UNITED STATES SECURITIES 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 endedSeptember 30, 2018or 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.  152,178,141 common shares issued and outstanding as of November 14, 2018  PART 1 – FINANCIAL INFORMATION  ITEM 1. FINANCIAL STATEMENTS  The Company’s unaudited interim consolidated financial statements for the nine months ended September 30, 2018, 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, 2017, on Form 10-K, as filed with the Securities and Exchange Commission on September 10, 2018.  1   PARALLAX HEALTH SCIENCES, INC. CONSOLIDATED BALANCE SHEETS  September 30, 2018December 31, 2017(Unaudited)ASSETSCurrent assetsCash and cash equivalents$315$183Accounts receivable, net––3,275Current assets held for sale––51,961Total current assets31555,419Intangible assets, net609,190709,655Goodwill785,060785,060Noncurrent assets held for sale––201,902TOTAL ASSETS$1,394,565$1,752,036LIABILITIES AND STOCKHOLDERS' DEFICITCurrent liabilitiesAccounts payable and accrued expenses$2,015,789$3,048,348Notes payable, convertible1,241,000741,000Related party payables780,449629,567Total current liabilities4,037,2384,418,915Long-term liabilitiesLicense fees payable, net of unamortized discount410,000890,000Royalties payable300,000200,000Notes and loans payable, unsecured––95,975Notes payable, convertible720,154144,000Notes payable, convertible, related party628,8501,167,254Notes payable, secured, net of unamortized discount32,78917,393,240Total long-term liabilities2,091,79319,890,469Liabilities subject to compromise––4,620,735Total liabilities6,129,03128,930,119Stockholders' deficitPreferred stock, $.001 par, 10,000,000 shares authorized,1,0148641,013,691 and 863,691 issued and outstandingat September 30, 2018, and December 31, 2017, respectivelyCommon stock, $.001 par, 250,000,000 shares authorized,152,077136,754152,078,141 and 136,754,530 issued and outstandingat September 30, 2018, and December 31, 2017, respectivelyAdditional paid in capital-preferred1,415,653665,803Additional paid in capital-common9,005,5995,580,668Subscriptions receivable(92)(592)Accumulated deficit(15,308,717)(33,561,580)Total stockholders' deficit(4,734,466)(27,178,083)TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT$1,394,565$1,752,036   The accompanying notes are an integral part of these consolidated financial statements  2   PARALLAX HEALTH SCIENCES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)  For the three months endedFor the nine months endedSeptember 30, 2018September 30, 2017September 30, 2018September 30, 2017Revenue$990$30,139$10,749$70,641Cost of sales5,23041,37415,507110,127Gross profit (loss)(4,240)(11,235)(4,758)(39,486)General and administrative expenses2,102,7122,319,9925,202,9443,161,740Operating loss(2,106,952)(2,331,227)(5,207,702)(3,201,226)Other income (expenses)Gain on disposal of subsidiary5,079,416––5,079,416––Gain on extinguishment of debt22,931,148––22,931,148––Discount amortization(35,000)(1,315,000)(2,775,000)(3,935,000)Interest expense(231,676)(265,946)(950,601)(713,510)Total other income (expenses)27,743,888(1,580,946)24,284,963(4,648,510)Net income (loss) – continuing operations25,636,936(3,912,173)19,077,261(7,849,736)Net income (loss) – discontinued operations93,773(794,440)(824,398)(2,271,269)Net income (loss)$25,730,709$(4,706,613)$18,252,863$(10,121,005)Net income (loss) per common share - basicContinuing operations$0.172$(0.036)$0.125$(0.060)Discontinued operations$0.001$(0.006)$(0.006)$(0.020)Net income (loss) per common share - dilutedContinuing operations$0.124$(0.026)$0.089$(0.060)Discontinued operations$0.000$(0.004)$(0.004)$(0.013)Weighted average common shares outstanding - basic149,431,153129,822,471146,294,981116,254,776Weighted average common shares outstanding – diluted208,254,652183,520,865205,118,481169,953,170   The accompanying notes are an integral part of these consolidated financial statements  3  PARALLAX HEALTH SCIENCES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)  For the nine months endedSeptember 30, 2018September 30, 2017Cash flows from operating activities:Net income (loss)$19,077,261$(7,849,736)Adjustments to reconcile net income (loss) to net cash used by operating activities:Depreciation and amortization90,46552,733Stock compensation/stock option amortization3,103,3902,177,608Discount amortization2,775,0003,935,000Allowance for bad debt236––Gain on disposal of subsidiary(5,079,416)––Gain on extinguishment of debt(22,931,148)––Changes in operating assets and liabilities:(Increase) decrease in trade and other receivables3,039(7,833)Increase in employee advances––(2,000)Decrease in prepaid expenses––2,690Increase in accounts payable and accrued expenses2,182,5481,219,585Increase (decrease) in related party payables492,356(630,334)Net cash used by operating activities(286,269)(1,102,287)Cash flows from financing activities:Repayments of notes payable(5,451)(57,623)Proceeds from convertible notes payable825,000696,000Repayments of convertible notes payable(50,000)––Proceeds from convertible notes payable, related party––300,000Proceeds from issuance of preferred shares300,000150,000Proceeds from issuance of common shares41,2501,500Proceeds from issuance of common shares for acquisition of intangible asset––2,500Net cash provided by financing activities1,110,7991,092,377Net cash provided (used) by continuing operations824,530(9,910)Cash flows from discontinued operations:Net cash used by operating activities(824,398)1,066Net cash provided by financing activities––(39,400)Net cash used by discontinued operations(824,398)(38,334)Net increase (decrease) in cash132(48,244)Cash - beginning of period18363,363Cash - end of period$315$15,119NON-CASH ACTIVITIESDiscounts on long-term liabilities$2,775,000$3,935,000Conversion of accounts payable to convertible notes payable$37,500$––Conversion of related party payables to preferred stock$450,000$––Conversion of convertible related party notes payable to common stock$––$485,733Conversion of convertible notes payable to common stock$296,114$––Conversion of related party convertible note payable to non-related party convertible note payable$576,154$––Conversion of related party payables to non-related party payables$42,356$––Common stock issued for acquisition of intangible assets$––$622,500Subscriptions receivable$(92)$(342)SUPPLEMENTAL INFORMATIONInterest paidContinuing operations$61,088$56,878Discontinued operations$106$162,455Income taxes paid$––$––   The accompanying notes are an integral part of these consolidated financial statements  4  PARALLAX HEALTH SCIENCES, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2018  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, 2017. 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 to build and expand an integrated digital healthcare network with products and services that can provide remote communication, diagnosis, treatment, and monitoring of patients on a proprietary platform. Parallax’s technology-enabled digital healthcare companies include:  ●Parallax Diagnostics Inc. (“PDI”), with its medical diagnostic testing platform capable of diagnosing and monitoring several health issues. ●Parallax Health Management, Inc. (“PHM”), which provides personalized patient care through remote health care services. ●Parallax Behavioral Health, Inc. (“PBH”), which provides behavioral health solutions through patented information technology. ●Parallax Communications, Inc (“PCI”), which provides digitally connected health solutions via Internet of Things, (“IoT”) devices over partner mobile networks.  Business Overview  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. ("PBH"), a Delaware corporation.  On April 26, 2017, pursuant to a resolution of the Board of Directors, the Company, through its wholly-owned subsidiary, Parallax Behavioral Health, Inc., completed the asset acquisition of 100% of certain intellectual property (“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, the initial consideration for the Intellectual Property was paid to ProEventa in the form of a stock purchase agreement to purchase 2,500,000 shares of the Company’s common stock for $2,500, resulting in a net cost for the Intellectual Property of $622,500.  In addition, the Agreement included the following conditional contingent liabilities (the “Revenue Share and Royalties”):  ●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 generated from the intellectual property, ending at such time as Parallax has paid ProEventa $25,000,000; 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.  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 September 20, 2018, the Company formed Parallax Communications, Inc., a Delaware corporation and wholly-owned subsidiary of Parallax Health Management, Inc.  Business Segments  The Company’s current operations include the following business segments: Remote Care Services (RCS), Behavioral Health Services (BHS), and Diagnostics/Corporate (DCS).  ●Remote Care Systems Services (RCS) PHM provides the health care 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 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 Health Services (BHS) In April 2017, the Company through its wholly-owned subsidiary, Parallax Behavioral Health, Inc., acquired the intellectual property known as REBOOT, the acronym for Reliable Evidence-Based Outcomes Optimization Technologies.  In 2018, the Company rebranded the technology as Intrinsic Code (“Intrinsic Code”), 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 technology, Intrinsic Code 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 Intrinsic Code software and systems. As of September 30, 2018, the BHS segment had not yet begun full operations, generating limited test market sales.  ●Diagnostics/Corporate (DCS) The Diagnostics 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.  In addition, the Diagnostics 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.  RoxSan Pharmacy, Inc.  On August 13, 2015, the Company entered into an agreement with RoxSan Pharmacy, Inc., a California corporation, and its sole shareholder, Shahla Melamed, to purchase 100% of the issued and outstanding shares of RoxSan's common stock and its assets and inventory. Pursuant to the agreement , the Company, among other things, issued the Seller a Secured Promissory Note in the amount of $20.5 million.  As a result, effective August 13, 2015, RoxSan became the Company's wholly-owned subsidiary.  Concurrently, Mrs. Melamed resigned from all positions within RoxSan, and Mr. J. Michael Redmond was appointed RoxSan's President and Chief Executive Officer, and Ms. Calli R. Bucci its Chief Financial Officer. Mr. Redmond and Ms. Bucci were also appointed as Chairman and member, respectively, of RoxSan’s board of directors.   5  RoxSan provided a full range of pharmacy services including retail, compounding and fertility medications, and generated revenues primarily by dispensing prescription drugs, both through local channels by direct delivery as well as mail order. RoxSan also sold 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 was fully licensed and qualified to conduct business in over 40 US States.  