UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549












FORM 10-K












(Mark
One)



| ̈ | ANNUAL REPORT PURSUANT TO
    SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



For the fiscal year ended December 31, 2014



| ̈ | TRANSITION REPORT PURSUANT
    TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | --------------------------------------------------------------------------------------------



For the transition period from ___________to __________



Commission file number 0001582054



Millennium
Healthcare Inc.

(Exact name of registrant
as specified in its charter)



|Delaware                                                             | 11-3229358                                  
|-------------------------------------------------------------------- | --------------------------------------------
|State or other jurisdiction of
        Incorporation or organization | (I.R.S. Employer
        Identification No.)





|400 Garden City Plaza, Suite
        440, Garden City, New York | 11530     
|--------------------------------------------------------------- | ----------
|(Address of principal
    executive offices)                    | (Zip Code)





Registrant’s
telephone number, including area code: 516-628-5500



Securities registered
pursuant to Section 12(b) of the Act: None



Securities registered
pursuant to section 12(g) of the Act:



Common Stock,
par value $.0001



Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act.           ̈Yes                xNo



Indicate by check mark if the registrant is not required to
file reports pursuant to Section 13 or Section 15(d) of the Act.      ̈Yes                 xNo



Note – Checking the box above will not relieve
any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those
Sections.





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.   xYes    ̈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).    x Yes   ̈  No



Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K.   ̈



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 a smaller reporting company) | Smaller reporting companyx



Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Act).  ̈
Yes x No



State the aggregate market value of the
voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last
sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently
completed second fiscal quarter.



Note.—If a determination as to whether a particular person
or entity is an affiliate cannot be made without involving unreasonable effort and expense, the aggregate market value of the
common stock held by non-affiliates may be calculated on the basis of assumptions reasonable under the circumstances, provided
that the assumptions are set forth in this Form.



As of June 30, 2014, the aggregate market value of voting stock
held by non-affiliates of the registrant, based on the closing sales price of Common Stock on OTCQB was approximately $22,813,042 million.



APPLICABLE ONLY TO
REGISTRANTS INVOLVED IN BANKRUPTCY



PROCEEDINGS DURING
THE PRECEDING FIVE YEARS:



Indicate by check mark whether the registrant
has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent
to the distribution of securities under a plan confirmed by a court.     ̈Yes   ̈No



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



The number of shares of common stock outstanding as of April
10, 2015 is 134,788,942.



DOCUMENTS INCORPORATED BY REFERENCE



List hereunder the following documents
if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated:
(1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule
424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g.,
annual report to security holders for fiscal year ended December 24, 1980).











Table of Contents





|         |                                                                                                                  | Page
|-------- | ---------------------------------------------------------------------------------------------------------------- | ----
|         |                                                                                                                  |     
|PART I  
|         |                                                                                                                  |     
|Item 1.  | Business                                                                                                         | 3   
|         |                                                                                                                  |     
|Item 1A. | Risk Factors                                                                                                     | 12  
|         |                                                                                                                  |     
|Item 1B. | Unresolved Staff Comments                                                                                        | 17  
|         |                                                                                                                  |     
|Item 2.  | Properties                                                                                                       | 17  
|         |                                                                                                                  |     
|Item 3.  | Legal Proceedings                                                                                                | 18  
|         |                                                                                                                  |     
|Item 4.  | Mine Safety Disclosures                                                                                          | 18  
|         |                                                                                                                  |     
|PART II 
|         |                                                                                                                  |     
|Item 5.  | Market for Registrant’s
    Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 19  
|         |                                                                                                                  |     
|Item 6.  | Selected Financial
    Data                                                                                      | 23  
|         |                                                                                                                  |     
|Item 7.  | Management’s
    Discussion and Analysis of Financial Condition and Results of Operations                        | 23  
|         |                                                                                                                  |     
|Item 7A. | Quantitative and Qualitative
    Disclosures About Market Risk                                                   | 29  
|         |                                                                                                                  |     
|Item 8.  | Financial Statements
    and Supplementary Data                                                                  | 30  
|         |                                                                                                                  |     
|Item 9.  | Changes in and Disagreements
    with Accountants on Accounting and Financial Disclosure                         | 65  
|         |                                                                                                                  |     
|Item 9A. | Controls and Procedures                                                                                          | 65  
|         |                                                                                                                  |     
|Item 9B. | Other Information                                                                                                | 66  
|         |                                                                                                                  |     
|PART III
|         |                                                                                                                  |     
|Item 10. | Directors, Executive
    Officers, and Corporate Governance                                                      | 67  
|         |                                                                                                                  |     
|Item 11. | Executive Compensation                                                                                           | 68  
|         |                                                                                                                  |     
|Item 12. | Security Ownership
    of Certain Beneficial Owners and Management and Related Stockholder Matters.              | 70  
|         |                                                                                                                  |     
|Item 13. | Certain Relationships
    and Related Transactions, and Director Independence                                    | 70  
|         |                                                                                                                  |     
|Item 14. | Principal Accountant
    Fees and Services                                                                       | 70  
|         |                                                                                                                  |     
|PART IV 
|         |                                                                                                                  |     
|Item 15. | Exhibits, Financial
    Statement Schedules                                                                      | 71  



2







Cautionary Statement Regarding Forward
Looking Statements



The discussion contained in this Annual
Report on Form 10-K contains “forward-looking statements” within the meaning of Section 27A of the United States Securities
Act of 1933, as amended, or the Securities Act, and Section 21E of the United States Securities Exchange Act of 1934, as amended,
or the Exchange Act. Any statements about our expectations, beliefs, plans, objectives, assumptions or future events or performance
are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of
words or phrases like “anticipate,” “estimate,” “plans,” “projects,” “continuing,”
“ongoing,” “target,” “expects,” “management believes,” “we believe,”
“we intend,” “we may,” “we will,” “we should,” “we seek,” “we
plan,” the negative of those terms, and similar words or phrases.  We base these forward-looking
statements on our expectations, assumptions, estimates and projections about our business and the industry in which we operate
as of the date of this Form 10-K. These forward-looking statements are subject to a number of risks and uncertainties that cannot
be predicted, quantified or controlled and that could cause actual results to differ materially from those set forth in, contemplated
by, or underlying the forward-looking statements. Statements in this Form 10-K describe factors, among others, that could
contribute to or cause these differences. Actual results may vary materially from those anticipated, estimated, projected or expected
should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect. Because the
factors discussed in this Form 10-K could cause actual results or outcomes to differ materially from those expressed in any forward-looking
statement made by us or on our behalf, you should not place undue reliance on any such forward-looking statement. New factors
emerge from time to time, and it is not possible for us to predict which will arise. In addition, we cannot assess the impact
of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statement. Except as required by law, we undertake no obligation to publicly
revise our forward-looking statements to reflect events or circumstances that arise after the date of this Form 10-K or the date
of documents incorporated by reference herein that include forward-looking statements.



PART I



|Item 1. | Business
|------- | --------



Overview and Description of business





Millennium Healthcare
Inc. (“Millennium” or the “Company”) is a medical device and healthcare support and services company.
The Company purchases, supplies and distributes revolutionary medical devices and equipment with a focus on prevention and early
detection. The Company also provides physician practice administration with a focus on physician practices specializing in cardiovascular
procedures. In addition, the Company provides support and services specializing in medical procedure billing and collections,
medical procedure coding, call and message management, and emergency dispatch. The marketplace for the Company’s products
and services continues to be high quality physician office, practice and facility locations with competent and caring doctors
and staff. The Company was incorporated in Delaware on July 5, 1994 under the name “Kirlin Holding Corp.” In July
2008, the Company changed its name to “Zen Holding Corp.” in connection with the sale of its subsidiary. On June 14,
2011, the Company entered into an asset purchase agreement with Millennium HealthCare Solutions Inc. (“MHS”), whereby
it purchased assets of MHS along with assets of its wholly-owned subsidiaries. The Company’s executive office is located
at 400 Garden City Plaza, Suite 440, Garden City, NY 11530. The Company’s telephone number is 516-628-5500. Unless otherwise
specified, references to the “Company,” “we,” “our” and “us” refer to Millennium
Healthcare Inc. and, unless otherwise specified, its subsidiaries.



Emerging
Growth Company Status



We are an "emerging
growth company", as defined in the Jumpstart Our Business Startups Act enacted on April 5, 2012 (the "JOBS Act").
For as long as we are an emerging growth company, we may take advantage of certain exemptions from various reporting requirements
that are applicable to other public companies that are not emerging growth companies, including, but not limited to, not being
required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure
obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements
of holding advisory "say-on-pay" and "say-when-on-pay" votes on executive compensation and shareholder advisory
votes on golden parachute compensation.



Under the JOBS Act,
we will remain an emerging growth company until the earliest of:



| |  ̈ | the last day of the fiscal
    year during which we have total annual gross revenues of $1 billion or more;                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  ̈ | the last day of the fiscal year following
    the fifth anniversary of the date of the first sale of our common stock;                                                                                                                                                                                                                                                                                                                                                                                        
| |  ̈ | the date on which we have, during the
    previous three-year period, issued more than $1 billion in non-convertible debt; or                                                                                                                                                                                                                                                                                                                                                                                 
| |  ̈ | the date on which we are deemed to
    be a "large accelerated filer" under the Securities Exchange Act of 1934 (the "Exchange Act") (we will
    qualify as a large accelerated filer as of the first day of the first fiscal year after we have (i) more than $700 million
    in outstanding common equity held by our non-affiliates and (ii) been public for at least 12 months; the value of
    our outstanding common equity will be measured each year on the last day of our second fiscal quarter).





3







The JOBS Act also provides that an emerging
growth company may utilize the extended transition period provided in Section 7(a)(2)(B) of the Securities Act, for complying
with new or revised accounting standards. However, we are choosing to "opt out" of such extended transition period,
and, as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards
is required for companies that are not emerging growth companies. Section 107 of the JOBS Act provides that our decision
to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.



Products and Services



Medical Device Distribution



The Company is currently
launching its medical equipment and device business. Through its wholly owned subsidiary, the Company will focus on forming strategic
alliances and partnerships with medical device companies that provide innovative and revolutionary medical devices that utilize
cutting edge technology and are cost effective and approved by the Food and Drug Administration (“FDA”). The devices
that the Company plans to distribute are mainly focused on preventative and diagnostic testing and care with the anticipation
of detecting potential medical issues in their early stages yielding positive medical outcomes. All of the products that the Company
plans to distribute have obtained necessary approvals and certifications and are reimbursable under current medical procedure
billing codes. The Company intends to ramp up and maintain an inventory of such devices and kits in anticipation of meeting and
maintaining distribution and delivery requirements in a timely manner.



During 2013, the Company
has entered into a series of distribution agreements with manufacturers for various medical devices. In February, the Company
entered into an exclusive nationwide distribution agreement with CDx Diagnostics Inc. for an oral cancer biopsy test. The patented
and proprietary oral swab diagnostic platform consists of a unique tissue sampling method combined with computer-assisted laboratory
tissue analysis which can identify precancerous epithelial cells that cannot be practically found by any other means. In May,
the Company entered into a distribution agreement with Atossa Genetics Inc. for a breast health test and collection kit (“ForeCYTE
Breast Health Test”). The ForeCYTE Breast Health Test provides a cytopathological approach for identifying breast cancer
risk utilizing Nipple Aspirate Fluid (“NAF”) collected with FDA-cleared, patented MASCT® non-invasive biopsy instrument
with a Patented Lab Development Test (“LDT”) that uses five biomarkers of hyperplasia and an additional marker of
sample integrity to help evaluate NAF collected. Also in May, the Company entered into an exclusive distribution agreement with
Heart Smart Inc. for a heart health test and assessment device (“VasoScan”). VasoScan is designed to analyze the Autonomic
Nervous System (ANS) function, Stress and Peripheral Blood Circulation. The VasoScan product is FDA-cleared and provides early
detection of arterial wall elasticity and determination of biological arterial age using a non-invasive LED/Photodiode finger
probe sensor. In June, the Company entered into an exclusive distribution agreement with eWellness Corporation for distance monitored
physical therapy programs. Distance monitored physical therapy programs (“DMpt”) are easy to use physical therapy
programs that are critical elements in reducing the effects of diabetes and cardiovascular disease and have the potential to dramatically
reduce the overall healthcare expenditures associated with these diseases. The DMpt programs are complete and comprehensive programs
that include patient evaluation and testing, exercise intervention and exercise demonstration, all based around on-line program
monitoring and follow-up, yielding the most beneficial exercise prescription in achieving optimal patient outcomes and results.
The Company is also currently negotiating a Memorandum of Understanding and formal proposal with a nationwide distribution and
fulfillment company to facilitate the Company’s primary product support and distribution operations incorporating fulfillment,
warehousing and distribution services for its medical devices and products.



Portions of the distribution
agreement with CDx Diagnostics Inc. and the distribution agreement with Heart Smart Inc., have been omitted and filed separately
with the SEC pursuant to a request for confidential treatment.



On May 24, 2013, the
Company entered into a Supply and Distribution Agreement with eWellness Corporation. Under the terms of the Agreement, the Company
was granted the right to distribute certain of eWellness’ products in Maine, New Hampshire, Massachusetts, Rhode Island,
Connecticut, New York, New Jersey, Delaware Maryland, Virginia, North Carolina, Georgia and Florida. The term of this agreement
is for 25 years subject to earlier termination as provided in the agreement. For every $100,000 of revenue from the Company for
the services provided pursuant to the agreement, eWellness will issue the Company 110,000 shares of its restricted common stock
up to a maximum amount of 1,100,000 shares (subject to adjustment as provided in the agreement). The Company has the right to
use eWellness Corporation’s trademarks or trade names in connection with the Agreement. eWellness Corporation agrees to
provide support to the Company’s technical service representatives within 12 to 48 hours. eWellness Corporation may terminate
the Agreement by giving the Company written notice upon occurrence of certain events, including any material breach by either
party, dissolution of either party, if the Company is restrained for 60 days from transacting its business, or if either party
is in bankruptcy. The Company may terminate the Agreement upon 30 days’ prior written notice.





4







The Company has entered
into a Distribution and Marketing Services Agreement with Atossa. Under the Agreement, the Company has been engaged to use its
best commercial efforts to distribute and market Atossa’s ForeCYTE products. Under the Agreement, the Company is required
to purchase a minimum quantity of ForeCYTE products as follows:



|Date        |  | ForeCYTE Product                      |  | Quantity |        |  | Price* FOB Origin |  
|----------- |  | ------------------------------------- |  | -------- | ------ |  | ----------------- | -
|            |  |                                       |  |          |        |  |                   |  
|May 1, 2013 |  | ForeCYTE Collection
    Kits (AG-FC5) |  |          | 10,000 |  |                   | $
|May 1, 2013 |  | MASCT pump (AG-MASCT)                 |  |          | 40     |  |                   |  



|Date        |  | ForeCYTE Product                      |  | Quantity |        |  | Price* FOB Origin |  
|----------- |  | ------------------------------------- |  | -------- | ------ |  | ----------------- | -
|            |  |                                       |  |          |        |  |                   |  
|May 1, 2014 |  | ForeCYTE Collection
    Kits (AG-FC5) |  |          | 20,000 |  |                   | $
|May 1, 2014 |  | MASCT pump (AG-MASCT)                 |  |          | 80     |  |                   |  



|Date        |  | ForeCYTE Product                      |  | Quantity |        |  | Price* FOB Origin |  
|----------- |  | ------------------------------------- |  | -------- | ------ |  | ----------------- | -
|            |  |                                       |  |          |        |  |                   |  
|May 1, 2015 |  | ForeCYTE Collection
    Kits (AG-FC5) |  |          | 30,000 |  |                   | $
|May 1, 2015 |  | MASCT pump (AG-MASCT)                 |  |          | 120    |  |                   |  



Additionally, Atossa
shall pay the Company a fixed fee as follows:



|Service Period |  | Fixed
    Service Fee |        
|-------------- |  | --------------------- | -------
|May 2013       |  | $                     | 0      
|June 2013      |  | $                     | 25,000 
|July 2013      |  | $                     | 50,000 
|August 2013    |  | $                     | 75,000 
|September 2013 |  | $                     | 75,000 
|October 2013   |  | $                     | 75,000 
|November 2013  |  | $                     | 100,000
|December 2013  |  | $                     | 100,000
|January 2014   |  | $                     | 125,000
|February 2014  |  | $                     | 125,000
|March 2014     |  | $                     | 125,000
|April 2014     |  | $                     | 125,000



|Service Period |  | Fixed
    Service Fee |        
|-------------- |  | --------------------- | -------
|May 2014       |  | $                     | 150,000
|June 2014      |  | $                     | 150,000
|July 2014      |  | $                     | 150,000
|August 2014    |  | $                     | 150,000
|September 2014 |  | $                     | 175,000
|October 2014   |  | $                     | 175,000
|November 2014  |  | $                     | 175,000
|December 2014  |  | $                     | 175,000
|January 2015   |  | $                     | 200,000
|February 2015  |  | $                     | 200,000
|March 2015     |  | $                     | 200,000
|April 2015     |  | $                     | 200,000



|Service Period |  | Fixed
    Service Fee |        
|-------------- |  | --------------------- | -------
|May 2015       |  | $                     | 200,000
|June 2015      |  | $                     | 200,000
|July 2015      |  | $                     | 200,000
|August 2015    |  | $                     | 200,000
|September 2015 |  | $                     | 250,000
|October 2015   |  | $                     | 250,000
|November 2015  |  | $                     | 250,000
|December 2015  |  | $                     | 250,000
|January 2016   |  | $                     | 300,000
|February 2016  |  | $                     | 300,000
|March 2016     |  | $                     | 300,000
|April 2016     |  | $                     | 300,000





5











The Company may delegate
or assign its duties under the Agreement to its representatives, subject to certain provisions and Atossa will provide training
to the Company’s sales personnel. The Agreement may be terminated by either party upon 30 days’ written notice or
upon a material breach if such breach is not cured within 30 days after written notice of said breach by the non-breaching party.



Pursuant to an agreement
dated February 1, 2013, as amended on October 31, 2013, by and between the Company and CDx Diagnostics, Inc. the Company agreed
to purchase from CDx OralCDx Brush Test Kits (the “Products”). Under the Agreement, the Company is the only one authorized
to market, distribute and sell the Products in United States to primary care physicians including healthcare clinics, and hospitals.
The Company is required to have completed a minimum amount of sales to third party end users in certain periods and commits to
a minimum amount of Products in certain periods as follows:



|Millennium Sales Requirements
    in Units per Period
|-----------------------------------------------------



|                                     |  | Derm Units |         |  | Oral Units | 
|------------------------------------ |  | ---------- | ------- |  | ---------- | 
|January 1, 2014 to December 31, 2014 |  |            | 12,500  |  |            | 
|January 1, 2015 to June 30, 2015     |  |            | 35,000  |  |            | 
|July 1, 2015 to December 31, 2015    |  |            | 60,000  |  |            | 
|January 1, 2016 to June 30, 2016     |  |            | 120,000 |  |            | 
|July 1, 2016 to December 31, 2016    |  |            | 150,000 |  |            | 
|January l, 2017 to June 30, 2017     |  |            | 250,000 |  |            | 
|July l, 2017 to December, 2017       |  |            | 300,000 |  |            | 
|January l, 2018 to June 30, 2018     |  |            | 350,000 |  |            | 
|July 1, 2018 to December 31, 2018    |  |            | 500,000 |  |            | 



In addition, the Company
agrees to purchase and the Company agrees to deliver the following minimum numbers of units on the following dates (which shall
be estimated at 70% Oral units and 30% Derm units:



|Year |  | Sales
    Requirements |           |  | Purchases
    January 1 |  |         | Purchases
    July 1 | 
|---- |  | ---------------------- | --------- |  | ----------------------- |  | ------- | -------------------- | 
|2015 |  |                        | 142,500   |  |                         |  | 50,000  |                      | 
|2016 |  |                        | 405,000   |  |                         |  | 225,000 |                      | 
|2017 |  |                        | 825,000   |  |                         |  | 425,000 |                      | 
|2018 |  |                        | 1,275,000 |  |                         |  | 700,000 |                      | 





Of the initial 100,000
Units, 4,000 Units shall be delivered by December 31, 2013, 10,000 Units shall be delivered by January 31, 2014 and 16,000 Units
shall be delivered by February 28, 2014 for a total of 30,000 Units delivered by February 28, 2014. Payment for units required
to be purchased and delivered under this Section shall be made in full by the Company on the applicable date for such purchase
set forth in the table above.



In addition, pursuant
to the Agreement, CDx Diagnostics, Inc. grants to the Company a reasonable supply of current marketing materials and the Company
agrees to not alter the trademarks or marketing materials without express written consent from CDx Diagnostics, Inc. CDx Diagnostics,
Inc. will also provide the Company’s sales personnel training. The Company has the right to terminate the Agreement effective
as of any one-year anniversary of the Agreement upon prior written notice to CDx Diagnostics, Inc. no more than 120 days and no
fewer than 90 days prior to such anniversary. CDx Diagnostics, Inc. may also terminate the Agreement as of any period if the Company
fails to meet its minimum sales requirements for such period upon 30 days’ prior written notice. The Agreement may be terminated
upon a material breach if such breach is not cured within 30 days after written notice of said breach by the non-breaching party
or if either party is dissolved or in bankruptcy.



The Company has entered
into a Master Purchase, Supply and Distribution Agreement with Heart Smart Inc. Under the Agreement, the Company is acting as
Heart Smart’s exclusive master distributor for the exclusive distribution and marketing of Heart Smart’s VasoScan
Early Detection and Assessment Test products in the United States, provided however until the Company completes the purchase of
the first 200 units, Heart Smart’s internal sales force shall be entitled to sell the aforementioned products. In order
to maintain the exclusivity, the Company needs to have completed purchases totaling a minimum of 50 units in the first 12 months
with completed purchases totaling a minimum of 200 Units within the first 12 Months, with a minimum of 250 additional Units to
be completed by the end of the following 12 month period. The Agreement has an initial term of 5 years. The Company is further
granted a license to use Heart Smart’s trademarks, trade names, copyrights, patents and other intellectual properties under
the Agreement. The Agreement may be terminated upon a material breach if such breach is not cured within 30 days after written
notice of said breach by the non-breaching party or if either party is dissolved or in bankruptcy.





6







Practice Support and Administration



Through its wholly
owned subsidiary, the Company offers physician practice development, support and administration services for physician facilities
and practices with a focus on vascular disorders. With extensive collective experience and a comprehensive suite of administration
services and support, the Company assists the physician and his practice in creating environments in which essential vascular
access care is provided effectively and efficiently, with optimal outcomes for both the physician and the patient. The Company
develops and supports physician practices and locations specializing in the diagnosis and treatment of peripheral arterial disease
(“PAD”) of the lower extremities. PAD is a condition that develops when the arteries that supply blood to the internal
organs, arms and legs become completely or partially blocked as a result of atherosclerosis. The Company provides complete and
comprehensive administrative services to these practices assisting and supporting physicians build, operate and manage their facility,
helping physicians to develop their practice to deliver the most effective and efficient treatments in a safe, convenient, patient-friendly
environment. These support services include business management, room build-out, recruitment, information technology, market analysis
and assessment, equipment procurement, and credentialing. The Company also provides individual specialized healthcare provider
support services through its wholly owned subsidiaries.



The Company provides
high quality, advanced medical procedure coding and medical procedure billing and collections. Services include all aspects of
medical billing and collections along with medical diagnosis and procedure coding and training for ICD-10, electronic medical
records implementation and support. Clinical Documentation Improvement (“CDI”) services include concurrent and retrospective
CDI reviews, DRG validation services and secure remote and on-site medical procedure coding. The Company also specializes in providing
services in handling call processes and message management for the medical and healthcare industries, the service and trade industries,
and the professional and business industries. High quality call answering and emergency dispatch services are provided with state
of the art technology designed specifically to manage call, answering, messaging and paging services in a live, true call center
environment including live answering 24/7, call overflow management, reception, voicemail and call screening services and on-call,
covering physician update management.



Distribution Methods



For its medical device
and equipment business, the Company seeks purchase, supply and distribution agreements with labs, manufacturers and/or distributors
for specific products the Company chooses to market and distribute. Once arrangements have been made to procure inventory for
such products, all distribution and fulfillment will be completed by a national fulfillment company to facilitate the Company’s
product support and distribution operations incorporating fulfillment, warehousing and distribution services.



For its physician
practice administration business, the Company seeks administrative service agreements with physicians and/or medical PCs for specific
administrative services. The distribution of administrative services contracted for will be completed and fulfilled by the Company’s
employees, consultants and agents. The Company concentrates on back office and administration duties solely under the direction
of the physician or medical PC.



Suppliers



Medical Device Distribution



Currently, the Company’s
order fulfillment will be handled by a contracted provider.  In order to meet the Company’s high quality standards
for product creation and development, fulfillment providers will be directed to purchase from approximately 4 primary vendors.
They, then assemble, pick, pack, and fulfill orders for final delivery by FedEx ground or air from orders that are received online,
by phone or mail, and digitally transmitted through the Company’s order fulfillment software. Current suppliers for medical
devices the Company plans to distribute are CDx Diagnostics Inc., Atossa Genetics Inc., HeartSmart Inc., and eWellness Corporation.
Portions of the distribution agreement with CDx Diagnostics Inc., the distribution agreement with Heart Smart Inc., have been
omitted and filed separately with the SEC pursuant to a request for confidential treatment.





7







Practice Support and Administration



Currently, the Company’s
order fulfillment for medical supplies monitored and maintained on behalf of a physician practice will be handled by an independent
contractor at the facility.  In order to meet the Company’s high quality standards and to ensure physician needs
are met, independent contractors on site will work with supplier reps and purchase from a variety of vendors and approximately
6 primary vendors. Arrangements are then made for final delivery to the physician’s facility. Current primary suppliers
for medical supplies the Company plans to monitor and maintain on behalf of a physician practice are Cardio Vascular Systems Inc.,
Abbott Vascular, Terumo Medical Corp., Merit Medical Systems Inc., CR Bard Inc. and St. Jude Medical.



Competition



Medical Device Distribution



Currently, the Company’s order fulfillment
will be handled by a contracted provider.  In order to meet the Company’s high quality standards for product creation
and development, fulfillment providers will be directed to purchase from approximately 4 primary vendors. They, then assemble,
pick, pack, and fulfill orders for final delivery by FedEx ground or air from orders that are received online, by phone or mail,
and digitally transmitted through the Company’s order fulfillment software. Current suppliers for medical devices the Company
plans to distribute are CDx Diagnostics Inc., Atossa Genetics Inc., HeartSmart Inc., and eWellness Corporation. Portions of the
distribution agreement with CDx Diagnostics Inc., the distribution agreement with Heart Smart Inc., have been omitted and filed
separately with the SEC pursuant to a request for confidential treatment.



Practice Support and Administration



Currently, the Company’s
order fulfillment for medical supplies monitored and maintained on behalf of a physician practice will be handled by an independent
contractor at the facility.  In order to meet the Company’s high quality standards and to ensure physician needs
are met, independent contractors on site will work with supplier reps and purchase from a variety of vendors and approximately
6 primary vendors. Arrangements are then made for final delivery to the physician’s facility. Current primary suppliers
for medical supplies the Company plans to monitor and maintain on behalf of a physician practice are Cardio Vascular Systems Inc.,
Abbott Vascular, Terumo Medical Corp., Merit Medical Systems Inc., CR Bard Inc. and St. Jude Medical.



Competition



Medical Device Distribution



The Company’s
medical device distribution business operates in competitive areas and markets. Basic barriers to entry-level product distribution
in the healthcare industry can be relatively low and the products the Company distributes may face challenges in market adoption
due to the reliance of physicians and other medical professionals on existing devices, equipment and diagnostic tools. In addition,
physicians and other medical professionals may view certain devices distributed by the Company as a screening tools for existing
illnesses, rather than as early detection or preventative tools. As a result, these products may be deemed to compete directly
with existing, established procedures, which could impair market adoption of such products.



The Company has secured
exclusive and non-exclusive distribution agreements for the products it distributes and as such, the Company does not believe
that it currently faces significant competition in providing medical devices and equipment to healthcare providers and practices.
The Company believes that the devices it distributes are well positioned to compete in markets based on the innovative, high quality
devices being offered, the reputations of the physicians utilizing the devices, as well as the Company’s and its management
team’s reputation and extensive industry experience; however, there can be no assurance that these devices will be able
to compete effectively with existing devices in their markets or that new devices or competitors will not enter into their markets
or that the equipment and devices being distributed will be readily accepted into their markets. These existing and new competitors
may have greater financial and other resources than the Company and/or the products’ manufacturers. The Company faces increased
competition from existing equipment and devices, as well as the development of new medical equipment and devices entering its
markets.





