UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

Amendment No. 2

(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2011

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (D) OF THE EXCHANGE ACT

For the transition period from __________ to __________

COMMISSION FILE NUMBER: 000-52422

HASCO Medical, Inc.

(Name of Registrant as specified in its charter)

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

15928 Midway Road, Addison, TX 75001

(Address of principal executive office)

(214) 302-0930

(Registrant’s telephone number)

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 months (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. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

[ ]

Accelerated filer

[ ]

Non-accelerated filer

(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 issuer’s classes of common stock, as of the latest practicable date. 763,102,390 shares of common stock are issued and outstanding as of August 15, 2011.

HASCO MEDICAL, INC.

Form 10-Q/A

Quarterly period ended June 30, 2011

Index

Explanatory Note

We are filing this Amendment No. 22 on Form 10-Q/A to amend and restate in their entirety the following items of our Quarterly Report Amendment No. 1 on Form 10-Q /A for the quarter ended June 30, 2011 as filed with the Securities and Exchange Commission on September 13, 2011 (the “Original Form 10-Q”): (i) Item 1 of Part 1 of “Financial Information,” and (ii) Item 2 of Part 1, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” , and we have also updated the signature page, the certifications of our Chief Executive Officer and Chief Financial Officer in Exhibits 31.1, 31.2, 32.1, and 32.2, and our financial statements formatted in Extensible Business Reporting Language (XBRL) in Exhibits 101. No other sections were affected. This report on Form 10-Q/A No. 2 is presented as of the filing date of the Original Form 10-Q and does not reflect events occurring after that date, or modify or update disclosures in any way other than as required to reflect the restatement described below.

We have determined that our previously reported results erroneously treated the acquisition of our wholly owned subsidiary Mobility Freedom, Inc. (“Mobility Freedom”) as a pooling of interests rather than as a purchase as required by Generally Accepted Accounting Principles (“GAAP”). The Original Form 10-Q included the entire year of operating results for Mobility Freedom for both the three and six months ended June 30, 2011 and 2010. Under the purchase method of accounting, the operating results for Mobility Freedom should only be included from the date of acquisition of May 13, 2011. This change reduced the Consolidated Statements of Operations by $354,971 from $161,623 to a loss of $193,348 for the six months ended June 30, 2011, and by $192,488 from $154,797 to a loss of $37,691 for the three months ended June 30, 2011. This change also reduced the Consolidated Statements of Operation by $339,010 from $68,976 to $(270,035) for the three months ended June 30, 2010; and by $155,308 from $(365,133) to $(520.441) for the six months ended June 30, 2010. Additionally cash at the end of the period decreased by $237,534 from $260,216 to $22,682 for the six months ended June 30, 2010. We have made necessary conforming changes in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” resulting from the correction of this error.

The accounting error was identified prior to filing our 10-K for the period ended December 31, 2011 and as such the 10-K accurately reported the acquisition of Mobility Freedom.

Part I.	Financial Information

	Item 1.	Financial Statements	4

		Consolidated Balance Sheets as of June 30, 2011 (Unaudited) and as of December 31, 2010 (Audited)	4

		Consolidated Statements of Operations for the three and six months ended June 30, 2011 and 2010 (Unaudited)	5

		Consolidated Statements of Cash Flows for the six months ended June 30, 2011 and 2010 (Unaudited)	6

		Notes to Unaudited Consolidated Financial Statements	7

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Part II.	Other Information

	Item 6.	Exhibits	32

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FORWARD LOOKING STATEMENTS

This report contains forward-looking statements regarding our business, financial condition, results of operations and prospects. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and similar expressions or variations of such words are intended to identify forward-looking statements, but are not deemed to represent an all-inclusive means of identifying forward-looking statements as denoted in this report. Additionally, statements concerning future matters are forward-looking statements.

Although forward-looking statements in this report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the headings “Risks Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our annual report on Form 10-K, in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-Q and in other reports that we file with the SEC. You are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this report.

We file reports with the SEC. The SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us. 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.

We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report, except as required by law. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this quarterly report, which are designed to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.

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PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

Hasco Medical, Inc. & Subsidiaries

Consolidated Balance Sheets

	June 30, 2011 RESTATED			December 31, 2010
	(unaudited)			(audited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	362,190		$	423
Accounts receivable, net		334,840			254,362
Inventory		2,382,394			76,356
Prepaid expenses and other current asset		23,963			18,845

Total Current Assets		3,103,387			349,986

LONG-TERM ASSETS:
Property and equipment, net		757,309			147,769
Intangible Assets acquired, net		2,283,447			—
Other		38,019			420

Total Assets	$	6,182,162		$	498,175

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:
Accounts payable and accrued liabilities	$	1,753,877		$	612,282
Overdraft liabilities		—			46,023
Customer deposits		55,026			—
Notes payable		227,857			18,005
Other Liabilities		69,158			30,000

Total Current Liabilities		2,105,918			706,310

Long Term Debt		4,300,000			152,509

STOCKHOLDERS’ EQUITY:
Preferred stock, $.001 par value; 3,000,000 shares authorized, none issued and outstanding		—			—
Common stock, $.001 par value; 1,000,000,000 shares authorized; 757,586,910 and 746,436,909 shares issued and outstanding, respectively.		757,587			746,437
Additional paid in capital		3,536,688			3,217,602
Accumulated deficit		(4,518,031	)		(4,324,683	)
Total Stockholders’ Equity (Deficit)		(223,756	)		(360,644	)

Total Liabilities and Stockholders’ Deficit	$	6,182,162		$	498,175

See accompanying notes to audited financial statements

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Hasco Medical, Inc. & Subsidiaries

Consolidated Statements of Operations

(unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011 RESTATED			2010			2011 RESTATED			2010

Net revenues	$	1,861,783		$	584,273		$	2,346,112		$	1,229,840

Cost of sales (1)		1,247,279			194,803			1,403,118			386,117

Gross profit		614,504			389,470			942,994			843,723

Operating expenses:
General and administrative		650,914			647,083			1,119,370			1,323,736
Depreciation		22,103			7,302			29,211			14,604

Total operating expenses		673,017			654,385			1,148,581			1,338,340

Income (loss) from operations		(58,513	)		(264,915	)		(205,587	)		(494,617	)

Other income (expenses):
Other income		80,072			—			80,072			—
Interest expense		(59,250	)		(5,120	)		(67,833	)		(9,978	)

Total other expenses		20,822			(5,120	)		12,239			(9,978	)

Income (loss) before income taxes		(37,691	)		(270,035	)		(193,348	)		(504,595	)

Income tax (expense)		—			—			—			(15,846	)

Net Income (loss)	$	(37,691	)	$	(270,035	)	$	(193,348	)	$	(520,441	)

Earnings per share:
Basic and dilutive	$	—		$	—		$	—		$	—

Weighted average share outstanding:
Basic and dilutive		757,426,583			733,559,369			753,386,076			727,525,965

See accompanying notes to audited financial statements

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Hasco Medical, Inc. & Subsidiaries

Consolidated Statements of Cash Flows

(unaudited)

	Six Months Ended
	June 30,
	2011 RESTATED			2010
Cash flows from operating activities:
Net loss	$	(193,348	)	$	(520,441	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation & Amortization		74,799			82,671
Stock based compensation		80,406			114,400
Bad debt expense		—			142,174
Amortization of debt issuance costs		—			98
Fair value of options issued to employees		4,880			6,520
Changes in operating assets and liabilities:
Accounts receivable		(80,478	)		(122,633	)
Prepaid expenses & other current assets:		(5,118	)		11,052
Inventory		(1,088,006	)		4,236
Other assets		(37,599	)		—
Accounts payable and accrued liabilities		1,321,595			221,819
Customer deposits and deferred revenue		55,026			—
Net cash (used in) provided by operating activities		132,157			(60,104	)

Cash flows from investing activities:
Disposal (Purchase) of property and equipment		(180,368	)		(33,614	)
Net cash used in investing activities		(180,368	)		(33,614	)

Cash flows from financing activities:
Repayment of overdraft liability		(76,023	)		—
Proceeds from note and loans payable		444,506			100,000
Debt issuance costs		—			(3,000	)
Proceeds from sale of common stock		59,500			28,000
Repayments of notes payable		(18,005	)		(8,800	)
Net cash provided by financing activities		409,978			116,200

Net increase (decrease) in cash		361,767			22,482
Cash, Beginning of period		423			200
Cash, End of period	$	362,190		$	22,682

Supplemental disclosures of cash flow information:
Cash paid for:
Interest	$	—		$	—
Income taxes	$	—		$	—

Non-Cash transactions:
Settlement of management fees in exchange for common stock	$	180,000			—
Vehicles acquired through financing	$	—		$	21,759
Intangibles and net assets acquired in Mobility Freedom acquisition	$	3,856,250		$	—
Promissory notes issued for the acquisition of assets	$	4,000,000		$	—

See accompanying notes to unaudited consolidated financial statements

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HASCO MEDICAL, INC. AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011 and 2010

NOTE 1 - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS

HASCO Medical, Inc. (“HASCO” or the “Company”), formerly BBC Graphics of Palm Beach Inc., was incorporated in May 2009 under the laws of the State of Florida. The Company operated as a provider of advertising and graphic design services. In June 2009, the Company changed its name to HASCO Medical, Inc.

On May 12, 2009, HASCO completed the acquisition of Southern Medical & Mobility, Inc. (SMM”) pursuant to the terms of the Agreement and Plan of Merger (the “Merger Agreement”) among HASCO, SMM and Southern Medical Acquisition, Inc., a Delaware corporation and a wholly-owned subsidiary of the Company. Under the terms of the Merger Agreement Southern Medical Acquisition, Inc. was merged into Southern Medical & Mobility, Inc., and Southern Medical & Mobility, Inc. became a wholly-owned subsidiary of HASCO. The shareholder of Southern Medical & Mobility, Inc. was issued a total of 554,676,000 shares of the Company’s common stock in exchange for their Southern Medical & Mobility, Inc. share.

After the merger and transactions that occurred at the same time as the merger, there were 642,176,000 shares of the Company’s common stock outstanding, of which 620,000,000, approximately 96.5%, were held by HASCO Holdings, LLC, the former sole shareholder of Southern Medical & Mobility, Inc.

