UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, 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 ended:  March 31, 2015

or

[  ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________________ to ____________________

Commission file number:  000-52422

Hasco Medical, Inc.

(Exact name of registrant as specified in its charter)

Florida	65-0924471
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

15928 Midway Road, Addison, TX	75001
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:  (214) 302-0930

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 past 90 days.

[√] Yes    [  ] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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 (or for such shorter period that the registrant 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:

Large accelerated filer	[  ]	Accelerated filer	[  ]
Non-accelerated filer	[  ] (Do not check if smaller reporting company)	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 registrant’s classes of common stock, as of the latest practicable date:  

1,006,762,163 shares of common stock were issued and outstanding as of April 20, 2015.

Hasco Medical, Inc.

FORM 10-Q

TABLE OF CONTENTS

Index

PART I – FINANCIAL INFORMATION		4
ITEM 1.	FINANCIAL STATEMENTS.	4
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.	14
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.	18
ITEM 4.	CONTROLS AND PROCEDURES.	19
PART II – OTHER INFORMATION		20
ITEM 6.	EXHIBITS	20
SIGNATURES		21

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FORWARD–LOOKING STATEMENTS

This Report on Form 10-Q (including the section regarding Management’s Discussion and Analysis of Financial Condition and Results of Operations) and any documents incorporated by reference herein or therein may contain “forward-looking statements”. Forward-looking statements reflect management’s current view about future beliefs, plans, objectives, goals or expectations. When used in such documents, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,” or the negative of these terms and similar expressions as they relate to us or our management identify forward-looking statements. Such statements include, but are not limited to, statements relating to our business goals, business strategy, our future operating results and liquidity and capital resources outlook. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Our actual results may differ materially from those contemplated by these forward-looking statements. They are neither statements of historical fact nor guarantees or assurance of future performance.  Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events.

Important factors that could cause actual results to differ materially from those in the forward-looking statements include, without limitation, a decline in general economic conditions nationally and internationally; decreased demand for our products and services; a change in the market acceptance of our products and services; our ability to protect our intellectual property rights; the impact of any infringement actions or other litigation brought against us; competition from other providers and products; our ability to develop and commercialize new and improved products and services; our ability to raise capital to fund continuing operations; changes in government regulation; our ability to complete customer transactions and capital raising transactions; and other factors (including the risks contained in the sections of our annual report on Form 10-K entitled “Risk Factors”) relating to our industry, our operations and results of operations or any businesses that may be acquired by us. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.

We file reports with the Securities and Exchange Commission (“SEC”). Our electronic filings with the United States Securities and Exchange Commission (including our Annual Reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and any amendments to these reports) are available free of charge on the Securities and Exchange Commission’s website at http://www.sec.gov. You can also read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. You can obtain additional information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us.

The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this annual report and other reports we have filed or will file with the SEC and which are incorporated by reference herein, including statements under the caption “Risk Factors” and “Forward-Looking Statements”.  Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these.

OTHER PERTINENT INFORMATION

When used in this annual report, the terms “Hasco,” “the Company,” ” we,” “our,” and “us” refer to Hasco Medical, Inc., a Florida corporation, and our subsidiaries.  “Management” refers to the executive officers of Hasco Medical, Inc. and any of its subsidiaries.

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PART I – FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

Hasco Medical, Inc. & Subsidiaries

Consolidated Balance Sheets

	March 31,
	2015			December 31,
	(unaudited)			2014
Assets
Current assets
Cash	$	210,791		$	509,924
Accounts receivable, net of allowance for doubtful accounts of $379,453 and $752,624, respectively		6,402,944			9,006,558
Inventory, net of inventory reserve of $106,449 and $109,993 respectively		15,668,718			16,641,806
Deferred tax asset, short term		448,877			448,877
Current portion of note receivable		25,525			25,515
Prepaid expenses and other current assets		776,109			603,699
Total current assets		23,532,964			27,236,379
Property & equipment, net of accumulated depreciation of $2,002,267 and $1,940,549, respectively		1,933,196			2,041,141
Intangible assets, net of accumulated depreciation of $37,774 and $31,108, respectively		6,146,452			6,153,118
Deferred tax asset, long term		194,669			194,669
Note receivable, net of current portion		80,086			88,631
Other non-current assets		599,625			591,609
Total Assets	$	32,486,992		$	36,305,547
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable and accrued expenses	$	2,092,768		$	2,842,626
Cash overdraft		187,089			—
Customer deposits and deferred revenue		865,331			465,167
Line of credit		3,918,885			2,738,878
Note payable - floor plan		11,704,519			15,584,949
Obligation under capital leases		574,800			434,142
Current portion of notes payable		389,989			402,546
Current portion note payable, related party		364,659			359,579
Other current liabilities		1,761,460			2,456,637
Total current liabilities		21,859,500			25,284,524
Obligation under capital leases, net of current portion		604,081			870,176
Notes payable, net of current portion		3,550,136			3,667,125
Notes payable to related party, net of current portion		1,471,823			1,576,076
Total liabilities		27,485,540			31,397,901
Stockholders’ Equity
Preferred stock, $0.001 par value, 3,000,000 shares authorized, none issued and outstanding		—			—
Common stock, $0.001 par value, 2,000,000,000 shares authorized; and 1,009,619,306 and 1,004,210,973 shares issued and outstanding, respectively		1,009,619			1,004,210
Additional paid-in capital		6,959,216			6,875,350
Accumulated deficit		(2,967,383	)		(2,971,914	)
Total stockholders’ equity		5,001,452			4,907,646
Total Liabilities and Stockholders’ Equity	$	32,486,992		$	36,305,547

See accompanying notes to unaudited consolidated financial statements

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Hasco Medical, Inc. & Subsidiaries