Practice Support and Administration



The Company’s
physician practice administration business operates in competitive areas and markets. The Company’s clients compete with
other PAD practice providers, practices and surgical clinics that provide PAD and atherectomy procedures and vascular surgeons.
Basic barriers to entry-level practice management in the cardiovascular and PAD care industry can be relatively low.



The Company does not
believe that it currently faces significant competition in providing administration and support services to cardiovascular practices.
The Company believes that the cardiovascular practices it manages and works with are well positioned to compete in markets based
on the reputations of the physicians providing services at those practice facilities, as well as the Company’s and its management
team’s reputation and extensive industry experience; however, there can be no assurance that these physician practices will
be able to compete effectively with existing providers in their markets or that new competitors will not enter into their markets.
These existing and new competitors may have greater financial and other resources than the Company or the practices under management
do. The Company faces increased competition from existing practices, as well as new healthcare management companies and healthcare
providers entering its markets.



As the Company distributes
medical devices and equipment and also provides a full suite of management, administration, support and consulting services to
physicians, healthcare providers, practices, offices, facilities and locations, the Company’s products and services appeal
and apply to a vast array of clientele. As such, these businesses can have no real dependency on any one type or class of customer.
Currently, the Company has a concentration of sales with one major customer for its physician practice management business. Additionally,
as the Company has begun the rollout of certain medical devices, it also currently has a concentration of sales with three major
customers for its medical device distribution business.



Intellectual Property



The
Company has the following intellectual properties :



| |  ̈ | United States Letters Patent
    entitled Safety Syringe - application serial no. 12/931,053 filed on January 21, 2011
| | - | ----------------------------------------------------------------------------------------------------------------------





8







Government Regulations



To the best of its
knowledge, there are currently no known existing or probable government regulations that may adversely affect the Company’s
business, however, a severe and/or drastic change in the government’s reimbursement rates, policies and/or procedures, for
both targeted medical devices and practice management procedures along with the related medical coding and billing for such devices
and services could have a material effect on the Company’s business.



Information Systems:The Company’s information systems, to the extent such systems hold or transmit patient medical information, operate
in compliance with state and federal laws and regulations relating to the privacy and security of patient medical information,
including the Health Insurance Portability and Accountability Act (“HIPAA”). While the Company has endeavored to establish
its information systems to be compliant with such laws, including HIPAA, such laws are complex and subject to interpretation.



United States Medical
Device Regulation: The Federal Food, Drug, and Cosmetic Act (“FDCA”), and the FDA’s implementing regulations,
govern registration and listing, manufacturing, labeling, storage, advertising and promotion, sales and distribution, and post-market
surveillance. Medical devices and their manufacturers are also subject to inspection by the FDA. The FDCA, supplemented by other
federal and state laws, also provides civil and criminal penalties for violations of its provisions. The Company distributes and
markets medical devices that, when manufactured, may be regulated by the FDA, comparable state agencies and regulatory bodies.



Privacy and Security
of Health Information and Personal Information; Standard Transactions: The Company may be engaged by a healthcare practice
or facility that is considered a Covered Entity under the terms of HIPPA. In providing and performing administration and support
services for such Covered Entities (i.e. physician practices and laboratories), such as medical coding and medical billing, medical
chart review, healthcare facility call and message management, healthcare emergency dispatch and physician practice administration,
the company may come in contact with a Covered Entity’s confidential patient medical information. Under such an engagement,
the Covered Entity may make available and/or transfer to the Company certain Protected Health Information, as that term is defined
and certain Electronic Protected Health Information ("EPHI") as that term is defined, in connection with goods or services
that are being provided by the Company to the Covered Entity, that is confidential and subject to protection under HIPAA, HIPAA
regulations and the HITECH Act. As such, the Company would be considered a Business Associate of the Covered Entity and further
be subject to state and federal laws and implementing regulations relating to the privacy and security of the medical information
of the patients the Company’s client physician practices and facilities treat. The Company, as a “Business Associate”,
is subject to state and federal laws and implementing regulations relating to the privacy and security of the medical information
of the patients its client physicians treat. The principal federal legislation is part of HIPAA, pursuant to which, the Secretary
of the Department of Health and Human Services, or “HHS”, has issued final regulations designed to improve the efficiency
and effectiveness of the healthcare system by facilitating the electronic exchange of information in certain financial and administrative
transactions, while protecting the privacy and security of the patient information exchanged. These regulations also confer certain
rights on patients regarding their access to and control of their medical records in the hands of healthcare providers.



Four principal regulations
have been issued in final form: privacy regulations, security regulations, standards for electronic transactions, and the National
Provider Identifier regulations. The HIPAA privacy regulations, which fully came into effect in April 2003, establish comprehensive
federal standards with respect to the uses and disclosures of an individual’s personal health information, referred to in
the privacy regulations as “protected health information,” by health plans, healthcare providers, and healthcare clearinghouses.
The Company is a Business Associate within the meaning of HIPAA. HIPAA requires health care providers to enter into Business Associate
contracts with certain businesses to which they disclose patient health information. These Business Associate contracts generally
require the recipients of such information to use appropriate safeguards to protect the patient health information they receive.
The regulations establish a complex regulatory framework on a variety of subjects, including:



| |  ̈ | Provide that the company
    obtain and use confidential patient health information obtained from its clients only as necessary to perform customer service
    and support functions;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  ̈ | Limit access to such information
    to those employees and agents who perform identified service and support functions;
| | - | ------------------------------------------------------------------------------------------------------------------------



| |  ̈ | Prohibit disclosure of
    patient health information received from clients to persons who are not employees or agents of the company in the absence
    of express approval from the legal department and, if appropriate, the client and/or patient;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  ̈ | Require all employees and
    agents of the company to report uses and disclosures of patient information that are not permitted by the company’s
    Privacy and Security Policy;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  ̈ | Provide that the company
    investigate all reports that patient health information was used in a manner not permitted by its Privacy and Security Policy
    and will impose appropriate sanctions for conduct prohibited by the policy as required and/or permitted by law;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





9







| |  ̈ | Establish and ensure that
    the company’s employees and agents who may come in contact with patient health information receive training regarding
    the company’s Privacy and Security Policy and the importance of protecting the privacy and security of patient health
    information;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  ̈ | Provide for the storage
    and transmission of patient health information received from clients in a secure manner that protects the integrity, confidentiality
    and availability of the information; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  ̈ | Establish that the company’s
    employees, contractors and agents who may come in contact with patient health information maintain any and all protected health
    information obtained through operating their respective businesses confidential, and agree and acknowledge that such information
    is subject to protection under HIPAA, the HIPAA regulations and the HITECH Act and will conduct their businesses according
    to such.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The federal privacy
regulations, among other things, restricts the Company’s ability to use or disclose protected health information in the
form of patient-identifiable data, without written patient authorization, for purposes other than payment, physician treatment,
or healthcare operations (as defined by HIPAA) except for disclosures for various public policy purposes and other permitted purposes
outlined in the privacy regulations. The privacy regulations provide for significant fines and other penalties for wrongful use
or disclosure of protected health information, including potential civil and criminal fines and penalties. Although the HIPAA
statute and regulations do not expressly provide for a private right of damages, the Company could incur damages under state laws
to private parties for the wrongful use or disclosure of confidential health information or other private personal information.



The Company has implemented
policies and practices that it believes brings it into compliance with the privacy regulations. However, the documentation and
process requirements of the privacy regulations are complex and subject to interpretation. Failure to comply with the privacy
regulations could subject the Company to sanctions or penalties, loss of business, and negative publicity.



The HIPAA privacy
regulations establish a “floor” of minimum protection for patients as to their medical information and do not supersede
state laws that are more stringent. Therefore, the Company is required to comply with both HIPAA privacy regulations and various
state privacy laws. The failure to do so could subject the Company to regulatory actions, including significant fines or penalties,
and to private actions by patients, as well as to adverse publicity and possible loss of business. In addition, federal and state
laws and judicial decisions provide individuals with various rights for violation of the privacy of their medical information
by healthcare providers.



The final HIPAA security
regulations, which establish detailed requirements for physical, administrative, and technical measures for safeguarding protected
health information in electronic form, became effective on April 21, 2005. The Company has employed what it considers to be a
reasonable and appropriate level of physical, administrative and technical safeguards for patient information. Failure to comply
with the security regulations could subject the Company to sanctions or penalties and negative publicity.



The final HIPAA regulations
for electronic transactions, referred to as the transaction standards, establish uniform standards for certain specific electronic
transactions and code sets and mandatory requirements as to data form and data content to be used in connection with common electronic
transactions, such as billing claims, remittance advices, enrollment, and eligibility. The Company has outsourced to a third-party
vendor the handling of its billing and collection transactions, to which the transaction standards apply. Failure of the vendor
to properly conform to the requirements of the transaction standards could, in addition to possible sanctions and penalties, result
in payors not processing transactions submitted on the Company’s behalf, including claims for payment.



The HIPAA regulations
on adoption of national provider identifiers, or NPI, required healthcare providers to adopt new, unique identifiers for reporting
on claims transactions submitted after May 23, 2007. The Company may obtain NPIs for our client physicians so that we may report
NPIs to Medicare, Medicaid, and other health plans on their behalf.



The healthcare information
of the Company’s client physician’s patients includes social security numbers and other personal information that
are not of an exclusively medical nature. The consumer protection laws of a majority of states now require organizations that
maintain such personal information to notify each individual if their personal information is accessed by unauthorized persons
or organizations, so that the individuals can, among other things, take steps to protect themselves from identity theft. The costs
of notification and the adverse publicity can both be significant. Failure to comply with these state consumer protection laws
can subject a company to penalties that vary from state to state, but may include significant civil monetary penalties, as well
as to private litigation and adverse publicity. California recently enacted legislation that expanded its version of a notification
law to cover improper access to medical information generally, and other states may follow suit.





10







Federal and State
Fraud and Abuse Laws: The federal healthcare Anti-Kickback Statute prohibits, among other things, knowingly and willfully
offering, paying, soliciting, or receiving remuneration to induce referrals or in return for purchasing, leasing, ordering, or
arranging for the purchase, lease, or order of any healthcare item or service reimbursable under a governmental payor program.
The definition of “remuneration” has been broadly interpreted to include anything of value, including gifts, discounts,
the furnishing of supplies or equipment, credit arrangements, payments of cash, waivers of payments, ownership interests, opportunity
to earn income, and providing anything at less than its fair market value. The Anti-Kickback Statute is broad, and it prohibits
many arrangements and practices that are lawful in businesses outside of the healthcare industry. Recognizing that the Anti-Kickback
Statute is broad and may technically prohibit many innocuous or beneficial arrangements within the healthcare industry, HHS has
issued a series of regulatory “safe harbors.” These safe harbor regulations set forth certain provisions that, if
met, will provide healthcare providers and other parties with an affirmative defense against prosecution under the federal Anti-Kickback
Statute. Although full compliance with these provisions ensures against prosecution under the federal Anti-Kickback Statute, the
failure of a transaction or arrangement to fit within a specific safe harbor does not necessarily mean that the transaction or
arrangement is illegal or that prosecution under the federal Anti-Kickback Statute will be pursued.



Physician Referral
Prohibitions: Under a federal law directed at “self-referral,” commonly known as the Stark Law, prohibitions exist,
with certain exceptions, on Medicare and Medicaid payments for procedures/tests referred by physicians who personally, or through
a family member, have an investment interest in, or a compensation arrangement with, the facility performing the procedures/tests.
A person who engages in a scheme to circumvent the Stark Law’s referral prohibition may be fined up to $100,000 for each
such arrangement or scheme. In addition, any person who presents or causes to be presented a claim to the Medicare or Medicaid
programs in violation of the Stark Law is subject to civil monetary penalties of up to $15,000 per bill submission, an assessment
of up to three times the amount claimed, and possible exclusion from participation in federal governmental payor programs. Bills
submitted in violation of the Stark Law may not be paid by Medicare or Medicaid, and any person collecting any amounts with respect
to any such prohibited bill is obligated to refund such amounts.



Any arrangement between
a facility and a physician or physicians’ practice that involves remuneration will prohibit the facility from obtaining
payment for services resulting from the physicians’ referrals, unless the arrangement is protected by an exception to the
self-referral prohibition or a provision stating that the particular arrangement would not result in remuneration. Among other
things, a facility’s provision of any item, device, or supply to a physician would result in a Stark Law violation unless
it was used only to collect, transport, process, or store specimens for the facility, or was used only to order tests or procedures
or communicate related results. This may preclude a facility’s provision of fax machines and computers that may be used
for unrelated purposes. Most arrangements involving physicians that would violate the Anti-Kickback Statute would also violate
the Stark Law. Many states also have “self-referral” and other laws that are not limited to Medicare and Medicaid
referrals. These laws may prohibit arrangements which are not prohibited by the Stark Law, such as a laboratory’s placement
of a phlebotomist in a physician’s office to collect specimens for the laboratory. Finally, recent amendments to these laws
require self-disclosure of violations by providers.



Corporate Practice
of Medicine: The Company’s contractual relationships with licensed healthcare providers are subject to regulatory oversight,
mainly by state licensing authorities. In certain states, for example, limitations may apply to the relationship with the provider
that the Company intends to engage, particularly in terms of the degree of control that the Company exercises or has the power
to exercise over the practice of medicine by those providers. A number of states, including New York, Texas, and California, have
enacted laws prohibiting business corporations, such as the Company, from practicing medicine and employing or engaging physicians
to practice medicine. These requirements are generally imposed by state law in the states in which we operate, vary from state
to state, and are not always consistent among states. In addition, these requirements are subject to broad powers of interpretation
and enforcement by state regulators. Some of these requirements may apply to the Company even if it does not have a physical presence
in the state, based solely on the engagement of a healthcare provider licensed in the state or the provision of services to a
resident of the state. The Company believes that it operates in material compliance with these requirements. However, failure
to comply can lead to action against the Company and the licensed healthcare professionals that the Company engages, fines or
penalties, receipt of cease and desist orders from state regulators, loss of healthcare professionals’ licenses or permits,
the need to make changes to the terms of engagement of those professionals that interfere with the Company’s business, and
other material adverse consequences.



Referrals of a
Public Company: The Company’s stock is quoted on the OTC Pink, and as such, is not able to accept referrals from physicians
who own, directly or indirectly, shares of our stock unless we comply with the Stark Law exception for publicly traded securities.
This requires, among other things, $75 million in stockholders’ equity (total assets minus total liabilities). The parallel
safe harbor requires, among other things, $50 million in undepreciated net tangible assets, in order for any distributions to
such stockholders to be protected under the Anti-Kickback Statute.



Compliance Programs:Compliance with government rules and regulations is a significant concern throughout the industry, in part due to evolving
interpretations of these rules and regulations. The Company seeks to conduct its business in compliance with all statutes and
regulations applicable to its operations. To this end, the Company has established and continues to establish compliance programs
that review for regulatory compliance procedures, policies, and facilities throughout its business.



Employees



As of April 10, 2015, the Company had six
(6) full-time employees.  None of our employees are represented by a labor union, and we consider relations with our
employees to be good.





11







The officers of the
company and the company’s subsidiaries have the same powers and duties with respect to the management of the business affairs
for the Company and the oversight of the day-to-day management operations for the Company as officers of a business would have.
They perform such other reasonable duties (taking into consideration the person’s position in the Company) as may be prescribed
by the Board of Directors of the Company from time to time. They are obligated to use best efforts to serve the Company faithfully
and promote its best interests and shall devote all of his business time, attention and services to the faithful and competent
discharge of such duties.



|Item 1A. | Risk Factors
|-------- | ------------



An investment in the Company’s
common stock involves an extremely high degree of risk.  You should carefully consider the risks described below and
the other information contained in this prospectus before deciding to invest in the Company’s common stock.  You
should only purchase our securities if you can afford to suffer the loss of your entire investment.



RISKS RELATED TO OUR BUSINESS





The Company has incurred loss since
inception and the Company’s auditor has expressed substantial doubt about our ability to continue as a going concern.



The
Company commenced generating revenues from operations in 2011. The Company has incurred operating losses for the years ended December
31, 2014 and 2013, has a working capital deficiency of $2,923,247 and an accumulated deficit of $76,378,261 as of December 31, 2014.



In
their report dated April 15, 2015, the Company’s independent registered auditor ,
Paritz & Company PA, stated that the Company’s financial statements for the fiscal year ended December 31, 2014, were
prepared assuming that it would continue as a going concern. However, they also expressed substantial doubt about the Company’s
ability to continue as a going concern. The Company continues to experience operating losses. We can give no assurance as to our
ability to raise sufficient capital or our ability to continue as a going concern.



The Company’s
success depends on the successful raise of sufficient working capital.



The success of the
Company’s business strategy depends on the Company’s ability to successfully secure raising additional working capital.
The Company’s ability to continue as a going concern is an issue raised as a result of significant losses due to certain
debt instruments. The Company also continues to experience operating losses. Although not specifically determined at this time,
the company intends to continue to investigate and pursue options and methods of raising capital to meet its financing needs and
financial goals, however we can give no assurance as to our ability to raise such sufficient capital or our ability to continue
as a going concern.



The Company is dependent on the
continued participation and level of service of its third-party service provider(s).



The Company relies
on third-party service providers to provide certain services to us and/or our customers. If any of these third-party service providers
stop supporting the Company or if our network of providers does not expand, we will likely have to expand our internal team to
meet the needs of our customers, which could increase our operating costs and result in lower gross margins. We can make no assurance
that we will be able to establish and maintain the third-party relationships or establish additional relationships as necessary
to support growth and profitability of our business on economically viable terms.



Defects, failures or quality issues
associated with the products the Company distributes could lead to recalls or safety alerts, negative publicity regarding the
Company and litigation, including product liability claims, that could adversely affect its business and reputation and result
in loss of customers. Loss reserves are difficult to estimate.



The design, manufacture
and marketing of medical devices of the types the Company distributes entail inherent risks. There are a number of factors that
could result in an unsafe condition, injury or death of a patient with respect to products that the Company distributes, including
quality issues, component failures, manufacturing flaws, unanticipated or improper uses of the products, design defects or inadequate
disclosure of product-related risks or product-related information. Any of these issues could lead to a recall of, or safety alert
relating to, one or more of the products distributed by the Company. Any recall, whether voluntary or required by the FDA could
result in significant costs and significant negative publicity. Negative publicity including regarding a quality or safety issue,
whether accurate or inaccurate, could reduce market acceptance of the products, harm the Company’s reputation, decrease
demand for the products, result in the loss of customers, lead to product withdrawals and/or harm the Company’s ability
to successfully launch and market in the future. The foregoing problems could also result in enforcement actions by state and
federal governments or other enforcement bodies, or product liability claims or lawsuits including those being brought by individuals
or by groups seeking to represent a class or establish multi-district litigation proceedings, and a material adverse effect on
our business, results of operations, financial condition and/or liquidity.





12







The Company faces competition
from existing providers, as well as new providers entering its markets.



The Company’s
medical equipment and device business operates in competitive areas and markets. Basic barriers to entry-level product distribution
in the healthcare industry can be relatively low and the products the Company distributes may face challenges in market adoption
due to the reliance of physicians and other medical professionals on existing devices, equipment and diagnostic tools. In addition,
physicians and other medical professionals may view certain devices distributed by the Company as a screening tool for existing
illnesses, rather than as an early detection or preventative tool. As a result, certain products may be deemed to compete directly
with existing, established procedures, which could impair market adoption of such products.



The Company’s
physician practice administration business operates in competitive areas and markets. The Company’s clients compete with
other PAD practice management providers, practices and surgical clinics that provide PAD and atherectomy procedures and vascular
surgeons. Basic barriers to entry-level practice management in the cardiovascular and PAD care industry can be relatively low.



New
distributors and new healthcare providers that enter the Company’s markets impact the Company’s market share, business
volume and growth rates. Increased competitive pressures require the Company to commit resources to marketing efforts, which impacts
the Company’s margins and profitability. There can be no assurance that the Company will be able to compete effectively
with existing providers in its markets or that new competitors will not enter into its markets. These existing and new competitors
may have greater financial and other resources than the Company does. Increased competition could also make it more difficult
for the Company to expand its business.



The development of alternative
treatments could diminish demand for the Company’s services.



The
healthcare industry is dynamic, and new, technologically intensive devices are constantly under development. New devices that
are more effective could decrease patient demand or profitability for the products that the Company currently distributes and
patients could seek treatment elsewhere.



If the
Company is found not to be in compliance with applicable laws and regulations, it could be subject to significant fines or penalties,
be forced to curtail certain of our operations or rearrange material agreements to its detriment.



The
Company is subject to numerous federal and state laws and regulations, including, but not limited to, federal and state anti-kickback
laws, controlled substances laws, the federal Stark law and state self-referral laws, false claims laws, the HIPAA, Medicare and
Medicaid regulations and laws regulating the business of insurance. These laws and regulations are extremely complex and could
be subject to various interpretations. Many aspects of the Company’s business, to date, have not been the subject of federal
or state regulatory review and the Company may not have been in compliance at all times with all applicable laws and regulations.
If the Company is found by a court or regulatory authority to have violated any applicable laws or regulations, the Company could
be subject to significant fines or penalties or be forced to curtail certain of its operations.



The Company’s success
depends on retaining key members of its management team.



The
success of the Company’s business strategy depends on the continued contribution of key members of its management team.
The loss of key members of this team could disrupt its growth plans and its ability to implement its business strategy.



Economic
instability could continue to adversely affect the Company.



Financial
markets and the economies in the United States and internationally may continue to experience disruption and volatility as they
have in recent years and conditions could worsen. As a result, the economic environment (including deteriorating economic conditions
in certain countries in Europe) may, among other things:



| |  ̈ | increase the sales cycle
    for certain of our products;
| | - | ---------------------------------------------------------



| |  ̈ | slow the adoption of new
    technology;
| | - | ----------------------------------------



| |  ̈ | adversely affect the Company’s
    suppliers, which could disrupt the Company’s ability to distribute the products; and
| | - | -----------------------------------------------------------------------------------------------------------------------



| |  ̈ | limit the Company access
    to capital on terms acceptable to the Company.
| | - | ---------------------------------------------------------------------------



These
conditions may continue in the future. Any of these conditions could have a material adverse effect on the Company’s business,
results of operations, financial condition and/or liquidity.



We may be subject to significant
liability claims and litigation, including potential exposure from the use of our product candidates as well as from physician
locations under management, and our insurance may be inadequate to cover claims that may arise.





13







Our business exposes
us to potential liability risks inherent in the administration and support of healthcare facilities and the processing, marketing
and distribution of medical device products. Such liability claims may be expensive to defend and result in large judgments against
us. We face an inherent risk of product liability exposure related to current and any future product candidates and will face
an even greater risk with respect to any commercial sales of such products once distribution begins. No product candidate has
been widely used over an extended period of time, and therefore safety data is limited. The manufacturing process and handling
requirements are extensive, which increases the risk of quality failures and subsequent product liability claims.



We
will need to increase our insurance coverage when we begin commercializing product candidates, if ever. At that time, we may not
be able to obtain or maintain product liability insurance on acceptable terms with adequate coverage or at all, or if claims against
us substantially exceed our coverage, then our financial position could be significantly impaired.



Whether or not we
are ultimately successful in any product liability litigation that may arise, such litigation could consume substantial amounts
of our financial and managerial resources, decreased demand for our products and injure our reputation.



We seek to maintain
errors and omissions, directors and officers, workers' compensation and other insurance at levels we believe to be appropriate
to our business activities. If, however, we were subject to a claim in excess of this coverage or to a claim not covered by our
insurance and the claim succeeded, we would be required to pay the claim from our own limited resources, which could have a material
adverse effect on our financial condition, results of operations and business. Additionally, liability or alleged liability could
harm our business by diverting the attention and resources of our management and damaging our reputation.



There is no guarantee that the market
for our products or services will develop, and it exposes us to risks inherent in the long-term distribution and growth of our
products and services.



There currently is
no significant global market for our product candidates, nor is there any guarantee that such markets will develop in the near
future, or at all. Adverse outcomes or limitations of our products or services, including, but not limited to damage, destruction
or a failure in performance or facility or systems of our service providers, could harm our reputation and business and expose
us to significant liability from customers. While we believe that we will procure insurance to cover certain of these risks, we
may in fact have insufficient insurance to cover losses beyond the limits on its policies, which could have a material adverse
effect on our financial condition.



Healthcare companies have been the
subjects of federal and state investigations, and we could become subject to investigations in the future.



Both federal and state
government agencies have heightened civil and criminal enforcement efforts. There are numerous ongoing investigations of health
care companies, as well as their executives and managers. In addition, amendments to the Federal False Claims Act, including under
Healthcare Reform, have made it easier for private parties to bring “ qui tam ” (whistleblower) lawsuits against
companies under which the whistleblower may be entitled to receive a percentage of any money paid to the government. The Federal
False Claims Act provides, in part, that an action can be brought against any person or entity that has knowingly presented, or
caused to be presented, a false or fraudulent request for payment from the federal government, or who has made a false statement
or used a false record to get a claim approved. The government has taken the position that claims presented in violation of the
federal anti-kickback law, Stark Law or other healthcare-related laws, including laws enforced by the FDA, may be considered a
violation of the Federal False Claims Act. Penalties include substantial fines for each false claim, plus three times the amount
of damages that the federal government sustained because of the act of that person or entity and/or exclusion from the Medicare
program. In addition, a majority of states have adopted similar state whistleblower and false claims provisions. We are not aware
of any government investigations involving any of our physician facilities or management. While we believe that we are in material
compliance with applicable governmental healthcare laws and regulations, any future investigations of our business, clients or
executives could cause us to incur substantial costs, and result in significant liabilities or penalties, as well as damage to
our reputation.



It is uncertain to what extent the
government, private health insurers and third-party payors will approve coverage or provide reimbursement for the products distributed
or the physician practices to which our administration services relate. Availability for such reimbursement may be further limited
by an increasing uninsured population and reductions in Medicare and Medicaid funding in the United States.



To the extent that
health care providers cannot obtain coverage or reimbursement for cardiovascular procedures and treatment or for medical device
products, they may elect not to provide such therapies and products to their patients and, thus, may not need our products or
services. Further, as cost containment pressures are increasing in the health care industry, government and private payors may
adopt strategies designed to limit the amount of reimbursement paid to health care providers.



Similarly, the trend
toward managed health care and bundled pricing for health care services in the United States, which may accelerate under the healthcare
reform legislation approved by Congress on March 23, 2010 and thereafter signed into law (“Healthcare Reform”), could
significantly influence the purchase of healthcare support services and products, resulting in lower prices and reduced demand
for our products and support services.





14







Federal health care
programs, such as Medicare, are subject to changes in coverage and reimbursement rules and procedures, including retroactive rate
adjustments. These contingencies could materially decrease the range of physician services and products covered by such programs
or the reimbursement rates paid directly or indirectly to physicians could significantly influence the products sold to, and our
administration and support services for, such physicians and their facilities. To the extent that any health care reform favors
the reimbursement of other product and services over products and services the company provides, such reform could affect our
ability to sell our products and services, which may have a material adverse effect on our revenues.



The limitation on
reimbursement available from private and government payors may reduce the demand for, or the price of, physician services and
products, which could have a material adverse effect on our revenues. Additional legislation or regulation relating to the health
care industry or third-party coverage and reimbursement may be enacted in the future which could adversely affect the revenues
generated from the sale of our products and services provided to such healthcare facilities.



Furthermore, there
has been a trend in recent years towards reductions in overall funding for Medicare and Medicaid. There has also been an increase
in the number of people who do not have any form of health care coverage in recent years and who are not eligible for or enrolled
in Medicare, Medicaid or other governmental programs. The extent to which the reforms brought about under Healthcare Reform may
be successful in reducing the number of such uninsured is unclear, and the reduced funding of governmental programs and increase
in uninsured populations could have a negative impact on the demand for our administration services to the extent they relate
to such products sold and administrative services provided to physician facilities which are reimbursed by government and private
payors.



Additionally, and
more specifically reimbursements and reimbursement rates for Peripheral Arterial Disease (PAD) procedures are currently under
review and a negative change could drastically affect the Company’s ability to successfully and profitably perform practice
management and administration for physicians which could further result in the discontinuance of that business segment.



Unintended consequences of recently
adopted healthcare reform legislation in the U.S. may adversely affect our business.