Prior to the merger, the Company was a shell company with no business operations.

Southern Medical & Mobility, Inc. provides home health care services and products consisting primarily of the rental and sale of home medical equipment and home health care supplies. These services and products are paid for primarily by Medicare, Medicaid, and other third-party payers.

For accounting purposes, HASCO Medical, Inc. has accounted for the transaction as a reverse acquisition and HASCO will be the surviving entity as a publicly-traded company under the name HASCO Medical Inc. or together with its subsidiaries. The Company did not recognize goodwill or any intangible assets in connection with this transaction.

The Merger was accounted for as a reverse acquisition, with Southern Medical & Mobility, Inc., as the accounting acquirer. Therefore, the Company’s historical financial statements reflect those of Southern Medical & Mobility, Inc. Accordingly, the reverse acquisition is being accounted for as a capital transaction in substance, rather than a business combination. For accounting purposes, the net liabilities of HASCO Medical, Inc. were recorded at fair value as of the Closing Date, with an adjustment to additional paid-in capital. The deficit accumulated by HASCO was carried forward after the Merger.

Effective with the reverse merger, all previously outstanding common stock owned by HASCO Medical, Inc.’s shareholders were exchanged for the Company’s common stock. The value of the Company’s common stock that was issued to HASCO Medical, Inc.’s shareholders was the historical cost of the Company’s net tangible assets, which did not differ materially from its fair value.

All references to common stock, share and per share amounts have been retroactively restated to reflect the reverse acquisition as if the transaction had taken place as of the beginning of the earliest period presented.

On May 13, 2011 HASCO Medical, Inc. completed the acquisition of Mobility Freedom, Inc., including its rental operations conducted under the trade name Wheelchair Vans of America. Mobility Freedom was founded in 1999 in Clermont, Florida. Mobility Freedom caters to individuals with physical limitations that need specialty equipment to drive as well as families with members who are disabled that need to be transported. In certain circumstances, both the van itself as well as its specialty equipment is paid for, directly to Mobility Freedom, by a federal or state agency. As an example, approximately 45 % of Mobility Freedom’s customers are veterans, receiving benefits from the United States Department of Veterans Affairs (the “VA”). As part of the VA’s mission “to provided veterans the world-class benefits and services they have earned”, the VA pays for a van for disabled veterans. As a result, Mobility Freedom is both a VA and Vocational Rehabilitation (VR) state certified vendor. In addition, Mobility Freedom is an exclusive vendor for certain Florida state funded agencies, including the Florida Birth-Related Neurological Injury Compensation Association (NICA).

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Mobility Freedom provides mobility solutions to its client base with disabilities through both the sale and rental of wheelchair accessible vans. It sales operations are conducted as an authorized dealer for a number of original equipment manufacturers (OEM) handicap van manufacturers including:

	•	The Braun Corporation, which offers a variety of wheelchair accessible van conversions of popular minivan models including the Dodge Grand Caravan, the Chrysler Town & Country, the Toyota Sienna and the Honda Odyssey;

	•	Vantage Mobility International; and

	•	El Dorado National Company, a THOR company.

These OEM manufacturers provide chassis conversions to traditional minivans and full size vans in order to make them handicap accessible. These conversions traditionally include lowering the floors in order to increase head room, the addition of side entry or rear entry ramps and the installation of a wheelchair lift. Upon the selection by a customer of its base van, Mobility Freedom provides custom conversion services.

Mobility Freedom’s mobility services revolve around an analysis of each individual’s use of the van as well as individual physical limitations. In those instances where it is the passenger and not the driver who requires a wheelchair, Mobility Freedom provides full installation of EZ Lock Tie Down Systems to secure the wheelchair during movement. In connection with meeting the needs of a handicapped driver, the Company utilizes an independent evaluator who evaluates the needs of the driver and recommends the appropriate Driver Adaptive Equipment (“DAE”).

DAE installed by Mobility Freedom covers a broad array of products designed to allow a motorist with disabilities to drive despite his or her physical limitations. The equipment, the cost of which in certain circumstances can exceed $100,000, includes:

	•	hand controls;

	•	spinner knob to aid in turning the steering wheel;

	•	a transfer seat;

	•	electronic driving controls such as a touch screen which controls various electronic equipment in an auto such as the ignition; and

	•	reduced effort steering and braking.

Mobility Freedom also offers another unique solution with the option of a wheelchair accessible truck or truck conversion. Offered by Ryno Mobility, a wheelchair truck conversion offers the ability to retain the style and performance of a truck while the handicap truck conversion allows wheelchair access.

Mobility Freedom has four corporate owned stores which are located in Orlando, Largo, Clermont and Palm Coast/Bunell, and three affiliates which are located in Edgewater, Pensacola and Ocala for a total of seven operations centers in Florida. We believe that many of the demographics factors in North Central Florida make it an ideal location for Mobility Freedom’s operations including:

	•	an older and aging population;

	•	the numerous tourist destinations that define the greater Orlando area; and

	•	a significant population of military veterans attracted by the Orlando VA Medical Center. Currently the new Orlando VA Medical Center is under construction and will be located on a 65-acre campus in southeast Orange County. The 1.2 million square foot facility, scheduled to open in fall of 2012, will have a large multispecialty outpatient clinic, 134-inpatient beds, 120-community living center beds, a 60-bed domiciliary and administrative and support services. The VA will be co-located with the University of Central Florida College of Medicine, the Burnham Institute, the University of Florida Academic and Research Center and Nemours Children’s Hospital in the Lake Nona area known as the “Medical City.”

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Our agreements with the vehicle manufacturers permit it to sell the vehicles within certain specific territories and it is not authorized to sell all brands in all of these areas. The agreements with the affiliates provide that Mobility Freedom holds the territory rights to sell vehicles and the affiliate provides the location. The affiliate is entitled to receive 50% of the profit on each van sold as consideration for providing the location. We expect that Mobility Freedom’s operations will represent a material portion of our business in the future.

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 operations are conducted within two business units:

	•	Mobility Freedom, including its rental operations conducted under the trade name Wheelchair Vans of America located in Northern Florida, and

	•	Southern Medical & Mobility located in Mobile Alabama.

Our objective is to continue to grow both intrinsically and through acquisitions in areas that we currently offer products and services in, as well in areas that are complementary. As Mobility Freedom is significantly larger than Southern Mobility, we anticipate that Mobility Freedom will drive our near term financial results.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, the consolidated financial statements do not include all of the information and footnotes required by US GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and such adjustments are of a normal recurring nature. These consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2010 and notes thereto and other pertinent information contained in Form 10-K of HASCO Medical, Inc. (the “Company”, “we”, “us”. Or “our”) as filed with the Securities and Exchange Commission (the “Commission”). All significant intercompany transactions and balances have been eliminated in consolidation.

Restatement of Financial Statements

Our Consolidated Statement of Operations and our Consolidated Statements of Cash Flows for the three (for Consolidated Statement of Operations only) and six months ended June 30, 2011 and 2011 have been restated to treat the acquisition of Mobility Freedom on May 13, 2011 properly as a purchase rather than a pooling of interest under U.S. GAAP. Under the purchase method, the acquired company’s financial results are only included for the periods subsequent to the purchase date. Under the pooling of interest method, the acquired company’s results are included in all periods presented as if the acquired company had always been a part of the consolidated entity. The following table summarizes the effects of our restatement resulting from the correction of this error.

	Restated				Previously Reported
	Three Months ended June 30,				Three Months ended June 30,
	2011	2010			2011			2010

Consolidated Statement of Operations:
Net Income	(37,691)	(270,035)		154,797			68,976

	Restated				Previously Reported
	Six Months ended June 30,				Six Months ended June 30,
	2011	2010			2011			2010

Consolidated Statement of Operations:
Net Income	(193,348)	(520,441)	161,623			(365,133)
Consolidated Statements of Cash Flows:
Cash, end of period	362,190	22,682	362,190			260,216

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Use of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheets and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Significant estimates in 2011 and 2010 include the allowance for doubtful accounts, the valuation of inventory, the useful life of property and equipment and the assumptions used to calculate stock-based compensation.

Reclassification

Certain amounts in the 2010 consolidated financial statements have been reclassified to conform to the 2011 presentation. Such reclassifications had no effect on the reported net loss.

Fair Value of Financial Instruments

Effective January 1, 2008, the Company adopted FASB ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”), for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements, and establishes a framework for measuring fair value and expands disclosure about such fair value measurements. The adoption of ASC 820 did not have an impact on the Company’s financial position or operating results, but did expand certain disclosures.

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

	Level 1:	Observable inputs such as quoted market prices in active markets for identical assets or liabilities

	Level 2:	Observable market-based inputs or unobservable inputs that are corroborated by market data

	Level 3:	Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.

Cash and cash equivalents include money market securities that are considered to be highly liquid and easily tradable as of June 30, 2011 and December 31, 2010. These securities are valued using inputs observable in active markets for identical securities and are therefore classified as Level 1 within our fair value hierarchy.

In addition, FASB ASC 825-10-25 Fair Value Option was effective for January 1, 2008. ASC 825-10-25 expands opportunities to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value. The Company did not elect the fair value options for any of its qualifying financial instruments.

The carrying amounts of financial instruments, including cash, accounts receivable, accounts payable and accrued liabilities, and promissory note, approximated fair value as of June 30, 2011 and December 31, 2010 , because of the relatively short-term maturity of these instruments and their market interest rates.

Revenue Recognition and Concentration of Credit Risk

Revenues are recognized under fee for service arrangements through equipment that the Company rents to patients, sales of equipment, supplies, and other items the Company sells to patients. Revenue generated from equipment that the Company rents to patients is recognized over the rental period and commences on delivery of the equipment to the patients. Revenue related to sales of equipment, and supplies is recognized on the date of delivery to the patients. All revenues are recorded at amounts estimated to be received under reimbursement arrangements with third-party payers, including private insurers, prepaid health plans, Medicare and Medicaid.