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.  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 on December 22, 2017, the pharmacy ceased operations and closed the business location in Beverly Hills, CA; however, some residual operations were still ongoing during 2018 to wind down 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 sought to discharge approximately $5 million of liabilities owed to various parties, and intercompany loans in excess of $1 million owed to the Company.  As a result of the loss of financial control of RoxSan, the Company has derecognized the subsidiary as of  September30, 2018 (Note 15). The deconsolidation resulted in a gain of $5,079,416. The Company also extinguished $22,778,281 in debt and accrued interest related to the acquisition of RoxSan.  Going Concern The Company has incurred losses since inception resulting in an accumulated deficit of $15,308,717, and a working capital deficit of $4,036,923, 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.  The accompanying unaudited interim 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.  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., and Parallax Behavioral Health, 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.  Changes in the Company’s ownership interests in subsidiaries that do not result in the Company losing control over the subsidiaries are accounted for as equity transactions. When the Company loses control of a subsidiary, a gain or loss is recognized and is calculated as the difference between:  ●the aggregate of the fair value of consideration received and the fair value of any retained interest at the date when control is lost; and ●the carrying amount of the net assets (liabilities) of the subsidiary and any noncontrolling interest.  Upon deconsolidation of a subsidiary, any loans to the former subsidiary made by the Company are measured at fair value at the deconsolidation date.  Any difference between the carrying amount of the loan to the subsidiary and its fair value is included as part of the gain or loss calculation upon deconsolidation.  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.  6  Cash and Cash Equivalents The Company considers all highly liquid instruments with maturity of nine months or less at the time of issuance to be cash equivalents. As of September 30, 2018, and December 31, 2017, the Company had no cash equivalents.  Fair Value of Financial Instruments As of September 30, 2018, and December 31, 2017, 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 6 for additional information about long-term debt.  There were no outstanding derivative financial instruments held by the Company as of September 30, 2018, and December 31, 2017.  Accounts Receivable Accounts receivable are stated net of an allowance for doubtful accounts. The accounts receivable balance primarily includes amounts due from customers.  Charges to bad debt are based on both historical write-offs and specifically identified receivables.  The activity in the allowance for doubtful accounts receivable for the nine months and the year ended September 30, 2018, and December 31, 2017, respectively, is as follows:  September 30, 2018December 31, 2017Beginning balance$4,000$––Additions charged to bad debt expense2364,000Write off of allowance for doubtful collections(4,236)––Ending balance$––$4,000  During the nine months and the year ended September 30, 2018, and December 31, 2017, the allowance for doubtful collections increased by $236 and $4,000, respectively.  As of September 30, 2018, and December 31, 2017, the allowance for doubtful collections was $0 and $4,000, respectively.  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.  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. Costs to extend and maintain patents and trademarks are charged directly to expense as incurred. See Note 4 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.  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.  The Company believes that future projected cash flows are sufficient for the recoverability of its long-lived assets, and no 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.  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 Loss Per Common Share Net loss per common share is computed by dividing net 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 debt, convertible preferred shares and the exercise of the Company’s stock options and warrants.  Comprehensive Loss As of September 30, 2018, and December 31, 2017, 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.  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 may have 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 September 30, 2018, the Company has not yet filed its 2012 through 2017 annual corporate income tax returns.  Due to the Company’s recurring losses,it is anticipated that no corporate income taxes are due for these periods.  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.  7  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:  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.  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.  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.  Not yet adopted:  In June 2018, the FASB issued ASU No 2018-07 (“ASU 2018-07”), Compensation-Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting.  ASU 2018-07 expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. ASU 2018-07 will be effective for the Company for annual periods beginning after December 15, 2018, 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 August 2018, the FASB issued ASJ No. 2018-15 (“ASU 2018-15”), Intangibles—Goodwill and Other— Internal-Use Software (Subtopic 350-40).  ASJ 2018-15 was issued to help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement (hosting arrangement) by providing guidance for determining when the arrangement includes a software license.  ASU 2018-15 will be effective for the Company for annual periods beginning after December 15, 2019, 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:  September 30, 2018December 31, 2017Customer receivables$––$7,275Less: allowance for doubtful accounts––(4,000)Accounts receivable, net$––$3,275  As of September 30, 2018, and December 31, 2017, respectively, the Company was owed $0 and $7,275 in accounts receivable due from customers.  During the nine months and the year ended September 30, 2018, and December 31, 2017, respectively, the allowance for doubtful collections increased by $236 and $4,000, respectively.  As of September 30, 2018, and December 31, 2017, the allowance for doubtful collection was $0 and $4,000, respectively.  NOTE 4. INTANGIBLE ASSETS  The following are the components of finite-lived intangible assets:  September 30, 2018December 31, 2017Products and processes$12,500$12,500Trademarks and patents / technology150,700150,700Customer lists / relationships30,00030,000Non-compete agreement30,00040,000Marketing related64,00064,000Software510,300510,300Sub-total797,500807,500Accumulated amortization(188,310)(97,845)Intangible assets, net$609,190$709,655  Amortization expense from continuing operations for the nine months ended September 30, 2018 and 2017, was $90,465 and $52,733, respectively.  NOTE 5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES  Accounts payable and accrued expenses consist of: September 30, 2018December 31, 2017Accounts payable-vendors$917,694$865,569Credit cards payable41,96939,841Payroll taxes payable82,51775,637Accrued interest469,6241,894,694Accrued payroll and payroll taxes253,984172,6071,765,7893,048,348Reserve-legal fees250,000–Total accounts payable and accrued expenses$2,015,789$3,048,348  Payroll taxes payable includes $17,476 and $5,485 in penalties, and $3,438 and $634 in interest, related to unpaid payroll taxes as of September 30, 2018, and December 31, 2017, respectively.  The Company has established an estimated reserve of $250,000 and $0 at September 30, 2018, and December 31, 2017, respectively, for future legal fees to be incurred in connection with pending legal actions (Note 17).  8  NOTE 6. NOTES AND LOANS PAYABLE  Notes and loans payable consists of the following: September 30, 2018December 31, 2017Short-term:Notes payable, convertible$1,241,000$741,000Total short-term notes payable1,241,000741,000Long-term:Notes and loans payable, unsecuredLoans payable––11,900Notes payable––84,075Total notes and loans payable, unsecured––95,975Note payable, convertible720,154[1]144,000Notes payable, secured, net of unamortized discount:Note payable-bank32,78938,240Note payable––20,500,000Less: unamortized discount––(3,145,000)Note payable, net of unamortized discount––17,355,000Total notes payable, secured, net of unamortized discount––17,393,240Total long-term notes and loans payable752,94317,633,215Total notes and loans payable$1,993,943$18,374,215  [1]At September 30, 2018, $576,154 in convertible notes payable and related accrued interest of $90,742 was reclassified from related party to non-related party, resulting from a change in related parties (Note 7).  Between July 14, 2017, and January 25, 2018, the Company issued convertible promissory notes (“Convertible Notes”) for financing in the amount of $746,000 (“Investor Group A”).  The Convertible Notes accrue interest at a rate of 10% per annum, mature in one (1) year, 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.  During the nine months ended September 30, 2018, five (5) noteholders of Investor Group A elected to convert their notes in the aggregate principal sum of $225,000 and accrued interest of $21,114.  As a result, the noteholders were issued an aggregate of 2,461,129 shares of the Company’s restricted common stock.  As of  September 30, 2018, principal in the amount of $521,000 remains.  In February 2018, the Company issued senior secured convertible notes (the “CV Note(s)”) in the aggregate principal sum of $220,000 to two lenders (“Lender Group A”).  The CV Notes are convertible into restricted shares of the Company’s common stock at a conversion rate of $0.10 per share. Two (2) of the CV Notes in the aggregate principal sum of $145,000 bear interest at a rate of twelve percent (12%) plus 290,000 shares of the Company’s restricted common stock for each ninety (90) day period. The CV Note in the principal sum of $75,000 bears interest at a rate of twenty percent (20%) plus 150,000 shares of the Company’s restricted common stock for each thirty (30) day period.  In addition to interest, the note holders have been issued an aggregate of 2,820,000 shares of the Company’s restricted common stock through September 30, 2018, valued at $282,000. During the nine months ended September 30, 2018, principal repayments in the amount of $100,000 have been made.  As of September 30, 2018, principal in the amount of $120,000 remains.  Between April 24, 2018, and June 18, 2018, the Company issued senior secured convertible promissory notes (the “Notes”) to four accredited investors (“Investor Group B”) 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 31, 2018, the unsecured convertible promissory note issued to The Kasper Group, Ltd. in the principal sum of $144,000 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.  Non-related party convertible notes payable consist of the following:  Note HolderPrincipalAPRAccrued