The healthcare industry
is undergoing fundamental changes resulting from political, economic and regulatory influences. In the U.S., comprehensive programs
are under consideration that seek to, among other things, increase access to healthcare for the uninsured and control the escalation
of healthcare expenditures within the economy. On March 23, 2010, healthcare reform legislation was approved by Congress and has
been signed into law. While we do not believe this legislation will have a direct impact on our business, the legislation has
only recently been enacted and requires the adoption of implementing regulations, which may have unintended consequences or indirectly
impact our business. For instance, the scope and implications of the recent amendments pursuant to the Fraud Enforcement and Recovery
Act of 2009 (“FERA”), have yet to be fully determined or adjudicated and as a result it is difficult to predict how
future enforcement initiatives may impact our business. Also, in some instances our clients may be health insurers that will be
subject to limitations on their administrative expenses and new federal review of “unreasonable” rate increases that
could impact the prices they pay for our services. If the legislation causes such unintended consequences or indirect impact,
it could have a material adverse effect on our business, financial condition and results of operations.



Defects or disruptions in our services
and products along with changes in reimbursement rates and procedures could diminish demand, delay or defer collection cycles
for accounts receivable and subject us to substantial liability.



Because
our products and service are complex, our services may be subject to errors and our products may have defects that are identified
after use that could result in unanticipated downtime for our customers and harm our reputation and our business. We have from
time to time found defects and errors in our services and products and new defects and errors may be detected in the future. In
addition, our customers may use products and services in unanticipated ways that may cause a disruption in service or product
use. Since our customers use our products and services for important aspects of their business, any errors, defects, disruptions
in service or other performance problems with our products or services could hurt our reputation and may damage our customers’
businesses. Furthermore, our customers are physician and healthcare profession facilities who rely on health care programs, such
as Medicare, for medical procedures performed and medical devices used in their practices and are subject to changes in coverage
and reimbursement rules and procedures, including retroactive rate adjustments. These contingencies could materially decrease
the range of physician services and products covered by such programs or the reimbursement rates paid. If that occurs, customers
could elect not to renew, or delay or withhold payment to us, we could lose future sales or customers may make warranty claims
against us,



RISKS ASSOCIATED WITH INVESTING IN THE COMPANY’S
COMMON STOCK





15







The Company’s Stock Has Historically Had a Limited
Market and the Trading Prices May Be Volatile.



The market price of
the Company’s shares of common stock may be based on factors that may not be indicative of future market performance.  Consequently,
the market price of the Company’s common stock may vary greatly.  There is a significant risk that the Company’s
stock price may fluctuate dramatically in the future in response to any of the following factors, some of which are beyond the
Company’s control:



| | ● | variations in the Company’s quarterly
    operating results;
| | - | ------------------------------------------------------------



| | ● | announcements that the Company’s
    revenue or income/loss levels are below analysts’ expectations;
| | - | ----------------------------------------------------------------------------------------------------



| | ● | general economic slowdowns;
| | - | ---------------------------



| | ● | changes in market valuations of similar
    companies;
| | - | ------------------------------------------------------



| | ● | announcements by the Company or its
    competitors of significant contracts; or
| | - | --------------------------------------------------------------------------------



| | ● | acquisitions, strategic partnerships,
    joint ventures or capital commitments.
| | - | --------------------------------------------------------------------------------



Because the Company’s Shares Are Deemed “Penny
Stocks,” You May Have Difficulty Selling Them In The Secondary Trading Market.



The SEC has adopted
regulations which generally define a “penny stock” to be any equity security that has a market price (as therein defined)
of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions.  Additionally,
if the equity security is not registered or authorized on a national securities exchange that makes certain reports available,
the equity security may also constitute a “penny stock.”  As the Company’s common stock comes within the
definition of penny stock, these regulations require the delivery by the broker-dealer, prior to any transaction involving the
Company’s common stock, of a risk disclosure schedule explaining the penny stock market and the risks associated with it.
The broker-dealer also must provide the customer with bid and offer quotations for the penny stock, the compensation of the broker-dealer
and any salesperson in the transaction, and monthly account statements indicating the market value of each penny stock held in
the customer’s account.  In addition, the penny stock rules require that, prior to a transaction in a penny stock not
otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable
investment for the purchaser and receive the purchaser’s written agreement to the transaction.  These disclosure requirements
may have the effect of reducing the trading activity in the secondary market for the Company’s common stock. The ability
of broker-dealers to sell the Company’s common stock and the ability of shareholders to sell the Company’s common
stock in the secondary market would be limited.  As a result, the market liquidity for the Company’s common stock would
be severely and adversely affected. The Company can provide no assurance that trading in the Company’s common stock will
not be subject to these or other regulations in the future, which would negatively affect the market for the Company’s common
stock.



The Company IS Subject To The Reporting Requirements
Of Federal Securities Laws, Which Can Be Expensive.



The Company is subject
to the information and reporting requirements under the Securities Exchange Act of 1934 and other federal securities laws, and
the compliance obligations of the Sarbanes-Oxley Act of 2002.  The costs of preparing and filing annual and quarterly reports
and other information with the SEC causes our expenses to be higher than they would be if the Company was a privately-held company.



The Company’s
failure to maintain effective internal control over financial reporting could lead to inaccuracies in its reported financial results.



A material weakness is a significant deficiency,
or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the
annual or interim financial statements will not be prevented or detected.  Moreover, any failure to establish and maintain
effective systems of internal control and procedures may impair its ability to accurately report its financial results.  Our
management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2014
and identified a material weakness in internal control over financial reporting as of that date. A material weakness is a deficiency,
or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that
a material misstatement of the annual or interim financial statement will not be prevented or detected on a timely basis. Because
of the material weakness described in this Report on Form 10-K, management concluded that, as of December 31, 2014, our internal
control over financial reporting was not effective. Such failures and the reporting that the Company’s system of internal
controls over financial reporting was not effective could result in a restatement of its financial statements and cause investors
to lose confidence in the reliability of its financial statements, which could result in a decline in the Company’s stock
price. In



In addition to potential dilution
associated with future fundraising transactions, we currently have significant numbers of securities outstanding that are convertible
into or exercisable for our Common Stock, which could result in significant additional dilution and downward pressure on our stock
price.



The issuance of these
shares in the future would result in significant dilution to our current stockholders and could adversely affect the price of
our Common Stock and the terms on which we could raise additional capital. In addition, the issuance and subsequent trading of
shares could cause the supply of our Common Stock available for purchase in the market to exceed the purchase demand for our Common
Stock. Such supply in excess of demand could cause the market price of our Common Stock to decline.





16







Actual and beneficial ownership
of large quantities of our Common Stock and certain Preferred Stock by our executive officers and directors may substantially
reduce the influence of other stockholders.



As a result, such
persons may have the ability to exercise enhanced control and influence over the approval process for actions that require stockholder
approval, including the approval of mergers, sales of assets or other significant corporate transactions or other matters submitted
for stockholder approval. Furthermore, at certain times the interests of our substantial stockholders may conflict with the interests
of our other stockholders.



If we are unsuccessful in raising
the required capital or building or contracting for commercial sales and marketing capabilities in the United States, our revenues
from any future products will be adversely affected.



We currently have
no capabilities or experience in the selling, marketing or commercial distribution of medical device products. We currently have
product candidates that are ultimately approved for marketing, and would need to hire and develop an internal sales and marketing
organization and/or outsource these functions to one or more third parties.



We may be unable to
secure the required capital or be unable to establish sufficient marketing, sales and distribution capabilities necessary to successfully
inventory, commercialize and gain market acceptance for any of our product candidates. In addition, co-promotion or other marketing
arrangements with third parties to commercialize product candidates could significantly limit the revenues we recognize from such
product candidates, and these third parties may fail to commercialize the product candidates successfully.



Factors outside the Company's control could require us
to record an asset impairment of goodwill.



We are required to
analyze goodwill and other intangible assets for impairment. Factors out of the Company's control, including, but not limited
to the economic environment, market capitalization, federal and local government regulations and anticipated cash flows of the
Company could require us to record an impairment charge for goodwill. The accounting guidance establishes a method of testing
goodwill for impairment on an annual basis, or on an interim basis if an event occurs that would reduce the fair value of a reporting
unit or an indefinite-lived intangible asset below its carrying value. If an impairment is found to exist, we will be required
to record a non-cash asset impairment charge which could be significant.



|Item 1B. | Unresolved Staff Comments
|-------- | -------------------------



Not applicable.



|Item 2. | Properties
|------- | ----------



DESCRIPTION OF PROPERTY





The Company leases
approximately 7,500 square feet in Garden City, New York. All management activities of the Company are conducted out of this
location. The lease term expires on December 31, 2023, and has an annual rent of approximately $201,208 for the year ended December
31, 2014.  The Company in executing a more virtual model, is vacating its Garden City, New York offices and is currently
relocating to a virtual office environment within Long Island, New York. This new location will be used to provide executive,
management and administrative offices for the Company’s regional operations.



The Company, on behalf
of one of its operating subsidiary, leases approximately 2,900 square feet in New Brunswick, New Jersey commencing on November
15, 2012 for an initial term of sixty months. The annual rent is approximately $72,216 for the year ended December 31, 2014. 
The subsidiary utilizes the space for clients and anticipates a minimum of 1 day per month for the current year.



One of the Company’s
subsidiaries leases approximately 1,800 square feet in New York, New York commencing in June 2013 for an initial term of twenty-four
months. The Company has two options to renew the term of the lease for twelve months each. The lease has an estimated annual rent
of approximately $140,000 for the year ended December 31, 2013. The subsidiary utilizes the space for its client and anticipates
a minimum of 1 day per week for the current year. The Company is no longer utilizing this location after 2013.



The Company, on behalf
of one of its operating subsidiaries, leases certain office space in Garden City, New York commencing on October 1, 2013 for an
initial term of sixty months. The Company can renew the lease for two additional twelve month terms. The annual rent is approximately
$24,000 for the year ended December 31, 2014.  The subsidiary utilizes the space for its client and anticipates a minimum
of 1 day per month for the current year.





17







The Company leases
approximately 5,442 square feet in New York, New York commencing May 2014 (with rent commencing July 2014) for an initial term
of 62 months. The lease has an annual rent payment of approximately $282,984 for the first year and increases 3% per year subsequent
thereto. In addition, the Company must pay any increases in real estate taxes over the base year, as defined. The Company utilizes
this space for executive offices. The Company, in executing a more virtual model, will be looking to consolidate administrative
and executive offices and vacate this location in 2015.



The Company leases
approximately 29,389 square feet in Boynton Beach, Florida commencing May 2014 (upon delivery of the premises) for an initial
term of 60 months. The lease has an annual rent payment for the first year of approximately $102,861 plus operating expenses of
approximately $98,160 plus annual increase. The Company in executing a more virtual model, is vacating its Boynton Beach, Florida
warehouse and storage facility and relocating to a third party warehousing, inventory and logistics facility located in Miami,
Florida. This new location will be used to provide and manage complete inventory, logistics and distribution for the Company’s
regional operations.





|Item 3. | Legal Proceedings
|------- | -----------------



From time to time, we may become involved
in various lawsuits and legal proceedings, which arise in the ordinary course of business.  However, litigation is subject
to inherent uncertainties, and an adverse result in these or other matters  may arise from time to time that may harm its
business. We are not currently party to any material legal proceedings.



|Item 4. | Mine Safety disclosures
|------- | -----------------------



Not Applicable.



18







PART II





|Item 5. | Market for Registrant’s Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity Securities
|------- | ----------------------------------------------------------------------------------------------------------------



Quotations for the
common stock of the Company are included in the under the symbol “MHCC.” The following table sets forth for the respective
periods indicated the prices of the common stock as quoted on the OTC Markets. Such prices are based on inter-dealer bid and ask
prices, without markup, markdown, commissions, or adjustments and may not represent actual transactions.



|Quarter Ended:     |  | High Bid ($) |      |  | Low Bid ($) |  
|------------------ |  | ------------ | ---- |  | ----------- | -
|                   |  |              |      |  |             |  
|                   |  |              |      |  |             |  
|March 31, 2013     |  | $            | 1.11 |  |             | $
|June 30, 2013      |  | $            | 0.80 |  |             | $
|September 30, 2013 |  | $            | 0.60 |  |             | $
|December 31, 2013  |  | $            | 0.51 |  |             | $
|March 31, 2014     |  | $            | 1.01 |  |             | $
|June 30, 2014      |  | $            | 1.50 |  |             | $
|September 30, 2014 |  | $            | 0.74 |  |             | $
|December 31, 2014  |  | $            | 0.68 |  |             | $



As of April 10, 2015,
there were approximately 128 holders of record of our common stock.



Since inception, no
dividends have been paid on the common stock.  The Company intends to retain any earnings for use in its business activities,
so it is not expected that any dividends on the common stock will be declared and paid in the foreseeable future.



Equity Compensation Plan Information



As of December 31,
2014, we do not have any securities authorized for issuance under any equity compensation plans and we do not have any equity
compensation plans.



Recent
Sales of Unregistered Securities



Common Stock



On January 21, 2014
the Company issued 300,000 shares of common stock for an addendum to a master purchase, supple and distribution agreement. The
above referenced securities were offered and sold in reliance on the exemption from registration afforded by Section 4(2) and
Regulation D (Rule 506) under the Securities Act and corresponding provisions of state securities laws.



On January 21, 2014,
the Company issued 3,400,000 shares of common shares to certain professional and employees for services rendered. The above referenced
securities were offered and sold in reliance on the exemption from registration afforded by Section 4(2) and Regulation D (Rule
506) under the Securities Act and corresponding provisions of state securities laws.



On January 21, 2014,
the Company issued 175,000 shares of common shares to a certain entity for the acquisition of certain assets of that entity. The
above referenced securities were offered and sold in reliance on the exemption from registration afforded by Section 4(2) and
Regulation D (Rule 506) under the Securities Act and corresponding provisions of state securities laws.



Between February 11
and March 31, 2014, the Company issued 3,575,000 shares of common stock to certain consultants for services rendered. The above
referenced securities were offered and sold in reliance on the exemption from registration afforded by Section 4(2) and Regulation
D (Rule 506) under the Securities Act and corresponding provisions of state securities laws.



Between April 21 and
June 11, 2014, the Company issued 4,650,000 shares of common stock to certain consultants for services rendered. The above referenced
securities were offered and sold in reliance on the exemption from registration afforded by Section 4(2) and Regulation D (Rule
506) under the Securities Act and corresponding provisions of state securities laws.



On April 24, 2014
the Company issued 575,000 shares of common stock for settlement and full satisfaction of a promissory note. The above referenced
securities were offered and sold in reliance on the exemption from registration afforded by Section 4(2) and Regulation D (Rule
506) under the Securities Act and corresponding provisions of state securities laws.





19







On May 27, 2014, the
Company issued 225,000 shares of common stock through a private placement. The above referenced securities were offered and sold
in reliance on the exemption from registration afforded by Section 4(2) and Regulation D (Rule 506) under the Securities Act and
corresponding provisions of state securities laws.



Between July 11 and
September 25, 2014, the Company issued 10,600,000 shares of common stock to certain consultants for services rendered. The above
referenced securities were offered and sold in reliance on the exemption from registration afforded by Section 4(2) and Regulation
D (Rule 506) under the Securities Act and corresponding provisions of state securities laws.



Between August 11
and September 9, 2014, the Company issued 620,000 shares of common stock to a certain note holder for maturity extensions of a
convertible promissory note. The above referenced securities were offered and sold in reliance on the exemption from registration
afforded by Section 4(2) and Regulation D (Rule 506) under the Securities Act and corresponding provisions of state securities
laws.



On September 12, 2014
the Company issued 4,025,000 shares of common stock for settlement and full satisfaction of certain promissory and demand notes.
The above referenced securities were offered and sold in reliance on the exemption from registration afforded by Section 4(2)
and Regulation D (Rule 506) under the Securities Act and corresponding provisions of state securities laws.



On September 25, 2014,
the Company issued 625,000 shares of common shares to a certain professional for services rendered. The above referenced securities
were offered and sold in reliance on the exemption from registration afforded by Section 4(2) and Regulation D (Rule 506) under
the Securities Act and corresponding provisions of state securities laws.



Between November 14
and November 18, 2014, the Company issued 3,050,000 shares of common stock to certain consultants for services rendered. The above
referenced securities were offered and sold in reliance on the exemption from registration afforded by Section 4(2) and Regulation
D (Rule 506) under the Securities Act and corresponding provisions of state securities laws.



On November 17, 2014
the Company issued 13,596,770 shares of common stock for settlement and full satisfaction of certain claims, complaints and summons.
The above referenced securities were offered and sold in reliance on the exemption from registration afforded by Section 4(2)
and Regulation D (Rule 506) under the Securities Act and corresponding provisions of state securities laws.



Between December 2
and December 4, 2014, the Company issued 7,075,000 shares of common stock to certain holders through private placement subscription
agreements. The above referenced securities were offered and sold in reliance on the exemption from registration afforded by Section
4(2) and Regulation D (Rule 506) under the Securities Act and corresponding provisions of state securities laws.



On December 9, 2014,
the Company issued 2,600,000 shares of common stock to a certain consultant for services rendered. The above referenced securities
were offered and sold in reliance on the exemption from registration afforded by Section 4(2) and Regulation D (Rule 506) under
the Securities Act and corresponding provisions of state securities laws.



On December 16, 2014,
the Company issued 6,250,000 shares of common stock to certain consultants for services rendered. The above referenced securities
were offered and sold in reliance on the exemption from registration afforded by Section 4(2) and Regulation D (Rule 506) under
the Securities Act and corresponding provisions of state securities laws.



On December 19, 2014,
the Company issued 1,000,000 shares of common shares to a certain professional for services rendered. The above referenced securities
were offered and sold in reliance on the exemption from registration afforded by Section 4(2) and Regulation D (Rule 506) under
the Securities Act and corresponding provisions of state securities laws.



On December 22, 2014
the Company issued 3,250,000 shares of common stock for settlement and full satisfaction of warrants with a certain holder. The
above referenced securities were offered and sold in reliance on the exemption from registration afforded by Section 4(2) and
Regulation D (Rule 506) under the Securities Act and corresponding provisions of state securities laws.



Series F Preferred Stock



From August 2013 to
February 2014, the Company completed a private placement pursuant to a term sheet closed on 3,000,000 units of its securities
for gross proceeds of $ 3,000,000.  Each unit (“Unit”) consists of one share of the Company’s Common
Stock, and one share of a new series of preferred stock to be designated by the Company (“Series F Preferred Stock”).  
The above referenced securities were offered and sold in reliance on the exemption from registration afforded by Section 4(2)
and Regulation D (Rule 506) under the Securities Act and corresponding provisions of state securities laws.





20









Series G Preferred Stock



The Company sold 5,335 units and raised
$5,335,000 under a private placement in 2014. Each unit for this private placement consisted of one thousand shares of common
stock and one share of Series G Preferred Stock (“Series G Preferred Stock”), which have the rights and preferences
set forth in the Certificate of Designation, Preferences, Rights and Limitations of Series G Preferred Stock of the Company. .
As a result, 5,335 shares of Series G were to be issued. The above referenced securities were offered and sold in reliance on
the exemption from registration afforded by Section 4(2) and Regulation D (Rule 506) under the Securities Act and corresponding
provisions of state securities laws.

Convertible Notes





On February 10, 2014,
the Company sold a Convertible Promissory Note in the principal amount of $353,000, dated February 7, 2014 for cash consideration
of $325,000 by and between the Company and WHC Capital LLC, Bravo Series. The transaction did not involve any underwriters, underwriting
discounts or commissions, or any public offering. The issuance of these securities was deemed to be exempt from the registration
requirements of the Securities Act of 1933, as amended, by virtue of Section 4(2) thereof, as a transaction by an issuer not involving
a public offering.



Between June 26 and
July 11 2014, the Company issued original issue discount convertible notes (the “OID Notes”) with an aggregate principal
amount of $1,235,218 with warrants to acquire up to 823,530 shares of Common Stock at $1.00 per share.  The OID Notes mature
in 13 months after issuance and were issued at an original issue discount of $185,283.  No regularly scheduled interest
payments shall be made on the OID Notes.  The OID Notes may be converted by the note holders into shares of the Company’s
common stock at the lower of (i) $0.75 or (ii) 80% of the per share price of the Company’s equity securities sold in a future
public offering.  The warrants expire five years from the date of issuance and are exercisable at (i) $1.00 or (ii) 80% the
lowest per share price of the Company’s common stock sold by the Company in any future public offering, during the period
that the investor’s OID Note is outstanding. The OID Notes and related warrants contain anti-dilution provisions. In
addition, the Company agreed to pay to the placement agent a fee of 10% of the gross proceeds received by the Company and a warrant
equal to 10% of the aggregate number of shares issuable upon conversion of the Notes at an exercise price equal to 110% of the
warrant exercise price. The above referenced securities were offered and sold in reliance on the exemption from registration afforded
by Section 4(2) and Regulation D (Rule 506) under the Securities Act and corresponding provisions of state securities laws.



On September 18, 2014,
the Company issued a promissory note to accredited investors in the amount of $200,000. The transaction did not involve any underwriters,
underwriting discounts or commissions, or any public offering. The issuance of these securities was deemed to be exempt from the
registration requirements of the Securities Act of 1933, as amended, by virtue of Section 4(2) thereof, as a transaction by an
issuer not involving a public offering.



On October 9, 2014,
the Company issued a promissory note to an accredited investor in the amount of $250,000. The transaction did not involve any
underwriters, underwriting discounts or commissions, or any public offering. The issuance of these securities was deemed to be
exempt from the registration requirements of the Securities Act of 1933, as amended, by virtue of Section 4(2) thereof, as a transaction
by an issuer not involving a public offering.



On October 20, 2014,
the Company issued a promissory note to an accredited investor in the amount of $40,000. The transaction did not involve any underwriters,
underwriting discounts or commissions, or any public offering. The issuance of these securities was deemed to be exempt from the
registration requirements of the Securities Act of 1933, as amended, by virtue of Section 4(2) thereof, as a transaction by an
issuer not involving a public offering.



In October 2014, the
Company issued a short term note to an investor in the principal amount of $450,000. The transaction did not involve any underwriters,
underwriting discounts or commissions, or any public offering. The issuance of these securities was deemed to be exempt from the
registration requirements of the Securities Act of 1933, as amended, by virtue of Section 4(2) thereof, as a transaction by an
issuer not involving a public offering.



On November 19, 2014,
the Company sold Convertible Promissory Notes in the aggregate principal amount of $1,100,000, dated November 10, 2014 for an
aggregate of $1,000,000 pursuant to certain Securities Purchase Agreements. The Notes mature on May 10, 2015 and bear an interest
rate of 18% per annum. Any accrued and unpaid principal and interest on the Convertible Promissory Notes when due shall bear an
interest rate of 22% per annum. The issuance of these securities was deemed to be exempt from the registration requirements of
the Securities Act by virtue of the provisions of Section 4(a)(2) and Regulation D (Rule 506) thereunder, and the corresponding
provisions of state securities laws.



On December 2, 2014,
the Company issued a promissory note to an accredited investor in the amount of $205,000. The transaction did not involve any
underwriters, underwriting discounts or commissions, or any public offering. The issuance of these securities was deemed to be
exempt from the registration requirements of the Securities Act of 1933, as amended, by virtue of Section 4(2) thereof, as a transaction
by an issuer not involving a public offering.





21







On December 24, 2014, the Company sold
Convertible Promissory Notes in the principal amount of $350,000 and 350,000 shares of the Company’s common stock for an
aggregate of $350,000 pursuant to certain Securities Purchase Agreements to an accredited investor. The above referenced securities
were offered and sold in reliance on the exemption from registration afforded by Section 4(2) and Regulation D (Rule 506) under
the Securities Act and corresponding provisions of state securities laws.





Warrants



On February 25, 2014,
the Company entered into an agreement and general mutual release with a note and warrant holder. As a result, the Company cancelled
500,000 warrants with exercise prices ranging from $.50 to $1.00.



On June 26, 2014,
the Company issued five year warrants to purchase 549,020 shares of common stock at an exercise price of $1.00 per share in connection
with the issuance of certain convertible promissory notes with non-related parties. The Company agreed to pay a placement agent
a commission of warrants equal to 10% of the aggregate number of shares issuable upon conversion of these convertible notes at
an exercise price equal to 110% of the warrant exercise price. The issuance of these securities was deemed to be exempt from the
registration requirements of the Securities Act of 1933, as amended, by virtue of Section 4(2) thereof, as a transaction by an
issuer not involving a public offering.



On July 9, 2014, the
Company issued five year warrants to purchase 117,647 shares of common stock at an exercise price of $1.00 per share in connection
with the issuance of certain convertible promissory notes with non-related parties. The Company agreed to pay a placement agent
a commission of warrants equal to 10% of the aggregate number of shares issuable upon conversion of these convertible notes at
an exercise price equal to 110% of the warrant exercise price. The issuance of these securities was deemed to be exempt from the
registration requirements of the Securities Act of 1933, as amended, by virtue of Section 4(2) thereof, as a transaction by an
issuer not involving a public offering.



On July 11, 2014,
the Company issued five year warrants to purchase 156,863 shares of common stock at an exercise price of $1.00 per share in connection
with the issuance of certain convertible promissory notes with non-related parties. The Company agreed to pay a placement agent
a commission of warrants equal to 10% of the aggregate number of shares issuable upon conversion of these convertible notes at
an exercise price equal to 110% of the warrant exercise price. The issuance of these securities was deemed to be exempt from the
registration requirements of the Securities Act of 1933, as amended, by virtue of Section 4(2) thereof, as a transaction by an
issuer not involving a public offering.



On July 25, 2014,
the Company issued two year warrants to purchase 1,200,000 shares of common stock at an exercise price of $3.00 per share in connection
with a consulting agreement with a non-related party. The transaction did not involve any underwriters, underwriting discounts
or commissions, or any public offering. The issuance of these securities was deemed to be exempt from the registration requirements
of the Securities Act of 1933, as amended, by virtue of Section 4(2) thereof, as a transaction by an issuer not involving a public
offering.



On September 9, 2014,
the Company issued five year warrants to purchase 500,000 shares of common stock at an exercise price of $3.00 per share in connection
with a consulting agreement with a non-related party. The transaction did not involve any underwriters, underwriting discounts
or commissions, or any public offering. The issuance of these securities was deemed to be exempt from the registration requirements
of the Securities Act of 1933, as amended, by virtue of Section 4(2) thereof, as a transaction by an issuer not involving a public
offering.



In October 2014, the
Company authorized and approved 12,000,000 warrants, with an exercise price of $0.25, for its executive officers. These warrants
shall be disseminated prior to December 31, 2014.



On November 4, 2014,
the Company entered into a settlement agreement with a warrant holder. As a result, the Company cancelled 500,000 warrants with
an exercise price of $.50.



On December 19, 2014,
the Company entered into a warrant settlement and exchange agreement with an existing warrant holder. As a result, the Company
issued 3,000,000 warrants with an exercise price of $.16 and cancelled 2,000,000 warrants with exercise prices ranging from $.50
to $1.00. The transaction did not involve any underwriters, underwriting discounts or commissions, or any public offering. The
issuance of these securities was deemed to be exempt from the registration requirements of the Securities Act of 1933, as amended,
by virtue of Section 4(2) thereof, as a transaction by an issuer not involving a public offering.



On December 24, 2014,
the Company issued 35,000 warrants in connection with an agreement to pay a placement agent a commission of warrants equal to
10% of the aggregate number of shares issuable upon sale of certain units through a private placement. The issuance of these securities
was deemed to be exempt from the registration requirements of the Securities Act of 1933, as amended, by virtue of Section 4(2)
thereof, as a transaction by an issuer not involving a public offering.





22









|Item 6. | Selected Financial Data
|------- | -----------------------



Not applicable.





|Item 7. | Management’s Discussion and Analysis
    of Financial Condition and Results of Operations
|------- | -----------------------------------------------------------------------------------------





Company Overview



The Company is a medical
device and healthcare support and services company. The Company purchases, supplies and distributes revolutionary medical devices
and equipment focused primarily on preventative care through early detection. The Company also provides physician practice administration
with a current focus on physician practices specializing in cardiovascular procedures. In addition, the Company provides support
and services specializing in medical procedure billing and collections, medical procedure coding, call and message management,
and emergency dispatch. The marketplace for the Company’s products and services continues to be high quality physician offices,
practices and facility locations with competent and caring doctors and staff.



