UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


[√]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: June 30, 2015


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

For the transition period from __________________ to ____________________

Commission file number: 000-52422

Hasco Medical, Inc.

(Exact name of registrant as specified in its charter)


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


16800 Dallas Parkway, Ste 200, Dallas, Texas	75248
(Address of principal executive offices)	(Zip Code)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

[√] Yes [ ] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 (or for such shorter period that the registrant was required to submit and post such files).

[√] Yes [ ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company:


Large accelerated filer	[ ]	Accelerated filer	[ ]
Non-accelerated filer	[ ] (Do not check if smaller reporting company)	Smaller reporting company	[√]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

[ ] Yes [√] No

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date:

1,007,787,161 shares of common stock were issued and outstanding as of July 28, 2015.

Hasco Medical, Inc.

FORM 10-Q

TABLE OF CONTENTS

Index


PART I – FINANCIAL INFORMATION		4

ITEM 1.	FINANCIAL STATEMENTS.	4
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.	15
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.	21
ITEM 4.	CONTROLS AND PROCEDURES.	22

PART II – OTHER INFORMATION		23

ITEM 6.	EXHIBITS	23

SIGNATURES		24

- 2 -

FORWARD–LOOKING STATEMENTS

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

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

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

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

OTHER PERTINENT INFORMATION

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

- 3 -

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

Hasco Medical, Inc. & Subsidiaries

Consolidated Balance Sheets


	June 30,
	2015			December 31,
	(unaudited)			2014

Assets
Current assets
Cash	$	321,033		$	509,924
Accounts receivable, net of allowance for doubtful accounts of $283,728 and $752,624, respectively		7,412,816			9,006,558
Inventory, net of inventory reserve of $124,999 and $109,993 respectively		19,643,382			16,641,806
Deferred tax asset, short term		448,877			448,877
Current portion of note receivable		25,530			25,515
Prepaid expenses and other current assets		753,159			603,699
Total current assets		28,604,797			27,236,379

Property & equipment, net of accumulated depreciation of $2,217,640 and $1,940,549, respectively		1,789,602			2,041,141
Intangible assets, net of accumulated amortization of $44,441 and $31,108, respectively		6,139,785			6,153,118
Deferred tax asset, long term		194,669			194,669
Note receivable, net of current portion		75,760			88,631
Other non-current assets		591,075			591,609
Total Assets	$	37,395,688		$	36,305,547

Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable and accrued expenses	$	2,970,483		$	2,842,626
Cash overdraft		143,588			—
Customer deposits and deferred revenue		1,094,713			465,167
Line of credit		4,031,613			2,738,878
Note payable - floor plan		14,780,714			15,584,949
Obligation under capital leases		620,953			434,142
Current portion of notes payable		395,034			402,546
Current portion note payable, related party		369,525			359,579
Other current liabilities		1,921,151			2,456,637
Total current liabilities		26,327,774			25,284,524

Obligation under capital leases, net of current portion		464,725			870,176
Notes payable, net of current portion		3,448,680			3,667,125
Notes payable to related party, net of current portion		1,378,559			1,576,076
Total liabilities		31,619,738			31,397,901

Stockholders’ Equity
Preferred stock, $0.001 par value, 3,000,000 shares authorized, none issued and outstanding		—			—
Common stock, $0.001 par value, 2,000,000,000 shares authorized; and 1,007,787,161 and 1,004,210,973 shares issued and outstanding, respectively		1,007,787			1,004,210
Additional paid-in capital		6,991,506			6,875,350
Accumulated deficit		(2,223,343	)		(2,971,914	)
Total stockholders’ equity		5,775,950			4,907,646

Total Liabilities and Stockholders’ Equity	$	37,395,688		$	36,305,547

See accompanying notes to unaudited consolidated financial statements

- 4 -

Hasco Medical, Inc. & Subsidiaries

Consolidated Statements of Operations

(unaudited)


	For the Three Months ended June 30,
	2015			2014

Product sales	$	23,542,058		$	19,656,944
Rental revenue		330,937			312,593
Service and other		3,671,496			4,022,638
Total net revenues		27,544,491			23,992,175

Cost of sales		21,277,014			18,869,736

Gross profit		6,267,477			5,122,439

Operating expenses:
Selling and marketing		1,100,160			1,017,177
General and administrative		3,489,740			3,329,271
Amortization and depreciation		222,040			287,855
Total operating expenses		4,811,940			4,634,303

Income from operations		1,455,537			488,136

Other income		49,448			54,996
Interest expense		(314,880	)		(248,549	)
Total other income (expense)		(265,432	)		(193,553	)

Income from continuing operations before income taxes		1,190,105			294,583

Provision for income taxes		446,065			88,557

Income from continuing operations		744,040			206,026

Gain from discontinued operations, net of income tax		—			54,227

Net income		744,040			260,253

Earnings per share:
Basic and dilutive-continuing operations	$	0.00		$	0.00
Basic and dilutive-discontinued operations	$	0.00		$	0.00

Weighted average shares outstanding:
Basic and dilutive		1,006,781,119			997,706,194

See accompanying notes to unaudited consolidated financial statements

- 5 -

Hasco Medical, Inc. & Subsidiaries

Consolidated Statements of Operations

(unaudited)