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Revenues are recognized on an accrual basis at the time services and related products are provided to patients and collections are reasonably assured, and are recorded at amounts estimated to be received under healthcare contracts with third-party payers, including private insurers, Medicaid, and Medicare. Insurance benefits are assigned to us by patients receiving medical treatments and related products and, accordingly, we bill on behalf of our patients/customers. Under these contracts, we provide healthcare services, medical equipment and supplies to patients pursuant to a physician’s prescription. The insurance company reimburses us for these services and products at agreed upon rates. The balance remaining for product or service costs becomes the responsibility of the patient. A systematic process is employed to ensure that sales are recorded at net realizable value and that any required adjustments are recorded on a timely basis. We have established an allowance to account for contractual sales adjustments that result from differences between the amount remitted for reimbursement and the expected realizable amount. Due to the nature of the industry and the reimbursement environment in which we operate, certain estimates are required to record net revenue and accounts receivable at their net realizable values at the time products and/or services are provided. Inherent in these estimates is the risk that they will have to be revised or updated as additional information becomes available. Specifically, the complexity of many third party billing arrangements and the uncertainty of reimbursement amounts for certain services from certain payers may result in adjustments to amounts originally recorded. Such adjustments are typically identified and recorded at the point of cash application, claim denial or account review. The Company reports revenues in our financial statements net of such adjustments. The Company recorded contractual adjustments of $176,864 and $182,807 during the six months ended June 30, 2011 and 2010, respectively.

Certain items provided by the Company are reimbursed under rental arrangements that generally provide for fixed monthly payments established by fee schedules for as long as the patient is using the equipment and medical necessity continues (subject to capped rental arrangements which limit the rental payment periods in some instances and which may result in a transfer of title to the patient at the end of the rental payment period). Once initial delivery of rental equipment is made to the patient, a monthly billing cycle is established based on the initial date of delivery. The Company recognizes rental arrangement revenues ratably over the monthly service period and defers revenue for the portion of the monthly bill that is unearned. No separate payment is earned from the initial equipment delivery and setup process. During the rental period, the Company is responsible for servicing the equipment and providing routine maintenance, if necessary.

The Company follows the guidance of the FASB ASC 605-10-S99 “Revenue Recognition Overall – SEC Materials”. The Company records revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured.

Included in accounts receivable are earned but unbilled receivables. Unbilled accounts receivable represent charges for equipment and supplies delivered to customers for which invoices have not yet been generated by the billing system. Prior to the delivery of equipment and supplies to customers, the Company performs certain certification and approval procedures to ensure collection is reasonably assured and that unbilled accounts receivable are recorded at net amounts expected to be paid by customers and third-party payers. Billing delays, generally ranging from several days to several weeks, can occur due to delays in obtaining certain required payer-specific documentation from internal and external sources, interim transactions occurring between cycle billing dates established for each customer within the billing system and business acquisitions awaiting assignment of new provider enrollment identification numbers. In the event that a third-party payer does not accept the claim for payment, the customer is ultimately responsible.

The Company performs analyses to evaluate the net realizable value of accounts receivable. Specifically, the Company considers historical realization data, accounts receivable aging trends, other operating trends and relevant business conditions. Because of continuing changes in the health care industry and third-party reimbursement, it is possible that our estimates could change, which could have a material impact on the Company’s operations and cash flows.

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 a high credit quality financial institution. The Company’s account at this institution is insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. For the six months ended June 30, 2011, the Company has not 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.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents, accounts receivable, and notes payable. The Company’s investment policy is to invest in low risk, highly liquid investments. The Company does not believe it is exposed to any significant credit risk in its cash investment.

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The Company performs on-going credit evaluations of its customer base including those included in accounts receivable at June 30, 2011 and December 31, 2010, and, generally, does not require collateral. The Company maintains reserves for potential credit losses and such losses have been within management’s expectations.

Accounts Receivable

Accounts receivable of Southern Medical and Mobility Freedom consists primarily of receivables due from Medicare, the Veterans Administration, Medicaid, and third party payers. The Company recorded a bad debt allowance of $303,177 and $327,697 as of June 30, 2011 and December 31, 2010, respectively. Management performs ongoing evaluations of its accounts receivable.

Due to the nature of the industry and the reimbursement environment in which the Company operates, certain estimates are required to record net revenues and accounts receivable at their net realizable values. Inherent in these estimates is the risk that they will have to be revised or updated as additional information becomes available. Specifically, the complexity and uncertainty of reimbursement amounts for certain services from certain payers may result in adjustments to amounts originally recorded. Such adjustments are typically identified and recorded at the point of cash application, claim denial or account review.

Management performs periodic analyses to evaluate accounts receivable balances to ensure that recorded amounts reflect estimated net realizable value. Specifically, management considers historical realization data, accounts receivable aging trends, and other operating trends. Also considered are relevant business conditions such as governmental and managed care payer claims processing procedures and system changes.

Accounts receivable are reduced by an allowance for doubtful accounts which provides for those accounts from which payment is not expected to be received, although services were provided and revenue was earned. Upon determination that an account is uncollectible, it is written-off and charged to the allowance.

Accounts receivable balance concentrations by major payer category as of June 30, 2011 and December 31, 2010 were as follows:

Percentage of Accounts Receivable Outstanding:	June 30, 2011	December 31, 2010

Medicare	23.8%	36.6%
Veterans Administration	20.8%	0%
Medicaid/Other Government	20.2%	3.6%
Private Insurance/Other	35.2%	59.8%
Total	100.0%	100.0%

Inventory

Inventory is valued at the lower of cost or market, on an average cost basis and includes primarily finished goods.

Advertising

Advertising, marketing and selling is expensed as incurred. Such expenses for the six months ended June 30, 2011 and 2010 totaled $85,181 and $29,607, respectively.

Shipping and Handling Costs

The Company classifies costs related to freight as costs of sales.

Property and Equipment

Property and equipment, including rental equipment are carried at cost and are depreciated on a straight-line basis over the estimated useful lives of the assets. Depreciation of rental equipment is computed using the straight-line method over the estimated useful lives, generally one to three years. Such depreciation of rental equipment is charged to cost of sales. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. The Company examines the possibility of decreases in the value of fixed assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable.

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Impairment of Long-Lived Assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. The Company did not record any impairment charges for the six months ended June 30, 2011 and 2010.

Income Taxes

Deferred income tax assets and liabilities are computed for differences between the carrying amounts of assets and liabilities for financial statement and tax purposes. Deferred income tax assets are required to be reduced by a valuation allowance when it is determined that it is more likely than not that all or a portion of a deferred tax asset will not be realized. In determining the necessity and amount of a valuation allowance, management considers current and past performance, the operating market environment, tax planning strategies and the length of tax benefit carry forward periods.

Pursuant to accounting standards related to the accounting for uncertainty in income taxes, the evaluation of a tax position is a two-step process. The first step is to determine whether it is more likely than not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50% likelihood of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which the threshold is no longer met. The accounting standard also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosures, and transition. The adoption had no effect on the Company’s consolidated financial statements.

Subsequent Events

For purposes of determining whether a post-balance sheet event should be evaluated to determine whether it has an effect on the financial statements for the six months ended June 30, 2011, subsequent events were evaluated by the Company as of the date on which the consolidated financial statements for the three and six months ended June 30, 2011 and 2010 were available to be issued.

Stock Based Compensation

In December 2004, the Financial Accounting Standards Board, or FASB, issued FASB ASC Topic 718: Compensation – Stock Compensation (“ASC 718”). Under ASC 718, companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation arrangements include stock options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. Companies may elect to apply this statement either prospectively, or on a modified version of retrospective application under which financial statements for prior periods are adjusted on a basis consistent with the pro forma disclosures required for those periods under ASC 718. Upon adoption of ASC 718, the Company elected to value employee stock options using the Black-Scholes option valuation method that uses assumptions that relate to the expected volatility of the Company’s common stock, the expected dividend yield of our stock, the expected life of the options and the risk free interest rate. Such compensation amounts, if any, are amortized over the respective vesting periods or period of service of the option grant.

Related Parties

Parties are considered to be related to the Company if the parties that, 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.

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Recently Issued Accounting Pronouncements

We have reviewed the FASB issued Accounting Standards Update (“ASU”) accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration. Reference is made to these recent accounting pronouncements as if they are set forth therein in their entirety.

Earnings (Loss) Per Share

Earnings per common share are calculated under the provisions of a FASB issued new guidance which established new accounting standards for computing and presenting earnings per share. 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 as they would be anti-dilutive. As of June 30, 2011, there were 3,075,000 stock options which could potentially dilute future earnings per share.

NOTE 2 – GOING CONCERN CONSIDERATIONS

The accompanying consolidated financial statements are prepared assuming the Company will continue as a going concern. At June 30, 2011, the Company had an accumulated deficit of approximately $4.5 million. The ability of the Company to continue as a going concern is dependent upon increasing sales and obtaining additional capital and financing to support its recent acquisition. During the quarter ended June 30, 2011, the Company secured a working capital line of credit in the amount of $400,000. Management intends to attempt to raise additional funds by way of a public or private offering. While the Company believes in the viability of its strategy to increase sales volume and in its ability to raise additional funds, there can be no assurances to that effect.

NOTE 3 – PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

	Estimated Life	June 30, 2011			December 31, 2010
Building improvements	15-39 years	$	60,110		$	—
Office equipment	5 years		108,434			38,979
Rental equipment	13 - 36 months		1,521,767			468,646
Vehicles	5 years		114,775			71,656
Computer equipment	5 years		53,086			31,483
			1,858,172			610,764
Less: accumulated depreciation			(1,100,863	)		(462,995	)

		$	757,309		$	147,769

For the six months ended June 30, 2011 and 2010, depreciation expense amounted to $74,799 and $82,671, respectively of which $45,588 and $68,067 is included in cost of sales, respectively.

The Company has entered into various financing arrangements in connection with the acquisition of three delivery vehicles (see Note 4 below).

NOTE 4 – INTANGIBLE PROPERTY

On May 13, 2011 Hasco Medical, Inc. completed the acquisition of Mobility Freedom, Inc., including its rental operations conducted under the trade name Wheelchair Vans of America. The purchase price consisted of $2,000,000 cash, a Promissory Note of $1,850,000 and 250,000 shares of common stock with a fair market value of $6,250 for a total purchase price of $3,856,250. Hasco acquired 100% of the shares outstanding of Mobility Freedom. The purchase price was first assigned to the identifiable assets and liabilities assumed in the transaction. The Company allocated the remaining cost,estimated at June 30, 2011 to be $2,321,303, to identifiable intangible assets.