Current Operations
and Recent Developments



The Company is currently
launching its medical equipment and device business. This business focuses on strategic alliances and partnerships with medical
device companies that provide innovative medical devices that utilize cutting edge technology, are cost effective, and FDA cleared.
Devices the Company elects to distribute are focused on preventative and diagnostic testing and care with the anticipation of
detecting potential medical issues in their early stages yielding positive medical outcomes for patients. All of the products
that the Company distributes have obtained necessary approvals and certifications and are reimbursable under current medical procedure
billing codes. As the Company continues to launch and grow this business, it continues to secured network selling agreements with
US based healthcare organization for the use of its medical devices within these organizations’ managed locations. These
network agreements include average monthly minimum usage requirements for managed locations. The Company continues to procure
and take delivery of device inventory for distribution in fulfilling these agreements during launch and rollout. The Company has
also secured office space in New York City, New York, which will contain executive offices, and warehousing space in Boynton Beach,
Florida, which will house regional inventory, distribution, local management and training facilities. The Company has also entered
into employment agreements with key management as well as at-will employment agreements to facilitate the regional roll out of
the Company’s medical device business.



The Company is currently
re-focusing and streamlining its physician practice administration and support business. This business offers physician practice
development, support and administration services for physician facilities and practices with a focus on vascular disorders. This
group assists the physician and his practice in creating environments in which essential vascular access care is provided effectively
and efficiently, with optimal outcomes for both the physician and the patient.



On May 1, 2013, the Company
entered into a distribution agreement with Atossa Genetics Inc. for a breast health test and collection kit (“ForeCYTE Breast
Health Test”). Material terms of the agreement include automatic term renewals for one year, minimum purchase commitments
of 40 units for May 2013, 80 units for May 2014 and 120 units for May 2015. The agreement also provides for a minimum monthly
fixed service fee earned by the Company through April 2016. On October 4, 2013, Atossa Genetics Inc. initiated a voluntary recall
of the ForeCYTE Breast Health Test to address FDA’s concerns regarding the modifications identified in a Warning Letter.
The ForeCYTE Breast Health Test has not been cleared by the FDA for marketing in the United States and cannot be marketed or distributed
within the United States until clearance for this device is received from the FDA. The Company has not distributed any of the
products and has no plan to distribute the products until clearance is received. Therefore, the management of the Company believes
the recall has no impact on the Company’s operations.



On September 18, 2013, the Company secured
a strategic alliance and entered into an agreement with CodeSmart Group Inc., whereby the Company (through its Coding & Billing
subsidiary) will offer, promote and endorse CodeSmart Group Inc.’s ICD-10 Educational and Consulting services and solutions,
including, but not limited to ICD-10 traditional services, outsourced coding, strategic consulting services and educational products,
including, but not limited to proprietary programs such as CodeSmart University and online education programs. In 2014, several
officers of CodeSmart Holdings, Inc., the holding company of CodeSmart Group Inc., resigned from their positions and no new officers
have been appointed, based on the SEC filings of CodeSmart Holdings, Inc. The management believes that these changes have no impact
on the Company’s business as services pursuant to the agreement with CodeSmart Group Inc. were never utilized.



23







Critical Accounting
Policies and Estimates: Our management’s discussion and analysis of our financial condition and results of operations
is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in
the United States, or GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect
the reported amounts of assets, liabilities and expenses. On an ongoing basis, we evaluate these estimates and judgments, including
those described below. We base our estimates on our historical experience and on various other assumptions that we believe to
be reasonable under the circumstances. These estimates and assumptions form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent from other sources. Actual results and experiences may differ materially
from these estimates.



While our significant
accounting policies are more fully described in our financial statements, we believe that the following accounting policies are
the most critical to aid you in fully understanding and evaluating our reported financial results and affect the more significant
judgments and estimates that we use in the preparation of our financial statements.



Convertible Instruments: The
Company reviews the terms of convertible debt and equity securities for indications requiring bifurcation, and separate accounting,
for the embedded conversion feature. Generally, embedded conversion features where the ability to physical or net-share settle
the conversion option is not within the control of the Company are bifurcated and accounted for as a derivative financial instrument.
(See Derivative Financial Instruments below). Bifurcation of the embedded derivative instrument requires allocation of the proceeds
first to the fair value of the embedded derivative instrument with the residual allocated to the debt instrument. The resulting
discount to the face value of the debt instrument is amortized through periodic charges to interest expense using the Effective
Interest Method.



Derivative Financial
Instruments: The Company generally does not use derivative financial instruments to hedge exposures to cash-flow or market
risks. However, certain other financial instruments, such as warrants or options to acquire common stock and the embedded conversion
features of debt and preferred instruments that are indexed to the Company’s common stock, are classified as liabilities
when either (a) the holder possesses rights to net-cash settlement or (b) physical or net share settlement is not within the control
of the Company. In such instances, net-cash settlement is assumed for financial accounting and reporting, even when the terms
of the underlying contracts do not provide for net-cash settlement. Such financial instruments are initially recorded at fair
value and subsequently adjusted to fair value at the close of each reporting period.



Revenue Recognition: The Company recognizes
revenues from the following sources:



Sales of medical devices
are recognized when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the buyer
is fixed or determinable, and collectability is reasonable assured.



Healthcare support, management
and administration services rendered to healthcare centers and physician practices are recognized when the services have been
rendered.



Impairment of Long-Lived
Assets: Long-lived assets, primarily fixed assets, are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of the assets might not be recoverable. The Company performs a periodic assessment of assets
for impairment in the absence of such information or indicators. Conditions that would necessitate an impairment assessment include
a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset
is used, or a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable.
For long-lived assets to be held and used, the Company recognizes an impairment loss only if its carrying amount is not recoverable
through its undiscounted cash flows and measures the impairment loss based on the difference between the carrying amount and estimated
fair value.



In December, 2013 management
decided to initiate a strategic change in the business operations of the Company. In connection therewith, management decided
to focus its future efforts on the development of its medical device distribution business and to phase out its existing businesses.



24







As a result, the Company
has impaired its goodwill and other net intangible assets aggregating $4,046,826 which were acquired in acquisitions consummated
in 2011.



Stock-Based Compensation:



The Company measures compensation
expense for its non-employee stock-based compensation under ASC 505-50, “Accounting for Equity Instruments that are Issued
to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services ”. The fair value of the
option issued is used to measure the transaction, as this is more reliable than the fair value of the services received. The fair
value is measured at the value of the Company’s common stock on the date that the commitment for performance by the counterparty
has been reached or the counterparty’s performance is complete. The fair value of the equity instrument is charged directly
to expense and additional paid-in capital.



Results of Operations



Twelve Months Ended
December 31, 2014 Compared to Twelve Months Ended December 31, 2013



Revenue



For the twelve months
ended December 31, 2014, the Company had total revenue of $8,340,831 as compared to revenue of $1,987,312 for the twelve months
ended December 31, 2013. Revenue increased by $6,353,519 or 319% over prior period due to the initial distribution and placement
of medical devices within contracted networks and the acquisition of call answering service customers. 2014 revenue consisted
of $1,800,000 in revenue from physician practice administration and support, $237,575 in revenue from medical coding and billing
and call answering and emergency dispatch services performed and $6,303,256 in revenues from the distribution and placement of
medical devices.



For the twelve months
ended December 31, 2013, the Company had total revenue of $1,987,312. 2013 revenue consisted of $1,817,825 in revenue from physician
practice administration and support and $169,487 in revenue from medical coding and billing and call answering and emergency dispatch
services performed. The changes in our operating expenses from December 31, 2014 to December 31, 2013 are as follows:



Payroll, consulting,
and professional fees



Payroll, consulting, and
professional fees aggregated $26,640,367 for the twelve months ended December 31, 2014 compared to $11,209,451 for the twelve
months ended December 31, 2013, an increase of $15,430,916 or 137.7%. The increase is primarily attributed to an increase in the
value of common stock issued for professional services of $12,082,757 from $9,050,464 to $21,133,221, due to the issuance of shares
to consultants and professionals for services rendered for investor and public relations, marketing and capital raising efforts,
shares issued in connection with debt maturity extensions and settlements, and the issuance of shares through employment agreements.
Additionally, professional fees increased $1,834,360 to $3,322,841 from $1,488,482 in 2013 resulting from consulting fees related
to the launching of the medical device business, investor and public relations initiatives and capital raising efforts. In addition,
payroll and related tax expenses for the twelve months ended December 31, 2014 increased $734,298 to $1,042,732 compared to $308,434
for the twelve months ended December 31, 2013. The increase is the result of rate increases along with added management personnel
and professional staffing for the launching of the medical device business. Also, legal and accounting fees combined for the twelve
months ended December 31, 2014 increased $779,501 to $1,141,573 compared to $362,071 for the twelve months ended December 31,
2013 due to the Company utilizing additional legal and accounting services for support within the normal course of business and
for compliance with SEC requirements to become and remain fully reporting in accordance with those regulations.



25







Rent



Rent expense for the twelve
months ended December 31, 2014 was $672,564 compared to $310,468 for the twelve months ended December 31, 2013, an increase of
$362,096 or 116.6%. The increase was the result of the expenses related to the corporate headquarters in Garden City, New York
and related escalations, expenses related to new executive office space in New York, New York, expenses related to new office/warehouse
space in Boynton Beach, Florida and additional usage days for physician practice management services.



General and administrative



General and administrative
expenses aggregated $1,382,005 for the twelve months ended December 31, 2014 compared to $1,013,608 for the twelve months ended
December 31, 2013, an increase of $368,397 or 36.5%. The increase is primarily attributable to $221,884 in insurance expense for
the twelve months ended December 31, 2014 compared to $134,269 for the twelve months ended December 31, 2013, an increase of $87,615
or 65.3%. The increase was primarily due to expanding coverages for our device division as well as physician practice management
division for vascular services, increased overall business policy coverage and rate increases; $110,581 in telephone and
telecommunication expense for the twelve months ended December 31, 2014 compared to $90,165 for the twelve months ended December
31, 2013, a decrease of $20,416 or 22.6%. These costs increased primarily due to one-time and setup expenses for voice, data,
software and hosting usage along with related repairs/maintenance and expansion of such services and equipment as the Company
began building the infrastructure to develop and launch its device business; $145,815 in travel, entertainment, meals and related
expenses for the twelve months ended December 31, 2014 compared to $46,244 for the twelve months ended December 31, 2013, an increase
of $99,571 or 215.3%, The increase is due to the launching of the medical device business and an increase in the Company’s
capital raise and investor and public relations efforts; and $904,986 in medical supplies, office and information technology expense
for the twelve months ended December 31, 2014 compared to $742,931 for the twelve months ended December 31, 2013, an increase
of $162,056 or 21.8%. These costs remained relatively the same period to period as the Company maintained its physician practice
management division and the purchase of medical supplies for that business and had increases in office and related technology
expenses for its corporate offices and warehousing location.



Cost of devices



Cost of devices for the
twelve months ended December 31, 2014 aggregated $550,000 and increased $550,000 from $-0- or 100.0% from the twelve months ended
December 31, 2013 due to the initial rollout and distribution of medical devices during 2014.



Depreciation and
amortization



Depreciation and amortization
expenses for the twelve months ended December 31, 2014 aggregated $172,017 and decreased $598,337 from $770,354 or 77% from the
twelve months ended December 31, 2013 primarily due to the impairment of certain fixed and intangible assets during 2013.



Other income (expense)



Net other income (expense)
was ($44,890) for the twelve months ended December 31, 2014 compared to ($3,943,085) for the twelve months ended December 31, 2013,
an increase of $3,898,195. This decrease in expense is primarily attributable to the fair value adjustment related to the derivative
liability of $78,935 offset by an increase in interest expense of $69,695 for the twelve months ended December 31, 2014 and one-time
expense of $4,046,826 for the impairment of certain fixed and intangible assets during the twelve months ended December 31, 2013.



Income taxes



No provision for income taxes has been recorded
as the Company has provided a full valuation allowance.



26







Net Loss



The net loss of the twelve
months ended December 31, 2014 was ($24,357,707) compared to the net loss of ($16,459,663) for the twelve months ended December
31, 2013. The Company had a loss per weighted common share outstanding of ($0.16) for the twelve months ended December 31, 2014
compared to ($0.36) for the twelve months ended December 31, 2013.



Liquidity and
Capital Resources



We have a history of operating
losses as we have focused our efforts on raising capital and maintaining our physician practice administration business and the
rollout and launching of our medical device business. The report of our independent auditors issued on our consolidated financial
statements as of and for the year ending December 31, 2014 expresses substantial doubt about our ability to continue as a going
concern. In 2012, we were successful in raising net proceeds of $693,500 through private placements and $1,270,000 through debt
financing in order to fund the development and growth of our operations. During 2013, we were successful in raising net proceeds
of $1,950,000 through private placements and $1,805,200 through debt financing in order to fund the development and growth of
our operations. During 2014 we were successful in raising net proceeds of $5,970,000 through private placements and $3,893,218
through debt financing in order to fund the development and growth of our operations as well as the extinguishing of certain existing
demand, promissory and original issue discount notes as they became due. Our ability to continue as a going concern is dependent
on our obtaining additional adequate capital to fund additional operating losses until we become profitable. If we are unable
to obtain adequate capital, we could be forced to cease operations.



The following table presents a summary of our
net cash provided by (used in) operating, investing and financing activities for December 31, 2014 and 2013:



|                                          |  | Twelve Months Ended
    December 31 |           
|----------------------------------------- |  | ----------------------------------- | ----------
|                                          |  | 2014                                |           
|Net cash used in operating activities     |  |                                     | (5,835,548
|Net cash used in investing activities     |  |                                     | (1,132,222
|Net cash provided by financing activities |  |                                     | 6,964,850 
|Net decrease in cash                      |  |                                     | (2,920    



Cash flows for the twelve
months ended December 31, 2014 compared to December 31, 2013:For the twelve months ended December 31, 2014, we incurred
a net loss of $24,357,707. Net cash used in operating activities was $5,835,548, net cash used in investing activities was $1,132,222
and net cash provided by financing activities was $6,964,850. For the twelve months ended December 31, 2013, we incurred a net
loss of $16,577,078. Net cash used in operating activities was $3,131,773, net cash used in investing activities was $38,295 and
net cash provided by financing activities was $3,158,564.



Working Capital Deficit Information- The
following table presents a summary of our working capital deficit:



|Category                  |  | December 31, 2014 |           |  | December 31, 2013 |  
|------------------------- |  | ----------------- | --------- |  | ----------------- | -
|Current assets            |  |                   | 6,023,714 |  |                   |  
|Current liabilities       |  |                   | 8,946,961 |  |                   |  
|Working capital (deficit) |  | $                 | 2,923,247 |  |                   | $



27







As of December 31, 2014,
the Company had a working capital deficit of $2,923,247, compared to $4,518,853 at December 31, 2013, or a decrease in working
capital deficit of $1,595,606. For 2014, current assets increased by $3,877,829 primarily due to a decrease of $4,332,220 in cash, an
increase of $4,332,220 in accounts receivable related to our practice management services and the launch of our medical device
business, a net decrease of $720,963 in inventory related to the purchase and placement of medical devices and prepaid expenses
of $269,492 primarily related to compensation as a result of certain consulting agreements and deposits for new locations. Current
liabilities increased $2,282,734 primarily related to increases of $1,958,448 in liability for stock to be issued, decrease in
the change of fair value of the derivative liability related to the warrants issued with notes payable of $816,070 and an increase
of $531,191 in accounts payable and accrued expense, along with an increase in current portion of notes payable of $635,101. In
addition, non-current portion of notes payable increased $350,000 and the Company issued $337,500 Series F preferred shares which
have been classified as a liability.



Rollforward of the Allowance for Doubtful Accounts



The rollforward of the
allowance for doubtful accounts consisted of the following for the years ended December 31, 2014, 2013 and 2012:



|                               |  | December 31 |           |  | December 31 |   |           | December 31 | 
|------------------------------ |  | ----------- | --------- |  | ----------- | - | --------- | ----------- | 
|                               |  | 2014        |           |  | 2013        |   |           | 2012        | 
|                               |  |             |           |  |             |   |           |             | 
|Balance at beginning of period |  | $           | 1,200,000 |  |             | $ | -         |             | 
|Provision                      |  |             | 3,236,000 |  |             |   | 1,200,000 |             | 
|Write-offs                     |  |             | 1,436,000 |  |             |   | -         |             | 
|Recoveries                     |  |             | -         |  |             |   | -         |             | 
|Balance at end of period       |  | $           | 3,000,000 |  |             | $ | 1,200,000 |             | 



Funding Requirements:We
expect to incur substantial expenses and generate ongoing operating losses for the foreseeable future as we prepare for the scale-up
of inventory and commencement and ongoing development of our medical equipment and device business as well as maintaining the
existing base of our physician practice administration and support business. If we are unable to raise an adequate amount of capital,
however, we could be forced to curtail or cease operations. Our future capital uses and requirements depend on numerous forward-looking
factors. These factors include the following:



-the time and
expense needed to complete the procurement of inventory and successful launch of the medical equipment and device business;



-the expense
associated with building a network of independent sales representatives to market the devices selected for distribution;



28







-the degree
and speed of patient and physician acceptance of these devices and products and the degree to which third-party payors approve
and pay for reimbursement; and



-the time and
expense needed to complete the securing of additional days at existing location under contract and/or the securing of additional
new physician practice facilities and locations under contract for our practice administration and support business.



Our revenue generating
activities during 2014 continue to improve as the physician practice management services business is re-focused and continues
to progress and the commencement of our medical device distribution business, as we strategically start to place our medical devices
for distribution into the marketplace. During 2013, we entered into several distribution agreements to launch our medical device
division and have procured over $1.4 Million in medical device inventory for distribution through the fourth quarter 2014. The
Company has also secured several network selling agreements with US based healthcare organizations for the use of certain medical
devices we are distributing in a number of each organizations’ locations which include average monthly minimum unit usage
per device, per location. Strategic rollout and placement of these devices has commenced in the later part of the first quarter
of 2014, with fulfillment starting for these initial networks under contract in the later part of the third quarter of 2014. The
Company has also secured additional key management personnel in 2013 and 2014 to help facilitate the launch and rollout of our
device division as well as the securing of professional staffing in 2014 to facilitate the rollout of our device division at new
locations. The Company also continues its capital raising efforts during 2014 with increased exposure and awareness through more
formalized investor and public relations, roadshows and the engaging of professional firms.



In view of these matters,
realization of certain of the assets in the accompanying balance sheet is dependent upon our continued operations, which in turn
is dependent upon our ability to meet our financial requirements, raise additional financing, and the success of our future operations.



Additional funding may
not be available to us on acceptable terms or at all. In addition, the terms of any financing may adversely affect the holdings
or the rights of our stockholders. For example, if we raise additional funds by issuing equity securities or by selling debt securities,
if convertible, further dilution to our existing stockholders would result. To the extent our capital resources are insufficient
to meet our future capital requirements, we will need to finance our future cash needs through public or private equity offerings,
collaboration agreements, debt financings or licensing arrangements.



If adequate funds are
not available, we may be required to terminate, significantly modify or delay the development and launch of our businesses, reduce
our planned commercialization efforts, or obtain funds through means that may require us to relinquish certain rights that we
might otherwise seek to protect and retain. Further, we may elect to raise additional funds even before we need them if we believe
the conditions for raising capital are favorable.







|Item 7A. | Quantitative and Qualitative Disclosures
    About Market Risk
|-------- | --------------------------------------------------------------



Not applicable





29







|Item 8. | Financial Statements and Supplementary Data
|------- | -------------------------------------------





ltrhd2



REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM





To the Board of Directors and Stockholders of

Millennium Healthcare, Inc.



We have audited the accompanying consolidated balance sheet
of Millennium Healthcare, Inc. (the “Company”), as of December 31, 2014 and 2013 and the related statements of operations,
stockholders’ deficit and cash flows for the year sended December 31, 2014 and 2013. These consolidated financial statements
are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial
statements based on our audit.



We have conducted our audit in accordance
with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The
Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our
audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control
over financial reporting.  Accordingly, we express no such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.



In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial position of Millennium Healthcare, Inc. as of December 31, 2014
and 2013, and the results of their operations and their cash flows for the years ended December 31, 2014 and 2013, in conformity
with accounting principles generally accepted in the United States of America.



The accompanying consolidated financial
statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the accompanying
financial statements, the Company has incurred operating losses for the past several years, has a working capital deficiency of
$2,923,247 and a stockholders’ deficit of $2,390,368 as of December 31, 2014. These factors, among others, raise substantial
doubt about its ability to continue as a going concern. Management's plans in regard to this matter are described in Note 4. The
financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.





/s/ Paritz & Company,
P.A.



Hackensack, New Jersey

April 15, 2015







30









MILLENNIUM HEALTHCARE
INC.

CONSOLIDATED
BALANCE SHEETS

DECEMBER 31,
2014 AND 2013





|                                                                                                                                                                   |  | DECEMBER 31, |             |   | DECEMBER 31, |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------ | ----------- | - | ------------ | -
|                                                                                                                                                                   |  | 2014         |             |   | 2013         |  
|ASSETS                                                                                                                                                             |  |              |            
|                                                                                                                                                                   |  |              |             |   |              |  
|                                                                                                                                                                   |  |              |             |   |              |  
|CURRENT ASSETS                                                                                                                                                     |  |              |             |   |              |  
|Cash                                                                                                                                                               |  | $            | 112,725     |   |              | $
|Accounts receivable, net of allowance for doubtful accounts
    of $3,000,000 and $1,200,000 at December 31, 2014 and 2013, respectively                           |  |              | 5,193,634   |   |              |  
|Inventory                                                                                                                                                          |  |              | 100,000     |   |              |  
|Prepaid expenses                                                                                                                                                   |  |              | 617,355     |   |              |  
|Total current
    assets                                                                                                                                           |  |              | 6,023,714   |   |              |  
|                                                                                                                                                                   |  |              |             |   |              |  
|Fixed assets, net                                                                                                                                                  |  |              | 789,950     |   |              |  
|                                                                                                                                                                   |  |              |             |   |              |  
|OTHER ASSETS                                                                                                                                                       |  |              |             |   |              |  
|Security deposits                                                                                                                                                  |  |              | 375,595     |   |              |  
|Intangible assets, net                                                                                                                                             |  |              | 54,833      |   |              |  
|Total other assets                                                                                                                                                 |  |              | 430,428     |   |              |  
|                                                                                                                                                                   |  |              |             |   |              |  
|TOTAL ASSETS                                                                                                                                                       |  | $            | 7,244,092   |   |              | $
|                                                                                                                                                                   |  |              |             |   |              |  
|LIABILITIES AND STOCKHOLDERS' (DEFICIT)                                                                                                                            |  |              |             |   |              |  
|                                                                                                                                                                   |  |              |             |   |              |  
|CURRENT LIABILITIES                                                                                                                                                |  |              |             |   |              |  
|Accounts payable and accrued expenses                                                                                                                              |  | $            | 1,278,748   |   |              | $
|Preferred stock dividends payable                                                                                                                                  |  |              | 0           |   |              |  
|Current portion of notes payable,
    net of debt discounts of $220,878 and $384,563, and original issue discounts of $106,504 and $91,122, net of current portion |  |              | 2,862,836   |   |              |  
|Derivative liability                                                                                                                                               |  |              | 1,061,476   |   |              |  
|Liability for common stock to be issued                                                                                                                            |  |              | 640,100     |   |              |  
|Liability for preferred stock to
    be issued                                                                                                                     |  |              | 3,103,800   |   |              |  
|Total current
    liabilities                                                                                                                                      |  |              | 8,946,960   |   |              |  
|                                                                                                                                                                   |  |              |             |   |              |  
|Preferred stock                                                                                                                                                    |  |              | 337,500     |   |              |  
|Notes payable                                                                                                                                                      |  |              | 350,000     |   |              |  
|                                                                                                                                                                   |  |              |             |   |              |  
|TOTAL LIABILITIES                                                                                                                                                  |  |              | 9,634,460   |   |              |  
|                                                                                                                                                                   |  |              |             |   |              |  
|STOCKHOLDERS' (DEFICIT)                                                                                                                                            |  |              |             |   |              |  
|Preferred stock, $0.0001 par value, 15,000,000 shares authorized                                                                                                   |  |              |             |   |              |  
|Series A Preferred stock, $0.0001 par value, 1,000,000
    shares authorized,                                                                                      |  |              |             |   |              |  
|600,000 and 500,000 shares issued and outstanding, respectively                                                                                                    |  |              | 60          |   |              |  
|Series B Preferred stock, $0.0001 par value, 0 shares
    issued and outstanding respectively                                                                      |  |              | -           |   |              |  
|Series D Preferred stock, $0.0001 par value, 0 shares
    issued and outstanding respectively                                                                      |  |              | -           |   |              |  
|Series E Preferred stock, $0.0001 par value, 200,000 shares
    authorized, 0 and 132,258                                                                          |  |              |             |   |              |  
|shares issued and outstanding,
    respectively                                                                                                                    |  |              | -           |   |              |  
|Series F Preferred stock, $0.0001 par value, 3,000,000 shares authorized,
    550,000 shares                                                                       |  |              |             |   |              |  
|issued and outstanding                                                                                                                                             |  |              | -           |   |              |  
|Series G Preferred stock, $0.0001 par value, 100,000 shares authorized,
    0 shares                                                                               |  |              |             |   |              |  
|issued and outstanding respectively                                                                                                                                |  |              | -           |   |              |  
|Common stock, $0.0001 par value, 200,000,000 shares authorized,                                                                                                    |  |              |             |   |              |  
|128,828,942 and 63,237,172 shares issued and outstanding,
    respectively                                                                                         |  |              | 12,883      |   |              |  
|Additional paid in capital                                                                                                                                         |  |              | 77,427,977  |   |              |  
|Deferred compensation                                                                                                                                              |  |              | (3,453,027  | ) |              |  
|Accumulated deficit                                                                                                                                                |  |              | (76,378,261 | ) |              |  
|Total stockholders'
    (deficit)                                                                                                                                  |  |              | (2,390,368  | ) |              |  
|                                                                                                                                                                   |  |              |             |   |              |  
|TOTAL LIABILITIES
    AND STOCKHOLDERS' (DEFICIT)                                                                                                                  |  | $            | 7,244,092   |   |              | $











The accompanying
notes are an integral part of these consolidated financial statements.





31









MILLENNIUM HEALTHCARE
INC.

CONSOLIDATED
STATEMENTS OF OPERATIONS







|                                                                    |  | YEAR ENDED            |             |   | YEAR ENDED            |  
|------------------------------------------------------------------- |  | --------------------- | ----------- | - | --------------------- | -
|                                                                    |  | DECEMBER 31,
    2014 |             |   | DECEMBER 31,
    2013 |  
|                                                                    |  |                       |             |   |                       |  
|                                                                    |  |                       |             |   |                       |  
|REVENUE                                                             |  | $                     | 8,340,831   |   |                       | $
|                                                                    |  |                       |             |   |                       |  
|OPERATING EXPENSES                                                  |  |                       |             |   |                       |  
|Payroll, consulting and professional fees                           |  |                       | 26,640,367  |   |                       |  
|Rent                                                                |  |                       | 672,564     |   |                       |  
|General and administrative                                          |  |                       | 1,382,006   |   |                       |  
|Cost of devices sold                                                |  |                       | 550,000     |   |                       |  
|Depreciation and amortization                                       |  |                       | 179,489     |   |                       |  
|Bad debt expense                                                    |  |                       | 3,229,222   |   |                       |  
|                                                                    |  |                       |             |   |                       |  
|Total operating
    expenses                                        |  |                       | 32,653,648  |   |                       |  
|                                                                    |  |                       |             |   |                       |  
|LOSS BEFORE OTHER INCOME (EXPENSE) AND PREFERRED                    |  |                       | (24,312,817 | ) |                       |  
|STOCK DIVIDENDS                                                     |  |                       |             |   |                       |  
|                                                                    |  |                       |             |   |                       |  
|OTHER INCOME (EXPENSE)                                              |  |                       |             |   |                       |  
|Interest income (expense)                                           |  |                       | (3,075,633  | ) |                       |  
|Impairment of assets                                                |  |                       | -           |   |                       |  
|Gain on change in fair value of
    derivative liability            |  |                       | 3,030,743   |   |                       |  
|                                                                    |  |                       |             |   |                       |  
|Total other income
    (expense)                                    |  |                       | (44,890     | ) |                       |  
|                                                                    |  |                       |             |   |                       |  
|NET (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS                      |  |                       | (24,357,707 | ) |                       |  
|                                                                    |  |                       |             |   |                       |  
|Preferred stock dividends                                           |  |                       | (127,902    | ) |                       |  
|                                                                    |  |                       |             |   |                       |  
|NET (LOSS)                                                          |  | $                     | (24,485,609 | ) |                       | $
|                                                                    |  |                       |             |   |                       |  
|WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
    - BASIC & DILUTED |  |                       | 82,207,894  |   |                       |  
|                                                                    |  |                       |             |   |                       |  
|NET INCOME (LOSS)
    PER SHARE - BASIC & DILUTED                   |  | $                     | (0.16       | ) |                       | $









The accompanying
notes are an integral part of these consolidated financial statements.