	For the Six Months Ended June 30,
	2015			2014

Product sales	$	39,328,455		$	36,113,894
Rental revenue		730,261			557,598
Service and other		6,947,520			7,874,956
Total net revenues		47,006,236			44,546,448

Cost of sales		36,124,376			34,194,764

Gross profit		10,881,860			10,351,684

Operating expenses:
Selling and marketing		1,968,638			1,970,701
General and administrative		6,910,675			6,681,031
Amortization and depreciation		446,126			561,588
Total operating expenses		9,325,439			9,213,320

Income from operations		1,556,421			1,138,364

Other income		226,096			37,156
Interest expense		(647,702	)		(520,632	)
Total other income (expense)		(421,606	)		(483,476	)

Income from continuing operations before income taxes		1,134,815			654,888

Provision for income taxes		386,244			258,966

Income from continuing operations		748,571			395,922

Gain from discontinued operations, net of income tax		—			58,678

Net income		748,571			454,600

Earnings per share:
Basic and dilutive-continuing operations	$	0.00		$	0.00
Basic and dilutive-discontinued operations	$	0.00		$	0.00

Weighted average shares outstanding:
Basic and dilutive		1,006,512,196			997,324,412

See accompanying notes to unaudited consolidated financial statements

- 6 -

Hasco Medical, Inc. & Subsidiaries

Consolidated Statements of Cash Flows

(unaudited)


	For the six months Ended June 30,
	2015			2014

Cash Flows from operating activities:
Net income	$	748,571		$	454,600
Adjustment to reconcile net income to net cash used in operations:
Depreciation and amortization		446,126			561,892
Stock based compensation		119,275			53,608
Loss on disposal of property and equipment		13,812			14,723
Gain on disposition of subsidiary		—			(93,859	)
Deferred tax asset		—			10,718
Changes in assets and liabilities:
Accounts receivable		1,593,742			(1,118,098	)
Inventory		(3,001,576	)		(1,842,741	)
Prepaid expenses		(149,460	)		(92,653	)
Other assets		534			28,356
Accounts payable and accrued expenses		127,857			898,376
Customer deposits and deferred revenue		629,546			(4,246	)
Other liabilities		(535,486	)		800,412
Net cash used in operating activities		(7,059	)		(328,912	)

Cash Flows from investing activities:
Purchase of property and equipment		(195,066	)		(84,902	)
Proceeds from note receivable		12,856			—
Net cash used in investing activities		(182,210	)		(84,902	)

Cash Flows from financing activities:
Proceeds from floor plan financing		23,507,270			25,938,133
Repayments of floor plan financing		(24,311,505	)		(24,287,934	)
Proceeds from line of credit		16,136,503			1,195,614
Repayments of line of credit		(14,843,768	)		(1,453,732	)
Repayments of note and loan payables		(225,957	)		(183,197	)
Repayments of loans payables – related party		(187,571	)		(140,011	)
Principal payments under capital lease obligations		(218,640	)		(178,489	)
Cash overdraft		143,588			(78,376	)
Proceeds from issuance of common stock		458			2,000
Net cash provided by financing activities		378			814,008

Net change in cash		(188,891	)		400,194
Cash at beginning of period		509,924			150,313
Cash at end of period	$	321,033		$	550,507

Supplemental disclosures of cash flow information
Cash paid for:
Income Taxes	$	600,000		$	—
Interest	$	647,607		$	520,632
Non-Cash transactions:
Loan payments made through issuance of common stock	$	—		$	41,366
Note receivable from sale of business entity		—			124,618
Vehicles purchased through capital lease	$	—		$	302,928

See accompanying notes to unaudited consolidated financial statements

- 7 -

Hasco Medical, Inc. & Subsidiaries

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

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

NATURE OF OPERATIONS

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

Services and Products

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

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

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

Our corporate headquarters and principal corporate operations are conducted in Dallas, Texas. We also house a portion of our corporate operations in Londonderry, New Hampshire.

Modified Mobility Vehicles

Ride-Away, Mobility Freedom and Auto Mobility serve individuals with physical limitations that need specialty equipment in order to safely operate their vehicle. We also provide products for families and care-givers with transport requirements for those under care. In certain circumstances both the van itself and its specialty equipment is paid for directly by a federal or state agency. For the periods ended June 30, 2015 and 2014, approximately 18% and 27%, respectively, of the Modified Mobility Vehicles segments revenue was derived from veterans receiving benefits from the United States Department of Veterans Affairs (the “VA”). Mobility Freedom and Ride-Away are both a VA and Vocational Rehabilitation (VR) certified vendors in all the states in which we operate. Ride-Away has thirteen corporate owned stores which are located in Beltsville, MD, East Hartford, CT, Essex Junction, VT, Gray, ME, Londonderry, NH, Norfolk, VA, Norristown, PA, North Attleboro, MA, Norwood, MA, Richmond, VA, Tampa, FL, Brooklyn, NY, and Parkville, MD. Mobility Freedom has five corporate owned stores located in Orlando, Largo, Clermont, Bunnell and Ocala, Florida. Auto Mobility Sales has locations in Fort Lauderdale and Lake Worth, Florida.