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The Company’s acquired intellectual property and rights is being amortized on a straight-line basis over the estimated useful life.

NOTE 5 – NOTES PAYABLE

	June 30,		December 31,
	2011		2010
	(unaudited)		(audited)

Between December 2008 and January 2009, the Company issued notes payable amounting to $52,979 in connection with the acquisition of three delivery vehicles. The notes payable bear approximately 2% interest per annum and are secured by a lien of all three delivery vehicles. These notes shall be payable in thirty-six equal monthly payments of $1,516 beginning in January 2009 through December 2011.	$	15,176	$	20,514

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		2,000,000		—

On June 29, 2011 Hasco Medical, Inc. entered into a $400,000 revolving line of credit agreement with Whitney Bank, which includes an annual renewal. An annual facility fee of .25% was charged. Interest at the Wall Street Journal prime rate plus 1.0% on the used facility will be paid monthly. At June 30, 2011 the aforementioned interest rate was 4.25%. As of June 30, 2011 there remains $100,000 available on the line of credit.		300,000		—

In February 2011, HASCO Holdings, LLC, the largest shareholder of the Company, loaned $50,000 to the Company. These loans are non-interest bearing and are due on demand.		50,000		150,000

In February 2011, one of the Company’s directors loaned $135,000 to the Company. These loans are non-interest bearing and are due on demand.		135,000		—

Various small notes all due within one year bearing interest from 5% to 8% secured with equipment.		27,681		—

Note Payable to related party, dated May 13, 2011, issued for the acquisition of Mobility Freedom, original amount of $2 million, ten years (120 months), 6% interest rate, commenced August 1, 2011, matures on July 1, 2021, monthly installment payments of $22,204		2,000,000		—

Total debt		4,527,857		170,514
Current portion of long-term debt, notes payable		227,857		18,005
Long-term portion	$	4,300,000	$	152,509

NOTE 6 – EQUITY

On May 12, 2009 HASCO Medical, Inc. (“HASCO”) completed the acquisition of Southern Medical & Mobility, Inc. (SMM”) pursuant to the terms of the Agreement and Plan of Merger (the “Merger Agreement”) among HASCO, SMM and Southern Medical Acquisition, Inc., a Delaware corporation and a wholly-owned subsidiary of the Company. Under the terms of the Merger Agreement Southern Medical Acquisition, Inc. was merged into Southern Medical & Mobility, Inc., and Southern Medical & Mobility, Inc. became a wholly-owned subsidiary of HASCO. The shareholder of Southern Medical & Mobility, Inc. was issued a total of 554,676,000 shares of the Company’s common stock in exchange for their Southern Medical & Mobility, Inc. share.

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Prior to the merger, the Company was a shell company with no business operations.

In January 2011, in connection with the sale of the Company’s common stock, the Company issued 2,000,000 shares of common stock for net proceeds of approximately $20,000.

In February 2011, the Company entered into a placement agent agreement whereby the Company engaged that firm to assist us in a best efforts private offering of the Company’s securities. Under the terms of the agreement, the Company paid the firm an upfront retainer of 150,000 shares of the Company’s common stock as compensation for services. The Company shall pay 2% commissions based on the proceeds received by the Company from the offering. The Company valued these common shares at the fair market value on the date of grant at $0.02 per share or $3,000 and was recorded as stock-based consulting expense.

In March 2011, the Company issued 9,000,000 shares in connection with the payment of accrued management fees of $180,000 to HASCO Holdings, LLC. The Company valued these common shares at the fair market value on the date of grant at $0.02 per share or $180,000.

NOTE 7 – STOCK OPTION PLAN

Under the Company’s stock option plan, adopted on July 9, 2009, 20,000,000 shares of common stock were reserved for issuance upon exercise of options granted to directors, officers and employees of the Company. The Company is authorized to issue Incentive Stock Options (“ISOs”), which meet the requirements of Section 422 of the Internal Revenue Code of 1986. At its discretion, the Company can also issue Non Statutory Options (“NSOs”). When an ISO is granted, the exercise price shall be equal to the fair market value per share of the common stock on the date of the grant. The exercise price of an NSO shall not be less than fair market value of one share of the common stock on the date the option is granted. The vesting period will be determined on the date of grant.

On November 1, 2009, the Company granted an aggregate of 4,075,000 5-year option to purchase shares of common stock at $0.007 per share which vests at the end of two years, to four officers and three directors of the Company. The 4,075,000 options were valued on the grant date at $0.0064 per option or a total of $26,080 using a Black-Scholes option pricing model with the following assumptions: stock price of $0.007 per share, volatility of 150%, expected term of five years, and a risk free interest rate of 2.33%.

Stock option activity for the three months ended June 30, 2011 is summarized as follows:

	Number of shares		Weighted average exercise price
Outstanding at December 31, 2010	4,075,000		$	0.007
Granted	—			—
Exercised	—			—
Cancelled	(1,000,000	)		—
Outstanding at June 30, 2011	3,075,000		$	0.007

Options exercisable at end of year	—		$	—
Weighted average fair value of options granted during the year			$	—

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Stock options outstanding at June 30, 2011 as disclosed in the above table have $29,212 intrinsic value at the end of the year.

The following table summarizes the Company’s stock options outstanding at June 30, 2011:

Options Outstanding						Options Exercisable
	Range of Exercise Price	Number Outstanding	Weighted Average Remaining Contractual Life		Weighted Average Exercise Price	Number Exercisable		Weighted Average Exercise Price
$	0.007	3,075,000	3.58 Years	$	0.007	—	$	—
		3,075,000		$	0.007	—	$	—

NOTE 8 – COMMITMENTS

Operating Lease

The Company leases office space in Mobile, Alabama, and several sites in Florida under two- five-year operating leases that expire on April 30, 2014. The office lease agreements have certain escalation clauses and renewal options. Additionally, the Company has lease agreements for computer equipment, including an office copier and fax machine. Future minimum rental payments required under these operating leases are as follows:

Period ending June 30:
2011		145,311
2012		277,120
2013 and thereafter		309,431
	$	731,862

Rent expense was $64,431 and $98,506 for the sixmonths ended June 30, 2011 and 2010, respectively.

In April 2011, the Company received approximately $80,000 from Hasco Holdings, LLC. In March 2011, Hasco Holdings LLC. entered into a settlement and release agreement with the former owners of Southern Medical & Mobility, Inc. (“SMM”). The former owners agreed to reimburse Hasco Holdings LLC for all the refunds made to third party payers associated with billings prior to the acquisition of Hasco Holdings LLC of SMM in June 2008.

NOTE 9 – SEGMENT REPORTING

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

The Company’s operating decision-maker is considered to be the chief executive officer (CEO). The CEO reviews financial information for purposes of making operating decisions and assessing financial performance. The financial information reviewed by the CEO is identical to the information presented in the accompanying statements of operations. Therefore, the Company has determined that it operates in a single operating segment. For the periods ended December 31, 2010 and 2009 all material assets and revenues of the Company were in the United States.

NOTE 10 – RELATED PARTY TRANSACTIONS

Management Fee

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NOTE 11 – RESTATEMENT OF FINANCIAL INFORMATION

BALANCE SHEET, June 30, 2011	Originally
	Reported			Adjustments		Restated

Current assets	3,103,387			—		3,103,387
Property and equipment	757,309			—		757,309
Intangible property	2,730,694		(a)	(447,247	)	2,283,447
Other assets	38,019			—		38,019
Total Assets	6,629,409					6,182,162

Current liabilities	2,105,918			—		2,105,918
Notes Payable	4,300,000			—		4,300,000

Capital stock	4,369,019		(a)	(74,744	)	4,294,275
Accumulated deficit	(4,145,528	)	(a)	(372,503	)	(4,518,031	)
Total Liabilities and Equity	6,629,409					6,182,162

(a) adjustment for equity and period net income of acquired company

STATEMENT OF	As reported in 10-Q						Six Months Ended			As reported in 10-Q			Three Months
OPERATIONS	Six Months Ended			MF Activity			June 30,			Three months ended			Ended June 30,
	June 30,			1/1 to 5/13			Restated			Mar 31, 2011			Restated

Net revenues	$	6,439,186		$	(4,093,074	)	$	2,346,112		$	484,329		$	1,861,783
Cost of sales (1)		3,984,923			2,581,806			1,403,117			155,839			1,247,278

Gross profit		2,454,262			(1,511,268	)		942,994			328,490			614,504

Operating expenses:
General and administrative		2,202,749			1,083,380			1,119,369			468,455			650,914
Depreciation		102,128			72,917			29,211			7,108			22,103
Total operating expenses		2,304,878			1,156,297			1,148,581			475,563			673,018

Income from operations		149,385			(354,971	)		(205,586	)		(147,073	)		(58,513	)

Other income (expenses):
Other income		80,072			—			80,072			—			80,072
Interest expense		(67,833	)		—			(67,833	)		(8,583	)		(59,250	)
Total other expenses		12,239			—			12,239			(8,583)			20,822

Income (Loss) before income taxes		161,623			(354,971	)		(193,348	)		(155,656	)		(37,692	)

Income tax (expense)		—			—			—			—			—

Net Income	$	161,623		$	(354,971	)	$	(193,348	)	$	(155,656	)	$	(37,692	)

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NOTE 12 – PROFORMA FINANCIAL INFORMATION

On May 13, 2011 Hasco Medical, Inc. completed the acquisition of Mobility Freedom, Inc., including its rental operations conducted under the trade name Wheelchair Vans of America. The purchase price consisted of $2,000,000 cash, a Promissory Note of $1,850,000 and 250,000 shares of common stock with a fair market value of $6,250 for a total purchase price of $3,856,250. Hasco acquired 100% of the shares outstanding of Mobility Freedom. The following pro-forma financial information presents the HASCO Financials as if the acquisition had occurred at the beginning of each period presented.