Consolidated Statements of Operations

(unaudited)

	For the Three Months ended March 31,
	2015			2014
Product sales	$	15,786,396		$	16,588,280
Rental revenue		399,325			245,005
Service and other		3,276,024			3,852,318
Total net revenues		19,461,745			20,685,603
Cost of sales		14,846,915			15,425,817
Gross profit		4,614,830			5,259,786
Operating expenses:
Selling and marketing		868,478			953,798
General and administrative		3,421,383			3,415,207
Amortization and depreciation		224,086			234,327
Total operating expenses		4,513,947			4,603,332
Income from operations		100,883			656,454
Other income (expense)		176,649			20,989
Interest expense		(332,822	)		(302,838	)
Total other income (expense)		(156,173	)		(281,849	)
Income (loss) from continuing operations before income taxes		(55,290	)		374,605
Provision (benefit) for income taxes		(59,821	)		170,218
Income from continuing operations		4,531			204,387
Loss from discontinued operations, net of income tax		—			(10,040	)
Net income		4,531			194,347
Earnings per share:
Basic and dilutive-continuing operations	$	—		$	—
Basic and dilutive-discontinued operations	$	—		$	—
Weighted average shares outstanding:
Basic and dilutive		1,009,024,984			994,619,535

See accompanying notes to unaudited consolidated financial statements

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Hasco Medical, Inc. & Subsidiaries

Consolidated Statements of Cash Flows

(unaudited)

	For the Three months Ended March 31,
	2015			2014
Cash Flows from operating activities:
Net income	$	4,531		$	194,347
Adjustment to reconcile net income to net cash provided by operations:
Depreciation and amortization		224,086			234,327
Stock based compensation		89,275			34,607
Loss on disposal of property and equipment		13,812			—
Changes in assets and liabilities:
Accounts receivable		2,603,614			364,811
Inventory		973,088			590,726
Prepaid expenses		(172,410	)		(149,592	)
Other assets		(8,016	)		18,035
Accounts payable and accrued expenses		(749,858	)		512,254
Customer deposits and deferred revenue		400,164			872
Other liabilities		(695,177	)		381,162
Net cash provided by operating activities		2,683,109			2,181,549
Cash Flows from investing activities:
Purchase of property and equipment		(123,287	)		(44,875	)
Proceeds from note receivable		8,535			—
Net cash used in investing activities		(114,752	)		(44,875	)
Cash Flows from financing activities:
Proceeds from floor plan financing		8,751,989			10,751,664
Repayments of floor plan financing		(12,632,419	)		(10,271,136	)
Proceeds from line of credit		8,322,572			—
Repayments of line of credit		(7,142,565	)		(1,374,333	)
Repayments of note and loan payables		(129,546	)		(121,665	)
Repayments of loans payables – related party		(99,173	)		(83,557	)
Principal payments under capital lease obligations		(125,437	)		(103,384	)
Cash overdraft		187,089			(175,572	)
Net cash used in financing activities		(2,867,490	)		(1,377,983	)
Net change in cash		(299,133	)		758,691
Cash at beginning of period		509,924			150,313
Cash at end of period	$	210,791		$	909,004
Supplemental disclosures of cash flow information
Cash paid for:
Interest	$	332,822		$	281,914
Income Taxes	$	—		$	170,218
Non-Cash transactions:
Loan payments made through issuance of common stock	$	—		$	42,426
Vehicles purchased through capital lease	$	—		$	201,426

See accompanying notes to unaudited consolidated financial statements

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Hasco Medical, Inc. & Subsidiaries

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

Hasco Medical, Inc., formerly BBC Graphics of Palm Beach Inc., was incorporated in May 1999 under the laws of the State of Florida. Through a series of transactions, BBC Graphics of Palm Beach, Inc. (at the time an inactive corporation) became Hasco Medical, Inc. (Hasco).  Concurrently, Hasco Medical, Inc. acquired Southern Medical & Mobility.  In May, 2011, Hasco acquired Mobility Freedom, Inc. and Wheelchair Vans of America.  In November, 2011, Hasco acquired Certified Medical Systems II (Certified Medical).  A more detailed description of these transactions is contained in our 10-K filing with the Securities and Exchange Commission for the period ended December 31, 2013. On September 1, 2012, Hasco Medical, Inc. completed the acquisition of Ride-Away Handicap Equipment Corp., a closely-held New Hampshire corporation (Ride-Away).  On September 4, 2013, Hasco Medical, Inc. completed the acquisition of Auto Mobility Sales, Inc. (Auto Mobility).

Services and Products

Historically, our operations were focused on the provision of a diversified range of home health care services and products.  Following our May 2011 acquisition of Mobility Freedom, our March 2012 acquisition of Ride-Away and our September 2013 acquisition of Auto Mobility Sales, our operations are conducted within one major business unit:

· Modified Mobility Vehicles – conducts sales of handicap accessible vans, parts and services as well as the rental of such vehicles.  This segment consists of Ride-Away Handicap Equipment Corp. which has thirteen (13) locations from Maine to Florida, Mobility Freedom Inc. which has five (5) locations in Florida and includes “Wheelchair Vans of America” operating our van rental operations, and Auto Mobility Sales, Inc., which has two (2) locations in Florida.

With our acquisitions of Mobility Freedom, Ride-Away, and Auto Mobility Sales as well as the sale of Certified Medical, our Modified Mobility Vehicles segment comprises 100% of our consolidated revenues.  As a consequence and for purposes of consolidated financial statement presentation, our Home Health Care segment is no longer materially relevant when considering the consolidated financial statements as a whole.

