Services (“BHS”), and Corporate.  Retail Pharmacy Services (RPS) RoxSan provides a full range of pharmacy services including retail, compounding and fertility medications.  RoxSan generates net revenues primarily by dispensing prescription drugs, both through local channels by direct delivery as well as mail order. RoxSan also sells a wide assortment of general merchandise, including over-the-counter drugs, beauty products and cosmetics, seasonal merchandise and convenience foods, through the Company’s pharmacy.  In 2017, the pharmacy was fully licensed and qualified to conduct business in over 40 US States.  5   Since the Company’s acquisition of RoxSan, the deleterious actions against the pharmacy by the former owner, including, among other things, interference with management and operations, and attempts to damage and/or divert customer and vendor relationships, had a significant adverse impact on the pharmacy. Furthermore, the discovery of the former owner’s alleged involvement in suspected insurance fraud caused RoxSan’s contract with its primary In Vitro Fertilization (“IVF”) drug rebate program to be terminated in August 2016. As a result, RoxSan was no longer eligible to receive incentive rebates for the majority of its IVF drug purchases, which were key to the profitability of the IVF drug sales; and for which without the rebates, RoxSan was unable to provide its customers with comparably priced IVF drugs.   This, among other things, caused a precipitous drop of over 90% in RoxSan’s IVF revenues, and ultimate exit from the IVF market in mid-2017.  The total IVF revenues for 2017 and 2016, respectively, were $953,680 and $17,216,036, or 29.8% and 75.7% of total revenues.  Soon thereafter, in July 2017, RoxSan’s contract with its primary drug supplier was terminated for similar reasons connected to the former owner and alleged criminal activities associated with the Melamed family name, despite the Company’s new ownership and management. After careful consideration, the Company determined that RoxSan was unable to generate enough profits to sustain its pharmacy business, and in December 2017, the RPS segment ceased operations.  In May 2018, RoxSan filed a Chapter 7 bankruptcy petition.  Remote Care Services (RCS) PHM provides the healthcare industry’s first comprehensive remote patient monitoring system, which utilizes proprietary software and technology to bridge clinical behavioral science with technology and logistics across a variety of wellness and clinical devices, including both fitness and clinical applications, for payers, providers and clinical professionals.  PHM generates net revenues primarily through the licensing, installation and maintenance of its patented Qolpom Hub, an integrated, secure and scalable platform for collecting, transmitting and analyzing biometric data, as well as the sale of wireless medical devices and home monitoring kits.  Behavioral Healthcare Services (BHS) In May 2017, the Company, through its subsidiary, Parallax Behavioral Health, Inc., acquired the intellectual property known as REBOOT, the acronym for Reliable Evidence-Based Outcomes Optimization Technologies.  REBOOT is a software platform specifically designed to improve health treatment outcomes using proprietary behavioral technology systems, that enables its users and user groups to more effectively achieve goals within a prescribed timeline. Through a proprietary behavioral health intelligence engine, REBOOT powers decision support that can also be delivered securely to any internet connected device. The REBOOT software can be used by an individual or an organization of any size, with the potential to transform the cost of treating and managing chronic illnesses such as pulmonary-COPD-asthma, diabetes, obesity and cardiovascular disease, by effecting the modification of behavior in patients being treated for these chronic diseases.  PBH generates revenues primarily through licensing and subscription of the REBOOT software and systems. As of June 30, 2017, the  BHS segment had not yet begun full operations, generating limited test market sales.  Corporate The Corporate Segment provides management and administrative services to support the Company, and consists of certain aspects of the Company’s executive management, corporate relations, legal, compliance, human resources, and corporate information technology and finance departments.  In addition, the Corporate Segment supports the costs and operating expenses related to the continued development and exploitation of the Company's proprietary medical diagnostic and monitoring platform and processes, which remains the Company's primary focus.  The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”).  The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and that effect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.  Going Concern The Company has incurred losses since inception resulting in an accumulated deficit of $25,363,919, and a working capital deficit of $5,252,507, and further losses are anticipated. The Company’s ability to continue as a going concern is dependent upon its ability to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due, which may not be available at commercially reasonable terms.  There can be no assurance that the Company will be able to continue to raise funds, in which case the Company may be unable to meet its obligations and the Company may cease operations. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.  The Company will require additional financing in order to proceed with its plan of operations, including approximately $3,000,000 over the next 12 months to pay for its ongoing expenses. These cash requirements include working capital, general and administrative expenses, the development of the Company’s product line, and the pursuit of acquisitions. These cash requirements are in excess of the Company’s current cash and working capital resources. Accordingly, the Company will require additional financing in order to continue operations and to repay its liabilities. There is no assurance that the financing will be completed as planned or at all. If the Company is unable to secure adequate capital to continue the Company’s planned operations, the Company’s shareholders may lose some or all of their investment and the Company’s business may fail.  6   The unaudited interim consolidated financial statements reflect all adjustments consisting of normal recurring adjustments, which, in the opinion of management, are necessary for a fair presentation of the results for the periods shown. The unaudited interim consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue as a going concern.  NOTE: The following notes and any further reference made to “the Company”, "we", "us", "our" and "Parallax" shall mean Parallax Health Sciences, Inc., and its wholly-owned subsidiaries, Parallax Diagnostics, Inc., Parallax Health Management, Inc. (formerly Qolpom, Inc.), Parallax Behavioral Health, Inc., and RoxSan Pharmacy, Inc., unless otherwise indicated.  NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  Basis of Presentation This summary of significant accounting policies is presented to assist in understanding the Company’s financial statements.  These accounting policies conform to accounting principles, generally accepted in the United States of America, and have been consistently applied in the preparation of the financial statements.  The Company’s fiscal year-end is December 31.  Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated.  Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.  Fair Value Hierarchy The Company utilizes the three-level valuation hierarchy for the recognition and disclosure of fair value measurements. The categorization of assets and liabilities within this hierarchy is based upon the lowest level of input that is significant to the measurement of fair value. The three levels of the hierarchy consist of the following:  Level 1:Inputs to the valuation methodology are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.  Level 2:Inputs to the valuation methodology are quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active or inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the instrument.  Level 3:Inputs to the valuation methodology are unobservable inputs based upon management’s best estimate of inputs market participants could use in pricing the asset or liability at the measurement date, including assumptions about risk.  Cash and Cash Equivalents The Company considers all highly liquid instruments with maturity of six months or less at the time of issuance to be cash equivalents. As at June 30, 2017, and December 31, 2016, the Company had no cash equivalents.  Fair Value of Financial Instruments As of June 30, 2017, and December 31, 2016, respectively, the carrying values of Company’s Level 1 financial instruments including cash and cash equivalents, accounts receivable, accounts payable, and short-term debt approximate fair value. The fair value of Level 3 instruments is calculated as the net present value of expected cash flows based on externally provided or obtained inputs. Certain Level 3 instruments may also be based on sales prices of similar assets. The Company’s fair value calculations take into consideration the credit risk of both the Company and its counterparties as of the date of valuation. See Note 9 and 14 for additional information about long-term debt.  There were no outstanding derivative financial instruments as of June 30, 2017, and December 31, 2016.  Accounts Receivable Accounts receivable are stated net of an allowance for doubtful accounts. The accounts receivable balance primarily includes amounts due from third party providers (e.g., pharmacy benefit managers, insurance companies and governmental agencies), as well as customers, vendors and manufacturers.  Charges to bad debt are based on both historical write-offs and specifically identified receivables.  7   The activity in the allowance for doubtful accounts receivable for the six months and the year ended June 30, 2017, and December 31, 2016, respectively, is as follows:  June 30, 2017December 31, 2016Beginning balance$50,000$8,412,853Additions charged to bad debt expense for customer receivables and insurance claims60,62077,000Allowance for doubtful collection of workers compensation claims––23,934Write off of allowance for doubtful collection of customer receivables and insurance claims(88,620)(51,000)Write off of allowance for doubtful collection of workers compensation claims––(8,402,787)Ending balance$22,000$50,000  Management has determined that the collection of certain revenues relating to workers compensation insurance claims in the amount of $8,402,787, generated between August 2015 and December 2016, cannot be reasonably assured. As a result, an allowance for doubtful collections of these claims was established. At December 31, 2016, management determined that no future collectability is likely, and the uncollectable claims receivable of $8,402,787 and related allowance of $8,402,787, was written off as of December 31, 2016.  During the six months and the year ended June 30, 2017, and December 31, 2016, the allowance for doubtful collections of customer receivables and insurance claims not related to workers compensation increased by $60,620 and $77,000, respectively.  As of June 30, 2017, and December 31, 2016, the allowance for doubtful collections was $22,000 and $50,000, respectively.  Inventory Inventory is stated at the lower of cost or market. Prescription drug inventories are accounted for using the weighted average cost method. Front store inventories are accounted for on a first-in, first-out basis using the retail inventory method. Physical inventory counts are taken on a regular basis and a continuous cycle count process is the primary procedure used to validate the inventory balances on hand to ensure that the amounts reflected in the accompanying financial statements are properly stated.  Property and Equipment Property and equipment is comprised of office and computer equipment and software, furniture and fixtures, leasehold improvements, and vehicles, recorded at cost and depreciated using the double declining balance method over the estimated useful lives of 5 to 7 years. Repairs and maintenance costs are charged directly to expense as incurred. Major renewals or replacements that substantially extend the useful life of an asset are capitalized and depreciated. Application development stage costs for significant internally developed software projects are capitalized and depreciated. See Note 5 for additional information about property and equipment.  Intangible Assets Product processes, patents and customer lists are amortized on a straight-line basis over their estimated useful lives between 4 and 20 years. See Note 6 for additional information about intangible assets.  Goodwill and other Indefinitely-lived assets Goodwill and other indefinitely-lived assets are not amortized, but are subject to impairment reviews annually, or more frequently if necessary.  Due to the Retail Pharmacy segment’s recurring losses and the liquidation of RoxSan in 2018, its goodwill was evaluated for impairment and the entire amount of goodwill of $3,887,818 was written off as of December 31, 2016.  Impairment of Long-Lived Assets The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable.  When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount.  Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made.  Due to the Retail Pharmacy segment’s recurring losses and the liquidation of RoxSan in 2018, its long-lived assets were evaluated for impairment.  The Company has determined there is limited recoverability for these assets, and an impairment of property and equipment of $129,106 was recorded as of December 31, 2016.  The Company believes that future projected cash flows are sufficient for the recoverability of the remainder of its long-lived assets, and no other impairment exists.  There can be no assurance, however, that market conditions will not change or demand for the Company’s products and products under development will continue.  Either of these could result in future impairment losses.  8   Convertible Debt The Company recognizes the advantageous value of conversion rights attached to convertible debt. Such rights give the debt holder the ability to convert debt into common stock at a price per share that is less than the trading price to the public on the date of the debt. The beneficial value is calculated as the intrinsic value (the market price of the stock at the commitment date in excess of the conversion rate) of the beneficial conversion feature of the debt, and is recorded as a discount to the related debt and an addition to additional paid in capital. The discount is amortized over the remaining outstanding period of related debt using the interest method.  Net Income (Loss) Per Common Share Net earnings (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and dilutive common stock equivalents outstanding during the period. Dilutive common stock equivalents consist of shares issuable upon conversion of convertible preferred shares and the exercise of the Company’s stock options and warrants.  Comprehensive Loss As at June 30, 2017, and December 31, 2016, the Company has no items that represent comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.  Revenue Recognition Revenue is recognized when: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the seller’s price to the buyer is fixed or determinable, and (iv) collectability is reasonably assured.  The Retail Pharmacy recognizes revenue at the time the customer takes possession of the merchandise. Customer returns are not material. Sales taxes are not included in revenue.  Shipping and Handling Costs The Company includes shipping and handling costs relating to the delivery of products to its locations (freight-in) as costs of sales. Shipping and handling costs, which include third-party shipment providers, postage, messenger and driver salaries and fees relating to the delivery of products to customers, are classified as Selling, Marketing and Pharmacy (“SM&P”) expense. Shipping and handling costs included in SM&P expense were:  For the six months endedJune 30, 2017June 30, 2016Shipping, postage & messenger$69,406$125,659Drivers salaries and fees42,18359,345Total shipping and handling costs$111,589$185,004  Income Taxes Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. These assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to reverse.  The Company has net operating loss carryforwards available to reduce future taxable income. Future tax benefits for these net operating loss carryforwards are recognized to the extent that realization of these benefits is considered more likely than not. To the extent that the Company will not realize a future tax benefit, a valuation allowance is established.  As of June 30, 2017, the Company has not yet filed its 2013 through 2016 annual corporate income tax returns.  Due to the Company’s recurring losses and significant loss carryforward (Note 17), it is anticipated that no corporate income taxes are due for these periods. The Company intends to bring current these filings as soon as practicable.  Stock-Based Compensation The Company records stock-based compensation using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued.  Recently Adopted Accounting Standards The Company evaluates the pronouncements of various authoritative accounting organizations, primarily the Financial Accounting Standards Board (“FASB”), the US Securities and Exchange Commission (“SEC”), and the Emerging Issues Task Force (“EITF”), to determine the impact of new pronouncements on US GAAP and the impact on the Company. The Company has recently adopted the following new accounting standards:  9   Adopted:  In February 2016, the FASB issued ASU No. 2016-02 (“ASU 2016-02”), Leases. Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (a) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (b) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 will be effective for the Company beginning January 1, 2019 with early adoption permitted. The Company is currently evaluating the impact of the application of this accounting standard update on its financial statements and related disclosures.  In March 2016, the FASB issued ASU No. 2016-09 (“ASU 2016-09”), Compensation-Stock Compensation. The new guidance simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 will be effective for the Company for annual periods beginning after December 15, 2017, including interim periods, with early adoption permitted. The Company is currently evaluating the impact of the application of this accounting standard update on its financial statements and related disclosures.  In April 2016, the FASB issued ASU No. 2016-10 (“ASU 2016-10”), Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing.  ASU 2016-10 clarifies the accounting for licenses of intellectual property as well as the identification of distinct performance obligations in a contract. ASU 2016-10 will be effective for the Company for annual periods beginning after December 15, 2017, including interim periods. Earlier application is permitted only as of annual periods beginning after December 15, 2016, including interim periods.  The Company is currently evaluating the impact of the application of this accounting standard update on its financial statements and related disclosures.  In May 2016, the FASB issued ASU No. 2016-12 (“ASU 2016-12”), Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. ASU 2016-12 addresses certain issues identified in the guidance on assessing collectability, presentation of sales taxes, noncash consideration, and completed contracts and contract modifications at transition. ASU 2016-12 will be effective for the Company for annual periods beginning after December 15, 2017, including interim periods. Earlier application is permitted only as of annual periods beginning after December 15, 2016, including interim periods.  The Company is currently evaluating the impact of the application of this accounting standard update on its financial statements and related disclosures.  In August 2016, the FASB issued ASU No. 2016-15 (“ASU 2016-15”), Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 provides guidance on eight specific cash flow issues, for which specific guidance had not previously been provided, with the objective of reducing the existing diversity in practice.  ASU 2016-15 will be effective for the Company for fiscal years beginning after December 15, 2017, and interim periods.  