10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended June 30, 2012
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934
	For the transition period from ____________ to ____________

Commission file number: 000-52684

Progressive Care Inc.

(Exact name of registrant as specified in its charter)

Delaware	32-0186005
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1111 Park Center Blvd., Suite 202, Miami Gardens, FL  33169

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: 

1-786-657-2060

Indicate by check mark whether the issuer: (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 x No o

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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated file, a non-accelerated file, or a smaller reporting company.  See the definitions of “large accelerated filer, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):

Large accelerated filer                                o	Accelerated filer                                o
Non-Accelerated filer                                 o	Smaller reporting company              x
(Do not check if a 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 o No x

As of August 14, 2012, the Registrant had 24,338,185 shares of common stock outstanding.

PROGRESSIVE CARE INC.

FORM 10-Q

TABLE OF CONTENTS

		Page
	PART I.—FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets	2
	Consolidated Statements of Operations - unaudited	3
	Consolidated Statement of Equity –unaudited	4
	Consolidated Statement of Cash Flows - unaudited	5
	Notes to Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Conditions and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risks	24
Item 4.	Controls and Procedures	24
	PART II—OTHER INFORMATION
Item 1.	Legal Proceedings
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Mine Safety Disclosures	25
Item 5.	Other Information	25
Item 6.	Exhibits	25
SIGNATURE		26

PART I.—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Progressive Care Inc. and Subsidiaries
Consolidated Balance Sheets
(unaudited)
			December 31, 2011
	June 30, 2012		(As Restated)
			(unaudited)
Assets
Current Assets
Cash	$	107,976	$	88,874
Accounts receivable - net		1,285,757		1,006,835
Inventory		299,754		248,678
Prepaids		13,395		21,741
Total Current Assets		1,706,882		1,366,128
Property and equipment - net		283,808		276,795
Other Assets
Debt issue costs - net		145,413		22,259
Deposits		43,746		44,741
Total Other Assets		189,159		67,000
Total Assets	$	2,179,849	$	1,709,923
Liabilities and Stockholders' Equity
Current Liabilities
Cash overdraft	$	-	$	71,380
Accounts payable and accrued liabilities		337,823		248,785
Deferred rent payable		32,387		17,535
Income taxes payable		42,656		42,656
Debt - net		398,024		87,767
Debt - related party		-		73,329
Accrued interest payable -  related party		-		24,732
Derivative liability		228,208		-
Total Current Liabilities		1,039,098		566,184
Long Term Liabilities
Debt		150,000		150,000
Stockholders' Equity
Common stock, par value $0.0001; 100,000,000 shares authorized
38,314,617 and 36,596,617 issued and outstanding and
38,066,830 and 36,348,830 issued and outstanding, respectively		3,831		3,807
Additional paid in capital		136,885		(88,581	)
Retained Earnings		850,035		1,078,513
Total Stockholders' Equity		990,751		993,739
Total Liabilities and Stockholders' Equity	$	2,179,849	$	1,709,923

See accompanying notes to financial statements

2

Progressive Care Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
	Three Months Ended						Six Months Ended
	June 30, 2012			June 30, 2011			June 30, 2012			June 30, 2011
				(As Restated)						(As Restated)
Sales - net	$	2,542,478		$	1,897,289		$	4,970,006		$	3,769,909
Cost of sales		1,744,855			880,752			3,587,871			1,831,953
Gross profit		797,623			1,016,537			1,382,135			1,937,956
Selling, general and administrative expenses		857,431			1,079,100			1,609,462			1,973,889
Loss from operations		(59,808	)		(62,563	)		(227,327	)		(35,933	)
Other Income (Expense)
Change in fair value of derivative liability		15,945			-			15,945			-
Gain on debt forgiveness		69,298			-			69,298			12,585
Interest expense		(78,898	)		(1,538	)		(86,394	)		(12,571	)
Total other income (expense) - net		6,345			(1,538	)		(1,151	)		14
Loss from operations before provision for income taxes		(53,463	)		(64,101	)		(228,478	)		(35,919	)
Provision for income taxes (benefit)
Current income tax		-			(49,067	)		-			-
Deferred income tax		-			26,100			-			-
Total income tax benefit - net		-			(22,967	)		-			-
Net loss	$	(53,463	)	$	(41,134	)	$	(228,478	)	$	(35,919	)
Basic and diluted net loss per common share		(0.00	)		(0.00	)		(0.01	)		(0.00	)
Weighted average number of common shares outstanding
during the period - basic and diluted		36,514,906			37,209,546			36,436,786			36,478,861

See accompanying notes to financial statements

3

Progressive Care Inc. and Subsidiaries
Consolidated Statement of Stockholders' Equity
Years Ended December 31, 2011 and 2010 and the Six Months Ended June 30, 2012
(unaudited)
	Common Stock				Additional						Total
	$0.0001 Par Value				Paid-in			Retained			Stockholders'
	Shares		Amount		Capital			Earnings			Equity
Balance, December 31, 2010 (as restated)		35,280,000		3,528		(1,141,029	)		1,301,600			164,099
Issuance of common stock for services rendered		302,261		30		83,213			-			83,243
Issuance of common stock for services rendered - related parties		1,385,596		139		524,861			-			525,000
Issuance of common stock in connection with the conversions of debt and accrued interest		1,098,973		110		439,479			-			439,589
Issuance of warrants as debt issue cost - related party		-		-		4,895			-			4,895
Net loss - 2011		-		-		-			(223,087	)		(223,087	)
Balance, December 31, 2011 (as restated)		38,066,830		3,807		(88,581	)		1,078,513			993,739
Issuance of common stock for debt issue costs		196,078		19		99,981			-			100,000
Issuance of common stock for services rendered		30,000		3		14,497			-			14,500
Issuance of common stock for services rendered - related party		21,709		2		9,998			-			10,000
Gain on debt forgiveness - related party		-		-		100,990			-			100,990
Net loss for the six months ended June 30, 2012		-		-		-			(228,478	)		(228,478	)
Balance, June 30, 2012 (Unaudited)		38,314,617	$	3,831	$	136,885		$	850,035		$	990,751

See accompanying notes to financial statements

4

Progressive Care Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
	Six Months Ended
	June 30, 2012			June 30, 2011
				(As Restated)
Cash Flows From Operating Activities:
Net loss	$	(228,478	)	$	(35,919	)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation		128,574			40,556
Bad debt		38,311			-
Stock-based compensation		14,500			335,845
Stock-based compensation - related parties		10,000			-
Amortization of debt issue costs and debt discount		67,485			-
Change in fair value of derivative liability		(15,945	)		-
Gain on debt forgiveness		(69,298	)		-
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable		(317,233	)		(228,455	)
Inventory		(51,076	)		67,568
Prepaids		8,346			(4,985	)
Deposits		995			(35,704	)
Increase (decrease) in:
Accounts payable and accrued liabilities		217,745			100,073
Deferred rent		14,852			8,733
Accrued interest payable - related party		2,929			(2,897	)
Net Cash Provided by (Used in) Operating Activities		(178,293	)		244,815
Cash Flows From Investing Activities:
Purchase of property and equipment		(135,587	)		(128,766	)
Net Cash Used in Investing Activities		(135,587	)		(128,766	)
Cash Flows From Financing Activities:
Cash overdraft		(71,380	)		-
Proceeds from issuance of debt		540,000			-
Debt issue costs		(52,500	)		-
Repayment of debt		(83,138	)		(71,780	)
Net Cash Provided by (Used in) Financing Activities		332,982			(71,780	)
Net increase in cash		19,102			44,269
Cash at beginning of period		88,874			204,336
Cash at end of period	$	107,976		$	248,605
Supplemental disclosures of cash flow information:
Cash paid for interest	$	12,062		$	2,480
Cash paid for taxes	$	-		$	-
Supplemental disclosures of non-cash financing activities:
Conversion of accounts payable to notes	$	122,176		$	-
Debt discount recorded on convertible debt accounted for as a derivative liability	$	244,153		$	-
Issuance of common stock for debt issue costs	$	100,000		$	-
Gain on debt forgiveness - related party	$	100,990		$	-

See accompanying notes to financial statements

5

Progressive Care Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

June 30, 2012

(unaudited)

Note 1 Nature of Operations & Restatement

Organization

Progressive Training, Inc. (“Progressive Training”) was incorporated on October 31, 2006 in the State of Delaware. Pharmco, LLC a Florida limited liability company (“PharmCo”) was incorporated on November 29, 2005. On October 21, 2010, Progressive Training entered into an Agreement and Plan of Merger with PharmCo, and Pharmco Acquisition Corp. (“Acquisition Sub”), pursuant to which Acquisition Sub was merged with and into PharmCo, and PharmCo, as the surviving corporation, became the Company’s wholly-owned subsidiary (the “Reverse Merger”). As part of the Reverse Merger, Progressive Training was renamed Progressive Care Inc. (the “Company”).

Recapitalization

Immediately following the Reverse Merger, the shareholders of PharmCo owned a majority of the outstanding shares of the Company. In addition, as part of the transaction, the previous owners of Progressive Training retained the training video business; therefore, the transaction was accounted for as a reverse recapitalization. The assets and liabilities and the historical operations that are reflected in the financial statements are those of PharmCo. The historical consolidated financial statements reflect the impact of the change in capital structure that resulted from the recapitalization from the earliest period presented.

Description of the Business

The Company is a retail pharmacy specializing in the sale of anti-retroviral medications and related patient care management, the sale and rental of durable medical equipment ("DME") and the supply of prescription medications and DME to nursing homes and assisted living facilities. Prior to the Reverse Merger, the Company operated a training video business.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they may not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. It is management's opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation. The results for the interim period are not necessarily indicative of the results to be expected for the full year.

The unaudited interim consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, which contains the audited financial statements and notes thereto, together with Management’s Discussion and Analysis of Financial Condition and Results of Operation, for the year ended December 31, 2011. The interim results for the period ended June 30, 2012 are not necessarily indicative of results for the full fiscal year.

The Company’s year ended December 31, 2011 audited financial statements are currently being restated and therefore the Company has presented them herein as unaudited, since the related restatements have not yet been filed, and since the audit has not been completed.

Restatement

On May 28, 2012, the Company concluded that the following financial statements required restatement: its audited financial statements for the year ended December 31, 2010 filed in an annual report on Form 10-K with the SEC on April 15, 2011; (ii) its audited financial statements for the year ended December 31, 2011, filed in an annual report on Form 10-K with the SEC on April 16, 2012; (iii) its unaudited financial statements for the period ended March 31, 2011, filed in a quarterly report on Form 10-Q with the SEC on May 23, 2011; (iv) its unaudited financial statements for the period ended June 30, 2011, filed in a quarterly report on Form 10-Q with the SEC on August 22, 2011; (v) its unaudited financial statements for the period ended September 30, 2011, filed in a quarterly report on Form 10-Q with the SEC on November 14, 2011, and (vi) its unaudited financial statements for the period ended March 31, 2012, filed in a quarterly report on Form 10-Q with the SEC on May 21, 2012. The Company plans on completing the restatements in the next 30 days.

The following tables present the impact of the restatements on the Company’s year ended December 31, 2011 balance sheet and six months ended June 30, 2011 statement of operations and statement of cash flows, which are used as comparative information to the Company’s current financial statement herein:

6

Progressive Care Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

June 30, 2012

(unaudited)

Consolidated Balance Sheet as of December 31, 2011:

	December 31, 2011
	As Originally Reported			Adjustments			As Restated
							(unaudited)
Assets
Current Assets
Cash	$	88,874		$	-		$	88,874
Accounts receivable - net		1,006,835			-			1,006,835
Inventory		248,678			-			248,678
Prepaids		21,741			-			21,741
Total Current Assets		1,366,128			-			1,366,128
Property and equipment - net		276,795			-			276,795
Other Assets
Intangibles - net		1,574,663			(1,574,663	)		-
Goodwill		1,348,402			(1,348,402	)		-
Debt issue costs		22,259			-			22,259
Deposits		44,741			-			44,741
Total Other Assets		2,990,065			(2,923,065	)		67,000
Total Assets	$	4,632,988		$	(2,923,065	)	$	1,709,923
Liabilities and Stockholders' Equity
Current Liabilities
Cash overdraft	$	71,380		$	-		$	71,380
Accounts payable and accrued liabilities		248,786			-			248,785
Deferred rent payable		17,535			-			17,535
Income taxes payable		42,656			-			42,656
Notes payable		87,767			-			87,767
Notes payable - related party		73,329			-			73,329
Accrued interest payable - related party		24,732			-			24,732
Total Current Liabilities		566,185			-			566,184
Long Term Liabilities
Convertible Debt - note payable		150,000			-			150,000
Total Long Term Liabilities		150,000			-			150,000
Stockholders' Equity
Common stock, par value $0.0001; 100,000,000 shares authorized
38,066,830 and 36,348,830 issued and outstanding (2011); and
35,280,000 and 33,562,000 shares issued and outstanding (2010)		3,807			-			3,807
Additional paid in capital		6,278,571			(6,367,152	)		(88,581	)
Accumulated deficit		(2,365,574	)		3,444,087			1,078,513
Total Stockholders' Equity		3,916,804			(2,923,065	)		993,739
Total Liabilities and Stockholders' Equity	$	4,632,989		$	(2,923,065	)	$	1,709,923

7

Progressive Care Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

June 30, 2012

(unaudited)

Consolidated Statement of Operations for the three and six months ended June 30, 2011:

	Three Months Ended									Six Months Ended
	June 30, 2011									June 30, 2011
	As Originally Reported			Adjustments			As Restated			As Originally Reported			Adjustments			As Restated
Sales - net	$	1,897,289		$	-		$	1,897,289		$	3,769,909		$	-		$	3,769,909
Cost of sales		880,752			-			880,752			1,831,953			-			1,831,953
Gross profit		1,016,537			-			1,016,537			1,937,956			-			1,937,956
Selling, general and administrative expenses		1,139,734			(60,635	)		1,079,100			2,094,492			(120,603	)		1,973,889
Loss from operations		(123,197	)		60,635			(62,563	)		(156,536	)		120,603			(35,933	)
Other Income (Expense)
Gain on debt settlement - former related party		-			-			-			12,585			-			12,585
Interest expense		(1,538	)		-			(1,538	)		(12,571	)		-			(12,571	)
Total other income - net		(1,538	)		-			(1,538	)		14			-			14
Losses from continuing operations before provision for income taxes		(124,735	)		60,635			(64,101	)		(156,522	)		120,603			(35,919	)
Provision for income taxes (benefit)
Current income tax		(49,067	)		-			(49,067	)		-			-			-
Deferred income tax		26,100			-			26,100			-			-			-
Total income tax benifit - net		(22,967	)		-			(22,967	)		-			-			-
Net loss	$	(101,768	)	$	60,635		$	(41,134	)	$	(156,522	)	$	120,603		$	(35,919	)
Basic and diluted loss per share:		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Weighted average number of common shares outstanding
during the period - basic and diluted		37,209,546						37,209,546			36,478,861						36,478,861

8

Progressive Care Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

June 30, 2012

(unaudited)

Consolidated Statement of Cash Flows for the six months ended June 30, 2011:

	June 30, 2011
	As Originally Reported			Adjustments			As Restated
Cash Flows From Operating Activities:
Net loss	$	(156,522	)	$	120,603		$	(35,919	)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation		40,556			-			40,556
Stock-based compensation		335,845			-			335,845
Amortization of intangibles		120,603			(120,603	)		-
Changes in operating assets and liabilities:
Accounts receivable		(228,455	)		-			(228,455	)
Inventory		67,568			-			67,568
Prepaids		(4,985	)		-			(4,985	)
Deposits		(35,704	)		-			(35,704	)
Accounts payable and accrued liabilities		100,073			-			100,073
Deferred rent		8,733			-			8,733
Accrued interest payable - related parties		(2,897	)		-			(2,897	)
Net Cash Provided by Operating Activities		244,815			-			244,815
Cash Flows From Investing Activities:
Purchase of property and equipment		(128,766	)		-			(128,766	)
Net Cash Used in Investing Activities		(128,766	)		-			(128,766	)
Cash Flows From Financing Activities:
Repayment of debt		(71,780	)		-			(71,780	)
Net Cash Used in Financing Activities		(71,780	)		-			(71,780	)
Net increase in cash	$	44,269		$	-		$	44,269
Cash at beginning of period		204,336			-			204,336
Cash at end of period	$	248,605		$	-		$	248,605
Supplemental disclosures of cash flow information:
Cash paid for interest	$	2,480.00					$	2,480.00
Cash paid for taxes	$	-					$	-

9

Progressive Care Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

June 30, 2012

(unaudited)

Note 2 Summary of Significant Accounting Policies

Principles of Consolidation

All inter-company accounts and transactions have been eliminated in consolidation.