InterestConversion
PriceTerm/DueLender Group A$120,00012-20%$121,740$0.1005/2018Investor Group A521,00010%55,499$0.1007/2018-09/2018Investor Group B600,00012%25,630$0.1012/2018The Kasper Group, Ltd.144,0007%68,047$0.1010/01/2019Joseph M. Redmond576,154[1]5%112,289[1]$0.1007/31/2017$1,961,154$383,205  As of September 30, 2018, and December 31, 2017, respectively, short-term non-related party convertible promissory notes in the amount of $1,241,000 and $741,000 are owed by the Company.  During the nine months and the year ended September 30, 2018, and December 31, 2017, respectively, interest in the amount of $197,142 and $26,840 was expensed.  As of September 30, 2018, and December 31, 2017, respectively, a total of $202,869 and $26,840 in interest has been accrued, and is included as an accrued expense on the accompanying consolidated balance sheet.  As of September 30, 2018, and December 31, 2017, respectively, long-term non-related party convertible promissory notes in the amount of $720,154 [1] and $144,000 are owed by the Company. During the nine months and the year ended September 30, 2018, and December 31, 2017, respectively, interest in the amount of $29,087 and $10,080 was expensed.  As of September 30, 2018, and December 31, 2017, respectively, a total of $180,336 [1] and $60,507 in interest has been accrued, and is included as an accrued expense on the accompanying consolidated balance sheet.  As of September 30, 2018 and December 31, 2017, long-term unsecured non-related party loans and promissory notes consists of $0 and $95,975, respectively.  During the nine months and the year ended September 30, 2018, and December 31, 2017, respectively, interest in the amount of $5,460 and $1,800 was expensed.  On September 30, 2018, $95,975 in principal and $56,892 in accrued interest was extinguished, resulting in a gain of $152,867. As of September 30, 2018, and December 31, 2017, respectively, a total of $0 and $51,432 in interest has been accrued and is included as an accrued expense on the accompanying consolidated balance sheet.  As of September 30, 2018, and December 31, 2017, respectively, long-term secured non-related party promissory notes consists of $32,789 and $17,393,240, net of unamortized discount of $0 and $3,145,000.  During the nine months and the year ended September 30, 2018, and December 31, 2017, respectively, interest in the amount of $694,450 and $880,242 was expensed.  As of September 30, 2018, in connection with RoxSan’s Chapter 7 petition filed in May 2018 (Note 17), $20,500,000 in principal and $2,278,281 in accrued interest has been extinguished and recharacterized as a contingent liability (Note 8), resulting in a gain of $22,778,281.  As of September 30, 2018, and December 31, 2017, respectively, a total of $296 and $1,585,714 in interest has been accrued, and is included as an accrued expense on the accompanying consolidated balance sheet.  The future maturities of notes payable are summarized as follows:  2018$576,1542019176,789Total$752,943  During the nine months and the year ended September 30, 2018, and December 31, 2017, respectively, interest on non-related party notes and loans payable in the amount of $926,139 and $924,462 has been expensed.  As of September 30, 2018, and December 31, 2017, respectively, a total of $383,501 [1] and $1,724,093 in interest, net of extinguishments of $2,335,173 and $0, has been accrued and is included as part of accrued expenses on the accompanying consolidated balance sheets.  NOTE 7. RELATED PARTY TRANSACTIONS  Related party transactions consist of the following: September 30, 2018December 31, 2017Related party payablesAccrued compensation$607,802$501,269Cash advances172,647128,298Total related party payables780,449629,567Notes payable, convertible, related party628,850[1]1,167,254Total related party transactions$1,409,299$1,796,821  [1]As of January 1, 2018, Mr. Joseph M. Redmond, former President and member of the board of directors, is no longer a related party.  As a result, related party transactions was reduced by $618,510, representing $42,356 in accrued compensation, and $576,154 in convertible promissory notes. As of September 30, 2018, $42,356 is included as part of accounts payable and accrued expenses (Note 5), and $576,154 is included as part of long-term convertible notes payable (Note 6), on the accompanying consolidated balance sheets. In addition, accrued interest of $90,742 related to the convertible promissory notes was reclassified from related party to non-related party accrued interest. See Note 17 for additional information and legal proceedings related to Mr. Redmond.  Related party convertible notes payable consist of the following:  Note HolderPrincipalAPRAccrued InterestConversion
PriceTerm/DueHuntington Chase, Beneficial Owner$291,1007%$68,924$0.1012/31/2015AvantGarde, LLC, Beneficial Owner281,50012%14,517$0.2010/26/2018Hamburg Investment Co., Beneficial Owner56,25012%2,682$0.2011/08/2018Total$628,850$86,123  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.  As of September 30, 2018, and December 31, 2017, respectively, related parties are due a total of $1,409,299 and $1,796,821, consisting of $607,802 and $501,269 in accrued compensation owed to officers; $172,647 and $128,298 in cash advances from officers and beneficial owners to the Company for operating expenses; and $628,850 and $1,167,254 in convertible promissory notes.  As of September 30, 2018, and December 31, 2017, respectively, convertible promissory notes in the aggregate sum of $628,850 and $1,167,254 are owed by the Company.  During the nine months and the year ended September 30, 2018, and December 31, 2017, respectively, interest in the amount of $44,814 and $86,712 was expensed, of which $798 and $16,833 was paid to the note holders in cash, and $37,750 and $0 was converted to principal.  As of September 30, 2018, and December 31, 2017, respectively, a total of $86,123 and $170,600 in interest has been accrued and is included as part of accrued expenses on the accompanying consolidated balance sheets.  On January 1, 2018, the Company entered into an Executive Agreement with its Chief Financial Officer.  The agreement replaces any other written agreement with the Company, is for a term of one (1) year, with the option to extend, and includes annual compensation of $216,000 in year 1, as well as a bonus plan and customary executive benefits.  In addition, the agreement provides for a non-refundable, fully-vested signing bonus of $100,000, as well as a grant of stock options to purchase 1,000,000 shares of the Company's common stock at an exercise price of $0.25 per share. The options are for a period of five (5) years, and vest quarterly over a one (1) year period.  On January 1, 2018, the Company entered into a Consulting Agreement with Huntington Chase Financial Group, LLC, whose principal is a related party. The agreement replaces any other written agreement with the Company, is for a term of three (3) years, and includes monthly compensation of $25,000 in year 1; $30,000 in year 2 and $35,000 in year 3, of which the year 2 and 3 increases are deferred until completion of certain development projects, as well as customary expense allowances.  In addition, the agreement provides for a grant of stock options to purchase 4,000,000 shares of the Company's common stock at an exercise price of $0.25 per share. The options are for a period of five (5) years, of which 25% vest immediately, and the remainder vest when certain market share prices of the Company’s common stock are met.  On September 30, 2018, in connection with the Series C Convertible Preferred Stock equity offering (Note 9), three officers of the Company were issued an aggregate of 90,000 Series C Shares at a price of $5.00 per share in exchange for accrued compensation in the aggregate of $450,000. In connection with the Series C Shares, the officers were issued an aggregate of 1,250,000 warrants, which are exercisable for a period of three (3) years at an exercise price of $0.25 per share.  During the nine months and the year ended September 30, 2018, and December 31, 2017, respectively, interest on related party notes payable in the amount of $44,814 and $86,712 was expensed. As of September 30, 2018, and December 31, 2017, respectively, a total of $86,123 and $170,600 in interest has been accrued and is included as part of accrued expenses on the accompanying consolidated balance sheets.  NOTE 8. COMMITMENTS AND CONTINGENCIES  On August 13, 2015, the Company issued a secured promissory note in the amount of $20,500,000 (the “Promissory Note”) in connection with the acquisition of RoxSan Pharmacy, Inc. (“RoxSan”).  The Promissory Note bore interest at a rate of 6% per annum, and matured August 13, 2018 ("Maturity").  At the time of issuance, Management determined that the Promissory Note did not fairly represent the fair market value for the related acquisition.  As a result, a discount of $15,300,000, representing the difference between the face value and the estimated fair market value of the Promissory Note was recorded. During the nine months and the year ended September 30, 2018, and December 31, 2017, respectively, the Company expensed $3,145,000 and $5,100,000 in discount amortization.  As of September 30, 2018, and December 31, 2017, respectively, $0 and $3,145,000 in unamortized discount remained.  During the nine months and the year ended September 30, 2018, and December 31, 2017, respectively, interest in the amount of $692,967 and $876,214 was expensed. As of September 30, 2018 and December 31, 2017, respectively, a total of $2,278,281 and $1,585,314 in interest was accrued.  As part of the deconsolidation of RoxSan resulting from its Chapter 7 petition filed on May 14, 2018 (Note 15), management reevaluated the characteristics of the Promissory Note.  Included in the evaluation were the following considerations: 1) the related asset is no longer a part of the parent financial statements due to a loss of financial control; 2) the Company is currently in litigation as a result of material breaches by the note holder;  3) the Company has claims against the note holder for losses and damages directly related to the Promissory Note and its underlying assets; 4) there is a high likelihood that no obligation exists.  After careful consideration, management has determined that  the current characteristics of the liability are contingent in nature, and the debt of $20,500,000 and related $2,278,281 in accrued interest has been extinguished as of September 30, 2018, resulting in a gain of $22,778,281.  