Early adoption is permitted. The Company is currently evaluating the impact of the application of this accounting standard update on its financial statements and related disclosures.  In October 2016, the FASB issued ASU No. 2016-16 (“ASU 2016-16”), Income Taxes (Topic 740), Intra-Entity Transfers of Assets Other Than Inventory.  ASU 2016-16 improves the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. as part of the Board’s initiative to reduce complexity in accounting standards. ASU 2016-16 will be effective for the Company for annual reporting periods beginning after December 15, 2017, and interim periods.  Early adoption is permitted for interim or annual reporting periods for which financial statements have not been issued or made available for issuance. The Company is currently evaluating the impact of the application of this accounting standard update on its financial statements and related disclosures.  In October 2016, the FASB issued ASU No. 2016-17 (“ASU 2016-17”), Consolidation (Topic 810), Interests Held through Related Parties That Are Under Common Control.  ASU 2016-17 amends the consolidation guidance on how a reporting entity that is the single decision maker of a VIE should treat indirect interests in the entity held through related parties that are under common control with the reporting entity. The amendments in this update are effective for fiscal years beginning after December 15, 2016, and interim periods.  Early adoption is permitted.  Not Yet Adopted:  In January 2017, the FASB issued ASU No. 2017-01 (“ASU 2017-01”), Business Combinations (Topic 805), Clarifying the Definition of a Business.  ASU 2017-01 clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation.  ASU 2017-01 will be effective for the Company for annual periods beginning after December 15, 2017, and interim periods.  Early adoption is permitted under certain conditions. The Company is currently evaluating the impact of the application of this accounting standard update on its financial statements and related disclosures.  10   In January 2017, the FASB issued ASU No. 2017-04 (“ASU 2017-04”), Intangibles-Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment.  ASU 2017-04 simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test, which should reduce the cost and complexity of evaluating goodwill for impairment. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill.  ASU 2017-04 will be effective for the Company for annual periods beginning after December 15, 2019, and interim periods.  Early adoption is permitted for testing performed after January 1, 2017. The Company is currently evaluating the impact of the application of this accounting standard update on its financial statements and related disclosures.  In May 2017, the FASB issued ASU No. 2017-09 (“ASU 2017-09”), Compensation-Stock Compensation (Topic 718), Scope of Modification Accounting.   ASU 2017-09 clarifies and reduces both the (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718 to a change to the terms or conditions of a share-based payment award. ASU 2017-09 will be effective for the Company for annual periods beginning after December 15, 2017, and interim periods.  Early adoption is permitted. The Company is currently evaluating the impact of the application of this accounting standard update on its financial statements and related disclosures.  Recently Issued Accounting Standards Updates: There were other various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries. None of the updates are expected to a have a material impact on the Company's consolidated financial position, results of operations or cash flows.  NOTE 3. ACCOUNTS RECEIVABLE, NET  Accounts receivable, net, consists of the following: June 30, 2017December 31, 2016Insurance claims receivable$63,375$603,316Workers compensation claims receivable31,23659,015Customer receivables112,826153,454Total accounts receivable207,437815,785Less: allowance for doubtful accounts(22,000)(50,000)Accounts receivable, net$185,437$765,785  As of June 30, 2017, and December 31, 2016, respectively, the Company was owed $185,437 and $815,785 in accounts receivable, consisting of $63,375 and $603,316 in insurance claims, $31,236 and $59,015 in workers compensation claims, and $112,826 and $153,454 in customer house account charges, for which payment has not yet received.  As of June 30, 2017, and December 31, 2016, respectively, $112,826 and $153,454 was owed from customers, consisting of $6,535 and $2,043 in services revenue, $68,287 and $93,731 in copayments, and $38,004 and $57,680 in charges for prescriptions and other retail purchases made by certain preferred customers, for which the Company provides monthly invoices to and receives regular payments on.  During the six months and the year ended June 30, 2017, and December 31, 2016, respectively, the allowance for doubtful collections of insurance claims increased by $60,620 and $77,000, respectively.  As of June 30, 2017, and December 31, 2016, the allowance for doubtful collection of these insurance claims was $22,000 and $50,000, respectively.  NOTE 4. LOANS RECEIVABLE  As of June 30, 2017, and December 31, 2016, loans receivable consists of $169,902 in monies owed to the Company from the former owner of RoxSan Pharmacy.  Included in this amount are monies collected by the former owner for revenues earned subsequent to the closing date of August 13, 2015 (the “Closing Date”), less monies collected by the Company for revenues earned prior the Closing Date; and monies advanced by the Company on behalf of the former owner for expenses incurred prior to the Closing Date, less monies advanced by the former owner on behalf of the Company for expenses incurred subsequent to the Closing Date.  The amount owed to the Company is being disputed by the former owner and is part of the legal proceedings disclosed in Note 19. The Company is confident that it shall prevail in this matter.  11   NOTE 5. PROPERTY AND EQUIPMENT  The following are the components of property and equipment: June 30, 2017December 31, 2016Appliances$4,486$7,160Computer and office equipment44,44265,774Furniture and fixtures20,21339,615Leasehold improvements18,731104,357Software6,2516,323Medical devices and instruments45,19445,194Sub-total139,317268,423Less: accumulated depreciation(114,635)(99,958)Less: impairment losses––(129,106)Property and equipment, net$24,682$39,359  Impairment losses for the six months and the year ended June 30, 2017, and December 31, 2016, was $0 and $129,106, respectively.  Depreciation expense for the six months ended  June 30, 2017 and  2016, was $14,677 and $19,013, respectively.  NOTE 6. INTANGIBLE ASSETS  The following are the components of finite-lived intangible assets: June 30, 2017December 31, 2016Products and processes$12,500$12,500Trademarks and patents / technology377,00072,500Customer lists / relationships280,000280,000Non-compete agreement40,00040,000Marketing related162,40030,000Software1,985,600––Sub-total2,857,500435,000Accumulated amortization(339,576)(243,273)Intangible assets, net$2,517,924$191,727  On April 26, 2017, the Company, through its wholly owned subsidiary, Parallax Behavioral Health, Inc., acquired certain intangible assets at a cost of $2,422,500.  Amortization expense for the six months ended June 30, 2017 and 2016, was $96,303 and $84,166, respectively.  NOTE 7. ACCOUNTS PAYABLE AND ACCRUED EXPENSES  Accounts payable and accrued expenses consist of: June 30, 2017December 31, 2016Accounts payable-vendors$1,885,352[1]$1,457,654Credit cards payable483,662469,186Factors payable141,529459,353Income taxes payable35,39335,393Payroll taxes payable936,607564,820Accrued interest1,350,757942,685Accrued payroll and payroll taxes123,07145,260Total accounts payable and accrued expenses$4,956,371$3,974,351  [1]As of June 30, 2017, $105,746 has been reclassified from related party payables to accounts payable, resulting from a change in related parties (Note 10).  NOTE 8. PENSION PLAN  On June 1, 2016, the Company, through its wholly-owned subsidiary, RoxSan Pharmacy, Inc. (the “Plan Sponsor”), adopted the RoxSan Pharmacy Inc. Profit Sharing Plan (the “Plan”).  The Plan is available to all RoxSan employees employed over three (3) months. Participants may make voluntary contributions, subject to plan limitations.  The Plan Sponsor provides matching contributions up to 4%, subject to plan limitations.  All contributions vest immediately.  For the six months and the year ended June 30, 2017, and December 31, 2016, respectively, the Plan Sponsor contributed $17,773 and $37,715 to the Plan. As of June 30, 2017, and December 31, 2016, respectively, contributions in the amount of $5,806 and $10,822 are payable.  12   NOTE 9. NOTES AND LOANS PAYABLE  Notes and loans payable consists of the following: June 30, 2017December 31, 2016Notes and loans payable, unsecuredLoans payable$11,900$11,900Notes payable84,07584,075Total notes and loans payable, unsecured95,97595,975Note payable, convertible144,000144,000Notes payable, secured, net of unamortized discount:Note payable-merchant965,5441,095,920Note payable-bank45,46499,470Note payable20,500,00020,500,000Less: unamortized discount(5,695,000)(8,245,000)Note payable, net of unamortized discount14,805,00012,255,000Total notes payable, secured, net of unamortized discount15,816,00813,450,390Total notes and loans payable$16,044,083$13,690,365  As of June 30, 2017, and December 31, 2016, respectively, long-term non-related party loans and promissory notes in the aggregate sum of $95,975 are owed by the Company.  The loans in the amount of $11,900 were for overhead requirements, and are unsecured and non-interest bearing.  The notes in the amount of $84,075 bear an interest rate of 8% to 10% per annum, are unsecured, and are payable upon demand.  As of June 30, 2017, no demand has been made.  During the six months and the year ended June 30, 2017, and December 31, 2016, respectively, interest in the amount of $3,619 and $7,320 was expensed. As of June 30, 2017, and December 31, 2016, respectively, a total of $47,751 and $44,132 in interest has been accrued and is included as an accrued expense on the accompanying consolidated balance sheet.  Non-related party convertible notes payable consist of the following: Note HolderPrincipalAPRAccrued InterestConversion
PriceTerm/DueThe Kasper Group, Ltd.$144,0007%$55,425$0.10 [1]10/01/2019 [1][1] On July 31, 2018, the note was modified 1) to extend the note’s maturity to October 1, 2019, and 2) to change the conversion price from $0.25 to $0.10 per share.   As of June 30, 2017, and December 31, 2016, a non-related party convertible promissory note in the amount of $144,000 is owed by the Company. The unsecured note bears interest at a rate of 7% per annum, was due by January 1, 2015, and contains a repayment provision to convert the debt into shares of the Company's common stock at a rate of $0.25 per share.[1]  As of June 30, 2017, no demand for payment or conversion has been made. During the six months and the year ended June 30, 2017, and December 31, 2016, respectively, interest in the amount of $4,998 and $10,107 was expensed.  As of June 30, 2017, and December 31, 2016, respectively, a total of $55,425 and $50,427 in interest has been accrued, and is included as an accrued expense on the accompanying consolidated balance sheet.  On August 13, 2015, the Company issued a secured promissory note in the amount of $20.5 million in connection with the acquisition of RoxSan Pharmacy, Inc. (Note 13).  The note bears interest at a rate of 6% per annum, and matures August 13, 2018 ("Maturity").  Management has determined that the note issued does not fairly represent the fair market value for the related acquisition at the date of purchase due to fraudulent inducement and false representations and warranties of the seller at the time this note was issued.  As a result, a discount of $15,300,000, representing the difference between the face value and the estimated fair market value of the note has been recorded. During the six months and the year ended June 30, 2017, and December 31, 2016, respectively, the Company expensed $2,550,000 and $5,100,000 in discount amortization.  As of June 30, 2017, and December 31, 2016, respectively, $5,695,000 and $8,245,000 in unamortized discount remains, to be amortized over the next 14 months, to the note's Maturity.  During the six months and the year ended June 30, 2017, and December 31, 2016, respectively, interest in the amount of $396,346 and $607,398 has been expensed. As of June 30, 2017, and December 31, 2016, respectively, a total of $1,105,446 and $709,100, in interest has been accrued, and is included as an accrued expense on the accompanying consolidated balance sheet. The Company is currently in litigation with the note holder/former owner of RoxSan, and is also evaluating this liability in connection with RoxSan’s Chapter 7 petition filed in May 2018 (Note 19).  13   On October 9, 2015, the Company, through its wholly-owned subsidiary, RoxSan, entered into a Business Loan and Security Agreement (the "Loan") with American Express, FSB, in the principal sum of $2,000,000.  The Loan includes interest in the form of a flat fee of $240,000, or 6% per annum, to be amortized over twenty-four (24) months, to the Loan's maturity.  Payments of principal and interest are made through collection of merchant funds received by the Company for customer purchases paid with the American Express credit card.  During the six months and the year ended June 30, 2017, and December 31, 2016, respectively, payments totaling $190,376 and $854,481, representing $130,376 and $734,481 in principal and $60,000 and $120,000 in interest, have been made. As of June 30, 2017, and December 31, 2016, respectively, principal of $965,544 and $1,095,920, and unamortized loan fees of $35,807 and $95,807 remained.  On February 11, 2016, the Company was advanced $100,000 from a line of credit (“LOC”) with Bank of America.  The LOC bears interest at a rate of between 6.06% and 6.31% per annum, variable upon Prime Rate fluctuations, and matures July 25, 2017.  During the six months and the year ended June 30, 2017, and December 31, 2016, respectively, principal payments in the amount of $54,006 and $530 were made, and interest in the amount of $2,383 and $4,693 was paid. As of June 30, 2017, and December 31, 2016, respectively, principal of $45,464 and $99,470 remained.  The future maturities of notes payable are summarized as follows:  YearPrincipal2017$1,274,899[2]201820,500,000$21,774,899  [2]Includes notes payable on demand in the amount of $228,075  During the six months and the year ended June 30, 2017, and December 31, 2016, respectively, interest on non-related party notes and loans payable in the amount of $404,963 and $749,518 has been expensed.  As at June 30, 2017, and December 31, 2016, respectively, a total of $1,208,622 and $803,659 in interest has been accrued and is included as part of accrued expenses on the accompanying consolidated balance sheets.  NOTE 10. RELATED PARTY TRANSACTIONS  Related party transactions consist of the following: June 30, 2017December 31, 2016Related party payablesAccrued compensation$439,336[1]$198,700Cash advances138,684[1]41,380Total related party payables578,020240,080Note payable, related party185,000185,000Notes payable, related party, convertible1,207,2541,357,254Total notes payable1,392,2541,542,254Total related party transactions$1,970,274$1,782,334  [1]As of January 1, 2017, Mr. Dave Engert, former Executive Chairman of the board of directors, is no longer a related party.  As a result, related party payables has been reduced by $105,746, representing $105,000 in accrued compensation and $746 in cash advances. As of June 30, 2017, $105,746 is included as part of accounts payable (Note 7) on the accompanying consolidated balance sheets. See Note 19 for additional information and legal proceedings related to Mr. Engert.  As at June 30, 2017, and December 31, 2016, respectively, related parties are due a total of $1,970,274 and $1,782,334, consisting of $439,336 and $198,700 in accrued compensation owed to officers; $138,684 and $41,380 in cash advances from officers and beneficial owners to the Company for operating expenses; and $1,392,254 and $1,542,254 in related party notes payable, of which $1,207,254 and $1,357,254 contain conversion features.  On January 23, 2017, in connection with a certain subscription agreement, the Company issued 30,000 shares of its Series B preferred Stock at $5.00 per share to a related party, for cash in the amount of $150,000 (Note 11).  On March 16, 2017, in connection with a related party convertible promissory note in the amount of $250,000 and accrued interest of $7,954, of which $6,422 and $1,532 was expensed during the six months and the year ended June 30, 2017, and December 31, 2016, respectively, the Company issued 1,228,346 shares of its restricted common stock at a conversion rate of $0.21 per share (Note 12).  On May 18, 2017, in connection with a related party convertible promissory note in the amount of $200,000 and accrued interest of $27,781, of which $3,781 and $24,000 was expensed during the six months and the year ended June 30, 2017, and December 31, 2016, respectively, the Company issued 2,277,808 shares of its restricted common stock at a conversion rate of $0.10 per share (Note 12).  14   Related party convertible notes payable consist of the following: Note HolderPrincipalAPRAccrued InterestConversion