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

Discontinued Operations

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

- 8 -

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of normal and recurring accruals) necessary to present fairly the consolidated financial position as of June 30, 2015 and the consolidated statements of operations, and cash flows for the three month and six month periods ended June 30, 2015 and 2014 of Hasco Medical Inc. (“Hasco” or the “Company”).

The significant accounting policies followed by the Company are set forth in Note 1 to the Company’s consolidated financial statements in the December 31, 2014, Hasco Medical Inc. Annual Report on Form 10-K, which should be read in conjunction with these financial statements. The results of operations for the periods ended June 30, 2015 are not necessarily indicative of the result to be expected for the full year.

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


·	Hasco Medical, Inc.;
·	Mobility Freedom, Inc.;
·	Ride Away Handicapped Equipment, Inc.;
·	Auto Mobility Sales, Inc.;
·	Certified Medical Systems II, Inc.; (discontinued operations)

Use of Estimates

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

Revenue Recognition

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

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

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

- 9 -

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company places its cash with high credit quality financial institutions. The Company’s accounts at these institutions are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. From time to time and for the three month periods ended June 30, 2015 and December 31, 2014, the Company reached bank balances exceeding the FDIC insurance limit. To reduce its risk associated with the failure of such financial institution, the Company evaluates, at least annually, the rating of the financial institution in which it holds deposits.

Related Parties

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

Earnings per Share

Earnings per common share are calculated under the provisions of ASC 260. The accounting standard requires the Company to report both basic earnings per share, which is based on the weighted-average number of common shares outstanding, and diluted earnings per share, which is based on the weighted-average number of common shares outstanding plus all potential dilutive common shares outstanding. The computation of diluted net loss per share does not include dilutive common stock equivalents in the weighted average shares outstanding if they would be anti-dilutive. There were no stock options which could potentially dilute earnings per share for the periods ended June 30, 2015 and 2014, respectively.

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


	For The Six Months ended June 30,						For The Three Months ended June 30,
		2015			2014			2015			2014

Net income	$	748,571		$	454,600		$	744,040		$	260,253

Basic weighted average outstanding shares of common stock		1,006,512,196			997,324,412			1,006,781,119			997,706,194
Diluted weighted average common stock		1,006,512,196			997,324,412			1,006,781,119			997,706,194

Earnings per share:
Basic and diluted	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)

The number of outstanding shares of our common stock as of June 30, 2015 was 1,007,787,161.

Recently Issued Accounting Pronouncements

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

- 10 -

NOTE 2 – ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following:


	June 30, 2015 (unaudited)			%	December 31, 2014			%

Trade receivables	$	3,451,475		44.8	$	4,457,010		45.7
Government receivables		4,245,069		55.2		5,302,172		54.3
		7,696,544		100.0		9,759,182		100.0
Less: allowances for doubtful accounts		(283,728	)			(752,624	)
Total	$	7,412,816			$	9,006,558

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

NOTE 3 – INVENTORY

Inventory consists of the following:


	June 30, 2015 (unaudited)			December 31, 2014

Vehicles	$	18,088,877		$	15,254,709
Work in Process		526,902			474,850
Equipment and supplies		1,152,602			1,022,240
Inventory reserve		(124,999	)		(109,993	)
	$	19,643,382		$	16,641,806

NOTE 4 – PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:


		June 30,
	Estimated	2015			December 31,
	Life	(unaudited)			2014

Building improvements	Varies	$	968,474		$	949,478
Office furniture and equipment	5 years		284,111			306,331
Rental equipment	13-36 months		663,836			581,245
Vehicles	5 years		231,060			161,786
Capitalized leases	Varies		1,859,761			1,982,850
Total			4,007,242			3,981,690
Accumulated depreciation			(2,217,640	)		(1,940,549	)
Net		$	1,789,602		$	2,041,141

For the three months and six months ended June 30, 2015 and 2014 depreciation expense amounted to $215,373 and $276,824, and $432,793 and $539,526, respectively.

- 11 -

NOTE 5 – INTANGIBLE ASSETS

Intangible assets consist of the following:


		June 30,
	Estimated	2015			December 31,
	Life	(unaudited)			2014
Goodwill related to acquisition of Mobility Freedom	Indefinite		1,641,303			1,641,303
Goodwill related to acquisition of Ride-Away	Indefinite		1,888,710			1,888,710
Trade name related to acquisition of Mobility Freedom	Indefinite		400,000			400,000
Trade name related to acquisition of Ride-Away	Indefinite		990,000			990,000
Primary market area related to acquisition of Mobility Freedom	Indefinite		280,000			280,000
Primary market area related to acquisition of Ride-Away	Indefinite		470,000			470,000
Goodwill related to acquisition of Auto Mobility Sales	Indefinite		284,213			284,213
Primary market area related to acquisition of Auto Mobility Sales	Indefinite		150,000			150,000
Non-compete agreements area related to acquisition of Auto Mobility Sales	3 years		80,000			80,000
Subtotal			6,184,226			6,184,226
Accumulated amortization			(44,441	)		(31,108	)
Total		$	6,139,785		$	6,153,118

For the three months and six months ended June 30, 2015 and 2014 amortization expense were $6,667 and $11,031, and $13,333 and 22,062, respectively.