Our corporate headquarters and principal corporate operations are conducted in Addison, Texas, a northern suburb of Dallas, Texas. We also house a portion of our corporate operations in Londonderry, New Hampshire.  Hasco Medical Inc. is a Florida corporation.

Modified Mobility Vehicles

Ride-Away, Mobility Freedom and Auto Mobility serve individuals with physical limitations that need specialty equipment in order to safely operate their vehicle.  We also provide products for families and care-givers with transport requirements for those under care. In certain circumstances both the van itself and its specialty equipment is paid for directly by a federal or state agency.  For the periods ended March 31, 2015 and 2014, approximately 18% and 24%, respectively, of the Modified Mobility Vehicles segments revenue was derived from veterans receiving benefits from the United States Department of Veterans Affairs (the “VA”).  Mobility Freedom and Ride-Away are both a VA and Vocational Rehabilitation (VR) certified vendors in all the states in which we operate. Ride-Away has thirteen corporate owned stores which are located in Beltsville, MD, East Hartford, CT, Essex Junction, VT, Gray, ME, Londonderry, NH, Norfolk, VA, Norristown, PA, North Attleboro, MA, Norwood, MA, Richmond VA, Tampa, FL Brooklyn, NY and Parkville, MD.  Mobility Freedom has five corporate owned stores located in Orlando, Largo, Clermont, Bunnell and Ocala, Florida.  Auto Mobility Sales has locations in Fort Lauderdale and Lake Worth, Florida.

Wheelchair Vans of America specializes in renting conversion vans to disabled individuals, and is located in Orlando, Florida. Our rental operations compliment the retail products we provide through our Mobility Freedom, Auto Mobility Sales and Ride-Away subsidiaries.

Discontinued Operations

During the second quarter of 2014, the Company initiated a plan to sell the division of Certified Medical Systems II, Inc. These operations were originally reported in the home health care segment. The Company assessed the fair value of the operations at the time of the disposition and sale of the entity.  Management has also determined that the amount of assets continued to be realized is immaterial and therefore not separately disclosed.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal and recurring accruals) necessary to present fairly the consolidated financial position as of March 31, 2015 and the consolidated statements of operations, and cash flows for the three month periods ended March 31, 2015 and  2014 of Hasco Medical Inc. (“Hasco” or the “Company”).

The significant accounting policies followed by the Company are set forth in Note 1 to the Company’s consolidated financial statements in the December 31, 2014, Hasco Medical Inc. Annual Report on Form 10-K, which should be read in conjunction with these financial statements.  The results of operations for the periods ended March 31, 2015 are not necessarily indicative of the result to be expected for the full year.

The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”) and present the financial statements of the Company and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.  The consolidated entities are:

· Hasco Medical, Inc.;

· Mobility Freedom, Inc.;

· Ride Away Handicapped Equipment, Inc.;

· Auto Mobility Sales, Inc.;

· Certified Medical Systems II, Inc.; (discontinued operations)

Use of Estimates

Management’s Discussion and Analysis or Plan of Operations is based upon our consolidated financial statements that have been prepared in accordance with accounting principles generally accepted in the United States of America. Management bases its use of estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ significantly from these estimates under different assumptions or conditions.

Revenue Recognition

The Company recognizes revenue in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 605, “Revenue Recognition”, and with the guidelines of the Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition”. Under SAB 104, four conditions must be met before revenue can be recognized: (i) there is persuasive evidence that an arrangement exists, (ii) delivery has occurred or service has been rendered, (iii) the price is fixed or determinable, and (iv) collection is reasonably assured.  Revenues consist of the sales of new and used vehicles, sales of parts and automotive services, commissions from finance and insurance products, and vehicle rentals.  The Company recognizes revenue in the period in which products are sold or the services are rendered and only if there is reasonable expectation of collection.  For vehicles, a sale is recorded only when title has transferred and the vehicle has been delivered.  Rebates received from manufacturers are recorded as a reduction of the costs of each vehicle and recognized upon the sale of the vehicle or when earned under a specific manufacturer program.

In certain instances, customers place deposits on vehicles or special order parts for service and conversions.  Deposits are not recognized as revenue until the related vehicle or part is sold.

The Company arranges financing for customers through various institutions and receives financing fees based on the difference between the loan rates charged to customers and wholesale financing rates set by the financing institution.  The Company also receives fees from the sale of extended service contracts, warranties and vehicle security systems.

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Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company places its cash with high credit quality financial institutions. The Company’s accounts at these institutions are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000.  From time to time and for the three month periods ended March 31, 2015 and December 31, 2014, the Company reached bank balances exceeding the FDIC insurance limit. To reduce its risk associated with the failure of such financial institution, the Company evaluates, at least annually, the rating of the financial institution in which it holds deposits.

Related Parties

Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management, and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all related party transactions. All transactions shall be recorded at fair value of the goods or services exchanged. Property purchased from a related party is recorded at the cost to the related party and any payment to or on behalf of the related party in excess of the cost is reflected as a distribution to related party.

Earnings per Share

Earnings per common share are calculated under the provisions of ASC 260. The accounting standard requires the Company to report both basic earnings per share, which is based on the weighted-average number of common shares outstanding, and diluted earnings per share, which is based on the weighted-average number of common shares outstanding plus all potential dilutive common shares outstanding. The computation of diluted net loss per share does not include dilutive common stock equivalents in the weighted average shares outstanding if they would be anti-dilutive. There were no stock options which could potentially dilute earnings per share for the periods ended March 31, 2015 and 2014, respectively.

The following table sets forth the computation of basic and diluted income per share:

	For The Three Months ended March 31,
		2015		2014
Net income	$	4,531	$	194,347
Basic weighted average outstanding shares of common stock		1,009,024,984		994,619,535
Diluted weighted average common stock		1,009,024,984		994,619,535
Earnings per share:
Basic and diluted	$	0.00	$	0.00

The number of outstanding shares of our common stock as of March 31, 2015 was 1,009,619,306.