	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010

Net revenues	$	3,724,153		$	3,253,492		$	6,439,186		$	6,086,987
Cost of sales (1)		2,394,395			1,985,800			3,984,923			4,039,849

Gross profit		1,329,757			1,267,692			2,454,262			2,047,138

Operating expenses:
General and administrative		1,133,747			1,111,541			2,202,749			2,222,832
Depreciation		51,270			58,950			102,128			117,900
Total operating expenses		1,185,018			1,170,491			2,304,878			2,340,732

Income from operations		144,740			97,201			149,385			(293,594	)

Other income (expenses):
Other income		46,246			—			80,072			—
Interest expense		(36,188	)		(28,225	)		(67,833	)		(55,693	)
Total other expenses		10,057			(28,225	)		12,239			(55,693	)

Income (Loss) before income taxes		154,797			68,976			161,623			(349,287	)

Income tax (expense)		—			—			—			(15,846	)

Net Income	$	154,797		$	68,976		$	161,623		$	(365,133	)

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Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes appearing elsewhere in this report. This discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. The actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including but not limited to the risks discussed in this report.

Overview

From our formation in May 1999 through April 2006, we were in the business of providing advertising and graphic design services to our clients. On October 1, 2004, we were administratively dissolved by the State of Florida pursuant to Sections 607.1420 and 607.1421 of the Florida Business Corporation Act. On April 29, 2006, we were reinstated as an active Florida corporation pursuant to Section 607.1422 of the Florida Business Corporation Act. As of that date, we discontinued our advertising and graphics design business.

We were organized under the laws of the State of Florida in May 1999. Our principal executive offices are located at 1416 West I-65 Service Road S., Mobile, AL 36693, and our telephone number is (251) 633-4133.

On January 12, 2009 HASCO Holdings, LLC acquired 65,324,000 shares of HASCO Medical, Inc. common stock for total consideration of $150,000. HASCO Holdings, LLC thereby purchased beneficial ownership of 75% of the outstanding shares of common stock of the Company. HASCO Holdings, LLC acquired the common shares of the Company from two shareholders, Robert Druzak, and John R. Signorello.

On May 12, 2009, HASCO Medical, Inc. (i) closed a share exchange transaction, pursuant to which HASCO Medical, Inc. became the 100% parent of SOUTHERN MEDICAL & MOBILITY, and (ii) assumed the operations of SOUTHERN MEDICAL & MOBILITY.

On May 12, 2009, we completed the acquisition of Southern Medical & Mobility, Inc. (SMM”) pursuant to the terms of the Agreement and Plan of Merger (the “Merger Agreement”) among HASCO, SMM and Southern Medical Acquisition, Inc., a Delaware corporation and a wholly-owned subsidiary of the Company. Under the terms of the Merger Agreement Southern Medical Acquisition, Inc. was merged into Southern Medical & Mobility, Inc., and Southern Medical & Mobility, Inc. became our wholly-owned subsidiary. The shareholder of Southern Medical & Mobility, Inc. was issued a total of 554,676,000 shares of our common stock in exchange for their Southern Medical & Mobility, Inc. share.

After the merger and transactions that occurred at the same time as the merger, there were 642,176,000 shares of our common stock outstanding, of which 620,000,000, approximately 96.5%, were held by HASCO Holdings, LLC, the former sole shareholder of Southern Medical & Mobility, Inc.

Prior to the merger, we were a shell company with no business operations.

HASCO Medical, Inc., through the reverse merger of its wholly-owned subsidiary with and into Southern Medical & Mobility, is a low cost, quality provider of a broad range of home healthcare services that serve patients in Alabama, Florida, and Mississippi. We have two major service lines: home respiratory equipment and durable/ home medical equipment. Our objective is to be a leading provider of home health care products and services in the markets we operate.

For accounting purposes, the Merger was treated as a reverse acquisition with Southern Medical & Mobility, Inc. being the accounting acquirer. Therefore, the Company’s historical financial statements reflect those of Southern Medical & Mobility, Inc.

Historically, our operations were focused on the provision of a diversified range of home health care services and products. Following our May 13, 2011 acquisition of Mobility Freedom, our operations are conducted within two business units:

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	•	Wheelchair Vans – which conducts sales of handicap accessible vans, parts and service and rental operations. This business unit is conducted through Mobility Freedom, including its rental operations conducted under the trade name Wheelchair Vans of America located in Northern Florida, and

	•	Home Health Care – which conducts sales of medical equipment and supplies. This business unit is conducted through Southern Medical & Mobility located in Mobile Alabama.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Significant estimates in 2011 and 2010 include the allowance for doubtful accounts, the valuation of inventory, the useful life of property and equipment and the assumptions used to calculate stock-based compensation.

A summary of significant accounting policies is included in Note 1 to the audited consolidated financial statements for the year ended December 31, 2010 and notes thereto contained in this report as filed with the Securities and Exchange Commission. Management believes that the application of these policies on a consistent basis enables us to provide useful and reliable financial information about the Company’s operating results and financial condition.

Our consolidated financial statements include a summary of the significant accounting policies and methods used in the preparation of our consolidated financial statements. Management believes the following critical accounting policies affect the significant judgments and estimates used in the preparation of the consolidated financial statements.

Use of Estimates - Management’s Discussion and Analysis or Plan of Operations is based upon our audited consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, management evaluates these estimates, including those related to allowances for doubtful accounts receivable and the carrying value of and equipment and long-lived assets. Management bases these 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 from these estimates under different assumptions or conditions.

Revenue Recognition - The Company follows the guidance of the FASB ASC 605-10-S99 “Revenue Recognition”. The Company records revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. The following policies reflect specific criteria for the various revenues streams of the Company:

	•	Revenues are recognized under fee for service arrangements through vans that the Company rents to disabled individuals visiting Florida. Revenue generated from vans that the Company rents to individuals is recognized over the rental period and commences on delivery of the van to the customer.

	•	Revenue related to sales of vans, and supplies is recognized on the date of delivery to the customer.

	•	Revenues from sales of products are generally recognized when products are shipped unless the Company has obligations remaining under sales or licensing agreements, in which case revenue is either deferred until all obligations are satisfied or recognized ratably over the term of the contract.

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	•	Revenue from services is recorded as it is earned. Customers are generally billed every two weeks based on the units of production for the project. Each project has an estimated total which is based on the estimated units of production and agreed upon billing rates.

	•	Amounts billed in advance of services being provided are recorded as deferred revenues and recognized in the consolidated statement of operations as services are provided.

Stock Based Compensation - In December 2004, the Financial Accounting Standards Board, or FASB, issued FASB ASC Topic 718: Compensation – Stock Compensation (“ASC 718”). Under ASC 718, companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation arrangements include stock options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. Companies may elect to apply this statement either prospectively, or on a modified version of retrospective application under which financial statements for prior periods are adjusted on a basis consistent with the pro forma disclosures required for those periods under ASC 718. Upon adoption of ASC 718, the Company elected to value employee stock options using the Black-Scholes option valuation method that uses assumptions that relate to the expected volatility of the Company’s common stock, the expected dividend yield of our stock, the expected life of the options and the risk free interest rate. Such compensation amounts, if any, are amortized over the respective vesting periods or period of service of the option grant.

Accounts Receivable - Management performs ongoing evaluations of its accounts receivable. Due to the nature of the industry and the reimbursement environment in which the Company operates, certain estimates are required to record net revenues and accounts receivable at their net realizable values. Inherent in these estimates is the risk that they will have to be revised or updated as additional information becomes available. Specifically, the complexity and uncertainty of reimbursement amounts for certain services from certain payers may result in adjustments to amounts originally recorded. Such adjustments are typically identified and recorded at the point of cash application, claim denial or account review. Management performs periodic analyses to evaluate accounts receivable balances to ensure that recorded amounts reflect estimated net realizable value. Specifically, management considers historical realization data, accounts receivable aging trends, and other operating trends. Also considered are relevant business conditions such as governmental and managed care payer claims processing procedures and system changes. Accounts receivable are reduced by an allowance for doubtful accounts which provides for those accounts from which payment is not expected to be received, although services were provided and revenue was earned. Upon determination that an account is uncollectible, it is written-off and charged to the allowance.

Inventory is valued at the lower of cost or market, on an average cost basis and includes primarily finished goods.

Long-Lived Assets - The Company reviews for impairment whenever events or circumstances indicate that the carrying amount of assets may not be recoverable, pursuant to guidance established in ASC 360-10-35-15, “Impairment or Disposal of Long-Lived Assets” . The Company reviews, long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value.

Reimbursement by Third Party Payers

With the acquisition of Mobility Freedom & Wheelchairs of America on May 13, 2011 the revenue mix has changed significantly. Mobility Freedom revenues are recognized under fee for service arrangements through vans that the Company rents to disabled individuals visiting Florida. Revenue generated from vans that the Company rents to individuals is recognized over the rental period and commences on delivery of the van to the customer. Revenue related to sales of vans, and supplies is recognized on the date of delivery to the customer.

We no longer derive substantially all of our revenues from reimbursement by third party payers, including Medicare, Medicaid, and private insurers. However, our business has been, and may continue to be, significantly impacted by changes mandated by Medicare legislation

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Under existing Medicare laws and regulations, the sale and rental of our products generally are reimbursed by the Medicare program according to prescribed fee schedule amounts calculated using statutorily-prescribed formulas. The Balanced Budget Act of 1997 (BBA) granted authority to the Secretary of the Department of Health and Human Services (DHHS) to increase or reduce the reimbursement for home medical equipment, including oxygen, by up to 15% each year under an inherent reasonableness procedure. The regulation implementing the inherent reasonableness authority establishes a process for adjusting payments for certain items and services covered by Medicare Part B when the existing payment amount is determined to be grossly excessive or deficient. The regulation lists factors that may be used by the Centers for Medicare and Medicaid Services (CMS), the agency within the DHHS responsible for administering the Medicare program, and its contractors to determine whether an existing reimbursement rate is grossly excessive or deficient and to determine what a realistic and equitable payment amount is. Also, under the regulation, CMS and its contractors will not consider a payment amount to be grossly excessive or deficient and make an adjustment if they determine that an overall payment adjustment of less than 15% is necessary to produce a realistic and equitable payment amount. The implementation of the inherent reasonableness procedure itself does not trigger payment adjustments for any items or services and to date, no payment adjustments have occurred or been proposed under this inherent reasonableness procedure.