9   On April 26, 2017, pursuant to a resolution of the Board of Directors, the Company, through its wholly-owned subsidiary, Parallax Behavioral Health, Inc., completed the asset acquisition of 100% of certain intellectual property (“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, the initial consideration for the Intellectual Property was paid to ProEventa in the form of a stock purchase agreement to purchase 2,500,000 shares of the Company’s common stock for $2,500, resulting in a net cost for the Intellectual Property of $622,500.  In addition, the Agreement included the following conditional contingent liabilities (the “Revenue Share and Royalties”):  ●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 generated from the intellectual property, ending at such time as Parallax has paid ProEventa $25,000,000; and ●a limited license to ProEventa for the use of certain of the Intellectual Property's technology at Grafton Schools.  During the nine months and the year ended September 30, 2018, and December 31, 2017, no Revenue Share and Royalties were recognized. As of September 30, 2018, and December 31, 2017, no Revenue Share and Royalties are payable.  NOTE 9. 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 or about August 1, 2018, the Company established a private placement equity offering for the purchase of Series C convertible preferred stock (the “Series C Shares”).  The offering provides for, among other thing, the purchase of Series C Shares at a price of $5.00 per share, with a minimum unit of 20,000 shares, or $100,000.  All Series C Shares are convertible into common stock under the following terms: if converted in the first year, the Series C Shares are convertible into common stock at a conversion rate of $0.12 per share, or a ratio of 41.67 shares of common stock for each Series C Share held (41.67:1) (“Conversion Ratio”).  The shares also include warrants to purchase common stock for a period of 3 years at an exercise price of $0.25 per share, the number of warrants of which is determined at 50% of the prevailing Conversion Ratio. The holders of Series C Shares will be entitled, but not obligated, to convert any or all of their Series C Shares including accrued dividends into the following at the lower of either $0.12 per share or a 33% discount; (a) the company’s next primary offering or (b) any new equity linked financing within the next 24 months of the closing date of the offering.  On August 10, 2018, in connection with the Series C Shares equity offering, an accredited investor was issued 20,000 Series C Shares at a price of $5.00 per share, for cash in the amount of $100,000.  As a result, $99,980 was recorded to preferred paid in capital.  On August 11, 2018, in connection with the Series C Shares equity offering, an accredited investor was issued 40,000 Series C Shares at a price of $5.00 per share, for cash in the amount of $200,000.  As a result, $199,960 was recorded to preferred paid in capital.  On September 30, 2018, in connection with the Series C Shares equity offering, three officers of the Company were issued an aggregate of 90,000 Series C Shares at a price of $5.00 per share, in exchange for debt in the principal sum of $450,000.  As a result, $449,910 was recorded to preferred paid in capital.  As of September 30, 2018, and December 31, 2017, respectively, the Company had 1,013,691 and 863,691shares of preferred stock issued and outstanding.  NOTE 10. 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 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  $6,000, of which $1,000 was cash and $5,000 was stock compensation.  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 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 February 2018, in connection with certain senior secured promissory notes, the Company issued 440,000 shares of its restricted common stock to the note holders as a form of interest.  The shares were valued at $44,000, of which $22,211 was expensed, $21,789 was deferred, to be amortized over the term of the notes, and $43,560 was recorded to paid in capital.  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 8, 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 May 2018, in connection with certain senior secured promissory notes, the Company issued 890,000 shares of its restricted common stock to the note holders as a form of interest.  The shares were valued at $89,000, of which $62,583 was expensed, $11,417 was deferred, to be amortized over the term of the notes, and $88,110 was recorded to paid in capital.  On June 30, 2018, in connection with the exercise of certain employee stock options, the Company issued 846,051 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 $269,325.  As a result, $268,479 was recorded to paid in capital.  On July 28 2018, in connection with certain senior secured promissory notes, the Company issued 150,000 shares of its restricted common stock to the note holders as a form of interest.  The shares were valued at $15,000. As a result, $14,850 was recorded to paid in capital.  In August 2018, in connection with certain senior secured promissory notes, the Company issued 440,000 shares of its restricted common stock to the note holders as a form of interest.  The shares were valued at $44,000, of which $33,011 was expensed, $10,989 was deferred, to be amortized over the term of the notes, and $43,560 was recorded to paid in capital.  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 13, 2018, in connection with the exercise of certain employee stock options, the Company issued 1,071,430 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 $187,500.  As a result, $186,429 was recorded to paid in capital.  10   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.  On August 28, 2018, in connection with certain convertible debt in the amount of $20,000 and accrued interest of $2,000, the Company issued 220,000 shares of its restricted common stock at a conversion rate of $0.10 per share.  As a result, $21,780 was recorded to paid in capital.  On September 28, 2018, in connection with certain senior secured promissory notes, the Company issued 150,000 shares of its restricted common stock to the note holders as a form of interest.  The shares were valued at $15,000. As a result, $14,850 was recorded to paid in capital.  On September 30, 2018, in connection with certain convertible debt in the amount of $50,000, the Company issued 625,000 shares of its restricted common stock at a conversion rate of $0.08 per share.  As a result, $49,375 was recorded to paid in capital.  During the nine months and the year ended September 30, 2018, and December 31, 2017, respectively, a total of $274,500 and $2,838,500 in deferred stock compensation was recorded, and $973,925 and $1,028,498 was expensed. As of September 30, 2018, and December 31, 2017, respectively, there remains $1,110,577 and $1,810,002 in deferred stock compensation to be expensed over the next 24 months.  As of September 30, 2018, and December 31, 2017, respectively, the Company had 152,078,141 and 136,734,530 common shares issued and outstanding.  NOTE 11. WARRANTS AND OPTIONS  As of September 30, 2018, and December 31, 2017, respectively, the Company had 18,217,500 and 7,205,000 warrants, and 18,060,000 and 20,675,000 options, issued and outstanding.  On January 25, 2018, in connection with a certain convertible promissory note, 25,000 warrants were issued.  The warrants vest periodically over the term of the agreement, and are exercisable for a period of three (3) years at an exercise price of $0.25 per share.  On January 29, 2018, in connection with a certain consulting agreement, 250,000 warrants were issued.  The warrants vest periodically over the term of the agreement, and are exercisable for a period of three (3) years at an exercise price of $0.25 per share.  On February 13, 2018, in connection with a certain consulting agreement, 200,000 warrants were issued.  The warrants vest periodically over the term of the agreement, and are exercisable for a period of three (3) years at an exercise price of $0.25 per share.  Between April 24, 2018 and June 14, 2018, in connection with certain convertible promissory notes, 7,687,500 warrants were issued.  The warrants and are exercisable for a period of three (3) years at an exercise price of $0.20 per share, with a provision for the exercise price to be reduced to $0.10 per share if certain conditions are not met by the Company.  On June 28, 2018, in connection with a certain advisory agreement, 300,000 warrants were issued.  The warrants are exercisable for a period of five (5) years, at an exercise price of $0.001 per share.  On August 10, 2018, in connection with the Series C Shares equity offering, 416,667 warrants were issued.  The warrants and are exercisable for a period of three (3) years at an exercise price of $0.25 per share.  On August 11, 2018, in connection with the Series C Shares equity offering, 833,333 warrants were issued.  The warrants and are exercisable for a period of three (3) years at an exercise price of $0.25 per share.  On September 30, 2018, in connection with the Series C Shares equity offering, 1,250,000 warrants were issued to three officers of the Company.  The warrants and are exercisable for a period of three (3) years at an exercise price of $0.25 per share.  Warrants OutstandingNumber ofRemainingExercise PriceWeightedCommonContractual LifeTimes NumberAverageExercise PriceShares(in years)Of SharesExercise Price$0.001300,0004.75$300$0.22$0.1062,5004.506,250$0.27$0.10250,0002.0025,000$0.29$0.151,000,0002.25150,000$0.26$0.1762,5004.5010,625$0.27$0.1862,5004.5011,250$0.27$0.203,000,0002.75600,000$0.23$0.204,687,5002.50937,500$0.24$0.2162,5004.5013,125$0.27$0.21100,0002.0021,000$0.31$0.252,500,0003.00625,000$0.23$0.25475,0002.25118,750$0.25$0.253,255,0002.00813,750$0.29$0.251,500,0001.75375,000$0.34$0.35250,0002.0087,500$0.29$0.60250,0002.00150,000$0.31$0.75300,0000.50225,000$0.29$0.75100,0000.2575,000$0.2818,217,500$4,245,050$0.23  Warrant ActivityWeightedNumber ofAverageSharesExercise PriceOutstanding at December 31, 20177,205,000$0.26Issued11,012,500$0.24Exercised––––Expired / Forfeited––––Outstanding at September 30, 201818,217,500$0.23  On January 1, 2018, in connection with an executive agreement, the Company granted the executive 1,000,000 options to purchase common shares at $0.25 for a period of five (5) years.  The options vest annually over a one (1) year period, and were valued at $134,500 using the Black-Scholes method.  The assumptions used in valuing the options were: expected term 3.75 years, expected volatility 1.78, risk free interest rate 2.25%, and dividend yield 0%.  On January 1, 2018, in connection with a consulting agreement, the Company granted the consultant 4,000,000 options to purchase common shares at $0.25 for a period of five (5) years.  The options vest annually over a three (3) year period, and were valued at $539,200 using the Black-Scholes method.  The assumptions used in valuing the options were: expected term 3.5 years, expected volatility 1.86, risk free interest rate 2.25%, and dividend yield 0%.  