32











MILLENNIUM HEALTHCARE
INC.

CONSOLIDATED
STATEMENTS OF CASH FLOWS

FOR THE YEARS
ENDED DECEMBER 31, 2014 AND 2013





|                                                                |  | YEAR ENDED            |             |   | YEAR ENDED            |  
|--------------------------------------------------------------- |  | --------------------- | ----------- | - | --------------------- | -
|                                                                |  | DECEMBER 31,
    2014 |             |   | DECEMBER 31,
    2013 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                           |  |                       |             |   |                       |  
|Net loss                                                        |  | $                     | (24,357,707 | ) |                       | $
|                                                                |  |                       |             |   |                       |  
|Adjustments to reconcile net loss                               |  |                       |             |   |                       |  
|to net cash
    used in operating activities:                   |  |                       |             |   |                       |  
|Depreciation and amortization                                   |  |                       | 172,017     |   |                       |  
|Non-cash interest                                               |  |                       | 718,937     |   |                       |  
|Impairment loss                                                 |  |                       | -           |   |                       |  
|Gain on change in fair value of derivative                      |  |                       | (3,030,743  | ) |                       |  
|Preferred stock dividend                                        |  |                       | 127,902     |   |                       |  
|Amortization of deferred compensation                           |  |                       | 1,335,450   |   |                       |  
|Share-based compensation                                        |  |                       | 22,548,665  |   |                       |  
|Allowance for doubtful accounts                                 |  |                       | 3,000,000   |   |                       |  
|                                                                |  |                       |             |   |                       |  
|Change in operating assets and liabilities:                     |  |                       |             |   |                       |  
|Prepaid expenses                                                |  |                       | (269,492    | ) |                       |  
|Accounts receivable                                             |  |                       | (7,332,220  | ) |                       |  
|Inventory                                                       |  |                       | 720,963     |   |                       |  
|Accounts payable and accrued expenses                           |  |                       | 530,680     |   |                       |  
|Total adjustments                                               |  |                       | 18,522,159  |   |                       |  
|Net cash used
    in operating activities                       |  |                       | (5,835,548  | ) |                       |  
|                                                                |  |                       |             |   |                       |  
|                                                                |  |                       |             |   |                       |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                           |  |                       |             |   |                       |  
|Security deposits                                               |  |                       | (296,332    | ) |                       |  
|Acquisition of fixed assets                                     |  |                       | (835,890    | ) |                       |  
|Net cash used
    in investing activities                       |  |                       | (1,132,222  | ) |                       |  
|                                                                |  |                       |             |   |                       |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                           |  |                       |             |   |                       |  
|Issuance of preferred and common stock for cash (including      |  |                       |             |   |                       |  
|liability for shares to be issued)                              |  |                       | 6,229,500   |   |                       |  
|Preferred dividends paid                                        |  |                       | (101,448    | ) |                       |  
|Proceeds received from notes payable                            |  |                       | 4,188,218   |   |                       |  
|Repayments of notes payable                                     |  |                       | (3,351,420  | ) |                       |  
|Net cash provided
    by financing activities                   |  |                       | 6,964,850   |   |                       |  
|                                                                |  |                       |             |   |                       |  
|NET DECREASE IN CASH AND CASH EQUIVALENTS                       |  |                       | (2,920      | ) |                       |  
|                                                                |  |                       |             |   |                       |  
|CASH AND CASH EQUIVALENTS
    - BEGINNING OF YEAR               |  |                       | 115,645     |   |                       |  
|                                                                |  |                       |             |   |                       |  
|CASH AND CASH EQUIVALENTS
    - END OF YEAR                     |  | $                     | 112,725     |   |                       | $
|                                                                |  |                       |             |   |                       |  
|SUPPLEMENTAL CASH FLOW INFORMATION:                             |  |                       |             |   |                       |  
|Cash paid during the period for:                                |  |                       |             |   |                       |  
|Interest                                                        |  | $                     | -           |   |                       | $
|Taxes                                                           |  | $                     | -           |   |                       | $
|                                                                |  |                       |             |   |                       |  
|NON-CASH SUPPLEMENTAL INFORMATION:                              |  |                       |             |   |                       |  
|Issuance of common stock for liability of stock to be issued    |  | $                     | 3,802,550   |   |                       | $
|Issuance of preferred stock for liability of stock to be issued |  | $                     | 2,269,500   |   |                       | $
|Common stock to be issued for acquisition of intangible asset   |  | $                     | -           |   |                       | $
|Derivative liability issued for debt discount                   |  | $                     | 385,350     |   |                       | $







The accompanying
notes are an integral part of these consolidated financial statements.









33









MILLENNIUM HEALTHCARE
INC.

CONSOLIDATED
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT

FOR THE YEARS
ENDED DECEMBER 31, 2014 and 2013





|                                                                         |  | Series A        |         |  | Series B        |   |    | Series D        |  |  | Series E        |  |  | Series F        |   |  | Series G        |  |          |              |  |   | Additional |  |  |          |          |   |             |   |     |        | 
|------------------------------------------------------------------------ |  | --------------- | ------- |  | --------------- | - | -- | --------------- |  |  | --------------- |  |  | --------------- | - |  | --------------- |  | -------- | ------------ |  | - | ---------- |  |  | -------- | -------- | - | ----------- | - | --- | ------ | 
|                                                                         |  | Preferred Stock |         |  | Preferred Stock |   |    | Preferred Stock |  |  | Preferred Stock |  |  | Preferred Stock |   |  | Preferred Stock |  |          | Common Stock |  |   | Paid-In    |  |  | Deferred |          |   | Accumulated |   |     |        | 
|                                                                         |  | Shares          |         |  | Amount          |   |    | Shares          |  |  | Amount          |  |  | Shares          |   |  | Amount          |  |          | Shares       |  |   | Amount     |  |  | Shares   |          |   | Amount      |   |     | Shares | 
|                                                                         |  |                 |         |  |                 |   |    |                 |  |  |                 |  |  |                 |   |  |                 |  |          |              |  |   |            |  |  |          |          |   |             |   |     |        | 
|Balance - December 31, 2012                                              |  |                 | 100,000 |  |                 |   | 10 |                 |  |  | -               |  |  |                 | - |  |                 |  | 110,000  |              |  |   | 11         |  |  |          | -        |   |             |   | -   |        | 
|                                                                         |  |                 |         |  |                 |   |    |                 |  |  |                 |  |  |                 |   |  |                 |  |          |              |  |   |            |  |  |          |          |   |             |   |     |        | 
|Shares issued for services rendered and liability for stock to be issued |  |                 | -       |  |                 |   | -  |                 |  |  | -               |  |  |                 | - |  |                 |  | -        |              |  |   | -          |  |  |          |          |   |             |   |     |        | 
|                                                                         |  |                 |         |  |                 |   |    |                 |  |  |                 |  |  |                 |   |  |                 |  |          |              |  |   |            |  |  |          |          |   |             |   |     |        | 
|Shares issued under agreements with consultants and employees            |  |                 | -       |  |                 |   | -  |                 |  |  | -               |  |  |                 | - |  |                 |  | -        |              |  |   | -          |  |  |          |          |   |             |   |     |        | 
|                                                                         |  |                 |         |  |                 |   |    |                 |  |  |                 |  |  |                 |   |  |                 |  |          |              |  |   |            |  |  |          |          |   |             |   |     |        | 
|Shares issued for cash                                                   |  |                 |         |  |                 |   |    |                 |  |  |                 |  |  |                 |   |  |                 |  |          |              |  |   |            |  |  |          |          |   |             |   |     |        | 
|                                                                         |  |                 |         |  |                 |   |    |                 |  |  |                 |  |  |                 |   |  |                 |  |          |              |  |   |            |  |  |          |          |   |             |   |     |        | 
|Deferred compensation                                                    |  |                 |         |  |                 |   |    |                 |  |  |                 |  |  |                 |   |  |                 |  |          |              |  |   |            |  |  |          |          |   |             |   |     |        | 
|                                                                         |  |                 |         |  |                 |   |    |                 |  |  |                 |  |  |                 |   |  |                 |  |          |              |  |   |            |  |  |          |          |   |             |   |     |        | 
|Amortization of deferred compensation                                    |  |                 | -       |  |                 |   | -  |                 |  |  | -               |  |  |                 | - |  |                 |  | -        |              |  |   | -          |  |  |          |          |   |             |   |     |        | 
|                                                                         |  |                 |         |  |                 |   |    |                 |  |  |                 |  |  |                 |   |  |                 |  |          |              |  |   |            |  |  |          |          |   |             |   |     |        | 
|Shares issued to founders                                                |  |                 | 400,000 |  |                 |   | 40 |                 |  |  | -               |  |  |                 | - |  |                 |  | -        |              |  |   | -          |  |  |          |          |   |             |   |     |        | 
|                                                                         |  |                 |         |  |                 |   |    |                 |  |  |                 |  |  |                 |   |  |                 |  |          |              |  |   |            |  |  |          |          |   |             |   |     |        | 
|Shares issued of Series D Preferred Stock for accrued dividends          |  |                 | -       |  |                 |   | -  |                 |  |  | -               |  |  |                 | - |  |                 |  | 13,200   |              |  |   | 1          |  |  |          |          |   |             |   |     |        | 
|                                                                         |  |                 |         |  |                 |   |    |                 |  |  |                 |  |  |                 |   |  |                 |  |          |              |  |   |            |  |  |          |          |   |             |   |     |        | 
|Conversion of Series D Preferred Stock for Series E Preferred Stock      |  |                 | -       |  |                 |   | -  |                 |  |  | -               |  |  |                 | - |  |                 |  | (123,200 |              |  |   | (12        |  |  |          | 126,280  |   |             |   | 13  |        | 
|                                                                         |  |                 |         |  |                 |   |    |                 |  |  |                 |  |  |                 |   |  |                 |  |          |              |  |   |            |  |  |          |          |   |             |   |     |        | 
|Shares issued of Series E Preferred Stock for accrued dividends          |  |                 |         |  |                 |   |    |                 |  |  |                 |  |  |                 |   |  |                 |  |          |              |  |   |            |  |  |          | 3,384    |   |             |   | -   |        | 
|                                                                         |  |                 |         |  |                 |   |    |                 |  |  |                 |  |  |                 |   |  |                 |  |          |              |  |   |            |  |  |          |          |   |             |   |     |        | 
|Net loss for the year ended December 31, 2013                            |  |                 |         |  |                 |   | -  |                 |  |  | -               |  |  |                 | - |  |                 |  | -        |              |  |   | -          |  |  |          |          |   |             |   |     |        | 
|                                                                         |  |                 |         |  |                 |   |    |                 |  |  |                 |  |  |                 |   |  |                 |  |          |              |  |   |            |  |  |          |          |   |             |   |     |        | 
|Balance - December 31, 2013                                              |  |                 | 500,000 |  |                 | $ | 50 |                 |  |  | -               |  |  | $               | - |  |                 |  | -        |              |  | $ | -          |  |  |          | 129,664  |   |             | $ | 13  |        | 
|                                                                         |  |                 |         |  |                 |   |    |                 |  |  |                 |  |  |                 |   |  |                 |  |          |              |  |   |            |  |  |          |          |   |             |   |     |        | 
|Shares issued for services rendered and liability for stock to be issued |  |                 | -       |  |                 |   | -  |                 |  |  | -               |  |  |                 | - |  |                 |  | -        |              |  |   | -          |  |  |          |          |   |             |   |     |        | 
|                                                                         |  |                 |         |  |                 |   |    |                 |  |  |                 |  |  |                 |   |  |                 |  |          |              |  |   |            |  |  |          |          |   |             |   |     |        | 
|Shares issued under agreements with consultants and employees            |  |                 | -       |  |                 |   | -  |                 |  |  | -               |  |  |                 | - |  |                 |  | -        |              |  |   | -          |  |  |          |          |   |             |   |     |        | 
|                                                                         |  |                 |         |  |                 |   |    |                 |  |  |                 |  |  |                 |   |  |                 |  |          |              |  |   |            |  |  |          |          |   |             |   |     |        | 
|Shares issued for cash                                                   |  |                 |         |  |                 |   |    |                 |  |  |                 |  |  |                 |   |  |                 |  |          |              |  |   |            |  |  |          |          |   |             |   |     |        | 
|                                                                         |  |                 |         |  |                 |   |    |                 |  |  |                 |  |  |                 |   |  |                 |  |          |              |  |   |            |  |  |          |          |   |             |   |     |        | 
|Deferred compensation                                                    |  |                 |         |  |                 |   |    |                 |  |  |                 |  |  |                 |   |  |                 |  |          |              |  |   |            |  |  |          |          |   |             |   |     |        | 
|                                                                         |  |                 |         |  |                 |   |    |                 |  |  |                 |  |  |                 |   |  |                 |  |          |              |  |   |            |  |  |          |          |   |             |   |     |        | 
|Amortization of deferred compensation                                    |  |                 | -       |  |                 |   | -  |                 |  |  | -               |  |  |                 | - |  |                 |  | -        |              |  |   | -          |  |  |          |          |   |             |   |     |        | 
|                                                                         |  |                 |         |  |                 |   |    |                 |  |  |                 |  |  |                 |   |  |                 |  |          |              |  |   |            |  |  |          |          |   |             |   |     |        | 
|Shares issued to founders                                                |  |                 | 100,000 |  |                 |   | 10 |                 |  |  | -               |  |  |                 | - |  |                 |  | -        |              |  |   | -          |  |  |          |          |   |             |   |     |        | 
|                                                                         |  |                 |         |  |                 |   |    |                 |  |  |                 |  |  |                 |   |  |                 |  |          |              |  |   |            |  |  |          |          |   |             |   |     |        | 
|Shares issued in settlements                                             |  |                 | -       |  |                 |   | -  |                 |  |  | -               |  |  |                 | - |  |                 |  | 0        |              |  |   | 0          |  |  |          |          |   |             |   |     |        | 
|                                                                         |  |                 |         |  |                 |   |    |                 |  |  |                 |  |  |                 |   |  |                 |  |          |              |  |   |            |  |  |          |          |   |             |   |     |        | 
|Conversion/settlement of Series E Preferred Stock                        |  |                 | -       |  |                 |   | -  |                 |  |  | -               |  |  |                 | - |  |                 |  | 0        |              |  |   | 0          |  |  |          | (132,258 | ) |             |   | (13 | )      | 
|                                                                         |  |                 |         |  |                 |   |    |                 |  |  |                 |  |  |                 |   |  |                 |  |          |              |  |   |            |  |  |          |          |   |             |   |     |        | 
|Shares issued of Series E Preferred Stock for accrued dividends          |  |                 |         |  |                 |   |    |                 |  |  |                 |  |  |                 |   |  |                 |  |          |              |  |   |            |  |  |          | 2,594    |   |             |   | 0   |        | 
|                                                                         |  |                 |         |  |                 |   |    |                 |  |  |                 |  |  |                 |   |  |                 |  |          |              |  |   |            |  |  |          |          |   |             |   |     |        | 
|Shares issued for note extensions                                        |  |                 |         |  |                 |   |    |                 |  |  |                 |  |  |                 |   |  |                 |  |          |              |  |   |            |  |  |          |          |   |             |   |     |        | 
|                                                                         |  |                 |         |  |                 |   |    |                 |  |  |                 |  |  |                 |   |  |                 |  |          |              |  |   |            |  |  |          |          |   |             |   |     |        | 
|Issuance of warrants for services                                        |  |                 |         |  |                 |   |    |                 |  |  |                 |  |  |                 |   |  |                 |  |          |              |  |   |            |  |  |          |          |   |             |   |     |        | 
|                                                                         |  |                 |         |  |                 |   |    |                 |  |  |                 |  |  |                 |   |  |                 |  |          |              |  |   |            |  |  |          |          |   |             |   |     |        | 
|Net loss for the year ended December 31, 2014                            |  |                 |         |  |                 |   | -  |                 |  |  | -               |  |  |                 | - |  |                 |  | -        |              |  |   | -          |  |  |          |          |   |             |   |     |        | 
|                                                                         |  |                 |         |  |                 |   |    |                 |  |  |                 |  |  |                 |   |  |                 |  |          |              |  |   |            |  |  |          |          |   |             |   |     |        | 
|Balance - December 31, 2014                                              |  |                 | 600,000 |  |                 | $ | 60 |                 |  |  | 0               |  |  | $               | 0 |  |                 |  | 0        |              |  | $ | 0          |  |  |          | 0        |   |             | $ | 0   |        | 







34









MILLENNIUM HEALTHCARE
INC.

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

DECEMBER 31, 2014
AND 2013





|NOTE 1- | ORGANIZATION
    AND BUSINESS DESCRIPTION
|------- | -----------------------------------------



Millennium Healthcare Inc. (the
“Company”), was formed in the State of Delaware on July 28, 1994 as Kirlin Holding Corp., changed its name to Zen
Holding Corp. in July, 2008 and to Millennium Healthcare, Inc. on June 16, 2011.



The Company launched its medical
equipment and device business in 2013. In connection therewith the Company has entered into various agreements to become the nationwide
distributor for various medical devices mainly focused on preventative and diagnostic testing and care including an oral diagnostic
biopsy test, a heart health test and assessment device, and a medical testing device in the area of breast cancer.



The Company also provides physician
practice administration and support with a current focus on physician practices specializing in cardiovascular and vascular procedures
and provides support and services specializing in medical procedure billing and collections, medical procedure coding, call and
message management, and emergency dispatch.



Going Concern



These consolidated financial statements
are presented on the basis that the Company will continue as a going concern which contemplates the realization of assets and
satisfaction of liabilities in the normal course of business. The Company has incurred operating losses for the past several years,
has a working capital deficiency of $2,923,247 and a stockholders’ deficit of $2,390,368 as of December 31, 2014. These
conditions, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The financial
statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.



|NOTE 2- | SUMMARY
    OF SIGNIFICANT ACCOUNTING POLICIES
|------- | ----------------------------------------------



Principles of Consolidation



The consolidated financial statements
include the accounts of the Company and its subsidiaries, all of which are wholly owned. All significant intercompany accounts
and transactions have been eliminated in consolidation.



Use of Estimates



The preparation of consolidated
financial statements in conformity with accounting principles generally accepted in the United States of America requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets
and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.





35









MILLENNIUM
HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013





Cash



The Company considers all highly
liquid debt instruments and other short-term investments with maturity of three months or less, when purchased, to be cash equivalents.



The Company maintains cash and
cash equivalent balances at financial institutions that are insured by the Federal Deposit Insurance Corporation.



Fixed Assets



Fixed assets are stated at cost,
less accumulated depreciation. Depreciation is provided using the straight-line method over the estimated useful lives of the
related assets. Costs of maintenance and repairs will be charged to expense as incurred. Costs for renewals and betterments are
capitalized. Gains or losses upon sale or retirement due to obsolescence are reflected in the operating results in the period
the event occurs.



Accounts Receivable and
Allowance for Doubtful Accounts



Accounts receivable are stated
at the amounts management expects to collect from outstanding balances. Management provides for probable uncollectible amounts
through a charge to earnings and a credit to a valuation allowance based on its assessment of the current status of individual
accounts. Balances outstanding after management has used collection efforts are written off through a charge to bad debt expense.



Inventory



Inventories, consisting of finished
medical devices purchased for resale, are valued at the lower of cost or market determined on the first in first out method.



Impairment of Long-Lived
Assets



Long-lived assets, primarily fixed assets, are reviewed
for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable.
The Company performs a periodic assessment of assets for impairment in the absence of such information or indicators. Conditions
that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant
change in the extent or manner in which an asset is used, or a significant adverse change that would indicate that the carrying
amount of an asset or group of assets is not recoverable. For long-lived assets to be held and used, the Company recognizes an
impairment loss only if its carrying amount is not recoverable through its undiscounted cash flows and measures the impairment
loss based on the difference between the carrying amount and estimated fair value.





36









MILLENNIUM
HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013





In December 2013, management decided to initiate a
strategic change in the business operations of the Company. In connection therewith, management decided to focus its future efforts
on the development of its medical device distribution business and to phase out its existing businesses.



As a result, the Company has impaired its goodwill,
other net intangible assets and certain fixed assets aggregating $4,046,826 which were acquired in acquisitions consummated in
2011.



Convertible Instruments



The Company reviews the terms
of convertible debt and equity securities for indications requiring bifurcation, and separate accounting, for the embedded conversion
feature. Generally, embedded conversion features where the ability to physical or net-share settle the conversion option is not
within the control of the Company are bifurcated and accounted for as a derivative financial instrument. (See Derivative Financial
Instruments below). Bifurcation of the embedded derivative instrument requires allocation of the proceeds first to the fair value
of the embedded derivative instrument with the residual allocated to the debt instrument. The resulting discount to the face value
of the debt instrument is amortized through periodic charges to interest expense using the Effective Interest Method.



Derivative Financial Instruments



The Company generally does not
use derivative financial instruments to hedge exposures to cash-flow or market risks. However, certain other financial instruments,
such as warrants or options to acquire common stock and the embedded conversion features of debt and preferred instruments that
are indexed to the Company’s common stock, are classified as liabilities when either (a) the holder possesses rights to
net-cash settlement or (b) physical or net share settlement is not within the control of the Company. In such instances, net-cash
settlement is assumed for financial accounting and reporting, even when the terms of the underlying contracts do not provide for
net-cash settlement. Such financial instruments are initially recorded at fair value and subsequently adjusted to fair value at
the close of each reporting period.





37









MILLENNIUM
HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013



Income Taxes



Deferred income taxes are determined
using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company’s
assets and liabilities. Deferred income taxes are measured based on the tax rates expected to be in effect when the temporary
differences are included in the Company’s tax return. Deferred tax assets and liabilities are recognized based on anticipated
future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and
their respective tax bases. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight
of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will
not be realized.



The Company follows ASC 740-10,
“Accounting for Uncertainty in Income Taxes” (“ASC 740-10”). This interpretation requires recognition
and measurement of uncertain income tax positions using a “more-likely-than-not” approach.



The Company has performed a review
of its material tax positions. During the years ended December 31, 2014 and 2013, the Company did not recognize any amounts for
interest and penalties with respect to any unrecognized tax benefits.





Revenue Recognition





Sales of medical devises are recognized when persuasive
evidence of an arrangement exists, delivery has occurred or services have been rendered, the buyer is fixed or determinable, and
collectability is reasonable assured. Healthcare support, management and administration services rendered to healthcare centers
and physician practices are recognized when the services have been rendered.



Loss Per Share of Common
Stock



Basic net income (loss) per common
share is computed using the weighted average number of common shares outstanding. Diluted loss per share (EPS) include additional
dilution from common stock equivalents, such as convertible notes, preferred stock, stock issuable pursuant to the exercise of
stock options and warrants. Common stock equivalents are not included in the computation of diluted earnings per share when the
Company reports a loss because to do so would be anti-dilutive for periods presented.





38









MILLENNIUM
HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013





Goodwill



Goodwill and Other Intangible
Assets—Under ASC No. 350, “Intangibles—Goodwill and Other” (“ASC 350”), goodwill and indefinite
lived intangible assets are not amortized but are reviewed annually for impairment, or more frequently, if impairment indicators
arise. Intangible assets that have finite lives are amortized over their estimated useful lives and are subject to the provisions
of ASC No. 360, “Property, Plant and Equipment” (“ASC 360”).



Goodwill impairment is tested
at least annually or when factors indicate potential impairment using a two-step process that begins with an estimation of the
fair value of each reporting unit. Step 1 is a screen for potential impairment pursuant to which the estimated fair value of each
reporting unit is compared to its carrying value. The Company estimates the fair values of each reporting unit by a combination
of (i) estimation of the discounted cash flows of each of the reporting units based on projected earnings in the future (the income
approach) and (ii) a comparative analysis of revenue and margins multiples of public companies in similar markets (the market
approach). If there is a deficiency (the estimated fair value of a reporting unit is less than its carrying value), a Step 2 test
is required.



The Company evaluates the goodwill
attributable to each of the reporting units in accordance with ASC 350-20-35-36 and ASC 350-20-35-41. (see note )



Stock-Based
Compensation



The Company accounts for stock
based compensation in accordance with the provisions of ASC 718-10 “Share Based Payments”



The Company recognizes these compensation
costs, net of an estimated forfeiture rate, on a pro rata basis over the requisite service period of each vesting tranche of each
award. The Company considers voluntary termination behavior as well as trends of actual option forfeitures when estimating the
forfeiture rate.



The Company measures compensation expense for its non-employee
stock-based compensation under ASC 505-50, “Accounting for Equity Instruments that are Issued to Other Than Employees
for Acquiring, or in Conjunction with Selling, Goods or Services”.



Rental Expense



Rental expense is accounted for on the straight line
method. Deferred rent payable represents the excess of rent charged to operations over the actual rents paid of $527,000 and $66,000,
and is included in accounts payable and accrued expenses in the accompanying December 31, 2014 and 2013, balance sheets, respectively.





39









MILLENNIUM
HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013



Segment Information



The Company follows the provisions
of ASC 280-10, “Disclosures about Segments of an Enterprise and Related Information”. This standard requires
that companies disclose operating segments based on the manner in which management disaggregates the Company in making internal
operating decisions. As of December 31, 2014 and for the years ended December 31, 2014 and 2013, the Company operated in three
segments as well as separately identifying the corporate overhead costs. The segments are as follows: Coding – this includes
the coding, billing and telecommunications services of the Company; Vascular – this includes all vascular physician practice
administration and support services; and Devices – this includes all services related to the medical device and equipment
segment.



The Company’s chief financial
officer reviews financial information presented on an entity level basis accompanied by disaggregated information about revenues
by product type and certain information about geographic regions where appropriate for purposes of making operating decisions
and assessing financial performance.



|December 31, 2014     |  | Coding |       |  | Device |   |           | Vascular |  |   | Corporate |  |  | Total |           
|--------------------- |  | ------ | ----- |  | ------ | - | --------- | -------- |  | - | --------- |  |  | ----- | ----------
|                      |  |        |       |  |        |   |           |          |  |   |           |  |  |       |           
|Revenues              |  | $      | 3,596 |  |        | $ | 6,299,660 |          |  | $ | 2,037,575 |  |  | $     | -         
|Operating Expenses    |  |        | 3,773 |  |        |   | 3,214,329 |          |  |   | 2,406,878 |  |  |       | 27,028,668
|Other (Income) Loss   |  |        | -     |  |        |   | -         |          |  |   | -         |  |  |       | 44,890    
|                      |  |        |       |  |        |   |           |          |  |   |           |  |  |       |           
|Assets                |  |        |       |  |        |   |           |          |  |   |           |  |  |       |           
|Fixed Assets          |  | $      | -     |  |        | $ | 739,974   |          |  | $ | 10,440    |  |  | $     | 39,536    
|Intangible
    Assets |  |        | -     |  |        |   | -         |          |  |   | 54,833    |  |  |       | -         





40









MILLENNIUM
HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013



|December
    31, 2013 |  | Coding |         |  | Device |   |         | Vascular |  |   | Corporate |  |  | Total |           
|--------------------- |  | ------ | ------- |  | ------ | - | ------- | -------- |  | - | --------- |  |  | ----- | ----------
|                      |  |        |         |  |        |   |         |          |  |   |           |  |  |       |           
|Revenues              |  | $      | 169,487 |  |        | $ | -       |          |  | $ | 1,817,825 |  |  | $     | -         
|                      |  |        |         |  |        |   |         |          |  |   |           |  |  |       |           
|Operating Expenses    |  |        | 576,064 |  |        |   | 129,983 |          |  |   | 2,258,248 |  |  |       | 11,539,595
|Impairment Loss       |  |        |         |  |        |   |         |          |  |   |           |  |  |       | 4,046,826 
|Other (Income) Loss   |  |        | -       |  |        |   |         |          |  |   | 3,368     |  |  |       | (107,109  
|                      |  |        |         |  |        |   |         |          |  |   |           |  |  |       |           
|Assets                |  |        |         |  |        |   |         |          |  |   |           |  |  |       |           
|Fixed Assets          |  | $      | -       |  |        | $ | -       |          |  | $ | 35,693    |  |  | $     | 62,967    
|Intangible Assets     |  |        | 82,250  |  |        |   | -       |          |  |   | -         |  |  |       | -         
|                      |  |        |         |  |        |   |         |          |  |   |           |  |  |       |           
|Total Assets          |  | $      | 82,250  |  |        | $ | -       |          |  | $ | 35,693    |  |  | $     | 62,967    



Generally, any item not related
to one of our other segments would generally be included in the Corporate Column. This includes corporate overhead costs such
as consulting fees, legal fees, and other professional fees including all common stock issued for services; and interest expenses,
including all fair value measurements of warrants and fair value adjustments related to our derivative liability that have been
charged to interest. The Company has determined it would be more appropriate to include a corporate column rather than develop
an allocation to our other divisions as the Company has not determined allocation percentages.