PriceTerm/DueJ. Michael Redmond, President (former)$576,1545%$76,220$0.1007/31/2017Huntington Chase, Beneficial Owner331,1007%52,281$0.1012/31/2015AvantGarde, LLC, Beneficial Owner250,00012.5%5,655$0.2004/26/2018[2]Hamburg Investment Co., Beneficial Owner50,00012.5%907$0.2005/08/2018[2]Total$1,207,254$134,973  [2]Upon maturity, the note was extended and amended.  See Note 19 for additional information.  On April 26, 2017, the Company issued a subordinate secured convertible promissory note in the principal sum of $250,000.  The note bears interest at a rate of 12.5% per annum, is for a term of twelve (12) months, and contains a repayment provision to convert the principal into restricted shares of the Company’s common stock at a price of $0.20 per share.  The note is secured by 1,500,000 shares of the Company’s restricted common stock. During the six months ended June 30, 2017, interest in the amount of $5,565 was expensed.  As of June 30, 2017, a total of $5,565 in interest has been accrued, and is included as an accrued expense on the accompanying consolidated balance sheet.  On May 8, 2017, the Company issued a subordinate secured convertible promissory note in the principal sum of $50,000.  The note bears interest at a rate of 12.5% per annum, is for a term of twelve (12) months, and contains a repayment provision to convert the principal into restricted shares of the Company’s common stock at a price of $0.20 per share.  The note is secured by 250,000 shares of the Company’s restricted common stock. During the six months ended June 30, 2017, interest in the amount of $907 was expensed.  As of June 30, 2017, a total of $907 in interest has been accrued, and is included as an accrued expense on the accompanying consolidated balance sheet.  As of June 30, 2017, the Company has convertible promissory notes issued to its principals in the aggregate sum of $1,207,254, representing cash loans and unpaid compensation.  The notes bear interest at a rate of between 5% to 12.5% per annum, mature between December 31, 2015 to July 31, 2017, and contain repayment provisions to convert the debt into the Company’s common stock at a price of $0.10 per share. The conversion price of $0.10 resulted in a beneficial conversion feature.  As a result, the difference between the conversion rate and the market rate in the aggregate of $473,494 was classified as discounts on the notes, and was fully expensed in prior years. During the six months and the year ended June 30, 2017, and December 31, 2016, respectively, interest in the amount of $38,672 and $63,686 was expensed, of which $8,198 and $35,130 was paid to the note holders in cash.  As of June 30, 2017, and December 31, 2016, respectively, a total of $134,973 and $136,453 in interest has been accrued and is included as part of accrued expenses on the accompanying consolidated balance sheets.  On January 1, 2017, the Company, through its wholly-owned subsidiary, Parallax Health Management, Inc. (formerly Qolpom, Inc.) entered into an Employment Agreement with Mr. Nathaniel T. Bradley, the President of Parallax Health Management, Inc. The agreement is for a term of three (3) years, and includes annual compensation of $150,000, as well as a bonus plan contingent upon the Company's performance, and customary employee benefits.  In addition, the agreement provides for a non-refundable, fully-vested signing bonus of $50,000. As of June 30, 2017, $111,730 in compensation has been accrued under this agreement and is included as part of accrued expenses on the accompanying consolidated balance sheets.  On January 31, 2017, the Company’s wholly-owned subsidiary, RoxSan Pharmacy, Inc. issued a secured promissory note to Parallax Health Sciences, Inc. along with a Pledge and Security Agreement and Note Agreement of the same date, for funding, up to $2,000,000, to be disbursed to RoxSan upon request (the “Principal”).  The note bears interest at a rate of 3% per annum, is for a term of five (5) years, and is secured by all of RoxSan’s unencumbered assets.  Repayment of the Principal is to be made to Parallax in installments of up to $400,000 at the end of year 3; $400,001 up to $1,000,000 by the end of year 4; and the remainder of any unpaid Principal at the end of year 5, along with all accrued interest.  As of June 30, 2017, principal in the amount of $332,509 has been disbursed, and interest in the amount of $1,579 has been accrued.  During the six months and the year ended June 30, 2017, and December 31, 2016, respectively, interest on related party notes payable in the amount of $47,040 and $66,259 was expensed. As of June 30, 2017, and December 31, 2016, respectively, a total of $142,134 and $139,026 in interest has been accrued and is included as part of accrued expenses on the accompanying consolidated balance sheets.  NOTE 11: CONVERTIBLE PREFERRED STOCK  The total number of authorized shares of preferred stock that may be issued by the Company is 10,000,000 with a par value of $0.001 per share.  On January 23, 2017, in connection with a certain subscription agreement, the Company issued 30,000 shares of its Series B preferred Stock at $5 per share to a related party, for cash in the amount of $150,000. As a result, $149,970 was recorded to paid in capital.  15   The holders of the Preferred Stock shall be entitled to the number of votes equal to the number of shares of common stock into which such shares of Preferred Stock could be converted. All preferred shares are convertible into the Company’s common stock at a rate of 20 shares of common stock for each preferred share held.  Series B preferred shares were issued with 50% warrant coverage for a period of two (2) years, to purchase shares of the Company's common stock at a price of $0.75 per share.(Note 13).  The number of shares of common stock underlying the warrants and the exercise price are subject to adjustment upon certain events. The outstanding shares of Preferred Stock automatically convert into common stock upon the election of the holders of a majority of the then outstanding shares of Preferred Stock. Dividends are payable semi-annually on the Company’s Series A preferred stock at a rate of 7% per annum, and 10% per annum on Series B preferred stock.  Dividends may be paid in kind, at the option of the Company, to the extent that if the Company is not legally permitted to distribute cash dividends, it shall pay dividends in the form of preferred shares equal to the amount of the dividend. No dividends have been declared on the Company’s preferred stock. In the event of any liquidation, dissolution, winding-up or sale or merger of the Company, whether voluntarily or involuntarily, each holder of Preferred Stock is entitled to receive, in preference to the holders of common stock, a per-share amount equal to the original issue price plus all declared but unpaid dividends.  As of June 30, 2017, and December 31, 2016, respectively, the Company had 863,691 and 833,691 shares of preferred stock issued and outstanding.  NOTE 12. COMMON STOCK  The total number of authorized shares of common stock that may be issued by the Company is 250,000,000 with a par value of $0.001 per share.  On March 16, 2017, in connection with a certain related party convertible promissory note in the amount of $250,000 and accrued interest of $7,954, the Company issued 1,228,346 shares of its restricted common stock at a conversion rate of $0.21 per share.  As a result, $256,724 was recorded to paid in capital.  On May 17, 2017, in connection with the ProEventa Agreement dated April 26, 2017, the Company issued 2,500,000 shares of its restricted common stock. The shares, valued at $625,000, were issued for cash in the amount of $2,500.  As a result, $622,500 was recorded to paid in capital.  On May 17, 2017, in connection with a certain consulting agreement dated April 26, 2017, the Company issued 500,000 shares of its restricted common stock to the consultant for cash in the amount of $500, for services to be provided over a thirty-six (36) month period.  The shares were valued at $125,000, of which $124,500 was recorded to paid in capital, $6,916 was expensed, and $117,854 was deferred, to be amortized over the next thirty-five (35) months.  On May 18, 2017, in connection with a certain related party convertible debt in the amount of $200,000 and accrued interest of $27,781, the Company issued 2,277,808 shares of its restricted common stock at a conversion rate of $0.10 per share.  As a result, $225,503 was recorded to paid in capital.  On June 2, 2017, in connection with the exercise of certain employee stock options, the Company issued 237,500 shares of its restricted common stock at a conversion rate of $0.05 per share.  The shares were issued on a cashless basis, resulting in a net value of $57,000.  As a result, $56,763 was recorded to paid in capital.  During the six months and the year ended June 30, 2017 and December 31, 2016, respectively, a total of $124,500 and $0 in deferred stock compensation was recorded, of which $6,916 and $0 was expensed. As of June 30, 3017 and December 31, 2016, respectively, there remains $117,854 and $0 in deferred stock compensation to be expensed over the next thirty-five (35) months.  As of June 30, 2017, and December 31, 2016, respectively, the Company had 113,810,428 and 107,066,774 common shares issued and outstanding.  NOTE 13. WARRANTS AND OPTIONS  As of June 30, 2017, and December 31, 2016, respectively, the Company had 1,126,785 and 15,362,491 warrants and 12,085,000 and 11,135,000 options issued and outstanding.  On January 23, 2017, in connection with the issuance of 30,000 shares of the Company’s Series B preferred stock, 300,000 warrants were issued.  The warrants are exercisable for a period of two (2) years at an exercise price of $0.75 per share of common stock.  On June 17, 2017, 14,535,706 warrants underlying 726,786 shares of preferred stock expired.  16   Warrants OutstandingNumber ofRemainingExercise PriceWeightedCommonContractual Lifetimes NumberAverageExercise PriceShares(in years)of SharesExercise Price$0.41278726,7850.23$300,000$0.28174$0.75000400,0001.53300,000$0.281611,126,785$600,000$0.29405   Warrant ActivityNumber ofWeighted AverageSharesExercise PriceOutstanding at December 31, 201615,362,491$0.41278Issued300,000$0.28614Exercised––––Expired / Forfeited(14,535,706)$0.27518Outstanding at June 30, 20171,126,785$0.29405  On April 26, 2017, in connection with a certain consulting agreement, the Company granted the consultant 1,000,000 options to purchase common shares at $0.25 for a period of three (3) years.  The options vest annually over a three (3) year period, and were valued at $220,900, using the Black-Scholes method.  The assumptions used in valuing the options were: expected term 2.5 years, expected volatility 1.97, risk free interest rate 1.46%, and dividend yield 0%.  On April 30, 2017, the Company granted key employees 1,980,000 options to purchase common shares at $0.05 for a period of five (5) years.  The options vest quarterly over a three (3) year period, and were valued at $472,030, using the Black-Scholes method.  The assumptions used in valuing the options were: expected term 5.75 years, expected volatility 1.97, risk free interest rate 1.84%, and dividend yield 0%.  Of the options granted, 840,000, valued at $200,260, were forfeited.  Options OutstandingRemainingExercise PriceWeightedNumber ofContractual Lifetimes NumberAverageExercise PriceShares(in years)of SharesExercise Price$0.053,250,0001.25$162,500$0.08$0.054,160,0003.25208,000$0.08$0.0560,0003.503,000$0.06$0.05100,0004.255,000$0.08$0.051,140,0004.8357,000$0.09$0.10250,0002.2525,000$0.06$0.101,375,0003.50137,500$0.10$0.25250,0002.2562,500$0.06$0.251,000,0002.82250,000$0.10$0.35250,0002.2587,500$0.07$0.60250,0002.25150,000$0.0812,085,000$1,148,000$0.09   Options ActivityNumber ofWeighted AverageSharesExercise PriceOutstanding at December 31, 201611,135,000$0.08Issued2,980,000$0.09Exercised(300,000)$0.09Expired / Forfeited(1,730,000)$0.09Outstanding at June 30, 201712,085,000$0.09  During the six months and the year ended June 30, 2017, and December 31, 2016, respectively, 2,980,000 and 2,160,000 options were issued, 300,000 and -0- options were exercised, -0- and 225,000 options expired, and 1,730,000 and -0- options were forfeited/cancelled. A total of $445,725 and $65,040 in deferred stock option compensation was recorded, and $109,341 and $154,017 in stock option compensation was expensed during the six months and the year ended June 30, 2017, and December 31, 2016, respectively.  There remains $565,528 and $232,909 in deferred compensation as of June 30, 2017, and December 31, 2016, respectively, to be expensed over the next 27 months.  17  NOTE 14: BUSINESS ACQUISITIONS  Parallax Health Management, Inc. (formerly Qolpom, Inc.) On August 31, 2016 (the “Execution Date”), the Company entered into an agreement with Qolpom, Inc., an Arizona corporation (“Qolpom”) and its shareholders (the “Seller”) to purchase 100% of the issued and outstanding shares of Qolpom’s common stock and its assets, inventory and intellectual property on the Closing Date in exchange for:  1.5,000,000 shares of the Company’s common stock; and 2.2,500,000 options to purchase shares of the Company's common stock, to be granted one year from the Execution Date, and vesting over three (3) years, of which 500,000 shares are exercisable at $0.10, 1,000,000 are exercisable at $0.15, and 1,000,000 are exercisable at $0.25; and 3.10% of revenues generated from PHM business segment, up to $1,000,000; and 7% thereafter, up to $2,000,000; and 4.3% of revenues generated from the sale of Qolpom hardware and monitoring service fees.  The following represent the fair values of the assets acquired and liabilities assumed by the Company on September 20, 2016:  Assets:Cash$5,000Intellectual property160,000Loans receivable87,008Total assets252,008Liabilities:Accounts payable7,068License fees payable, net of unamortized discount540,000Royalties payable200,000Total liabilities747,068Goodwill785,060Fair market value of consideration$290,000  The goodwill represents future economic benefits expected to arise from the Company’s expanded presence in the  remote patient monitoring and telehealth market,the assembled workforce acquired, and the expected synergies from combining operations with PHM. The goodwill is nondeductible for income tax purposes.  PHM's results of operations are included in the Company’s statements of operations beginning on September 20, 2016 (Note 19).  During the year ended December 31, 2016, acquisition costs of $10,000 were expensed and incurred within general and administrative expenses.  NOTE 15. LEASES  The Company leases office space and commercial facilities in Beverly Hills, California.  The lease agreement for the office space renews annually at a base rent of $92,880.  The commercial facilities are leased under agreements with original terms of twelve (12) years, with one (1) renewal option of twelve (12) years, and contain base monthly rent for premises plus a proportionate share of common area maintenance cost (CAM). The company also sub-leases office space for its administrative offices in Santa Monica, California, for $5,600 per month, on a month-to-month basis.  The future minimum rental payments required under the lease agreements are summarized as follows:  YearBaseCAMTotal2017$110,791$29,209$140,0002018207,95853,549261,507$318,749$82,758$401,507  Rent expense for the six months ended June 30, 2017 and 2016, respectively, was $214,016 and $215,667, including $29,234 and $29,209 of common area maintenance cost.  18  NOTE 16. CONCENTRATIONS  Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of demand deposits with a financial institution. At June 30, 2017, there are no balances exceeding FDIC insurance of $250,000. The Company believes there is minimal credit risk relative to its cash and investment accounts.  The Company is also potentially subject to concentrations of credit risk in its accounts receivable. Credit risk with respect to receivables is limited due to the source of its receivables is primarily from insurance payers, from which a pre-approval of payment is provided at the time of sale. In addition, historically, there have been no significant unpaid customer receivables. Although the Company is directly affected by the financial condition of its customers, management does not believe significant credit risks exist at June 30, 2017, and December 31, 2016. Generally, the Company does not require collateral or other securities to support its accounts receivable.  Major Customer  The Company has one major insurance payer that accounted for approximately 82% and $1,604,570 and 75% and $9,101,422 of insurance payments received for the six months and the year ended June 30, 2017, and December 31, 2016, respectively.  The Company also has one major fertility clinic that accounted for approximately 1% and $5,460 and 8% and $1,320,957 of fertility sales for the six months and the year ended June 30, 2017, and December 31, 2016, respectively.  In August 2016, RoxSan’s contract with its primary fertility drug rebate program was terminated. As a result, RoxSan was no longer eligible to receive incentive rebates for the majority of its fertility drug purchases, and RoxSan was unable to provide its customers with comparably priced fertility drugs.  This, among other things, caused the loss of its major customers.  Major Vendor The Company has one major supplier that accounted for approximately 34% and $795,871 and 78% and $15,000,618 of cost of sales for the six months and the year ended June 30, 2017, and December 31, 2016, respectively. In July 2017, RoxSan’s contract with its primary drug supplier was terminated.  NOTE 17. INCOME TAXES  A reconciliation of the expected statutory federal and state taxes and the total income tax expense (benefit) at June 30, 2017, and December 31, 2016, was as follows:  June 30, 2017December 31, 2016Income (loss) before taxes$(5,467,284)$(13,160,859)Statutory rate (Fed & State(s))43%43%Computed expected tax payable (recovery)$(2,342,200)$(5,638,200)Non-deductible expenses:Impairment loss––1,720,900Stock compensation/amortization of stock options74,30066,000Discount amortization1,122,4002,184,800Penalties47,30051,500Other3,60034,800Total non-deductible expenses1,247,6004,058,000Change in valuation allowance$1,094,600$1,601,200Reported income taxes:Federal$––$––State––21,000Total$––$21,000  19  The significant components of deferred income tax assets and liabilities at June 30, 2017, and December 31, 2016 are as follows:  June 30, 2017December 31, 2016Net operating loss carried forward$8,558,900$7,549,500Bad debt allowance8,80019,900Officers’ accrued compensation62,60044,300Accrued related party interest56,60055,400Valuation allowance(8,686,900)(7,669,100)Net deferred income tax asset$––$––  The Company’s net operating losses are as follows:  Tax YearNet Operating LossExpires2008$40020282009132,1002029201041,60020302011659,10020312012552,20020322013492,600203320141,113,200203420153,706,8002035201612,250,20020362017-to date2,534,0002037Total$21,482,200  As at June 30, 2017, and December 31, 2016, respectively, the Company had approximately $21,482,200 and $18,948,200 of federal net operating losses. The Company is open to examinations for the tax year 2011 through the current tax year.  NOTE 18. SEGMENT REPORTING  As of June 30, 2017, the Company’s business segments consisted of: Retail Pharmacy Services, Remote Care Services, Behavioral Healthcare, and Corporate. See Note 1 and 2 for a description of each segment and related significant accounting policies.  The following table is a reconciliation of the Company’s business segments to the consolidated financial statements:  Pharmacy SegmentRemote Care (1)
SegmentBehavioral  (2)
Healthcare SegmentCorporate
SegmentConsolidated
TotalsJune 30, 2017Revenue$2,724,032$40,502$––$––$2,764,534Gross profit (loss)484,301(28,251)––––456,050Operating loss(884,755)(497,641)(128,184)(709,300)(2,219,880)Depreciation and amortization35,5103,45464,545832104,341Interest expense, net of interest income(179,840)(146)––(447,418)(627,404)Impairment loss––––––--Discount amortization––(70,000)––(2,550,000)(2,620,000)Total assets692,850931,4662,351,31617,3763,993,008Goodwill––785,060––––785,060Additions to property and equipment––––––––––June 30, 2016Revenue$14,217,251$––$––$––$14,217,251Gross profit2,040,925––––––2,040,925Operating loss(401,444)––––(573,244)(974,688)Depreciation and amortization99,269––––3,91013,179Interest expense67,092––––321,361388,453Discount amortization––––––2,550,0002,550,000Total assets7,216,040––––19,9197,235,959Goodwill3,887,818––––––3,887,818Additions to property and equipment83,853––––––83,853  (1)Remote Care Services Segment commenced September 20, 2016 (2)Behavioral Healthcare Segment commenced March 22, 2017  20  NOTE 19. SUBSEQUENT EVENTS  The Company has evaluated the events and transactions for recognition or disclosure subsequent to June 30, 2017, and has determined that there have been no events that would require disclosure, except for the following:  On July 1, 2017, in connection with a certain consulting agreement, the Company issued 1,500,000 shares of its restricted common stock to the consultant for services to be provided over a twelve (12) month period.  The shares were valued at of $315,000, of which $78,750 was expensed, and $236,250 was deferred, to be amortized over the next twelve (12) months. As a result, $313,500 was recorded to paid in capital.  On July 6, 2017, Mr. J. Michael Redmond was terminated as Chief Executive Officer and President of the Company and resigned as chairman and member of the board of directors, pursuant to his employment agreement.  On July 7, 2017, pursuant to a unanimous Board resolution, Mr. Paul R. Arena was appointed as the Company’s President and Chief Executive Officer, and the Board caused Mr. Arena's election to the Company's Board and the Board of its wholly-owned subsidiaries, RoxSan Pharmacy, Inc. Parallax Health Management, Inc, and Parallax Behavioral Health, Inc.  On July 7, 2017, in connection with Mr. Arena’s appointment, the Company entered into an Executive Employment Agreement (the “Agreement”) with Mr. Arena dated July 7, 2017, wherein Mr. Arena will serve as President and Chief Executive Officer for a period of three (3) years.  As compensation for his services, Mr. Arena will receive a base compensation of $350,000 in year one, of which 30% shall be deferred until certain goals are met, $425,000 in year two, and $550,000 in year three, as well as annual bonus compensation equal to 2x base when certain Company earnings are reached.  In addition, the Agreement includes a grant to purchase 10,000,000 restricted common shares at $0.001 per share, of which 25% vests immediately; 25% vests in one year; 25% vests after two years; and 25% vests when certain funding goals have been met.  The shares were valued at $2,000,000, of which $500,000 was expensed, and $1,500,000 was deferred, to be amortized over the next thirty-six (36) months. The Agreement also includes the grant of 5,000,000 stock options at an exercise price of $0.25 per share.  The options are exercisable for a period of five (5) years, and vest when certain market share prices of the Company’s common stock are met.  On July 10, 2017, the Company granted a key employee 90,000 options to purchase common shares at $0.05 for a period of three (3) years.  The options vest quarterly over a three (3) year period, and were valued at $24,230, using the Black-Scholes method.  The assumptions used in valuing the options were: expected term 4.75 years, expected volatility 2.47. risk free interest rate 1.81%, and dividend yield 0%.  