Reclassification

The Company has reclassified certain prior period amounts to conform to the current period presentation including the restatement previously mentioned. These reclassifications had no effect on the financial position, results of operations or cash flows for the periods presented.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Such estimates and assumptions impact both assets and liabilities, including but not limited to: net realizable value of accounts receivable, estimated useful lives and potential impairment of property and equipment, estimated fair value of warrants and derivative liabilities using the Black-Scholes option pricing method and estimates of tax liabilities.

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, actual results could differ significantly from estimates.

Cash

The Company minimizes credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits; however, at June 30, 2012 and December 31, 2011, respectively, the balances did not exceed the federally insured limit.

Risks and Uncertainties

The Company's operations are subject to intense competition, risk and uncertainties including financial, operational, regulatory and other risks including the potential risk of business failure. See Note 11 – Going Concern.

10

Progressive Care Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

June 30, 2012

(unaudited)

Billing Concentrations

The Company’s primary receivables are from prescription medication and DME equipment billed to various insurance providers.  Ultimately, the insured is responsible for payment should the insurance company not reimburse the Company. The Company generated reimbursements from significant insurance providers for the six months ended June 30, 2012 and 2011 as shown below.

Insurance Provider	Six months ended June 30, 2012	Six months ended June 30, 2011
A	20%	11%
B	15%	13%
C	13%	1%
D	13%	-
E	-	17%

Inventory

Inventory is valued on a lower of first-in, first-out (FIFO) cost or market basis.  Inventory primarily consists of prescription medications, DME and retail items.

Property and Equipment

Company used property and equipment is stated at cost, less accumulated depreciation. Expenditures for maintenance and repairs are charged to expense as incurred.

The Company provides DME on rent-to-own terms. Pursuant to Medicare guidelines (which are followed by private insurance carriers as well) DME equipment is “rented” to the insured for 13 months, after which title to the equipment transfers to the insured. Depreciation of DME equipment is recorded to cost of sales.

Fair Value of Financial Instruments

The Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level.

The following are the hierarchical levels of inputs to measure fair value

● Level 1  -  Observable inputs that reflect quoted market prices in active markets for identical assets or liabilities.

●	Level 2  -	Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.
●	Level 3  -	Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

The following are the major categories of liabilities measured at fair value on a recurring basis as of June 30, 2012 and December 31, 2011, using quoted prices in active markets for identical liabilities (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3):

		June 30, 2012		December 31, 2011
Derivative Liabilities (Level 2)	$	228,208	$	-

The Company's financial instruments consisted primarily of accounts receivable, prepaids, accounts payable and accrued liabilities, derivative liabilities and debt. The carrying amounts of the Company's financial instruments generally approximated their fair values as of June 30, 2012 and December 31, 2011, respectively, due to the short-term nature of these instruments.

11

Progressive Care Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

June 30, 2012

(unaudited)

Beneficial Conversion Feature and Debt Discount

For conventional convertible debt where the rate of conversion is below market value, the Company records a "beneficial conversion feature" ("BCF") and related debt discount.

When the Company records a BCF, the relative fair value of the BCF is recorded as a debt discount against the face amount of the respective debt instrument. The discount is amortized to interest expense over the life of the debt. At June 30, 2012 and 2011, there were no BCFs.

Derivative Liabilities

Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments, and measurement of their fair value. In determining the appropriate fair value, the Company uses the Black-Scholes option-pricing model. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt, the Company will continue its evaluation process of these instruments as derivative financial instruments.

Once derivative liabilities are determined, they are adjusted to reflect fair value at the end of each reporting period. Any increase or decrease in the fair value is recorded in results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative instruments such as warrants, are also valued using the Black-Scholes option-pricing model. Once a derivative liability ceases to exist any remaining fair value will be reclassified to additional paid in capital.

Revenue Recognition

The Company records revenue when all of the following have occurred: (1) persuasive evidence of an arrangement exists, (2) asset is transferred to the customer without further obligation, (3) the sales price to the customer is fixed or determinable, and (4) collectability is reasonably assured.

For the six months ended June 30, 2012 and 2011, the Company had two revenue streams.

   (i) Pharmacy

The Company recognizes its pharmacy revenue when a customer picks up or is delivered their prescription or merchandise.  Billings for most prescription orders are with third-party payers, including Medicare, Medicaid and other insurance carriers.  Customer returns are nominal. 

Total pharmacy revenues for the six months ended June 30, 2012 and 2011 were approximately $4,281,000 (86%) and $3,411,000 (90%), respectively.

   (ii) Durable Medical Equipment

The Company recognizes DME revenue from the date the equipment is picked up or delivered to the customer. Revenue from DME rentals is booked over a 13 month period. Customer returns are nominal. 

Total DME revenues for the six months ended June 30, 2012 and 2011 were approximately $689,000 (14%) and $359,000 (10%), respectively.

Cost of Sales

Cost of pharmacy sales is derived based upon vendor purchases relating to prescriptions sold and point-of-sale scanning information for non-prescription sales, and is adjusted based on periodic inventories. All other costs related to sales are expensed as incurred.

12

Progressive Care Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

June 30, 2012

(unaudited)

Cost of DME sales is derived based upon vendor purchases relating to equipment sold and is adjusted based on periodic inventories. All other costs related to sales are expensed as incurred.

Vendor Concentrations

For the six months ended June 30, 2012 and 2011, the Company had significant vendor concentrations with vendors as follows:

Vendor	Six months ended June 30, 2012	Six months ended June 30, 2011
A	65%	6%
B	15%	35%
C	1%	35%

Due to a large selection of pharmaceutical wholesalers in the United States, management does not believe that losing any vendor relationship will have an impact on the Company’s business.

Selling, General and Administrative Expenses (SG&A)

SG&A primarily consists of salaries, contract labor, occupancy costs, and expenses directly related to the Company’s operations.  Other administrative costs include advertising, insurance and depreciation.

Advertising

Costs incurred for producing and communicating advertising for the Company are charged to operations as incurred and are as follows:

Six months ended June 30, 2012		Six months ended June 30, 2011
$	14,200	$	49,180

Stock-Based Payment Arrangements

Generally, all forms of stock-based payments, including warrants, are measured at their fair value on the awards’ grant date typically using a Black-Scholes pricing model, based on the estimated number of awards that are ultimately expected to vest. Stock-based compensation awards issued to non-employees for services rendered are recorded at either the fair value of the services rendered or the fair value of the stock-based payment, whichever is more readily determinable. The expense resulting from stock-based payments are recorded in general and administrative expense in the consolidated statement of operations.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained.

The Company does not believe it has any uncertain tax positions.

13

Progressive Care Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

June 30, 2012

(unaudited)

Earnings (Loss) per Share

Basic earnings/loss per share (“EPS”) is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to all dilutive potential of shares of common stock outstanding during the period including stock warrants, using the treasury stock method (by using the average stock price for the period to determine the number of shares assumed to be purchased from the exercise of warrants), and convertible debt, using the if-converted method. Diluted EPS excludes all dilutive potential of shares of common stock if their effect is anti-dilutive.

The Company had the following potential common stock equivalents at June 30, 2012:

	Shares
Convertible debt – face amount of $150,000; fixed conversion price; $0.40		375,000
Convertible debt – face amount of $500,000; variable conversion price; $0.40		1,253,133
Common stock warrants - 15,000; exercise price of $0.40		15,000
Total common stock equivalents		1,643,133

The Company had no common stock equivalents at June 30, 2011.

The Company reflected a net loss for the six months ended June 30, 2012 and 2011; therefore, the effect of considering any common stock equivalents, if outstanding, would have been anti-dilutive. Consequently, a separate computation of diluted earnings (loss) per share is not presented.

In connection with the recapitalization, all share and per share amounts have been retroactively restated.

Recent Accounting Pronouncements

There are no new accounting pronouncements that have any impact on the Company’s financial statements.

Note 3 Accounts Receivable

Accounts receivable consisted of the following at June 30, 2012 and December 31, 2011.

	June 30, 2012			December 31, 2011
Gross accounts receivable	$	1,353,439		$	1,057,696
Allowance		(67,682	)		(50,861	)
Accounts receivable – net	$	1,285,757		$	1,006,835

The Company recorded an approximate 5% allowance for bad debt for estimated differences between expected and actual payment of accounts receivables. These reductions are made based upon estimates that are determined by historical experience, contractual terms, and current conditions. Each quarter, the Company reevaluates its estimates to assess the adequacy of its allowance, adjusting the amounts as necessary.

In addition, for the six months ended June 30, 2012 the Company wrote off $38,311 of its accounts receivable to bad debt expense; there we no bad debt write-offs during the six months ended June 30, 2011.

Note 4 Property and Equipment

Property and equipment consisted of the following.

	June 30, 2012			December 31, 2011			Estimated Useful Life
DME rental equipment	$	260,815		$	223,685		Life of the lease
Leasehold improvements and fixtures		181,536			139,008		5 years
Vehicles		90,046			90,046		3 years
Computer equipment and software		56,407			56,407		3-5 years
Furniture and equipment		30,575			28,486		13 months
Total		619,379			537,632
Less: accumulated amortization/depreciation		(335,571	)		(260,837	)
Property and equipment – net	$	283,808		$	276,795

14

Progressive Care Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

June 30, 2012

(unaudited)

Depreciation is computed on a straight-line basis over estimated useful lives. Property and equipment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. There were no impairment charges taken for the six months ended June 30, 2012 or 2011.

Depreciation expense for the six months ended June 30, 2012 and 2011 was $128,574 and $40,556, respectively.

Note 5 Debt

Debt consists of the following:

	June 30, 2012			December 31, 2011
A. Convertible debt - Secured	$	500,000		$	-
Less: debt discount		(206,014	)		-
Convertible debt - net		293,986			-
B. Convertible debt - Unsecured		150,000			150,000
C. Note - Secured		29,920			-
D. Notes – Unsecured		74,118			161,096
Total debt	$	548,024		$	311,096
Current portion	$	398,024		$	161,096
Long term portion	$	150,000		$	150,000

The corresponding debts above are more fully discussed below:

(A)Convertible Debt – Secured

During the six months ended June 30, 2012 the Company issued a secured convertible note for $500,000. The note bears interest of 12%, 6% of which is charged monthly and 6% of which is accrued and due in a balloon payment at maturity. The note has a default interest rate of 18%, a maturity date of April 30, 2013 and is secured by all of the assets of the Company and its subsidiaries.  The debt holder is entitled, at their option, to convert all or part of the principal and accrued interest into shares of the Company’s common stock. The note is convertible at 95% of the volume weighted average price of the Company’s common stock for the 5 days preceding conversion. The embedded conversion feature within this note classifies it as a derivative liability. See Note 6.

The Company incurred debt issue costs of $152,500 in connection with the note; of which $100,000 was in stock (196,708 shares @ $0.51 per share) and the remaining $52,500 in cash. See Note 5(E).

(B)Convertible Debt – Unsecured

On November 28, 2011, the Company entered into a $150,000 3-year 8% convertible note with an investor. Under the terms of the note, the investor has the option to convert their note into shares of the Company’s common stock at an exercise price of $0.40/share. In connection with this note, the Company paid debt issue costs of $18,000 and issued 15,000, 3-year warrants exercisable at $0.40 per share, having a fair market value of $4,895, as calculated using the Black Scholes valuation method.  The warrants vested on the date of issuance and expire November 27, 2014. See Note 7 – Stock Warrants.

15

Progressive Care Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

June 30, 2012

(unaudited)

(C)Note - Secured

The Company has a one year secured note with a DME vendor that bears no interest and matures on January 15, 2013. The note is secured by only the DME equipment to which the note appertains. Secured notes consist of the following:

Balance, December 31, 2011	$	-
Reclassification from accounts payable to notes payable		51,290
Repayments		(21,370	)
Balance, June 30, 2012	$	29,920

(D)Notes - Unsecured

The Company has two short term note with vendors that bear no interest. Unsecured Notes consists of the following:

Balance, December 31, 2011	$	161,0966
Reclassification from accounts payable to notes payable		70,8866
Additional borrowings		40,000
Repayments		(61,7688	)
Debt forgiveness		(62,7677	)
Debt forgiveness – related party		(73,3299	)
Balance, June 30, 2012	$	74,1188

During the quarter ended June 30, 2012, a party related to a principal shareholder in the Company, agreed to forgive debt of $73,329 (see above) and accrued interest of $27,661 (totalling $100,990), which was charged to addition to paid-in capital. The Company does not record gains or losses on related party transactions.

(E) Debt Issue Costs

The Company paid debt issue costs in connection with raising funds through the issuance of convertible debt.  These costs are being amortized over the life of the debt and recorded as interest expense. If a conversion of the underlying debt occurs, the proportionate share of the unamortized amounts will be immediately expensed.

For the six months ended June 30, 2012 the Company incurred debt issue costs and amortization expense of $152,500 and $29,346, respectively. For the six months ended June 30, 2011 the Company paid no debt issue costs and incurred no amortization expense.

The following is a summary of the Company’s debt issue costs.

	June 30, 2012			December 31, 2011
Debt issue costs	$	175,395		$	22,895
Accumulated amortization of debt issue costs		(29,982	)		(636	)
Debt issue costs – net	$	145,413		$	22,259

Future amortization of debt issue costs for the fiscal years 2012 through 2014 are as follows:

Year	Amount
2012 (6 months remaining)	$	80,724
2013		57,769
2014		6,920
	$	145,413

 (E) Debt Discount

The Company recorded debt discounts in connection with the issuance of convertible debt that contains an embedded conversion option. These costs are amortized over the life of the debt to interest expense. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts will be immediately expensed.

16

Progressive Care Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

June 30, 2012

(unaudited)

The following is a summary of the Company’s debt discount.

	June 30, 2012			June 30, 2012
Debt discount	$	244,153		$	-
Accumulated amortization of debt discounts		(38,139	)		-
Debt discount – net	$	206,014		$	-

Note 6 Derivative Liabilities

The Company identified a conversion feature embedded within one of its convertible debts and has determined that it should be accounted for at fair value as a derivative liability.

The fair value of the conversion feature is summarized as follow:

Derivative liability - December 31, 2011	$	-
Fair value at the commitment date for debt instruments		244,153
Fair value mark to market adjustment for debt instruments		(15,945	)
Derivative liability – June 30,2012	$	228,208

The fair value at the commitment and re-measurement dates for the Company’s derivative liabilities were based upon the following management assumptions during 2012:

	Commitment Date			Re-measurement Date
Expected dividends		0	%		0	%
Expected volatility		119	%		121	%
Expected term:	12 months			10 months
Risk free interest rate		0.18	%		0.19	%

Note 7 Stock Warrants

A summary of warrant activity for the Company for the periods ended June 30, 2012 and December 31, 2011 is as follows:

	Number of Warrants		Weighted Average Exercise Price
Balance at December 31, 2011	$	15,000	$	0.40
Granted		-		-
Exercised		-		-
Forfeited		-		-
Balance at June 30, 2012	$	15,000	$	0.40

A summary of all outstanding and exercisable warrants as of June 30, 2012 is as follows:

Exercise  Price		Warrants  Outstanding		Warrants  Exercisable		Weighted Average  Remaining  Contractual Life	Aggregate Intrinsic Value
$	0.40		15,000		15,000	2.41 years	$	300

Note 8 Commitments and Contingencies

Operating Leases

The Company leases approximately 5,100 square feet of pharmacy space under a 10-year lease executed January 11, 2011. The Company also leases approximately 1,200 square feet of office space under a 2-year lease executed November 15, 2010.

17

Progressive Care Inc. and Subsidiaries

Notes to the Consolidated Financial Statements

June 30, 2012

(unaudited)

On July 1, 2011 the Company entered into a 5 year lease of approximately 4,200 square feet in Miami, Florida. Under the term of this lease the Company is not responsible for lease payments until the lessor has completed the build out of this location which is anticipated in late 2012.

On October 6, 2011 the Company also entered into a 5 year lease of approximately 3,100 square feet in Opa Locka, Florida. Under the term of this lease the Company’s lease payments commenced February 1, 2012.

Rent expense was $125,823 and $53,512 for the six months ended June 30, 2012 and 2011.

Deferred rent payable at June 30, 2012 and December 31, 2011 was $32,387 and $17,535, respectively. Deferred rent payable is the sum of the difference between the monthly rent payment and the monthly rent expense of an operating lease that contains escalated payments in future periods.

Rental commitments for currently occupied space for the fiscal years of 2012 through 2020 are approximately as follows:

Year	Amount
2012 (6 months remaining)		108,000
2013		227,000
2014		216,000
2015		222,000
2016		230,000
Thereafter		763,000
	$	1,766,000

Legal Matters

From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters that may arise from time to time may harm its business. The Company is currently neither a party to nor is it aware of any such legal proceedings or claims to be filed against it.