Recently Issued Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our financial position or results of operations upon adoption.

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NOTE 2 – ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following:

	March 31, 2015 (unaudited)			%	December 31, 2014			%
Trade receivables	$	2,497,182		36.8	$	4,457,010		45.7
Government receivables		4,285,215		63.2		5,302,172		54.3
		6,782,397		100.0		9,759,182		100.0
Less: allowances for doubtful accounts		(379,453	)			(752,624	)
Total	$	6,402,944			$	9,006,558

Trade receivables represent amounts due for van sales, van rentals, and medical supplies that have been delivered or sold. Government receivables represent receivables from the VA and other Government bodies related to van sales and rentals listed above.  The Company does not bill Medicare or Medicaid for any vehicle-related sales or service.

NOTE 3 – INVENTORY

Inventory consists of the following:

	March 31, 2015 (unaudited)			December 31, 2014
Vehicles	$	14,267,837		$	15,254,709
Work in Process		398,804			474,850
Equipment and supplies		1,108,526			1,022,240
Inventory reserve		(106,449	)		(109,993	)
	$	15,668,718		$	16,641,806

NOTE 4 – PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

		March 31,
	Estimated	2015			December 31,
	Life	(unaudited)			2014
Building improvements	Varies	$	955,602		$	949,478
Office furniture and equipment	5 years		265,207			306,331
Rental equipment	13-36 months		623,833			581,245
Vehicles	5 years		231,060			161,786
Capitalized leases	Varies		1,859,761			1,982,850
Total			3,935,463			3,981,690
Accumulated depreciation			(2,002,267	)		(1,940,549	)
Net		$	1,933,196		$	2,041,141

For the three months ended March 31, 2015 and 2014 depreciation expense amounted to $217,420 and $223,296 respectively.

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NOTE 5 – INTANGIBLE ASSETS

Intangible assets consist of the following:

		March 31,
	Estimated	2015			December 31,
	Life	(unaudited)			2014
Goodwill related to acquisition of Mobility Freedom	Indefinite		1,641,303			1,641,303
Goodwill related to acquisition of Ride-Away	Indefinite		1,888,710			1,888,710
Trade name related to acquisition of Mobility Freedom	Indefinite		400,000			400,000
Trade name related to acquisition of Ride-Away	Indefinite		990,000			990,000
Primary market area related to acquisition of Mobility Freedom	Indefinite		280,000			280,000
Primary market area related to acquisition of Ride-Away	Indefinite		470,000			470,000
Goodwill related to acquisition of Auto Mobility Sales	Indefinite		284,213			284,213
Primary market area related to acquisition of Auto Mobility Sales	Indefinite		150,000			150,000
Non-compete agreements area related to acquisition of Auto Mobility Sales	3 years		80,000			80,000
Subtotal			6,184,226			6,184,226
Accumulated amortization			(37,774	)		(31,108	)
Total		$	6,146,452		$	6,153,118

For the three months ended March 31, 2015 and 2014 amortization expense was $6,666 and $11,031 respectively.

NOTE 6 – NOTES PAYABLE AND DEBT

Revolving Line of Credit

On October 31, 2013, the Company renewed its Commercial Note agreement with a bank for advances of funds for working capital purposes under a line of credit arrangement for $8,000,000 with an interest calculation of the prime rate plus 0.25% which reflected an interest rate of 3.50% as of March 31, 2015.  The agreement is secured against all property of the borrowers assets, on demand with an annual review as of December 31, 2014 and expires on October 31, 2016.  Payments due are interest only and the interest rate varies based on the Company’s leverage ratio.  The balance of the line of credit was $3,918,885 at March 31, 2015 and $2,738,878 at December 31, 2014.

Acquisitions Term Loan Draw Facility

On February 27, 2015, the Company contracted with a bank for a term loan draw facility to be used solely as an acquisitions line of credit.  Borrowing on this agreement is up to $1,000,000 for up to 50% of the acquisition amount of any US company in the Modified Mobility Vehicle industry.  These draws will be charged 6% interest per annum, at the one (1) year anniversary date of each given draw amount, a 48 month term loan is then granted at the same 6% interest amount and the facility is renewed to the full $1,000,000 availability.  This agreement expires on March 27, 2020.

Note Payable – Floor Plan

The Company has a floor plan line of credit with General Electric Credit Corporation with a maximum borrowing capacity of $11,250,000 for Ride-Away, $3,850,000 for Mobility Freedom, and $1,750,000 for Auto Mobility Sales at March 31, 2015.  The borrowing capacity was increased by $5 million on May 20, 2014.  Amounts borrowed for vehicles under this line bear no interest for 60 days and then bear interest at the 90 day LIBOR plus 6.0% for Ride-Away and at the 90 day LIBOR plus 5.5% for Mobility Freedom and Auto Mobility Sales.  The loan balance on the vehicle is due when the vehicle is fully funded or paid by the customer.  If the vehicle is not fully funded or paid within nine months of being purchased by the Company and funded by the floor plan, a graduated percentage of the balance is due with the entire balance due at twelve months. The note is secured by the vehicles financed. At March 31, 2015 and December 31, 2014, the Company had $11,704,519 and $15,584,949 respectively, outstanding under these lines.

With the discretionary nature of this loan agreement, the Lender or the Company can terminate this agreement with a sixty (60) day written notice at any time.