On July 21, 2017, in connection with a certain consulting agreement, the Company issued 1,000,000 shares of its restricted common stock to the consultant for services rendered.  The shares were valued at $270,000. As a result, $269,000 was recorded to paid in capital.  Effective August 1, 2017, the Employment Agreement dated January 1, 2017 with Mr. Nathaniel Bradley, President of PHM, was superseded by a new agreement which was executed on November 30, 2017, and replaces any other employment agreement between Mr. Bradley and the Company or any of its subsidiaries.  The agreement is for an initial term of three (3) years, and provides annual compensation for Mr. Bradley to serve as the Company’s Chief Technology Officer (“CTO”), as well as CTO of Parallax Health Management, Inc. and Parallax Behavioral Health, Inc., in the aggregate of $222,000 year one, $265,000 in year two and $320,000 in year three, as well as various performance bonuses, and customary employee benefits. In addition, the agreement provides for a grant to purchase 3,000,000 restricted common shares at $0.001 per share, valued at $750,000 and 100% vesting immediately, as well as options granted to purchase 1,000,000 shares of the Company's common stock at a price of $0.25 per share.  The options are for a period of five (5) years, and vest annually over a three (3) year period, with an initial vesting of 25%.  Between July 2017 and September 2017, the Company issued convertible promissory notes (“Convertible Notes”) to twenty-one (21) accredited investors for financing in the aggregate amount of $696,000.  The Convertible Notes include interest at a rate of 10% per annum, mature in three (3) years, and are convertible into restricted shares of the Company’s common stock at a conversion rate of $0.10 per share.  The common shares were issued with 50% warrant coverage for a period of three (3) years at an exercise price of $0.25 per common share.  On August 3, 2017, in connection with the exercise of certain employee stock options, the Company issued 44,102 shares of its restricted common stock at a conversion rate of $0.05 per share.  The shares were issued on a cashless basis, resulting in a net value of $10,584.  As a result, $10,540 was recorded to paid in capital.  On August 9, 2017, in connection with a certain debt settlement, the Company issued 100,000 shares of its restricted common stock to a consultant as partial payment for services rendered. The shares were valued at $15,000.  As a result, $14,900 was recorded to paid in capital.  On September 1, 2017, in connection with certain consulting agreements, the Company issued 250,000 shares of its restricted common stock to the consultants for services to be provided over a twelve (12) month period.  The shares were valued at $50,000, which was deferred, to be amortized over the next twelve (12) months, and $49,750 was recorded to paid in capital.  On September 11, 2017, in connection with a certain related party convertible debt in the amount of $40,000, the Company issued 400,000 shares of its restricted common stock at a conversion rate of $0.10 per share.  As a result, $39,600 was recorded to paid in capital.  On October 4, 2017, in connection with a certain consulting agreement, the Company issued 200,000 shares of its restricted common stock to the consultant for services to be provided over a twelve (12) month period.  The shares were valued at $38,000, of which 25% vest immediately, and the remainder vest monthly over the first three (3) months of the agreement.  As  a result, $9,500 was expensed, $28,500 was deferred, to be amortized over three (3) months, and $37,800 was recorded to paid in capital.  On October 23, 2017, the Company issued a convertible promissory note to an accredited investor for financing in the amount of $45,000.  The note includes interest at a rate of 10% per annum, matures in three (3) years, and is convertible into restricted shares of the Company’s common stock at a conversion rate of $0.10 per share.  The common shares were issued with 50% warrant coverage for a period of three (3) years at an exercise price of $0.25 per common share.  On November 14, 2017, the Company suspended the services provided by Dr. Robert Arnot under the Consulting Agreement dated September 25, 2016.  Between November 14, 2017 and December 13, 2017, in connection with an equity offering, the Company issued 3,950,000 shares of its restricted common stock at a price of $0.05 per share, for cash in the amount of $197,500.  As a result, $193,550 was recorded to paid in capital.  On December 4, 2017, in connection with a certain settlement for debt in the amount of $87,500 and interest of $12,500, the Company issued 2,000,000 shares of its restricted common stock at a rate of $0.05 per share.  As a result, $98,000 was recorded to paid in capital.  On December 15, 2017, in connection with a certain consulting agreement, the Company issued 500,000 shares of its restricted common stock to the consultant for services to be provided over a twelve (12) month period.  The shares were valued at $51,250, of which 60% vest immediately, and the remainder vest periodically over the term of the agreement.  As a result, $30,750 was expensed, $20,500 was deferred, to be amortized over the next twelve (12) months, and $50,750 was recorded to paid in capital.  In addition, the consultant was issued 500,000 warrants for a period of three (3) years to purchase shares of the Company’s common stock at a price of $0.15 per share.  The warrants vest periodically over the term of the agreement.  On December 22, 2017, RoxSan Pharmacy, Inc. terminated its operations and closed the business location in Beverly Hills, CA.  On January 11, 2018, pursuant to a resolution of the Board of Directors, the Company issued 6,000,000 shares of its restricted common stock to certain officers and directors.  The shares were purchased at par, or $0.001 per share, for cash in the amount of $6,000.  On January 19, 2018, in connection with an equity offering, the Company issued 1,000,000 shares of its restricted common stock at a price of $0.04 per share, for cash in the amount of $40,000.  As a result, $39,000 was recorded to paid in capital.  On January 25, 2018, the Company issued a convertible promissory note to an accredited investor for financing in the amount of $5,000.  The note includes interest at a rate of 10% per annum, matures in three (3) years, and is convertible into restricted shares of the Company’s common stock at a conversion rate of $0.10 per share.  The common shares were issued with 50% warrant coverage for a period of three (3) years at an exercise price of $0.25 per common share.  On January 29, 2018, in connection with a certain consulting agreement, the Company issued 250,000 shares of its restricted common stock to the consultant for services to be provided over a twelve (12) month period.  The shares were valued at $67,500, of which 25% vest immediately, and the remainder vest periodically over the term of the agreement.  As a result, $16,875 was expensed, $50,625 was deferred, to be amortized over the next twelve (12) months, and $67,250 was recorded to paid in capital.  In addition, the consultant was issued 250,000 warrants to purchase shares of the Company’s common stock at a price of $0.25 per share, for a period of three years.  The warrants vest periodically over the term of the agreement.  On February 27, 2018, in connection with certain convertible debt in the amount of $45,000 and accrued interest of $3,114, the Company issued 481,130 shares of its restricted common stock at a conversion rate of $0.10 per share.  As a result, $47,633 was recorded to paid in capital.  In February 2018, the Company issued three senior secured convertible notes (the “CV Note(s)”) in the aggregate principal sum of $220,000. Two (2) of the CV Notes in the aggregate principal sum of $145,000 bear interest at a rate of twelve percent (12%) for ninety (90) days, or $17,400. The CV Note in the principal sum of $75,000 bears interest at a rate of four percent (4%) for thirty (30) days, or $3,000.  In addition to interest, the note holders were issued an aggregate of 440,000 shares of the Company’s restricted common stock, valued at $44,000. As a result, $43,560 was recorded to paid in capital. The CV Notes have been extended to mature July 15, 2018.  On April 5, 2018, in connection with a stock purchase agreement, the Company granted a key employee the right to purchase 1,000,000 shares of its restricted common stock at a price of $0.001 per share.  The shares, valued at $200,000, were issued for cash in the amount of $1,000.  As a result, $199,000 was recorded to paid in capital.  On April 26, 2018, the Company extended and amended the subordinate secured convertible promissory note dated April 26, 2017 in the principal sum of $250,000.  The amended note was issued for the principal sum of $281,500, to include accrued interest to date (the “Amended Note”). The Amended Note bears interest at rate of 12% per annum, matures October 26, 2018, or earlier, contingent upon certain financing conditions, and contains a repayment provision to convert the note into restricted shares of the Company’s common stock at a price of $0.10 per share.  The Amended Note is secured by all of the Company’s personal property, and includes warrant coverage for a period of three (3) years to purchase shares of the Company’s common stock at a purchase price of $0.20 per share, with a provision for the price to be reduced to $0.10 per share if certain conditions are not met by the Company.  On May 8, 2018, the Company extended and amended the subordinate secured convertible promissory note dated May 8, 2017 in the principal sum of $50,000. The amended note was issued for the principal sum of $56,250, to include accrued interest to date (the “Amended Note”). The Amended Note bears interest at rate of 12% per annum, matures November 8, 2018, or earlier, contingent upon certain financing conditions, and contains a repayment provision to convert the note into restricted shares of the Company’s common stock at a price of $0.10 per share.  The Amended Note is secured by all of the Company’s personal property, and includes warrant coverage for a period of three (3) years to purchase shares of the Company’s common stock at a purchase price of $0.20 per share, with a provision for the price to be reduced to $0.10 per share if certain conditions are not met by the Company.  On May 14, 2018, pursuant to a unanimous resolution of the Boards of Directors of RoxSan Pharmacy, Inc. and Parallax Health Sciences, Inc., RoxSan filed a Chapter 7 petition in the United States Bankruptcy Court for the Central District of California.  Mr.Timothy Yoo was appointed trustee on May 15, 2018.  In connection with this filing, RoxSan seeks to discharge approximately $5 million of liabilities owed to various parties including more than $1 million owed to the Company.  On June 4, 2018,Mr.Anand Kumar resigned as a member of the Board of Directors.  This resignation did not involve any disagreement with the Company.  Mr.Nathaniel T. Bradley, currently serving as Chief Technology Officer, succeeds him; to serve as a member of the Board of Directors until the next annual meeting of the shareholders and/or until his successor is duly appointed.  On June 18, 2018, the Company issued senior secured convertible promissory notes (the “Notes”) to four accredited investors in the aggregate principal sum of $600,000.  The Notes bear interest at rate of 12% per annum, mature December 15, 2018, or earlier, contingent upon certain financing conditions, and contain a repayment provision to convert the Notes into restricted shares of the Company’s common stock at a price of $0.10 per share.  The Notes are secured by all of the Company’s personal property, and include warrant coverage for a period of three (3) years to purchase shares of the Company’s common stock at a purchase price of $0.20 per share, with a provision for the price to be reduced to $0.10 per share if certain conditions are not met by the Company.  On July 18, 2018, an amendment (the “Amendment”) was made to the Agreement to Purchase and Sell One Hundred Percent (100%) of the Issued and Outstanding Shares of Qolpom, Inc. and its Assets, Intellectual Property and Inventory dated August 31, 2016 (the “Agreement”). The Amendment modifies the Agreement’s Earn-Out consideration by basing any monies due under the Earn Out solely upon revenues generated, with no guaranteed minimum payment owed, thereby eliminating the $2,000,000 guaranteed payment previously owed by the Company .  The Amendment resulted in a change in the value of certain assets acquired and liabilities assumed as follows:  Originally StatedRevisedIncrease (Decrease)Assets:Non-Compete Agreement$40,000$30,000$(10,000)Liabilities:License fee$2,000,000$260,000$(1,740,000)License fee, unamortized discount$(1,460,000)$––$1,460,000Net Effect$(270,000)  On July 31, 2018, the unsecured convertible promissory note in the principal sum of $144,000 (Note 9) was modified 1) to extend the note’s maturity to October 1, 2019 and 2) to change the conversion price from $0.25 to $0.10 per share.  On August 12, 2018, in connection with certain convertible debt in the amount of $10,000 and accrued interest of $1,000, the Company issued 110,000 shares of its restricted common stock at a conversion rate of $0.10 per share.  As a result, $10,890 was recorded to paid in capital.  On August 20, 2018, in connection with certain convertible debt in the amount of $150,000 and accrued interest of $15,000, the Company issued 1,650,000 shares of its restricted common stock at a conversion rate of $0.10 per share.  As a result, $164,835 was recorded to paid in capital.  21   Legal Matters:  Dispute with Former Owner of RoxSan  In October 2015, shortly following the Company's acquisition of RoxSan, Shahla Melamed (“Melamed”), initiated two (2) legal actions against the Company in the Superior Court of the State of California, County of Los Angeles, West District, Shahla Melamed v. Parallax Health Sciences, Inc., action numbers SC 124873 and SC 125702.  In the matter, action No. SC 124873, Melamed sought rescission of the August 13, 2015 Purchase Agreement. During the proceedings, Melamed also contended that the Company owed Melamed monies for, among other things, expenses paid by Melamed on behalf of the Company.  As a result, the Court split the action into two separate rulings: (1) Rescission Phase and (2) Accounting Phase.  ●Action No. SC 124873-Rescission Phase: In the Matter, action no. SC 124873, rescission was sought by Melamed on the basis that, allegedly, in order to acquire the Pharmacy, the Company and its principals had allegedly defrauded Melamed, there had allegedly been a complete failure of consideration, and a unilateral mistake was allegedly made on the part of Melamed.  Subsequently filed pleadings by the Company and RoxSan in action no. SC 124873 allege, among other things, that Melamed misrepresented the true earnings and source of income for the pharmacy business and had engaged in a fraudulent and illegal scheme to ship medications to states where her pharmacy was not licensed prior to the sale of the Pharmacy.  Final Ruling:  On March 17, 2017, the Court ruled in favor of the Company, and issued that Melamed is not entitled to rescission of the Purchase Agreement.  The ruling of the Court stated that no fraud on the part of the Company or its principals had been demonstrated.  The Court further ruled that there had been no failure of consideration, and that Melamed’s entry into the Agreement was not a result of a unilateral mistake on the part of Melamed.  The Minutes of the Ruling were entered by the County Clerk on March 17, 2017.  ●Action No. SC 124873-Accounting Phase: In the Matter, action No. SC 124873, Melamed contended that the Company owed Melamed monies for, among other things, expenses paid by Melamed post-Closing.  An accounting was presented by Melamed’s expert, BDO Seidman (“BDO”), alleging that the Company owed Melamed in excess of $500,000.  The Company disputed this vigorously and prepared a 400+ page analysis (the “Analysis Report”) of the BDO reconciliation report.  The Analysis Report identified errors in the BDO report in excess of $900,000 and found that Melamed owed the Company over $400,000.  Melamed argued the findings in the Analysis Report. Consequently, due to the complexities of the accountings, the Court ordered a third-party adjudicator with an accounting background to review both the BDO report and the Company’s Analysis Report.  Draft Ruling: On July 24, 2017, in the Matter, action No. SC124873, the Company was notified that the results of the reconciliation review performed by third-party adjudicator were in favor of the Company in the amount of $412,948.  Melamed objected to the adjudicator’s findings, and a final hearing was held in January 2018.  A final judgment is pending for the Court’s decision on the exact monies owed by Melamed to the Company.  ●Action No. SC125702: In the Matter, action No. SC125702, Melamed alleges that the Company is in default under the terms of the Purchase Agreement and Secured Note, and the Company’s termination of Melamed’s employment agreement.  The Company firmly believes that it had adequate grounds to justify the termination of the employment, that it acted within its rights, and shall prevail in these proceedings.  A trial date is currently set for July 2018.  ●Action No. SC 124898: The Company has initiated legal action against Melamed and filed a complaint, action number SC 124898, in the Superior Court of the State of California, County of Los Angeles, West District, Parallax Health Sciences,et al. v. Shahla Melamed, et al.  The Complaint in that action alleges that Melamed has breached several obligations under the Purchase Agreement, and the Company is seeking to reduce the Secured Note due to undisclosed material changes in the business. A trial date is currently set for July 2018.  As part of the Company’s pleadings to the courts, the Company has presented the following matters:  ●Purchase Price Dispute Included in the Acquisition Agreement for RoxSan Pharmacy, Inc., and as part of the negotiated purchase price, were representations and warranties made by the former owner involving certain primary revenue streams and related contracts.  Shortly after the closing, however, management discovered that these representations were substantially inaccurate and/or completely false.  These inaccuracies, and the improper disclosures and/or omissions made by the former owner during negotiations, would have significantly affected the purchase price and related note payable.  As a result, among other things, management has initiated legal action against the former owner to seek a reduction in the purchase price.  Included in the false representations made by the former owner were prescription revenues in excess of $8 million (and approximately $16 million prior to the change in ownership) related to workers compensation claims that the former owner warranted as collectible.  The insurance claims related to these prescriptions, which originated from and were provided to the pharmacy by the former owner's direct family members, were investigated by a third-party expert retained by the Company, and the claims were substantially identified as fraudulent.  The former owner's family member has been indicted by the Department of Justice for among other things, insurance fraud.  22    In addition, management engaged a third-party to perform a valuation of the Pharmacy, utilizing revised inputs that more accurately reflected the Pharmacy's revenue streams as of the date of Acquisition.  The valuation performed resulted in a fair market value of $4.7 to $5.2 million. After careful consideration, and based upon these significant differences, management has determined that the purchase price and related promissory note of $20.5 million does not fairly represent the fair market value at the date of purchase.  The Company has, therefore, applied a discount to the note of $15.3 million, to reduce the purchase price and related note to its estimated fair market value of $5.2 million, utilizing the higher value on the range as a conservative measure.  The valuation performed does not include the effects of any liabilities the former owner omitted or damages caused to the Company as a result of the former owner and her immediate family members connected to the Pharmacy.  ●Control of Funds Dispute / US Postal Interference For a period of time immediately after the closing of the Acquisition, the Melamed would not relinquish control of the Pharmacy's bank accounts, and collected the Pharmacy's incoming cash revenues, refusing to transfer the funds to the new ownership. Furthermore, when the Company attempted to change the corporate records and signatories on the existing bank accounts, the former owner disputed the changes, resulting in approximately $180,000 in corporate funds being frozen and held for adjudication. During this period, the Company was forced to request that the former owner pay the Pharmacy's operating expenses.  At no time after the Company opened new accounts did the former owner cooperate with the transference or willingly relinquish control of the Pharmacy's operating cash flow or incoming cash revenues.  The former owner continued to interfere in the transference of control of the Pharmacy by submitting change of address forms to the US Postal Service, wherein the former owner diverted the Pharmacy mail to her home address.  Once this was discovered and rectified with the post office, the former owner filed another change of address to divert mail to a post office box.  During these periods of time, the former owner received check payments and negotiated the checks by opening up a bank account utilizing a DBA, "Roxsan Pharmacy."  The Company was able to identify some of the checks the former owner negotiated by directly contacting the payer and receiving copies of the cancelled checks, with the former owner's signature endorsement and account number on the check.  Disputes with Former Executives  ●Action No. CV2017-052804 On March 9, 2017, Dave Engert former Executive Chairman and director of the Company filed a lawsuit in Arizona and then on or about May 5, 2017, Mr. Engert, changed the venue and filed suit against the Company and RoxSan Pharmacy, Inc. in the United States District Court, Central District of California for an amount exceeding $75,000.  The Company intends to vigorously defend against this action, and on October 23, 2017, filed an answer and counterclaims against Mr. Engert for an amount exceeding $100,000.  The counterclaims include possible fraud and negligence committed by Mr. Engert and Mr. J. Michael Redmond, former successor Chairman of Mr. Engert, director, President and Chief Executive Officer of the Company and former President, Chief Executive Officer, Chairman and director of RoxSan Pharmacy, Inc.  ●Action No. BC700070 On March 28, 2018, Mr.J. Michael Redmond filed a lawsuit against the Company and RoxSan Pharmacy, Inc. in the United States District Court, Central District of California for an amount exceeding $75,000. The Company intends to vigorously defend against this action. There are counterclaims that include possible fraud and negligence committed byMr.Redmond, former successor Chairman of Mr. Engert, director, President and Chief Executive Officer of the Company and former President, Chief Executive Officer, Chairman and director of RoxSan Pharmacy, Inc.  Disputes with Creditors/Vendors  ●Action No. SC127712 On or about June 20, 2017, American Express Bank, FSB filed suit against RoxSan Pharmacy, Inc. in Superior Court of California, County of Los Angeles for an amount of $1,015,052.  On or about June 27, 2017, American Express Travel Related Services Company, Inc. filed suit against RoxSan Pharmacy, Inc. in Supreme Court of New York, County of New York in the amounts of $153,500 and $273,500.  On July 31, 2017, and August 16, 2017, respectively, the Company entered into stipulation and settlement agreements of these matters to make payments in lieu of further litigation at this time.  There are five (5) legal matters currently pending at this time.   *    *    *    *    *  23   ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  Forward-Looking Statements  This quarterly report contains forward-looking statements. These statements relate to future events or the Company’s future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors” that may cause the Company or the Company’s industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.  Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.  The Company’s unaudited financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with the Company’s financial statements and the related notes that appear elsewhere in this quarterly report.  In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to "common shares" refer to the common shares in the Company’s capital stock.  As used in this quarterly report, the terms "we", "us", "our" and "Parallax" means Parallax Health Sciences, Inc., and its wholly-owned subsidiaries, Parallax Diagnostics, Inc., Parallax Health Management, Inc. (formerly Qolpom, Inc.), Parallax Behavioral Health, Inc., and RoxSan Pharmacy, Inc., unless otherwise indicated.  Corporate History and Overview  The Company was incorporated in the State of Nevada on July 6, 2005.  On November 1, 2012, the Company, formerly Endeavor Power Corporation, and its wholly owned subsidiary Endeavor Holdings, Inc., a Nevada corporation, entered into an Agreement and Plan of Merger with Parallax Diagnostics, Inc., a Nevada corporation ("Parallax Diagnostics"), whereby Parallax Diagnostics became a wholly owned subsidiary.  On January 9, 2014, the Company changed its name to Parallax Health Sciences, Inc. (“Parallax”).  (OTC:PRLX).  Parallax’s current family of companies that serve as the foundation for its cross-over business model of operations include:  ●Parallax Diagnostics, Inc. ("Parallax Diagnostics" or "PDI") is the Company’s point of care diagnostic testing company focused on the exploitation of a proprietary diagnostic immunoassay testing platform and test cartridges for the areas of infectious diseases, cardiac markers, drugs of abuse and various other medical conditions. Parallax’s primary focus is to commercialize the Target System worldwide.  Parallax Diagnostics is currently pre-revenue and continues to pursue viable opportunities for the commercialization of its product.  The commercial and clinical proposition of Parallax Diagnostics’ Target System is based on:  ●The Target System will allow doctors to test patients in their office; and ●The Target System is one time learning process to perform all of its tests; and ●The Target System delivers test results in 10 minutes or less providing patients with important information at the time of testing; and ●The Target System costs less than outside lab-based tests allowing payers to pay less, a reduction in patient co-pays; and ●Allows doctors to earn additional revenue that they cannot participate in with outside labs and testing not performed in their offices.  The Company has sought to identify strategies that would make its proposition more valuable and competitive.  To this end, the Company has pursued the creation of patents around its foundational technology and developed a novel immune status test targeting the HIV/AIDS and TB markets. Since the inception of Parallax Diagnostics, the novel CD4-CD8 immune status test has been developed, and the Company has been issued patents on elements of its core technology and testing system.  ●RoxSan Pharmacy, Inc. (“RoxSan”), acquired in August 2015, is the Company’s 62-year-old, Beverly Hills, California based compound pharmacy that is licensed to operate in over 40 States.  ●Parallax Health Management, Inc.(formerly Qolpom, Inc.) (“PHM”) a Tucson, Arizona based Remote Patient Monitoring (“RPM”) business is the Company’s most recent acquisition, and represents an opportunity to develop products and services, and commercialize them, on a proprietary platform, in the RPM and Telehealth market, that will allow for systems integration with a number of third party services and solutions. In 2016, PHM initiated the generation of revenue through the deployment of its services and products.  24   The commercial and clinical proposition of PHM is based on the following propositions:  ●Improve digital connectivity among consumers, providers, health plans, and life sciences companies; and ●Facilitate self-managed care, with the help of technology-enabled solutions, in a secure environment that `protects consumer privacy; and ●Deliver care outside the traditional clinical setting, potentially providing better access to care at a lower cost. ●Assist chronic care management and improve population health outcomes; and ●PHM empowers patients by providing a cost-effective tool that connect them with their doctors; and ●PHM empowers doctors with improved patient scheduling flexibility and timely communications; and ●PHM provides hospitals with a tool to address the problem and economic hardship caused by readmissions; and ●PHM provides a virtual management tool for chronic disease management.  ●Parallax Behavioral Health, Inc. (“PBH”), a Delaware corporation, was formed by the Company in March 2017, and acquired the intellectual property known as REBOOT, the acronym for Reliable Evidence-Based Outcomes Optimization Technologies.  REBOOT is a software platform specifically designed to improve health treatment outcomes through Internet-based and mobile behavioral technology systems that enable its users and user groups to more effectively achieve goals within a prescribed timeline. The REBOOT software can be used by an individual or an organization of any size, with the potential to transform the cost of treating and managing chronic illnesses such as Pulmonary-COPD-Asthma, Diabetes, and cardiovascular disease by effecting the modification of behavior in patients being treated for these chronic diseases.  The Company is currently implementing its development and marketing strategies to integrate the REBOOT system within the Parallax family of healthcare products and services.  Acquisition of RoxSan Pharmacy, Inc.  In 2013, Parallax identified an opportunity to acquire RoxSan Pharmacy, Inc. ("RoxSan"), a California corporation, and began the due diligence process.  The Company's initial interest centered on utilizing the acquisition as a means of accelerating the commercialization of the Parallax Target System and diagnostic platform, as RoxSan had access to a nationwide network of doctors and sales representatives.  During the due diligence process, the Company became aware of the numerous opportunities that RoxSan and its markets represented.  On August 13, 2015 (the "Closing Date"), pursuant to a resolution of the board of directors (the "Board"), the Company entered into an Agreement to Purchase and Sell One Hundred Percent of the Issued and Outstanding Shares of RoxSan Pharmacy, Inc. ("RoxSan" or the "Pharmacy"), and its Assets and Inventory (the “Purchase Agreement”).  Pursuant to the Purchase Agreement between the Company, RoxSan and its sole shareholder, Shahla Melamed (the “Seller” or "Melamed"), in exchange for 100% of RoxSan's common stock, and its assets and inventory, the Company, among other things, issued the Seller a Secured Promissory Note (the "Note") dated August 13, 2015 in the amount of $20.5 million (the "Acquisition").  The Note bears interest at a rate of 6% per annum, and matures in three (3) years, or August 13, 2018 ("Maturity").  The Company is seeking a reduction in the Purchase Price and related promissory note (See Legal Proceedings).  As a result of the Acquisition, effective August 13, 2015, RoxSan became a wholly owned subsidiary of the Company. No change in control of the Company occurred as a result of the Acquisition.  In connection with the Acquisition, the Company entered into an Employment Agreement (the "Employment Agreement") with the Seller.  Under the Employment Agreement, Melamed agreed to provide exclusive consulting services to the Company in the areas of public relations and marketing for a term of four (4) years. On March 4, 2016, the Company terminated the Employment Agreement in accordance with paragraph 3.2 Termination for Cause.  The termination was the result of, among other things, Melamed's breaches in the Agreement, which were substantiated by an investigation conducted by an employment law firm retained by RoxSan.  Under the terms of the Agreement, no financial obligation resulted in the termination. (see "Dispute with Former Owner of RoxSan" below).  Closure of RoxSan Pharmacy, Inc.  Since the Company’s acquisition of RoxSan, the deleterious actions against the pharmacy by the former owner, including, among other things, interference with management and operations, and attempts to damage and/or divert customer and vendor relationships, had a significant adverse impact on the pharmacy. Furthermore, the discovery of the former owner’s alleged involvement in suspected insurance fraud caused RoxSan’s contract with its primary In Vitro Fertilization (“IVF”) drug rebate program to be terminated in August 2016. As a result, RoxSan was no longer eligible to receive incentive rebates for the majority of its IVF drug purchases, which were key to the profitability of the IVF drug sales; and for which without the rebates, RoxSan was unable to provide its customers with comparably priced IVF drugs.  This, among other things, caused a precipitous drop in RoxSan’s IVF revenues, and ultimate exit from the IVF market in mid-2017.  Soon thereafter, in July 2017, RoxSan’s contract with its primary drug supplier was terminated for similar reasons connected to the former owner and alleged criminal activities associated with the Melamed family name, despite the Company’s new ownership and management. After careful consideration, the Company determined that RoxSan was unable to generate enough profits to sustain its pharmacy business, and in December 2017, the pharmacy ceased operations.  On May 14, 2018, pursuant to a unanimous resolution of the Boards of Directors of RoxSan Pharmacy, Inc. and Parallax Health Sciences, Inc., RoxSan filed a Chapter 7 petition in the United States Bankruptcy Court for the Central District of California.  Mr. Timothy Yoo was appointed trustee on May 15, 2018.  In connection with this filing, RoxSan seeks to discharge approximately $5 million of liabilities owed to various parties including more than $1 million owed to the Company.  25  Acquisition of Parallax Health Management, Inc, (formerly Qolpom, Inc.)  As part of the Company’s strategic plan to obtain a platform to enhance its diagnostic tests, on August 31, 2016, the Company entered into an agreement with Qolpom, Inc., an Arizona corporation in the remote healthcare monitoring and telehealth business (“Qolpom”) and its shareholders (the “Seller”) to purchase 100% of the issued and outstanding shares of Qolpom’s common stock and its assets, inventory and intellectual property.   The Purchase Agreement was fully executed on September 20, 2016, and the transaction was completed (the “Closing Date”). The Qolpom name was later changed to Parallax Health Management, Inc. (“PHM”).  Pursuant to the Qolpom Agreement, in exchange for 100% of the Qolpom stock and 100% of Qolpom’s assets, inventory and intellectual property, among other things, consideration to the Seller included:  ●5,000,000 shares of the Company’s common stock at $0.001 per share; and ●2,500,000 options to purchase shares of the Company's common stock, vesting over three (3) years beginning August 31, 2017, of which 500,000 are exercisable at $0.10, 1,000,000 are exercisable at $0.15, and 1,000,000 are exercisable at $0.25; and ●10% of revenues generated from PHM business segment, up to $1,000,000; and 7% thereafter, up to $2,000,000; and ●3% of revenues generated from the sale of Qolpom hardware and monitoring service fees.  Formation of Parallax Behavioral Health, Inc.  On March 22, 2017, the Company formed a wholly owned subsidiary, Parallax Behavioral Health, Inc. (“PBH”), a Delaware corporation.  On April 26, 2017, pursuant to a resolution of the board of directors, the Company and its wholly-owned subsidiary, Parallax Behavioral Health, Inc., completed the acquisition of 100% of certain intellectual property from ProEventa Inc., a Virginia Corporation (“ProEventa”), in accordance with the Intellectual Property Purchase Agreement between the Company, PBH and ProEventa (the “ProEventa Agreement”). ProEventa has an expertise in the development of behavioral health technologies, and is the wholly owned subsidiary of Grafton Integrated Health Network, Inc., a non-profit Virginia corporation (“Grafton”), Pursuant to the ProEventa Agreement, consideration to ProEventa for the acquisition of the intellectual property was:  ●a stock purchase agreement to purchase 2,500,000 shares of the Company’s common stock at $0.001 per share; and ●a revenue sharing agreement, providing for a cash earn-out to be paid to the ProEventa shareholders of up to $3,000,000, to be derived from certain net revenue generated by the Company, as defined in the agreement; and ●a royalty agreement, providing for a royalty of 3% of the revenues be paid to ProEventa, up to $25,000,000 in revenues, generated from the intellectual property, and ●a limited license to ProEventa for the use of certain of the Intellectual Property's technology at Grafton Schools.  On April 26, 2017, in conjunction with the ProEventa Agreement, the Company entered into a consulting agreement with James Gaynor, founder of ProEventa, that, among other things, provides for consideration to Mr. Gaynor as follows:  ●a stock purchase agreement to purchase 500,000 shares of the Company’s common stock at $0.001 per share; and ●a grant of options to purchase 1,000,000 shares of the Company's common stock at a price of $0.25 per share, vesting annually over a three (3) year period beginning September 1, 2017.  Changes in Management  On December 29, 2016, Mr. John L. Ogden and Ms. Calli R. Bucci were elected to serve as members of the Company's board of directors.  On April 6, 2017, the Board elected Mr. Joseph M. Redmond as Chairman, to serve until the Company’s next meeting, in accordance with the Company's bylaws, or a resignation is duly tendered.  Effective July 6, 2017, the Board of the Company caused the departure of Mr. Redmond from his position as President and Chief Executive Officer of the Company and its wholly-owned subsidiary, RoxSan Pharmacy, Inc. Pursuant to the Employment Agreement dated August 1, 2015, a resignation from the Board of the Company and its wholly-owned subsidiaries, RoxSan Pharmacy, Inc. and Parallax Health Management, Inc. was tendered automatically.  Effective July 7, 2017, pursuant to a unanimous Board resolution, Mr. Paul R. Arena was appointed as the Company’s President and Chief Executive Officer, and the Board caused Mr. Arena's election to the Company's Board and the Board of its wholly-owned subsidiaries, RoxSan Pharmacy, Inc., Parallax Health Management, Inc., and Parallax Behavioral Health, Inc.  26  On July 7, 2017, in connection with Mr. Arena’s appointment, the Company entered into an Executive Employment Agreement (the “Agreement”) with Mr. Arena dated July 7, 2017, wherein Mr. Arena will serve as President and Chief Executive Officer for a period of three (3) years.  As compensation for his services, Mr. Arena will receive a base compensation of $350,000 in year one, of which 30% shall be deferred until certain goals are met, $425,000 in year two, and $550,000 in year three, as well as annual bonus compensation equal to 2x base when certain Company earnings are reached.  In addition, the Agreement includes a restricted stock award of 10,000,000 common shares, of which 25% vests immediately; 25% vests in one year; 25% vests after two years; and 25% vests when certain funding goals have been met.  The shares were valued at $2,000,000, of which $500,000 was expensed, and $1,500,000 was deferred, to be amortized over the next thirty-six (36) months. The Agreement also includes the grant of 5,000,000 stock options at an exercise price of $0.25 per share.  The options are exercisable for a period of five years, and vest when certain market share prices of the Company’s common stock are met.  On July 26, 2017, Mr. Jorn Gorlach resigned as a member of the board of directors.  This resignation did not involve any disagreements with the Company.  On June 4, 2018, Mr. Anand Kumar resigned as a member of the board of directors.  This resignation did not involve any disagreement with the Company.  Mr. Nathaniel T. Bradley, currently serving as Chief Technology Officer, succeeds him; to serve as a member of the board of directors until the next annual meeting of the shareholders and/or until his successor is duly appointed.  Dispute with Former Owner of RoxSan  Shortly after the Closing, the Company's management and Melamed clashed over control of the RoxSan Pharmacy business operations and bank accounts.  ●Purchase Price Dispute Included in the Acquisition Agreement, and as part of the negotiated purchase price, were representations and warranties made by the former owner involving certain primary revenue streams and related contracts.  Shortly after the closing, however, management discovered that these representations were substantially inaccurate and/or completely false.  These inaccuracies, and the improper disclosures and/or omissions made by the former owner during negotiations, would have significantly affected the purchase price and related note payable.  As a result, among other things, management has initiated legal action against the former owner to seek a reduction in the purchase price.  In addition, management engaged a third-party to perform a valuation of the pharmacy, utilizing revised inputs that more accurately reflected the Pharmacy's revenue streams as of the date of Acquisition.  The valuation performed resulted in a fair market value of $4.7 to $5.2 million. After careful consideration, and based upon these significant differences, management has determined that the purchase price and related promissory note of $20.5 million does not fairly represent the fair market value at the date of purchase.  The Company has, therefore, applied a discount to the note of $15.3 million, to reduce the purchase price and related note to its estimated fair market value of $5.2 million, utilizing the higher value on the range of as a conservative measure.  The valuation performed does not include the effects of any liabilities the former owner omitted or damages caused to the Company as a result of the former owner and her immediate family members connected to the Pharmacy.  ●Control of Funds Dispute / US Postal Service Interference For a period of time immediately after the closing of the Acquisition, the former owner would not relinquish control of the Pharmacy's bank accounts, and collected the Pharmacy's incoming cash revenues, refusing to transfer the funds to the new ownership. Furthermore, when the Company attempted to change the corporate records and signatories on the existing bank accounts, the former owner disputed the changes, resulting in approximately $180,000 in corporate funds being frozen and held for adjudication. During this period, the Company was forced to request that the former owner pay the Pharmacy's operating expenses.  At no time after the Company opened new accounts did the former owner cooperate with the transference or willingly relinquish control of the Pharmacy's operating cash flow or incoming cash revenues.  The former owner continued to interfere in the transference of control of the Pharmacy by submitting change of address forms to the US Postal Service, wherein the former owner diverted the Pharmacy mail to her home address.  Once this was discovered and rectified with the post office, the former owner filed another change of address to divert mail to a post office box.  During these periods of time, the former owner received check payments and negotiated the checks by opening up a bank account utilizing a DBA, "Roxsan Pharmacy."  The Company was able to identify some of the checks the former owner negotiated by directly contacting the payer and receiving copies of the cancelled checks, with the former owner's signature endorsement and account number on the check.  As a result, an extensive reconciliation was performed to determine what amounts were collected and paid by the former owner, and what amounts were due to the Company.  The reconciliation resulted in over $412,000 owed to the Company from the former owner.  The reconciliation and underlying documentation went under judicial review, and on July 24, 2017 the Company was notified that the results of the review were in favor of the Company in the amount of $412,948.  A final judgment is pending for the exact amount of monies owed to the Company from the former owner.  27   Faced with Melamed continuing to materially interfere with the Pharmacy’s operations to the detriment of its business, the Company retained the services of an employment law firm to investigate Melamed's actions and provide a report to the Company’s Board (the "Report").  The Company also placed Melamed on a paid leave of absence because of her actions. The Board, after reviewing the findings in the Report, found substantive cause for Melamed's termination, and immediately sent Melamed written notification of the Company's intent to dismiss her for cause.  Under the Employment Agreement, Melamed was provided with a thirty (30) day cure period.  However, the Company received no response of intent to cure from Melamed or her counsel, and no evidence of a cure was provided to the Company.  As a result, the Board authorized Melamed's termination for cause on March 3, 2016, and on March 6, 2016, Melamed was formally terminated in writing.  In the course of management’s operation of the RoxSan Pharmacy, and adherence to Financial Accounting Standards Board revenue recognition policies, management became concerned with the absence of the claim processing for over $16 million of pre-Close Workers Compensation prescription revenues, which Melamed represented to the Company prior to Closing as being the vast majority of the high margin compound revenue. In addition to the $16 million in pre-Close claims, the Pharmacy generated over $8 million after the change in ownership, until the Chief Financial Officer of the Company, (the “CFO”) alerted management of a serious and dramatic change in the receivables collection timetable, the underpinning cash flow processes, and the potential illegitimacy of the Workers Compensation revenues. Further, the CFO was uncomfortable with recognizing the revenue as it was presented by Melamed's financial records, and, in the absence of any reasonable assurance of collectability of the Workers Compensation revenues, the Company established an allowance for doubtful receivables for the $8 million in post-Close claims for which collectability was highly unlikely. In fiscal year 2016, the Company completely wrote off this amount from its receivables.  The Company retained the services of a forensic Workers Compensation fraud specialist to determine the legitimacy of the pre-Close Workers Compensation revenues and related insurance claims.  As a result of this forensic review, it was determined that these claims were essentially valueless.  As a result of these findings and undisclosed changes to the cash flow and quality of earnings that represented a majority of the revenue of the Pharmacy, the Company’s Board deemed it necessary to demand a reduction in the terms of the Sale and Purchase Agreement to more accurately reflect the true valuation of the Company.  This was met with resistance on the part of the Seller.  Shortly thereafter, in October 2015, Melamed, initiated two (2) legal actions against the Companyin the Superior Court of the State of California, County of Los Angeles, West District, Shahla Melamed v. Parallax Health Sciences, Inc., action numbers SC 124873 and SC 125702.  In the matter, action No. SC 124873, Melamed sought rescission of the August 13, 2015 Purchase Agreement. During the proceedings, Melamed also contended that the Company owed Melamed monies for, among other things, expenses paid by Melamed on behalf of the Company.  As a result, the Court split the action into two separate rulings: (1) Rescission Phase and (2) Accounting Phase.  ●Rescission Phase  -  Final Ruling:  On March 17, 2017, the Court ruled in favor of the Company, and issued that Melamed is not entitled to rescission of the Purchase Agreement.  The ruling of the Court stated that no fraud on the part of the Company or its principals had been demonstrated.  The Court further ruled that there had been no failure of consideration, and that Melamed’s entry into the Agreement was not a result of a unilateral mistake on the part of Melamed.  The Minutes of the Ruling were entered by the County Clerk on March 17, 2017.  ●Accounting Phase  -  Draft Ruling: On July 24, 2017, in the Matter, action No. SC124873, the Company was notified that the results of the reconciliation review performed by third-party adjudicator were in favor of the Company in the amount of $412,948.  Melamed objected to the adjudicator’s findings, and a final hearing was held in January 2018.  A final judgment is pending for the Court’s decision on the exact monies owed by Melamed to the Company.  In the Matter, action No. SC125702, Melamed alleges that the Company is in default under the terms of the Purchase Agreement and Secured Note and the Company’s termination of Melamed’s employment agreement.  The Company firmly believes that it had adequate grounds to justify the termination of the employment, that it acted within its rights, and shall prevail in these proceedings.  The Company has initiated legal action against Melamed and filed a complaint, action number SC 124898, in the Superior Court of the State of California, County of Los Angeles, West District,Parallax Health Sciences, Inc., et al. v. Shahla Melamed, et al.  The Complaint in that action alleges that Melamed has breached several obligations under the Purchase Agreement, and the Company is seeking to reduce the Secured Note due to undisclosed material changes in the business.  On May 14, 2018, pursuant to a unanimous resolution of the Boards of Directors of RoxSan Pharmacy, Inc. and Parallax Health Sciences, Inc., RoxSan filed a Chapter 7 petition in the United States Bankruptcy Court for the Central District of California.  Mr. Timothy Yoo was appointed trustee on May 15, 2018.  In connection with this filing, RoxSan seeks to discharge approximately $5 million of liabilities owed to various parties including more than $1 million owed to the Company.  28   Disputes with Former Executives  On March 9, 2017, Mr. Dave Engert filed a lawsuit in Arizona and then on or about May 5, 2017, Mr. Engert, changed the venue and filed suit against the Company and RoxSan Pharmacy, Inc. in the United States District Court, Central District of California for an amount exceeding $75,000.  The Company intends to vigorously defend against this action, and on October 23, 2017, filed an answer and counterclaims against Mr. Engert for an amount exceeding $100,000.  The counterclaims include possible fraud and negligence committed by Mr. Engert and Mr. J. Michael Redmond, former successor Chairman of Mr. Engert, director, President and Chief Executive Officer of the Company and former President, Chief Executive Officer, Chairman and director of RoxSan Pharmacy, Inc.  On March 28, 2018, Mr. J. Michael Redmond filed a lawsuit against the Company and RoxSan Pharmacy, Inc. in the United States District Court, Central District of California for an amount exceeding $75,000.  The Company intends to vigorously defend against this action. There are counterclaims that include possible fraud and negligence committed by Mr. Redmond, former successor Chairman of Mr. Engert, director, President and Chief Executive Officer of the Company and former President, Chief Executive Officer, Chairman and director of RoxSan Pharmacy, Inc.  For additional information on these proceedings, see “ITEM 1. LEGAL PROCEEDINGS” section contained in Part II within this quarterly report.  Description of Business  Parallax Health Sciences, Inc. is an innovative biomedical health-care company headquartered in Santa Monica, California, which operates under four (4) divisions: Medical Diagnostics, Pharmaceuticals, and Remote Healthcare, and Behavioral Healthcare Each of these divisions target a separate vertical market that are synergistic, compliment, and strengthen each other and the Parallax value proposition as a whole.  The Parallax Business Model  In 60 years, healthcare has transitioned from a direct relationship between doctor and patient, to one that has patients separated from their doctors by the introduction of a huge number of stakeholders, ranging from health insurers, employers, pharmacy benefit managers, imaging, diagnostic testing, lawyers, specialist and a plethora of others.  The patient and healthcare provider both want the same thing: information, quality of service, transparency, value for their hard-earned dollars, and more time in their day.  Parallax believes that its products and services can provide solutions that mitigate rising costs, reduce waste in spending through transparency, reduce the amount of unnecessary services, and increase the health and wellness of patients before they are sick.  Parallax has developed, acquired and licensed multiple platforms, proprietary and exclusive, that provide services and products, across the healthcare continuum.  These platforms are designed to allow for multiple points of reciprocal consideration, through innovative business models, that provide patients with increased quality of services and products, at reduced cost of time and money.  They also provide healthcare providers with increased access to their patients, the ability to deliver better and more efficient service and increase their income from the services they supply.  Although Parallax’s multiple operations are focused in separate vertical markets, Parallax has designed its business model to allow for cross-pollination and reciprocal transfer of value at multiple points in their respective economic food chains.  Management  Parallax is led by experienced veterans from the healthcare, technology, finance and management fields.  The Company's disciplined and organized approach is balanced by its optimism for the future, and the opportunities present in the current healthcare market. The Parallax team is grounded in a belief that success in business is built on a combination of research, planning and execution.  Operating Segments  The Company's current business operations generate revenue through multiple economic models, ranging from cash payments and insurance reimbursements from pharmaceutical drug sales , to PHM’s initial remote patient monitoring activity, the deployment of its Good Health Outcomes Platform, and the sale of third-party vendor devices, as well as behavioral healthcare services provided through PBH’s REBOOT software systems.  29  Currently, the Company’s business segments consist of:  ●Pharmacy  RoxSan provides a full range of pharmacy services including retail, compounding and fertility medications.  RoxSan generates net revenues primarily by dispensing prescription drugs, both through local channels by direct delivery as well as mail order. RoxSan also sells a wide assortment of general merchandise, including over-the-counter drugs, beauty products and cosmetics, seasonal merchandise and convenience foods, through the Company’s pharmacy. The pharmacy is fully licensed and qualified to conduct business in over 40 US States.  ●Remote Patient Monitoring  PHM provides a first-of-its-kind technology platform that provides for the complete remote patient care delivery system: the patent-pending Good Health Outcomes, which utilizes proprietary software and technology to bridge clinical behavioral science with technology and logistics for payers, providers and clinical professionals across a variety of wellness and clinical devices, including both fitness and clinical applications. PHM’s Good Health Outcomes is a secure and scalable platform for collecting, transmitting and analyzing biometric, pharmaceutical, and health data to healthcare providers, primarily hospitals, accredited nursing operations, and physicians.  PHM generates revenues through fees charged for the license and utilization of its proprietary system that provides software integrations of the Good Health Outcomes platform.  Additionally, PHM generates incremental revenues through the delivery of acute, post-acute and chronic health patient management software systems that enable PHM customers to bill for and collect payments from patients and third-party payers for telemonitoring and remote services that they deliver.  ●Behavioral Healthcare  In May 2017, the Company, through its subsidiary, Parallax Behavioral Health, Inc., acquired the intellectual property known as REBOOT, the acronym for Reliable Evidence-Based Outcomes Optimization Technologies.  REBOOT is a software platform specifically designed to improve health treatment outcomes using proprietary behavioral technology systems, that enables its users and user groups to more effectively achieve goals within a prescribed timeline. Through a proprietary behavioral health intelligence engine, REBOOT powers decision support that can also be delivered securely to any internet connected device. The software can be used by an individual or an organization of any size.  PBH generates revenues primarily through licensing and subscription of the REBOOT software and systems. As of June 30 30, 2017, the  BHS segment had not yet begun full operations, generating limited test market sales.  ●Corporate  The Corporate Segment provides management and administrative services to support the Company and consists of certain aspects of the Company’s executive management, corporate relations, legal, compliance, human resources, and corporate information technology and finance departments.  In addition, the Corporate Segment supports the costs and operating expenses related to the continued development and exploitation of the Company's proprietary medical diagnostic and monitoring platform and processes, which remains the Company's primary focus.  NOTE: The following sections of this quarterly report and any further reference made to “the Company”, "we", "us", "our" and "Parallax " shall mean Parallax Health Sciences, Inc., and its wholly-owned subsidiaries, Parallax Diagnostics, Inc., Parallax Health Management, Inc. (formerly Qolpom, Inc.), Parallax Behavioral Health, Inc., and RoxSan Pharmacy, Inc., unless otherwise indicated.  Balance Sheet  As at June 30, 2017, the Company had total assets of $3,993,008, compared with total assets of $2,623,991 at December 31, 2016. The increase in total assets of $1,369,017 is attributable to a decrease in cash of $53,885, a decrease in accounts receivable, net of allowance for doubtful accounts of $580,348, a decrease in rebates receivable of $19,550, a decrease in inventories of $245,422, a decrease in employee advances of $4,302, and a decrease in prepaid expenses of $38,996; an increase in intangible assets of $2,422,500, $14,677 of depreciation related to equipment, and $96,303 of amortization related to intangible assets.  As at June 30, 2017, the Company had total liabilities of $25,598,433, compared with total liabilities of $20,197,872 at December 31, 2016. The increase in total liabilities of $5,400,561 is attributable to an increase in accounts payable and accrued expenses of $982,020, a decrease pension plan contribution payable of $5,016, an increase in related party payables of $337,940, an increase in license fees and royalties payable of $1,870,000, decrease in related party convertible notes payable of $150,000 a decrease in secured notes payable of $184,383, and a decrease in unamortized discount of $2,550,000.  30   Results of Operations  The three and six months ended June 30, 2017, compared to the three and six months ended June 30, 2016  The financial information provided includes the accounts of the Company and its wholly owned subsidiaries, Parallax Diagnostics, Inc., Parallax Health Management, Inc. (formerly Qolpom, Inc.), Parallax Behavioral Health, Inc., and RoxSan Pharmacy, Inc., on a consolidated basis.  All significant intercompany accounts and transactions have been eliminated.  For the three months endedFor the six months endedJune 30, 2017June 30, 2016June 30, 2017June 30, 2016Revenue$803,574$6,812,592$2,764,534$14,217,251Cost of sales$707,478$6,050,647$2,308,484$12,176,326Gross profit (loss)$96,096$761,945$456,050$2,040,925Sales, marketing, and pharmacy expenses$228,103$353,427$528,888$988,893General and administrative expenses$1,055,902$965,087$2,147,042$2,026,720Operating (loss)$(1,187,909)$(556,569)$(2,219,880)$(974,688)Discount amortization$(1,315,000)$(1,275,000)$(2,620,000)$(2,550,000)Interest and dividend income (expense)$(324,102)$(188,597)$(627,404)$(388,453)Net loss$(2,827,011)$(2,020,166)$(5,467,284)$(3,913,141)  Revenue  Revenue in the amount of $803,574 for the three months ended June 30, 2017, consists of pharmaceutical sales related to the Company's pharmacy operations in the amount of $777,334, and contract fees and equipment sales related to the Company’s remote healthcare systems in the amount of $26,240.  