NOTE 6 – NOTES PAYABLE AND DEBT

Revolving Line of Credit

On October 31, 2013, the Company renewed its Commercial Note agreement with a bank for advances of funds for working capital purposes under a line of credit arrangement for $8,000,000 with an interest calculation of the prime rate plus 0.25% which reflected an interest rate of 3.50% as of June 30, 2015. The agreement is secured against all property of the borrowers assets, on demand with an annual review as of December 31, 2014 and expires on October 31, 2016. Payments due are interest only and the interest rate varies based on the Company’s leverage ratio. The balance of the line of credit was $4,031,613 at June 30, 2015 and $2,738,878 at December 31, 2014.

Acquisitions Term Loan Draw Facility

On February 27, 2015, the Company contracted with a bank for a term loan draw facility to be used solely as an acquisitions line of credit. Borrowing on this agreement is up to $1,000,000 for up to 50% of the acquisition amount of any US company in the Modified Mobility Vehicle industry. These draws will be charged 6% interest per annum, at the one (1) year anniversary date of each given draw amount, a 48 month term loan is then granted at the same 6% interest amount and the facility is renewed to the full $1,000,000 availability. This agreement expires on March 27, 2020. The note balance of this facility was $0 as of June 30, 2015.

Note Payable – Floor Plan

The Company has a floor plan line of credit with General Electric Credit Corporation with a maximum borrowing capacity of $11,250,000 for Ride-Away, $3,850,000 for Mobility Freedom, and $1,750,000 for Auto Mobility Sales at June 30, 2015. The borrowing capacity was increased by $5 million on May 20, 2014. Amounts borrowed for vehicles under this line bear no interest for 60 days and then bear interest at the 90 day LIBOR plus 6.0% for Ride-Away and at the 90 day LIBOR plus 5.5% for Mobility Freedom and Auto Mobility Sales. The loan balance on the vehicle is due when the vehicle is fully funded or paid by the customer. If the vehicle is not fully funded or paid within nine months of being purchased by the Company and funded by the floor plan, a graduated percentage of the balance is due with the entire balance due at twelve months. The note is secured by the vehicles financed. At June 30, 2015 and December 31, 2014, the Company had $14,780,714 and $15,584,949 respectively, outstanding under these lines.

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

- 12 -

Installment Debt

Installment debts consist of the following:


	June 30, 2015 (unaudited)		December 31, 2014

Vehicle Note Payable, dated August 18, 2011, vehicle financing arrangement for tow truck, original amount of $47,124, 5 years (60 months), 0% interest rate, commenced October 1, 2011, matures on October 1, 2016, monthly installment payments of $785	$	10,210	$	14,923

Note Payable, dated May 13, 2011, issued for the acquisition of Mobility Freedom, original amount of $2 million, fifteen years (180 months), 6% interest rate, commenced August 1, 2011, matures on July 1, 2026, monthly installment payments of $16,877 secured by grantee from the majority shareholder of Mobility Freedom		1,627,962		1,679,480

Note Payable to related party, dated May 13, 2011, associated with the acquisition of Mobility Freedom, original amount of $2 million, ten years (120 months), 5% interest rate, commenced August 1, 2011, matures on July 1, 2021, monthly installment payments of $22,204		1,317,180		1,415,737

Note Payable, dated November 16, 2011, issued for the acquisition of Certified Auto, original amount of $50,000, four years (16 quarters), 0% interest rate, commenced January 16, 2012, matures on November 16, 2015, quarterly installment payments of $3,125		—		18,660

Note Payable, dated March 1, 2012, issued for the acquisition of Ride-Away, original amount of $3,000,000, ten years (120 months), 5% interest rate, commences September 1, 2012, matures on May 2, 2022, monthly installment payments of $31,820. Note is with the former owner of Ride-Away		2,206,327		2,356,573

Note payable to related party, dated March 1, 2012, issued for the acquisition of Ride-Away, original amount of $500,000, five years (60 months), 6% interest rate, commenced April 1, 2012, matures March 1, 2017, monthly installment payments of $9,685		192,665		244,010

Promissory Note payable to a related party, dated September 4, 2014, issued for the acquisition of Auto Mobility Sales, original amount of $210,000, five years (60 months), 5% interest rate, commenced November 1, 2014, matures October 1, 2018, monthly installment payments of $3,963		142,366		165,565

Promissory Note payable to a related party, dated September 4, 2014, issued for the acquisition of Auto Mobility Sales, original amount of $140,000, five years (60 months), 5% interest rate, commenced November 1, 2014, matures October 1, 2018, monthly installment payments of $2,642		95,088		110,378

Total installment debt		5,591,798		6,005,326

Current portion of installment debt, notes payable		764,559		762,125
Long-term portion	$	4,827,239	$	5,243,201

NOTE 7 – STOCKHOLDERS’ EQUITY

During the three months ended June 30, 2015, 999,998 shares of common stock valued at $30,000 were issued to key employees as employee compensation and $458 were proceeds from the sale of stock.

- 13 -

NOTE 8 – CONTINGENCIES

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

NOTE 9 – INCOME TAXES

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

As of June 30, 2015 and 2014, the Company had no loss carry forwards available to reduce its future federal taxable income.