Note 9 Stockholders’ Equity

During the six months ended June 30, 2012, the Company issued 247,787 shares of its common stock, with share prices ranging from $0.35 to $0.51, to consultants for services rendered and the acquisition of debt; the shares have a fair value of $124,500. The fair value of stock issued is based upon the quoted closing trading price, or the value of the services provided, whichever is more readily determinable.

Note 10 Taxes

A summary of our tax liability from December 31, 2010 through June 30, 2011 is as follows:

	Accrued Income Tax Payable			Deferred Tax Assets
Balance, December 31, 2010	$	20,203		$	18,473
Changes in the first quarter of 2011		28,864			7,627
Balance, March 31, 2011		49,067			26,100
Changes in the second quarter of 2011		(49,067	)		(26,100	)
Balance, June 30, 2011		-			-

For the year ended December 31, 2010 the Company recorded its estimated current income tax liability and deferred tax assets, as shown above. In the first quarter of 2011, the Company estimated an increase in its tax liability and an increase in its deferred tax asset, also as shown above. However, at June 30, 2011, the Company reversed its tax estimate from 2010 and 2011 to date, because at that time the Company believed that it’s projected 2011 losses and adjustments to its taxable liability relating to its stock based compensation, would offset previously estimated taxes.

Note 11 Going Concern

As reflected in the accompanying unaudited interim consolidated financial statements, the Company had a net loss of approximately $228,000 and net cash used in operations of approximately $178,000 for the six months ended June 30, 2012. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

The ability of the Company to continue its operations is dependent on management’s plans, which include the raising of capital through debt and/or equity markets with some additional funding from other traditional financing sources, including term notes, until such time that funds provided by operations are sufficient to fund working capital requirements. The Company may need to incur liabilities with certain related parties to sustain the Company’s existence.

The Company will require additional funding to finance the growth of its current and expected future operations as well as to achieve its strategic objectives. The Company believes its current available cash along with anticipated revenues may be insufficient to meet its cash needs for the near future. There can be no assurance that financing will be available in amounts or terms acceptable to the Company, if at all.

In response to these issues, management is taking the following actions:

●   increasing it sales presence in the community by sponsoring health related events

●   hiring additional sales personnel to target additional market segments

●   seeking additional third party debt and/or equity financing

18

The accompanying unaudited interim consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

Other Matters

On June 11, 2012, the Company received written notice of the resignation of Andy Subachan as a director of the Company, effective immediately, and terminated the employment of Mr. Subachan as Chief Operating Officer, also effective immediately, as a result of the Company learning that Mr. Subachan had pleaded guilty to violating federal health care anti-kickback statutes at an assisted living facility owned and managed by him, and not related in any respect to the Company or its business. 

However, as a result of Mr. Subachan being a control shareholder, officer, and director, PharmCo (a wholly owned subsidiary of the Company) received written notice from the State of Florida Agency for Health Care Administration (“AHCA”) terminating PharmCo's participation in the state’s Medicaid program. Thereafter, PharmCo was orally advised by the staff at AHCA that no termination of the ability to bill for Medicaid goods and services would be effected pending the outcome of a hearing before AHCA regarding this matter, during which time the Company intended to seek Mr. Subachan’s consent to divest himself of his equity interest in the Company.

Notwithstanding, PharmCo has  encountered significant difficulties working with the Medicaid system protocols to bill Medicaid claims, and as such has not been able to process its Medicaid claims.

On July 31, 2012, Mr. Subachan returned 12,208,432 shares of common stock to the Company and the Company agreed to release him from claims. No indemnity, however, was granted for third party action(s).

On August 17, 2012, in a written agreement received from AHCA, PharmCo’s termination from the State’s Medicaid program was rescinded. As such, PharmCo expects to now receive all payments held by Medicaid, as well as be allowed to bill for and receive payment for the prescriptions it filled for customers who were insured by Medicaid during the period its participation in the state’s Medicaid program was restricted.

Note 12 Subsequent Events

On July 31, 2012, the Company’s former COO returned 12,208,432 shares of the Company’s common stock to the Company’s treasury. The shares returned to the Company were accounted for at par value.

19

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

The following discussion should be read in conjunction with the attached unaudited consolidated financial statements and notes thereto. In addition to historical information, the following discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Where possible, we have tried to identify these forward looking statements by using words such as “anticipate,” “believe,” “intends” or similar expressions. Our actual results may differ materially from those anticipated by the forward-looking statements due to important factors and risks including, but not limited to, those set forth under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2011.

Introduction

The Company is a South Florida pharmacy, which specializes in providing anti-retroviral patient care management, durable medical equipment (DME) and pharmaceutical needs to long term care facilities and doctor’s offices. The pharmacy industry is highly competitive;  we compete with national and independent retail drug stores, specialty pharmacies, supermarkets, convenience stores, mail order prescription providers, discount merchandisers, membership clubs, health clinics, internet pharmacies, and home medical equipment providers.

Our specific focus is to increase our revenues and presence in the specialty pharmacy business, pursuing expansion initiatives we instituted during the 2011 fiscal year.

Overview

As we entered the 2011 fiscal year, our business plan was to take advantage of our competitive bidding contract with Medicare by providing DME in South Florida. We also took several steps to enhance our long-term care prescription services including increasing our marketing efforts and moving forward with our expansion plans. We also began to concentrate on a new source of revenue, the specialty/anti-retroviral medication market, which we believe is underserved in South Florida.

In the second quarter of 2011 we entered the specialty/anti-retroviral medication market. We structured our pharmacy to provide prescription filling services for patients whose needs include anti-retroviral medication and offer patients care management. To increase the credibility and quality of our services, we hired a team of personnel, knowledgeable in the care and management of individuals with infectious diseases. Our services in this segment include customized and confidential prescription packaging, an extensive inventory of specialty/ anti-retroviral medications, and 24-hour emergency customer assistance.

Our plans to grow our specialty pharmacy segment include grassroots marketing efforts targeted at physician groups and other referral sources. During the past year, overall our gross profit margin on specialty pharmacy services has been impacted by two primary factors: high medication costs and low reimbursements rates by Medicare and Medicaid. Specialty medication costs are high, resulting in lower gross margins for such products. For the first six months ended June 30, 2012, sale of prescriptions to patients taking anti-retro viral medication were approximately $1.85 million.

In January 2011, our Medicare competitive bidding contract became effective for the sale of durable medical equipment. Since then, we have ramped up our marketing efforts of such products resulting in a substantial increase in our sales of 92% for the first six months of 2012 as compared to the same period in 2011. However, cash flow from DME sales has been hampered by Medicare’s review of nearly all rentals of hospital beds and oxygen products. As part of this review, Medicare has denied some claims at a much higher rate than had been previously experienced. Management believes that most of the denied claims will ultimately be approved because we believe we are in substantial compliance with all governmental regulations regarding equipment dispensing and billing. Further, audits conducted by Medicare have not yielded any material deficiencies in our compliance processes. Notwithstanding, and to mitigate the impact on our cash flow, management has taken certain steps, including:

·   the diversification of our product base by selling and marketing DME outside the scope of the review process;

·   an increase in compliance protocols to increase the likelihood of payment without review;

·   the improvement of the documentation process between us and Medicare, patients, doctors, and referral sources to ensure timely receipt of supporting documentation to substantiate billing claims; and

·   an increase in the training, productivity and efficiency of our sales staff to streamline overall processes.

Based on the above, we expect to see ongoing improvements in our cash flow in the near term.

In the second and third quarter of 2011, we targeted two additional South Florida locations. The first of these locations which is scheduled to open in the third quarter of 2012 is in the City of Opa Locka, FL, where we believe the specialty pharmacy needs are underserved. The second is located across from North Shore Hospital in Miami, FL, and is tentatively scheduled to open in the second quarter of 2013, pending the City of Miami’s approval of our building plans. This particular location was selected because management believes there is a lack of pharmacy services offered by North Shore Hospital and because of the close proximity of a new outpatient clinic currently under construction and adjacently located. We believe we will also benefit from long term care and senior living facilities in the immediate area, and have plans to relocate our nursing home fulfillment center to this location.

20

RESULTS OF OPERATIONS

Three Months Ended June 30, 2012 and 2011

The following table summarizes our results of operations for the three months ended June 30, 2012 and 2011.

Three Months Ended
	June 30, 2012						June 30, 2011
	Dollars			% of Revenue			Dollars			% of Revenue			$ change			% change
Total revenues - net	$	2,542,478			100	%	$	1,897,289			100	%	$	645,189			34	%
Total cost of sales		1,744,855			69	%		880,752			46	%		864,103			98	%
Total gross margin		797,623			31	%		1,016,537			54	%		(218,914	)		-22	%
Operating expenses		857,431			34	%		1,079,100			57	%		(221,669	)		-21	%
Other income (expense)		6,345			0	%		(1,538	)		0	%		7,883			-513	%
Operating loss		(53,463	)		-2	%		(64,101	)		-3	%		10,638			-17	%
Income tax expense		-						(22,967	)				$	22,967			-100	%
Net loss		(53,463	)		-2	%		(41,134	)		-2	%		(12,329	)

Revenue

Our pharmacy and DME revenues were as approximately as follows.

Three Months Ended
	June 30, 2012					June 30, 2011
	Dollars		% of Revenue			Dollars		% of Revenue			$ change		% change
Pharmacy	$	2,209,000		87	%	$	1,783,000		94	%	$	426,000		24	%
DME	$	333,000		13	%	$	114,000		6	%		219,000		192	%
Total Sales	$	2,542,000				$	1,897,000				$	645,000		34	%

Net revenue increased approximately $645,000 or 34% for the three months ended June 30, 2012 as compared to the three months ended June 30, 2011. Our increase in pharmacy revenue is mainly related to the increase in anti-retro viral medication sales, which carry a higher than average sale price; our increase in DME sales is related to our full implementation of our competitive bidding contract with Medicare, which had only just begun during the first quarter of 2011.

Gross Margin

Our gross margin as a percent of sales decreased from 54% to 31% for three months ended June 30, 2012 as compared to the three months ended June 30, 2011. Overall margins for this period were lower mainly due to higher sales of anti-retro viral medication that carry a lower gross margin than do other medications.  Conversely, our gross margin was positively impacted by our increase in DME sales, which allowed for bulk purchasing from vendors resulting in slightly higher overall margins for the three months ended June 30, 2012 as compared to the three months ended June 30, 2011.

Operating Expenses

Our operating expenses decreased approximately $222,000 or 21% for the three months ended June 30, 2012 as compared to the three months ended June 30, 2011. The decrease was mainly attributable to our restructuring of management’s compensation..

Net Loss

Our overall net loss increased slightly or approximately $12,000 for the three months ended June 30, 2012 as compared to the three months ended June 30, 2011. Our overall net loss was mainly attributable to a lower gross margin offset almost entirely by decreased operating expenses.

21

Six Months Ended June 30, 2012 and 2011

The following table summarizes our results of operations for the six months ended June 30, 2012 and 2011.

Six Months Ended
	June 30, 2012						June 30, 2011
	Dollars			% of Revenue			Dollars			% of Revenue			$ change			% change
Total revenues - net	$	4,970,006			100	%	$	3,769,909			100	%	$	1,200,097			32	%
Total cost of sales		3,587,871			72	%		1,831,953			49	%		1,755,918			96	%
Total gross margin		1,382,135			28	%		1,937,956			51	%		(555,821	)		-29	%
Operating expenses		1,609,462			32	%		1,973,889			52	%		(364,427	)		-18	%
Other income (expense)		(1,151	)		0	%		14			0	%		(1,165	)		-8321	%
Operating loss		(228,478	)		-5	%		(35,919	)		-1	%		(192,559	)		536	%
Income tax expense		-						-					$	-			0	%
Net loss		(228,478	)		-5	%		(35,919	)		-1	%		(192,559	)

Revenue

Our pharmacy and DME revenues were as approximately as follows.

Six Months Ended
	June 30, 2012					June 30, 2011
	Dollars		% of Revenue			Dollars		% of Revenue			$ change		% change
Pharmacy	$	4,281,000		86	%	$	3,411,000		90	%	$	870,000		26	%
DME	$	689,000		14	%	$	359,000		10	%		330,000		92	%
Total Sales	$	4,970,000				$	3,770,000				$	1,200,000		32	%

Net revenue increased approximately $1.2 million or 32% for the six months ended June 30, 2012 as compared to the six months ended June 30, 2011. Our increase in pharmacy revenue is mainly related to the increase in anti-retro viral medication sales, which carry a higher than average sale price; our increase in DME sales is related to our full implementation of our competitive bidding contract with Medicare, which had only just begun during the first quarter of 2011.

Gross Margin

Our gross margin as a percent of sales decreased from 51% to 28% for six months ended June 30, 2012 as compared to the six months ended June 30, 2011. Overall margins for this period were lower mainly due to much higher sales of anti-retro viral medication that carry a much lower gross margin than do other medications.  Conversely, our gross margin was positively impacted by our increase in DME sales, which allowed for bulk purchasing from vendors resulting in slightly higher overall margins for the six months ended June 30, 2012 as compared to the six months ended June 30, 2011.

Operating Expenses

Our operating expenses decreased approximately $364,000 or 18% for the six months ended June 30, 2012 as compared to the six months ended June 30, 2011. The decrease was mainly attributable to our restructuring of management’s compensation.

Net Loss

Our overall net loss increased approximately $193,000 for the six months ended June 30, 2012 as compared to the six months ended June 30, 2011. Our overall net loss was mainly attributable to a lower gross margin offset almost entirely by decreased operating expenses.

Three Months Ended June 30, 2012 as compared to the three Months Ended March 31, 2012

Our quarter-over-quarter revenues increased approximately $115,000 due mainly to new pharmacy sales, offset slightly by an approximately $23,000 decrease in DME sales. Quarter-over-quarter gross margins increased by approximately $216,000 or 27%, due primarily to an increase in more-profitable drug sales. Operating expense between the two quarters increased approximately $108,000 or 13% due to almost entirely from an increase in audit related fees of approximately $38,000 from our year-end audit and an increase in legal fees of approximately $77,000 relating to our upcoming S1 filing and acquisition that we ultimately decided not to pursue. Overall our quarter-over-quarter net loss decreased by approximately $122,000, from approximately $175,000 in the first quarter of 2012 to approximately $53,000 in the second quarter.

LIQUIDITY AND CAPITAL COMMITMENTS

Current Market Conditions

We regularly monitor economic conditions and associated impacts on the financial markets and our business. Though there has been improvement in the global economic environment we continue to be cautious. We continue to evaluate the financial health of our supplier base, carefully manage customer credit, and monitor the concentration risk of our cash.

We believe that no significant concentration of credit risk currently exists. For further discussions of risks associated with market conditions, See “Part I — Item 1A — Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2011.

22

Liquidity and Capital Resources

Six Months Ended
	June 30, 2012			June 30, 2011
Net change in cash from:
Operating activities	$	(178,293	)	$	244,815
Investing activities		(135,587	)		(128,766	)
Financing activities		332,982			(71,780	)
Change in cash	$	19,102		$	44,269
Cash at end of Period	$	107,976		$	248,605

At June 30, 2012, the Company had cash of approximately $108,000 and working capital of approximately $668,000, compared to cash of approximately $17,000 and a working capital of approximately $800,000 at December 31, 2011. The working capital decrease of approximately $132,000 is primarily due to an increase in debt and associated derivative liabilities of approximately $538,000 and an increase in accounts payable and accrued liabilities of approximately $89,000 offset by an increase in cash of approximately $90,000, an increase in accounts receivable of approximately $279,000, an increase in debt issue cost net of approximately $123,000 and an increase in inventory of approximately $51,000.

Net cash used in operating activities for the six months ended June 30, 2012 was approximately $178,000 compared to net cash provided by operating activities of approximately $245,000 for the six months ended June 30, 2011. When compared, net cash from operating activities primarily decreased as a result of approximately $193,000 in net losses, an increase of approximately $88,000 in depreciation expense, amortization of debt issue cost and debt discount of approximately $67,000, offset by a $69,000 gain from debt forgiveness and a decrease of $311,000 in stock based compensation.

Net cash used for investing activities was approximately $136,000 for the six months ended June 30, 2012 as compared to net cash used in investing activities of approximately $129,000 for the six months ended June 30, 2011. Net cash used in investing activities was for equipment purchases for the expansion of our DME sales.

Net cash provided by financing activities was approximately $333,000 for the six ended June 30, 2012 as compared to net cash used in financing activities of approximately $72,000 for the six months ended June 30, 2011. Our increase in net cash provided by financing activities was primarily due to the proceeds of our convertibles secured notes.