In addition to its inherent reasonableness authority, CMS has the discretion to reduce the reimbursement for home medical equipment (HME) to an amount based on the payment amount for the least costly alternative (LCA) treatment that meets the Medicare beneficiary’s medical needs. LCA determinations may be applied to particular products and services by CMS and its contractors through the informal notice and comment process used in establishing local coverage policies for HME. Using either its inherent reasonableness authority or LCA determinations, CMS and its contractors may reduce reimbursement levels for certain items and services covered by Medicare Part B, including products and services we offer which could have a material adverse effect on our revenues, profit margins, profitability, operating cash flows and results of operations. With respect to its LCA policies, on October 16, 2008, a U.S. District Court in the District of Columbia held that CMS did not have the authority to implement LCA determinations in setting payment amounts for covered inhalation drugs. DHHS filed its notice of appeal on December 10, 2008. We cannot predict whether this court decision will be overturned or whether CMS or its contractors will continue to apply LCA policies in the future to inhalation drugs or other HME products we offer to Medicare beneficiaries.

Recent legislation, each of which has been signed into law, including the Patient Protection and Affordable Care Act (“PPACA”), Medicare Improvement for Patients and Providers Act of 2008 (MIPPA), Medicare, Medicaid and State Children’s Health Insurance Program Extension Act of 2007 (“SCHIP Extension Act”), the Deficit Reduction Act of 2005 (DRA) and the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), contain provisions that negatively impact reimbursement for the primary HME products that we provide. MIPPA retroactively delayed the implementation of competitive bidding for eighteen months and decreased the 2009 fee schedule payment amounts by 9.5 percent for product categories included in competitive bidding. The SCHIP Extension Act reduced Medicare reimbursement amounts for covered Medicare Part B drugs, including inhalation drugs that we provide, beginning April 1, 2008. The DRA caps the Medicare rental period for oxygen equipment at 36 months of continuous use, after which time title of the equipment would transfer to the beneficiary. For purposes of this cap, the DRA provides for a new 36-month rental period that began January 1, 2006 for all oxygen equipment. With the passage of MIPPA, transfer of title of oxygen equipment at the end of the 36-month rental cap was repealed, although the rental cap remained in place. The MMA significantly reduced reimbursement for inhalation drug therapies beginning in 2005, reduced payment amounts for five categories of HME, including oxygen, beginning in 2005, froze payment amounts for other covered HME items through 2007, established a competitive acquisition program for HME and implemented quality standards and accreditation requirements for HME suppliers. PPACA was signed into law on March 23, 2010. Together with the Health Care and Education Reconciliation Act of 2010 (signed into law on March 30, 2010) which amended the statute, PPACA is a comprehensive health care law that is intended to expand access to health insurance, reform the health insurance market to provide additional consumer protections, and improve the health care delivery system to reduce costs and produce better outcomes through a combination of cost controls, subsidies and mandates. These legislative provisions, as currently in effect and when fully implemented, have had and will have a material adverse effect on our business, financial condition, operating results and cash flows. We cannot predict the impact that any federal legislation enacted in the future will have on our revenues, profit margins, profitability, operating cash flows and results of operations.

Changes in the law or new interpretations of existing laws could have a dramatic effect on permissible activities, the relative costs associated with doing business and the amount of reimbursement by government and other third-party payers. Reimbursement from Medicare and other government programs is subject to federal and state statutory and regulatory requirements, administrative rulings, interpretations of policy, implementation of reimbursement procedures, retroactive payment adjustments and governmental funding restrictions. Our levels of revenue and profitability, like those of other health care companies, are affected by the continuing efforts of government payers to contain or reduce the costs of health care, including competitive bidding initiatives, measures that impose quality standards as a prerequisite to payment, policies reducing certain HME payment rates and restricting coverage and payment for inhalation drugs, and refinements to payments for oxygen and oxygen equipment.

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(1) Competitive Bidding Program for HME. On April 2, 2007, CMS issued its final rule implementing a competitive bidding program for certain HME products under Medicare Part B. This nationwide competitive bidding program is designed to replace the existing fee schedule payment methodology. Under the competitive bidding program, suppliers compete for the right to provide items to beneficiaries in a defined region. CMS selects contract suppliers that agree to receive as payment the “single payment amount” calculated by CMS after bids are submitted. Round one of the competitive bidding program began on July 1, 2008 in ten high-population competitive bidding areas (CBAs). On July 15, 2008, Congress enacted the MIPPA legislation which retroactively delayed the implementation of competitive bidding and reduced Medicare prices nationwide by 9.5% beginning in 2009 for the product categories, including oxygen, that were initially included in competitive bidding. As a result of the delay, CMS cancelled all contract awards retroactively to June 30, 2008. In 2009, CMS reinstituted the bidding process in the nine largest MSA markets. Reimbursement rates from the re-bidding process were publicly released by CMS on June 30, 2010. CMS announced average savings of approximately 32% off the current payment rates in effect for the product categories included in competitive bidding. These payment rates are now in effect in the nine markets only, as of January 1, 2011. CMS will undertake a second round of competitive bidding in up to 91 additional markets, with contracts expected to be effective as of January 1, 2013. It is not certain at this time whether CMS intends to implement competitive bidding in all 91 markets simultaneously, or whether the program will be phased in over several years. The PPACA legislation requires CMS to expand competitive bidding further to all geographic markets (certain markets may be excluded at the discretion of CMS) or to use competitive bid pricing information to adjust the payment amounts otherwise in effect for areas that are not competitive acquisition areas by January 1, 2016. We will continue to monitor developments regarding the implementation of the competitive bidding program. While we cannot predict the outcome of the competitive bidding program on our business when fully implemented nor the Medicare payment rates that will be in effect in future years for the items subjected to competitive bidding, it is likely that the program will materially adversely affect our financial position and operating results.

On July 15, 2008, Congress enacted the MIPPA legislation which reduced Medicare payment rates nationwide for certain DME items, including oxygen equipment, by 9.5% beginning in 2009. In addition to the 9.5% reduction, CMS subjected the monthly payment amount for stationary oxygen equipment to additional cuts of 2.3% in 2009, thereby reducing the monthly payment rate from $199.28 in 2008 to $175.79 in 2009. The monthly payment amount was reduced by 1.5% in 2010, to $173.17. We estimate that this reduction negatively impacted our revenues in 2010. The stationary oxygen payment rate for 2011 has been established by CMS at $173.31 per month, an increase of 0.1%.

(2) Certain Clinical Conditions, Accreditation Requirements and Quality Standards. The MMA required establishment and implementation of new clinical conditions of coverage for HME products and quality standards for HME suppliers. Some clinical conditions have been implemented, such as the requirement for a face-to-face visit by treating physicians for beneficiaries seeking power mobility devices. CMS published its quality standards and criteria for accrediting organizations for HME suppliers in 2006 and revised some of these standards in October 2008. As an entity that bills Medicare and receives payment from the program, we are subject to these standards. We have revised our policies and procedures to ensure compliance in all material respects with the quality standards. These standards, which are applied by independent accreditation organizations, include business-related standards, such as financial and human resources management requirements, which would be applicable to all HME suppliers, and product-specific quality standards, which focus on product specialization and service standards. The product specific standards address several of our products, including oxygen and oxygen equipment, CPAP and power and manual wheelchairs and other mobility equipment.

Currently, we are accredited by the Accreditation Commission for Health Care, Inc. (ACHC) for Medical Supply Provider Services. The ACHC is a CMS recognized accrediting organization. Round one competitive bid suppliers will now be required to be accredited by September 30, 2009.

On January 25, 2008, CMS published a proposed rule to clarify, expand and add to the existing enrollment requirements that Durable Medical Equipment and Prosthetics, Orthotics, and Supplies (DMEPOS) suppliers must satisfy to establish and maintain billing privileges in the Medicare program. Included in the proposed rule are revised or clarified requirements regarding contracting with an individual or entity to provide licensed services, record retention, clarification of the term “appropriate site” as set forth in the regulation (which may be expanded to include a minimum square footage requirement), use of cell phones and beepers/pagers as a method of receiving calls from the public or beneficiaries, comprehensive liability insurance, patient solicitation, maintenance of ordering and referring documentation, sharing of a practice location with another Medicare provider, and minimum operating hours. At this time, we cannot predict the impact that this proposed rule, if implemented, would have on our business.

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On January 2, 2009, CMS published its final rule on surety bond requirements for DMEPOS suppliers, effective March 3, 2009. The amount of the surety bond has been set at $50,000 and must be obtained for each National Provider Identifier (NPI) number subject to Medicare billing privileges. We are required to have our own NPI number. There may be an upward adjustment for suppliers that have had adverse legal actions imposed on them in the past. DMEPOS suppliers already enrolled in Medicare must obtain a surety bond by October 2, 2009, and newly enrolled suppliers or those changing ownership will be subject to the provisions of the new rule on May 4, 2009. We obtained a surety bond on October 2, 2009 and still currently maintaining such surety bond.

(3) Reduction in Payments for HME and Inhalation Drugs. The MMA changes also included a reduction in reimbursement rates beginning in January 2005 for oxygen equipment and certain other items of home medical equipment (including wheelchairs, nebulizers, hospital beds and air mattresses) based on the percentage difference between the amount of payment otherwise determined for 2002 and the 2002 median reimbursement amount under the Federal Employee Health Benefits Program (FEHBP) as determined by the Office of the Inspector General of the DHHS. The FEHBP adjusted payments remained “frozen” through 2008. With limited exceptions, items that were not included in competitive bidding received a 5% update for 2009. As discussed above, for 2009, MIPPA included a 9.5% nationwide reduction in reimbursement for the product categories included in competitive bidding, as a budget neutrality offset for the eighteen month delay.

(4) Reductions in Payments for Oxygen and Oxygen Equipment. The DRA which was signed into law on February 8, 2006, has made certain changes to the way Medicare Part B pays for certain of our HME products, including oxygen and oxygen equipment. For oxygen equipment, prior to the DRA, Medicare made monthly rental payments indefinitely, provided medical need continued. The DRA capped the Medicare rental period for oxygen equipment at 36 months of continuous use, after which time ownership of the equipment would transfer to the beneficiary. For purposes of this cap, the DRA provides for a new 36-month rental period that began January 1, 2006 for all oxygen equipment. In addition to the changes in the duration of the rental period for capped rental items and oxygen equipment, the DRA permits payments for servicing and maintenance of the products after ownership transfers to the beneficiary.