The table below summarizes the differences between the Company’s effective tax rate and the statutory federal rate as follows for income for continuing operations for the six months ended June 30, 2015 and 2014:


	For the Six Months Ended June 30,
	2015			2014
Expected federal income tax expense (34%)	$	385,837		$	218,412
State tax expense, net of federal tax effect		45,373			23,944
Deferred taxes		—			(10,718	)
Other		(44,966	)		27,328
		386,244			258,966
Change in valuation allowance		—			—
Net income tax expense	$	386,244		$	258,966

NOTE 10 – DIVESTITURE OF CERTIFIED MEDICAL

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

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

NOTE 11 – SUBSEQUENT EVENTS

On July 30, 2015, Hasco Medical completed the acquisition of Access2Life – Waco, Texas pursuant to an Asset Purchase Agreement, dated as of July 30, 2015. The Access2Life location is now a wholly-owned subsidiary of Hasco Medical and will operate under the Ride-Away, Inc name. Under the terms of the Asset Purchase Agreement, Hasco paid $238,108 in cash for all assets of Access2Life - Waco. The purchase price was calculated as $103,108 for total assets and $135,000 for intangible assets – goodwill.

- 14 -

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

Results of Operations

The following table provides an overview of certain key factors of our results of continuing operations for the three months ended June 30, 2015 as compared to June 30, 2014:


	Three Months Ended June 30,
	2015			2014
Net revenues	$	27,544,491		$	23,992,175
Cost of sales		21,277,014			18,869,736
Operating expenses:
Selling and marketing		1,100,160			1,017,177
General and administrative		3,489,740			3,329,271
Amortization and depreciation		222,040			287,855
Total operating expenses		4,811,940			4,634,303
Income from operations		1,455,537			488,136
Total other income (expenses)		(265,432	)		(193,553	)
Provision for income taxes		446,065			88,557
Income from continuing operations		744,040			206,026
Income from discontinued operations		—			54,227
Net income from continuing operations	$	744,040		$	260,253

Other Key Indicators:


	Three Months Ended June 30,
	2015	2014
Cost of sales as a percentage of revenues	77.2%	78.6%
Gross profit margin	22.8%	21.4%
General and administrative expenses as a percentage of revenues	12.7%	13.9%
Total operating expenses as a percentage of revenues	17.5%	19.3%

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


	Three Months ended June 30,
	2015		2014
Product Sales	$	23,542,058	$	19,656,944
Rental Revenue		330,937		312,593
Service and other		3,671,496		4,022,638
Total Net Revenues	$	27,544,491	$	23,992,175

Three Months ended June 30, 2015 and 2014

Net Revenues

For the three months ended June 30, 2015, we reported revenues of $27,544,491 as compared to revenues of $23,992,175 for the three months ended June 30, 2014, an increase of $3,552,316 or approximately 14.8% over prior year. This increase is due to the establishment and implementation of a Commercial Sales department and team within the Hasco companies which resulted in a significant increase in product sales through commercial customers and increased demand in this quarter due to inclement weather in the first quarter.

Product sales for the three months ended June 30, 2015 and 2014 amounted to $23,542,058 and $19,656,944, respectively, an increase of $3,885,114 or 19.8%. This increase is due to the establishment and implementation of a Commercial Sales department and team within the Hasco companies which resulted in a significant increase in product sales through commercial customers and increased demand in this quarter due to inclement weather in the first quarter. Rental revenue for the three months ended June 30, 2015 and 2014 amounted to $330,937 and 312,593, respectively, an increase of $18,344 or 5.9%. Service and other revenue for the three months ended June 30, 2015 and 2014 amounted to $3,671,496 and $4,022,638, respectively, a decrease of $351,142 or 8.7%.

- 15 -

Product sales comprise approximately 83.7% of the Company’s sales for the three months ended June 30, 2015 compared to 81.9% in the same period of 2014.

Cost of Sales

Our cost of sales consists of products purchased for resale, and service parts and labor. For the three months ended June 30, 2015, cost of sales was $21,277,014, or approximately 77.2% of revenues, compared to $18,869,736, or approximately 78.6% of revenues, for the three months ended June 30, 2014. The overall increase of cost of sales for our Modified Mobility Vehicle operations is due to the increase in revenue.

We have a single vendor that represents 39% of our Cost of Sales. Our relationship with this vendor is excellent and we do not anticipate any change in the status of that relationship. Should there be any such change; management believes that substantially similar products are available from other competitive vendors at terms that will not have a substantial effect on our results of operations.

Gross Profit

Overall gross profit percentage increased to 22.8% for the three months ended June 30, 2015 from 21.4 % for the three months ended June 30, 2014 due to an increase in service margin from additions of ancillary items to vehicles in order to customize the driving experience.

Total Operating Expense

Total operating expenses decreased as a percentage of revenues to 17.5% for the three months ended June 30, 2015 from 19.3% for the three months ended June 30, 2014. These changes include:

Selling and Marketing Expense. For the three months ended June 30, 2015, selling and marketing costs were $1,100,160 and $1,017,117 for the three months ended June 30, 2014. The increase was due to the increase in marketing, advertising and print advertising programs initiatives, primarily in the Modified Mobility Vehicle operations.

General and Administrative Expense. For the three months ended June 30, 2015, general and administrative expenses were $3,489,740 as compared to $3,329,271 for the three months ended June 30, 2014, an increase of $160,469. The increase is due to the opening of the new Miami location and increases in benefit programs such as 401K.