Our continued operations will primarily depend on whether we are able to generate revenues and profits and/or raise additional funds through various potential sources, such as equity and debt financing. Such additional funds may not become available on acceptable terms and there can be no assurance that any additional funding that we do obtain will be sufficient to meet our needs in the long term. We will continue to fund operations from cash on hand and through the similar sources of capital previously described. We can give no assurances that any additional capital that we are able to obtain will be sufficient to meet our needs.

Our recent sources of cash have been derived from the sale of our convertible secured notes.  In addition, we recently entered into a $2,000,000 equity financing agreement, which will allow us to draw down on the line over a 2-year period, provided that certain conditions are met; however, there is no assurance that any such conditions will be met, and to date we have not drawn down against the line.

Furthermore, there is no guarantee that we will be successful in raising any additional capital. There can be no assurance that we will be able to raise these funds on terms acceptable to us, if at all.

Current and Future Financing Needs

We have spent, and expect to continue to spend, substantial amounts in connection with implementing our business strategy. Our cash flow has been severely hampered by issues relating to Medicaid (see “Other Matters” in Note 11 of the Notes to Consolidated Financial Statements included in “Part I — Item 1 — Financial Statements”); however we believe that the resolution of the Medicaid issue will, in the near term, alleviate this cash flow issue.

Based on our current plans, we believe that our current cash may not be sufficient to enable us to meet our planned operating needs.  However, the actual amount of funds we will need to operate is subject to many factors, some of which are beyond our control. We have based our estimate on assumptions that may prove to be wrong. We may need to obtain additional funds sooner or in greater amounts than we currently anticipate. Potential sources of financing include public or private sales of our shares or debt and other sources. We may seek to access the public or private equity markets when conditions are favorable due to our long-term capital requirements. We do not have any committed sources of financing at this time, and it is uncertain whether additional funding will be available when we need it on terms that will be acceptable to us, or at all. If we raise funds by selling additional shares of common stock or other securities convertible into common stock, the ownership interest of our existing stockholders will be diluted. If we are not able to obtain financing when needed, we may be unable to carry out our business plan. As a result, we may have to significantly limit our operations and our business, financial condition and results of operations would be materially harmed.

23

Critical Accounting Policies

The information required by this section is incorporated herein by reference to the information set forth under the caption “Summary of Significant Accounting Policies” in Note 2 of the Notes to Consolidated Financial Statements included in “Part I — Item 1 — Financial Statements” and is incorporated herein by reference.

Off-Balance Sheet Arrangements

We do not have any unconsolidated special purpose entities and, we do not have exposure to any off-balance sheet arrangements. The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with us is a party, under which we have: (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report and other documents that we file with the Securities and Exchange Commission contain forward-looking statements that are based on current expectations, estimates, forecasts and projections about our future performance, our business, our beliefs and our management’s assumptions.  Statements that are not historical facts are forward-looking statements, including forward-looking information concerning pharmacy sales trends, prescription margins, number and location of new store openings, outcomes of litigation and the level of capital expenditures, industry trends, demographic trends, growth strategies, financial results, cost reduction initiatives, acquisition synergies, regulatory approvals, and competitive strengths.  Words such as “expect,” “outlook,” “forecast,” “would,” “could,” “should,” “project,” “intend,” “plan,” “continue,” “sustain”, “on track”, “believe,” “seek,” “estimate,” “anticipate,” “may,” “assume,” and variations of such words and similar expressions are often used to identify such forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  These forward-looking statements are not guarantees of future performance and involve risks, assumptions and uncertainties, including, but not limited to, those described in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K and in other reports that we file or furnish with the Securities and Exchange Commission.  Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements.  Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made.  Except to the extent required by law, we undertake no obligation to update publicly any forward-looking statements after the date they are made, whether as a result of new information, future events, changes in assumptions or otherwise.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable because the Company is a smaller reporting company.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer (“CEO”), and Chief Financial Officer (“CFO”) of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. On May 28, 2012, the Company’s CEO and CFO and its Board of Directors concluded that its financial statements and notes thereto for the years ended December 31, 2011 and 2010 and the interim periods ended March 31, 2011, June 30, 2011, September 30, 2011 and March 31, 2012, were required to be restated to revise the initial treatment of the Merger from that of an acquisition to that of a reverse recapitalization.  In light of the need to restate the financial statements the Company’s CEO and CFO have concluded that the disclosure controls were deficient and the deficiency constituted a material weakness. The Company’s CEO and CFO have since concluded that all material weaknesses have been remediated and significant deficiencies have been remediated. Based upon its current evaluation, the Company’s CEO and CFO have concluded that the Company’s current disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during our fiscal quarter ended June 30, 2012 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

24

PART II—OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters that may arise from time to time may harm its business. The Company is currently neither a party to nor is it aware of any such legal proceedings or claims to be filed against it.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the six months ended June 30, 2012, the Company issued 247,787 shares of its common stock, with share prices ranging from $0.35 to $0.51, for debt issue costs and to consultants for services rendered; the shares have a fair value of $124,500. The fair value of stock issued for these services is based upon the quoted closing trading price of the Company’s common stock on the date if issue.  The securities issued for services were offered and sold in reliance on the exemption from registration under Section 4(2) of the Act. The offering was not conducted in connection with a public offering, and no public solicitation or advertisement was made or relied upon by the individual in connection with the offering.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.  MINE SAFETY DISCLOSURES

Not Applicable

ITEM 5.  OTHER INFORMATION

None.

ITEM 6. EXHIBITS

31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) *
31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) *
32.1	Certification pursuant to Section 1350 of the Sarbanes-Oxley Act of 2002 *
32.2	Certification pursuant to Section 1350 of the Sarbanes-Oxley Act of 2002 *
EX-101.INS	XBRL Instance Document
EX-101.SCH	XBRL Taxonomy Extension Schema
EX-101.CAL	XBRL Taxonomy Extension Calculation Linkbase
EX-101.DEF	XBRL Taxonomy Extension Definition Linkbase
EX-101.LAB	XBRL Taxonomy Extension Label Linkbase
EX-101.PRE	XBRL Taxonomy Extension Presentation Linkbase

*Filed herewith

25

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned.

PROGRESSIVE CARE INC.
By:	/s/ Avraham A. Friedman
	Avraham Friedman
	President and Chief Executive Officer
	(Principal Executive Officer)
	Date: August 20, 2012

26 

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO RULE 13a-14 OR RULE 15d-14 OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 I, Avraham A. Friedman, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Progressive Care Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:
	a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that  material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  August 20, 2012
By:	/s/ Avraham A. Friedman
Name:	Avraham A. Friedman
Title:	President and Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO RULE 13a-14 OR RULE 15d-14 OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 I, Alan Jay Weisberg, C.P.A. certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Progressive Care Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:
	a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that  material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  August 20, 2012
By:	/s/ Alan Jay Weisberg
Name:	Alan Jay Weisberg
Title:	Chief Financial Officer
	(Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

       Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officers of Progressive Care Inc. (the “Registrant”) hereby certifies, to such officer’s knowledge, that: 

(1)	the accompanying Quarterly Report on Form 10-Q of the Registrant for the quarter ended June 30, 2012 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date:  August 20, 2012
By:	/s/ Avraham A. Friedman
Name:	Avraham A. Friedman
Title:	President and Chief Executive Officer
	(Principal Executive Officer)

EX-32.2

EXHIBIT 32.2

CERTIFICATION PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

       Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Progressive Care Inc. (the “Registrant”) hereby certifies, to such officer’s knowledge, that: 

(1)	the accompanying Quarterly Report on Form 10-Q of the Registrant for the quarter ended June 30, 2012 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date:  August 20, 2012
By:	/s/ Alan Jay Weisberg
Name:	Alan Jay Weisberg
Title:	Chief Financial Officer
	(Principal Financial Officer)

XML

Property and Equipment (Details) (USD $)	6 Months Ended
	Jun. 30, 2012	Dec. 31, 2011
Property and equipment
Total	$ 619,379	$ 537,632
Less: accumulated depreciation	(335,571)	(260,837)
Property and equipment – net	283,808	276,795
DME rental equipment [Member]
Property and equipment
Total	260,815	223,685
Property, Plant and Equipment, Estimated Useful Lives	Life of the lease
Leasehold improvements and fixtures [Member]
Property and equipment
Total	181,536	139,007
Property and Equipment, Useful Life	5 years
Vehicles [Member]
Property and equipment
Total	90,046	90,046
Property and Equipment, Useful Life	3 years
Computer equipment and software [Member]
Property and equipment
Total	56,407	56,407
Furniture and equipment [Member]
Property and equipment
Total	$ 30,575	$ 28,486
Property and Equipment, Useful Life	13 months
Minimum [Member] | Computer equipment and software [Member]
Property and equipment
Property and Equipment, Useful Life	3 years
Maximum [Member] | Computer equipment and software [Member]
Property and equipment
Property and Equipment, Useful Life	5 years

XML

Taxes (Details) (USD $)	3 Months Ended
	Jun. 30, 2011	Mar. 31, 2011
Summary of income tax liability
Accrued Income Tax, Beginning Balance	$ 49,067	$ 20,203
Changes in Accrued Income Tax	(49,067)	28,864
Accrued Income Tax, Ending Balance		49,067
Deferred Tax Assets, Beginning Balance	26,100	18,473
Changes in Deferred Tax Assets	(26,100)	7,627
Deferred Tax Assets, Ending Balance		$ 26,100

XML

Derivative Liabilities (Details 1)	6 Months Ended
	Jun. 30, 2012
Commitment Date [Member]
Fair value at the commitment and re-measurement dates for the Company’s derivative liabilities
Expected dividends	0.00%
Expected volatility	119.00%
Expected term:	12 months
Risk free interest rate	0.18%
Re-Measurement Date [Member]
Fair value at the commitment and re-measurement dates for the Company’s derivative liabilities
Expected dividends	0.00%
Expected volatility	121.00%
Expected term:	10 months
Risk free interest rate	0.19%

XML

Going Concern (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Going Concern (Textual)
Net loss	$ (53,463)	$ (64,101)	$ (228,478)	$ (35,919)
Net Cash Provided by Operating Activities			$ (178,293)	$ 244,815
Return of shares from related party			12,208,432

XML

Debt (Details Textual) (USD $)	1 Months Ended	6 Months Ended
	Nov. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011	Nov. 28, 2011
Debt (Textual)
Secured Convertible Debt		$ 500,000
Conversion terms		95% of the volume weighted average price of the Company's common stock for the 5 days preceding conversion.
Convertible note with an investor		150,000			150,000
Number of years for Convertible note with an investor	3 years
Convertible note with an investor (in percentage)	8.00%
Common stock at an exercise price, per share	$ 0.40
Debt isssue costs	18,000	52,500
Debt issue costs, Cash		100,000
Debt issue costs, Stock		52,500
Warrants exercisable, shares issued	15,000
Warrants exercisable price, per share	$ 0.40	$ 0.40
Warrants exercisable, fair market value	4,895
Warrants exercisable (years)	3 years
Warrant vested date of issuance and expire	Nov. 27, 2014
Incurred amortization expense		29,346
Interest Rate		12.00%
Default interest rate		18.00%
Secured convertible note maturity		Apr. 30, 2013
Convertible debt - Secured		500,000
Accrued interest rate		6.00%
Debt forgiveness - related party		(73,329)
Accrued interest		27,661
Debt forgiveness and accrued interest		$ 100,990
Shares issused in connection with debt		196,708
Conversion price		$ 0.51

XML

Summary of Significant Accounting Policies (Details)	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Billing Concentrations
A	20.00%	11.00%
B	15.00%	13.00%
C	13.00%	1.00%
D	13.00%
E		17.00%
Vendor concentrations
A	65.00%	6.00%
B	15.00%	35.00%
C	1.00%	35.00%

XML

Derivative Liabilities (Tables)

6 Months Ended

Jun. 30, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Summary of fair value of the conversion feature

Derivative liability - December 31, 2011	$	-
Fair value at the commitment date for debt instruments		244,153
Fair value mark to market adjustment for debt instruments		(15,945	)
Derivative liability – June 30,2012	$	228,208

Fair value at the commitment and re-measurement dates for the Company’s derivative liabilities

	Commitment Date			Re-measurement Date
Expected dividends		0	%		0	%
Expected volatility		119	%		121	%
Expected term:	12 months			10 months
Risk free interest rate		0.18	%		0.19	%

XML

Stock Warrants (Details 1) (Warrant [Member], USD $)	6 Months Ended
	Jun. 30, 2012	Dec. 31, 2011
Warrant [Member]
Summary of all outstanding and exercisable warrants
Exercise Price	$ 0.40
Warrants Outstanding	15,000	15,000
Warrants Exercisable	15,000
Weighted Average Remaining Contractual Life	2 years 4 months 28 days
Aggregate Intrinsic Value	$ 300

XML

Debt (Details 1) (USD $)	6 Months Ended
	Jun. 30, 2012
Note Secured
Balance
Reclassification from accounts payable to notes payable	51,290
Repayments	(21,370)
Balance, ending	$ 29,920

XML

Accounts Receivable (Details) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Accounts receivable
Gross accounts receivable	$ 1,353,439	$ 1,057,696
Allowance	(67,682)	(50,861)
Accounts receivable – net	$ 1,285,757	$ 1,006,835

XML

Commitments and Contingencies (Details Textual) (USD $)	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011	Oct. 06, 2011	Jul. 01, 2011	Jan. 11, 2011	Nov. 15, 2010
Commitments and Contingencies (Textual)
Approximate leased space of company, (In square feet)				3,100	4,200	5,100	1,200
Execution period of lease				5 years	5 years	10 years	2 years
Rent expense on lease	$ 125,823	$ 53,512
Deferred rent payable	$ 32,387		$ 17,535

XML

Derivative Liabilities (Details) (USD $)	6 Months Ended
	Jun. 30, 2012
Summary of fair value of the conversion feature
Derivative liability - December 31, 2011
Fair value at the commitment date for debt instruments	244,153
Fair value mark to market adjustment for debt instruments	(15,945)
Derivative liability – June 30,2012	$ 228,208

XML

Accounts Receivable

6 Months Ended

Jun. 30, 2012

Receivables [Abstract]

Accounts Receivable

Note 3 Accounts Receivable

Accounts receivable consisted of the following at June 30, 2012 and December 31, 2011.

	June 30, 2012			December 31, 2011
Gross accounts receivable	$	1,353,439		$	1,057,696
Allowance		(67,682	)		(50,861	)
Accounts receivable – net	$	1,285,757		$	1,006,835

The Company recorded an approximate 5% allowance for bad debt for estimated differences between expected and actual payment of accounts receivables. These reductions are made based upon estimates that are determined by historical experience, contractual terms, and current conditions. Each quarter, the Company reevaluates its estimates to assess the adequacy of its allowance, adjusting the amounts as necessary.

In addition, for the six months ended June 30, 2012 the Company wrote off $38,311 of its accounts receivable to bad debt expense; there we no bad debt write-offs during the six months ended June 30, 2011.