Revenue in the amount of $6,812,592 for the three months ended June 30, 2016, consists of pharmaceutical sales related to the Company's pharmacy operations.  Revenue in the amount of $2,764,534 for the six months ended June 30, 2017, consists of pharmaceutical sales related to the Company's pharmacy operations in the amount of $2,724,032, and contract fees and equipment sales related to the Company’s remote healthcare systems in the amount of $40,502.  Revenue in the amount of $14,217,251 for the six months ended June 30, 2016, consists of pharmaceutical sales related to the Company's pharmacy operations.  In August 2016, the Company’s contract with its primary In Vitro Fertilization (“IVF”) drug rebate program was cancelled, resulting in an 92% reduction in IVF revenues for the six months ended June 30, 2017, compared to June 30, 2016.  The total IVF revenues for the six months ended June 30, 2017 and 2016, respectively, were $919,914 and $11,527,784, or 33.3% and 81.1% of total revenues.  As of June 30, 2017, the behavioral health segment had not commenced full operations. The Company has not yet launched its major business activity, which is medical diagnostics and testing.  Cost of sales  Costs of sales in the amount of $707,478 for the three months ended June 30, 2017, consists of pharmaceutical drug purchases, direct labor, and indirect pharmacy costs related to the Company's pharmacy operations in the amount of $666,767, and equipment and other costs related to the Company’s remote health care systems in the amount of $40,710.  Costs of sales in the amount of $6,050,647 for the three months ended June 30, 2016, consists primarily of pharmaceutical drug purchases, direct labor, and indirect pharmacy costs related to the Company's pharmacy operations.  Costs of sales in the amount of $2,308,484 for the six months ended June 30, 2017, consists of pharmaceutical drug purchases, direct labor, and indirect pharmacy costs related to the Company's pharmacy operations in the amount of $2,239,731, and equipment and other costs related to the Company’s remote healthcare systems in the amount of $68,753.  Costs of sales in the amount of $12,176,326 for the six months ended June 30, 2016, consists primarily of pharmaceutical drug purchases, direct labor, and indirect pharmacy costs related to the Company's pharmacy operations.  In August 2016, the Company’s contract with its primary IVF drug rebate program was cancelled, resulting in a 93.4% reduction in IVF costs and a 98% reduction in rebates for the six months ended June 30, 2017, compared to June 30, 2016.  The total IVF purchases for the six months ended June 30, 2017 and 2016, respectively, were $765,844 and $6,105,745, or 27.7% and 81.8% of total revenues and 33.2% and 99.5% of cost of sales. The total discontinued rebates received from the primary IVF drug rebate program for the six months ended June 30, 2017 and 2016, respectively, were $33,982 and $1,674,831, or 1.2% and 11.8% of total revenues and 1.5% and 13.8% of cost of sales.  The Company has not yet launched its major business activity, which is medical diagnostics and testing.  31    General and Administrative Expenses  For the three months endedFor the six months endedVarianceJune 30, 2017June 30, 2016June 30, 2017June 30, 20163-month6-monthLegal, accounting, and management services$174,511$301,436$481,991$688,078$(126,925)$(206,087)Stock compensation/stock option amortization161,64533,003173,50765,984128,642107,523Salaries and fees, and related taxes and benefits403,121207,576843,186430,240195,545412,946Depreciation and amortization81,23753,352110,980103,17927,8857,801Rent expense-office34,87440,02076,93180,040(5,146)(3,109)Travel, meals and entertainment17,45163,81960,510132,713(46,368)(72,203)Publicity and promotion18190,43020,368195,624(90,249)(175,256)Office supplies and miscellaneous expenses182,882175,451379,569330,8627,43148,707Total general and administrative expenses$1,055,902$965,087$2,147,042$2,026,720$90,815$120,322  During the three months ended June 30, 2017, the Company incurred general and administrative expenses totaling $1,055,902, compared with $965,087 for the three months ended June 30, 2016. The increase in general and administrative expenses of $90,815 is attributable to:  ●a decrease in legal, accounting and management fees of $126,925, due to a decrease in legal fees of $85,331 resulting from a reduction in legal counsel time spent for pending litigation matters during the current period compared to the same period in the prior year; an increase in accounting and audit fees of $7,688 due to a change in auditors; and a decrease in consulting fees of $45,000 resulting from a change in management; and a decrease in miscellaneous management fees of $4,282; and ●an increase in stock compensation/stock option amortization of $128,642 primarily due to the grant of restricted common stock in the current period, resulting in stock compensation expense of $6,916, and the exercise of stock options in the current period, resulting in stock compensation expense of $57,000, compared to none for the same period in the prior year; and the issuance of stock options in the current period resulting in an increase stock option amortization of $64,726; and ●an increase in salaries and fees, and related taxes and benefits of $195,545, primarily due to an increase in officer compensation of $51,250, staff compensation of $35,559, and related payroll taxes of $324, and an increase in employee benefits of $16,872; and an increase in penalties on unpaid payroll and state income taxes of $65,763; and an increase in miscellaneous fees for outside services in the amount of $25,777; and ●an increase in depreciation and amortization of $27,885, primarily due to fully depreciated assets, resulting in a decrease in depreciation of $3,930; and fully amortized intangible assets, resulting in a decrease in amortization of $41,667; and the acquisition of additional intangible assets, resulting in amortization expense of $73,482 during the current period compared to none for the same period in the prior year; and ●a decrease in rent expense of $5,146 due to a change in leased office space; and ●a decrease in travel, meals and entertainment of $46,368, primarily due to a reduction in travel costs of $26,678, and meals and entertainment of $19,690, resulting from the reduction in pharmacy segment operations; and ●a decrease in publicity and promotion of $90,249 primarily due to the cessation of certain IVF sales resulting in the reduction in IVF video development; and ●an increase in office supplies and miscellaneous expenses of $7,431, due to an increase in bad debt expense of $30,332, bank and wire fees of $8,634, pension plan contributions of $6,760, and communication costs of $3,522; and a decrease in automobile expense of $11,396, computer and internet costs of $2,035, insurance expense of $4,126, office expense of $13,766, parking of $5,706, repairs and maintenance of $2,820, licenses and permits of $10,383, and an increase in other general office expenses of $8,415, primarily resulting from the reduction in staff and general overhead due to decline in pharmacy operations.  32  During the six months ended June 30, 2017, the Company incurred general and administrative expenses totaling $2,147,042, compared with $2,026,720 for the six months ended June 30, 2016. The increase in general and administrative expenses of $120,322 is attributable to:  ●a decrease in legal, accounting and management fees of $206,087, due to a decrease in legal fees of $276,574 resulting from a reduction in legal counsel time spent for pending litigation matters during the current period compared to the same period in the prior year; an increase in accounting and audit fees of $160,440 due to a change in auditors, resulting in 2016 and 2017 audit fees charged by the newly engaged audit firm in the current period; and a decrease in consulting fees of $90,000 resulting from a change in management; and a decrease in miscellaneous management fees of $47; and ●an increase in stock compensation/stock option amortization of $107,523 primarily due to the grant of restricted common stock in the current period, resulting in stock compensation expense of $7,166, and the exercise of stock options in the current period, resulting in stock compensation expense of $57,000, compared to none for the same period in the prior year; and the issuance of stock options in the current period resulting in an increase stock option amortization of $43,357; and ●an increase in salaries and fees, and related taxes and benefits of $412,946, primarily due to an increase in officer compensation of $133,750, staff compensation of $84,386, and related payroll taxes of $12,730, and an increase in employee benefits of $15,672; and an increase in penalties on unpaid payroll and state income taxes of $110,237; and an increase in miscellaneous fees for outside services in the amount of $56,171; and ●an increase in depreciation and amortization of $7,801, primarily due to fully depreciated assets, resulting in a decrease in depreciation of $4,336; and fully amortized intangible assets, resulting in a decrease in amortization of $62,501; and the acquisition of additional intangible assets, resulting in amortization expense of $74,638 during the current period compared to none for the same period in the prior year; and ●a decrease in rent expense of $3,109 due to a change in leased office space; and ●a decrease in travel, meals and entertainment of $72,203, primarily due to a reduction in travel costs of $42,186, and meals and entertainment of $30,017, resulting from the reduction in pharmacy segment operations; and ●a decrease in publicity and promotion of $90,249 primarily due to the cessation of certain IVF sales resulting in the reduction in IVF video development; and ●an increase in office supplies and miscellaneous expenses of $48,707, due to an increase in bad debt expense of $60,620, bank and wire fees of $13,825, computer and internet costs of $6,897, pension plan contributions of $17,773, and communication costs of $6,400; and a decrease in automobile expense of $10,421, insurance expense of $5,261, office expense of $24,645, parking of $9,792, repairs and maintenance of $6,980, licenses and permits of $4,355, and an increase in other general office expenses of $4,646, primarily resulting from the reduction in staff and general overhead due to decline in pharmacy operations.  Net Loss  During the six months ended June 30, 2017, the Company incurred a net loss of $5,467,284, compared with a net loss of $3,913,141 for the six months ended June 30, 2016. The increase in net loss of $1,554,143 is primarily attributable to a decrease in revenue of $11,452,717, a decrease in in cost of goods sold of $9,867,842, a decrease in in sales, marketing and pharmacy expenses of $460,005, an increase in general and administrative expenses of $120,322, an increase in discount amortization of $70,000; and an increase in interest expense, net of interest income, of $238,951.  Liquidity and Capital Resources  Working CapitalIncreaseAt June 30, 2017At December 31, 2016(Decrease)Current Assets$472,690$1,415,193$(942,503)Current Liabilities5,725,1974,410,2531,314,944Working Capital (Deficit)$(5,252,507)$(2,995,060)$(2,257,447)  As at June 30, 2017, the Company had cash in the amount of $9,478 compared to $63,363 as of December 31, 2016.  The Company had a working capital deficit of $5,252,507 as of June 30, 2017, compared to a working capital deficit of $2,995,060 as of December 31, 2016. The increase in working capital deficit of $2,257,447 is primarily attributable to a decrease in cash of $53,885, a decrease in accounts receivable, net of allowance, of $580,348, a decrease in rebates receivable of $19,550, a decrease in inventory of $245,422, a decrease in employee advances of $4,302, a decrease in prepaid expenses of $38,996, an increase in accounts payable and accrued expenses of $982,020, a decrease in pension plan contribution payable of $5,016, and an increase in related party payables of $337,940.  Cash FlowsFor the six months endedIncreaseJune 30, 2017June 30, 2016(Decrease)Net cash used by operating activities$(323,502)$(309,256)$(14,246)Net cash used by investing activities––(83,853)83,853Net cash provided (used) by financing activities269,617(344,412)614,029Increase (decrease) in cash$(53,885)$(737,521)$683,636  33   Cash Flows from Operating Activities  During the six months ended June 30, 2017, the Company used $323,502 of cash flow for operating activities compared with $309,256 for the six months ended June 30, 2016. The increase in cash used by operating activities of $14,246 is primarily attributable to an increase in the net loss from operations of $1,554,143; an increase in decrease in depreciation and amortization of $7,801, stock compensation/stock option amortization of $107,523, discount amortization of $70,000; and allowance for bad debt of $36,685; a decrease in the changes in inventories of $122,073, and pension plan contribution payable of $5,016; and an increase in the changes in accounts receivable of $556,252, prepaid expenses of $17,945, accounts payable and accrued expenses of $166,526, and related party payables of $704,254.  Cash Flows from Investing Activities  During the six months ended June 30, 2017, the Company used no cash flow for investing activities compared with $83,853 for the six months ended June 30, 2016. The decrease in cash used by investing activities is attributable to $83,853 in professional equipment purchased during the period in the prior year, compared to.no purchases made in the current year.  Cash Flows from Financing Activities  During the six months ended June 30, 2017, the Company was provided with $269,617 of cash flow for financing activities, compared with using $344,412 for the six months ended June 30, 2016.  The increase in cash flows provided by financing activities of $614,029 is attributable to a decrease in proceeds from notes payable of $100,000; an increase in repayments of notes payable of $260,029, an increase in proceeds from related party convertible notes payable of $300,000, proceeds from the issuance of preferred stock of $150,000, and proceeds from the issuance of common stock of $3,500.  The Company’s principal sources of funds have been from the Company’s sales of its preferred and common stock, loans from related parties and third-party lenders, net revenues generated from the sale of prescription pharmaceuticals, and its remote healthcare sales and services.  During the six months ended June 30, 2017, the Company received $154,000 in funds from the issuance of common shares or other equity instruments, compared to none during the six months ended June 30, 2016.  As at June 30, 2017, related parties are due a total of $1,970,274, consisting of $544,337 in accrued compensation owed to officers; $139,429 in cash advances from officers and beneficial owners to the Company for operating expenses; and $1,392,254 in related party notes payable, of which $1,207,254 contain conversion features.  As of June 30, 2017, the Company has convertible promissory notes issued to its principals in the aggregate sum of $1,207,254, representing cash loans and unpaid compensation.  The notes bear interest at a rate of between 5% to 12.5% per annum, mature between December 31, 2015 to July 31, 2017, and contain repayment provisions to convert the debt into the Company’s common stock at a price of $0.10 per share. The conversion price of $0.10 resulted in a beneficial conversion feature.  As a result, the difference between the conversion rate and the market rate in the aggregate of $473,494 was classified as discounts on the notes, and was fully expensed in prior years. During the six months ended June 30, 2017, interest in the amount of $38,672 was expensed, of which $8,198 was paid to the note holders in cash.  As of June 30, 2017, a total of $134,973 in interest has been accrued.  The Company, through its wholly-owned subsidiary, RoxSan, issued two promissory notes to J. Michael Redmond in the principal sum of $197,000, for cash loans made to RoxSan for overhead requirements during the year ended December 31, 2016.  The notes bear interest at a rate of 5% per annum and mature October 14, 2016 and November 29, 2016.  During the year ended December 31, 2016, principal reductions were made in the aggregate of $12,000. At June 30, 2017, principal in the amount of $185,000 remains. During the six months ended June 30, 2017, interest in the amount of $4,588 was expensed.  As of June 30, 2017, a total of $7,160 in interest has been accrued.  Future Financings  The Company has suffered recurring losses from operations. The continuation of the Company’s operations is dependent upon the Company’s attaining and maintaining profitable operations and raising additional capital as needed. The Company anticipates that it will have to raise additional funds through private placements of the Company’s equity securities and/or debt financing to complete its business plan.  The Company will require additional financing in order to proceed with its plan of operations, including approximately $3,000,000 over the next 12 months to pay for its ongoing expenses. These cash requirements include working capital, general and administrative expenses, the development of the Company’s product line, and the pursuit of acquisitions. These cash requirements are in excess of the Company’s current cash and working capital resources. Accordingly, the Company will require additional financing in order to continue operations and to repay its liabilities.There is no assurance that the financing will be completed as planned or at all. If the Company is unable to secure adequate capital to continue the Company’s planned operations, the Company’s shareholders may lose some or all of their investment and the Company’s business may fail.  The Company anticipates continuing to rely on equity sales of its common stock and preferred stock in order to continue to fund its business operations. Issuances of additional shares will result in dilution to the Company’s existing stockholders. There is no assurance that the Company will achieve any additional sales of its equity securities or arrange for debt or other financing to fund its planned business activities.  34   Contractual Obligations  The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and is not required to provide the information under this item.  Going Concern  The Company has incurred losses since inception resulting in an accumulated deficit of $25,363,919, and further losses are anticipated. The Company’s ability to continue as a going concern is dependent upon its ability to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due, which may not be available at commercially reasonable terms  There can be no assurance that the Company will be able to continue to raise funds, in which case the Company may be unable to meet its obligations and the Company may cease operations. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.  The consolidated unaudited financial statements included with this quarterly report have been prepared on the going concern basis which assumes that adequate sources of financing will be obtained as required and that the Company’s assets will be realized and liabilities settled in the ordinary course of business. Accordingly, the consolidated unaudited financial statements do not include any adjustments related to the recoverability of assets and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.  Off-Balance Sheet Arrangements  The Company has no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.  Critical Accounting Policies  The discussion and analysis of the Company’s financial condition and results of operations are based upon the Company’s consolidated unaudited financial statements, which have been prepared in accordance with the accounting principles generally accepted in the United States of America. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. The Company believes that understanding the basis and nature of the estimates and assumptions involved with the following aspects of the Company’s financial statements is critical to an understanding of its consolidated financial statements.  Included in the Acquisition Agreement for RoxSan Pharmacy, Inc., and as part of the negotiated purchase price, were representations and warranties made by the former owner involving certain primary revenue streams and related contracts.  