On August 1, 2018, in connection with an employment agreement, the Company granted the employee 1,000,000 options to purchase common shares at $0.25 for a period of five (5) years.  Of the options granted, 50% vest immediately, and the remaining vest annually over a two (2) year period.  The options were valued at $160,000 using the Black-Scholes method.  The assumptions used in valuing the options were: expected term 3 years, expected volatility 2.06, risk free interest rate 2.78%, and dividend yield 0%  11  Options OutstandingNumber ofRemainingExercise PriceWeightedCommonContractual LifeTimes NumberAverageExercise PriceShares(in years)Of SharesExercise Price$0.0590,0003.75$4,500$0.14$0.051,140,0003.5057,000$0.09$0.05100,0003.005,000$0.08$0.0560,0002.253,000$0.06$0.05170,0002.008,500$0.12$0.10500,0002.0050,000$0.14$0.10250,0001.0025,000$0.06$0.151,000,0002.00150,000$0.14$0.255,000,0004.501,250,000$0.19$0.257,000,0003.751,750,000$0.16$0.251,000,0002.00250,000$0.15$0.251,000,0001.50250,000$0.10$0.25250,0001.0062,500$0.06$0.35250,0001.0087,500$0.07$0.60250,0001.00150,000$0.0818,060,000$4,103,000$0.23  Options ActivityWeightedNumber ofAverageSharesExercise PriceOutstanding at December 31, 201720,675,000$0.14Issued6,000,000$0.17Exercised(1,973,189)$0.16Expired / Forfeited(6,641,811)$0.16Outstanding at September 30, 201818,060,000$0.18  During the nine months and the year ended September 30, 2018, and December 31, 2017, respectively, 6,000,000 and 11,570,000 options were issued, 1,973,189 and 300,000 options were exercised, 1,000,000 and 0 options expired, and 5,641,811 and 1,730,000 options were forfeited. A total of $649,327 and $1,679,765 in deferred stock option compensation was recorded, net of forfeitures, and $483,391 and $589,679 was expensed during the nine months and the year ended September 30, 2018, and December 31, 2017, respectively.  There remains $1,484,945 and $1,319,010 in deferred compensation as of September 30, 2018, and December 31, 2017, respectively, to be expensed over the next 27 months.  NOTE 12. LEASES  The Company sub-leases office space for its headquarters in Santa Monica, California, for $5,600 per month, on a month-to-month basis.  Rent expense for the nine months and the year ended September 30, 2018, and December 31, 2017, was $53,557 and $68,880, respectively.  NOTE 13. INCOME TAXES  A reconciliation of the expected statutory federal and state taxes and the total income tax expense (benefit) at September 30, 2018, and December 31, 2017, was as follows:  September 30, 2018December 31, 2017Income (loss) before taxes$18,252,863$(10,511,392) [1]Statutory rate (Fed & State(s))30%30%Computed expected tax payable (recovery)5,301,700(3,160,100)Effect of the U.S. tax law change––805,200Effect of release of net operating loss carryforwards3,297,400Tax effect of non-taxable income and non-deductible expenses:Gain on extinguishment of debt-principal(6,145,800)––Stock compensation/amortization of stock options926,000738,100Discount amortization828,0001,626,300Other5,8006,200Total tax effect of non-taxable income and non-deductible expenses(4,386,000)2,370,600Change in valuation allowance(2,091,800)(15,700)Income tax expense$––$––Reported income taxes:Federal$––$––State––––Total$––$––  The significant components of deferred income tax assets and liabilities at September 30, 2018, and December 31, 2017, are as follows:  September 30, 2018December 31, 2017Net operating loss carried forward$––$2,262,600[1]Bad debt allowance––1,100Officers’ accrued compensation242,800140,300Accrued related party interest24,10047,700Valuation allowance(266,900)(2,451,700)Net deferred income tax asset$––$––  On September 30, 2018, the company realized extinguishment of debt principal in the amount of $20,595,975.  Per Internal Revenue Code (“IRC”) Section 108(a) (1) (A) the extinguishment of debt principal is excluded from taxable income for the company; however, any available tax attributes must be release up and to the amount of the extinguishment.  Therefore, net operating loss carryforwards were released with no remaining net operating losses available to use toward future taxable income as of September 30, 2018.  The Company is open to examinations for the tax year 2011 through the current tax year.  [1] As adjusted, due to correction of error (Note 14).  NOTE 14. CHANGE IN ESTIMATE AND CORRECTION OF ERROR  Change in Estimate: 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:  As Previously ReportedRevised ValueDecember 31, 2017AdjustmentsJuly 18, 2018AssetsCash$5,000$––$5,000Intellectual property160,000(10,000)150,000Loans receivable87,008––87,008Total assets252,008(10,000)242,008LiabilitiesAccounts payable7,068––7,068License fees payable2,000,000(1,740,000)260,000License fees payable, unamortized discount(1,460,000)1,460,000––Royalties payable200,000––200,000Total liabilities747,068280,000467,068Goodwill785,060––785,060Fair market value of consideration$290,000––290,000Net effect-current period adjustment$270,000$270,000  Correction of Error: During 2018, the Company discovered that the April 26, 2017, asset acquisition of intellectual property from ProEventa, Inc. (Note 8) erroneously included certain conditional contingent consideration as a part of the purchase price.  As a result, certain liabilities contingent in nature were erroneously recorded.  The errors have been corrected by restating each of the affected financial statement line items for the year ended December 31, 2017. The following tables summarize the impacts on the Company’s consolidated financial statements prior to deconsolidation:  As Previously ReportedRestatedDecember 31, 2017AdjustmentsDecember 31, 2017CONSOLIDATED BALANCE SHEETSAssetsCurrent assets$55,419$––$55,419Intangible assets, net2,298,094(1,588,439)709,655Other non-current assets986,962––986,962Total assets3,340,475(1,588,439)1,752,036LiabilitiesCurrent liabilities4,418,915––4,418,915Long-term liabilitiesLicense fees payable1,890,000(1,000,000)890,000Royalties payable1,000,000(800,000)200,000Other long-term liabilities23,421,204––23,421,204Total long-term liabilities26,311,204(1,800,000)24,511,204Liabilities subject to compromise4,620,735––4,620,735Total liabilities30,730,119(1,800,000)28,930,119Stockholders' deficitAccumulated deficit(33,773,141)211,561(33,561,580)Other equity6,383,497––6,383,497Total stockholders' deficit(27,389,644)211,561(27,178,083)Total liabilities and stockholders' deficit$3,340,475$(1,588,439)$1,752,036CONSOLIDATED STATEMENTS OF OPERATIONSGross profit (loss)$(47,107)$––$(47,107)General and administrative expenses4,209,073(211,561)3,997,512Operating loss(4,256,180)211,561(4,044,619)Other income and expenses(6,466,773)––(6,466,773)Net loss – continuing operatios(10,722,953)211,561(10,511,392)Net loss – discontinued operations(3,153,553)––(3,153,553)Net loss$(13,876,506)$211,561$(13,664,995)Net loss per common share – basic – continuing operations$(0.089)$0.002$(0.087)Net loss per common share – diluted – continuing operation$(0.062)$0.001$(0.061)  12  NOTE 15. DISCONTINUED OPERATIONS  In December 2017, the Company discontinued all operations related to the Retail Pharmacy Segment (RPS) involving the Company’s wholly-owned subsidiary, RoxSan Pharmacy, Inc.  On May 14, 2018, pursuant to a unanimous resolution of the Boards of Directors of RoxSan Pharmacy, Inc. (“RoxSan”) 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.  The pharmacy operations resulted in an accumulated deficit of $11,582,906 and $10,758,507 as of May 14, 2018 and December 31, 2017, respectively. In addition, certain advances were made to RoxSan Pharmacy, Inc. for the purpose of overhead expenses for which a secured promissory note was issued to the Company. As of May 14, 2018, and December 31, 2017, respectively, principal in the amount of $1,280,692 and $1,153,395 has been disbursed, and interest in the amount of $22,797 and $10,395 has been accrued in connection with the note.  As of May 14, 2018 and December 31, 2017, respectively, the assets and liabilities relating to the discontinued operations of RoxSan Pharmacy, Inc. are as follows: May 14, 2018December 31, 2017Current assets held for saleCash and cash equivalents$––$2,421Accounts receivable, net––40,856Employee advances––1,800Prepaid expenses––6,884Total current assets held for sale––51,961Noncurrent assets held for sale:Loans receivable - long term––169,902Property and equipment, net––10,000Deposits––22,000Total noncurrent assets held for sale$––201,902Total asset held for sale––253,863Liabilities subject to compromiseAccounts payable and accrued expenses3,543,160[2]2,979,132[1]Pension plan contribution payable––12,570Note payable, related party––185,000Related party payables376,430[2]469,207Note payable185,000[2]––Note payable-merchant974,826974,826Total liabilities subject to compromise5,079,4164,620,735Net liabilities of discontinued operations$5,079,416$4,366,872 [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 was reduced by $105,746, representing $105,000 in accrued compensation and $746 in cash advances. As of December 31, 2017, $105,746 is included in accounts payable and accrued expenses as part of liabilities subject to compromise. See Note 17 for additional information and legal proceedings related to Mr. Engert.  [2]As of January 1, 2018, Mr. Joseph M. Redmond, former President and member of the board of directors, is no longer a related party.  As a result, related party payables was reduced by $307,997, representing $185,000 in promissory notes, $119,270 in accrued compensation, and $3,727 in expense advances. As of May 14, 2018, $185,000 is reflected as a note payable, and $122,997 is included in accounts payable and accrued expenses as part of liabilities subject to compromise. In addition, accrued interest of $11,823 related to the promissory note was reclassified from related party to non-related party accrued interest, and is included in accounts payable and accrued expenses as part of liabilities subject to compromise. See Note 17 for additional information and legal proceedings related to Mr. Redmond.  Payroll taxes payable includes $296,959 and $283,058 in penalties, and $67,532 and $33,860 in interest, related to unpaid payroll taxes as of May 14, 2018, and December 31, 2017, respectively.  The results of the discontinued operations of RoxSan Pharmacy, Inc. are summarized as follows:  May 14, 2018Revenue$––Cost of sales––Gross profit––Sales, marketing and pharmacy expenses170,630General and administrative expenses586,993Operating loss(757,623)Interest expense(56,775)Loss on disposal of equipment(10,000)Net loss from discontinued operations$(824,398)  13  NOTE 16. SEGMENT REPORTING  The Company has the following business segments: Remote Care Services (RCS), Behavioral Health Services (BHS), and Diagnostics/Corporate (DCS).  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: . Remote Care
SegmentBehavioral [1]
Health SegmentDiagnostics/Corporate
SegmentConsolidated