Reclassifications



Certain amounts included in the
December 31, 2013 balance sheet have been reclassified to conform to 2014 presentation.



Recently Issued Accounting Standards



The Financial Accounting Standards
Board and the Securities Exchange commission have issued certain accounting standards updates and regulations that will become
effective in subsequent periods. Management does not believe that any of those updates would have significantly affected the Company’s
financial accounting measures or disclosures had they been in effect in 2014 and 2013, and it does not believe that any of those
pronouncements will have a significant impact on the Company’s consolidated financial statements at the time they become
effective.



|NOTE 3- | FIXED
    ASSETS
|------- | ----------------



Fixed assets as of December 31,
2014 and 2013 were as follows:





41







MILLENNIUM
HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013



|                               |  | Estimated Useful |  |              |           |  |              |  
|------------------------------ |  | ---------------- |  | ------------ | --------- |  | ------------ | -
|                               |  | Lives (Years)    |  | December 31, |           |  | December 31, |  
|                               |  |                  |  | 2014         |           |  | 2013         |  
|Computer equipment             |  | 5                |  | $            | 53,422    |  |              | $
|Vaso scan equipment            |  |                  |  |              | 798,601   |  |              |  
|Software                       |  | 3                |  |              | 34,180    |  |              |  
|Telephone                      |  | 5                |  |              | 1,400     |  |              |  
|Furniture and fixtures         |  | 5                |  |              | 125,565   |  |              |  
|                               |  |                  |  |              | 1,013,168 |  |              |  
|Less: accumulated depreciation |  |                  |  |              | 223,218   |  |              |  
|Fixed assets, net              |  |                  |  | $            | 789,950   |  |              | $



Depreciation expense charged to
operations was $172,017 and $144,656 for the years ended December 31, 2014 and 2013, respectively.



|NOTE 4- | INTANGIBLE
    ASSETS (exclusive of goodwill)
|------- | ---------------------------------------------



Intangible assets as of December
31, 2014 and 2013 were as follows:



|                                      |  | Estimated  Useful |  | December 31, |         |   | December 31, |  
|------------------------------------- |  | ----------------- |  | ------------ | ------- | - | ------------ | -
|                                      |  | Lives (Years)     |  | 2014         |         |   | 2013         |  
|Website                               |  | 3                 |  | $            | -       |   |              | $
|Patents                               |  | 10                |  |              | -       |   |              |  
|Customer Lists                        |  | 3                 |  |              | 82,250  |   |              |  
|                                      |  |                   |  |              | 82,250  |   |              |  
|Less: accumulated amortization        |  |                   |  |              | (27,417 | ) |              |  
|Less: accumulated impairment,
    net |  |                   |  |              | -       |   |              |  
|Intangible assets, net                |  |                   |  | $            | 54,833  |   |              | $



Amortization expense charged to
operations was $27,417 and $625,698 for the years ended December 31, 2014 and 2013, respectively.





|NOTE 5- | ACQUISITION
|------- | -----------



Effective November 4, 2013, the
Company’s acquired the call answering service accounts of Bellringer Communications Inc. (“Bellringer”) for
an aggregate consideration of $82,500 payable $17,500 in cash and the issuance of 175,000 shares of common stock to be issued.
Based on the fair values at the effective date of acquisition the purchase price was allocated to customer lists and is being
amortized over its estimated useful life of five years.



Unaudited proforma results of
operations for all periods presented as if the acquisition of Bellringer had been consummated as of the beginning of each period
presented are not presented as the effects on the financial statements would not be material.





42







MILLENNIUM
HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013



|NOTE 6- | PREFERRED
    STOCK - SERIES E, SERIES F AND SERIES G
|------- | -----------------------------------------------------



On June 1, 2013, the Company amended
the certificate of designation to authorize a Series E Preferred Stock. The Series E Preferred Stock is convertible without consideration
into 65 shares of common stock for each preferred share at any time after June 1, 2014 and convert automatically on May 31, 2018,
as well as providing for an annual dividend of $0.80 per share per year. Concurrent with the designation of the Series E Preferred
Stock, the Company exchanged the 126,280 shares of Series D Preferred Stock into Series E Preferred Stock. Additionally, the Company
accrued dividends on the Series E Preferred Stock. The Company issued 3,384 additional shares of Series E Preferred Stock to holders
as payment of $33,843 in accrued dividends during the year. Accrued dividends through December 31, 2013 were $25,936. In February
2014, the Company issued 2,594 shares of Series E Preferred Stock to holders as payment of the $25,936 in accrued dividends through
December 31, 2013. Accrued dividends for the Series E Preferred Stock through September 30, 2014 were $26,452. In November 2014,
the Company entered into a series of settlement agreements with all holders of the Series E Preferred Stock. As a result, a final
dividend payment of $75,000 was made, 8,596,770 common shares were issued in conversion and 5,000,000 common shares were issued
in settlement. There are no Series E Preferred shares issued or outstanding nor any dividends accrued or payable at December 31,
2014.



The Company raised $1,950,000
under a private placement during 2013 and $1,050,000 through March 31, 2014 for a total of $3,000,000 raised for this private
placement. As a result, 3,000,000 shares of Series F were to be issued, in which 550,000 shares were issued during 2013 and 2,450,000
shares valued at $1,356,500 were recorded as a liability for stock to be issued. This private placement is closed and will have
no future participation.



The Company raised $4,920,000
under a private placement during 2014. As a result, 4,920 shares of Series G are to be issued, which were valued at $1,747,300
and recorded as a liability for stock to be issued.





43







MILLENNIUM
HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013



|NOTE 7- | NOTES
    PAYABLE
|------- | -----------------



Demand Notes



One of the notes, original amount
borrowed of $111,000 bears interest at the rate of 18% per annum. The Company repaid $81,000 of this note through December 31,
2013. The entire balance due of $30,000 is reflected in the current portion of notes payable. This demand note has been fully
repaid and satisfied January 2014.



The Company borrowed $210,000
from an entity at various times during 2012. The notes, which do not bear interest, are short-term in nature and are to be repaid
upon future financings. The Company was to issue shares of common stock to the lender until the notes were fully repaid, however
the parties agreed to have repayment done upon completion of a larger funding to the Company. The Company issued 30,000 shares
of common stock to pay $42,000 (value of $1.40 per share) of interest for the remaining outstanding balance due for the life of
the notes. In addition, the Company repaid $80,000 during 2012. The remaining balance outstanding as of September 30, 2014 is
$130,000. These notes are in settlement negotiations at September 30, 2014 and have been settled and fully satisfied October 2014.



The Company borrowed an aggregate
of $107,500 from an individual during 2013 which bears interest at 5% per annum. This demand note has been fully repaid and satisfied
February 2014.



The Company borrowed $76,000 from
various entities during 2013 which bear interest at 5% per annum. These demand notes have been fully repaid and satisfied February
2014.



Promissory
Notes



The Company entered into a $375,000
Promissory Note with an unrelated third party on September 24, 2012. The note was scheduled to mature September 24, 2013 and bears
interest at the rate of 12% per annum. The Company, in accordance with the payment schedule, was to make two payments of interest
only and then ten payments of $39,593 including interest with the final payment being made on September 24, 2013.



The Company made the two required
interest payments in October and November 2012, however, the first payment of $39,593 to be made in December 2012 was not made
until February 2013, and no further payments have been made. As a result of the Company’s non-payment of the monthly amount
in a timely fashion, a default was triggered. The default interest rate is 18% per annum which is charged from the default date
through June 6, 2013, the date in which the default was cured when the Company paid the entire overdue amount and the note holder
issued notice that the Company was current.





44







MILLENNIUM
HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013



In addition, at the time the note
was considered to be in default, the promissory note became a convertible note into common stock at a price equal to: (i) the
conversion amount divided by (ii) 85% of the lowest daily volume weighted average price of the Company’s common stock during
the five trading days immediately prior to the conversion date. In accordance with the agreements, the Company had previously
recognized a beneficial conversion feature of $137,478 as of December 31, 2012, which was reduced to $102,941 as of March 31,
2013, and reduced to $0 as of June 30, 2013.



As stated, the Company cured the
default on June 6, 2013 with a payment of $99,829, of which $10,672 represented past due and accrued interest, and $89,157 represented
principal. The payment brought the Promissory Note balance to $250,000, which was the balance due at June 30, 2013. Additionally,
the Company entered into a Replacement, Amended and Restated Promissory Note (“Amended Note”) with the holder for
the $250,000 on July 9, 2013. This Amended Note matures on December 15, 2013, and reflects revised payment terms, and an interest
rate at 12% per annum, along with default rates should the Company have an event that results in an event of default under this
Amended Note. The $10,672 payment of interest represented the full interest due and no interest is accrued as of June 30, 2013.
Interest will commence again effective July 9, 2013 when the Amended Note is in effect.



Concurrent with the Amended Note,
the Company issued to the noteholder 415,800 shares of common stock as part of the settlement resulting in the Amended Note. The
value of the stock at July 9, 2013 was $0.50 per share or $207,900. This note has been settled and fully satisfied April 2014.



The Company borrowed an aggregate
of $375,000 from unrelated third parties during 2013 which bear interest at 10% to 18.2% per annum. These promissory notes have
been fully repaid and satisfied February 2014.



The Company entered into a short
term $200,000 Promissory Note on September 18, 2014. The note is scheduled to mature with the completion of the Company’s
next round of financing under certain terms. Interest on the note is fixed and stated at 20,000 shares of the Company’s
restricted common stock.



In October 2014, the Company entered
into a short term $250,000 Promissory Note with an individual. The note has a maturity of 30 days and interest on the note is
fixed at 175,000 shares of common stock. During October 2014, the Company made a $40,000 payment on the note for an extension
of the note’s maturity.





45









MILLENNIUM
HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013



In October 2014, the Company entered
into a short term $450,000 Promissory Note with an individual. The note has a maturity of 60 days and interest on the note is
fixed at 300,000 shares of common stock. In December 2014 the Company made a $250,000 payment on the note.



In October 2014, the Company entered
into a short term $40,000 Promissory Note with an individual. The note has a maturity of one year and interest on the note is
fixed at 10% per annum.



In October 2014, the Company negotiated
and completed a settlement and full satisfaction of certain promissory and demand notes. The settlements included the issuance
of 4,600,000 shares of common stock during September 2014 and payments of $450,000 during October 2014.



In December 2014, the Company
entered into a short term $205,000 Promissory Note with an entity. The note has a maturity of one year and interest on the note
is fixed at 10% per annum.



In December 2014, the Company
issued promissory note with a principal amount of $350,000 with 350,000 shares of Common Stock pursuant to a private placement. 
The note matures in 36 months and interest on the note is fixed at 12% and provides for regularly scheduled interest payments
which shall be made quarterly in arrears.  In addition, the Company agreed to pay to the placement agent a fee of 10% of
the aggregate purchase price received by the Company and a warrant equal to 10% of the aggregate number of shares issued in the
offering. The Company accrued fees of $35,000 and 35,000 warrants to the placement agent during 2014.



Promissory Notes - Convertible



The Company and an entity entered
into a convertible promissory note on February 7, 2014 for $353,000. The note has a term of six months and accrues interest at
18% per annum. At any time during the term, the holder may convert the outstanding balance into common shares at a fixed conversion
price of $1.00 per share. On August 11, 2014, the Company issued the note holder 125,000 shares and 75,000 warrants for an extension
of the note’s maturity date to August 25, 2014. On September 9, 2014, the Company issued the note holder 495,000 shares
for the relinquishment of the warrant and an extension of the note’s maturity date to September 17, 2014. This convertible
promissory note has been fully repaid and satisfied September 2014.



The Company and an entity entered
into a convertible promissory note on November 10, 2014 for $440,000. The note has a term of six months and accrues interest at
18% per annum. At any time during the term, the holder may convert the outstanding balance into common shares at a fixed conversion
price of $1.00 per share.





46









MILLENNIUM
HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013



The Company and an entity entered
into a convertible promissory note on November 10, 2014 for $660,000. The note has a term of six months and accrues interest at
18% per annum. At any time during the term, the holder may convert the outstanding balance into common shares at a fixed conversion
price of $1.00 per share.







Promissory
Notes – Original Issue Discounts



During the year ended December
31, 2013 the Company entered into various agreements pursuant to which it borrowed an aggregate of $1,681,500, net of original
issue discounts. In connection therewith, the Company issued 1,565,000 series A warrants and 1,565,000 series B warrants, both
of which have a five year term. The Company valued each component separately and considered the warrants a derivative liability
since they contained rachet provisions. As a result, the Company recognized a full discount in which such amount will be amortized
over the life of the notes.



Original Issue Discount Promissory
Notes have been fully repaid and satisfied as they became due between January and May 2014.



Assigned non-interest bearing
notes aggregate $250,000. These notes have been settled and fully satisfied October 2014.



Other short term notes outstanding
aggregate $55,000. These notes have been settled and fully satisfied October 2014.



Promissory
Notes – Original Issue Discount Convertible





During 2014, The Company issued
original issue discount convertible notes (the “OID Notes”) with an aggregate principal amount of $1,235,218 with
warrants to acquire up to 823,530 shares of Common Stock at $1.00 per share as described below.  The OID Notes mature in
13 months and were issued at an original issue discount of $185,283.  No regularly scheduled interest payments shall
be made on the OID Notes.  The OID Notes may be converted by the investors into the Company’s common stock at the lower
of (i) $0.75 or (ii) 80% of the per share price of the Company’s equity securities sold in a future public offering. 
The warrants give each investor, for five years from the date of issuance, the right to purchase the Company’s common stock
at (i) $1.00 or (ii) 80% the lowest per share price of the Company’s common stock sold by the Company in any future public
offering, during the period that the investor’s OID Note is outstanding. The OID Notes and related warrants contain
anti-dilution provisions. In addition, the Company agreed to pay to the placement agent a fee of 10% of the gross proceeds received
by the Company and a warrant equal to 10% of the aggregate number of shares issuable upon conversion of the Notes at an exercise
price equal to 110% of the warrant exercise price. The Company paid fees of $104,935 in cash and 164,706 warrants to the placement
agent during 2014.





47







MILLENNIUM
HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013



Preferred
Stock



The Company has amended their
certificates of designation to authorize the issuance of 6 separate series’ of preferred stock.





December 31, 2014



|PreferredStock |  | Authorized Date  |  | IssueDate     |  | Number of Shares |         |  | ParValue |   |       | Conversion to Common Stock
|-------------- |  | ---------------- |  | ------------- |  | ---------------- | ------- |  | -------- | - | ----- | --------------------------
|Series “A" (1) |  | June 14, 2011    |  | June 2011     |  |                  | 600,000 |  |          | $ | .0001 |                           
|Series “B" (2) |  | October 2011     |  | October 2011  |  |                  | 0       |  |          | $ | .0001 |                           
|Series “D” (3) |  | March 30, 2012   |  | April 2012    |  |                  | 0       |  |          | $ | .0001 |                           
|Series “E” (4) |  | June 1, 2013     |  | June 2013     |  |                  | 0       |  |          | $ | .0001 |                           
|Series “F” (5) |  | December 2, 2013 |  | December 2013 |  |                  | 550,000 |  |          | $ | .0001 |                           
|Series “G” (6) |  | March 7, 2014    |  | March 2014    |  |                  | 0       |  |          | $ | .0001 |                           



(1) Issued 100,000 shares to the principal owners
of Millennium Healthcare Solutions Inc. upon acquisition of the net assets of that company; and issued 500,000 to the officers
of Millennium Healthcare Inc.

(2) Issued to an unrelated third party in conversion
of the Line of Credit. There are no shares issued as of December 31, 2014.

(3) Issued to an unrelated third party in conversion
of the Series B Preferred Stock and additional funds provided. There are no shares issued as of December 31, 2014.

(4) Issued to an unrelated third party in conversion
of the Series D Preferred Stock. Settlement and conversion completed with all shareholders. There are no shares issued as of December
31, 2014.

(5) Issued to investors as part of a private offering.

(6) Issued to investors as part of a private offering.





48







MILLENNIUM
HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013



On December 19, 2013, the Company
increased their authorized preferred stock from 5,000,000 shares to 15,000,000 shares.



Series A Preferred Stock. These
shares are non-convertible, and have super voting rights of 200 to 1 versus the Common Stock. In June 2011, 100,000 shares of
Series A Preferred Stock were issued to the principal owners of Millennium Healthcare Solutions Inc. upon the acquisition of the
net assets of that company. In January 2012, the Company issued 100,000 shares, in December 2013, the Company issued 300,000 shares
and in July 2014 the Company issued 100,000 shares of Series A Preferred Stock to senior management of the Company. Each share
of this preferred has 200 votes in matters where shareholder votes are required. These shares are not convertible and are not
transferable and, accordingly, management has attributed a nominal value to these shares.



There were zero shares of Series
B Preferred Stock issued and outstanding at December 31, 2013. These had a value of $415,000 ($1.50 per share), which represented
the proceeds received. In addition, there was $185,000 of proceeds received in 2011 that were recorded as a liability for preferred
stock to be issued. These were to be in the form of Series C Preferred Stock which was to be convertible into common stock anytime
after January 1, 2013 at the rate of 30 common shares for each preferred share (Series C).



The Series C Preferred Stock was
never designated, and the Company further filed a Certificate of Designation for Series D Preferred Stock.



From the period January 1, 2012
through March 31, 2012, the party invested an additional $477,500. Those proceeds along with the accrued interest of $22,500 on
what was to be the issued Series C Preferred Stock, which ended up as liability for Preferred Stock to be issued, now brings the
total invested proceeds to $1,100,000. As a result of the additional proceeds, the Company amended the certificate of designation
to authorize a Series D Preferred Stock.



The Series D Preferred Stock has
the same terms of what was to be the Series C Preferred Stock, and the Company issued 110,000 shares of the Series D Preferred
Stock on March 30, 2012. Additionally, the $185,000 liability for preferred stock to be issued was also satisfied upon the issuance
of the Series D Preferred Stock.



The only addition was that for
each Series D Preferred Share, the Company issued a detachable cashless warrant that will give the holder the right to purchase
on a cashless basis 30 common shares (a total of 3,300,000 common stock warrants) at $0.50 per preferred share expiring in 2 years
(April 1, 2014). The warrant has been valued at $3,825,000 and recorded as additional paid in capital. In addition, the Company
is to pay a quarterly dividend in the amount of $33,000 ($0.30 per share per quarter) commencing April 1, 2012. No dividends had
been paid through March 31, 2013, therefore the Company accrued $132,000 as of March 31, 2013. Dividends can be paid in the form
of additional shares of Series D Preferred Stock or cash. In April 2013, the Company issued 13,200 shares of Series D Preferred
Stock as payment for accrued dividends of $132,000 (through March 31, 2013). These accrued dividends have been paid through the
issuance of 13,200 shares of Series D Preferred Stock in April 2013. In addition, 3,080 shares of Series D Preferred Stock were
issued as payment for accrued dividends for April and May 2013 of $24,640. The total of 126,280 shares of Series D Preferred Stock
was exchanged for 126,280 shares of Series E Preferred Stock.





49







MILLENNIUM
HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013



The Series D Preferred Stock was
redeemable at $11.50 per share at any time after September 1, 2012 by either party provided the Company has achieved any one of
the following: a) accumulated pre-tax profits in excess of $2,000,000 on or after April 1, 2012; b) Company raising in excess
of $2,000,000 equity capital on a cumulative basis on or after April 1, 2012; and c) Company reporting quarterly revenue in any
quarter on or after April 1, 2012 in excess of $5,000,000. None of these conditions had been satisfied through the period ended
May 31, 2013, just prior to the cancellation of these shares and re-issuance as Series E Preferred Stock.



On June 1, 2013, the Company amended
the certificate of designation to authorize a Series E Preferred Stock. The Series E Preferred Stock is convertible into 65 shares
of common stock for each preferred share at any time after June 1, 2014 and convert automatically on May 31, 2018, as well as
providing for an annual dividend of $0.80 per share per year. Concurrent with the designation of the Series E Preferred Stock,
the Company exchanged the 126,280 shares of Series D Preferred Stock into Series E Preferred Stock. The Company issued 3,384 additional
shares of Series E Preferred Stock to holders as payment of $33,843 in accrued dividends during the year. Accrued dividends through
December 31, 2013 were $25,936. In February 2014, the Company issued 2,594 shares of Series E Preferred Stock to holders as payment
of the $25,936 in accrued dividends through December 31, 2013. Accrued dividends for the Series E Preferred Stock through September
30, 2014 were $26,452.



The Series E Preferred Stock has
a stated value at $10.00 per share and rank: (i) junior to the Company’s Series A Preferred Stock, and any class or series
of capital stock created after June 1, 2013 created specifically ranking by its terms senior to the Series E Preferred Stock;
(ii) senior to all of the Company’s common stock; (iii) senior to any class or series of capital stock created after June
1, 2013 that does not specifically rank by its terms senior to or on parity with the Series E Preferred Stock; and (iv) on parity
with any class or series of capital stock of the Company specifically ranking by its terms on parity with the Series E Preferred
Stock in each case as to distributions of assets upon liquidation, dissolution or winding up of the Company, whether voluntary
or involuntary.





50







MILLENNIUM
HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013



During November 2014, the Company
entered into a series of settlement agreements with all holders of the Series E Preferred Stock. As a result, a final dividend
payment of $75,000 was made, 8,596,770 common shares were issued in conversion and 5,000,000 common shares were issued in settlement.
There are no Series E Preferred shares issued or outstanding nor any dividends accrued or payable at December 31, 2014.



The Company amended its certificate
of designation in December 2013 to authorize a Series F Preferred Stock (“Series F”) which provides for a quarterly
dividend of 10% of the Company's earnings before interest, taxes, depreciation and amortization ("EBITDA") and is payable
on a quarterly basis, beginning after two quarters following the issue date. Holders are not entitled to receive any dividend
from the Company after they have received an aggregate of $1.20 per share. Once holders receive an aggregate of $1.20 for each
share held, all Series F shall expire and/or be redeemable for $1.



Series F is: (i) junior to any
class or series of capital stock of the Company specifically ranking by its terms senior to any Series F Preferred Stock of whatever
subdivision; (ii) prior to any class or series of capital stock of the Company hereafter created not specifically ranking by its
terms senior to or on parity with any Series F of whatever subdivision; and (iii) on parity with any class or series of capital
stock of the Company hereafter created specifically ranking by its terms on parity with the Series F Preferred Stock in each case
as to distributions of assets upon liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary.



The Company sold 1,950,000 units
and raised $1,950,000 under a private placement during 2013. The Company sold 1,050,000 units and raised $1,050,000 through March
31, 2014 for a total of 3,000,000 units sold and $3,000,000 raised for this private placement. Each unit consisted of one share
of common stock and one share of Series F. As a result, 3,000,000 shares of Series F were to be issued, in which 550,000 shares
were issued during 2013 and 2,450,000 shares valued at $1,356,500 were recorded as a liability for stock to be issued. Due to
the redeemable nature of the Series F, the unit price was allocated between the Common stock and Series F and the Series F is
recorded as a preferred stock liability in the accompanying consolidated financial statements for the Series F shares that have
been issued. This private placement is closed and will have no future participation.



In March 2014, the Company amended
the certificate of designation to authorize a Series G Preferred Stock. During the six months ended June 30, 2014, the Company
sold 1,175 units for $1,000 per unit. Each unit consisted of 1,000 shares of common stock and 1 share of Series G preferred stock.
Holders of Series G Preferred Stock shall be entitled to receive, along with the Series F Holders, an aggregate quarterly dividend
of 10% of the Corporation’s earnings before interest, taxes depreciation and amortization (“EBITDA”) computed
under the generally accepted accounting principles (“GAAP”). For purposes of allocating the 10% dividend proportionally
to the Series F and G Preferred Holders, G Preferred Shares will be weighted and valued at 1,000 times that of Series F. Dividends
on Series G Preferred Stock shall be payable on a quarterly basis, beginning after two quarters following the original issue date
(“Issuance Date”). Holders Series G Preferred Stock shall not be entitled to receive any dividend from the Corporation
once they have received an aggregate of $1,200 for every share of Series G Preferred Stock they hold. As of June 30, 2014, no
shares of Series G Preferred stock have been issued and any proceeds received are included in preferred stock to be issued.





51







MILLENNIUM
HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013



Series G Preferred Stock shall
rank: (i) junior to any class or series of capital stock of the Corporation specifically ranking by its terms senior to any Series
G Preferred Stock of whatever subdivision (collectively, “Senior Securities”); (ii) prior to any class or series of
capital stock of the Corporation hereafter created not specifically ranking by its terms senior to or on parity with any Series
G Preferred Stock of whatever subdivision (collectively, “Junior Securities”); and (iii) on parity with any class
or series of capital stock of the Corporation hereafter created specifically ranking by its terms on parity with the Series G
Preferred Stock (“Parity Securities”) in each case as to distributions of assets upon liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary (all such distributions being referred to collectively as “Distributions”).



The Company sold 4,920 units and
raised $4,920,000 under a private placement through December 31, 2014. Each unit for this private placement consisted of one thousand
shares of common stock and one share of Series G. As a result, 4,920 shares of Series G were to be issued, were valued at $1,747.300
and recorded as a liability for stock to be issued.



Common Stock



The Company issued 36,225,000
shares of common stock for consulting and other services during the twelve months ended December 31, 2014.



The Company issued 4,600,000 shares
of common stock for settlement and full satisfaction of promissory and demand notes during the nine months ended December 31,
2014.





52







MILLENNIUM
HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013



The Company issued 13,596,770
shares of common stock for settlement and full conversion of Series E preferred shares during the twelve months ended December
31, 2014.



The Company issued 3,250,000 shares
of common stock for settlement and full cancellation of certain warrants during the twelve months ended December 31, 2014.



The Company issued 620,000 shares
of common stock for maturity extensions of a convertible promissory note during the twelve months ended December 31, 2014.



The Company raised $7,920,000
under private placements through December 31, 2014. As a result, 7,920,000 shares of common stock were to be issued, in which
550,000 shares were issued during 2013, 7,300,000 shares were issued during 2014 and 70,000 shares valued at $25,900 were recorded
as a liability for stock to be issued.



Warrants



During the years ended December
31, 2012 and 2013, the Company issued 9,760,000 warrants at exercise prices ranging from $.50 to $1.00 per share. During the twelve
months ending December 31, 2014, the Company settled and cancelled 5,800,000 warrants at exercise prices ranging from $.50 to
$1.00 per share. During the twelve months ending December 31, 2014, the Company issued 17,723,236 warrants at exercise prices
ranging from $.13 to $3.00 per share. All of the warrants are vested and remain outstanding. The warrants have a weighted average
price of $.58.



Consultant warrants provided for
services to be rendered over a one-year period of time. The Company issued 200,000 consultant warrants during 2013 and 1,700,000
consultant warrants during 2014. Such warrants vest evenly over a one-year period by month. The Company has recorded this as a
prepaid expense and will amortize through the conclusion of the contract.



The Company issued 823,530 warrants
at an exercise price of $1.00 per share to certain convertible note holders. The Company agreed to pay the placement agent a commission
of warrants equal to 10% of the aggregate number of shares issuable upon conversion of these convertible notes at an exercise
price equal to 110% of the warrant exercise price. The Company issued 164,706 warrants to the placement agent during 2014.



The Company authorized and approved
12,000,000 warrants, with an exercise price of $0.25, for its executive officers.





53







MILLENNIUM
HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013



The Company agreed to pay the
placement agent of a private placement a fee of warrants equal to 10% of the aggregate number of shares issued in the offering.
The Company issued 35,000 warrants to the placement agent during 2014.



The Company entered into a warrant
settlement and exchange agreement with an existing warrant holder. As a result, the Company issued 3,000,000 warrants with an
exercise price of $.16 and cancelled 2,000,000 warrants with exercise prices ranging from $.50 to $1.00 during 2014.



The Company entered into a release
agreement with a note and warrant holder. As a result, the Company cancelled 500,000 warrants with exercise prices ranging from
$.50 to $1.00 during 2014.