XML

Debt (Details 2) (USD $)	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Summary of Unsecured Notes
Balance	$ 161,096
Reclassification from accounts payable to notes payable	70,886
Additional Borrowings	40,000
Repayments	(61,768)
Debt forgiveness	(69,298)
Debt forgiveness - related party	(73,329)
Ending Balance	$ 74,118

XML

Nature of Operations & Restatement (Details) (USD $)	Jun. 30, 2012	Dec. 31, 2011	Dec. 31, 2010
Current Assets
Cash	$ 107,976	$ 88,874
Accounts receivable - net	1,285,757	1,006,835
Inventory	299,754	248,678
Prepaids	13,395	21,741
Total Current Assets	1,706,882	1,366,128
Property and equipment - net	283,808	276,795
Other Assets
Intangibles - net
Goodwill
Debt issue costs - net	145,413	22,259
Deposits	43,746	44,741
Total Other Assets	189,159	67,000
Total Assets	2,179,849	1,709,923
Current Liabilities
Cash overdraft		71,380
Accounts payable and accrued liabilities	337,823	248,785
Deferred rent payable	32,387	17,535
Income taxes payable	42,656	42,656
Notes payable	398,024	161,096
Notes payable - related party		73,329
Accrued interest payable - related party		24,732
Total Current Liabilities	1,039,098	566,184
Long Term Liabilities
Convertible Debt - note payable	150,000	150,000
Total Long Term Liabilities		150,000
Stockholders' Equity
Common stock, par value $0.0001; 100,000,000 shares authorized 38,314,617 and 36,596,617 issued and outstanding and 38,066,830 and 36,348,830 issued and outstanding, respectively	3,831	3,807
Additional paid in capital	136,885	(88,581)
Retained Earnings	850,035	1,078,513
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	990,751	993,739	164,099
Total Liabilities and Stockholders' Equity	2,179,849	1,709,923
As Originally Reported [Member]
Current Assets
Cash		88,874
Accounts receivable - net		1,006,835
Inventory		248,678
Prepaids		21,741
Total Current Assets		1,366,128
Property and equipment - net		276,795
Other Assets
Intangibles - net		1,574,663
Goodwill		1,348,402
Debt issue costs - net		22,259
Deposits		44,741
Total Other Assets		2,990,065
Total Assets		4,632,988
Current Liabilities
Cash overdraft		71,380
Accounts payable and accrued liabilities		248,786
Deferred rent payable		17,535
Income taxes payable		42,656
Notes payable		87,767
Notes payable - related party		73,329
Accrued interest payable - related party		24,732
Total Current Liabilities		566,185
Long Term Liabilities
Convertible Debt - note payable		150,000
Total Long Term Liabilities		150,000
Stockholders' Equity
Common stock, par value $0.0001; 100,000,000 shares authorized 38,314,617 and 36,596,617 issued and outstanding and 38,066,830 and 36,348,830 issued and outstanding, respectively		3,807
Additional paid in capital		6,278,571
Retained Earnings		(2,365,574)
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest		3,916,804
Total Liabilities and Stockholders' Equity		4,632,989
Adjustments [Member]
Current Assets
Cash
Accounts receivable - net
Inventory
Prepaids
Total Current Assets
Property and equipment - net
Other Assets
Intangibles - net		(1,574,663)
Goodwill		(1,348,402)
Debt issue costs - net
Deposits
Total Other Assets		(2,923,065)
Total Assets		(2,923,065)
Current Liabilities
Cash overdraft
Accounts payable and accrued liabilities
Deferred rent payable
Income taxes payable
Notes payable
Notes payable - related party
Accrued interest payable - related party
Total Current Liabilities
Long Term Liabilities
Convertible Debt - note payable
Total Long Term Liabilities
Stockholders' Equity
Common stock, par value $0.0001; 100,000,000 shares authorized 38,314,617 and 36,596,617 issued and outstanding and 38,066,830 and 36,348,830 issued and outstanding, respectively
Additional paid in capital		(6,367,152)
Retained Earnings		3,444,087
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest		2,923,065
Total Liabilities and Stockholders' Equity		$ (2,923,065)

XML

Taxes (Tables)

6 Months Ended

Jun. 30, 2012

Income Tax Disclosure [Abstract]

Summary of income tax liability

	Accrued Income Tax Payable			Deferred Tax Assets
Balance, December 31, 2010	$	20,203		$	18,473
Changes in the first quarter of 2011		28,864			7,627
Balance, March 31, 2011		49,067			26,100
Changes in the second quarter of 2011		(49,067	)		(26,100	)
Balance, June 30, 2011		-			-

XML

Subsequent Events (Details)	Jul. 31, 2012
Subsequent Events (Textual)
Common stock placed in the treasury	12,208,432

XML

Debt (Details 3) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Summary of the Company’s debt issue costs
Debt issue costs	$ 175,395	$ 22,895
Accumulated Amortization Of Debt Issue Costs	(29,982)	(636)
Debt issue costs - net	145,413	22,259
Future amortization of debt issue costs
2012 (6 months remaining)	80,724
2013	57,769
2014	6,920
Finite-Lived Intangible Assets, Net, Total	$ 145,413

XML

Nature of Operations & Restatement (Details 1) (USD $)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011
Income Statement [Abstract]
Sales - net	$ 2,542,478	$ 1,897,289	$ 4,970,006	$ 3,769,909
Cost of sales	1,744,855	880,752	3,587,871	1,831,953
Gross profit	797,623	1,016,537	1,382,135	1,937,956
Selling, general and administrative expenses	857,431	1,079,100	1,609,462	1,973,889
Loss from operations	(59,808)	(62,563)	(227,327)	(35,933)
Other Income (Expense)
Gain on debt settlement - related party				12,585,000
Interest expense	(78,898)	(1,538)	(86,394)	(12,571)
Total other income (expense) - net	6,345	(1,538)	(1,151)	14
Loss from operations before provision for income taxes	(53,463)	(64,101)	(228,478)	(35,919)
Provision for income taxes (benefit)
Current income tax		(49,067)
Deferred income tax		26,100
Total income tax benefit - net		(22,967)
Net loss	(53,463)	(41,134)	(228,478)	(35,919)	(223,087)
Basic and diluted net loss per common share	$ 0.00	$ 0.00	$ (0.01)	$ 0.00
Weighted average number of common shares outstanding during the period - basic and diluted	36,514,906	37,209,546	36,436,786	36,478,861
As Originally Reported [Member]
Income Statement [Abstract]
Sales - net		1,897,289		3,769,909
Cost of sales		880,752		1,831,953
Gross profit		1,016,537		1,937,956
Selling, general and administrative expenses		1,139,734		2,094,492
Loss from operations		(123,197)		(156,536)
Other Income (Expense)
Gain on debt settlement - related party				12,585
Interest expense		(1,538)		(12,571)
Total other income (expense) - net		(1,538)		14
Loss from operations before provision for income taxes		(124,735)		(156,522)
Provision for income taxes (benefit)
Current income tax		(49,067)
Deferred income tax		26,100
Total income tax benefit - net		(22,967)
Net loss		(101,768)		(156,522)
Basic and diluted net loss per common share		$ 0.00		$ 0.00
Weighted average number of common shares outstanding during the period - basic and diluted		37,209,546		36,478,861
Adjustments [Member]
Income Statement [Abstract]
Sales - net
Cost of sales
Gross profit
Selling, general and administrative expenses		(60,635)		(120,603)
Loss from operations		60,635		120,603
Other Income (Expense)
Gain on debt settlement - related party
Interest expense
Total other income (expense) - net
Loss from operations before provision for income taxes		60,635		120,603
Provision for income taxes (benefit)
Current income tax
Deferred income tax
Total income tax benefit - net
Net loss		$ 60,635		$ 120,603
Basic and diluted net loss per common share		$ 0.00		$ 0.00

XML

Nature of Operations & Restatement (Details 2) (USD $)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011
Cash Flows From Operating Activities:
Net loss	$ (53,463)	$ (41,134)	$ (228,478)	$ (35,919)	$ (223,087)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation			128,574	40,556
Stock-based compensation			14,500	335,845
Changes in operating assets and liabilities:
Accounts receivable			(317,233)	(228,455)
Inventory			(51,076)	67,568
Prepaids			8,346	(4,985)
Deposits			995	(35,704)
Accounts payable and accrued liabilities			217,745	100,073
Deferred rent			14,852	8,733
Accrued interest payable - related party			2,929	(2,897)
Net Cash Provided by Operating Activities			(178,293)	244,815
Cash Flows From Investing Activities:
Purchase of property and equipment			(135,587)	(128,766)
Net Cash Used in Investing Activities			(135,587)	(128,766)
Cash Flows From Financing Activities:
Repayment of debt			(83,138)	(71,780)
Net Cash Provided by (Used in) Financing Activities			332,982	(71,780)
Cash at beginning of period			88,874	204,336	204,336
Cash at end of period	107,976	248,605	107,976	248,605	88,874
Net increase in cash			19,102	44,269
Supplemental disclosures of cash flow information:
Cash paid for interest			12,062	2,480
Cash paid for taxes
Scenario, Previously Reported [Member]
Cash Flows From Operating Activities:
Net loss		(101,768)		(156,522)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation				40,556
Stock-based compensation				335,845
Amortization of intangibles				120,603
Changes in operating assets and liabilities:
Accounts receivable				(228,455)
Inventory				67,568
Prepaids				(4,985)
Deposits				(35,704)
Accounts payable and accrued liabilities				100,073
Deferred rent				8,733
Accrued interest payable - related party				(2,897)
Net Cash Provided by Operating Activities				244,815
Cash Flows From Investing Activities:
Purchase of property and equipment				(128,766)
Net Cash Used in Investing Activities				(128,766)
Cash Flows From Financing Activities:
Repayment of debt				(71,780)
Net Cash Provided by (Used in) Financing Activities				(71,780)
Cash at beginning of period				204,336	204,336
Cash at end of period		248,605		248,605
Net increase in cash				44,269
Supplemental disclosures of cash flow information:
Cash paid for interest				2,480.00
Cash paid for taxes
Restatement Adjustment [Member]
Cash Flows From Operating Activities:
Net loss		60,635		120,603
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation
Stock-based compensation
Amortization of intangibles				(120,603)
Changes in operating assets and liabilities:
Accounts receivable
Inventory
Prepaids
Deposits
Accounts payable and accrued liabilities
Deferred rent
Accrued interest payable - related party
Net Cash Provided by Operating Activities
Cash Flows From Financing Activities:
Repayment of debt
Net Cash Provided by (Used in) Financing Activities
Cash at beginning of period
Cash at end of period
Net increase in cash

XML

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2012

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 2 Summary of Significant Accounting Policies

Principles of Consolidation

All inter-company accounts and transactions have been eliminated in consolidation.

Reclassification

The Company has reclassified certain prior period amounts to conform to the current period presentation including the restatement previously mentioned. These reclassifications had no effect on the financial position, results of operations or cash flows for the periods presented.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Such estimates and assumptions impact both assets and liabilities, including but not limited to: net realizable value of accounts receivable, estimated useful lives and potential impairment of property and equipment, estimated fair value of warrants and derivative liabilities using the Black-Scholes option pricing method and estimates of tax liabilities.

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, actual results could differ significantly from estimates.

Cash

The Company minimizes credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits; however, at June 30, 2012 and December 31, 2011, respectively, the balances did not exceed the federally insured limit.

Risks and Uncertainties

The Company's operations are subject to intense competition, risk and uncertainties including financial, operational, regulatory and other risks including the potential risk of business failure. See Note 11 – Going Concern.

Billing Concentrations

The Company’s primary receivables are from prescription medication and DME equipment billed to various insurance providers.  Ultimately, the insured is responsible for payment should the insurance company not reimburse the Company. The Company generated reimbursements from significant insurance providers for the six months ended June 30, 2012 and 2011 as shown below.

Insurance Provider	Six months ended June 30, 2012	Six months ended June 30, 2011
A	20%	11%
B	15%	13%
C	13%	1%
D	13%	-
E	-	17%

Inventory

Inventory is valued on a lower of first-in, first-out (FIFO) cost or market basis.  Inventory primarily consists of prescription medications, DME and retail items.

Property and Equipment

Company used property and equipment is stated at cost, less accumulated depreciation. Expenditures for maintenance and repairs are charged to expense as incurred.

The Company provides DME on rent-to-own terms. Pursuant to Medicare guidelines (which are followed by private insurance carriers as well) DME equipment is “rented” to the insured for 13 months, after which title to the equipment transfers to the insured. Depreciation of DME equipment is recorded to cost of sales.

Fair Value of Financial Instruments

The Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level.

The following are the hierarchical levels of inputs to measure fair value

● Level 1  -  Observable inputs that reflect quoted market prices in active markets for identical assets or liabilities.

●	Level 2  -	Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.
●	Level 3  -	Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

The following are the major categories of liabilities measured at fair value on a recurring basis as of June 30, 2012 and December 31, 2011, using quoted prices in active markets for identical liabilities (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3):

		June 30, 2012		December 31, 2011
Derivative Liabilities (Level 2)	$	228,208	$	-

The Company's financial instruments consisted primarily of accounts receivable, prepaids, accounts payable and accrued liabilities, derivative liabilities and debt. The carrying amounts of the Company's financial instruments generally approximated their fair values as of June 30, 2012 and December 31, 2011, respectively, due to the short-term nature of these instruments.

Beneficial Conversion Feature and Debt Discount

For conventional convertible debt where the rate of conversion is below market value, the Company records a "beneficial conversion feature" ("BCF") and related debt discount.

When the Company records a BCF, the relative fair value of the BCF is recorded as a debt discount against the face amount of the respective debt instrument. The discount is amortized to interest expense over the life of the debt. At June 30, 2012 and 2011, there were no BCFs.

Derivative Liabilities

Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments, and measurement of their fair value. In determining the appropriate fair value, the Company uses the Black-Scholes option-pricing model. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt, the Company will continue its evaluation process of these instruments as derivative financial instruments.

Once derivative liabilities are determined, they are adjusted to reflect fair value at the end of each reporting period. Any increase or decrease in the fair value is recorded in results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative instruments such as warrants, are also valued using the Black-Scholes option-pricing model. Once a derivative liability ceases to exist any remaining fair value will be reclassified to additional paid in capital.

Revenue Recognition

The Company records revenue when all of the following have occurred: (1) persuasive evidence of an arrangement exists, (2) asset is transferred to the customer without further obligation, (3) the sales price to the customer is fixed or determinable, and (4) collectability is reasonably assured.

For the six months ended June 30, 2012 and 2011, the Company had two revenue streams.

   (i) Pharmacy

The Company recognizes its pharmacy revenue when a customer picks up or is delivered their prescription or merchandise.  Billings for most prescription orders are with third-party payers, including Medicare, Medicaid and other insurance carriers.  Customer returns are nominal. 

Total pharmacy revenues for the six months ended June 30, 2012 and 2011 were approximately $4,281,000 (86%) and $3,411,000 (90%), respectively.

   (ii) Durable Medical Equipment

The Company recognizes DME revenue from the date the equipment is picked up or delivered to the customer. Revenue from DME rentals is booked over a 13 month period. Customer returns are nominal. 

Total DME revenues for the six months ended June 30, 2012 and 2011 were approximately $689,000 (14%) and $359,000 (10%), respectively.

Cost of Sales

Cost of pharmacy sales is derived based upon vendor purchases relating to prescriptions sold and point-of-sale scanning information for non-prescription sales, and is adjusted based on periodic inventories. All other costs related to sales are expensed as incurred.

Cost of DME sales is derived based upon vendor purchases relating to equipment sold and is adjusted based on periodic inventories. All other costs related to sales are expensed as incurred.

Vendor Concentrations

For the six months ended June 30, 2012 and 2011, the Company had significant vendor concentrations with vendors as follows:

Vendor	Six months ended June 30, 2012	Six months ended June 30, 2011
A	65%	6%
B	15%	35%
C	1%	35%

Due to a large selection of pharmaceutical wholesalers in the United States, management does not believe that losing any vendor relationship will have an impact on the Company’s business.

Selling, General and Administrative Expenses (SG&A)

SG&A primarily consists of salaries, contract labor, occupancy costs, and expenses directly related to the Company’s operations.  Other administrative costs include advertising, insurance and depreciation.

Advertising

Costs incurred for producing and communicating advertising for the Company are charged to operations as incurred and are as follows:

Six months ended June 30, 2012		Six months ended June 30, 2011
$	14,200	$	49,180

Stock-Based Payment Arrangements

Generally, all forms of stock-based payments, including warrants, are measured at their fair value on the awards’ grant date typically using a Black-Scholes pricing model, based on the estimated number of awards that are ultimately expected to vest. Stock-based compensation awards issued to non-employees for services rendered are recorded at either the fair value of the services rendered or the fair value of the stock-based payment, whichever is more readily determinable. The expense resulting from stock-based payments are recorded in general and administrative expense in the consolidated statement of operations.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained.

The Company does not believe it has any uncertain tax positions.

Earnings (Loss) per Share

Basic earnings/loss per share (“EPS”) is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to all dilutive potential of shares of common stock outstanding during the period including stock warrants, using the treasury stock method (by using the average stock price for the period to determine the number of shares assumed to be purchased from the exercise of warrants), and convertible debt, using the if-converted method. Diluted EPS excludes all dilutive potential of shares of common stock if their effect is anti-dilutive.

The Company had the following potential common stock equivalents at June 30, 2012:

	Shares
Convertible debt – face amount of $150,000; fixed conversion price; $0.40		375,000
Convertible debt – face amount of $500,000; variable conversion price; $0.40		1,253,133
Common stock warrants - 15,000; exercise price of $0.40		15,000
Total common stock equivalents		1,643,133

The Company had no common stock equivalents at June 30, 2011.

The Company reflected a net loss for the six months ended June 30, 2012 and 2011; therefore, the effect of considering any common stock equivalents, if outstanding, would have been anti-dilutive. Consequently, a separate computation of diluted earnings (loss) per share is not presented.

In connection with the recapitalization, all share and per share amounts have been retroactively restated.

Recent Accounting Pronouncements

There are no new accounting pronouncements that have any impact on the Company’s financial statements.