TotalsSeptember 30, 2018Revenue$9,399$1,350$––$10,749Gross profit (loss)(6,108)1,350––(4,758)Operating loss(277,261)(144,218)(4,786,223)(5,207,702)Depreciation and amortization6,89782,3201,24890,465Interest expense2,206––948,395950,601Gain on disposal of subsidiary––––5,079,4165,079,416Gain on extinguishment of debt––––22,931,14822,931,148Discount amortization(370,000)––3,145,0002,775,000Total assets915,652467,00711,9061,394,565Goodwill785,060––––785,060Additions to property and equipment––––––––  September 30, 2017Revenue$70,641$––$––$70,641Gross profit (loss)(39,486)––––(39,486)Operating loss(489,744)(69,023)(2,642,459)(3,201,226)Depreciation and amortization5,75245,7331,24852,733Interest expense597––712,913713,510Discount amortization110,000––3,825,0003,935,000Total assets941,523576,76723,3081,541,598Goodwill785,060––––785,060Additions to property and equipment––––––––  [1]Behavioral Health Segment commenced March 22, 2017.  NOTE 17. 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 December 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 December 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, 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 was amortized over the term of the promissory note.  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 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 the Superior Court of California, County of Los Angeles for an amount of $996,622 in connection with RoxSan’s merchant financing loan.  On or about June 27, 2017, American Express Travel Related Services Company, Inc. filed suit against RoxSan Pharmacy, Inc. in the Supreme Court of New York, County of New York in the amounts of $153,500 and $273,500 in connection with RoxSan’s credit card obligations.  On July 31, 2017, and August 16, 2017, the Company entered into stipulation and settlement agreements for these matters to make payments in lieu of further litigation.  On May 10, 2018, American Express received a final judgement for the credit card obligations from the Supreme Court of New York in the amount of $387,245 representing the $427,000 balance plus court costs of $245, less $40,000 in payments made by the Company under the 2017 stipulation and settlement agreements.  There are five (5) legal matters currently pending at this time.  NOTE 18. SUBSEQUENT EVENTS  The Company has evaluated the events and transactions for recognition or disclosure subsequent to September 30, 2018, through the date of the issuance of the financial statements, and has determined that there have been no events that would require disclosure.  *    *    *    *    *  14   ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  Forward-Looking Statements  This quarterly report contains forward-looking statements. These statements relate to future events or the Company’s future financial performance. In some cases, forward-looking statements can be identified by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause the Company’s or the Company’s industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.  The Company’s unaudited interim consolidated financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. All references to "common shares" refer to the common shares in the Company’s capital stock. 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.  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., and Parallax Behavioral Health, Inc., unless otherwise indicated.  Corporate History  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”).  (OTCQB.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.  ●Parallax Health Management, 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.  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.  In 2018, the Company rebranded the technology as Intrinsic Code (“Intrinsic Code”), 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 Intrinsic Code technology and software platform 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 Intrinsic Code technology within the Parallax family of healthcare products and services.  Acquisition of Parallax Health Management, Inc.  As part of the Company’s strategic plan to obtain a platform to enhance its diagnostic tests, on August 31, 2016 (the “Execution Date”), 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; and ●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 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.  15   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, through its wholly-owned subsidiary, Parallax Behavioral Health, Inc., completed the asset acquisition of 100% of certain intellectual property (“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, the initial consideration for the Intellectual Property was paid to ProEventa in the form of a stock purchase agreement to purchase 2,500,000 shares of the Company’s common stock for $2,500, resulting in a net cost for the Intellectual Property of $622,500.  In addition, the Agreement included the following conditional contingent liabilities (the “Revenue Share and Royalties”):  ●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 generated from the intellectual property, ending at such time as Parallax has paid ProEventa $25,000,000; 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 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.  Formation of Parallax Communications, Inc.  On September 20, 2018, the Company formed Parallax Communications, Inc, a Delaware corporation and wholly-owned subsidiary of Parallax Health Management, Inc.  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. J. Michael 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 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. and Parallax Health Management, Inc.  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.  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 March 21, 2013, the Company entered into a Letter of Intent with Shahla Melamed, RoxSan's sole Shareholder, to acquire RoxSan.  Between 2013 and 2015, four (4) amendments were also executed.  As part of the acquisition, the Company was required to obtain licensure from the State of California, and on July 31, 2015, the Company received notice that its pharmacy and sterile compounding licenses were issued by the California State Board of Pharmacy.  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" below).  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 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 and closed the business location in Beverly Hills, CA; some residual operations were still ongoing during 2018 to wind down 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 sought to discharge approximately $5 million of liabilities owed to various parties, and intercompany loans in excess of $1 million owed to the Company.  As a result of the loss of financial control of RoxSan, the Company has derecognized the subsidiary as of September 30, 2018. The derecognition resulted in a gain of $5,079,416. The Company also extinguished $22,778,281 in debt and accrued interest related to the acquisition of RoxSan.  16   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, 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 discount was amortized over the term of the promissory note.  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.  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 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.  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 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.  ●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 sought to discharge approximately $5 million of liabilities owed to various parties, and intercompany loans in excess of $1 million owed to the Company.  17   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 digital healthcare company headquartered in Santa Monica, California. The Company’s principal focus is to build and expand an integrated digital healthcare network with products and services that can provide remote communication, diagnosis, treatment, and monitoring of patients on a proprietary platform. Parallax’s technology-enabled digital healthcare companies include:  Medical Diagnostics, Remote Health Care Services, and Behavioral Health Services. 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 the past 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 business operations generated revenue through multiple economic models, including  PHM’s initial remote patient monitoring activity, the deployment of its Good Health Outcomes Platform, integration of Intrinsic Code technology, and the sale of third-party vendor devices.  The Company’s operations include the following business segments: Remote Care Services (RCS), Behavioral Health Services (BHS), and Corporate.  ●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 Health Systems  In April 2017, the Company, through its wholly-owned subsidiary, Parallax Behavioral Health, Inc., acquired the intellectual property known as REBOOT, the acronym for Reliable Evidence-Based Outcomes Optimization Technologies.  In 2018, the Company rebranded the technology as Intrinsic Code (“Intrinsic Code”), 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 technology, Intrinsic Code 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 Intrinsic Code software and systems. As of September 30, 2018, the BHS segment had not yet begun full operations, generating limited test market sales.  ●Diagnostics/Corporate  The Diagnostics/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. In addition, the Diagnostics/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.  18   NOTE: The financial information of Parallax Health Sciences, Inc., and its wholly-owned subsidiaries, Parallax Diagnostics, Inc., Parallax Health Management, Inc., and Parallax Behavioral Health, Inc., is provided below on a consolidated basis, unless otherwise indicated. All significant intercompany accounts and transactions have been eliminated.  Balance Sheet  As of September 30, 2018, the Company had total assets of $1,394,565 compared with total assets of $1,752,036 at December 31, 2017. The decrease in total assets of $357,471 is attributable to an increase in cash of $132, a decrease in accounts receivable, net of allowance for doubtful accounts of $3,275, a decrease in current assets held for sale of $51,961, a decrease in intangible assets of $10,000, $90,465 of amortization related to intangible assets, and a decrease in noncurrent assets held for sale of $201,902.  As of September 30, 2018, the Company had total liabilities of $6,129,031 compared with total liabilities of $28,930,119 at December 31, 2017. The decrease in total liabilities of $22,801,088 is attributable to a decrease in accounts payable and accrued expenses of $1,032,559, an increase in convertible notes payable of $500,000, an increase in related party payables of $150,822, a decrease in license fees payable of $480,000, an increase in royalties payable of $100,000, a decrease in unsecured notes payable of $95,975, an increase in related party convertible notes payable of $37,750, repayments of secured notes payable of $5,451, a decrease in unamortized discount of $3,145,000, a decrease in long-term secured promissory notes of $20,500,000, and a decrease in liabilities subject to compromise of $4,620,735.   