The Company entered into
a settlement agreement with a warrant holder. As a result, the Company cancelled 3,300,000 warrants with exercise price of $.50
during 2014.



The Company used the black-scholes
method to value the warrants, with the following inputs: volatility 344.72%; quarterly dividend percentage 0%; and discount rate
of 0.95%.



|NOTE 8- | INCOME TAXES
|------- | ------------



The reconciliation of income tax
benefit at the U.S. statutory rate of 34% for the years ended December 31, 2014 and 2013 to the Company’s effective tax
rate is as follows:



|                                         |  | Years
     Ended      |      
|---------------------------------------- |  | --------------------- | -----
|                                         |  | December
    31, 2014 |      
|                                         |  |                       |      
|U.S. federal statutory rate              |  |                       | -34.0
|State income tax, net of federal benefit |  |                       | -6.0 
|Permanent differences                    |  |                       | -0.8 
|Change in valuation allowance            |  |                       | 40.8 
|Income Tax provision (benefit)           |  |                       | 0.0  



The benefit for income tax is
summarized as follows:



|                               |  | Years
    Ended       |           
|------------------------------ |  | --------------------- | ----------
|                               |  | December
    31, 2014 |           
|                               |  |                       |           
|Federal:                       |  |                       |           
|Current                        |  | $                     | (7,573,000
|Deferred                       |  |                       | (1,450,000
|State:                         |  |                       |           
|Current                        |  |                       | -         
|Deferred                       |  |                       |           
|Change in valuation allowance  |  |                       | 9,023,000 
|Income Tax provision (benefit) |  | $                     | -0-       





54







MILLENNIUM
HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013



The tax effects of temporary differences
that give rise to the Company’s net deferred tax liability as of December 31, 2014 and December 31, 2013 are as follows:



|                                    |  |                       |           
|----------------------------------- |  | --------------------- | ----------
|                                    |  | December
    31, 2014 |           
|                                    |  |                       |           
|Deferred Tax Assets                 |  |                       |           
|Net
    operating losses            |  | $                     | 15,599,000
|                                    |  |                       |           
|Deferred Tax Liabilities            |  |                       |           
|Impairment                          |  | $                     | 1,618,000 
|Allowance for
    doubtful accounts |  |                       | 1,200,000 
|                                    |  |                       | 2,818,000 
|                                    |  |                       |           
|Net deferred tax asset              |  |                       | 12,781,000
|Less: Valuation
    allowance       |  |                       | 12,781,000
|                                    |  | $                     | -         



As of December 31, 2014 and 2013,
the Company had approximately $49,000,000 of federal and state net operating loss carryovers (“NOLs”) which begin
to expire in 2030. Utilization of the NOLs may be subject to limitation under the Internal Revenue Code Section 382 should there
be a greater than 50% ownership change as determined under regulations.



In assessing the realization of
deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets
will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during
the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax
liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the assessment, management
has established a full valuation allowance against the entire deferred tax asset relating to NOLs for every period because it
is more likely than not that all of the deferred tax asset will not be realized.





55







MILLENNIUM
HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013



The Company files U.S. federal
and state of New York tax returns that are subject to audit by tax authorities beginning with the year ended December 31, 2011.
The Company’s policy is to classify assessments, if any, for tax and related interest and penalties as tax expense.



|NOTE 9- | FAIR
    VALUE MEASUREMENTS
|------- | ---------------------------



The Company adopted certain provisions
of ASC Topic 820. ASC 820 defines fair value, provides a consistent framework for measuring fair value under generally accepted
accounting principles and expands fair value financial statement disclosure requirements. ASC 820’s valuation techniques
are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while
unobservable inputs reflect our market assumptions. ASC 820 classifies these inputs into the following hierarchy:



Level 1 inputs: Quoted prices
for identical instruments in active markets.



Level 2 inputs: Quoted prices
for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active;
and model-derived valuations whose inputs are observable or whose significant value drivers are observable.



Level 3 inputs: Instruments with
primarily unobservable value drivers.



The following table represents
the fair value hierarchy for those financial assets and liabilities measured at fair value on a recurring basis as of December
31, 2014:



|                                                     |  | Level
    1 |         |  | Level
    2 |   |   | Level
    3 |  |   | Total     | 
|---------------------------------------------------- |  | ----------- | ------- |  | ----------- | - | - | ----------- |  | - | --------- | 
|                                                     |  |             |         |  |             |   |   |             |  |   |           | 
|Cash                                                 |  | $           | 112,725 |  |             | $ | - |             |  | $ | -         | 
|                                                     |  |             |         |  |             |   |   |             |  |   |           | 
|Total assets                                         |  | $           | 112,725 |  |             | $ | - |             |  | $ | -         | 
|                                                     |  |             |         |  |             |   |   |             |  |   |           | 
|Notes payable, net of debt discount and OID          |  | $           | -       |  |             | $ | - |             |  | $ | 3,212,836 | 
|                                                     |  |             |         |  |             |   |   |             |  |   |           | 
|Embedded conversion feature and derivative liability |  | $           | -       |  |             | $ | - |             |  | $ | 1,061,476 | 
|                                                     |  |             |         |  |             |   |   |             |  |   |           | 
|Total liabilities                                    |  | $           | -       |  |             | $ | - |             |  | $ | 4,274,312 | 





56







MILLENNIUM
HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013



The following table represents
the fair value hierarchy for those financial assets and liabilities measured at fair value on a recurring basis as of December
31, 2013:



|                                                     |  | Level
    1 |         |  | Level
    2 |   |   | Level
    3 |  |   | Total     | 
|---------------------------------------------------- |  | ----------- | ------- |  | ----------- | - | - | ----------- |  | - | --------- | 
|                                                     |  |             |         |  |             |   |   |             |  |   |           | 
|Cash                                                 |  | $           | 115,645 |  |             | $ | - |             |  | $ | -         | 
|                                                     |  |             |         |  |             |   |   |             |  |   |           | 
|Total assets                                         |  | $           | 115,645 |  |             | $ | - |             |  | $ | -         | 
|                                                     |  |             |         |  |             |   |   |             |  |   |           | 
|Notes payable, net of debt discount and OID          |  | $           | -       |  |             | $ | - |             |  | $ | 2,227,735 | 
|                                                     |  |             |         |  |             |   |   |             |  |   |           | 
|Embedded conversion feature and derivative liability |  | $           | -       |  |             | $ | - |             |  | $ | 1,877,547 | 
|                                                     |  |             |         |  |             |   |   |             |  |   |           | 
|Total liabilities                                    |  | $           | -       |  |             | $ | - |             |  | $ | 4,105,282 | 





|                                                                            |  | Year 
    Ended 
    December 31, |           |  | Year 
    Ended 
    December 31, |  
|--------------------------------------------------------------------------- |  | --------------------------------- | --------- |  | --------------------------------- | -
|                                                                            |  | 2014                              |           |  | 2013                              |  
|                                                                            |  |                                   |           |  |                                   |  
|Total gain/(loss) from revaluation
    of derivatives included in earnings: |  | $                                 | 3,030,743 |  |                                   | $



The carrying amounts of our short and long term credit obligations approximate fair value because the effective yields on these
obligations, which include contractual interest rates taken together with other features such as concurrent issuances of warrants
and/or embedded conversion options, are comparable to rates of returns for instruments of similar credit risk.



We calculated the fair value of
the embedded conversion feature and derivative liability using the Black-Scholes option-pricing model with the following assumptions:
Fair value of stock $0.14; exercise price $0.16 to $1.00; risk free interest rate 0.95%, term of 5 years; volatility rate of 344.72%;
dividend yield of 0%.





57







MILLENNIUM
HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013



The following tables provide reconciliations
of beginning and ending balances at December 31, 2014 and December 31, 2013:



|                                                    |  | Fair
    Value Measurements Using Significant Unobservable Inputs (Level 3) |           
|--------------------------------------------------- |  | --------------------------------------------------------------------------- | ----------
|                                                    |  | Notes
    Payable                                                           |           
|                                                    |  |                                                                             |           
|December 31, 2014                                   |  |                                                                             |           
|                                                    |  |                                                                             |           
|Beginning balance                                   |  |                                                                             | 2,227,735 
|Transfers into Level 3                              |  |                                                                             | -         
|Transfers out of Level 3                            |  |                                                                             | -         
|Total gains or losses                               |  |                                                                             | -         
|included in earnings                                |  |                                                                             | 718,937   
|included in other comprehensive
    income          |  |                                                                             | -         
|Purchases, issuances, sales, and
    settlements    |  |                                                                             | -         
|Purchases                                           |  |                                                                             | -         
|Issuances                                           |  |                                                                             | 3,617,584 
|Sales                                               |  |                                                                             | -         
|Settlements                                         |  |                                                                             | (3,351,420
|Ending balance                                      |  |                                                                             | 3,212,836 
|                                                    |  |                                                                             |           
|December 31, 2013                                   |  |                                                                             |           
|                                                    |  |                                                                             |           
|Beginning balance                                   |  |                                                                             | 397,404   
|Transfers into Level 3                              |  |                                                                             | 201,000   
|Transfers out of Level 3                            |  |                                                                             | -         
|Total gains or losses                               |  |                                                                             | -         
|included in earnings (or changes
    in net assets) |  |                                                                             | -         
|included in other comprehensive
    income          |  |                                                                             | -         
|Purchases, issuances, sales, and
    settlements    |  |                                                                             | -         
|Purchases                                           |  |                                                                             | -         
|Issuances                                           |  |                                                                             | 2,213,267 
|Sales                                               |  |                                                                             | -         
|Settlements                                         |  |                                                                             | (583,936  
|Ending balance                                      |  |                                                                             | 2,227,735 





|NOTE 10- | COMMITMENTS
|-------- | -----------





In April 2014, the Company entered
into a five year two month lease agreement in New York City, New York for executive offices of the Company, which requires an
annual payment of approximately $283,000 for the first year and increases 3% per year subsequent thereto. In addition, the Company
must pay any increases in real estate taxes over the base year, as defined. Rent commenced July 1, 2014 and the Company paid a
security deposit of $259,402.





58







MILLENNIUM
HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013



In April 2014, the Company entered
into a five year lease agreement in Boynton Beach, Florida for the development of a new 30,000 square foot facility which
will be used to manage inventory and distribution for the Company’s regional operations and house local management and training
facilities. The lease provides for first year rent of approximately $103,000 plus operating expenses of approximately $98,000
plus annual increases. Rent commenced May 13, 2014 and the Company paid a security deposit of $36,099.



The Company is obligated under
non-cancelable operating leases which expire through December 31, 2023. The aggregate future obligations under these leases are
as follows:





|2015       |  | $ | 873,000 | 
|---------- |  | - | ------- | 
|           |  |   |         | 
|2016       |  | $ | 873,000 | 
|           |  |   |         | 
|2017       |  | $ | 852,000 | 
|           |  |   |         | 
|2018       |  | $ | 806,000 | 
|           |  |   |         | 
|2019       |  | $ | 461,000 | 
|           |  |   |         | 
|Thereafter |  | $ | 642,000 | 





Rental expense charged to operations
aggregated $672,565 and $281,500 for the twelve months ended December 31, 2014 and 2013, respectively.



Rental expense is accounted for
on the straight-line method.



The excess of recognized rent
expense over scheduled lease payments is included in accounts payable and accrued expenses.



Employment Agreements



The Company has entered into employment
agreements and has amended employment agreements with additional and existing key management individuals in 2014. The Company
has issued stock bonuses which vest over a one to three-year period to certain individuals. The unvested portion is reflected
as deferred compensation, with the vested portion expensed as stock based compensation.











59







MILLENNIUM
HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013



| | NOTE 11- | CREDIT
                                         RISK AND OTHER CONCENTRATIONS
| | -------- | -----------------------------------------------------------------------------



Financial instruments which potentially
subject the Company to concentrations of credit risk consist principally of cash, cash equivalents and trade receivables. The
Company places its cash with high credit quality financial institutions. At times, such cash and cash equivalents may exceed the
FDIC insured limit of $250,000.



Accounts receivable, net of allowance,
from two customers were $4,775,507, which accounted for approximately 92% of the total receivables at December 31, 2014 and from
two customers were $826,829, which accounted for approximately 96% of the total receivables at December 31, 2013.



Revenue from one customer was
$5,794,212, and from another was $1,800,000, which accounted for approximately 69% and 22% of the total revenues respectively
for the twelve months ended December 31, 2014 and revenue from one customer was $900,000 and from another was $900,000, which
accounted for approximately 45% and 45% of the total revenues respectively for the twelve months ended December 31, 2013.





| | NOTE 12- | RELATED
                                         PARTY TRANSACTIONS
| | -------- | -------------------------------------------------------------------



Commencing in the year ended December
31, 2013 the Company retained an entity wholly owned by Elizabeth Sartorio, the spouse of the Chief Executive Officer of the Company,
to furnish support and administrative type consulting services and an entity wholly owned by Kristine Urbano, the spouse of the
Chief Financial Officer of the Company, to furnish bookkeeping/accounting support and administrative type consulting services.
For the year ending December 31, 2014 consulting expenses related to these services were $150,000 and $37,500, respectively.



| | NOTE 13- | CONTINGENCIES
| | -------- | -------------



On August 11, 2014, as previously
disclosed, LMARK Holding LLC (“LMARK”) and Cypress Drive Partners LLC (“Cypress”) (“Cypress and
LMARK are collectively referred to as the “Members”) filed a summons’s and complaint in the United States District
Court Eastern District of New York against the Company (the “Federal Action”). The complaint (among other allegations)
alleges that the Members sought to convert their respective Series E Preferred Shares and the Company refused to honor their requests.
The complaint asks that the court order the Company to issue 1,950,000 unrestricted shares of its common stock to the Members.
The Complaint asserts claims for breach of contract and alleges that the Members were injured in an amount to be determined at
trial but not less than $1,000,000. The Company denies these allegations.



On November 13, 2014, the Company,
Cypress and LMARK entered into a Settlement Agreement. Pursuant to the Settlement Agreement, on or before November 20, 2014, the
Company shall issue: 812,500 shares of unrestricted common stock to Cypress in full conversion of their 12,500 Series E Preferred
Shares, (ii) 1,137,500 unrestricted shares of common stock to LMARK in full conversion of their 17,500 Series E Preferred Shares,
(iii) 416,000 restricted shares of common stock to LMARK and (iv) 584,000 restricted shares of common stock to Cypress. The parties
agreed to promptly file a Stipulation of Voluntary Dismissal with Prejudice of the Federal Action. The Company received a release
(subject to the terms of the Settlement Agreement) from Cypress and LMARK including with respect to the claims in the Federal
Action and the Company gave Cypress and LMARK a release (subject to the terms of the Settlement Agreement).





60







MILLENNIUM
HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013



On August 12, 2014, as previously
disclosed, Aquafina Design LLC whose purported members are Cypress and LMARK, filed a summons and complaint with the Supreme Court
of the State of New York, county of Nassau (the “Aquafina Action”) asserting that it provided the Company with certain
loans, and was issued (among other securities) 110,000 detachable warrants, with each warrant giving it the right to purchase
30 common shares, for a total of 3,300,000 common shares.  The complaint further asserts that Aquafina exercised all of its
warrants on a cashless basis on March 5, 2014 and was entitled to receive 1,312,048 unrestricted common shares and that the Company
has not issued such shares.  The complaint seeks compensatory damages for breach of contract in favor of Aquafina in an amount
to be determined at trial, but not less than $1,088,990.  The Company denies these allegations.



On November 13, 2014, the Company
and Aquafina entered into a Settlement Agreement. Pursuant to the Settlement Agreement, the Company agreed to issue 2,000,000
restricted shares of common stock on or before November 20, 2014, in full satisfaction of any and all issues set forth in the
Settlement Agreement, including but not limited to any claims for cashless warrants or a preferred offering. The Company also
received a release from Aquafina pursuant to which Aquafina released all claims set forth in the Aquafina Action (subject to the
terms of the Settlement Agreement) and the parties agreed to promptly file a Stipulation of Discontinuance with Prejudice of the
Aquafina Action. Pursuant to the Settlement Agreement the Company also gave Aquafina a release (subject to the terms of the Settlement
Agreement).



|NOTE 14- | SUBSEQUENT
    EVENTS
|-------- | ---------------------



Common Stock



In January 2015, the Company issued
2,000,000 shares of common stock for consulting services.





In February 2015, the Company
issued 500,000 shares of common stock for consulting services.





61







MILLENNIUM
HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013



In February 2015, the Company
issued 70,000 shares of common stock as a result of a private placement. These shares were previously recorded as a liability
for common stock to be issued.



In March 2015, the Company entered
into satisfaction, exchange and release agreements with a certain Series F Preferred Stock holders, in which the holders exchanged
shares held of the Company’s Series F Preferred Stock for shares of the Company’s common stock totaling 240,000 shares.



In March 2015, the Company issued
3,000,000 shares of common stock for consulting services.



In March 2015, the Company committed
to certain actions to amend its Certificate of Incorporation to increase the number of authorized shares of common stock of the
Company, par value $0.0001 per share from 200,000,000 shares to 350,000,000 shares.



Preferred Stock



In March 2015, the Company issued
400,000 shares of Series A Preferred Stock to senior management of the Company. Each share of this series preferred has 200 votes
in matters where shareholder votes are required. These shares are not convertible and are not transferable and, accordingly, management
has attributed a nominal value to these shares.



In March 2015, the Company filed
an amendment to its Designation, Number, Voting Powers, Preferences and Rights of Series A Preferred Stock. With this amendment,
the holders of Series A Preferred Stock vote together as a single class with common stock holders and any other class or series
of shares entitled to vote with the common stock, with the holders of the Series A Preferred Stock being entitled to fifty-one
percent (51%) of the total votes on all such matters regardless of the actual number of shares of Series A Preferred Stock then
outstanding, and the holders of common stock and any other shares entitled to vote being entitled to their proportional share
of the remaining 49% of the total votes based on their respective voting power.



During February and March 2015,
the Company entered into satisfaction, exchange and release agreements with certain Series F and Series G Preferred Stock holders,
in which the holders exchanged shares held of the Company’s Series F or Series G Preferred Stock for shares of the Company’s
common stock.





62







MILLENNIUM
HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013



Warrants



In April 2015, the Company authorized
and approved the issuance of 106,200,000 shares of the Company’s common stock in exchange for 1,560,000 warrants as a result
of satisfaction agreements and releases with certain warrant holders. These shares shall be issued upon full and complete execution
of the satisfaction agreements and releases with these certain warrant holders.



In April 2015, the Company authorized
and approved 60,000,000 warrants at an exercise price of $0.025 for its executive officers and employees.



Promissory
Notes



In January 2015, the Company entered
into a $220,000 Promissory Note with an individual. The note has a maturity of one year and interest on the note is fixed at 10%
per annum.



In January 2015, the Company entered
into Promissory Notes totaling $300,000 as a result of private placements. These notes mature in 36 months and interest on the
note is fixed at 12% and provides for regularly scheduled interest payments which shall be made quarterly in arrears.  In
addition, the Company agreed to pay to the placement agent a fee of 10% of the aggregate purchase price received by the Company.



In February 2015, the Company
entered into a $119,030 Promissory Note with an individual. The note has a maturity of one year and interest on the note is fixed
at 10% per annum.



In February 2015, the Company
entered into Promissory Notes totaling $142,000 as a result of private placements. These notes mature in 36 months and interest
on the note is fixed at 12% and provides for regularly scheduled interest payments which shall be made quarterly in arrears. 
In addition, the Company agreed to pay to the placement agent a fee of 10% of the aggregate purchase price received by the Company
and a warrant equal to 10% of the aggregate number of shares issued in the offering.



Employment Agreement



In January 2015 the Company entered
into an employment agreement with a key management individual. The Company is to issue a stock bonus which vests over a three-year
period. The unvested portion will be reflected as deferred compensation, with the vested portion expensed as stock based compensation.





63







MILLENNIUM
HEALTHCARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2014 AND 2013





Commitments



One of the Company’s subsidiaries
received an executed purchase order to purchase certain products during December 2014. As a direct result of limited capitalization
and funds availability for the procurement of sufficient inventory, this purchase order commitment has not been recorded nor reflected
in revenues or related receivables for that period.



In March 2015, the Company, in
executing a more virtual model, has vacated its Boynton Beach, Florida warehouse and storage facility and relocated to a state
of the art, third party warehousing, inventory and logistics facility located in Miami, Florida. This new location will be used
to provide and manage complete inventory, logistics and distribution for the Company’s regional operations.



In March 2015, the Company, in
executing a more virtual model, has vacated its Garden City, New York offices and is currently relocating to a state of the art,
true virtual office environment within Long Island, New York. This new location will be used to provide executive, management
and administrative offices for the Company’s regional operations.







64







|Item 9. | Changes in and Disagreements With Accountants
    on Accounting and Financial Disclosure
|------- | ----------------------------------------------------------------------------------------



None.



|Item 9A. | Controls and Procedures
|-------- | -----------------------



Our independent accounting
firm has not, nor is required, to perform any procedures to assess the effectiveness of management remediation efforts.



Evaluation of Disclosure Controls and
Procedures.



Our Principal Executive Officer and Principal
Financial Officer evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by
this report. Based on that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure
controls and procedures as of the end of the period covered by this report were not effective such that the information required
to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time
periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our Principal Executive Officer
and Principal Financial Officer, as appropriate to allow timely decisions regarding disclosure. The Company is growing and currently
lacks documented procedures including documentation related to testing of processes, data validation procedures from the systems
into the general ledger, testing of systems, validation of results, disclosure review, and other analytics. Furthermore, the Company
lacked sufficient personnel to properly segregate duties. A controls system cannot provide absolute assurance, however, that the
objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within a company have been detected.



Management’s
Report on Internal Control Over Financial Reporting  .



Our management is responsible for establishing
and maintaining adequate internal control over financial reporting for our company. Internal control over financial reporting
is defined in Exchange Act Rules 13a-15(f) and 15(d) -15(f) as a process designed by, or under the supervision of, our Chief Executive
and Chief Financial Officer and effected by our board of directors, management, and other personnel to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles and includes those policies and procedures that:



| |  ̈ | pertain to the maintenance of records that in reasonable detail
    accurately and fairly reflect the transactions and disposition of our assets;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------



| |  ̈ | provide reasonable assurance that transactions are recorded as
    necessary to permit preparation of financial statements in accordance with generally accepted accounting principles;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  ̈ | provide reasonable assurance that our receipts and expenditures
    are being made only in accordance with authorization of our management and directors; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  ̈ | provide reasonable assurance regarding prevention or timely detection
    of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Because of inherent limitations, internal
controls over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future
periods are subject to the risks that controls may become inadequate because of changes in conditions or that the degree of compliance
with the policies or procedures may deteriorate.



Our management conducted an evaluation
of the effectiveness of our internal control  over financial reporting as of December 31, 2013 and identified a material
weakness in internal control over financial reporting as of that date. A material weakness is a deficiency, or combination of
deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement
of the annual or interim financial statement will not be prevented or detected on a timely basis. In making this assessment, we
used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway  Commission (COSO), in Internal
Control-Integrated Framework. Because of the material weakness described below, management concluded that, as of December 31,
2013, our internal control over financial reporting was not effective .





65







Changes in Internal Controls.



There were no changes
in our internal controls over financial reporting during the fiscal year ended December 31, 2014, that have materially affected,
or are reasonably likely to materially affect, our internal control over financial reporting.



|Item 9B. | Other Information
|-------- | -----------------



None.



66







PART III





|Item 10. | Directors, Executive Officers and Corporate
    Governance
|-------- | ----------------------------------------------------------



Directors and officers



As of April 10, 2015, the executive officers
and directors of the Company were as follows:



|Name                 |  | Date of Appointment |  | Positions                           
|-------------------- |  | ------------------- |  | ------------------------------------
|Dominick Sartorio    |  | June 7, 2011        |  | Chief Executive Officer, Chairman   
|Christopher Amandola |  | June 8, 2011        |  | President and Director              
|Anthony Urbano       |  | June 6, 2011        |  | Chief Financial Officer and Director
|David Perry          |  | April 8, 2014       |  | Chief Operating Officer and Director
|Marc Pergament       |  | August 13, 2012     |  | Director                            



Biographies



The following are brief biographies of the officers and directors:



Dominick Sartorio, Age 49, from
2011 to Present served as Chief Executive Officer of Millennium Healthcare Inc. From 2010 to 2011 Mr. Sartorio served as Chief
executive Officer of Millennium Healthcare Solutions Inc. From 2008 until 2010 Mr. Sartorio served as Director of New Business
for a Wall Street management consulting firm creating and implementing initiatives for client companies’ worth up to $550
million in annual sales. During this tenure, Mr. Sartorio was placed as acting CEO of a global technology firm, directing the
research and development process, patent approval, product launch, and the negotiation of sales agreements. Prior, Mr. Sartorio
co-founded a manufacturing and distribution company maintaining global reach in numerous industries such as medical, chemical
and emerging technology markets. Mr. Sartorio has attended the Bachelor of Sciences Program at Farmingdale University. He also
has earned an Associates in Electronic Engineering from The Wilson Technological Institute and holds various Certificates in Strategic
Sales and Marketing.



Christopher Amandola , Age 43 has
more than 15 years of professional sales, sales management, senior management and entrepreneurial experience in the medical device
arena. From 2011 to Present Mr. Amandola has served as President of Millennium Health Care Inc. From 2010 to 2011, Mr. Amandola
served as President at Millennium Health Care Solutions Inc. Prior to joining Millennium Health Care Solutions, Mr. Amandola held
territory sales management positions at Smith & Nephew Inc. from 2009 to 2010  Prior, Mr. Amandola has held positions
at medical device companies including C.R. Bard Inc., Boston Scientific Corporation and Edwards Lice Sciences Inc. Mr. Amandola
has experience and extensive knowledge in fields of Peripheral Vascular, Coronary, Gastroenterology, Wound Care and Infection
Control. Mr. Amandola has earned a Bachelor of Arts degree from Western Connecticut State University.



Anthony Urbano , Age 45, has over
18 years of forensic and financial accounting, finance, administration, operational, sales/marketing budgets and projections,
advisory and managerial experience in entrepreneurial and high-growth companies. His experience comes from a variety of industries
including, manufacturing, distribution, small cap/start-ups, financial markets and financial data reporting, automotive, technology
and media/entertainment. From 2011 to Present, Mr. Urbano has served as Chief Financial Officer for Millennium Healthcare Inc.
From 2010 to 2011 Mr. Urbano has served as Chief Financial Officer for Millennium Healthcare Solutions Inc. Mr. Urbano has served
as Managing Partner for a private management consulting firm specializing in creating and implementing capital raises, refinancing,
restructuring and turnaround initiatives from 2008 to 2010. Prior, Mr. Urbano led the finance and administration initiatives for
a highly successful manufacturing and distribution company maintaining a global presence in numerous industries such as medical,
chemical and emerging technology markets. Mr. Urbano has provided strong executive leadership for companies including the management
and direction of cash/profitability forecasting activities, budgeting, implementation of financial reporting structures, financial
analyses, evaluation and recommendations of company information systems, sales and marketing initiatives, audit support, infrastructures,
traditional and alternative financing, information technology, cost and debt reduction initiatives, restructuring and strategic
planning. Mr. Urbano also has extensive experience in managing reporting, compliance and issue resolutions for government and
regulatory bodies. He also has executed the planning, design and implementation of complete human resource/employee benefit and
retirement initiatives, information technology infrastructures and corporate/commercial risk management. Mr. Urbano has earned
a Bachelor of Science degree, Magna Cum Laude, from St. John’s University – College of Business Administration.



David Perry, Age 50,has
over twenty years of success within the medical device arena. Starting with large corporations like Johnson& Johnson Inc.,
Pfizer Medical Technology Inc., and Boston Scientific Inc, Mr. Perry decided to bring his wealth of corporate sales experience
to the start up world. He made significant contributions in executing the sale of Fox Hollow Technologies to EV3 Inc, the sale
of Microvention to Terumo Inc., and bringing Cardiovascular Systems Inc. to the public market. His vast experience in sales, marketing,
and management with the medical device field has translated well in assisting Millennium Health Care in all divisions. From 2012
to Present, Mr. Perry served as President of Millennium Vascular Management Group Inc. From 2009 to 2012, Mr. Perry served as
Senior Sales Representative at Angioscore. Mr. Perry served as Executive Sales Representative for Cardiovascular Systems Inc.
from 2007 to 2009. Mr. Perry has earned a Bachelor of Arts degree from the University of Maine and a Masters of Business Administration
from the University of Maine.