Depreciation and Amortization Expense. For the three months ended June 30, 2015, depreciation and amortization expense amounted to $222,040 as compared to $287,855 for the three months ended June 30, 2014, a decrease of $65,815.

Income from Continuing Operations before Taxes

We reported income from continuing operations of $1,190,105 for the three months ended June 30, 2015 as compared to income from continuing operations of $294,593 for the three months ended June 30, 2014.

Other Income (Expense)

Other expense for the three months ended June 30, 2015 amounted to $265,432 compared to $193,553 for the three months ended June 30, 2014. Other income and expense consists of Other Income and Interest Expense.

Other Income consists primarily of expense pricing discounts earned which totaled $49,448 for the three months ended June 30, 2015 and $54,996 for the three months ended June 30, 2014.

Interest expense for the three months ended June 30, 2015 amounted to $314,880 as compared to $248,549 for the three months ended June 30, 2014, an increase of $66,331. This increase is due to the additional debt with the increase in purchase volume and the remaining inventory on the GE floor plan agreement.

Net Income

Our net income was $744,040 for the three months ended June 30, 2015 as compared to net income of $260,253 for the three months ended June 30, 2014.

- 16 -

Assets and Liabilities

Assets were $37,395,688 as of June 30, 2015. Assets consisted of cash of $321,033, accounts receivable of $7,412,816, inventory of $19,643,382, current portion of notes receivable of $25,530, prepaid expense of $753,159, short-term deferred tax asset of $448,877, long-term deferred tax asset of $194,669, property and equipment of $1,789,602, intangible assets of $6,139,785, long term notes receivable of $75,760, and other non-current assets of $591,075. Liabilities were $31,619,738 as of June 30, 2015 and consisted primarily of accounts payable of $2,970,483, customer deposits and deferred revenue of $1,094,713, cash overdraft of 143,588, line of credit of $4,031,613, notes payable – floor plan of $14,780,714, obligation under capital leases short term of $620,953, current portion of notes payable of $395,034, related party short-term notes payable of $369,525, long-term capital leases of $464,725, long-term notes payable of $3,448,680, related party long-term notes payable of $1,378,559, and other current liabilities of $1,921,151 which includes income taxes payable of $843,813.

Stockholders’ Equity

Stockholders’ equity was $5,775,950 as of June 30, 2015. Stockholder’s equity consisted primarily of shares issued for acquisitions, fundraising, employee compensation, and settlement of services totaling $7,999,293, offset primarily by the deficit of $2,223,343 at June 30, 2015.

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

The following table provides an overview of certain key factors of our results of continuing operations for the six months ended June 30, 2015 as compared to June 30, 2014:


	Six Months Ended June 30,
	2015			2014
Net revenues	$	47,006,236		$	44,546,448
Cost of sales		36,124,376			34,194,764
Operating expenses:
Selling and marketing		1,968,638			1,970,701
General and administrative		6,910,675			6,681,031
Amortization and depreciation		446,126			561,588
Total operating expenses		9,325,439			9,213,320
Income from operations		1,556,421			1,138,364
Total other income (expense)		(421,606	)		(483,476	)
Provision for (benefit from) income taxes		386,244			258,966	)
Net income from continuing operations	$	748,571		$	395,922

Other Key Indicators:


	Six Months Ended June 30,
	2015	2014
Cost of sales as a percentage of revenues	76.9%	76.8%
Gross profit margin	23.1%	23.2%
General and administrative expenses as a percentage of revenues	14.7%	15.0%
Total operating expenses as a percentage of revenues	19.8%	20.7%

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


	Six Months ended June 30,
	2015		2014
Product Sales	$	39,328,455	$	36,113,894
Rental Revenue		730,261		557,598
Service and other		6,947,520		7,874,956
Total Net Revenues	$	47,006,236	$	44,546,448

- 17 -

Six Months ended June 30, 2015 and 2014

Net Revenues

For the six months ended June 30, 2015, we reported revenues of $47,006,236 as compared to revenues of $44,546,448 for the six months ended June 30, 2014, an increase of $2,459,788 or approximately 5.5%. The increase is due to the increase in private pay business for van sales and the acquisition of Auto Mobility Sales.

Product sales for the six months ended June 30, 2015 and 2014 amounted to $39,328,455 and $36,113,894, respectively, an increase of $3,214,561 or 8.9%. Rental revenue for the six months ended June 30, 2015 and 2014 amounted to $730,261 and $557,598, respectively, an increase of $172,663 or 31.0%. Service and other revenue for the six months ended June 30, 2015 and 2014 amounted to $6,947,520 and $7,874,956, respectively, a decrease of $927,436 or 11.8%. The increase in product sales is due to the establishment and implementation of a Commercial Sales department and team within the Hasco companies which resulted in a significant increase in product sales through commercial customers.

Product sales comprise approximately 83.7% of the Company’s sales for the six months ended June 30, 2015 compared to 81.1% in the same period of 2014.

Cost of Sales

Our cost of sales consists of products purchased for resale, and service parts and labor. For the six months ended June 30, 2015, cost of sales was $36,124,376, or approximately 76.9% of revenues, compared to $34,194,764, or approximately 76.8% of revenues, for the six months ended June 30, 2014. The overall increase of cost of sales for our Modified Mobility Vehicle operations is due to the increase in revenue.