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Installment Debt

Installment debts consist of the following:

	March 31, 2015 (unaudited)		December 31, 2014
Vehicle Note Payable, dated August 18, 2011, vehicle financing arrangement for tow truck, original amount of $47,124, 5 years (60 months), 0% interest rate, commenced October 1, 2011, matures on October 1, 2016, monthly installment payments of $785		12,566		14,923
Note Payable, dated May 13, 2011, issued for the acquisition of Mobility Freedom, original amount of $2 million, fifteen years (180 months), 6% interest rate, commenced August 1, 2011, matures on July 1, 2026, monthly installment payments of $16,877 secured by grantee from the majority shareholder of Mobility Freedom		1,653,914		1,679,480
Note Payable to related party, dated May 13, 2011, associated with the acquisition of Mobility Freedom, original amount of $2 million, ten years (120 months), 5% interest rate, commenced August 1, 2011, matures on July 1, 2021, monthly installment payments of $22,204		1,363,965		1,415,737
Note Payable, dated November 16, 2011, issued for the acquisition of Certified Auto, original amount of $50,000, four years (16 quarters), 0% interest rate, commenced January 16, 2012, matures on November 16, 2015, quarterly installment payments of $3,125		—		18,660
Note Payable, dated March 1, 2012, issued for the acquisition of Ride-Away, original amount of $3,000,000, ten years (120 months), 5% interest rate, commences September 1, 2012, matures on May 2, 2022, monthly installment payments of $31,820.  Note is with the former owner of Ride-Away		2,273,645		2,356,573
Note payable to related party, dated March 1, 2012, issued for the acquisition of Ride-Away, original amount of $500,000, five years (60 months), 6% interest rate, commenced April 1, 2012, matures March 1, 2017, monthly installment payments of $9,685		218,532		244,010
Promissory Note payable to a related party, dated September 4, 2014, issued for the acquisition of Auto Mobility Sales, original amount of $210,000, five years (60 months), 5% interest rate, commenced November 1, 2014, matures October 1, 2018, monthly installment payments of $3,963		152,391		165,565
Promissory Note payable to a related party, dated September 4, 2014, issued for the acquisition of Auto Mobility Sales, original amount of $140,000, five years (60 months), 5% interest rate, commenced November 1, 2014, matures October 1, 2018, monthly installment payments of $2,642		101,594		110,378
Total debt		5,776,607		6,005,326
Current portion of long-term debt, notes payable		754,648		762,125
Long-term portion	$	5,021,959	$	5,243,201

NOTE 7 – STOCKHOLDERS’ EQUITY

During the three months ended March 31, 2015, 5,408,333 shares of common stock valued at $89,275 were issued to key employees as employee compensation.

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NOTE 8 – CONTINGENCIES

Company operations involve the handling and disposal of waste and hazardous material within a highly regulated oversight structure.  The Company is subjected to inspections by OSHA and other regulatory bodies.  Management believes that there are no current regulatory claims that would have a material effect on the Company’s financial position or results of operations.

NOTE 9 – INCOME TAXES

Prior to its acquisition in September 2008 by HASCO Holdings, LLC, the Company was an S Corporation.  Beginning in September 2008 the Company’s tax status changed to a C Corporation.  The Company accounts for income taxes under ASC Topic 740: Income Taxes requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and the tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax losses and tax credit carry forwards. ASC Topic 740 additionally requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets.

As of March 31, 2015 and 2014, the Company had no loss carry forwards available to reduce its future federal taxable income.

The table below summarizes the differences between the Company’s effective tax rate and the statutory federal rate as follows for income for continuing operations for the three months ended March 31, 2015 and 2014:

	For The Three months Ended March 31,
	2015			2014
Expected federal income tax expense (benefit) (34%)	$	1,540		$	127,184
State tax expense, net of federal tax effect		—			23,427
Other		(61,361	)		19,607
		(59,821	)		170,218
Change in valuation allowance		—			—
Net income tax expense (benefit)	$	(59,821	)	$	170,218

NOTE 10 – SEGMENT REPORTING

Accounting standards for the Disclosure about Segments of an Enterprise and Related Information establishes standards for the reporting by business enterprises of information about operating segments, products and services, geographic areas, and major customers. The method for determining what information to report is based on the way that management organizes the operations of the Company for making operational decisions and assessments of financial performance.

According to such standards, management determined that, as a consequence of our Home Healthcare Segment now comprising less than 1% of our gross revenue, the reporting of segment operating results is no longer relevant when considering the financial statement as a whole.

NOTE 11 – DIVESTITURE OF CERTIFIED MEDICAL

On June 30, 2014 the Company entered into an agreement with a related party and completed the sale of its Certified Medical business in exchange for a note receivable in the amount of $124,618.  In connection with the sale, the Company recognized a gain of $92,653.  In accordance with ASC 205-20, the results of operations for the Home Healthcare business segment through March 31, 2015, and for all applicable prior periods, are reported as discontinued operations.  For the three months ended March 31, 2015, income or loss from discontinued operations from Certified Medical was $0.

Concurrent with the sale of its Certified Medical business, the Company and the buyer entered into a transition services agreement pursuant to which each of the parties will provide certain transitional, administrative, and support services to the other party for a period up to nine months, which may be extended upon mutual agreement. Such services provided to the buyer by the Company will be recorded as contra-expense since the Company will be reimbursed for the service cost incurred. Activity associated with transitional service is not considered significant relative to the condensed consolidated financial statements of the Company.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Results of Operations

The following table provides an overview of certain key factors of our results of continuing operations for the three months ended March 31, 2015 as compared to March 31, 2014:

	Three Months Ended March 31,
	2015			2014
Net revenues	$	19,461,745		$	20,685,603
Cost of sales		14,846,915			15,425,817
Operating expenses:
Selling and marketing		868,478			953,798
General and administrative		3,421,383			3,415,207
Amortization and depreciation		224,086			234,327
Total operating expenses		4,513,947			4,603,332
Income from operations		100,883			656,454
Total other income		(156,173	)		(281,849	)
Provision for income taxes		(59,821	)		170,218
Income from continuing operations		4,531			204,387
Income (loss) from discontinued operations		—			(10,040	)
Net income from continuing operations	$	4,531		$	194,347

Other Key Indicators:

	Three Months Ended March 31,
	2015	2014
Cost of sales as a percentage of revenues	76.3%	74.6%
Gross profit margin	23.7%	25.4%
General and administrative expenses as a percentage of revenues	17.6%	16.5%
Total operating expenses as a percentage of revenues	23.2%	22.3%

The following table provides comparative data regarding the source of our net revenues in each of these periods:

	Three Months ended March 31,
	2015		2014
Product Sales	$	15,786,396	$	16,588,280
Rental Revenue		399,325		245,005
Service and other		3,276,024		3,852,318
Total Net Revenues	$	19,461,745	$	20,685,603

Three Months ended March 31, 2015 and 2014

Net Revenues

For the three months ended March 31, 2015, we reported revenues of $19,461,745 as compared to revenues of $20,685,603 for the three months ended March 31, 2014, a decrease of $1,223,858 or approximately 5.9% over prior year.  The decrease is due to the inclement weather in January and February 2015 in the northeastern region of the United States which caused a high number of closure days for the retail units.  Also the weather deterred our customers from traveling in the elements for service repairs and new van purchases.

Product sales for the three months ended March 31, 2015 and 2014 amounted to $15,786,396 and $16,588,280, respectively, a decrease of $801,884 or 4.8%.  Rental revenue for the three months ended March 31, 2015 and 2014 amounted to $399,325 and $245,005, respectively, an increase of $154,320 or 63.0%.  Service and other revenue for the three months ended March 31, 2015 and 2014 amounted to $3,276,024 and $3,852,318, respectively, a decrease of $576,294 or 15.0%.  The decrease is due to the inclement weather in January and February 2015 in the northeastern region of the United States which caused a high number of closure days for the retail units over prior year.  Also the weather deterred our customers from traveling in the elements for service repairs and new van purchases.

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Product sales comprise approximately 81.1% of the Company’s sales for the three months ended March 31, 2015 compared to 80.2% in the same period of 2014.

Cost of Sales

Our cost of sales consists of products purchased for resale, and service parts and labor. For the three months ended March 31, 2015, cost of sales was $14,846,915, or approximately 76.3% of revenues, compared to $15,425,817, or approximately 74.6% of revenues, for the three months ended March 31, 2014. The overall decrease of cost of sales for our Modified Mobility Vehicle operations is due to the decrease in revenue.

We have a single vendor that represents 37% of our Cost of Sales.  Our relationship with this vendor is excellent and we do not anticipate any change in the status of that relationship.  Should there be any such change, management believes that substantially similar products are available from other competitive vendors at terms that will not have a substantial effect on our results of operations.

Gross Profit

Overall gross profit percentage decreased to 23.7% for the three months ended March 31, 2015 from 25.4 % for the three months ended March 31, 2014 due to a decrease in our service revenue, which provides higher margins than product revenues.

Total Operating Expense

Total operating expenses increased as a percentage of revenues to 23.2% for the three months ended March 31, 2015 from 22.3% for the three months ended March 31, 2014.  These changes include:

Selling and Marketing Expense. For the three months ended March 31, 2015, selling and marketing costs were $868,478 and $953,798 for the three months ended March 31, 2014. The decrease was due to the decrease in marketing, advertising and print advertising programs initiatives, primarily in the Modified Mobility Vehicle operations.

General and Administrative Expense. For the three months ended March 31, 2015, general and administrative expenses were $3,421,383 as compared to $3,415,207 for the three months ended March 31, 2014, an increase of $6,176. The increase is due to the annual rental increases for our land and building leases as well as increase in salaries as we continue to fill in needed positions.

Depreciation and Amortization Expense. For the three months ended March 31, 2015, depreciation and amortization expense amounted to $224,086 as compared to $234,327 for the three months ended March 31, 2014, a decrease of $10,241.

Income from Continuing Operations before Taxes

We reported income (loss) from continuing operations of $(55,290) for the three months ended March 31, 2015 as compared to income from continuing operations of $374,605 for the three months ended March 31, 2014.

Other Income (Expense)

Other expense for the three months ended March 31, 2015 amounted to $(156,173) compared to $(281,849) for the three months ended March 31, 2014.  Other income and expense consists of other income and interest expense.

Other Income consists primarily of expense pricing discounts earned which totaled $176,649 for the three months ended March 31, 2015 and $20,989 for the three months ended March 31, 2014.

Interest expense for the three months ended March 31, 2015 amounted to $332,822 as compared to $302,838 for the three months ended March 31, 2014, an increase of $29,984.  This increase is due to the additional debt with the increase in purchase volume in 2015 and the remaining inventory on the GE floor plan agreement.

Net Income

Our net income was $4,531 for the three months ended March 31, 2015 as compared to net income of $194,347 for the three months ended March 31, 2014.

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Assets and Liabilities

Assets were $32,486,992 as of March 31, 2015.  Assets consisted of cash of $210,791, accounts receivable of $6,402,944, inventory of $15,668,718, current portion of notes receivable of $25,525, prepaid expense of $776,109, short-term deferred tax asset of $448,877, long-term deferred tax asset of $194,669, property and equipment of $1,933,196, intangible assets of $6,146,452, long term notes receivable of $80,086, and other non-current assets of $599,625.  Liabilities were $27,485,540 as of March 31, 2015. Liabilities consisted primarily of accounts payable of $2,092,768, cash overdraft of $187,089, customer deposits and deferred revenue of $865,331, line of credit of $3,918,885, notes payable – floor plan of $11,704,519, obligation under capital leases short term of $574,800, current portion of notes payable of $389,989, related party short-term notes payable of $364,659, long-term capital leases of $604,081, long-term notes payable of $3,550,136, related party long-term notes payable of $1,471,823, and other current liabilities of $1,761,460.