On November 1, 2006, CMS released a final rule to implement the DRA changes, which went into effect January 1, 2007. Under the rule, CMS clarified the DRA’s 36-month rental cap on oxygen equipment. CMS also revised categories and payment amounts for the oxygen equipment and contents during the rental period and for oxygen contents after equipment ownership by the beneficiary as described below. With the passage of MIPPA on July 15, 2008, transfer of title to oxygen equipment at the end of the 36-month rental cap was repealed, although the rental cap remained in place. Effective January 1, 2009, after the 36th continuous month during which payment is made for the oxygen equipment, the equipment is to continue to be furnished during any period of medical need for the remainder of the reasonable useful lifetime of the equipment. After the 36-month rental cap, payment is made only for oxygen contents and for certain reasonable and necessary maintenance and servicing (for parts and labor not covered by the supplier’s or manufacturer’s warranty)

In its November 1, 2006 final rule, CMS also acknowledged certain other payments after the 36-month rental cap, including payment for supplies such as tubing and masks. In addition, CMS detailed several requirements regarding a supplier’s responsibility to maintain and service capped rental items and provided for a general maintenance and servicing payment for certain oxygen-generating equipment beginning six months after the 36-month rental cap. On October 30, 2008, CMS issued new oxygen payment rules and supplier responsibilities to address changes to the transfer of title under MIPPA. In the final rule, CMS determined that for liquid or gaseous oxygen (stationary or portable), after the 36-month rental cap, there will be no additional Medicare payment for the maintenance and servicing of such equipment for the remainder of the useful lifetime of the equipment. CMS also determined that for 2009 only, Medicare will pay for in-home, maintenance and servicing visits for oxygen concentrators and transfilling equipment every six months, beginning six months after the end of the 36-month rental cap. This payment will be made if the supplier visits the beneficiary’s home, performs any necessary maintenance and servicing, and inspects the equipment to ensure that it will function safely for the next six months. CMS also solicited public comments on whether to continue such maintenance and servicing payments after 2009. Finally, CMS clarified that though it retains title to the equipment, a supplier is required to continue to furnish needed oxygen equipment and contents for liquid or gaseous equipment after the 36-month rental cap until the end of the equipment’s reasonable useful lifetime. CMS determined the reasonable useful lifetime for oxygen equipment to be five years provided there are no breaks in service due to medical necessity, computed based on the date the equipment is delivered to the beneficiary. On January 27, 2009, CMS posted further instructions on the implementation of the 36-month rental cap, including guidance on payment for oxygen contents after month 36 and the replacement of oxygen equipment that has been in continuous use by the patient for the equipment’s reasonable useful lifetime (as defined above). In accordance with these instructions, and consistent with the final rule published on October 30, 2008, suppliers may bill for oxygen contents on a monthly basis after the 36-month rental cap, and the supplier can deliver up to a maximum of three months of oxygen contents at one time. Additionally, in accordance with these instructions, and consistent with the final rule published on October 30, 2008, we now provide replacement equipment to our patients that exceed five years of continuous use.

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The financial impact of the 36-month rental cap will depend upon a number of variables, including, (i) the number of Medicare oxygen customers reaching 36 months of continuous service, (ii) the number of patients receiving oxygen contents beyond the 36-month rental period and the coverage and billing requirements established by CMS for suppliers to receive payment for such oxygen contents, (iii) the mortality rates of patients on service beyond 36 months, (iv) the incidence of patients with equipment deemed to be beyond its reasonable useful life that may be eligible for new equipment and therefore a new rental episode and the coverage and billing requirements established by CMS for suppliers to receive payment for a new rental period, (v) any breaks in continuous use due to medical necessity, and (vi) payment amounts established by CMS to reimburse suppliers for maintenance of oxygen equipment. We cannot predict the impact that any future rulemaking by CMS will have on our business. If payment amounts for oxygen equipment and contents are further reduced in the future, this could have an adverse effect on our revenues, profit margins, profitability, operating cash flows and results of operations.

Results of Operations

The following table provides an overview of certain key factors of our results of operations for the three and six months ended June 30, 2011 as compared to June 30, 2010:

	Three months ended June 30,						Six months ended June 30,
	2011			2010			2011			2010
Net Revenues	$	1,861,783		$	584,273		$	2,346,112		$	1,229,840
Cost of sales		1,247,279			194,803			1,403,118			386,117
Operating Expenses:
Depreciation		22,103			7,302			29,211			14,604
General and administrative		650,914			647,083			1,119,370			1,323,736
Total operating expenses		673,017			654,385			1,148,581			1,338,340
Income (loss) from operations		(58,513	)		(264,915	)		205,587			(494,617	)
Total other income (expense)		20,822			(5,120	)		12,239			(9,978	)
Provision for income taxes		—			—			—			(15,846	)
Net income (loss)	$	(37,691	)	$	(270,035	)	$	(193,348	)	$	(520,441	)

Other Key Indicators:

	Three months ended June 30,		Six months ended June 30,
	2011	2010	2011	2010
Cost of sales as a percentage of revenues	67.0%	33.3%	59.8%	31.4%
Gross profit margin	33.0%	66.7%	40.2%	68.6%
General and administrative expenses as a percentage of revenues	35.0%	110.8%	47.7%	107.6%
Total operating expenses as a percentage of revenues	36.1%	112.0%	49.0%	108.8%

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

	Three months ended June 30,				Six months ended June 30,
	2011		2010		2011		2010
Product Sales	$	1,476,598	$	321.420	$	1,855,135	$	628,355
Service		12,088		—		12,089		—
Rental Revenue		373,097		262,853		478,888		601,485
Total Net Revenues:	$	1,861,783	$	584,273	$	2,346,112	$	1,229,840

	Three months ended June 30,		Six months ended June 30,
Gross profit as a Percentage of Net Revenues	2011	2010	2011	2010
Product sales	79.3%	55.0%	79.1%	51.1%
Rental Revenue	20.0%	45.0%	20.4%	48.9%
Service Revenue	.7%	—	.5%	—

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Six Month Period ended June 30, 2011 and 2010

Net Revenues

For the six months ended June 30, 2011, we reported revenues of $2,346,112 as compared to revenues of $1,229,840 for the six months ended June 30, 2010, an increase of $1,116,272 or approximately 90.8 % Product sales for the six months ended June 30, 2011 increased by $1,226,780 or approximately 195.2 % as compared to the six months ended June 30, 2010. Rental revenue for the six months ended June 30, 2011 decreased by $122,597 or approximately 20.4% as compared to the six months ended June 30, 2010. The increase in product sales, which drove the increase in overall sales, is due to the acquisition of Mobility Freedom on May 13, 2011. The decrease of rental revenue is due to the impact of the 9.5% MIPAA reduction, lower reimbursement rates from third party payers and lower hospital census levels.

Cost of Sales

Our cost of sales consists of the depreciation of rental assets and products purchased for resale. For the six months ended June 30, 2011, cost of sales was $1,403,118 or approximately 59.8% of revenues, compared to $386,117, or approximately 31.4% of revenues, for the six months ended June 30, 2010.. During the six months ended June 30, 2011, cost of sales as a percentage of net revenues increased due to the acquisition of Mobility Freedom, which traditionally has a higher cost of sales percentage than the that of home health care products..

Gross Profit

During the six months ended June 30, 2011, our gross profit as a percentage of net revenues decreased by approximately 28.4% as compared to the six months ended June 30, 2010. The decrease is due to the wheelchair van sales which have a lower gross profit than that of home health care products.

Total Operating Expenses

Our total operating expenses decreased slightly at approximately 1.4% to $1,148,581 for the six months ended June 30, 2011 as compared to $1,338,340 for the six months ended June 30, 2010. These changes include:

• Depreciation and amortization expense. For the six months ended June 30, 2010, depreciation expense amounted to $29,211 as compared to $14,604 for the six months ended June 30, 2010, an increase of $14,607 or 100% due to the acquisition of Mobility Freedom.

• General and administrative expense. For the six months ended June 30, 2011, general and administrative expenses were $1,119,370 as compared to $1,323,736 for the six months ended June 30, 2010, a decrease of $204,366. For the six months ended June 30, 2011 and 2010 general and administrative expenses consisted of the following:

	Six Months Ended June 30, Fiscal Q1
	2011			2010
Rent	$	64,431		$	32,866
Employee compensation		827,646			722,378
Professional fees		179,932			99,102
Internet/Phone		35,401			15,408
Travel/Entertainment		20,699			27,977
Bad debt expense		(43,042	)		142,174
Insurance		64,018			25,202
Management fee		0			180,000
Other general and administrative		(29,715	)		78,629
	$	1,119,370		$	1,323,736

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	•	For the six months ended June 30, 2011, Rent expense increased by $31,565 or 96.0% over the same period in 2010. The increase is due to the addition of the Mobility Freedom locations

	•	For the six months ended June 30, 2011, employee compensation, related taxes and stock-based compensation expenses increased to $827,646 as compared to $722,378, a 14.6% increase. The increase relates to the Mobility Freedom acquisition.

	•	For the six months ended June 30, 2011, professional fees increased to $179,932 as compared to $99,102, an increase of $80,830 or 81.6%. The increase is primarily related to increase in audit and accounting fees related to the Mobility Freedom acquisition.

	•	For the six months ended June 30, 2011, internet/telephone expense increased to $35,401 as compared to $15,408, an increase of $19,993 or 129.8%. This increase is attributable to the acquisition of Mobility Freedom.

	•	For the six months ended June 30, 2011, travel and entertainment expense decreased to $20,699 as compared to $27,977. This 26.0% decrease is due to decreased executive travel.

	•	For the six months ended June 30, 2011 bad debt expense was reduced to ($43,042) as compared to $142,174 for the six months ended June 30, 2010, a decrease of $185,216 or 130.3%. The decrease was due to a detailed review of Accounts Receivable aging by senior management, which determined that the provision for bad debt was overstated.