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

Gross Profit

Overall gross profit percentage decreased to 23.1% for the six months ended June 30, 2015 from 23.2% for the six months ended June 30, 2014. The slight decrease is a direct correlation to the decrease in Service revenues and the increase in the lower margin Commercial sales.

Total Operating Expense

Total operating expenses decreased as a percentage of revenues to 19.8% for the six months ended June 30, 2015 from 20.7% for the six months ended June 30, 2014. These changes include:

Selling and Marketing Expense. For the six months ended June 30, 2015, selling and marketing costs were $1,968,638 and $1,970,701 for the six months ended June 30, 2014 a decrease of $2,063. The decrease was due to various small cost adjustments throughout the 6 months.

General and Administrative Expense. For the six months ended June 30, 2015, general and administrative expenses were $6,910,675 as compared to $6,681,031for the six months ended June 30, 2014, an increase of $229,644. The increase is due to the additional rent and professional fees associated with the acquisition of business entities in 2014, additional personnel associated with the opening of Parkville, MD and Miami, Fl., and additions of staff in the accounting and sales departments as well as fully staffing the locations with management and sales personnel.

Depreciation and Amortization Expense. For the six months ended June 30, 2015, depreciation and amortization expense amounted to $446,126 as compared to $561,588 for the six months ended June 30, 2014, a decrease of $115,469. The decrease is due to the strategic move of our rental fleet from our capital lease obligation financing to our more conventional line of credit financing.

- 18 -

Income from Continued Operations

We reported income from operations of $1,556,421 for the six months ended June 30, 2015 as compared to income from operations of $1,138,364 for the six months ended June 30, 2014.

Other Income (Expense)

Other Income (Expense) for the six months ended June 30, 2015 amounted to $(421,606) compared to $(483,476) for the six months ended June 30, 2014. Other income and expense consists of Other Income and Interest Expense.

Other Income consists of discounts earned and totaled $226,096 for the six months ended June 30, 2015 and $37,156 for the six months ended June 30, 2014 an increase of $188,940.

Interest expense for the six months ended June 30, 2015 amounted to $(647,702) as compared to $(520,632) for the six months ended June 30, 2014, an increase of $127,070. This increase is due to the additional debt with the increase in purchase volume and the remaining inventory on the GE floor plan agreement.

Net Income

Our net income was $748,571 for the six months ended June 30, 2015 compared to net income of $454,600 for the six months ended June 30, 2014.

Liquidity and Capital Resources

General – Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations and otherwise operate on an ongoing basis. The following table provides an overview of certain selected balance sheet comparisons between June 30, 2015 and December 31, 2014:


	June 30, 2015			December 31, 2014			$ Change			% Change
Working capital surplus	$	2,277,023		$	1,951,855		$	325,168		16.7

Cash		321,033			509,924			(188,891	)	(37.0	)
Accounts receivable, net		7,412,816			9,006,558			(1,593,742	)	(17.7	)
Inventory, net		19,643,382			16,641,806			3,001,576		18.0
Total current assets	$	28,604,797		$	27,236,379		$	1,368,418		5.0
Property and equipment, net		1,789,602			2,041,141			(251,539	)	(12.3	)
Intangible assets, net		6,139,785			6,153,118			(13,333	)	(0.2	)
Total assets	$	37,395,688		$	36,305,547		$	1,090,141		3.0

Accounts payable and accrued liabilities	$	2,970,483		$	2,842,626		$	127,857		4.5
Cash overdraft		143,588			—			143,588		100.0
Customer deposits and deferred revenue		1,094,713			465,167			629,546		135.3
Line of credit		4,031,613			2,738,878			1,292,735		47.2
Note Payable – floor plan		14,780,714			15,584,949			(804,235	)	(5.2	)
Current portion of capital leases		620,953			434,142			186,811		43.0
Notes payable-current		395,034			402,546			(7,512	)	(1.9	)
Notes payable, related party-current		369,525			359,579			9,946		2.8
Total current liabilities	$	26,327,774		$	25,284,524		$	1,043,250		4.1
Capital lease obligations long term		464,725			870,176			(405,451	)	(46.6	)
Notes payable-long term		3,448,680			3,667,125			(218,445	)	(6.0	)
Notes payable, related party-long term		1,378,559			1,576,076			(197,517	)	(12.5	)
Total liabilities	$	31,619,738		$	31,397,901		$	221,837		0.7
Accumulated deficit		(2,223,343	)		(2,971,914	)		748,571		(25.2	)
Stockholders’ equity	$	5,775,950		$	4,907,646		$	868,304		17.7

- 19 -

Overall, we had a decrease in cash flows of $188,891 in the six months ending June 30, 2015 resulting from cash used in operating activities of $7,059 and cash used in investing activities of $182,210, and cash used in financing activities of $378.