Shortly after the closing, however, management discovered that these representations were substantially inaccurate and/or completely false. These inaccuracies, and the improper disclosures and/or omissions made by the former owner during negotiations, would have significantly affected the purchase price and related note payable issued under the Acquisition Agreement. Management engaged a third-party to perform a valuation of the Pharmacy, utilizing revised inputs that more accurately reflected the Pharmacy's revenue streams as of the date of Acquisition.  The valuation performed resulted in a fair market value of $4.7 to $5.2 million. After careful consideration, and based upon these significant differences, management has determined that the purchase price and related promissory note of $20,500,000 does not fairly represent the fair market value at the date of purchase.  The Company has, therefore, applied a discount to the note of $15.3 million, to reduce the purchase price and related note to its estimated fair market value of $5.2 million, utilizing the higher value on the range as a conservative measure.  The discount is being amortized over thirty-six (36) months.  ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and is not required to provide the information under this item.  ITEM 4. CONTROLS AND PROCEDURES  Management’s Report on Disclosure Controls and Procedures  The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s president, chief executive officer and chief financial officer to allow for timely decisions regarding required disclosure. In designing and evaluating the Company’s disclosure controls and procedures, the Company’s management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and the Company’s management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.  35    As of June 30, 2017, the end of the period covered by this quarterly report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s president, chief executive officer and chief financial officer of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on the foregoing, the Company’s president, chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.  Changes in Internal Control over Financial Reporting  There have been no changes in the Company’s internal controls over financial reporting that occurred during the six month period ended June 30, 2017 that have materially or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.  Audit Committee  The Company established an audit committee of the board of directors comprised of John L. Ogden and E. William “Bill” Withrow Jr. The audit committee’s duties are to recommend to the Company’s board of directors the engagement of an independent registered public accounting firm to audit the Company’s financial statements and to review the Company’s accounting and auditing principles. The audit committee will review the scope, timing and fees for the annual audit and the results of audit examinations performed by the internal auditors and independent registered public accounting firm, including their recommendations to improve the system of accounting and internal controls. The audit committee will at all times be composed exclusively of directors who are, in the opinion of the Company’s board of directors, free from any relationship which would interfere with the exercise of independent judgment as a committee member and who possess an understanding of financial statements and generally accepted accounting principles.  PART II OTHER INFORMATION  ITEM 1. LEGAL PROCEEDINGS  From time to time, the Company may be involved in litigation relating to claims arising out of its operations in the normal course of business.  The Company knows of no material, existing or pending legal proceedings against it, nor is the Company involved as a plaintiff in any material proceeding or pending litigation, beyond those defined below.  There are no proceedings in which any of its directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest that is adverse to the Company’s interests.  Dispute with Former Owner of RoxSan  In October 2015, shortly following the Company's acquisition of RoxSan, Shahla Melamed (“Melamed”), initiated two (2) legal actions against the Companyin the Superior Court of the State of California, County of Los Angeles, West District, Shahla Melamed v. Parallax Health Sciences, Inc., action numbers SC 124873 and SC 125702.  In the matter, action No. SC 124873, Melamed sought rescission of the August 13, 2015 Purchase Agreement. During the proceedings, Melamed also contended that the Company owed Melamed monies for, among other things, expenses paid by Melamed on behalf of the Company.  As a result, the Court split the action into two separate rulings: (1) Rescission Phase and (2) Accounting Phase.  ●Action No. SC 124873-Rescission Phase: In the Matter, action no. SC 124873, rescission was sought by Melamed on the basis that, allegedly, in order to acquire the Pharmacy, the Company and its principals had allegedly defrauded Melamed, there had allegedly been a complete failure of consideration, and a unilateral mistake was allegedly made on the part of Melamed.  Subsequently filed pleadings by the Company and RoxSan in action no. SC 124873 allege, among other things, that Melamed misrepresented the true earnings and source of income for the pharmacy business and had engaged in a fraudulent and illegal scheme to ship medications to states where her pharmacy was not licensed prior to the sale of the Pharmacy.  Final Ruling:  On March 17, 2017, the Court ruled in favor of the Company, and issued that Melamed is not entitled to rescission of the Purchase Agreement.  The ruling of the Court stated that no fraud on the part of the Company or its principals had been demonstrated.  The Court further ruled that there had been no failure of consideration, and that Melamed’s entry into the Agreement was not a result of a unilateral mistake on the part of Melamed.  The Minutes of the Ruling were entered by the County Clerk on March 17, 2017.  36   ●Action No. SC 124873-Accounting Phase: In the Matter, action No. SC 124873, Melamed contended that the Company owed Melamed monies for, among other things, expenses paid by Melamed post-Closing.  An accounting was presented by Melamed’s expert, BDO Seidman (“BDO”), alleging that the Company owed Melamed in excess of $500,000.  The Company disputed this vigorously and prepared a 400+ page analysis (the “Analysis Report”) of the BDO reconciliation report.  The Analysis Report identified errors in the BDO report in excess of $900,000 and found that Melamed owed the Company over $400,000.  Melamed argued the findings in the Analysis Report. Consequently, due to the complexities of the accountings, the Court ordered a third-party adjudicator with an accounting background to review both the BDO report and the Company’s Analysis Report.  Draft Ruling: On July 24, 2017, in the Matter, action No. SC124873, the Company was notified that the results of the reconciliation review performed by third-party adjudicator were in favor of the Company in the amount of $412,948.  Melamed objected to the adjudicator’s findings, and a final hearing was held in January 2018.  A final judgment is pending for the Court’s decision on the exact monies owed by Melamed to the Company.  ●Action No. SC125702: In the Matter, action No. SC125702, Melamed alleges that the Company is in default under the terms of the Purchase Agreement and Secured Note, and the Company’s termination of Melamed’s employment agreement.  The Company firmly believes that it had adequate grounds to justify the termination of the employment, that it acted within its rights, and shall prevail in these proceedings.  A trial date is currently set for July 2018.  ●Action No. SC 124898: The Company has initiated legal action against Melamed and filed a complaint, action number SC 124898, in the Superior Court of the State of California, County of Los Angeles, West District, Parallax Health Sciences, Inc., et al. v. Shahla Melamed, et al.  The Complaint in that action alleges that Melamed has breached several obligations under the Purchase Agreement, and the Company is seeking to reduce the Secured Note due to undisclosed material changes in the business. A trial date is currently set for July 2018.  As part of the Company’s pleadings to the courts, the Company has presented the following matters:  ●Purchase Price Dispute Included in the Acquisition Agreement for RoxSan Pharmacy, Inc., and as part of the negotiated purchase price, were representations and warranties made by the former owner involving certain primary revenue streams and related contracts.  Shortly after the closing, however, management discovered that these representations were substantially inaccurate and/or completely false.  These inaccuracies, and the improper disclosures and/or omissions made by the former owner during negotiations, would have significantly affected the purchase price and related note payable.  As a result, among other things, management has initiated legal action against the former owner to seek a reduction in the purchase price.  Included in the false representations made by the former owner were prescription revenues in excess of $8 million (and approximately $16 million prior to the change in ownership) related to workers compensation claims that the former owner warranted as collectible.  The insurance claims related to these prescriptions, which originated from and were provided to the pharmacy by the former owner's direct family members, were investigated by a third-party expert retained by the Company, and the claims were substantially identified as fraudulent.  The former owner's family member has been indicted by the Department of Justice for among other things, insurance fraud.  In addition, management engaged a third-party to perform a valuation of the Pharmacy, utilizing revised inputs that more accurately reflected the Pharmacy's revenue streams as of the date of Acquisition.  The valuation performed resulted in a fair market value of $4.7 to $5.2 million. After careful consideration, and based upon these significant differences, management has determined that the purchase price and related promissory note of $20.5 million does not fairly represent the fair market value at the date of purchase.  The Company has, therefore, applied a discount to the note of $15.3 million, to reduce the purchase price and related note to its estimated fair market value of $5.2 million, utilizing the higher value on the range as a conservative measure.  The valuation performed does not include the effects of any liabilities the former owner omitted or damages caused to the Company as a result of the former owner and her immediate family members connected to the Pharmacy.  37   ●Control of Funds Dispute / US Postal Interference For a period of time immediately after the closing of the Acquisition, the Melamed would not relinquish control of the Pharmacy's bank accounts, and collected the Pharmacy's incoming cash revenues, refusing to transfer the funds to the new ownership. Furthermore, when the Company attempted to change the corporate records and signatories on the existing bank accounts, the former owner disputed the changes, resulting in approximately $180,000 in corporate funds being frozen and held for adjudication. During this period, the Company was forced to request that the former owner pay the Pharmacy's operating expenses.  At no time after the Company opened new accounts did the former owner cooperate with the transference or willingly relinquish control of the Pharmacy's operating cash flow or incoming cash revenues.  The former owner continued to interfere in the transference of control of the Pharmacy by submitting change of address forms to the US Postal Service, wherein the former owner diverted the Pharmacy mail to her home address.  Once this was discovered and rectified with the post office, the former owner filed another change of address to divert mail to a post office box.  During these periods of time, the former owner received check payments and negotiated the checks by opening up a bank account utilizing a DBA, "Roxsan Pharmacy."  The Company was able to identify some of the checks the former owner negotiated by directly contacting the payer and receiving copies of the cancelled checks, with the former owner's signature endorsement and account number on the check.  On May 14, 2018, pursuant to a unanimous resolution of the Boards of Directors of RoxSan Pharmacy, Inc. and Parallax Health Sciences, Inc., RoxSan filed a Chapter 7 petition in the United States Bankruptcy Court for the Central District of California.  Mr. Timothy Yoo was appointed trustee on May 15, 2018.  In connection with this filing, RoxSan seeks to discharge approximately $5 million of liabilities owed to various parties including more than $1 million owed to the Company.  Disputes with Former Executives  ●Action No.CV2017-052804 On March 9, 2017, Mr. Dave Engert filed a lawsuit in Arizona and then later changed the venue to Federal Court in Southern California claiming, among other issues, that monies are owed to him under his Consulting Agreement and that his termination was without cause.  The Company is in disagreement with the position and claims made by Mr. Engert, and as such has counter claimed against Mr. Engert asserting that the Company intends to vigorously defend its position.  On October 23, 2017, the Company filed a response and counterclaims against Mr. Engert for an amount exceeding $100,000.  The counterclaims include possible fraud and negligence committed by Mr. Engert and Mr. J. Michael Redmond, former successor Chairman of Mr. Engert, director, President and Chief Executive Officer of the Company and former President, Chief Executive Officer, Chairman and director of RoxSan Pharmacy, Inc.  ●Action No. BC700070 On March 28, 2018, Mr. J. Michael Redmond filed a lawsuit against the Company and RoxSan Pharmacy, Inc. in the United States District Court, Central District of California for an amount exceeding $75,000.  The Company intends to vigorously defend against this action. There are counterclaims that include possible fraud and negligence committed by Mr. Redmond, former successor Chairman of Mr. Engert, director, President and Chief Executive Officer of the Company and former President, Chief Executive Officer, Chairman and director of RoxSan Pharmacy, Inc.  Disputes with Creditors/Vendors  ●Action No. SC127712 On or about June 20, 2017, American Express Bank, FSB filed suit against RoxSan Pharmacy, Inc. in Superior Court of California, County of Los Angeles for an amount of $1,015,052.  On or about June 27, 2017, American Express Travel Related Services Company, Inc. filed suit against RoxSan Pharmacy, Inc. in Supreme Court of New York, County of New York in the amounts of $153,500 and $273,500.  On July 31, 2017, and August 16, 2017 respectively, the Company entered into stipulation and settlement agreements of these matters to make payments in lieu of further litigation at this time.  All legal matters are currently pending.  The Company knows of no other material existing or pending legal proceedings against it, nor is the Company involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of the Company’s directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to the Company.  ITEM 1A. RISK FACTORS  The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and is not required to provide the information under this item.  38   ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS  On January 23, 2017, in connection with a certain subscription agreement, the Company issued 30,000 shares of its Series B Preferred Stock at $5.00 per share to a related party, for cash in the amount of $150,000. The shares are convertible into common stock at a ratio of 20 common shares for each preferred share held, and include 50% warrant coverage at an exercise price of $0.75 for a period of two (2) years.  Dividends are payable semi-annually at a rate of 10% per annum.  On March 16, 2017, in connection with a certain related party convertible promissory note in the amount of $250,000 and accrued interest of $7,954, the Company issued 1,228,346 shares of its restricted common stock at a conversion rate of $0.21 per share.  On May 17, 2017, in connection with the ProEventa Agreement dated April 26, 2017, the Company issued 2,500,000 shares of its restricted common stock. The shares, valued at $625,000, were issued for cash in the amount of $2,500.  On May 17, 2017, in connection with a certain consulting agreement dated April 26, 2017, the Company issued 500,000 shares of its restricted common stock to the consultant for cash in the amount of $500, for services to be provided over a thirty-six (36) month period.  The shares were valued at $125,000, of which $6,916 was expensed, and $117,854 was deferred, to be amortized over the next thirty-five (35) months.  On May 18, 2017, in connection with a certain related party convertible debt in the amount of $200,000 and accrued interest of $27,781, the Company issued 2,277,808 shares of its restricted common stock at a conversion rate of $0.10 per share.  On June 2, 2017, in connection with the exercise of certain employee stock options, the Company issued 237,500 shares of its restricted common stock at a conversion rate of $0.05 per share.  The shares were issued on a cashless basis, resulting in a net value of $57,000.  ITEM 3. DEFAULTS UPON SENIOR SECURITIES  None.  ITEM 4. MINE SAFETY STANDARDS  Not Applicable.  ITEM 5. OTHER INFORMATION  None.  ITEM 6. EXHIBITS  Exhibits required by Item 601 of Regulation S-B  Exhibit
NumberDescription of ExhibitFiling Reference(2)Plan of Purchase, Sale, Reorganization, Arrangement, Liquidation or Succession2.1Share Exchange Agreement between Endeavor Power Corporation, Endeavor Holdings, Inc. and Parallax Diagnostics, Inc. and the Parallax Shareholders dated October 1, 2012Filed with the SEC on November 15, 2012 as part of the Company’s Current Report on Form 8-K.2.2Letter of Intent between Parallax Diagnostics, Inc. and Endeavor Power Corporation dated August 15, 2012Filed with the SEC on November 15, 2012 as part of the Company’s Current Report on Form 8-K.2.3Agreement to Purchase and Sell 100% of RoxSan Pharmacy, and Its Assets and InventoryFiled with the SEC on August 18, 2015 as part of the Company's Current Report on Form 8-K.2.4Agreement to Purchase and Sell 100% of Qolpom, Inc, and Its Assets, Intellectual Property and Inventory dated August 31, 2016Filed with the SEC on September 23, 2016 as part of the Company's Current Report on Form 8-K(3)Articles of Incorporation and Bylaws3.1Articles of IncorporationFiled with the SEC on March 5, 2007 as part of the Company’s Registration Statement on Form SB-2.3.1(a)Amended and Restated Articles of IncorporationFiled with the SEC on May 17, 2010 as part of the Company’s Annual Report on Form 10-K.3.2BylawsFiled with the SEC on March 5, 2007 as part of the Company’s Registration Statement on Form SB-2.3.2(a)Amended BylawsFiled with the SEC on May 17, 2010 as part of the Company’s Annual Report on Form 10-K.3.3Articles of Merger between Endeavor Power Corporation and Parallax Diagnostics, Inc. filed with Secretary of State of Nevada on November 6, 2012Filed with the SEC on November 15, 2012 as part of the Company’s Current Report on Form 8-K.3.4Certificate of Amendment filed with the Secretary of State of Nevada on January 9, 2014Filed with the SEC on April 14, 2014 as part of the Company’s Annual Report on Form 10-K.(31)Section 302 Certifications31.1*Section 302 Certification of Paul R. ArenaFiled herewith.31.2*Section 302 Certification of Calli R. BucciFiled herewith.(32)Section 906 Certifications32.1*Section 906 Certification of Paul R. ArenaFiled herewith.32.2*Section 906 Certification of Calli R. BucciFiled herewith.(100)XBRL Related Documents101.INS**XBRL Instance DocumentFiled herewith.101.SCH**XBRL Taxonomy Extension Schema DocumentFiled herewith.101.CAL**XBRL Taxonomy Extension Calculation Linkbase DocumentFiled herewith.101.LAB**XBRL Taxonomy Extension Labels Linkbase DocumentFiled herewith.101.PRE**XBRL Taxonomy Extension Presentation Linkbase DocumentFiled herewith.101.DEF**XBRL Taxonomy Extension Definition Linkbase DocumentFiled herewith.    *Filed herewith. **Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.  39  SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.  PARALLAX HEALTH SCIENCES, INC.Dated: August 29, 2018/s/ Paul R. ArenaPaul R. ArenaPresident, Chief Executive Officer, and DirectorDated: August 29 2018/s/ Calli R. BucciCalli R. BucciChief Financial Officer  40