XML

Nature of Operations & Restatement (Details Textual) (USD $)	Jun. 30, 2012	Dec. 31, 2011	Dec. 31, 2010
Nature of Operations, Recapitalization & Basis of Presentation (Textual)
Common stock, par value	$ 0.0001	$ 0.0001	$ 0.0001
Common stock, shares authorized	100,000,000	100,000,000	100,000,000
Common stock, shares issued	38,314,617	38,066,830	35,280,000
Common stock, shares outstanding	36,596,617	36,348,830	33,562,000

XML

Property and Equipment (Details Textual) (USD $)	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Property and Equipment (Textual)
Depreciation	$ 128,574	$ 40,556

XML

Stockholders' Equity (Details) (USD $)	6 Months Ended
	Jun. 30, 2012
Stockholders Equity (Textual)
Common stock issued for service, shares	247,787
Common stock issued for service, value	$ 124,500
Minimum [Member]
Stockholders Equity (Textual)
Share Price	$ 0.35
Maximum [Member]
Stockholders Equity (Textual)
Share Price	$ 0.51

XML

Consolidated Balance Sheets (USD $)	Jun. 30, 2012	Dec. 31, 2011	Dec. 31, 2010
Current Assets
Cash	$ 107,976	$ 88,874
Accounts receivable - net	1,285,757	1,006,835
Inventory	299,754	248,678
Prepaids	13,395	21,741
Total Current Assets	1,706,882	1,366,128
Property and equipment - net	283,808	276,795
Other Assets
Debt issue costs - net	145,413	22,259
Deposits	43,746	44,741
Total Other Assets	189,159	67,000
Total Assets	2,179,849	1,709,923
Current Liabilities
Cash overdraft		71,380
Accounts payable and accrued liabilities	337,823	248,785
Deferred rent payable	32,387	17,535
Income taxes payable	42,656	42,656
Debt - net	398,024	161,096
Debt - related party		73,329
Accrued interest payable - related party		24,732
Derivative liabilitity	228,208
Total Current Liabilities	1,039,098	566,184
Long Term Liabilities
Debt	150,000	150,000
Stockholders' Equity
Common stock, par value $0.0001; 100,000,000 shares authorized 38,314,617 and 36,596,617 issued and outstanding and 38,066,830 and 36,348,830 issued and outstanding, respectively	3,831	3,807
Additional paid in capital	136,885	(88,581)
Retained Earnings	850,035	1,078,513
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	990,751	993,739	164,099
Total Liabilities and Stockholders' Equity	$ 2,179,849	$ 1,709,923

XML

Debt (Details 4) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Summary of the Company’s debt discount
Debt discount	$ 244,153
Accumulated amortization of debt discounts	(38,139)
Debt discount - net	$ 206,014

XML

Consolidated Statements of Cash Flows (Unaudited) (USD $)	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Cash Flows From Operating Activities:
Net loss	$ (228,478)	$ (35,919)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation	128,574	40,556
Bad debt	38,311
Stock-based compensation	14,500	335,845
Stock-based compensation - related parties	10,000
Amortization of debt issue costs and debt discount	67,485
Change in fair value of derivative liability	(15,945)
Gain on debt forgiveness	(69,298)
(Increase) decrease in:
Accounts receivable	(317,233)	(228,455)
Inventory	(51,076)	67,568
Prepaids	8,346	(4,985)
Deposits	995	(35,704)
Increase (decrease) in:
Accounts payable and accrued liabilities	217,745	100,073
Deferred rent	14,852	8,733
Accrued interest payable - related party	2,929	(2,897)
Net Cash Provided by (Used in) Operating Activities	(178,293)	244,815
Cash Flows From Investing Activities:
Purchase of property and equipment	(135,587)	(128,766)
Net Cash Used in Investing Activities	(135,587)	(128,766)
Cash Flows From Financing Activities:
Cash overdraft	(71,380)
Proceeds from issuance of debt	540,000
Debt issue costs	(52,500)
Repayment of debt	(83,138)	(71,780)
Net Cash Provided by (Used in) Financing Activities	332,982	(71,780)
Net increase in cash	19,102	44,269
Cash at beginning of period	88,874	204,336
Cash at end of period	107,976	248,605
Supplemental disclosures of cash flow information:
Cash paid for interest	12,062	2,480
Cash paid for taxes
Supplemental disclosures of non-cash financing activities:
Conversion of accounts payable to notes	122,176
Debt discount recorded on convertible debt accounted for as a derivative liability	224,153
Issuance of common stock for debt issue costs	100,000
Gain on debt forgiveness - related party	$ 100,990

XML

Summary of Significant Accounting Policies (Details 2) (USD $)	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Advertising costs
Advertising Expense	$ 14,200	$ 49,180
Potential common stock equivalents
Convertible debt – face amount of $150,000; fixed conversion price of $0.40	375,000
Convertible debt – face amount of $500,000; variable conversion price; $0.40	1,253,133
Common stock warrants - 15,000; exercise price of $0.40	15,000
Total common stock equivalents	1,643,133

XML

Accounts Receivable (Table)

6 Months Ended

Jun. 30, 2012

Receivables [Abstract]

Accounts receivable

	June 30, 2012			December 31, 2011
Gross accounts receivable	$	1,353,439		$	1,057,696
Allowance		(67,682	)		(50,861	)
Accounts receivable – net	$	1,285,757		$	1,006,835

XML

Summary of Significant Accounting Policies (Details Textual) (USD $)	1 Months Ended	6 Months Ended			6 Months Ended
	Nov. 30, 2011	Jun. 30, 2012	Dec. 31, 2011	Nov. 28, 2011	Jun. 30, 2012 Pharmacy [Member]	Jun. 30, 2011 Pharmacy [Member]	Jun. 30, 2012 Durable Medical Equipment [Member]	Jun. 30, 2011 Durable Medical Equipment [Member]
Summary of Significant Accounting Policies (Textual)
Health care organization revenue					$ 4,281,000	$ 3,411,000	$ 689,000	$ 359,000
Health care organization revenue percentage					86.00%	90.00%	14.00%	10.00%
Property, plant and equipment, rented lives							Revenue from DME rentals is booked over a 13 month period.
Rental revenue recognized, additional period							13 months
Period for DME rent provide by parent company		13 months
Convertible debt face amount		150,000		150,000
Fixed conversion price, per share		$ 0.40
Secured Convertible Debt		$ 500,000
Variable conversion price, per share		$ 0.40
Completion period of restatements		Next 30 days
Common stock warrants, shares		15,000
Investment Warrants, Exercise Price	$ 0.40	$ 0.40

XML

Debt (Tables)

6 Months Ended

Jun. 30, 2012

Debt Disclosure [Abstract]

Summary of debt

	June 30, 2012			December 31, 2011
A. Convertible debt - Secured	$	500,000		$	-
Less: debt discount		(206,014	)		-
Convertible debt - net		293,986			-
B. Convertible debt - Unsecured		150,000			150,000
C. Note - Secured		29,920			-
D. Notes – Unsecured		74,118			161,096
Total debt	$	548,024		$	311,096
Current portion	$	398,024		$	161,096
Long term portion	$	150,000		$	150,000

Summary of Secured Notes

Balance, December 31, 2011	$	-
Reclassification from accounts payable to notes payable		51,290
Repayments		(21,370	)
Balance, June 30, 2012	$	29,920

Summary of Unsecured Notes

Balance, December 31, 2011	$	161,0966
Reclassification from accounts payable to notes payable		70,8866
Additional borrowings		40,000
Repayments		(61,7688	)
Debt forgiveness		(62,7677	)
Debt forgiveness – related party		(73,3299	)
Balance, June 30, 2012	$	74,1188

Summary of the Company’s debt issue costs

	June 30, 2012			December 31, 2011
Debt issue costs	$	175,395		$	22,895
Accumulated amortization of debt issue costs		(29,982	)		(636	)
Debt issue costs – net	$	145,413		$	22,259

Future amortization of debt issue costs

Year	Amount
2012 (6 months remaining)	$	80,724
2013		57,769
2014		6,920

Summary of the Company’s debt discount

	June 30, 2012			June 30, 2012
Debt discount	$	244,153		$	-
Accumulated amortization of debt discounts		(38,139	)		-
Debt discount – net	$	206,014		$	-

XML

Nature of Operations & Restatement

6 Months Ended

Jun. 30, 2012

Organization, Consolidation and Presentation Of Financial Statements [Abstract]

Nature of Operations & Restatement

Note 1 Nature of Operations & Restatement

Organization

Progressive Training, Inc. (“Progressive Training”) was incorporated on October 31, 2006 in the State of Delaware. Pharmco, LLC a Florida limited liability company (“PharmCo”) was incorporated on November 29, 2005. On October 21, 2010, Progressive Training entered into an Agreement and Plan of Merger with PharmCo, and Pharmco Acquisition Corp. (“Acquisition Sub”), pursuant to which Acquisition Sub was merged with and into PharmCo, and PharmCo, as the surviving corporation, became the Company’s wholly-owned subsidiary (the “Reverse Merger”). As part of the Reverse Merger, Progressive Training was renamed Progressive Care Inc. (the “Company”).

Recapitalization

Immediately following the Reverse Merger, the shareholders of PharmCo owned a majority of the outstanding shares of the Company. In addition, as part of the transaction, the previous owners of Progressive Training retained the training video business; therefore, the transaction was accounted for as a reverse recapitalization. The assets and liabilities and the historical operations that are reflected in the financial statements are those of PharmCo. The historical consolidated financial statements reflect the impact of the change in capital structure that resulted from the recapitalization from the earliest period presented.

Description of the Business

The Company is a retail pharmacy specializing in the sale of anti-retroviral medications and related patient care management, the sale and rental of durable medical equipment ("DME") and the supply of prescription medications and DME to nursing homes and assisted living facilities. Prior to the Reverse Merger, the Company operated a training video business.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they may not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. It is management's opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation. The results for the interim period are not necessarily indicative of the results to be expected for the full year.

The unaudited interim consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, which contains the audited financial statements and notes thereto, together with Management’s Discussion and Analysis of Financial Condition and Results of Operation, for the year ended December 31, 2011. The interim results for the period ended June 30, 2012 are not necessarily indicative of results for the full fiscal year.

The Company’s year ended December 31, 2011 audited financial statements are currently being restated and therefore the Company has presented them herein as unaudited, since the related restatements have not yet been filed, and since the audit has not been completed.

Restatement

On May 28, 2012, the Company concluded that the following financial statements required restatement: its audited financial statements for the year ended December 31, 2010 filed in an annual report on Form 10-K with the SEC on April 15, 2011; (ii) its audited financial statements for the year ended December 31, 2011, filed in an annual report on Form 10-K with the SEC on April 16, 2012; (iii) its unaudited financial statements for the period ended March 31, 2011, filed in a quarterly report on Form 10-Q with the SEC on May 23, 2011; (iv) its unaudited financial statements for the period ended June 30, 2011, filed in a quarterly report on Form 10-Q with the SEC on August 22, 2011; (v) its unaudited financial statements for the period ended September 30, 2011, filed in a quarterly report on Form 10-Q with the SEC on November 14, 2011, and (vi) its unaudited financial statements for the period ended March 31, 2012, filed in a quarterly report on Form 10-Q with the SEC on May 21, 2012. The Company plans on completing the restatements in the next 30 days.

The following tables present the impact of the restatements on the Company’s year ended December 31, 2011 balance sheet and six months ended June 30, 2011 statement of operations and statement of cash flows, which are used as comparative information to the Company’s current financial statement herein:

Consolidated Balance Sheet as of December 31, 2011:

	December 31, 2011
	As Originally Reported			Adjustments			As Restated
							(unaudited)
Assets
Current Assets
Cash	$	88,874		$	-		$	88,874
Accounts receivable - net		1,006,835			-			1,006,835
Inventory		248,678			-			248,678
Prepaids		21,741			-			21,741
Total Current Assets		1,366,128			-			1,366,128
Property and equipment - net		276,795			-			276,795
Other Assets
Intangibles - net		1,574,663			(1,574,663	)		-
Goodwill		1,348,402			(1,348,402	)		-
Debt issue costs		22,259			-			22,259
Deposits		44,741			-			44,741
Total Other Assets		2,990,065			(2,923,065	)		67,000
Total Assets	$	4,632,988		$	(2,923,065	)	$	1,709,923
Liabilities and Stockholders' Equity
Current Liabilities
Cash overdraft	$	71,380		$	-		$	71,380
Accounts payable and accrued liabilities		248,786			-			248,785
Deferred rent payable		17,535			-			17,535
Income taxes payable		42,656			-			42,656
Notes payable		87,767			-			87,767
Notes payable - related party		73,329			-			73,329
Accrued interest payable - related party		24,732			-			24,732
Total Current Liabilities		566,185			-			566,184
Long Term Liabilities
Convertible Debt - note payable		150,000			-			150,000
Total Long Term Liabilities		150,000			-			150,000
Stockholders' Equity
Common stock, par value $0.0001; 100,000,000 shares authorized
38,066,830 and 36,348,830 issued and outstanding (2011); and
35,280,000 and 33,562,000 shares issued and outstanding (2010)		3,807			-			3,807
Additional paid in capital		6,278,571			(6,367,152	)		(88,581	)
Accumulated deficit		(2,365,574	)		3,444,087			1,078,513
Total Stockholders' Equity		3,916,804			(2,923,065	)		993,739
Total Liabilities and Stockholders' Equity	$	4,632,989		$	(2,923,065	)	$	1,709,923

Consolidated Statement of Operations for the three and six months ended June 30, 2011:

	Three Months Ended									Six Months Ended
	June 30, 2011									June 30, 2011
	As Originally Reported			Adjustments			As Restated			As Originally Reported			Adjustments			As Restated
Sales - net	$	1,897,289		$	-		$	1,897,289		$	3,769,909		$	-		$	3,769,909
Cost of sales		880,752			-			880,752			1,831,953			-			1,831,953
Gross profit		1,016,537			-			1,016,537			1,937,956			-			1,937,956
Selling, general and administrative expenses		1,139,734			(60,635	)		1,079,100			2,094,492			(120,603	)		1,973,889
Loss from operations		(123,197	)		60,635			(62,563	)		(156,536	)		120,603			(35,933	)
Other Income (Expense)
Gain on debt settlement - former related party		-			-			-			12,585			-			12,585
Interest expense		(1,538	)		-			(1,538	)		(12,571	)		-			(12,571	)
Total other income - net		(1,538	)		-			(1,538	)		14			-			14
Losses from continuing operations before provision for income taxes		(124,735	)		60,635			(64,101	)		(156,522	)		120,603			(35,919	)
Provision for income taxes (benefit)
Current income tax		(49,067	)		-			(49,067	)		-			-			-
Deferred income tax		26,100			-			26,100			-			-			-
Total income tax benifit - net		(22,967	)		-			(22,967	)		-			-			-
Net loss	$	(101,768	)	$	60,635		$	(41,134	)	$	(156,522	)	$	120,603		$	(35,919	)
Basic and diluted loss per share:		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Weighted average number of common shares outstanding
during the period - basic and diluted		37,209,546						37,209,546			36,478,861						36,478,861

Consolidated Statement of Cash Flows for the six months ended June 30, 2011:

	June 30, 2011
	As Originally Reported			Adjustments			As Restated
Cash Flows From Operating Activities:
Net loss	$	(156,522	)	$	120,603		$	(35,919	)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation		40,556			-			40,556
Stock-based compensation		335,845			-			335,845
Amortization of intangibles		120,603			(120,603	)		-
Changes in operating assets and liabilities:
Accounts receivable		(228,455	)		-			(228,455	)
Inventory		67,568			-			67,568
Prepaids		(4,985	)		-			(4,985	)
Deposits		(35,704	)		-			(35,704	)
Accounts payable and accrued liabilities		100,073			-			100,073
Deferred rent		8,733			-			8,733
Accrued interest payable - related parties		(2,897	)		-			(2,897	)
Net Cash Provided by Operating Activities		244,815			-			244,815
Cash Flows From Investing Activities:
Purchase of property and equipment		(128,766	)		-			(128,766	)
Net Cash Used in Investing Activities		(128,766	)		-			(128,766	)
Cash Flows From Financing Activities:
Repayment of debt		(71,780	)		-			(71,780	)
Net Cash Used in Financing Activities		(71,780	)		-			(71,780	)
Net increase in cash	$	44,269		$	-		$	44,269
Cash at beginning of period		204,336			-			204,336
Cash at end of period	$	248,605		$	-		$	248,605
Supplemental disclosures of cash flow information:
Cash paid for interest	$	2,480.00					$	2,480.00
Cash paid for taxes	$	-					$	-

XML

Consolidated Balance Sheets (Parenthetical) (USD $)	Jun. 30, 2012	Dec. 31, 2011	Dec. 31, 2010
Statement Of Financial Position [Abstract]
Common stock, par value	$ 0.0001	$ 0.0001	$ 0.0001
Common stock, shares authorized	100,000,000	100,000,000	100,000,000
Common stock, shares issued	38,314,617	38,066,830	35,280,000
Common stock, shares outstanding	36,596,617	36,348,830	33,562,000

XML

Going Concern

6 Months Ended

Jun. 30, 2012

Going Concern [Abstract]

Going Concern

Note 11 Going Concern

As reflected in the accompanying unaudited interim consolidated financial statements, the Company had a net loss of approximately $228,000 and net cash used in operations of approximately $178,000 for the six months ended June 30, 2012. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

The ability of the Company to continue its operations is dependent on management’s plans, which include the raising of capital through debt and/or equity markets with some additional funding from other traditional financing sources, including term notes, until such time that funds provided by operations are sufficient to fund working capital requirements. The Company may need to incur liabilities with certain related parties to sustain the Company’s existence.