	•	For the six months ended June 30, 2011 Insurance expense increased to $64,018 as compared to $25,202 for the six months ended June 30, 2010, an increase of $38,816 or 154.0%. Insurance expense increased due to added coverage and higher sales related premiums as compared to 2010, in addition to the inclusion of the Mobility Freedom insurance from the date of acquisition thru June 30, 2011.

	•	For the six months ended June 30, 2011 Management fee expense was eliminated as compared to $180,000 for the six months ended June 30, 2010. In January 2011, in consultation with Senior Management, the Chairman & principal investor voluntarily chose to forego contractual binding management fees.

	•	For the six months ended June 30, 2011 other general and administrative expense decreased to $(29,715) as compared to $78,629 for the six months ended June 30, 2010, a decrease of $108,344. This decrease is due to numerous cost reduction efforts as well as certain refunds related to the Mobility Freedom acquisition.

INCOME (LOSS) FROM OPERATIONS

We reported income from operations of $205,587 for the six months ended June 30, 2011 as compared to a loss from operations of $(494,617) for the six months ended June 30, 2010.

OTHER INCOME (EXPENSES)

Interest expense. For the six months ended June 30, 2011, interest expense amounted to $67,833 as compared to $9,978 for the six months ended June 30, 2010, an increase of $57,855. This increase is due to the acquisition of Mobility Freedom and the additional debt related to that acquisition.

NET INCOME (LOSS)

Our net loss was $(193,348) for the six months ended June 30, 2011 compared to net loss of $(520,441) for the six months ended June 30, 2010.

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Three Month Period ended June 30, 2011 and 2010

Net Revenues

For the three months ended June 30, 2011, we reported revenues of $1,861,783 as compared to revenues of $584,573 for the three months ended June 30, 2010, an increase of $1,277,510 or approximately 318.5%. This increase is due to the acquisition of Mobility Freedom on May 13, 2011 and the inclusion of their revenue from that date through June 30, 2011. Product sales for the three months ended June 30, 2011 increased by $1,155,178 or approximately 359.4% as compared to the six months ended June 30, 2010. Rental revenue for the three months ended June 30, 2011 increased by $110,244 or approximately 41.9% as compared to the six months ended June 30, 2010. The product revenues increase in 2011 are directly attributable to the acquisition of Mobility Freedom. The overall increase of rental revenue is due to Mobility Freedom rental revenue partially offset by the impact of the 9.5% MIPAA reduction, lower reimbursement rates from third party payers and lower hospital census levels.

Cost of Sales

Our cost of sales consists of the cost of products purchased for resale and the depreciation of rental assets and. For the three months ended June 30, 2011, cost of sales was $1,247,279, or approximately 67.0% of revenues, compared to $194,803, or approximately 33.3% of revenues, for the three months ended June 30, 2010. During the three months ended June 30, 2011, cost of sales increased due to increased revenues as compared to the three months ended June 30, 2010. During the three months ended June 30, 2011, cost of sales as a percentage of net revenues increased due to the revenue mix as compared to the three months ended June 30, 2010. Wheelchair van sales have a higher cost of sales than home medical equipment. Approximately 74% of the company’s revenue was from wheelchair van sales for the three months ended June 30, 2011.

Total Operating Expenses

Our total operating expenses increased approximately 2.8% to $673,017 for the three months ended June 30, 2011 as compared to $654,385 for the three months ended June 30, 2010. These changes include:

• Depreciation and amortization expense. For the three months ended June 30, 2011, depreciation expense amounted to $22,103 as compared to $7,302 for the three months ended June 30, 2010, an increase of $14,801 or 202.7% primarily due to the acquisition of Mobility Freedom.

• General and administrative expense. For the three months ended June 30, 2011, general and administrative expenses were $650.914 as compared to $647,083 for the three months ended June 30, 2010, an increase of $3,831 or 0.6%. For the three months ended June 30, 2011 and 2010 general and administrative expenses consisted of the following:

	Three Months Ended June 30, Fiscal Q1
	2011			2010
Rent	$	47,290		$	16,500
Employee compensation		496,322			344,285
Professional fees		127,377			47,135
Internet/Phone		27,016			8,822
Travel/Entertainment		17,393			14,393
Bad debt expense		(49,298	)		74,332
Insurance		50,835			10,935
Management fee		0			90,000
Other general and administrative		(66,021	)		40,681
	$	650,914		$	647,083

	•	For the three months ended June 30, 2011, Rent expense increased to $47,290 as compared to $16,500 for the three months ended June 30, 2010 . The change relates to rent expense on the Mobility Freedom locations.

	•	For the three months ended June 30, 2011, employee compensation, related taxes and stock-based compensation expenses increased to $496,322 as compared to $344,285 for the three months ended June 30, 2010, an increase of $152,037 or 44.2%. The increase is due to the addition of Mobility Freedom on May 13, 2011.

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	•	For the three months ended June 30, 2011, professional fees increased to $127,377 as compared to $47,135 for the three months ended June 30, 2010, an increase of $80,242 or 170.2%. The increase is primarily related to increase in audit and accounting fees related to the Mobility Freedom acquisition.

	•	For the three months ended June 30, 2011, internet/telephone expense increased to $27,016 as compared to $8,822 for the three months ended June 30, 2010, an increase of $18,194. The addition of the Mobility Freedom locations created additional phone and internet expenses. Prior to the acquisition, HASCO Medical operated out of one location.

	•	For the three months ended June 30, 2011, travel and entertainment expense increased to $17,393 as compared to $14,393 for the three months ended June 30, 2010. The $3,000 or 20.8% increase is primarily due to the Mobility Freedom acquisition.

	•	For the three months ended June 30, 2011 bad debt expense was reduced by $49,298 as compared to a provision of $74,332 for the three months ended June 30, 2010, a change of $123,630 or 166.3%. The decrease was due to a detailed review of Accounts Receivable aging by senior management, which determined that the provision for bad debt was overstated.

	•	For the three months ended June 30, 2011 Insurance expense increased to $50,835 as compared to $10,935 for the three months ended June 30, 2010, an increase of $39,900, or 364.9%. Insurance expense increased due to the Mobility Freedom acquisition, as well as added coverage and higher sales related premiums as compared to 2010.

	•	For the three months ended June 30, 2011 other general and administrative expense decreased $110,702 to $(66,021) as compared to $40,681 for the three months ended June 30, 2010. The decrease is primarily attributable to refunds and credits related to the acquisition, as well as Sr. Management’s decision to reduce unnecessary costs.

LOSS FROM OPERATIONS

We reported a loss from operations of $58,513 for the three months ended June 30, 2011 as compared to a loss from operations of $264,915 for the three months ended June 30, 2010.

NET LOSS

Net loss was $37,691 for the three months ended June 30, 2011 compared to net loss of $270,035 for the three months ended June 30, 2010.

LIQUIDITY AND CAPITAL RESOURCES

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, 2011 and December 31, 2010:

	June 30,		December 31,		$
	2011		2010		Change
Working capital surplus (deficit)	997,469		(356,324	)	1,353,793

Cash	362,190		423		361,767
Accounts receivable, net	334,840		254,362		80,478
Inventory	2,382,394		76,356		2,306,038
Total current assets	3,103,387		349,986		2,753,401
Property and equipment, net	757,309		147,769		609,540
Total assets	6,182,162		498,175		5,683,987

Accounts payable and accrued liabilities	1,753,877		612,282		1,141,595
Notes payable-current	227,857		18,005		209,852
Total current liabilities	2,105,918		706,310		1,399,608
Notes payable-long term	4,300,000		152,509		4,147,491
Total liabilities	6,405,918		858,819		5,547,099
Accumulated deficit	(4,518,031	)	(4,324,683	)	(193,348	)
Stockholders’ equity (deficit)	(223,756	)	(360,644	)	136,888

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Net cash provided by operating activities was $132,157 for the six months ended June 30, 2011 as compared to net cash used in operating activities of $(60,104) for the six months ended June 30, 2010, an increase of $192,261. For the six months ended June 30, 2011, we had a net loss of $(193,348) offset by non-cash items such as depreciation and amortization expense of $74,799 and stock-based compensation of $80,406 and increases from changes in assets and liabilities of $165,420.

Net cash used in investing activities for the six months ended June 30, 2011 was $180,368 as compared to net cash used in investing activities of $33,614 for the six months ended June 30, 2010. During the six months ended June 30, 2011 and 2010, we used cash for property and equipment purchases.

Net cash provided by financing activities for the six months ended June 30, 2011 was $409,978 as compared to $116,200 for the six months ended June 30, 2010. For the six months ended June 30, 2011, net cash provided by financing activities related to proceeds from note and loans payable of $444,504, offset by payments of notes and overdraft liability totaling $(94,028) and by proceeds from sale of common stock of $59,500. For the six months ended June 30, 2010, net cash proceeds from note and loans payable of $100,000 offset by payments of notes of $(11,800).

At June 30, 2011 we had a working capital surplus of $997,469 and accumulated deficit of $(4,518,031).

Contractual Obligations and Off-Balance Sheet Arrangements

Contractual Obligations

The following tables summarize our contractual obligations as of June 30, 2011.

	Payments Due by Period
	Total		Less than 1 year		1-3 Years		3-5 Years		5 Years +
Contractual Obligations:
Operating Lease	$	731,862	$	145,311	$	520,552	$	65,999	$	—

Line of Credit		300,000		300,000		—		—		—
Notes payable		227,857		227,857		__		—		—
Notes payable – related party		4,000,000		242,982		526,672		586,067		2,644,279

Total Contractual Obligations:	$	5,259,719	$	916,150	$	1,047,224	$	652,066	$	2,644,279

Off-balance Sheet Arrangements

We have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties. 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 support to such entity. We do not have any 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

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PART II - OTHER INFORMATION

Item 6.

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.”

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	HASCO MEDICAL, INC.

	By: /s/ Hal Compton, Jr.
July 19, 2012	Hal Compton, Jr.,
	Chief Executive Officer, principal executive officer

	By: /s/ Robyn Priest
July 19, 2012	Robyn Priest
	Chief Financial Officer, principal financial and accounting officer

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