Stockholders’ Equity

Stockholders’ equity was $5,001,452 as of March 31, 2015.  Stockholder’s equity consisted primarily of shares issued for acquisitions, fundraising, employee compensation, and settlement of services totaling $7,968,835, offset primarily by the deficit of $2,967,383 at March 31, 2015.

The results of operations presented on a historical comparative basis require consideration in the nature of the change in business activity and the acquisition of business entities in 2013.  Any such comparison requires a careful examination of the change in the nature of the Company’s business activity in conjunction with numerical comparisons of year-to-year results.

Liquidity and Capital Resources

General – Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations and otherwise operate on an ongoing basis. The following table provides an overview of certain selected balance sheet comparisons between March 31, 2015 and December 31, 2014:

	March 31, 2015			December 31, 2014			$ Change			% Change
Working capital surplus	$	1,673,464		$	1,951,855		$	(278,391	)	(14.3	)
Cash		210,791			509,924			(299,133	)	(58.7	)
Accounts receivable, net		6,402,944			9,006,558			(2,603,614	)	(28.9	)
Inventory		15,668,718			16,641,806			(973,088	)	(5.8	)
Total current assets	$	23,532,964		$	27,236,379		$	(3,703,415	)	(13.6	)
Property and equipment, net		1,933,196			2,041,141			(107,945	)	(5.3	)
Intangible assets, net		6,146,452			6,153,118			(6,666	)	(0.1	)
Total assets	$	32,486,992		$	36,305,547		$	(3,818,555	)	(10.5	)
Accounts payable and accrued liabilities	$	2,092,768		$	2,842,626		$	(749,858	)	(26.4	)
Cash overdraft		187,089			—			187,089		100.0
Customer deposits and deferred revenue		865,331			465,167			400,164		86.0
Line of credit		3,918,885			2,738,878			1,180,007		43.1
Note Payable – Floor Plan		11,704,519			15,584,949			(3,880,430	)	(24.9	)
Current portion of capital leases		574,800			434,142			140,658		32.4
Notes payable-current		389,989			402,546			(12,557	)	(3.1	)
Notes payable, related party-current		364,659			359,579			5,080		1.4
Total current liabilities	$	21,859,500		$	25,284,524		$	(3,425,024	)	(13.5	)
Capital lease obligations long term		604,081			870,176			(266,095	)	(30.6	)
Notes payable-long term		3,550,136			3,667,125			(116,989	)	(3.2	)
Notes payable, related party-long term		1,471,823			1,576,076			(104,253	)	(6.6	)
Total liabilities	$	27,485,540		$	31,397,901		$	(3,912,361	)	(12.5	)
Accumulated deficit		(2,967,383	)		(2,971,914	)		4,531		(0.2	)
Stockholders’ equity	$	5,001,452		$	4,907,646		$	93,806		1.9

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Overall, we had a decrease in cash flows of $299,133 in the three months ending March 31, 2015 resulting from cash provided by operating activities of $2,683,109 and cash used in investing activities of $114,752, and cash used in financing activities of $2,867,490.

The following is a summary of our cash flows provided by (used in) operating, investing, and financing activities during the periods indicated:

	Three Months Ended March 31,
	2015			2014
Cash at beginning of period	$	509,924		$	150,313
Net cash provided by (used in) operating activities		2,683,109			2,181,549
Net cash (used in) investing activities		(114,752	)		(44,875	)
Net cash provided by financing activities		(2,867,490	)		(1,377,983	)
Cash at end of period	$	210,791		$	909,004

Net cash provided by operating activities was $2,683,109 for the three months ended March 31, 2015. For the three months ended March 31, 2015, we had net income of $4,531, non-cash items such as depreciation and amortization expense of $224,086, stock-based compensation of $89,275, loss on disposal of property of 13,812, the changes in operating assets and liabilities of $2,351,405.  The changes in operating assets and liabilities were primarily due to increases customer deposits and deferred revenue of 400,164, decreases in accounts receivable of $2,603,614, and inventory of $973,088; offset partially by the increase in prepaid expenses of $172,410, other assets of $8,016, accounts payable and accrued expenses of $749,858, and other current liabilities of $695,177.

Net cash provided by operating activities was $2,181,549 for the three months ended March 31, 2014. For the three months ended March 31, 2014, we had net income of $194,347, non-cash items such as depreciation and amortization expense of $234,327 and stock-based compensation of $34,607, and the changes in operating assets and liabilities of $1,718,268.  The changes in operating assets and liabilities were primarily due to decreases in inventory of $590,726, accounts payable and accrued expenses of $512,254, customer deposits and deferred revenue of $872, other current liabilities of $381,162, other assets of $18,035, and accounts receivable of $364,811, offset partially by the increases in prepaid expenses of $149,592.

Net cash used in investing activities for the three months ended March 31, 2015 was $114,752 which consists primarily of purchases of fixed assets of $123,287 offset by proceeds from notes receivable of $8,535.  Net cash used in investing activities for the three months ended March 31, 2014 was $44,875.

Net cash used by financing activities for the three months ended March 31, 2015 was $2,867,490. This consisted of principal and interests payments under capital lease obligations of $125,437, repayments of related party notes payable of $99,173, net draws and repayments on our floor plan of $3,880,430, and repayments on our notes payable of $129,546, offset partially by net draws and repayments on our line of credit of $1,180,007 and the cash overdraft of $187,089.