The Company will require additional funding to finance the growth of its current and expected future operations as well as to achieve its strategic objectives. The Company believes its current available cash along with anticipated revenues may be insufficient to meet its cash needs for the near future. There can be no assurance that financing will be available in amounts or terms acceptable to the Company, if at all.

In response to these issues, management is taking the following actions:

●   increasing it sales presence in the community by sponsoring health related events

●   hiring additional sales personnel to target additional market segments

●   seeking additional third party debt and/or equity financing

The accompanying unaudited interim consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

Other Matters

On June 11, 2012, the Company received written notice of the resignation of Andy Subachan as a director of the Company, effective immediately, and terminated the employment of Mr. Subachan as Chief Operating Officer, also effective immediately, as a result of the Company learning that Mr. Subachan had pleaded guilty to violating federal health care anti-kickback statutes at an assisted living facility owned and managed by him, and not related in any respect to the Company or its business. 

However, as a result of Mr. Subachan being a control shareholder, officer, and director, PharmCo (a wholly owned subsidiary of the Company) received written notice from the State of Florida Agency for Health Care Administration (“AHCA”) terminating PharmCo's participation in the state’s Medicaid program. Thereafter, PharmCo was orally advised by the staff at AHCA that no termination of the ability to bill for Medicaid goods and services would be effected pending the outcome of a hearing before AHCA regarding this matter, during which time the Company intended to seek Mr. Subachan’s consent to divest himself of his equity interest in the Company.

Notwithstanding, PharmCo has  encountered significant difficulties working with the Medicaid system protocols to bill Medicaid claims, and as such has not been able to process its Medicaid claims.

On July 31, 2012, Mr. Subachan returned 12,208,432 shares of common stock to the Company and the Company agreed to release him from claims. No indemnity, however, was granted for third party action(s).

On August 17, 2012, in a written agreement received from AHCA, PharmCo’s termination from the State’s Medicaid program was rescinded. As such, PharmCo expects to now receive all payments held by Medicaid, as well as be allowed to bill for and receive payment for the prescriptions it filled for customers who were insured by Medicaid during the period its participation in the state’s Medicaid program was restricted.

XML

Document and Entity Information	6 Months Ended
	Jun. 30, 2012	Aug. 14, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	Progressive Care Inc.
Entity Central Index Key	0001402945
Amendment Flag	false
Document Type	10-Q
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2012
Document Period End Date	Jun. 30, 2012
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		24,338,185

XML

Subsequent Events

6 Months Ended

Jun. 30, 2012

Subsequent Events [Abstract]

Subsequent Events

Note 12 Subsequent Events

On July 31, 2012, the Company’s former COO returned 12,208,432 shares of the Company’s common stock to the Company’s treasury. The shares returned to the Company were accounted for at par value.

XML

Consolidated Statements of Operations (Unaudited) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Income Statement [Abstract]
Sales - net	$ 2,542,478	$ 1,897,289	$ 4,970,006	$ 3,769,909
Cost of sales	1,744,855	880,752	3,587,871	1,831,953
Gross profit	797,623	1,016,537	1,382,135	1,937,956
Selling, general and administrative expenses	857,431	1,079,100	1,609,462	1,973,889
Loss from operations	(59,808)	(62,563)	(227,327)	(35,933)
Other Income (Expense)
Change in fair value of derivative liability	15,945		15,945
Gain on debt forgiveness	69,298		69,298	12,585
Interest expense	(78,898)	(1,538)	(86,394)	(12,571)
Total other income (expense) - net	6,345	(1,538)	(1,151)	14
Loss from operations before provision for income taxes	(53,463)	(64,101)	(228,478)	(35,919)
Provision for income taxes (benefit)
Current income tax		(49,067)
Deferred income tax		26,100
Total income tax benefit - net		(22,967)
Net loss	$ (53,463)	$ (41,134)	$ (228,478)	$ (35,919)
Basic and diluted net loss per common share	$ 0.00	$ 0.00	$ (0.01)	$ 0.00
Weighted average number of common shares outstanding during the period - basic and diluted	36,514,906	37,209,546	36,436,786	36,478,861

XML

Derivative Liabilities

6 Months Ended

Jun. 30, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Liabilities

Note 6 Derivative Liabilities

The Company identified a conversion feature embedded within one of its convertible debts and has determined that it should be accounted for at fair value as a derivative liability.

The fair value of the conversion feature is summarized as follow:

Derivative liability - December 31, 2011	$	-
Fair value at the commitment date for debt instruments		244,153
Fair value mark to market adjustment for debt instruments		(15,945	)
Derivative liability – June 30,2012	$	228,208

The fair value at the commitment and re-measurement dates for the Company’s derivative liabilities were based upon the following management assumptions during 2012:

	Commitment Date			Re-measurement Date
Expected dividends		0	%		0	%
Expected volatility		119	%		121	%
Expected term:	12 months			10 months
Risk free interest rate		0.18	%		0.19	%

XML

Debt

6 Months Ended

Jun. 30, 2012

Debt Disclosure [Abstract]

Debt

Note 5 Debt

Debt consists of the following:

	June 30, 2012			December 31, 2011
A. Convertible debt - Secured	$	500,000		$	-
Less: debt discount		(206,014	)		-
Convertible debt - net		293,986			-
B. Convertible debt - Unsecured		150,000			150,000
C. Note - Secured		29,920			-
D. Notes – Unsecured		74,118			161,096
Total debt	$	548,024		$	311,096
Current portion	$	398,024		$	161,096
Long term portion	$	150,000		$	150,000

The corresponding debts above are more fully discussed below:

(A)Convertible Debt – Secured

During the six months ended June 30, 2012 the Company issued a secured convertible note for $500,000. The note bears interest of 12%, 6% of which is charged monthly and 6% of which is accrued and due in a balloon payment at maturity. The note has a default interest rate of 18%, a maturity date of April 30, 2013 and is secured by all of the assets of the Company and its subsidiaries.  The debt holder is entitled, at their option, to convert all or part of the principal and accrued interest into shares of the Company’s common stock. The note is convertible at 95% of the volume weighted average price of the Company’s common stock for the 5 days preceding conversion. The embedded conversion feature within this note classifies it as a derivative liability. See Note 6.

The Company incurred debt issue costs of $152,500 in connection with the note; of which $100,000 was in stock (196,708 shares @ $0.51 per share) and the remaining $52,500 in cash. See Note 5(E).

(B)Convertible Debt – Unsecured

On November 28, 2011, the Company entered into a $150,000 3-year 8% convertible note with an investor. Under the terms of the note, the investor has the option to convert their note into shares of the Company’s common stock at an exercise price of $0.40/share. In connection with this note, the Company paid debt issue costs of $18,000 and issued 15,000, 3-year warrants exercisable at $0.40 per share, having a fair market value of $4,895, as calculated using the Black Scholes valuation method.  The warrants vested on the date of issuance and expire November 27, 2014. See Note 7 – Stock Warrants.

(C)Note - Secured

The Company has a one year secured note with a DME vendor that bears no interest and matures on January 15, 2013. The note is secured by only the DME equipment to which the note appertains. Secured notes consist of the following:

Balance, December 31, 2011	$	-
Reclassification from accounts payable to notes payable		51,290
Repayments		(21,370	)
Balance, June 30, 2012	$	29,920

(D)Notes - Unsecured

The Company has two short term note with vendors that bear no interest. Unsecured Notes consists of the following:

Balance, December 31, 2011	$	161,0966
Reclassification from accounts payable to notes payable		70,8866
Additional borrowings		40,000
Repayments		(61,7688	)
Debt forgiveness		(62,7677	)
Debt forgiveness – related party		(73,3299	)
Balance, June 30, 2012	$	74,1188

During the quarter ended June 30, 2012, a party related to a principal shareholder in the Company, agreed to forgive debt of $73,329 (see above) and accrued interest of $27,661 (totalling $100,990), which was charged to addition to paid-in capital. The Company does not record gains or losses on related party transactions.

(E) Debt Issue Costs

The Company paid debt issue costs in connection with raising funds through the issuance of convertible debt.  These costs are being amortized over the life of the debt and recorded as interest expense. If a conversion of the underlying debt occurs, the proportionate share of the unamortized amounts will be immediately expensed.

For the six months ended June 30, 2012 the Company incurred debt issue costs and amortization expense of $152,500 and $29,346, respectively. For the six months ended June 30, 2011 the Company paid no debt issue costs and incurred no amortization expense.

The following is a summary of the Company’s debt issue costs.

	June 30, 2012			December 31, 2011
Debt issue costs	$	175,395		$	22,895
Accumulated amortization of debt issue costs		(29,982	)		(636	)
Debt issue costs – net	$	145,413		$	22,259

Future amortization of debt issue costs for the fiscal years 2012 through 2014 are as follows:

Year	Amount
2012 (6 months remaining)	$	80,724
2013		57,769
2014		6,920
	$	145,413

 (E) Debt Discount

The Company recorded debt discounts in connection with the issuance of convertible debt that contains an embedded conversion option. These costs are amortized over the life of the debt to interest expense. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts will be immediately expensed.

The following is a summary of the Company’s debt discount.

	June 30, 2012			June 30, 2012
Debt discount	$	244,153		$	-
Accumulated amortization of debt discounts		(38,139	)		-
Debt discount – net	$	206,014		$	-

XML

Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2012

Property, Plant and Equipment [Abstract]

Property and equipment

	June 30, 2012			December 31, 2011			Estimated Useful Life
DME rental equipment	$	260,815		$	223,685		Life of the lease
Leasehold improvements and fixtures		181,536			139,008		5 years
Vehicles		90,046			90,046		3 years
Computer equipment and software		56,407			56,407		3-5 years
Furniture and equipment		30,575			28,486		13 months
Total		619,379			537,632
Less: accumulated amortization/depreciation		(335,571	)		(260,837	)
Property and equipment – net	$	283,808		$	276,795

XML

Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2012

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

All inter-company accounts and transactions have been eliminated in consolidation.

Reclassification

Reclassification

The Company has reclassified certain prior period amounts to conform to the current period presentation including the restatement previously mentioned. These reclassifications had no effect on the financial position, results of operations or cash flows for the periods presented.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Such estimates and assumptions impact both assets and liabilities, including but not limited to: net realizable value of accounts receivable, estimated useful lives and potential impairment of property and equipment, estimated fair value of warrants and derivative liabilities using the Black-Scholes option pricing method and estimates of tax liabilities.

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, actual results could differ significantly from estimates.

Cash

Cash

The Company minimizes credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits; however, at June 30, 2012 and December 31, 2011, respectively, the balances did not exceed the federally insured limit.

Risks and Uncertainties

Risks and Uncertainties

The Company's operations are subject to intense competition, risk and uncertainties including financial, operational, regulatory and other risks including the potential risk of business failure. See Note 11 – Going Concern.

Billing Concentrations

Billing Concentrations

The Company’s primary receivables are from prescription medication and DME equipment billed to various insurance providers.  Ultimately, the insured is responsible for payment should the insurance company not reimburse the Company. The Company generated reimbursements from significant insurance providers for the six months ended June 30, 2012 and 2011 as shown below.

Insurance Provider	Six months ended June 30, 2012	Six months ended June 30, 2011
A	20%	11%
B	15%	13%
C	13%	1%
D	13%	-
E	-	17%

Inventory

Inventory

Inventory is valued on a lower of first-in, first-out (FIFO) cost or market basis.  Inventory primarily consists of prescription medications, DME and retail items.

Property and Equipment

Property and Equipment

Company used property and equipment is stated at cost, less accumulated depreciation. Expenditures for maintenance and repairs are charged to expense as incurred.

The Company provides DME on rent-to-own terms. Pursuant to Medicare guidelines (which are followed by private insurance carriers as well) DME equipment is “rented” to the insured for 13 months, after which title to the equipment transfers to the insured. Depreciation of DME equipment is recorded to cost of sales.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level.

The following are the hierarchical levels of inputs to measure fair value

● Level 1  -  Observable inputs that reflect quoted market prices in active markets for identical assets or liabilities.

●	Level 2  -	Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.
●	Level 3  -	Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

The following are the major categories of liabilities measured at fair value on a recurring basis as of June 30, 2012 and December 31, 2011, using quoted prices in active markets for identical liabilities (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3):

		June 30, 2012		December 31, 2011
Derivative Liabilities (Level 2)	$	228,208	$	-

The Company's financial instruments consisted primarily of accounts receivable, prepaids, accounts payable and accrued liabilities, derivative liabilities and debt. The carrying amounts of the Company's financial instruments generally approximated their fair values as of June 30, 2012 and December 31, 2011, respectively, due to the short-term nature of these instruments.

Beneficial Conversion Feature and Debt Discount

Beneficial Conversion Feature and Debt Discount

For conventional convertible debt where the rate of conversion is below market value, the Company records a "beneficial conversion feature" ("BCF") and related debt discount.

When the Company records a BCF, the relative fair value of the BCF is recorded as a debt discount against the face amount of the respective debt instrument. The discount is amortized to interest expense over the life of the debt. At June 30, 2012 and 2011, there were no BCFs.

Derivative Liabilities

Derivative Liabilities

Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments, and measurement of their fair value. In determining the appropriate fair value, the Company uses the Black-Scholes option-pricing model. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt, the Company will continue its evaluation process of these instruments as derivative financial instruments.

Once derivative liabilities are determined, they are adjusted to reflect fair value at the end of each reporting period. Any increase or decrease in the fair value is recorded in results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative instruments such as warrants, are also valued using the Black-Scholes option-pricing model. Once a derivative liability ceases to exist any remaining fair value will be reclassified to additional paid in capital.

Revenue Recognition

Revenue Recognition

The Company records revenue when all of the following have occurred: (1) persuasive evidence of an arrangement exists, (2) asset is transferred to the customer without further obligation, (3) the sales price to the customer is fixed or determinable, and (4) collectability is reasonably assured.

For the six months ended June 30, 2012 and 2011, the Company had two revenue streams.

   (i) Pharmacy

The Company recognizes its pharmacy revenue when a customer picks up or is delivered their prescription or merchandise.  Billings for most prescription orders are with third-party payers, including Medicare, Medicaid and other insurance carriers.  Customer returns are nominal. 

Total pharmacy revenues for the six months ended June 30, 2012 and 2011 were approximately $4,281,000 (86%) and $3,411,000 (90%), respectively.

   (ii) Durable Medical Equipment

The Company recognizes DME revenue from the date the equipment is picked up or delivered to the customer. Revenue from DME rentals is booked over a 13 month period. Customer returns are nominal. 

Total DME revenues for the six months ended June 30, 2012 and 2011 were approximately $689,000 (14%) and $359,000 (10%), respectively.

Cost of Sales

Cost of Sales

Cost of pharmacy sales is derived based upon vendor purchases relating to prescriptions sold and point-of-sale scanning information for non-prescription sales, and is adjusted based on periodic inventories. All other costs related to sales are expensed as incurred.

Cost of DME sales is derived based upon vendor purchases relating to equipment sold and is adjusted based on periodic inventories. All other costs related to sales are expensed as incurred.

Vendor Concentrations

Vendor Concentrations

For the six months ended June 30, 2012 and 2011, the Company had significant vendor concentrations with vendors as follows:

Vendor	Six months ended June 30, 2012	Six months ended June 30, 2011
A	65%	6%
B	15%	35%
C	1%	35%

Due to a large selection of pharmaceutical wholesalers in the United States, management does not believe that losing any vendor relationship will have an impact on the Company’s business.

Selling, General and Administrative Expenses

Selling, General and Administrative Expenses (SG&A)

SG&A primarily consists of salaries, contract labor, occupancy costs, and expenses directly related to the Company’s operations.  Other administrative costs include advertising, insurance and depreciation.

Advertising

Advertising

Costs incurred for producing and communicating advertising for the Company are charged to operations as incurred and are as follows:

Six months ended June 30, 2012		Six months ended June 30, 2011
$	14,200	$	49,180

Stock-Based Payment Arrangements

Stock-Based Payment Arrangements

Generally, all forms of stock-based payments, including warrants, are measured at their fair value on the awards’ grant date typically using a Black-Scholes pricing model, based on the estimated number of awards that are ultimately expected to vest. Stock-based compensation awards issued to non-employees for services rendered are recorded at either the fair value of the services rendered or the fair value of the stock-based payment, whichever is more readily determinable. The expense resulting from stock-based payments are recorded in general and administrative expense in the consolidated statement of operations.