Results of Operations  The three and nine months ended September 30, 2018, compared to the three and nine months ended September 30, 2017  For the three months endedFor the nine months endedSeptember 30, 2018September 30, 2017September 30, 2018September 30, 2017Revenue$990$30,139$10,749$70,641Cost of sales$5,230$41,374$15,507$110,127Gross profit (loss)$(4,240)$(11,235)$(4,758)$(39,486)General and administrative expenses$2,102,712$2,319,992$5,202,944$3,161,740Operating loss$(2,106,952)$(2,331,227)$(5,207,702)$(3,201,226)Gain on disposal of subsidiary$5,079,416$––$5,079,416$––Gain on extinguishment of debt$22,931,148$––$22,931,148$––Discount amortization$(35,000)$(1,315,000)$(2,775,000)$(3,935,000)Interest expense, net of income$(231,490)$(265,946)$(950,601)$(713,510)Net income (loss) – continuing operations$25,636,936$(3,912,173)$19,077,261$(7,849,736)Net income (loss)  – discontinued operations$93,773$(794,440)$(824,398)$(2,721,269)Net income (loss)$25,730,709$(4,706,613)$18,252,863$(10,121,005)  Revenue  Revenue in the amount of $990 for the three months ended September 30, 2018, consists contract fees and equipment sales related to the Company’s remote health care systems in the amount of $540, and subscription fees related to its behavioral health services in the amount of $450.  Revenue in the amount of $30,139 for the three months ended September 30, 2017, consists of contract fees and equipment sales related to the Company’s remote health care systems .  Revenue in the amount of $10,749 for the nine months ended September 30, 2018, consists contract fees and equipment sales related to the Company’s remote health care systems in the amount of $9,399, and subscription fees related to its behavioral health services in the amount of $1,350.  Revenue in the amount of $70,641 for the nine months ended September 30, 2017, consists of  contract fees and equipment sales related to the Company’s remote health care systems .  The Company’s behavioral health services segment had not yet begun full operations, generating limited test market sales.  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 $5,230 for the three months ended September 30, 2018, consists of equipment and other costs related to the Company’s remote health care systems.  Costs of sales in the amount of $41,374 for the three months ended September 30, 2017, consists of equipment and other costs related to the Company’s remote health care systems.  Costs of sales in the amount of $15,507 for the nine months ended September 30, 2018, consists of equipment and other costs related to the Company’s remote health care systems.  Costs of sales in the amount of $110,127 for the nine months ended September 30, 2017, consists of equipment and other costs related to the Company’s remote health care systems.  The Company’s behavioral health services segment had not yet begun full operations, generating limited test market sales.  The Company has not yet launched its major business activity, which is medical diagnostics and testing.  19   General and Administrative Expenses  For the three months endedFor the nine months endedVarianceSeptember 30, 2018September 30, 2017September 30, 2018September 30, 20173-month9-monthLegal, accounting, and management services$785,766$119,250$1,543,900$320,522$666,516$1,223,378Stock compensation/stock option amortization1,069,5612,004,1013,103,3902,177,608(934,540)925,782Salaries and fees, and related taxes and benefits137,056152,654224,581550,432(15,598)(325,851)Depreciation and amortization29,82130,15490,46552,733(333)37,732Rent expense-office16,8002,03753,5576,11114,76347,446Travel, meals and entertainment15,2382,42642,24419,56212,81222,682Office supplies and miscellaneous expenses48,4709,370144,80734,77239.100110,035Total general and administrative expenses$2,102,712$2,319,992$5,202,944$3,161,740$(217,280)$2,041,204  During the three months ended September 30, 2018, the Company incurred operating expenses totaling $2,102,712, compared with $2,319,922 for the three months ended September 30, 2017. The decrease in operating expenses of $217,280 is attributable to:  ●an increase in legal, accounting and management fees of $666,516, due to an increase in legal fees of $351,958, which includes a $250,000 reserve established for future legal expenses; an increase in accounting and audit fees of $1,250; and an increase in management fees of $249,117 resulting from changes in management and allocation of managerial resources; and an increase in miscellaneous management fees of $64,191 resulting from an increase in consultants; and ●a decrease in stock compensation/stock option amortization of $934,540 primarily due to an increase in amortization expense of $97,511 resulting from stock options granted in the current period; a decrease in amortization expense of $270,851 resulting from stock options granted in prior years; a decrease in deferred stock compensation amortization of $173,116 resulting from stock awards granted in prior years; stock compensation of $187,500 for stock options exercised in the current period; and stock awards granted in the prior year resulting in a decrease in stock compensation expense of $775,584; and ●a decrease in salaries and fees, and related taxes and benefits of $15,598, primarily due to an increase in salaries of $45,014, a decrease in related payroll taxes of $5,604; a decrease in employee benefits of $19,753 resulting from changes in benefits; a decrease in penalties on unpaid payroll and state income taxes of $7,255; and a decrease in miscellaneous fees for outside services in the amount of $28,000 resulting from a cancellation of contracted services; and ●a decrease in depreciation and amortization of $333, primarily due to a minor difference in amortization expense; and ●an increase  in rent expense of $14,763 due to a change in office space and allocation of office resources; and ●an increase in travel, meals and entertainment of $12,812, primarily due to an increase in travel costs of $7,950; and a decrease in meals and entertainment of $4,862; and ●an increase in office supplies and miscellaneous expenses of $39,100, due to an increase in automobile expenses of $12,984, bank charges of $1,522, computer and internet expenses of $5,353, product development costs of $11,383 related to the Company’s intellectual property rights; storage and moving costs of $3,169 primarily related to the relocation of corporate officers; telephone expense of $1,718 and other general office expenses of $2,971.  During the nine months ended September 30, 2018, the Company incurred operating expenses totaling $5,202,944, compared with $3,161,740 for the nine months ended September 30, 2017. The increase in operating expenses of $2,041,204 is attributable to:  ●an increase in legal, accounting and management fees of $1,223,378, due to an increase in legal fees of $372,874, which includes a $250,000 reserve established for future legal expenses; a decrease  in accounting and audit fees of $150,386 due to a change in auditors, resulting in 2016 and 2017 audit fees charged in the prior period compared to only current year charges in the current period; and an increase in management fees of $880,199 resulting from changes in management and allocation of managerial resources; and an increase in miscellaneous management fees of $120,691 resulting from an increase in consultants; and ●an increase in stock compensation/stock option amortization of $925,782 primarily due to an increase in amortization expense of $277,874 resulting from stock options granted in the current period; a decrease in amortization expense of $329,071 resulting from stock options granted in prior years; an increase in deferred stock compensation amortization of $163,738 resulting from stock awards granted in prior years; an increase in stock compensation of $201,741 for stock options exercised in the current period; stock awards granted in the prior year resulting in a decrease in stock compensation expense of $765,000; and stock awards granted in the current year resulting in an increase in stock compensation expense of $1,376,500; and ●a decrease in salaries and fees, and related taxes and benefits of $325,851, primarily due to a decrease in salaries of $161,449, and related payroll taxes of $84,355, resulting from a reduction in staff; an increase in employee benefits of $7,444 resulting from changes in benefits; a decrease in penalties on unpaid payroll and state income taxes of $11,991; and a decrease in miscellaneous fees for outside services in the amount of $75,500 resulting from a cancellation of contracted services; and ●an increase in depreciation and amortization of $37,732, primarily due to  the acquisition of intangible assets, resulting in an increase in amortization expense; and ●an increase  in rent expense of $47,446 due to a change in office space and allocation of office resources; and ●an increase in travel, meals and entertainment of $22,682, primarily due to an increase in travel costs of $705; and a decrease in meals and entertainment of $1,977; and an increase in relocation costs of $20,000;  and ●an increase in office supplies and miscellaneous expenses of $110,035, due to an increase in automobile expenses of $12,918, computer and internet expenses of $8,337, product development costs of $50,419 related to the Company’s intellectual property rights; storage and moving costs of $29,059 primarily related to the relocation of corporate officers; telephone expense of $5,550; and other general office expenses of $3,752.  Net Loss  During the nine months ended September 30, 2018, the Company generated net income from continuing operations of $19,077,261, compared with a net loss of $7,849,736 for the nine months ended September 30, 2017. The increase in net income of $26,926,997 is primarily attributable to a decrease in revenue of $59,892, a decrease in in cost of goods sold of $94,620, an increase in general and administrative expenses of $2,041,204, a gain on the disposal of subsidiary of $5,079,416, a gain on the extinguishment of debt of $22,931,148, a decrease in discount amortization of $1,160,000; and an increase in interest expense of $237,091. Net Loss  During the nine months ended September 30, 2018, the Company generated net income of $7,494,356, compared with a net loss of $7,849,736 for the nine months ended September 30, 2017. The increase in net income of $15,344,092 is primarily attributable to a decrease in revenue of $59,892, a decrease in in cost of goods sold of $94,620, an increase in general and administrative expenses of $1,962,956, a gain on the disposal of subsidiary of $5,079,416, a gain on the extinguishment of debt of $152,867, a decrease in discount amortization of $1,160,000; and an increase in interest expense of $236,905.  