Net cash used in financing activities for the three months ended March 31, 2014 was $1,377,983. This consisted of net draws and repayments on our floor plan of $480,528, net draws and repayments on our line of credit of $1,374,333, repayments on our notes payable of $121,665, principal payments under capital lease obligations of $103,384, repayments of related party notes payable of $83,557, and a cash overdraft of $175,572.

At March 31, 2015 we had a working capital surplus (current assets in excess of current liabilities) of $1,673,464 and accumulated deficit of $(2,967,383).

Financing – We believe our current working capital position, together with our expected future cash flows from operations will be adequate to fund our operations in the ordinary course of business, anticipated capital expenditures, debt and floor plan payment requirements, and other contractual obligations for at least the next twelve months.  However, this belief is based upon many assumptions and is subject to numerous risks (see “Risk Factors” in our annual report on Form 10-K), and there can be no assurance that we will not require additional funding in the future.

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As we attempt to expand and develop our operations, there exists a potential for net negative cash flows from future operations in amounts not now determinable, and we may be required to obtain additional financing in support of these plans. We have and expect to continue to have substantial capital expenditures and working capital needs.  We expect that the additional financing will (if available) take the form of a private placement of equity, bank borrowings and seller-financed acquisitions, although we may be constrained to obtain additional debt financing in lieu thereof. We are maintaining an on-going effort to consolidate sources of additional funding, without which we may not be able to continue our expansion efforts.  There are no assurances that we will be able to obtain or continue adequate financing.  If we are able to obtain and continue our required financing, future operating results depend upon a number of factors that are outside such financing considerations.

Vehicle Floorplans and Lines of Credit – Vehicle floorplans and line of credit reflect the amounts borrowed to finance the purchase of specific new and, to a lesser extent, used vehicle inventories with our corresponding manufacturers.  Changes in our vehicle floorplan and credit lines are reported in the financing cash flow section.  Below is a listing of our gross usage and payments on the company’s floorplan and credit lines for the three months ended March 31, 2015 and 2014:

For the three months ended March 31, 2015:

Facility	Additions		Payments		Net Usage Inc (Dec)
Floor plan	$	8,751,989	$	12,632,419	$	(3,880,430	)
Line of credit		8,322,572		7,142,565		1,180,007
Total	$	17,074,561	$	19,774,984	$	(2,700,423	)

For the three months ended March 31, 2014:

Facility	Additions		Payments		Net Usage Inc (Dec)
Floor plan	$	10,751,664	$	10,271,136	$	480,528
Line of credit		—		1,374,333		(1,374,333	)
Total	$	10,751,664	$	11,645,469	$	(893,805	)

Contractual Obligations and Off-Balance Sheet Arrangements

Contractual Obligations

With reference to SEC Regulation S-K Item 303(d), tables summarizing our contractual obligations are not required.

Off-balance Sheet Arrangements

The Company’s management considers all liabilities stated on the financial statement contained herein disclose all liabilities and potential liabilities in every material respect.  We have not entered into any derivative contracts that are indexed to our shares and classified as stockholder’s equity or that are not reflected in our consolidated financial statements.  Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk in support to such activity. We do not have any determinable or variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.

Recently Issued Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our financial position or results of operations upon adoption.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

There have been no material changes in our quantitative and qualitative market risks since the prior reporting period.

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ITEM 4.  CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

As required by Rule 13a-15 under the Securities Exchange Act of 1934, as of December 31, 2014, the end of the year covered by this report, our management concluded its evaluation of the effectiveness of the design and operation of our disclosure controls and procedures.

Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, 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 management is required to apply its judgment in evaluating and implementing possible controls and procedures.

Our management does not expect that our disclosure controls and procedures will prevent all errors and all fraud.  As previously discussed, management is aware of the limitations of current system of control and procedures.  A control system, no matter how well designed and operated, can provide only reasonable and not absolute assurance that the control system’s objectives will be met. Further, the design of a control system must reflect that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Identification of Significant Deficiencies in Controls and Procedures

In connection with the evaluation of our controls and procedures for the year ended December 31, 2014 we have determined that we have significant deficiencies in our controls and procedures, as more fully described below.

A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness; yet important enough to merit attention by those responsible for oversight of the Company’s financial reporting.

We have become aware that we need strengthened controls regarding:

A)	Controls over the selection and application of accounting principles that are in conformity with generally accepted accounting principles. Having sufficient expertise in selecting and applying accounting principles is an aspect of such controls.
B)	Antifraud programs and controls.
C)	Controls over non-routine and nonsystematic transactions.

With respect to the quarter ended March 31, 2015, under the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934. Based upon our evaluation regarding the period ending March 31, 2015, the Company’s management, including its Chief Executive Officer and Chief Financial Officer, has concluded that its disclosure controls and procedures were not effective.

There were no changes in our internal control over financial reporting during the quarter ended March 31, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 6.   EXHIBITS

Attached hereto and incorporated by reference are the following exhibits:

Exhibit Number	Description
31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
31.2	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
101	Interactive Data Files of Financial Statements and Notes contained in this Quarterly Report on Form 10-Q.**

* Filed herein

** In accordance with Regulation S-T, the Interactive Data Files in Exhibit 101 to the Quarterly Report on Form 10-Q shall be deemed “furnished” and not “filed.”

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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.

	Hasco Medical, Inc.
	By: /s/ Hal Compton, Jr.
May 14, 2015	Hal Compton, Jr.,
	Chief Executive Officer, principal executive officer
	By: /s/ Shane Jorgenson
May 14, 2015	Shane Jorgenson
	Chief Financial Officer, principal financial and accounting officer

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