Income Taxes

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained.

The Company does not believe it has any uncertain tax positions.

Earnings (Loss) per Share

Earnings (Loss) per Share

Basic earnings/loss per share (“EPS”) is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to all dilutive potential of shares of common stock outstanding during the period including stock warrants, using the treasury stock method (by using the average stock price for the period to determine the number of shares assumed to be purchased from the exercise of warrants), and convertible debt, using the if-converted method. Diluted EPS excludes all dilutive potential of shares of common stock if their effect is anti-dilutive.

The Company had the following potential common stock equivalents at June 30, 2012:

	Shares
Convertible debt – face amount of $150,000; fixed conversion price; $0.40		375,000
Convertible debt – face amount of $500,000; variable conversion price; $0.40		1,253,133
Common stock warrants - 15,000; exercise price of $0.40		15,000
Total common stock equivalents		1,643,133

The Company had no common stock equivalents at June 30, 2011.

The Company reflected a net loss for the six months ended June 30, 2012 and 2011; therefore, the effect of considering any common stock equivalents, if outstanding, would have been anti-dilutive. Consequently, a separate computation of diluted earnings (loss) per share is not presented.

In connection with the recapitalization, all share and per share amounts have been retroactively restated.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

There are no new accounting pronouncements that have any impact on the Company’s financial statements.

XML

Stockholders' Equity

6 Months Ended

Jun. 30, 2012

Equity [Abstract]

Stockholders’ Equity

Note 9 Stockholders’ Equity

During the six months ended June 30, 2012, the Company issued 247,787 shares of its common stock, with share prices ranging from $0.35 to $0.51, to consultants for services rendered and the acquisition of debt; the shares have a fair value of $124,500. The fair value of stock issued is based upon the quoted closing trading price, or the value of the services provided, whichever is more readily determinable.

XML

Stock Warrants

6 Months Ended

Jun. 30, 2012

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Stock Warrants

Note 7 Stock Warrants

A summary of warrant activity for the Company for the periods ended June 30, 2012 and December 31, 2011 is as follows:

	Number of Warrants		Weighted Average Exercise Price
Balance at December 31, 2011	$	15,000	$	0.40
Granted		-		-
Exercised		-		-
Forfeited		-		-
Balance at June 30, 2012	$	15,000	$	0.40

A summary of all outstanding and exercisable warrants as of June 30, 2012 is as follows:

Exercise  Price		Warrants  Outstanding		Warrants  Exercisable		Weighted Average  Remaining  Contractual Life	Aggregate Intrinsic Value
$	0.40		15,000		15,000	2.41 years	$	300

XML

Commitments and Contingencies

6 Months Ended

Jun. 30, 2012

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 8 Commitments and Contingencies

Operating Leases

The Company leases approximately 5,100 square feet of pharmacy space under a 10-year lease executed January 11, 2011. The Company also leases approximately 1,200 square feet of office space under a 2-year lease executed November 15, 2010.

On July 1, 2011 the Company entered into a 5 year lease of approximately 4,200 square feet in Miami, Florida. Under the term of this lease the Company is not responsible for lease payments until the lessor has completed the build out of this location which is anticipated in late 2012.

On October 6, 2011 the Company also entered into a 5 year lease of approximately 3,100 square feet in Opa Locka, Florida. Under the term of this lease the Company’s lease payments commenced February 1, 2012.

Rent expense was $125,823 and $53,512 for the six months ended June 30, 2012 and 2011.

Deferred rent payable at June 30, 2012 and December 31, 2011 was $32,387 and $17,535, respectively. Deferred rent payable is the sum of the difference between the monthly rent payment and the monthly rent expense of an operating lease that contains escalated payments in future periods.

Rental commitments for currently occupied space for the fiscal years of 2012 through 2020 are approximately as follows:

Year	Amount
2012 (6 months remaining)		108,000
2013		227,000
2014		216,000
2015		222,000
2016		230,000
Thereafter		763,000
	$	1,766,000

Legal Matters

From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters that may arise from time to time may harm its business. The Company is currently neither a party to nor is it aware of any such legal proceedings or claims to be filed against it.

XML

Taxes

6 Months Ended

Jun. 30, 2012

Income Tax Disclosure [Abstract]

Taxes

Note 10 Taxes

A summary of our tax liability from December 31, 2010 through June 30, 2011 is as follows:

	Accrued Income Tax Payable			Deferred Tax Assets
Balance, December 31, 2010	$	20,203		$	18,473
Changes in the first quarter of 2011		28,864			7,627
Balance, March 31, 2011		49,067			26,100
Changes in the second quarter of 2011		(49,067	)		(26,100	)
Balance, June 30, 2011		-			-

For the year ended December 31, 2010 the Company recorded its estimated current income tax liability and deferred tax assets, as shown above. In the first quarter of 2011, the Company estimated an increase in its tax liability and an increase in its deferred tax asset, also as shown above. However, at June 30, 2011, the Company reversed its tax estimate from 2010 and 2011 to date, because at that time the Company believed that it’s projected 2011 losses and adjustments to its taxable liability relating to its stock based compensation, would offset previously estimated taxes.

XML

Summary of Significant Accounting Policies (Details 1) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Major categories of liabilities measured at fair value on a recurring basis
Derivative Liabilities (Level 2)	$ 228,208

XML

Commitments and Contingencies (Details) (USD $)	Jun. 30, 2012
Summary of rental lease payment
2012 (6 months remaining)	$ 108,000
2013	227,000
2014	216,000
2015	222,000
2016	230,000
Thereafter	763,000
Total rental commitments	$ 1,766,000

XML

Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2012

Concentration Risk [Line Items]

Major categories of liabilities measured at fair value on a recurring basis

		June 30, 2012		December 31, 2011
Derivative Liabilities (Level 2)	$	228,208	$	-

Advertising costs

Six months ended June 30, 2012		Six months ended June 30, 2011
$	14,200	$	49,180

Potential common stock equivalents

	Shares
Convertible debt – face amount of $150,000; fixed conversion price; $0.40		375,000
Convertible debt – face amount of $500,000; variable conversion price; $0.40		1,253,133
Common stock warrants - 15,000; exercise price of $0.40		15,000
Total common stock equivalents		1,643,133

Billing Concentrations [Member]

Concentration Risk [Line Items]

Concentration Risks

Insurance Provider	Six months ended June 30, 2012	Six months ended June 30, 2011
A	20%	11%
B	15%	13%
C	13%	1%
D	13%	-
E	-	17%

Vendor Concentrations [Member]

Concentration Risk [Line Items]

Concentration Risks

Vendor	Six months ended June 30, 2012	Six months ended June 30, 2011
A	65%	6%
B	15%	35%
C	1%	35%

XML

Stock Warrants (Tables)

6 Months Ended

Jun. 30, 2012

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Summary of warrant activity

	Number of Warrants		Weighted Average Exercise Price
Balance at December 31, 2011	$	15,000	$	0.40
Granted		-		-
Exercised		-		-
Forfeited		-		-
Balance at June 30, 2012	$	15,000	$	0.40

Summary of all outstanding and exercisable warrants

Exercise  Price		Warrants  Outstanding		Warrants  Exercisable		Weighted Average  Remaining  Contractual Life	Aggregate Intrinsic Value
$	0.40		15,000		15,000	2.41 years	$	300

XML

Stock Warrants (Details) (Warrant [Member], USD $)	6 Months Ended
	Jun. 30, 2012
Warrant [Member]
Summary of warrant activity
Beginning Balance, Number of warrants	15,000
Granted, Number of warrants
Exercised, Number of warrants
Forfeited, Number of warrants
Ending Balance, Number of warrants	15,000
Beginning Balance, Weighted Average Exercise Price	$ 0.40
Granted, Weighted Average Exercise Price
Exercised, Weighted Average Exercise Price
Forfeited, Weighted Average Exercise Price
Ending Balance, Weighted Average Exercise Price	$ 0.40

XML

Debt (Details) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Debt
Convertible debt - Secured	$ 500,000
Debt Discount	(206,014)
Convertible Debt	293,986
Convertible debt - Unsecured	150,000	150,000
Note - Secured	29,920
Notes - Unsecured	74,118	161,096
Long-term Debt, Total	548,024	311,096
Debt - net	(398,024)	(161,096)
Debt	$ 150,000	$ 150,000

XML

Consolidated Statement of Stockholders' Equity (USD $)	Total	Common Stock $0.0001 Par Value	Additional Paid-in Capital	Retained Earnings
Beginning Balance at Dec. 31, 2010	$ 164,099	$ 3,528	$ (1,141,029)	$ 1,301,600
Beginning Balance, (Shares) at Dec. 31, 2010		35,280,000
Issuance of common stock for services rendered	83,243	30	83,213
Issuance of common stock for services rendered, (Shares)		302,261
Issuance of common stock for services rendered - related party	525,000	139	524,861
Issuance of common stock for services rendered - related party, (Shares)		1,385,596
Issuance of common stock in connection with the conversions of debt and accrued interest	439,589	110	439,479
Issuance of common stock in connection with the conversions of debt and accrued interest, (Shares)		1,098,973
Issuance of warrants as debt issue cost - related party	4,895		4,895
Net loss	(223,087)			(223,087)
Balance at Dec. 31, 2011	993,739	3,807	(88,581)	1,078,513
Balance, (Shares) at Dec. 31, 2011		38,066,830
Issuance of common stock for debt issue costs	100,000	19	99,981
Issuance of common stock for debt issue costs, (Shares)		196,078
Issuance of common stock for services rendered	14,500	3	14,497
Issuance of common stock for services rendered, (Shares)		30,000
Issuance of common stock for services rendered - related party	10,000	2	9,998
Issuance of common stock for services rendered - related party, (Shares)		21,709
Gain on debt forgiveness - related party	100,990		100,990
Net loss	(228,478)			(228,478)
Balance at Jun. 30, 2012	$ 990,751	$ 3,831	$ 136,885	$ 850,035
Balance, (Shares) at Jun. 30, 2012		38,314,617

XML

Property and Equipment

6 Months Ended

Jun. 30, 2012

Property, Plant and Equipment [Abstract]

Property and Equipment

Note 4 Property and Equipment

Property and equipment consisted of the following.

	June 30, 2012			December 31, 2011			Estimated Useful Life
DME rental equipment	$	260,815		$	223,685		Life of the lease
Leasehold improvements and fixtures		181,536			139,008		5 years
Vehicles		90,046			90,046		3 years
Computer equipment and software		56,407			56,407		3-5 years
Furniture and equipment		30,575			28,486		13 months
Total		619,379			537,632
Less: accumulated amortization/depreciation		(335,571	)		(260,837	)
Property and equipment – net	$	283,808		$	276,795

Depreciation is computed on a straight-line basis over estimated useful lives. Property and equipment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. There were no impairment charges taken for the six months ended June 30, 2012 or 2011.

Depreciation expense for the six months ended June 30, 2012 and 2011 was $128,574 and $40,556, respectively.

XML

Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2012

Commitments and Contingencies Disclosure [Abstract]

Summary of rental lease payments

Year	Amount
2012 (6 months remaining)		108,000
2013		227,000
2014		216,000
2015		222,000
2016		230,000
Thereafter		763,000
	$	1,766,000

XML

Accounts Receivable (Details Textual) (USD $)	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Accounts Receivable (Textual)
Reduction to accounts receivable	5.00%
Bad debt	$ 38,311

XML

Nature of Operations & Restatement (Tables)

6 Months Ended

Jun. 30, 2012

Organization, Consolidation and Presentation Of Financial Statements [Abstract]

Schedule of error corrections and prior period adjustments

Consolidated Balance Sheet as of December 31, 2011:

	December 31, 2011
	As Originally Reported			Adjustments			As Restated
							(unaudited)
Assets
Current Assets
Cash	$	88,874		$	-		$	88,874
Accounts receivable - net		1,006,835			-			1,006,835
Inventory		248,678			-			248,678
Prepaids		21,741			-			21,741
Total Current Assets		1,366,128			-			1,366,128
Property and equipment - net		276,795			-			276,795
Other Assets
Intangibles - net		1,574,663			(1,574,663	)		-
Goodwill		1,348,402			(1,348,402	)		-
Debt issue costs		22,259			-			22,259
Deposits		44,741			-			44,741
Total Other Assets		2,990,065			(2,923,065	)		67,000
Total Assets	$	4,632,988		$	(2,923,065	)	$	1,709,923
Liabilities and Stockholders' Equity
Current Liabilities
Cash overdraft	$	71,380		$	-		$	71,380
Accounts payable and accrued liabilities		248,786			-			248,785
Deferred rent payable		17,535			-			17,535
Income taxes payable		42,656			-			42,656
Notes payable		87,767			-			87,767
Notes payable - related party		73,329			-			73,329
Accrued interest payable - related party		24,732			-			24,732
Total Current Liabilities		566,185			-			566,184
Long Term Liabilities
Convertible Debt - note payable		150,000			-			150,000
Total Long Term Liabilities		150,000			-			150,000
Stockholders' Equity
Common stock, par value $0.0001; 100,000,000 shares authorized
38,066,830 and 36,348,830 issued and outstanding (2011); and
35,280,000 and 33,562,000 shares issued and outstanding (2010)		3,807			-			3,807
Additional paid in capital		6,278,571			(6,367,152	)		(88,581	)
Accumulated deficit		(2,365,574	)		3,444,087			1,078,513
Total Stockholders' Equity		3,916,804			(2,923,065	)		993,739
Total Liabilities and Stockholders' Equity	$	4,632,989		$	(2,923,065	)	$	1,709,923

Consolidated Statement of Operations for the three and six months ended June 30, 2011:

	Three Months Ended									Six Months Ended
	June 30, 2011									June 30, 2011
	As Originally Reported			Adjustments			As Restated			As Originally Reported			Adjustments			As Restated
Sales - net	$	1,897,289		$	-		$	1,897,289		$	3,769,909		$	-		$	3,769,909
Cost of sales		880,752			-			880,752			1,831,953			-			1,831,953
Gross profit		1,016,537			-			1,016,537			1,937,956			-			1,937,956
Selling, general and administrative expenses		1,139,734			(60,635	)		1,079,100			2,094,492			(120,603	)		1,973,889
Loss from operations		(123,197	)		60,635			(62,563	)		(156,536	)		120,603			(35,933	)
Other Income (Expense)
Gain on debt settlement - former related party		-			-			-			12,585			-			12,585
Interest expense		(1,538	)		-			(1,538	)		(12,571	)		-			(12,571	)
Total other income - net		(1,538	)		-			(1,538	)		14			-			14
Losses from continuing operations before provision for income taxes		(124,735	)		60,635			(64,101	)		(156,522	)		120,603			(35,919	)
Provision for income taxes (benefit)
Current income tax		(49,067	)		-			(49,067	)		-			-			-
Deferred income tax		26,100			-			26,100			-			-			-
Total income tax benifit - net		(22,967	)		-			(22,967	)		-			-			-
Net loss	$	(101,768	)	$	60,635		$	(41,134	)	$	(156,522	)	$	120,603		$	(35,919	)
Basic and diluted loss per share:		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.00	)
Weighted average number of common shares outstanding
during the period - basic and diluted		37,209,546						37,209,546			36,478,861						36,478,861

Consolidated Statement of Cash Flows for the six months ended June 30, 2011:

	June 30, 2011
	As Originally Reported			Adjustments			As Restated
Cash Flows From Operating Activities:
Net loss	$	(156,522	)	$	120,603		$	(35,919	)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation		40,556			-			40,556
Stock-based compensation		335,845			-			335,845
Amortization of intangibles		120,603			(120,603	)		-
Changes in operating assets and liabilities:
Accounts receivable		(228,455	)		-			(228,455	)
Inventory		67,568			-			67,568
Prepaids		(4,985	)		-			(4,985	)
Deposits		(35,704	)		-			(35,704	)
Accounts payable and accrued liabilities		100,073			-			100,073
Deferred rent		8,733			-			8,733
Accrued interest payable - related parties		(2,897	)		-			(2,897	)
Net Cash Provided by Operating Activities		244,815			-			244,815
Cash Flows From Investing Activities:
Purchase of property and equipment		(128,766	)		-			(128,766	)
Net Cash Used in Investing Activities		(128,766	)		-			(128,766	)
Cash Flows From Financing Activities:
Repayment of debt		(71,780	)		-			(71,780	)
Net Cash Used in Financing Activities		(71,780	)		-			(71,780	)
Net increase in cash	$	44,269		$	-		$	44,269
Cash at beginning of period		204,336			-			204,336
Cash at end of period	$	248,605		$	-		$	248,605
Supplemental disclosures of cash flow information:
Cash paid for interest	$	2,480.00					$	2,480.00
Cash paid for taxes	$	-					$	-