67







Marc Pergament – Directorserves as Partner of Weinberg, Gross & Pergament LLP. Mr. Pergament is a Long Island Chapter 7 Trustee and has been a
panel trustee in the Eastern District of New York since 1990, where he is assigned cases filed in the Central Islip Bankruptcy
Court. Mr. Pergament graduated from Brooklyn College in 1977 with a B.A. cum laude . He attended Rutgers University Law
School, graduating in 1980. He is a founding partner of the Garden City law firm, Weinberg, Gross & Pergament LLP which was
created in 1987. Prior to that, Mr. Pergament was a trial attorney for the United States Department of Justice, in their Antitrust
Division, from 1980 to 1983. He was previously involved as a coordinator and treasurer for 13 years with the Notre Dame Catholic
Youth Organization in Nassau County.



Family Relationships



There are no familial relationships among
our officers and directors.



Involvement in Certain Legal Proceedings



In 2007, Mr. Sartorio,
as CEO of the Marquee Group filed for corporate bankruptcy protection for its manufacturing and distribution subsidiaries/affiliates
and personal bankruptcy protection due to the devastating impact of Hurricane Katrina on his manufacturing and distribution subsidiaries/affiliates.



Other than disclosed
above, during the past ten years, none of our officers, directors, promoters or control persons have been involved in any legal
proceedings as described in Item 401(f) of Regulation S-K.



Board Committee



The Company does not
have a formal Audit Committee, Nominating Committee or Compensation Committee.  As the Company’s business expands,
however, it will reassess this.



Code of Ethics



The Company has adopted
a code of ethics to apply to its principal executive officer, principal financial officer, principal accounting officer and controller,
or persons performing similar functions.



Board Meetings



The Board of Directors
met one time during the fiscal year of 2014.



Section 16(a) Beneficial Ownership
Reporting Compliance



Compliance with Section 16(a) of the Exchange Act



Section 16(a) of the
Securities Exchange Act of 1934, as amended, requires our executive officers and directors and persons who own more than 10% of
a registered class of our equity securities to file with the Securities and Exchange Commission initial statements of beneficial
ownership, reports of changes in ownership and annual reports concerning their ownership of the our common stock and other equity
securities, on Form 3, 4 and 5 respectively. Executive officers, directors and greater than 10% shareholders are required by the
Securities and Exchange Commission regulations to furnish our company with copies of all Section 16(a) reports they file.



Based solely on our
review of the copies of such reports received by us, and on written representations by our officers and directors regarding their
compliance with the applicable reporting requirements under Section 16(a) of the Exchange Act, we believe that, with respect to
the fiscal year ended December 31, 2014, our officers and directors, and all of the persons known to us to own more than 10% of
our common stock, filed all required reports on a timely basis, except that Dominick Sartorio, Christopher Amandola, Anthony Urbano
each filed a Form 3 reporting their beneficial ownership of the Company’s common stock late. David Perry and MarcPergament didn’t file a Form 3 to report their beneficial ownership of the Company’s common stock.



|Item 11. | Executive Compensation
|-------- | ----------------------



The following table
sets forth for the two years ended December 31, 2014 and 2013 the compensation awarded to, paid to, or earned by, the Company’s
Chief Executive Officer and the Company’s other most highly compensated executive officers whose total compensation during
the year ended December 31, 2014 and 2013 exceeded $100,000.  Certain columns were excluded as the information was not
applicable.





68







Summary Compensation Table



|Name and Principal
    Position |  |  | Year |  |  |  | Salary ($) |  |  |  | Bonus ($) |  |  |  | Other IncentiveCompensation($) (1) |  |  |  | OptionAwards ($) (2) |  |  |  | Total $ | 
|------------------------------- |  |  | ---- |  |  |  | ---------- |  |  |  | --------- |  |  |  | ---------------------------------- |  |  |  | -------------------- |  |  |  | ------- | 
|Dominick Sartorio               |  |  | 2014 |  |  |  | 360,000    |  |  |  |           |  |  |  |                                    |  |  |  |                      |  |  |  | 360,000 | 
|                                |  |  | 2013 |  |  |  | 250,000    |  |  |  | 0         |  |  |  | 0                                  |  |  |  | 0                    |  |  |  | 250,000 | 
|Christopher Amandola            |  |  | 2014 |  |  |  | 180,000    |  |  |  |           |  |  |  |                                    |  |  |  |                      |  |  |  | 180,000 | 
|                                |  |  | 2013 |  |  |  | 180,000    |  |  |  | 0         |  |  |  | 0                                  |  |  |  | 0                    |  |  |  | 180,000 | 
|Anthony Urbano                  |  |  | 2014 |  |  |  | 220,000    |  |  |  |           |  |  |  |                                    |  |  |  |                      |  |  |  | 220,000 | 
|                                |  |  | 2013 |  |  |  | 180,000    |  |  |  | 0         |  |  |  | 0                                  |  |  |  | 0                    |  |  |  | 180,000 | 
|Edward Joyce                    |  |  | 2014 |  |  |  | 0          |  |  |  | 0         |  |  |  | 0                                  |  |  |  | 0                    |  |  |  | 0       | 
|                                |  |  | 2013 |  |  |  | 53,000     |  |  |  | 0         |  |  |  | 0                                  |  |  |  | 0                    |  |  |  | 53,000  | 
|David Perry                     |  |  | 2014 |  |  |  | 180,000    |  |  |  |           |  |  |  |                                    |  |  |  |                      |  |  |  | 180,000 | 
|                                |  |  | 2013 |  |  |  | 180,000    |  |  |  | 0         |  |  |  | 0                                  |  |  |  | 0                    |  |  |  | 180,000 | 
|Marc Pergament                  |  |  | 2014 |  |  |  | 0          |  |  |  | 0         |  |  |  | 0                                  |  |  |  | 0                    |  |  |  | 0       | 
|                                |  |  | 2013 |  |  |  | 0          |  |  |  | 0         |  |  |  | 0                                  |  |  |  | 0                    |  |  |  | 0       | 



(1) Represents the calculated costs of
stock based compensation for financial reporting purposes. The value represents the share price of our common stock upon approval
by the board of directors to issue the common shares to our executives multiplied by the number of shares being issued. Portions
of this value are recorded as deferred compensation when the shares are issued for a term that extends into a later period.



(2) Represents the compensation costs
of stock options for financial reporting purposes under FASB ASC 718, rather than an amount paid to or realized by the above named
executive officer.



Other than disclosed
above, no other board members received compensation in any form for their services as board members.



Employment Agreements



On June 8, 2011, Millennium HealthCare
Solutions, Inc. (“MHS”) entered into an employment agreement with Christopher Amandola (the “Amandola Employment
Agreement”), whereby Mr. Amandola agreed to serve as the President of MHS, in consideration for an annual base salary of
$130,000, a performance bonus of up to 200% of his base salary to be determined by the Board of Directors and a discretionary
bonus to be determined by the Board of Directors. Additionally, under the terms of the Amandola Employment Agreement, MHS shall
lease an automobile of up to a monthly lease amount of $500. Mr. Amandola shall also receive 500,000 shares of the Company’s
common stock in the event that MHS merges with a public entity. The term of the Amandola Employment Agreement commences on
the date of the Amandola Employment Agreement and ends when terminated by either party. The Amandola Employment Agreement was
assumed by the Company on June 14, 2011.



On January 9, 2012,
the Company and Mr. Amandola entered into an addendum to the Amandola Employment Agreement pursuant to which, the annual base
salary was raised to $180,000.



On June 7, 2011, MHS
entered into an employment agreement with Dominick Sartorio (the “Sartorio Employment Agreement”), whereby Mr. Sartorio
agreed to serve as the Chief Executive Officer of MHS, in consideration for an annual base salary of $130,000, a performance bonus
of no less than 125% and no more than 200% of his base salary to be determined by the Board of Directors and a discretionary bonus
to be determined by the Board of Directors. The Sartorio Employment Agreement was assumed by the Company on June 14, 2011.



On January 9, 2012,
the Company and Mr. Sartorio entered into an addendum to the Sartorio Employment Agreement pursuant to which, the annual base
salary was raised to $225,000.



On June 6, 2011, MHS
entered into an employment agreement with Anthony Urbano (the “Urbano Employment Agreement”), whereby Mr. Urbano agreed
to serve as the Chief Financial Officer of MHS, in consideration for an annual base salary of $130,000, a performance bonus of
no less than 25% and no more than 200% of his base salary to be determined by the Board of Directors and a discretionary bonus
to be determined by the Board of Directors. Additionally, under the terms of the Urbano Employment Agreement, MHS shall lease
an automobile of up to a monthly lease amount of $850. The term of the Urbano Employment Agreement commences on upon completion
of MHS’ first financing and ends when terminated by either party. The Urbano Employment Agreement was assumed by the Company
on June 14, 2011.



On January 9, 2012,
the Company and Mr. Urbano entered into an addendum to the Urbano Employment Agreement pursuant to which, the annual base salary
was raised to $180,000.





69











|Item 12. | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters
|-------- | --------------------------------------------------------------------------------------------------



The following table
sets forth as of April 10, 2015, the number and percentage of the outstanding shares of common stock which, according to the information
supplied to the Company, were beneficially owned by (i) each person who is currently a director, (ii) each executive officer,
(iii) all current directors and executive officers as a group, and (iv) each person who, to our knowledge, is the beneficial owner
of more than 5% of the outstanding common stock.



|                                                                |  | Number ofSharesBeneficiallyOwned |            |  | Percentage ofOutstandingshares owned | 
|--------------------------------------------------------------- |  | -------------------------------- | ---------- |  | ------------------------------------ | 
|Dominick Sartorio                                               |  |                                  | 8,000,000  |  |                                      | 
|Christopher Amandola                                            |  |                                  | 8,000,000  |  |                                      | 
|Anthony Urbano                                                  |  |                                  | 8,360,000  |  |                                      | 
|David Perry                                                     |  |                                  | 2,000,000  |  |                                      | 
|Marc Pergament                                                  |  |                                  | 2,250,000  |  |                                      | 
|All directors and executive officers
    as a group (5 persons) |  |                                  | 28,610,000 |  |                                      | 



*Less than 1%



| | (1) | In
    determining beneficial ownership of our common stock as of a given date, the number of shares shown includes shares of common
    stock which may be acquired on exercise of warrants or options or conversion of convertible securities within 60 days of that
    date. In determining the percent of common stock owned by a person or entity on April 10, 2015, (a) the numerator is the number
    of shares of the class beneficially owned by such person or entity, including shares which may be acquired within 60 days
    on exercise of warrants or options and conversion of convertible securities, and (b) the denominator is the sum of (i) the
    total shares of common stock outstanding on April 10, 2015 (134,788,942), and (ii) the total number of shares that the beneficial
    owner may acquire upon conversion of the preferred and on exercise of the warrants and options. Unless otherwise stated, each
    beneficial owner has sole power to vote and dispose of its shares.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Item 13. | Certain Relationships and Related Transactions,
    and Director Independence
|-------- | -----------------------------------------------------------------------------



Director independence and related transactions:





The Company currently
does, and may, from time to time, engage, consult, contract or hire family members and/or relations of current officers and/or
directors of the Company. Such engagements generally are for specific roles and do not consist of any executive, officer or directorship
responsibilities.



Commencing in the
year ended December 31, 2013 the Company retained an entity wholly owned by Elizabeth Sartorio, the spouse of the Chief Executive
Officer of the Company, to furnish support and administrative type consulting services and an entity wholly owned by Kristine
Urbano, the spouse of the Chief Financial Officer of the Company, to furnish bookkeeping/accounting, support and administrative
type consulting services. These services do not consist of any executive, officer or directorship responsibilities. For the year
ending December 31, 2014 consulting expenses related to these services were $150,000 and $37,500, respectively.



|Item 14. | Principal Accounting Fees and Services
|-------- | --------------------------------------



We were billed by
Paritz & Company PA, an independent registered public accounting firm, for the following professional services they performed
for us during fiscal years ended December 31, 2014 and 2013:



|                   |  | Fiscal
    year ended December 31, |        
|------------------ |  | ---------------------------------- | -------
|                   |  | 2014                               |        
|Audit fees         |  | $                                  | 123,400
|Audit-related fees |  |                                    | 5,000  
|Tax fees           |  |                                    | 4,950  
|All other fees     |  |                                    | -      
|Total              |  | $                                  | 133,350



The Board of Directors
pre-approves all audit and non-audit services performed by the Company's auditor and the fees to be paid in connection with such
services.



70







PART IV



|Item 15. | Exhibits, Financial Statement Schedules
|-------- | ---------------------------------------



The following documents are included as exhibits to this report.



|Exhibit No. |  | Title of Document                                                                                                                                                                                                                                                                                                                                                                                                            | 
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|3.1         |  | Certificate of Incorporation dated
    July 27, 1994 (Incorporated by reference to Exhibit 3.1 to Form 10 filed on December 6, 2013)                                                                                                                                                                                                                                                                                         | 
|3.2         |  | Certificate of Correct dated July 28,
    1994 (Incorporated by reference to Exhibit 3.2 to Form 10 filed on December 6, 2013)                                                                                                                                                                                                                                                                                               | 
|3.3         |  | Certificate of Amendment of Certificate
    of Incorporation dated July 11, 2000 (Incorporated by reference to Exhibit 3.3 to Form 10 filed on December 6, 2013)                                                                                                                                                                                                                                                             | 
|3.4         |  | Certificate of Amendment of Certificate
    of Incorporation dated December 18, 2002 (Incorporated by reference to Exhibit 3.4 to Form 10 filed on December 6, 2013)                                                                                                                                                                                                                                                         | 
|3.5         |  | Certificate of Correction of Certificate
    of Amendment of Certificate of Incorporation dated April 1, 2003 (Incorporated by reference to Exhibit 3.5 to Form 10 filed
    on December 6, 2013)                                                                                                                                                                                                                            | 
|3.6         |  | Certificate of Amendment of Certificate
    of Incorporation dated June 24, 2004 (Incorporated by reference to Exhibit 3.6 to Form 10 filed on December 6, 2013)                                                                                                                                                                                                                                                             | 
|3.7         |  | Certificate of Amendment of Certificate
    of Incorporation dated July 15, 2008 (Incorporated by reference to Exhibit 3.7 to Form 10 filed on December 6, 2013)                                                                                                                                                                                                                                                             | 
|3.8         |  | Certificate of Amendment of Certificate
    of Incorporation dated July 9, 2010 (Incorporated by reference to Exhibit 3.8 to Form 10 filed on December 6, 2013)                                                                                                                                                                                                                                                              | 
|3.9         |  | Certificate of Amendment of Certificate
    of Incorporation dated December 28, 2010 (Incorporated by reference to Exhibit 3.9 to Form 10 filed on December 6, 2013)                                                                                                                                                                                                                                                         | 
|3.10        |  | Certificate of Designations, Number,
    Voting Powers, Preferences and Rights of Series A Preferred Stock  dated June 14, 2011 (Incorporated by reference
    to Exhibit 3.10 to Form 10 filed on December 6, 2013)                                                                                                                                                                                                         | 
|3.11        |  | Certificate of Amendment of Certificate
    of Incorporation dated June 16, 2011 (Incorporated by reference to Exhibit 3.11 to Form 10 filed on December 6, 2013)                                                                                                                                                                                                                                                            | 
|3.12        |  | Certificate of Designation, Preferences
    and Rights of Series E Preferred Stock dated July 25, 2013 (Incorporated by reference to Exhibit 3.12 to Form 10 filed on
    December 6, 2013)                                                                                                                                                                                                                                  | 
|3.13        |  | By-Laws (Incorporated by reference
    to Exhibit 3.13 to Form 10 filed on December 6, 2013)                                                                                                                                                                                                                                                                                                                                 | 
|3.14        |  | Certificate of Designations, Number,
    Voting Powers, Preferences and Rights of Series F Preferred Stock  dated December 2, 2013 (Incorporated by reference
    to Exhibit 3.1 to Form 8-K filed on March 5, 2014)                                                                                                                                                                                                         | 
|10.1        |  | Distribution and Marketing Services
    Agreement by and between Millennium Medical Devices LLC and Atossa Genetics Inc. dated April 30, 2013 (Incorporated by
    reference to Exhibit 10.37 to Form 10 filed on December 12, 2014)                                                                                                                                                                                         | 
|10.2        |  | Medical Records Coding Agreement by
    and between Millennium Coding & Billing Inc. and CDx Diagnostics Inc. dated February 1, 201* (Incorporated by reference
    to Exhibit 10.37 to Form 10 filed on December 12, 2014)                                                                                                                                                                                                  | 
|10.3        |  | Master Purchase, Supply and Distribution
    Agreement by and between Millennium Medical Devices LLC and Heart Smart Inc. dated May 1, 2013* (Incorporated by reference
    to Exhibit 10.37 to Form 10 filed on December 12, 2014)                                                                                                                                                                                          | 
|10.4        |  | Agreement of Lease by and between Treeline
    100-400 GCP LLC and Millennium Healthcare, Inc. dated February 29, 2013 (Incorporated by reference to Exhibit 10.4 to Form
    10 filed on December 6, 2013)                                                                                                                                                                                                                  | 
|10.5        |  | Lease Agreement by and between Matrix/AEW
    NB, LLC and Millennium Healthcare Inc. dated September 11, 2012 (Incorporated by reference to Exhibit 10.5 to Form 10 filed
    on December 6, 2013)                                                                                                                                                                                                                           | 
|10.6        |  | Committed Equity Facility Agreement
    by and between TCA Global Credit Master Fund, L.P. and Millennium Healthcare, Inc. dated August 31, 2012 (Incorporated by
    reference to Exhibit 10.6 to Form 10 filed on December 6, 2013)                                                                                                                                                                                        | 
|10.7        |  | Registration Rights Agreement by and
    between TCA Global Credit Master Fund, L.P. and Millennium Healthcare, Inc. dated August 31, 2012 (Incorporated by reference
    to Exhibit 10.7 to Form 10 filed on December 6, 2013)                                                                                                                                                                                              | 
|10.8        |  | Securities Purchase Agreement by and
    between by and between TCA Global Credit Master Fund, L.P. and Millennium Healthcare, Inc. dated August 31, 2012 (Incorporated
    by reference to Exhibit 10.8 to Form 10 filed on December 6, 2013)                                                                                                                                                                               | 
|10.9        |  | Promissory Note issued to TCA Global
    Credit Master Fund, L.P. dated August 31, 2012 (Incorporated by reference to Exhibit 10.9 to Form 10 filed on December 6,
    2013)                                                                                                                                                                                                                                                 | 
|10.10       |  | Security Agreement by and between by
    and between TCA Global Credit Master Fund, L.P. and Millennium Healthcare, Inc. dated August 31, 2012 (Incorporated by reference
    to Exhibit 10.10 to Form 10 filed on December 6, 2013)                                                                                                                                                                                         | 
|10.11       |  | Security Agreement by and among TCA
    Global Credit Master Fund, L.P., Millennium Procomm Solutions, Inc., Millennium Coding & Billing, Inc., Millennium Medical
    Devices, LLC, Millennium Vascular Management Group, Inc. and Millennium Vascular Management Group of Staten Island, LLC dated
    August 31, 2012 (Incorporated by reference to Exhibit 10.11 to Form 10 filed on December 6, 2013)                   | 
|10.12       |  | Guaranty Agreement by and among Millennium
    Procomm Solutions, Inc., Millennium Coding & Billing, Inc., Millennium Medical Devices, LLC, Millennium Vascular Management
    Group, Inc. and Millennium Vascular Management Group of Staten Island, LLC for the benefit of TCA Global Credit Master Fund,
    L.P. dated August 31, 2012 (Incorporated by reference to Exhibit 10.12 to Form 10 filed on December 6, 2013) | 



71









|10.13 |  | Validity Guaranty made
    by Dominick Sartorio for the benefit of TCA Global Credit Master Fund, L.P. dated September 20, 2012 (Incorporated by reference
    to Exhibit 10.13 to Form 10 filed on December 6, 2013)                                          | 
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|10.14 |  | Purchase, Supply and Distribution Agreement
    between Millennium Medical Devices LLC and CDx Diagnostics Inc. dated February 1, 2013* (Incorporated by reference to Exhibit
    10.37 to Form 10 filed on December 12, 2014)                                 | 
|10.15 |  | Form Warrant Subscription Agreement
    dated February 2013 (Incorporated by reference to Exhibit 10.15 to Form 10 filed on July 25, 2013)                                                                                                                     | 
|10.16 |  | Form A Warrant dated February 21, 2013
    (Incorporated by reference to Exhibit 10.16 to Form 10 filed on July 25, 2013)                                                                                                                                      | 
|10.17 |  | Form B Warrant  dated February
    21, 2013 (Incorporated by reference to Exhibit 10.17 to Form 10 filed on July 25, 2013)                                                                                                                                     | 
|10.18 |  | Form Note Subscription Agreement dated
    February 21, 2013 (Incorporated by reference to Exhibit 10.18 to Form 10 filed on July 25, 2013)                                                                                                                    | 
|10.19 |  | Form Bridge Note dated February 21, 2013 (Incorporated
    by reference to Exhibit 10.19 to Form 10 filed on July 25, 2013)                                                                                                                                   
|      |  |                                                                                                                                                                                                                                                               
|10.20 |  | Form Security Agreement dated February 21, 2013 (Incorporated
    by reference to Exhibit 10.20 to Form 10 filed on July 25, 2013)                                                                                                                            
|      |  |                                                                                                                                                                                                                                                               
|10.21 |  | Form Subscription Agreement dated June 27, 2013 (Incorporated
    by reference to Exhibit 10.21 to Form 10 filed on July 25, 2013)                                                                                                                            
|      |  |                                                                                                                                                                                                                                                               
|10.22 |  | Form Promissory Note dated June 27, 2013 (Incorporated
    by reference to Exhibit 10.22 to Form 10filed on July 25, 2013)                                                                                                                                    
|      |  |                                                                                                                                                                                                                                                               
|10.23 |  | Form A Warrant dated June 27, 2013 (Incorporated by
    reference to Exhibit 10.23 to Form 10 filed on July 25, 2013)                                                                                                                                         
|      |  |                                                                                                                                                                                                                                                               
|10.24 |  | Form B Warrant dated June 27, 2013 (Incorporated by
    reference to Exhibit 10.24 to Form 10 filed on July 25, 2013)                                                                                                                                         
|      |  |                                                                                                                                                                                                                                                               
|10.25 |  | License Agreement between Devonshire Surgical Facility,
    LLC and Millennium Vascular Management Group Inc. dated June 6, 2013 (Incorporated by reference to Exhibit 10.25 to Form 10
    filed on December 6, 2013)                                        
|      |  |                                                                                                                                                                                                                                                               
|10.26 |  | Employment Agreement between Millennium HealthCare
    Solutions, Inc. and Christopher Amandola dated June 8, 2011 (Incorporated by reference to Exhibit 10.26 to Form 10 filed on
    December 6, 2013)                                                      
|      |  |                                                                                                                                                                                                                                                               
|10.27 |  | Employment Agreement between Millennium HealthCare
    Solutions, Inc. and Dominick Sartorio dated June 7, 2011 (Incorporated by reference to Exhibit 10.37 to Form 10 filed on December
    12, 2014)                                                        
|      |  |                                                                                                                                                                                                                                                               
|10.28 |  | Employment Agreement between Millennium HealthCare
    Solutions, Inc. and Anthony Urbano dated June 6, 2011 (Incorporated by reference to Exhibit 10.28 to Form 10 filed on December
    6, 2013)                                                            
|      |  |                                                                                                                                                                                                                                                               
|10.29 |  | Addendum to Employment Agreement between Millennium
    Healthcare Inc. and Christopher Amandola dated January 9, 2012 (Incorporated by reference to Exhibit 10.29 to Form 10 filed
    on December 6, 2013)                                                  
|      |  |                                                                                                                                                                                                                                                               
|10.30 |  | Addendum to Employment Agreement between Millennium
    Healthcare Inc. and Dominick Sartorio dated January 9, 2012 (Incorporated by reference to Exhibit 10.30 to Form 10 filed on
    December 6, 2013)                                                     
|      |  |                                                                                                                                                                                                                                                               
|10.31 |  | Addendum to Employment Agreement between Millennium
    Healthcare Inc. and Anthony Urbano dated January 9, 2012 (Incorporated by reference to Exhibit 10.31 to Form 10 filed on December
    6, 2013)                                                        
|      |  |                                                                                                                                                                                                                                                               
|10.32 |  | Supply and Distribution Agreement between Millennium
    Healthcare Inc. and eWellness Corporation dated May 24, 2013  (Incorporated by reference to Exhibit 10.37 to Form
    10 filed on December 12, 2014)                                                 
|      |  |                                                                                                                                                                                                                                                               
|10.34 |  | Asset Purchase Agreement dated November 4, 2013 (Incorporated
    by reference to Exhibit 10.1 to Form 8-K filed on December 4, 2013)                                                                                                                         
|      |  |                                                                                                                                                                                                                                                               
|10.35 |  | Form of Subscription Agreement (Incorporated by reference
    to Exhibit 10.1 to Form 8-K filed on March 5, 2014)                                                                                                                                             
|      |  |                                                                                                                                                                                                                                                               
|10.36 |  | the Amended and Restated Purchase, Supply and Distribution
    Agreement by and between Millennium Medical Devices LLC and CDx Diagnostics Inc. dated October 31, 2013* (Incorporated
    by reference to Exhibit 10.37 to Form 10 filed on December 12, 2014)
|      |  |                                                                                                                                                                                                                                                               
|10.37 |  | Addendum to Employment Agreement between Millennium
    Healthcare Inc. and Dominick Sartorio dated January 4, 2013 (Incorporated by reference to Exhibit 10.37 to Form 10 filed on
    December 12, 2014)                                                    
|      |  |                                                                                                                                                                                                                                                               
|14.1  |  | Code of Ethics (Incorporated by reference to Exhibit
    14.1 to Form 10 filed on July 25, 2013)                                                                                                                                                              
|      |  |                                                                                                                                                                                                                                                               
|16.1  |  | Letter dated November 25, 2013 from KBL, LLP to the
    Securities and Exchange Commission (Incorporated by reference to Exhibit 16.1 to Form 8-K filed on November 26, 2013)                                                                                 
|      |  |                                                                                                                                                                                                                                                               
|21.1  |  | List of Subsidiaries (Incorporated by reference to
    Exhibit 21.1 to Form 10 filed on July 25, 2013)                                                                                                                                                        
|      |  |                                                                                                                                                                                                                                                               
|31.1  |  | Certification by Chief Executive Officer pursuant to Sarbanes Oxley Section 302 (filed herewith).                                                                                                                                                             
|      |  |                                                                                                                                                                                                                                                               
|31.2  |  | Certification
by Chief Financial Officer pursuant to Sarbanes Oxley Section 302 (filed herewith).                                                                                                                                                             
|      |  |                                                                                                                                                                                                                                                               
|32.1  |  | Certification by Chief Executive
Officer pursuant to 18 U.S.C. Section 1350 (filed herewith).                                                                                                                                                                 
|      |  |                                                                                                                                                                                                                                                               
|32.2  |  | Certification by Chief Financial Officer pursuant to 18
U.S.C. Section 1350 (filed herewith).                                                                                                                                                                 



* Portions of the exhibits have been omitted pursuant to a
confidential treatment request.



72







SIGNATURES



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



|                      | Millennium Healthcare Inc.                                                                           |                      
|--------------------- | ---------------------------------------------------------------------------------------------------- | ---------------------
|                      |                                                                                                      |                      
|Date: April 15, 2015  | By:                                                                                                  | /s/ Dominick Sartorio
|                      | Dominick Sartorio
        Chief Executive Officer and Chairman (Principal Executive
        Officer)
|                      |                                                                                                     
|Date:  April 15, 2015 | By:                                                                                                  | /s/ Anthony Urbano   
|                      | Anthony Urbano
        Chief Financial Officer
        (Principal Financial and Accounting Officer) 



In accordance with the Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



|Name                             |  | Title                                |  | Date              
|-------------------------------- |  | ------------------------------------ |  | ------------------
|/s/ Dominick
        Sartorio    |  | Chief Executive Officer, Chairman    |  | April 15,
    2015
|Dominick Sartorio                |  |                                      |  |                   
|/s/ Christopher
        Amandola |  | President and Director               |  | April 15,
    2015
|Christopher Amandola             |  |                                      |  |                   
|/s/ Anthony
        Urbano       |  | Chief Financial Officer and Director |  | April 15,
    2015
|Anthony Urbano                   |  |                                      |  |                   





73