Liquidity and Capital Resources  Working CapitalIncreaseAt September 30, 2018At December 31, 2017(Decrease)Current Assets$315$3,458$(3,143)Current Liabilities4,037,2384,418,915(381,677)Working Capital (Deficit)$(4,036,923)$(4,415,457)$378,534  As of September 30, 2018, the Company had cash in the amount of $39,277 compared to $183 as of December 31, 2017.  The Company had a working capital deficit of $4,036,923 as of September 30, 2018, compared to a working capital deficit of $4,415,457 as of December 31, 2017. The decrease in working capital deficit of $378,534 is primarily attributable to an increase in cash of $132, a decrease in accounts receivable, net of allowance, of $3,275, a decrease in current assets held for sale of $51,961, a decrease in accounts payable and accrued expenses of $1,032,559, proceeds from convertible promissory notes of $825,000, repayments of convertible promissory notes of $50,000; conversion of convertible promissory notes of $275,000, and an increase in related party payables of $150,882.  20   Cash FlowsFor the nine months endedIncreaseSeptember 30, 2018September 30, 2017(Decrease)Net cash used by operating activities$(286,269)$(1,102,287)$816,018)Net cash used by investing activities––––––Net cash used by financing activities1,110,7991,092,37718,422Net cash provided by continuing operations824,530(9,910)834,440Net cash used by discontinued operations(824,398)(38,334)(786,064,)Increase (decrease) in cash$132$(48,224)$48,376  Cash Flows from Operating Activities  During the nine months ended September 30, 2018, the Company used $286,269 of cash flow for operating activities compared with $1,102,287 for the nine months ended September 30, 2017. The increase in cash used by operating activities of $816,018 is primarily attributable to an increase in the net income of $26,926,997; increases in depreciation and amortization of $37,732, stock compensation/stock option amortization of $925,782, allowance for bad debt of $236; a decrease in discount amortization of $1,160,000; a gain on the disposal of subsidiary of $5,079,416, a gain on the extinguishment of debt of $22,931,148; increases in the changes in in accounts receivable of $10,872, employee advances of $2,000, accounts payable and accrued expenses of $962,963, and related party payables of $1122,690; and a decrease in the changes in prepaid expenses of $2,690.  Cash Flows from Investing Activities  During the nine months ended September 30, 2018, and September 30, 2017, the Company used no cash flow for investing activities.  Cash Flows from Financing Activities  During the nine months ended September 30, 2018, the Company was provided with $1,110,799 of cash flow from financing activities, compared with $1,092,377 for the nine months ended September 30, 2017.  The increase in cash flows provided by financing activities of $18,422 is attributable to a decrease in repayments of notes payable of $52,172; an increase in proceeds from convertible notes payable of $129,000; an increase in repayments of convertible notes payable of $50,000; a decrease in proceeds form related party convertible notes payable of $300,000, a decrease in proceeds from the issuance of preferred stock of $150,000, and an increase in proceeds from the issuance of common stock of $37,250.  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 nine months ended September 30, 2018, the Company received $341,250 in funds from the issuance of preferred and common shares or other equity instruments, compared to $154,000 during the nine months ended September 30, 2017.  As of September 30, 2018, related parties are due a total of $1,409,299, consisting of $607,092 in accrued compensation owed to officers; $172,647 in cash advances from officers and beneficial owners to the Company for operating expenses; and $628,850 in convertible promissory notes.  During the nine months ended September 30, 2018, interest on related party notes payable in the amount of $44,814 was expensed, of which $798 was paid to the note holders in cash, and $37,750 was converted to principal.  As of September 30, 2018, a total of $86,123 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.  On or about August 1, 2018, the Company established a private placement equity offering for the purchase of Series C convertible preferred stock (the “Series C Shares”).  The offering provides for, among other thing, the purchase of Series C Shares at a price of $5.00 per share, with a minimum unit of 20,000 shares, or $100,000.  All Series C Shares are convertible into common stock under the following terms: if converted in the first year, the Series C Shares are convertible into common stock at a conversion rate of $0.12 per share, or a ratio of 41.67 shares of common stock for each Series C Share held (41.67:1) (“Conversion Ratio”).  The shares also include warrants to purchase common stock for a period of 3 years at an exercise price of $0.25 per share, the number of warrants of which is determined at 50% of the prevailing Conversion Ratio. The holders of Series C Shares will be entitled, but not obligated, to convert any or all of their Series C Shares including accrued dividends into the following at the lower of either $0.12 per share or a 33% discount; (a) the company’s next primary offering or (b) any new equity linked financing within the next 24 months of the closing date of the offering.  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.  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 $15,308,717, 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 unaudited interim consolidated 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 unaudited interim consolidated 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.  21   Critical Accounting Policies  The discussion and analysis of the Company’s financial condition and results of operations are based upon the Company’s unaudited interim consolidated 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, 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 was 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.  As of September 30, 2018, 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 three-month period ended September 30, 2018, 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.  22   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 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 December 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 December 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 $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, 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 was amortized over the term of the promissory note.  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.  23   ●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 sought to discharge approximately $5 million of liabilities owed to various parties, and intercompany loans in excess of $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 the Superior Court of California, County of Los Angeles for an amount of $996,622 in connection with RoxSan’s merchant financing loan.  On or about June 27, 2017, American Express Travel Related Services Company, Inc. filed suit against RoxSan Pharmacy, Inc. in the Supreme Court of New York, County of New York in the amounts of $153,500 and $273,500 in connection with RoxSan’s credit card obligations.  On July 31, 2017, and August 16, 2017, the Company entered into stipulation and settlement agreements for these matters to make payments in lieu of further litigation. On May 10, 2018, American Express received a final judgement for the credit card obligations from the Supreme Court of New York in the amount of $387,245 representing the $427,000 balance plus court costs of $245, less $40,000 in payments made by the Company under the 2017 stipulation and settlement agreements.  All five (5) 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.  ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS  On July 28 2018, in connection with certain senior secured promissory notes, the Company issued 150,000 shares of its restricted common stock to the note holders as a form of interest.  The shares were valued at $15,000.  In August 2018, in connection with certain senior secured promissory notes, the Company issued 440,000 shares of its restricted common stock to the note holders as a form of interest.  The shares were valued at $44,000.  On August 10, 2018, in connection with the Company’s Series C Convertible Preferred Stock (“Series C Shares”) equity offering, an accredited investor was issued 20,000 Series C Shares at a price of $5.00 per share, for cash in the amount of $100,000.  On August 11, 2018, in connection with the Company’s Series C Shares equity offering, an accredited investor was issued 40,000 Series C Shares at a price of $5.00 per share, for cash in the amount of $200,000.  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.  On August 13, 2018, in connection with the exercise of certain employee stock options, the Company issued 1,071,430 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 $187,500.  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.  On August 28, 2018, in connection with certain convertible debt in the amount of $20,000 and accrued interest of $2,000, the Company issued 220,000 shares of its restricted common stock at a conversion rate of $0.10 per share.  On September 28 2018, in connection with certain senior secured promissory notes, the Company issued 150,000 shares of its restricted common stock to the note holders as a form of interest.  The shares were valued at $15,000.  On September 30, 2018, in connection with certain convertible debt in the amount of $50,000, the Company issued 625,000 shares of its restricted common stock at a conversion rate of $0.08 per share.  As a result, $49,375 was recorded to paid in capital.  On September 30, 2018, in connection with the Company’s Series C Shares equity offering, three officers of the Company were issued an aggregate of 90,000 Series C Shares at a price of $5.00 per share, in exchange for debt in the principal sum of $450,000.  For additional information on the Company’s Series C Convertible Preferred Stock equity offering, please refer to the section Future Financing, contained within Part I, Item 2 of this report.  Exemption From Registration. The shares of Common Stock referenced herein were issued in reliance upon an exemption from registration afforded either under Section 4(2) of the Securities Act for transactions by an issuer not involving a public offering, or Regulation D promulgated thereunder, or Regulation S for offers and sales of securities outside the U.S.  ITEM 3. DEFAULTS UPON SENIOR SECURITIES  None.  ITEM 4. MINE SAFETY STANDARDS  Not Applicable.  ITEM 5. OTHER INFORMATION  None.  24   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.  25     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: November 14, 2018/s/ Paul R. ArenaPaul R. ArenaChief Executive OfficerDated: November 14, 2018/s/ Calli R. BucciCalli R. BucciChief Financial Officer  26