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


	Six Months Ended June 30,
	2015			2014
Cash at beginning of period	$	509,924		$	150,313
Net cash used in operating activities		(7,059	)		(328,912	)
Net cash used in investing activities		(182,210	)		(84,902	)
Net cash provided by financing activities		378			814,008
Cash at end of period	$	321,033		$	550,507

Net cash used in operating activities was $7,059 for the six months ended June 30, 2015. For the six months ended June 30, 2015, we had net income of $748,571, non-cash items such as depreciation and amortization expense of $446,126, stock-based compensation of $119,275, loss on disposal of property of $13,812, the changes in operating assets and liabilities of $1,334,843. The changes in operating assets and liabilities were primarily due to increases customer deposits and deferred revenue of $629,546, increases in accounts receivable of $1,593,742, other assets of $534, and decreases in accounts payable and accrued expenses of $127,857; offset partially by the increase in prepaid expenses of $149,460, inventory of $3,001,576 , and other current liabilities of $535,486.

Net cash used in operating activities was $328,912 for the six months ended June 30, 2014. For the six months ended June 30, 2014, we had net income of $454,600, non-cash items such as depreciation and amortization expense of $561,892, stock-based compensation of $53,608, loss on disposal of property and equipment of $14,723 and change in deferred tax asset of $10,718, offset partially by the gain on the disposal of business entity of $93,859 and the changes in operating assets and liabilities of $1,319,876. The changes in operating assets and liabilities were primarily due to increases in accounts receivable of $1,118,098, inventory of $1,842,741, prepaid expenses of $92,653, accounts payable and accrued expenses of $898,376 and other current liabilities of $800,937 offset partially by the decreases in customer deposits and deferred revenue of $4,246 and other assets of $28,356

Net cash used in investing activities for the six months ended June 30, 2015 was $182,210 which consists primarily of purchases of fixed assets of $195,066 offset by proceeds from note receivable of $12,856. Net cash used investing activities for the six months ended June 30, 2014 was $84,902 which consists primarily of purchases of fixed assets.

Net cash provided by financing activities for the six months ended June 30, 2015 was $378. This consisted of principal and interest payments under capital lease obligations of $218,640, repayments of related party notes payable of $187,571, net draws and repayments on our floor plan of $804,235, and repayments on our notes payable of $225,957, offset partially by net draws and repayments on our line of credit of $1,292,735, proceeds from issuance of common stock of $458 and the cash overdraft of $143,588.

Net cash provided by financing activities for the six months ended June 30, 2014 was $814,008. This consisted of net draws and repayments on our line of credit of $258,118, principal payments under capital lease obligations of $178,489, repayments of related party notes payable of $140,011, cash overdraft of 78,376, and repayments on our notes payable of $183,197, offset partially by net draws and repayments on our floor plan of $1,650,199, and the proceeds from issuance of common stock of $2,000.

At June 30, 2015 we had a working capital surplus (current assets in excess of current liabilities) of $2,277,023 and accumulated deficit of $(2,223,343).

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

- 20 -

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

Vehicle Floorplans and Lines of Credit – Vehicle floorplans and line of credit reflect the amounts borrowed to finance the purchase of specific new and, to a lesser extent, used vehicle inventories with our corresponding manufacturers. Changes in our vehicle floorplan and credit lines are reported in the financing cash flow section. Below is a listing of our gross usage and payments on the company’s floorplan and credit lines for the three months ended June 30, 2015 and 2014:

For the six months ended June 30, 2015:


Facility	Additions		Payments		Net Usage Inc (Dec)
Floor plan	$	23,507,270	$	24,311,505	$	(804,235	)
Line of credit		16,136,503		14,843,768		1,292,735
Total	$	39,643,773	$	39,155,273	$	488,500

For the six months ended June 30, 2014:


Facility	Additions		Payments		Net Usage Inc (Dec)
Floor plan	$	25,938,133	$	24,287,934	$	1,650,199
Line of credit		1,195,614		1,453,732		(258,118	)
Total	$	27,133,747	$	25,741,666	$	1,392,081

Contractual Obligations and Off-Balance Sheet Arrangements

Contractual Obligations

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

Off-balance Sheet Arrangements

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

Recently Issued Accounting Pronouncements

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

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

- 21 -

ITEM 4. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

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

Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating and implementing possible controls and procedures.

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

Identification of Significant Deficiencies in Controls and Procedures

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

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

We have become aware that we need strengthened controls regarding:


	A)	Controls over the selection and application of accounting principles that are in conformity with generally accepted accounting principles. Having sufficient expertise in selecting and applying accounting principles is an aspect of such controls.

	B)	Antifraud programs and controls.

	C)	Controls over non-routine and nonsystematic transactions.

With respect to the quarter ended June 30, 2015, under the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934. Based upon our evaluation regarding the period ending June 30, 2015, the Company’s management, including its Chief Executive Officer and Chief Financial Officer, has concluded that its disclosure controls and procedures were not effective.

There were no changes in our internal control over financial reporting during the quarter ended June 30, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

- 22 -

PART II – OTHER INFORMATION

ITEM 6. EXHIBITS

Attached hereto and incorporated by reference are the following exhibits:


Exhibit Number	Description

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

* Filed herein

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

- 23 -

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	Hasco Medical, Inc.

	By: /s/ Hal Compton, Jr.
August 13, 2015	Hal Compton, Jr.,
	Chief Executive Officer, principal executive officer


	By: /s/ Shane Jorgenson
August 13, 2015	Shane Jorgenson
	Chief Financial Officer, principal financial and accounting officer

- 24 -

HASCO Medical, Inc. 10-Q